Community Service with the Personal Touch

September 23, 2014
/   Insights

Question: Community branch, personal service, mobile banking—which is the odd one out? Answer: None. Otherwise, the industry is in trouble. For some time now, there have been discussions about the future of community banks...

Cause and Effect: If you build it, will they come?

July 23, 2014
/   Spotlight

Many financial institutions assume that digital banking is lucrative because the most valuable customers happen to bank online. While there is certainly a correlation between online bankers and higher profitability, quantitative evidence suggests that...

Fast Facts: Student Loans

January 22, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast...

Intuit 2020 Report: The Future of Financial Services

April 11, 2011
/   Insights

Today, Intuit released the latest edition of the Intuit 2020 report, Intuit 2020 Report: The Future of Financial Services, which identifies and examines four key trend areas that will  transform the financial services industry...

Small Business: Perception vs. Reality

November 21, 2012
/   Insights

In the most recent election cycle, like most others before it, the one sector of the economy that got the most attention was small business.  This is the future, we were told by every...

The Top 10 Trends in the Digital Banking Industry

December 18, 2013
/   Spotlight

2014 is rapidly approaching and as the year wraps, the Digital Insight team has pulled together the top 10 trends in the digital banking industry based on data and trends from studying financial institutions....

Mobile Banking Engagement: Data from Digital Insight

June 24, 2013
/   Spotlight

Intuit Financial Services has been conducting a comprehensive and ongoing study of financial institution customers. From these studies, the company has been able to provide a deeper view of banking customer behavior across several...

Fast Facts: Financial Executive Economic Outlook Report

February 1, 2013
/   Insights

The Financial Services Roundtable recently released another iteration of it’s Fast Facts, reliable, bullet-point research about issues facing the financial services industry. This series is the The Financial Services Roundtable’s first bi-annual Financial Executive Economic Outlook...

It’s rightly said that the SMB market, which employs a majority of the American workforce, is often overlooked in the national business discourse. Similarly, community banks and credit unions are too often neglected in the mainstream dialog over the financial services industry. This is a glaring oversight: these sectors not only play a critical role in the daily lives of many Americans, but also offer a fresh and distinct picture of the economy at large. Some recent stories, still more the exception than the rule, prove the point.

First, SNL Financial is out with its annual list of the nation’s best-performing community banks, and true to form, there are some very interesting angles. For example, Atlanta-based State Bank Financial Corp. (the holding company behind State Bank & Trust) ranks No. 1 among banks on the larger end of the spectrum, between $500 million and $5 billion in assets for 2011. This would seem to be an unlikely location for a success story of this caliber—Georgia has suffered through nearly 80 bank failures since the market tanked in 2008. However, SBFC has since acquired a dozen of those fallen competitors and assiduously built up a strong, and now market-leading, portfolio.

Coming in second is American First National Holdings of Houston, which has a very different story to tell. Founded by six entrepreneurs barely 15 years ago, it is focused on the Asian American market. And then there’s Citizens National Bank of Bossier City, La., launched in 1985 by a small group of local businesspeople who saw the need for a locally owned and managed bank that could provide modern banking services “without the cold and impersonal delivery. . .so prevalent in today’s financial institutions.”

The entire list exhibits this kind of national diversity. Texas has the highest number of ranked banks, with 12 entries in the top 100. California comes in second with nine, followed by Virginia and Pennsylvania with eight each.

SNL casts a separate look at banks with assets of less than $500 million, and here too there are pleasant surprises. Topping the list of community banks in this category is Amerasia Bank,located in Flushing, N.Y. That’s literally a stone’s throw away from Wall Street and its conglomerates. Launched less than 25 years ago, the bank has earned recognition from financial rating companies.

Meanwhile, The Street offers a different perspective on this very issue by pointing out that long-term growth investors would do well to “look beyond the largest bank holding companies and consider profitable, growing community banks.” The simple, underlying reason: While the multinationals get all the attention, it’s their smaller counterparts, working at the community level, that have more room to grow.

For the record, most of the largest banks are healthier now than they were even a few years ago: All but four of 19 major institutions got a boost last week after the Federal Reserve, reporting on rigorous stress tests conducted over the past few months, determined them strong enough to survive another harsh downturn. J.P. Morgan Chase and Wells Fargo, among others, got the thumbs-up; Citicorp did not, and the market seems to reacting accordingly.

The reality is that community banks play a critical role important in the daily economy, just like their much larger counterparts. However they get much less attention in the process, unless there’s a scandal, or something of political significance, such as last year’s much-heralded Bank Transfer Day.

But for the most part, community banks do what they do quietly—serve with dedication and innovation, effectively using the technologies and tools most needed to survive and thrive. For that, they deserve far greater recognition than they typically get.

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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp