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Best Metro Areas for Community Banking

April 8, 2013
Banking, Banking News
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Community banks are often cited as the lifeblood of American towns, gathering deposits from consumers and lending it to the small businesses in the same local community.  In fact, an FDIC study described community banks as being “inextricably connected to entrepreneurship” – in 2011, they provided 46% of the banking industry’s small business loans despite their smaller size.

Community banks, however, are not equally available or utilized in all areas of the United States.  To determine which regions are the best for community banking, NerdWallet analyzed data on 3 different factors for in U.S. metro areas, including:

  1. Are community bank branches prevalent compared to other institutions in the area? NerdWallet sought to identify metro areas in which community banks comprise the bulk of total bank branches.
  2. Are local community banks making small business loans? Smaller banks are a critical resource for business owners seeking credit in lower amounts (i.e. <$250,000).  NerdWallet ranked metro areas based on how many small business loans community banks in that area extended.
  3. Do community banks offer depositors competitive interest rates? Because many businesses owners choose community banks for their financing needs, these banks need to attract local deposits to fund the loans. Attractive savings yields help to do so, while also directly benefiting consumers.

Ten best metro areas for community banking

1. Sioux City, IA-NE-SD

The Sioux City metro area outperforms the average in all three categories. 74% of the region’s bank branches belong to a community bank. Community banks in the area are also active in the small business lending space, with a combined 290 small business loans per 10,000 residents (compared to an average of just 71). Finally, local depositors enjoy a relatively high average savings yield at their community banks. High rates at banks like First Dakota National Bank contribute to an overall average yield of 0.33% APY in the metro area. 

2. St. Joseph, MO-KS

Consumers and local businesses north of Kansas City, in the St. Joseph metro area are able to bank with a variety of community institutions – in fact, 65% of area branches belong to a community bank.  Business owners can take comfort in the fact that community banks in the area extended a combined 219 small business loans per 10,000 residents, led by banks like The Morrill & Janes Bank and Trust Company. Consumers also have reason to feel well supported, with an average community bank savings yield of 0.43% – more than three times the observed average. 

3. Manhattan, KS

Despite a name that reminds many Americans of the highly populated New York region, the Manhattan, KS metro area consists of slightly fewer than 100,000 residents. Many of these likely already know the value of their local community banks. With an average savings yield of 0.22% at community banks and 69% of area branches belonging to community banks, the only statistic that could fare better is that of abundant availability of small business credit. Community banks in the area extended a combined 400 small business loans per 10,000 residents, led by institutions like Kansas State Bank. 

4. Mankato-North Mankato, MN

In this southern Minnesota metro area, 68% of the bank branches are associated with a community bank, rather than a larger institution (compared to an average of just 29%). On average, residents do earn a lower-than-average APY on basic savings accounts, at just 0.04%. However, where Mankato banks truly excel is in small business lending. Community banks in the area together made approximately 509 small business loans, which was the highest amount NerdWallet observed. United Prairie Bank and Wells Federal Bank (not to be confused with Wells Fargo) were the top performers in this category.

5. Jonesboro, AR

Jonesboro area residents might take advantage of higher savings yields on average, at 0.27% APY. Institutions like Southern Bank of Poplar Bluff, Missouri are among those offering competitive savings rates. Meanwhile, area business owners may have easier access to credit from local community banks, as such institutions extended a combined 340 small business loans per 10,000 residents. Over half (52%) of branches in the Jonesboro metro area belong to community banks. 

6. Vineland-Millville-Bridgeton, NJ

As the only metro area located on the East Coast, this region stands out for it’s high average savings account yield. NerdWallet observed an average APY of 0.45% among area community banks, with institutions like Parke Bank and Colonial Bank leading the category. Additionally, 44% of bank branches in the area belong to community banks. The region did not fare quite as well for small business owners, however, as community banks made only a combined 38 small commercial loans per 10,000 residents – well below the average of 71.

7. Springfield, IL

Springfield’s banking landscape is populated in large part by community banks. More than three quarters (78%) of area branches belong to a community bank. These institutions also tend to be active lenders to small businesses. Springfield area community banks extended a combined 234 small commercial loans per 10,000 residents, led by institutions like Peoples Bank & Trust and Prairie State Bank & Trust. For consumers depositing their savings in local banks, however, yields tend to be slightly lower than average.

8. Alexandria, LA

While just fewer than 50% of bank branches in the Alexandria metro area are associated with local community banks, consumers tend to have higher savings yields at their disposal and small business owners have better access to credit through community institutions. NerdWallet observed an average personal savings account yield of 0.30% and a combined 186 small commercial loans per 10,000 residents among Alexandria community banks, led by institutions such as The Evangeline Bank and Trust Company.

9. Monroe, LA

NerdWallet calculated that community banks in the Monroe metro area extended a combined 175 small commercial loans per 10,000 residents, led by Richland State Bank. This statistic compares favorably to an overall average of 71, so local business owners may find it easier to seek financing from such institutions. Similarly, Monroe consumers benefit from an above-average savings yield of 0.33% among community banks. Unfortunately, just 36% of area branches belong to a community bank.

10. Elizabethtown, KY

Within the Elizabethtown metro area, community banks fare relatively well across all three categories. 67% of bank branches belong to a community bank, which extended a combined 108 small commercial loans per 10,000 residents. Finally, savings accounts at community banks in the Elizabethtown area average a yield of 0.20%, helped by institutions like Citizens Union Bank.

Data Table

  Metro Area % of Branches that are Community Banks # of Small Business Loans Extended by CBs (per 10,000 residents) Average Savings APY at Local CBs Overall Score
1. Sioux City, IA-NE-SD





2. St. Joseph, MO-KS





3. Manhattan, KS





4. Mankato-North Mankato, MN





5. Jonesboro, AR





6. Vineland-Millville-Bridgeton, NJ





7. Springfield, IL





8. Alexandria, LA





9. Monroe, LA





10. Elizabethtown, KY





  Average over 368 metro areas studied





The overall score for each metro area was derived from the following measures:

  1. Bank branch locations via the FDIC, as of March 21, 2013
  2. C&I Loans with original amounts under $250,000 via the FDIC, as of December 31, 2012
  3. Bank savings account rates from NerdWallet’s interest rates database – use our savings rates tool to research accounts in your own zip code
  4. Metro area population estimates as of July 1, 2012 via the United States Census Bureau

NerdWallet classified banks with assets under $1 billion as “community banks” for the purposes of the study.  The FDIC describes a more comprehensive definition of a community bank here. However, this approach would exclude just 92 of the 6,194  (1.5%) institutions below $1 billion in assets and include just an additional 330 banks above the same threshold.

Banking image via Shutterstock