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How are Community Banks Different from "Big Banks”?

Posted on: May 13, 2021

A Conversation with Your Michigan Bank

How are Community Banks Different from Big BanksIf you're researching where to open an account or apply for a loan in Metro Detroit, Ann Arbor, or Grand Rapids, you may have noticed some banks in Michigan call themselves 'community banks’. Did you know that the U.S. is home to almost 5,000 community banks? With more than 29,000 branches, community banks collectively represent more than 97 percent of banks operating in the U.S.!

Community banks are essential financial partners for their customers and an integral part of the communities they serve. To learn more about the unique advantages of choosing a community bank, we asked our team for insights.

Q. What is a community bank?

A There is no legal definition for the term community bank. Generally speaking, a community bank is a depository or lending institution that primarily serves individuals and businesses in a small geographic region. Community banks are typically owned and operated locally and specialize in personal service and relationship-focused banking.

The Federal Deposit Insurance Corporation (FDIC) considers an institution’s asset size and branch footprint when defining community banks. In most cases, community banks have less than 100 branches and less than $1 billion in assets, but some community banks may have assets up to $10 billion.

Q. Why would I choose a local community bank in Michigan over a large national bank?

A Ideally, we’d discuss the advantages of community banks while sharing a cup of coffee and a donut (or two). Our top-of-mind benefits to you as a customer include the following:

  • Local Focus - The mission of community banks centers on strengthening local economies. Unlike national banks, which may use your money to fund loans across the country, community banks only reinvest your money into local businesses and neighborhoods.
  • Personal Service – Community bankers take great care in knowing their customers. Because of this relationship focus, customers receive personalized service as opposed to the transaction focused approach at larger banks.
  • Flexible Lending - Community banks are more likely to use individual relationships and knowledge of the local economy when making lending decisions, rather than just standardized metrics and impersonal qualification criteria used by large banks.
  • Quick Decisions - Community bank lending teams understand the local market and make their decisions locally, which could help them review and approve loan applications faster than the average ‘big bank’. Larger banks often assemble loan-approval committees located in another state, far away from their customers.
  • Community Involvement - Community banks invest more than money. You’ll find team members actively involved in making connections throughout their neighborhoods and striving to make a positive difference every day.
  • Technology - Although community banks in Michigan are known for fostering good relationships, they recognize the importance of technology. At community banks like Level One Bank, you’ll find 'big bank' advantages like online banking, mobile banking, and Zelle. Many also provide robust commercial depository services.

How are Community Banks Different from Big BanksQ. Who are the best community banks in Michigan?

A We can answer objectively by sharing that Level One Bank ranked among the top 200 community banks in the nation by American Banker Magazine and S&P Global's Top 10 'Best-Performing Community Banks' in the nation. Level One Bank also received the Community Lender of the Year award from the U.S. Small Business Administration and is one of Metro Detroit's ‘Best Companies to Work For’.

We value the recognition but are most proud of our continued support of our communities. In 2020 alone, we helped over 2,000 small business owners get more than $400 million in Paycheck Protection Program (PPP) funds to support at least 30,000 jobs in Michigan. This year, we expect to help another 1,500 small businesses through the second round of the PPP to help weather the challenges of the ongoing pandemic. 

Please call or visit one of our local banking centers today. When you experience all that Level One Bank offers, you’ll know why we’re proud to be on the team!

“At its core, banking is not simply about profit, but about personal relationships.”
–Felix Rohaytn, investment banker

Posted in: Your Community, Your Bank

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