I recently spoke to a community group, and subsequently a community bank all-staff meeting regarding the definition of a community bank. The FDIC has defined community banks in their December 2020 Community Banking Report that either exclude or include the following criteria:
A community bank lends depositor money here.
A big bank lends a little here, there, and everywhere.
A community bank is vested in the success of the communities it serves. When the community(s) suffer, so does the bank.
A big bank is hardly vested in the success of any one or a few communities.
A community bank's risk management practices, such as lending to certain industries, making character loans, deposit availability, etc. are made near the customers most impacted by those practices.
A big bank makes risk management decisions at headquarters in a location far, far away.
Community bank customers get the bank's A-team.
If you're not a very large borrower with eight figure loan needs, you're likely getting a bench player, if you get a player at all. You might end up with a bot named Michele or Michael.
Community bank leaders are at your churches, in your restaurants, at the ballfields, and in your community organizations.
Big bank leaders are not.
Communities are better for having community banks in them. Is that true for big banks?