The essence of community banking can be easily summed up in one simple phrase: “We are you, you are us.” As you make your way through your town, village or city, the echoes of this statement can be felt and seen in everything you do on a daily basis, says Scott Dodds, Executive Vice President and Senior Loan Officer at Consumers National Bank.
“A community bank takes great pride in being a part of all aspects of a town by employing its people and supporting the financial needs of businesses, farms and schools,” Dodds says.
“Community bank employees volunteer and the bank makes donations to local nonprofit organizations. They help keep the local economy vibrant through returning dividends to shareholders who do business with the bank. They make investments and support financial decisions made by people who know the community. They know these businesses because they live in the same community.”
Smart Business spoke with Dodds about the different ways in which community banks can support their local economy.
Who benefits from the presence of a community bank?
When you consider the different industries and service providers that allow a community to thrive, just about any one of these entities are supported by a community bank. When you see new homes being constructed and young families moving into starter homes, they are often financed with various types of mortgages offered by a community bank.
Businesses receive strong support from a community bank’s advisers who understand the market and often play an active role in financing the building in which the company is located. The bank also provides ongoing working capital that supports both the business and the broader economy.
Schools are able to keep their infrastructure updated and offer students state-of-the-art technology to boost student learning experiences thanks to support from community banks. And in many smaller communities, the milk, cheese, meat and produce that consumers purchase is grown on farms that receive agricultural lending support from their community bank.
Finally, nonprofit organizations benefit from the time, talent and treasure provided by a bank and its employees who support a community bank’s mission to give back to the communities that they call home.
What responsibilities does a community bank have to the town it calls home?
Community banks will pay attention to all of the opportunities that exist in the regions they serve, no matter the industry, in order to ensure those businesses receive the capital they need to grow and thrive. Community banks raise both capital and deposits locally to fund their institutions and maintain the infrastructure of the bank.
That capital can also be used to hire people who can then volunteer and serve in the community and help it be a better place for everyone. Community banks also provide unlayered management, meaning customers in the area have closer access to the people in the bank who have the ability to make decisions in an advisory capacity. The bank’s advisers should know and consult with the local business owners and help provide needed capital critical to their success as they grow.
Community banks can also provide a more personal touch since they are typically headquartered in or near the same communities they serve. The business development officers and management take an active role in attending community functions and local volunteering.
Community banks should be aware of their local economies allowing them to understand the nuances of the industries for more thoughtful, informed decisions that can help a community continuously take steps to strengthen its economy. Applications are reviewed by employees who know and live in the area asking appropriate questions and resolving any concerns. Community banks also employ your neighbors and reward local shareholders by paying dividends from profits made keeping the cycle of money in your community.
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