Community banks are normally owned and operated by someone in the local community, thus “community” bank. The banks tend to focus more on the specific needs of the business checking account and people where the bank is located. Decisions about things like lending are made by employees who may reside in the community and understand the local needs of the people in the community.

Community banks in the United States make up 94% of the banking industry. These banks are defined either as independent banks, savings institutions, or bank and savings institution holding companies. Their assets are less than $1 billion. Larger multi-state and multi-national banks are more like corporations. They charge extra fees when they can, and have stiff penalties for overdrafts. Much of their revenue comes from things like credit
card interest which community banks may not even offer.

The advantage of banking with a community bank over larger banks is that because the community banks are locally owned and operated all lending decisions are made locally by people who understand the unique challenges and financial needs of the business people and residents who live there. It may be easier to obtain a loan that a bigger bank may not accept, or get out of an overdraft fee.

Community banks offer all of the standard banking services like checking, savings, loans and mortgages, safe deposit boxes, etc., for all customers. They also have branch locations that are conveniently located. Some of the bigger banks stay closer to the more populated areas or even inside the city limits. Smaller banks want and need your business. While larger banks may focus on technology, the community banks focus on personal relationships.

Just because a community bank is small, don’t think that your money is less safe. Small business bank are regulated by the same laws that govern the big banks and your money is still insured by the FDIC just like it would be if you banked with one of the giants.