Tag Archives: Community Banks

Big Banks vs. Community Banks

BigandSmallBanks2

In today’s world, increasingly more Americans are seeking out alternatives to big banks. Business Insider reports that 74% of Americans have “some or very little confidence” in large banks, while just 10% reported “a great deal of confidence.” Though smaller banks usually offer fewer conveniences (such as online banking and weekend hours), many make up for their small size with incentives, lower fees, and business-friendly solutions. They are also usually more engaged in their local communities.

When deciding which financial institution will meet your needs, consider the pros and cons of big banks, small banks, and credit unions and how they fit you or your business’ needs.

Accessibility

Big banks offer plenty of ATMs and branches, as well as attractive hours. Though smaller banks have a more limited selection, many will reimburse ATM fees for their customers. Also, more and more small banks and credit unions offer solutions for customers on the go. Mobile apps can help you find a nearby ATM, and growing technology means that more people no longer need to visit a branch for their daily transactions.

Fees

From monthly maintenance to overdraft fees, it’s important to consider how much a bank could cost you. According to money-rates.com, the typical customer at leading banks pays nearly $150 per year in checking account fees. Credit unions and smaller banks have less overhead, so they are able to pass on savings and lower fees to customers. More than 70% of the largest credit unions offer free checking, compared to 39% of banks, according to Bankrate.com.

Lending Flexibility

Big banks want to do business with big clients. Experts agree that community banks are the best option for both personal and business loans. The Washington Post reports that community banks are in a better position than larger institutions to set their own guidelines, and Bankrate reports that community banks are often positioned to offer more commercial loans than big banks.

Are you looking for a small bank or credit union in your neighborhood? Since we’ve been directly working with most of them in the South since 1981, let us be a resource. Call me and I’ll let you know which ones to contact!

Ron Ray

Ron Ray is Owner/Chief Executive Officer of Financial Professionals, a Dallas-based financial staffing agency. Since 1981, Ron has worked with a variety of banks and banking professionals to ensure they are working with the best talent.

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Will There Be Support in Basel III for Community Banks?

Washington DC - Basel III

Photo: Wikipedia Commons

Basel III in its current form could force a harsh new reality on community banks. Basel III regulation would combine banks across the globe into one ‘too big to fail’ category. This is bad news for the community bank business model, so to combat the negative effects they sending a message to DC: Keep an eye on providing relief to the smaller banks while you reinforce bank capital requirements. From recent discussions in DC, this message seems to be gaining support in Congress.

Since the June 12th proposal requiring all banks to hold higher capital levels, and the re-determination of risk-weighting certain assets, exemption for community banks is being driven home through varied support. Big Congressional hitters such as Sen. James Inhofe (R-OK), Rep. Jared Polis (D-CO), Sen. John Boozman (R-AR), and Sen. Tom Coburn (R-OK) have dug up a range of topics that could hurt community bank loan portfolios, including:

  • Restrictive capital requirements
  • How rising interest rates will affect available capital
  • The negative effects of increased risk-weighting

Opening this Basel III narrative on the impact for community banks is essential because of the need for continued economic improvement. The restrictions currently proposed not only reduce the available capital to lend and negatively impacting the communities, but also further strain an already stressed out local economy. Perhaps the key for Washington DC will be setting flexible standards within Basel III that grow with the smaller banks as they grow. Let’s hope the vested interest in keeping community banks solvent will prompt the necessary change, because in the case of Basel III one size truly does not fit all.

Miki Rose

Miki Rose is the Managing Partner at Financial Professionals, a Dallas-based recruiting agency specializing in financial jobs. Miki leads client relationships and business decisions that position Financial Professionals as a top staffing source for the southern US region.

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