Community banks are distinct from the attention-grabbing big guys

When I tell people I am a journalist who covers the banking industry, often they respond with a story about bad service they received at one of the big banks in town. Or they may ask me if I know a friend who works at Wells Fargo or U.S. Bank. (Usually I don’t.)

I cover a part of the industry that few people –- especially residents of large cities -- think much about. I cover community banking. I understand why people typically think of the big banks; they dominate the industry. Banking is an industry in which there are a few big players and everyone else. I cover the banks in that “everyone else” category.

You may think that every bank is huge, but in fact, only three banks have more than $1 trillion in assets: Citicorp, Morgan Chase and Bank of America. There are about 500 banks, or about 7 percent of the industry, that have $1 billion or more in assets. Those banks, however, control 86 percent of all the assets of the industry. There are 7,549 banks in the country, which means about 7,000 banks have less than $1 billion in assets. And 3,996 of those banks have assets of less than $100 million. That’s more than half of the banks in the industry, and they control just 1.9 percent of all the industry’s assets.

In Minnesota, when you mention banking people think of Wells Fargo, U.S. Bank and TCF Bank. Funny thing is, only TCF is actually based in Minnesota. Wells Fargo is based in San Francisco and the U.S. Bank charter is in Cincinnati. Minnesota has 449 banks, with 305 of them having less than $100 million in assets.

What does a $100 million bank look like? Typically, it would have about 30 employees and perhaps two or three offices. It would have a board of directors, meeting monthly, with outside board members earning compensation of about $500 per meeting. The owners of the bank likely would have about $8 million invested in the business and if the bank performs about average for banks of that size, they would earn about $1.2 million in a good year to divide among them. The president of the bank would make an annual salary of about $125,000, plus a bonus if the bank performs particularly well.

But the best stories I write about the banking industry usually don’t have a lot to do with the numbers; they are focused mostly on the people. In 20 years of covering community banking, I have had the opportunity to write about people who have done extraordinary things for their communities and neighbors. There are bankers who take big risks lending to start-up businesses, and others who work evenings and weekends to attract new businesses to town. I have written about bankers who have renovated and restored historic buildings, bankers who have funded theaters and special schools, bankers who have hosted visitors from all over the world including third world countries and Russia. I have written about bankers who have devoted a lot of energy to educational efforts designed to combat financial illiteracy. And I have written about bankers who have donated millions of dollars to students, hospitals, community projects, art organizations and many other endeavors.

Oh, I’ve also written about crooks who have ended up in jail or about ventures that failed or never worked out as intended. But my point is, there are thousands of interesting stories in the community sector of the banking industry which go almost completely ignored by the big time media.