A community bank is a smaller bank that takes deposits and lends mostly in the area around its offices, and decides on loans close to home.
“Community bank” is a description, not a charter. No statute gives one test for it. Regulators draw the line in different places for different rules. One example: the capital rule that lets a “qualifying community banking organization” use a simpler capital measure sets, among other tests, total consolidated assets of less than $10 billion.
For someone seeking a loan, the label matters for three reasons. First, size caps the loan: a bank’s largest loan to one borrower is tied to its capital, so a $300 million bank cannot hold the loan a $30 billion bank can. Second, the decision is usually made nearby, by a loan officer and a committee who know the local market, which can help a deal that needs explaining. Third, a community bank tends to lend where it has offices, so a property or business outside its area is often a no, however good the numbers are.
The practical step is to check size and footprint before you call, not after.
How it shows up in the data here
There is no community bank flag in the data, because no single legal definition exists. Use size and footprint instead: search banks and sort by total assets, or open lenders in your state to see which banks have offices there. Each bank page shows total assets, branch states and balances held by loan type, from the call report.
Go further
- Search banks: Filter by state, size and loan type.
- Legal lending limit estimate: A rough largest single loan for a bank of a given size.
- Legal lending limit estimate: The most a bank can lend to one borrower, from public capital figures. Always an estimate.
- How to place a commercial loan with a bank: A bank loan moves through the same stages every time. Knowing them tells you what the bank needs at each point, what its answer means, and where time is lost.
- How to find the right person at a bank for a loan: The main number reaches a branch. A commercial loan is handled by a commercial lender, and at many banks there are only a few. Finding that person is half the work of a first contact.
- How a loan broker works with community banks: A community bank will take a good loan from a broker it trusts. Trust comes from three things: the bank knows who is paying you, your packages are accurate, and you bring loans that fit what the bank does.
Related terms
- Savings institution: A savings institution is a savings association or savings bank: a deposit-taking lender whose charter grew out of home mortgage lending.
- Portfolio lender: A portfolio lender is a lender that keeps the loans it makes on its own books instead of selling them to an investor.
- Legal lending limit: The most a bank may have outstanding to one borrower by law. For national banks it is 15 percent of capital and surplus, plus 10 percent more when the extra is fully secured by readily marketable collateral.
- House limit: A cap a bank sets for itself, below the legal lending limit, on how much it will hold for one borrower, one property type or one market.
- Credit committee: A credit committee is the group inside a lender that decides on loans above the amount a single loan officer is allowed to decide alone.
- Call report: The financial report every bank and savings association files with its federal regulator each quarter, with a balance sheet, an income statement and schedules that break out loans by kind.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.