A community bank is a
depository institution
Colloquially, a depository institution is a financial institution in the United States (such as a savings bank, commercial bank, savings and loan associations, or credit unions) that is legally allowed to accept monetary deposits from consumers. ...
that is typically locally owned and operated. Community banks tend to focus on the needs of the businesses and families where the bank holds
branches
A branch, sometimes called a ramus in botany, is a woody structural member connected to the central trunk of a tree (or sometimes a shrub). Large branches are known as boughs and small branches are known as twigs. The term ''twig'' usually ...
and offices.
Lending
In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that de ...
decisions are made by people who understand the local needs of families, businesses and farmers. Employees often reside within the communities they serve.
In the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
, community banks are not clearly defined. Most agencies base this term on aggregate
assets
In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can b ...
size with varying definitions such as less than $1 billion (
Office of the Comptroller of the Currency
The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national ...
) up to less than $10 billion (Federal Reserve Board and Government Accountability Office).
Beyond size (as measured by assets) The
Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures credi ...
(FDIC) imposes a number of additional requirements on institutions classified as community banks.
From 1985 to 2004 community banks comprised roughly 94% of all commercial banks in the United States, but the proportion of total national deposits held by Community Banks declined from about 25.89% of all U.S. deposits in 1985 to 13.55% of the U.S. deposits in 2003.
[
][
] The decline in community banking prevalence in the United States has drawn the attention of
economists
An economist is a professional and practitioner in the social science discipline of economics.
The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this field there are ...
and
policy makers
Policy is a deliberate system of guidelines to guide decisions and achieve rational outcomes. A policy is a statement of intent and is implemented as a procedure or protocol. Policies are generally adopted by a governance body within an organ ...
, some of whom have argued that community banks play an important role in
macroeconomic
Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole.
For example, using interest rates, taxes, an ...
stability.
[
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]
See also
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United States Federal Deposit Insurance Corporation
The Federal Deposit Insurance Corporation (FDIC) is one of two agencies that supply deposit insurance to depositors in American depository institutions, the other being the National Credit Union Administration, which regulates and insures credi ...
*
Credit unions in the United States
Credit unions in the United States served 100 million members, comprising 43.7% of the economically active population, in 2014. U.S. credit unions are not-for-profit, cooperative, tax-exempt organizations. The clients of the credit unions becom ...
*
Mutual savings bank
A mutual savings bank is a financial institution chartered by a central or regional government, without capital stock, owned by its members who subscribe to a common fund. From this fund, claims, loans, etc., are paid. Profits after deductions ...
*
Regional bank
A regional bank is a depository institution, i.e. a bank, savings and loan, or credit union, which is larger than a community bank, which operates below the state level, but smaller than a national bank, which operates either nationally or inte ...
References
{{Reflist
External links
FDIC Future of Community Banking Conference(February 2012) Statistics and conference presentations.
ICBA (Independent Community Bankers of America - ICBA)ICBA - Community Bank LocatorSwitch to Community - Community Banking News and Locator
Banking in the United States