Key Takeaways

• • • • • • Banks vary in size; community banks can offer local expertise based on smaller size.
          • In general, bank products and services are very similar, but can vary in complexity.
          • Most banks protect deposits through FDIC membership.
          • Digital banking access allows you to monitor your accounts and bank online, but systems vary.
          • Community banks are more likely to make decisions, particularly for business loans, based on local conditions and relationships.

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    With so many banks available, choosing the best one for you can seem complicated. Comparing big banks to community banks can help clarify your options.

    What’s a community bank? What’s a big bank?

    Asset size is a good baseline for comparing banks and what they offer. According to the Federal Reserve, community banks have less than $10 billion in assets, while regional banks have $10 billion to $100 billion.¹ Banks with more than $100 billion in assets are considered Large Financial Institutions.² The size of the bank can affect what it offers, like the number of products, loan decisions and fees. 

    Regardless of size, banks have a lot in common

    In principle, all banks operate the same way: they pay interest on deposits and then charge interest to loan money. Banks provide security, too. Most U.S. banks protect deposits through membership in the Federal Deposit Insurance Corporation (FDIC). FDIC insurance secures deposits against bank failure up to $250,000 per depositor, per ownership category.³

    Banks differ in other ways too. Read on to find out more.

    Products and services

    All banks offer similar products and services: deposit products like checking and savings accounts; loans for individuals like home mortgages, home equity lines of credit, credit cards and personal loans; and loans for businesses like equipment loans, operating expense lines of credit and property loans. Based on resources, big banks often offer a larger and more specialized set of products than community banks.

    Access to your money

    People want to access their accounts anytime, anywhere. Digital access varies significantly among banks, with larger institutions typically offering more advanced solutions compared to community banks. It’s worth researching, however, as Lake City Bank Digital is comparable to the digital offerings of larger banks.

    Big banks have more branch offices and ATMs across larger geographic areas, making it easier for customers to stay with the same bank if they move to a new city. Some smaller banks, like Lake City Bank, offer checking accounts that refund ATM fees up to a certain level if account requirements are met.

    Local or Centralized

    Community banks focus on local areas, resulting in more personalized service and involvement in local activities. Often, business loans are approved and priced locally based on local business and economic insights. While large banks can offer a broader product set than smaller banks, loan decisions are typically made centrally, without the customization that comes from local knowledge.

    What’s best for me?

    Your choice should reflect what you need most from a financial institution. Be sure to do your research before you make that first deposit.

     

    Sources:

    ¹ https://www.federalreserve.gov/supervisionreg/community-and-regional-financial-institutions.htm

    ² https://www.federalreserve.gov/supervisionreg/large-financial-institutions.htm

    ³ https://www.fdic.gov/resources/deposit-insurance/financial-products-insured