Community Banks are defined by the Federal Deposit Insurance Corporation (FDIC), as institutions that have the characteristics to tend and revolve around, how and where the bank conducts business. Community Banks focus on providing traditional banking services in their local communities. They obtain most of their core deposits locally, and make many of their loans to local businesses.
This relationship approach to lending, the Report continues; is particularly important to small businesses that rely on community banks for loans and other services. Small businesses, particularly small start-up companies; may be unable to satisfy the requirements of the more structured approach to loan underwriting that larger banks use.
The year of 1990 marked the beginning of a significant negative trend, diluting the number of community banks operating in the United States. FDIC bank statistics show that in 1990 there were 12,343 banks across the nation. The number has now declined to 5,060 banks at the end of quarter March 31 2017, resulting in a loss of 59% bank charters, (number of banks), in the past 27 years!
Unfortunately, the majority of the lost banks were community banks, acquired by larger institutions. Additionally, of the remaining banks approximately half of the branches have been closed, favoring Technology over personal service.
Community banks, generally work with small and medium size businesses; providing best personal service, while funding their credit needs. This includes modern technology to the clients; and a high personal service that allows small business owners and individuals; the guidance and support from bank staff, not available in larger institutions.
According to the Annual Strategic Plan Report (2014/2018) of the Small Business Administration (SBA), America’s 28 million small business owners are the engine of job creation, and innovation; creating two out of every three net new jobs in the United States, and employing over half of the nation’s workforce.
The Small Business Administration (SBA) ensures that these businesses have the tools and resources they need to start and expand their operations and create good jobs that support a growing economy and strong middle class.
Hugo A. Castro, President
Hispanic American Bankers Association