Some people think community banks are just a smaller version of big banks, but that’s generally not the case. These entities don’t just differ in size. They differ significantly in their priorities, how they treat their customers, and their commitment to customer service. To help you get a sense of the differences between big banks and community banks, here’s a look at how they measure up in four key areas.
One way to distinguish between large banks and community banks is by asset size. For instance, Blue Hills Bank has $2.7 billion in assets. By contrast, the largest banks in the country have nearly 10 times that amount in total assets. JP Morgan Chase tops the list at $2.53 trillion, and Bank of America comes in at a close second with $2.28 trillion in assets. As of 2018, the 15 biggest banks in the country all have over $200 billion in assets.
When looking at assets, it’s important to consider the quality over quantity. Regardless of size, if a bank has troubled assets, such as unpaid mortgages, it may have to dip into its equity to cover those losses. When banks spend their equity cushion, they’re no longer earning money on those funds, and that can destabilize the bank financially.
An independent assessment of the asset quality at Blue Hills Bank revealed that less than 0.52% of the bank’s assets were not current. That’s about half of the national average, and as a result, Bank Rate gave the bank its highest asset quality rating of 40, higher than the national average of 37.49.
Often, big banks and community banks offer the same services. You can open a personal or business accounts at both types of banks. Individuals can apply for mortgages and signature loans, and businesses can access asset-based loans, SBA loans, commercial real estate, and specialized commercial loans through both of these types of institutions. Furthermore, many community banks also offer credit cards and money market accounts just like their larger peers.
In spite of having similar services, these banks often assess different fees. They also tend to have varying levels of customer service. As you’re choosing a bank, you may want to dig into these elements.
In the past, this was a category where big banks used to win, hands down. They have branches all over the country, large networks of ATMs, and 24/7 customer service lines. However, recent advances in technology have rendered many of these elements useless.
Now, many community banks offer their customers free access to large ATM networks. For instance, Blue Hills Bank is part of the SUM network, which has thousands of ATMs around the country. Additionally, thanks to mobile banking, customers at community banks can deposit checks, track their account activity, and handle a variety of banking needs on their phones from anywhere in the world.
When you hand a bank your savings, let them handle your mortgage, or trust them with other aspects of your financial life, you want to be confident that they will be trustworthy.
Unfortunately, many big banks have failed in this regard. In recent years, Wells Fargo opened millions of customer accounts without consent and paid refunds and fines worth $185 million. The following year, the same bank admitted to making changes to mortgages without permission, manipulating its overdraft fee system to earn more money, and forcing nearly a million people to buy auto insurance they didn’t need, triggering significant delinquencies on car loans.
In contrast, many community banks are scandal free. Thanks to the Federal Deposit Insurance Corporation, small banks offer the same levels of security as their larger counterparts, but they also offer a more trustworthy environment. When you choose a community bank, you get a smile when you walk in the door along with the reassurance that accounts won’t be fraudulently opened in your name or manipulated to boost the bank’s profits. Beyond that, community banks are locally owned. The customers and owners are members of the same community, and by extension, these banks want to foster long-lasting trust-filled relationships with their customers.
Should You Choose a Big Bank or a Community Bank?
Ultimately, when choosing between a big bank and a community bank, you need to make sure the bank offers the services you need. Then, you can start to look at the costs involved and compare those to the benefits and features you receive. You also need to think about accessibility, customer service, and trust. If a bank ticks all those boxes, it’s likely the right option. For some people, a big bank may fill that role, but for others, the trustworthiness and care offered by community banks is absolutely unbeatable.
At Blue Hills Bank, we believe the choice is clear. Community banking is the way forward. To learn more or to open an account, contact us today.