If you’re looking for a new bank, consider a community bank. Community banks may provide perks and advantages that large national banks don’t, depending on your financial circumstances and personal preferences. Here’s a closer look at community banking and why it can be the best option for your individual or small business banking needs.
What is a community bank?
Unlike a credit union or savings and loan, a community bank cannot be characterized exclusively. The Federal Deposit Insurance Corporation’s (FDIC) definition is the closest we can come. According to the FDIC, a community bank is a financial institution with less than $10 billion in assets.
Fortunately, it’s a little simpler to identify the features of community banks. Community banks typically offer conventional banking services to their local communities. These banks frequently lend to neighborhood businesses and get many of their core deposits locally, showing their commitment to the area. Just like some individuals shop locally and support small companies, others might favor community banking in Tennessee for their banking needs.
What distinguishes a community bank from a conventional big bank?
The mission is the main distinction between community and big banks. The primary goal of community bankers is to strengthen the communities they support. This entails accepting deposits from the community, lending money to locals, and doing its part to support the growth of nearby businesses.
A community bank is more likely to be privately owned than a large bank, which stockholders frequently own. Residents who know the area and have a financial and emotional stake typically run community banks.
2020 saw the release of the last FDIC report on community banking. Community banks comprised only 15% of the banking sector then. Community banks comprised only 15% of the banking sector then. However, community banks provided 36% of loans for small businesses and 70% of all loans for agriculture. Despite being small, community banks significantly impact nearby companies and farms.
Advantages of community banks
Here are some of the services that community banks provide:
You are more likely to receive personal attention when you enter a community bank. After all, the employees are residents who also work there.
Higher return rates
Community banks offer some of the finest rates on money market accounts (MMAs), certificates of deposit (CDs), and high-yield savings accounts.
It might be less structured.
Locally owned and operated, community banks frequently have laxer lending policies. That doesn’t mean they’ll give you whatever you ask for or that it doesn’t matter what your credit score is. Community banks must safeguard their bottom line (as well as other consumers), just like any other bank.
However, since you already have a working relationship with a community bank and its employees, they will be more willing to collaborate with you to develop novel loan financing solutions.
Giving back to the community
Finally, every dollar you deposit in a community bank increases the money the bank can put into your community. You contribute to the expansion and prosperity of your town.