Community banks are an integral part of Main Street; they reinvest local dollars back into the community and help create local jobs. Their relationship banking philosophy is ingrained in the way they conduct business, one loan—one customer—at a time. Local reinvestment helps small businesses grow and helps families finance major purchases and build financial security.

Community banks also are nimble in using new technology platforms, supporting emerging methods of payments and advocating tougher security standards to protect small-business owners and customers from hackers and other criminals.

• Local Focus: Unlike larger banks that may take deposits in one state and lend in others, community banks channel their loans to the neighborhoods where their depositors live and work, which helps local businesses and communities thrive.
• Relationship Banking: Community bank officers know their customers and may consider family history and discretionary spending in making loans. Megabank loan officers apply impersonal qualification criteria, such as credit scoring, without regard to individual circumstances.
• Innovation: As high-tech, high-touch local financial institutions, community banks work with their customers to ensure they have access to innovative products and services while partnering with and investing in financial technology providers.
• Lending Leadership to Small Business: According to the Federal Reserve’s Small Business Credit Survey: Report on Employer Firms, community banks are the small business lender of choice.
• Timely Decision-Making: Community banks offer nimble decision-making on business loans because decisions are made locally. Megabanks must often convene loan-approval committees located in another state, far away from their customers.
• Community Engagement and Accessibility: Community bank officers are typically deeply involved in their local communities, while megabank officers are often detached from the communities where their branches are located.

Community banks only thrive when their customers and communities flourish. They answer to Main Street.

• Lower Fees: Local banks offer more free accounts and charge fewer fees. According to Money-Rates.com, 43 percent of small banks’ checking accounts had no monthly maintenance fees compared to only 25 percent at large banks. Overdraft fees and ATM fees continue to rise in the megabank world as well.
• Local Decision Making: Community banks and credit unions use their intimate knowledge of the area to make loan decisions. Their insight into local market conditions can lead to approval of small business loans that a national bank may not value. According to the Institute for Local Self-Reliance, the largest 20 banks in the country commit only 18% of their commercial loans to small businesses.
• Relationship-Based Banking: As a local business owner, you’re known throughout the community. Small banks factor what they know about your character and personal qualifications into loan decisions rather than just punching a credit score into an automated application.
• Faster Decisions: When you have broken equipment, your business shouldn’t have to suffer while you wait for a loan. Local banks and credit unions make their decisions in-house with less red tape and hoops for you to jump through. Faster loan decisions keep your business on track and turning a profit.
• Local Connections: Your community bank and business banker are a valuable source of networking opportunities for small businesses. Connect with local suppliers, service providers, and potential clients. These contacts fuel the local economy and grow small businesses like yours.  It’s not unusual for a customer to be offered a cookie or cup of coffee when entering their local community bank branch. Local banks value each of their customers as individuals, often greeting them by name and asking about their families and lives. Local banks pride themselves on serving their neighbors and take the time to give customers the attention they need.
• Higher Quality Service: Smaller banks tend to have less employee turnover than larger institutions. Employees at community banks form deeper relationships with their customers, leading to higher quality service and flexible decision making.
• Higher Ethical Standards: As a member of the community, local banks are held to a higher standard than national chains. They know that the policies of their bank and the behavior of their employees has a direct effect on the local community. Unlike megabanks that use their assets to invest in national and international industries, most community banks invest in small, local businesses.

The megabank model first began to take shape in 1998 when Citicorp and Travelers Group merged to create the world’s largest financial services company.

Chase Manhattan followed suit two years later by acquiring J.P. Morgan. The idea took off and one by one the larger financial institutions scooped up smaller banking names.

By 2009, four megabanks had emerged to dominate the financial services industry: Citigroup, JPMorgan Chase, Bank of America, and Wells Fargo. These new megabanks leveraged their size and full menu of financial services to take advantage of rising home prices and demand for mortgage bonds.

When the housing bubble burst in 2008, the resulting financial crisis revealed all of the unsavory details of how these megabanks were run and regulated. Since then, megabank scandals have continued to appear in the news.

Shouldn’t your money go to a trustworthy institution with more accountability to its customers and community?

Community banks aren’t going away. They work hard every day for their communities because they depend on the health of their local economies to keep them running.

Megabanks aren’t as worried about losing one of their 5,800 retail branches so their decisions aren’t community-based. When you choose a local bank or credit union, you’re making a smart financial decision for yourself or your business.

Lower fees, better service, free accounts, and local decision-making benefit your financial bottom line and make your banking experience more enjoyable. Your business benefits from local insight, relationship-based policies, and networking opportunities.

The news is filled with scandals from megabanks as they repeatedly break regulations and betray their customers’ trust. Even their legal behavior is questionable as they use consumers’ assets to make speculative investments or invest in environmentally unfriendly oil, gas, and chemical industries.

When you support your local bank, you support your community. Your money stays close to home and is rooted in the local economy. Your local bank account or loan helps fund small business loans, pays your neighbor’s salary, and supports local charities.

Your money stays in the community and makes it a better place to live.