Every year we hear of more and more banks disappearing. In the year 2000 there were approximately 8,000 community banks in the United States; the state of Connecticut had over 60. By the end of 2017 the number had decreased to less than 6,000, while Connecticut-based community banks dropped to less than 40.
What happened to all these banks? Unfortunately some failed as a result of the financial crisis that began in 2008, but most disappeared as a result of mergers and acquisitions.
To fully appreciate why every community needs a community bank, it would be helpful to understand what a community bank is. Such an institution is generally defined by the scope of its business and to a lesser extent by how big it is in terms of assets.
Community banks generally have less than $10 billion in assets and provide traditional banking services in the local communities where they are based. Community banks gather deposits locally, offering checking and savings accounts as well as CDs and money- market accounts, and they tend to make loans locally — including home mortgages, personal loans, and small-business loans.
There is a common misconception that community banks, especially the smaller ones, are limited in the types of services and state-of-the-art technologies they offer their customers. But the fact is that community banks have made tremendous strides in recent years in terms of services and technology.
Mobile banking, P2P, chat, 0nline mortgage applications — most community banks offer all these services and technologies. Here at Newtown Savings Bank, we recently conducted a survey of our mobile banking customers and learned that they rated our mobile technology as good as or better then the technology offered by the “big banks.”
Contrary to the big “money centers” and large regional banks that conduct their business throughout the country and around the world — and are here today and may be gone tomorrow — community banks are truly local and committed to their communities. Indeed, their entire focus is local: Decisions and business plans are made locally and are tied to the important events and conditions in the communities that they serve.
Employees live and work locally. You may encounter them in the grocery store, coffee shop, your houses of worship or walking their dog in town. Community bankers take special care to play an active role as leaders in the community. They support the local Rotary chapter and chamber of commerce; they volunteer to serve on town committees, the local library board and local charities and other nonprofit organizations that serve the community.
Community banks also provide significant financial support to those local nonprofits. Precisely because community bankers are among your neighbors and friends, they have a special affinity for providing a superior customer experience to those who walk into their branches or call their customer service centers.
My favorite correspondence is from customers who write to tell us how a particular teller or manager helped them with a problem or gave them good advice, or provided outstanding customer service.
These are challenging times for community banks. The cost of doing business, of keeping up with technology and heightened regulatory compliance, continues to increase. Rising costs are one reason so many banks over the past 20 years have decided to merge or be acquired.
It is worth noting that some relief may come from a regulatory relief bill signed by President Donald Trump in May. As quoted by American Banker, Rebeca Romero Rainey, president of the Independent Community Bankers of America, said: “This hard-fought, long-awaited community bank regulatory relief legislation will put community banks in an enhanced position to foster local economic growth and prosperity.
“By unraveling some of the suffocating regulatory burdens community banks face,” she added, “they are better able to unleash their full economic potential to the benefit of their customers and communities.”
Even so, we need our customers now more than ever if we are going to survive and help our communities grow. We know you by name and we make all our decisions right here where we are located — not from some location halfway across the country.
Most importantly, we are here to serve you and work side-by-side with you in our communities. So the next time you need to open a bank account or apply for a loan, think local.
Think of your local community bank first.
Anthony F. Giobbi is the executive vice president and chief banking officer at Newtown Savings Bank, a mutual community bank headquartered in Newtown, Connecticut, with more than $1.2 billion in assets.