Community banks still serving their customers

From small business loans to employees' involvement in local organizations, community banks build on and encourage relationships with the areas they serve

Executive team — Exchange Bank’s senior vice president Catherine Ray Martin and her CEO father, Ricky Ray. Photo by Art Meripol.

Over the past three decades, the number of community banks has shrunk — from 13,568 in 1990 to 4,624 in 2020, according to the Federal Deposit Insurance Corp. But the community banks that remain provide a personalized service to their customers and communities. And Alabama businesses and consumers have access to a number of dynamic and active community banks.

For example, for more than a century, Exchange Bank has served the people of Etowah County. While many of its competitors have been overtaken by larger regional or national banks, Exchange Bank has remained independent, growing along with the community to include five branches throughout the county, says Catherine Ray Martin, senior vice president, who reports to her father, CEO Ricky Ray.

Newer community banks are also making a positive impact in communities across the state. For example, Paul Bryant Jr. started Bryant Bank in 2005 “to be an old-school community bank,” says Claude Edwards, president. “We’ve grown a lot over the years, but no matter how big we get, we never vary from our focus on community.”

Personal Relationships

One of the unique differentiators of community banks is their ability to build more intimate relationships with customers. “Community banks can create personal environments for their customers that larger banks cannot,” says William Petrey, president and CEO of First Citizens Bank in Luverne. “Community banks have the opportunity to know their customer beyond their banking needs. This creates relationships that are priceless.”

The valuable role of community banking relationships has perhaps never been more evident than during the pandemic, when community banks were crucial in distributing government-funded assistance to small businesses. Small business owners who had relationships with community banks were more likely to get access to a Paycheck Protection Program (PPP) loan than those who had to rely on larger, multi-state banks.

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For example, Congress authorized $350 billion in small business loans for the first round of the Paycheck Protection Program in March 2020. And although community banks hold just 15% of all loans in the U.S. banking system, they processed 60% of the loans in the first round of the PPP. Even after larger banks got more involved in the second round, community banks still processed 45% of loans for the second round.

The smallest banks made the smallest PPP loans, showing that these banks play a key role in serving businesses that may be outside the focus of larger banks, according to the Federal Reserve.

Community Difference

Most community banks’ focus goes beyond simply doing business and includes improving the communities they serve. “Our bank has made a huge difference in the community by not only being corporate citizens, but by also being active in the community outside of the bank,” Petrey says. “Our members are active in civic organizations such as Rotary, Kiwanis and Girl Scouts. We are also active in government, local churches and various charities.”

First Citizens Bank also serves its community by sponsoring local Little League teams, high school sports programs, school reading programs, the annual Citizen of the Year banquet and church events. Through lending to local businesses for upgrades and expansions and providing construction loans for new homes and subdivisions, the bank continually helps build and improve the community, Petrey says.

Similarly, Exchange Bank invests time and money back into Etowah County. Each employee gets one paid hour each week to do community service work, such as delivering meals to people in need. The bank sponsors a number of community financial education events, such as senior fairs, career fairs and classes about credit and loans at the Etowah County Career Center. The bank sponsors a school bank at West End Elementary School, where sixth graders work as tellers and students can make deposits in their own savings accounts every Wednesday.

In addition, Exchange Bank ensures customers that their money will also help support their local community. “All the money deposited here stays here,” Martin says. “Your money works where you live.”

Claude Edwards, president of Bryant Bank.

At Bryant Bank, the mission is to be “community-minded in everything we do,” Edwards says. “The community bank model allows bankers to be more flexible with their time, and we want our bankers to be involved in organizations throughout the community to make a difference. We listen to our bankers and contribute to the causes that matter to them. It’s a real source of pride to see the passion our bankers have, and every level of the bank participates in community service.”

For example, Bryant Bank helped a lot with health care throughout the pandemic. The team also serves at local food banks, works with Junior Achievement and sponsors school athletic teams and university capital campaigns.

Staying Competitive

As consumers have moved increasingly toward online and mobile banking, many community banks have worked to keep up with their demands. Combining the convenience of digital technologies with a personal touch has been a winning combination for many banks.

“We offer all the same bells and whistles that the larger banks offer, such as mobile banking and banking apps,” says Exchange Bank’s Martin. “But you can also come sit down and talk to us. If you have a credit card issue, you can come sit down and talk and figure it out.”

For other small banks that aren’t able to provide all the services their customers might want, Bryant Bank launched its Correspondent Banking Services. The program provides technology, cash management and other resources to other small banks in towns and cities across Alabama. For example, if a customer needs a loan that is larger than his community bank can legally make, Correspondent Banking can provide the capital to help that bank make the loan and serve its customer. If a new employer is moving into a small town and wants remote deposit or other services the local community bank can’t offer, Correspondent Banking can provide it.

“The services we provide help other community banks so that they can meet the needs of their customers,” says David Long, executive vice president of Correspondent Banking and Capital Markets at Bryant Bank. 

Nancy Mann Jackson and Art Meripol are freelance contributors to Business Alabama. Jackson is based in Madison and Meripol in Birmingham.

This article appeared in the May 2022 issue of Business Alabama.

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