While a community financial institution sounds like a fancy term for a local bank, a community financial institution can be defined by its size, its mission and its geographic location – an not only in our towns. The key word tying financial services to our towns is community.
On a mission of sustainable banking
A community thrives based on its economic health, and the economy of any broad neighborhood, city district, or small town flows through its community financial institutions. When an entrepreneur wants to open a new business, or an established business wants to expand its offerings to the community, often their first steps involve obtaining commercial loans. There are a variety of places from which to borrow money, but community financial institutions make an investment in the region and facilitate the economic opportunity of the people who live and work there.
When a business loan supports the local proprietor, that financing remains in the community. Local lending builds up the economic health of the region as the bank enables the financial health of the community, one business at a time.
The cycle of sustainable banking begins with the community financial institution, and flows through each financial product and service into the community.
Small in size but strong at heart
Size determines the category of a bank. When you hear the term “megabank,” you might think of a national chain of banks from Seattle to Miami. While the number of branches is important, what really determines the size of a financial institution is its total assets, or how much money the bank manages. Megabanks have considerable assets – and a wide regional spread – but those assets are not focused on the local communities where each individual branch might be located.
Ultimately, the mission of a community financial institution is to reinvest its assets locally. Community banks benefits those who bank local, shop local, work local, and live local, so these institutions choose to invest locally.
Providing business loans to the restaurants and food trucks in Citrus View and Hovley, California supports sustainable banking in and around Brawley, California. Likewise, the banks around Elizabethtown, Kentucky lend to and support stores and shops in Cecilia and Hodgenville, Kentucky, too. Each community financial institution sustains the region it serves by providing economic opportunity and regional financial growth from the heart of each community.
Economic might – when others might not
The mission and purpose of a community bank is to build up the community it serves. We only need to look at the benefits of the Paycheck Protection Program (PPP) during the pandemic to see how community representation took on a greater focus thanks to each community financial institution.
When small businesses were impacted during the middle of 2020, far more local banks were able to offer a PPP loan to sustain the economic health of their communities through the CARES Act. Businesses in Lovelock, Nevada and Ellettsville, Indiana were strengthened and sustained by the Small Business Administration loan fund facilitated and distributed by community financial institutions. The majority of loans that sustained communities weren’t from megabanks, but from the financial institutions based in these areas.
Choosing local economic sustainability
While every community bank works to support the community it serves, it is up to its account holders to be partners in the effort. The financial services may help build affordable housing where those account holders live. Their investments may flow into community facilities used by the local bank account holders. Community financial institutions rely on the people who live in the community – that key word again, community.
Choosing to bank local is more than a matter of convenience. It’s not just choosing a nearby branch: it’s deciding to impact local economic growth, and to provide economic opportunity to your neighborhood.
That’s the case whether you’re pocked in America’s big cities, nestled along the lakeshore or perched along a quiet farm. Every community deserves to be sustained by the economic strength of the community financial institutions that serve it. Whatever yours looks like, it is a reflection of you and commitment to it.