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Demographic Data Come in All Shapes and Sizes

Monday, January 1, 2001

Like any business, a financial institution must know its customers to profit in business. Customer knowledge can be acquired through any number of sources, most of which are free and readily available. For bankers, demographic information might come from empirical data derived from census data and research. Just as valuable is firsthand insight, such as employee and customer observation, community reconnaissance, staff knowledge and partnerships with community organizations.

Census Data Track Trends, Provide Empirical Base

Successful strategic market planning identifies trends and determines what is changing, emerging or staying the same. The U.S. Census Bureau is one of the best sources for data on where people live and how households change over time. Historically, it took a professional demographer to compile a simple table from census data. What's more, the data themselves were a one-time collection effort and were stale at best before the decade's end. This is no longer the case, however, thanks to American FactFinder, a new tool offered with census 2000.

American FactFinder now makes the voluminous demographic and economic statistics easy to find by putting them all in one place—the home page of the Census Bureau web site, It also offers fresh data pulled from annual surveys, estimates and projections. It has full mapping capabilities and offers information never before accessible—detail to the census block level.

With empirical data like the census in hand, bankers are well-positioned to form profitable partnerships. Roland Goicoechea of Arvest Bank, Arkansas, created a unique alliance with businesses in Rogers, Ark., when he saw evidence of a growing Hispanic population. Drawn to the area's thriving poultry industry, this market was generally unbanked and lacked financial literacy. Goicoechea helped form "Creating Hope in the Workplace," a series of financial seminars offered in both Spanish and English and taught where participants work. Since the program's inception in 1994, Arvest Bank of Rogers reports an increase of more than 400 home loans and $40 million in business as a result of the program.

Don't Overlook the Obvious

Southern Commercial Bank, a 110-year-old bank in St. Louis, used community reconnaissance and staff knowledge to adapt its business practices when a swell of Bosnians began settling in nearby neighborhoods in 1995. Bank Vice President Dan Ryan says that paying attention to what was going on in the bank's lobby and the bank's own back yard was essential to topping increased business.

Staff members at Southern Commercial turned to several sources to help them serve this new population. Information came from the bank's loan applications, from the community generally and organizations like the International Institute, an agency that helps to resettle new Americans. The bank hired 15 Bosnian staff and tailored loan products by using flexible underwriting criteria on credit history, work history and residency. Today, the bank's reach has gone well beyond its own neighborhoods: Satisfied customers have spread the word as far as California that Southern Commercial is the bank of choice for Bosnians.

The Bottom Line

Identifying emerging demographics is one thing; knowing what to do with that information is another. It takes creativity, dedication and good information—both the empirical and the observed—to take advantage of new business opportunities. But the payoffs can be profitable, in more ways than one.

Additional information on the 2000 census is available in the July and October issues of the St. Louis Fed's The Regional Economist.

Facts to Figure from the 2000 Census National Data


The Hispanic population increased by more than 50 percent since 1990, and in many areas the growth rate among ethnic minorities outstripped increases in Americans of white European descent. Are members of your staff multilingual? Do you offer resources in languages other than English? Do you offer Fair Lending or sensitivity training to your staff? Do you participate in outreach to potential home-buyers who represent different ethnic minorities?


The median age of the population in 2000 was 35.3 years, the highest ever. The 50-54 age group experienced the largest percentage growth. What products are tailored to the age groups in your community? Are there loan or investment opportunities for senior assisted-living facilities?

Household Type.

The number of non-family households rose at twice the rate of family households: 23 percent vs. 11 percent. Families maintained by women with no husband present increased three times as fast as married-couple families, 21 percent vs. 7 percent. Multi-generational family households now represent 4 percent of all households. What do changes in household composition mean for the types of services and marketing approaches offered by your bank?


Non-employer businesses represent 75 percent of all businesses. What are the implications for small-business loan demand? Do you participate in a loan pool for small-business or micro-enterprise lending?