Community banks are commonly defined as “a commercial bank that derives funds from and lends to the community where it operates.”
And certainly a community bank is committed to keeping funds local, but it is also deeply committed to keeping support local. Put another way, a community bank is trusted with providing support for the area in which it resides.
That support takes on many forms by:
- Making loans to local businesses based on more than just their balance sheet.
- Building the local economy through partnership with community-based economic development organizations and business associations.
- Sitting with a client and not just taking deposits, but working together on a long-term strategy.
- Serving alongside local nonprofits and getting involved in the community.
- Funding local organizations and sponsoring key events.
- Activating an army of employee volunteers.
- Honoring ‘place’ by immersing the bank in the local culture and history.
Further, a community bank is also critical toward helping the community breathe new life and vitality into today and the future. A community bank derives its funds from, and lends to, the community where it operates. In fact, in Washington and Oregon alone, community banks reinvest upwards of 95 percent of their loan portfolio in the local communities they serve. Further, these institutions’ lending strategies play an enormous role in developing and strengthening the local economy by helping to create wealth and jobs.
And even though community banks have only 20 percent of all bank assets and hold less than 20 percent of total deposits (FDIC), nationally they make almost 60 percent of small business loans.
Here in Vancouver, there are dozens of community banking locations serving small businesses. That translates to hundreds of millions if not billions of deposits and loans to the very core of our economy – small business. And again, so much of that is reinvested right back here in Southwest Washington, which reinforces how community banking is a vital part of the economic fabric of our area today, and into the future.
Further, community banks are tremendous partners with local nonprofits who deliver critical services in our towns and neighborhoods. When a local homeless advocacy group opens up a new shelter or a youth organization funds new after-school programs or a substance abuse treatment facility offers a new program, chances are very good a local community bank helped usher those efforts from dream to reality. In addition, community bank employees tend to be some of the biggest participants on local nonprofit boards and committees.
Finally, community banks are one of the most stable drivers of philanthropic giving; from employee volunteerism, to steady and reliable corporate giving, to being one of the most stable developers of board members and committee volunteers for area charities and nonprofits.
Indeed, community banks are woven into the fabric of our local area. And it’s my contention that just as locally grown produce or locally sourced craft beer enhances our quality of life, so too does the continued vibrancy of local community banks.
Kristy Weaver is senior vice president and commercial banking team leader for Columbia Bank.