Community Banks Have Unique Challenges, Opportunities

Community banks face many different challenges than their larger competitors, but are also uniquely position to take advantage of what those same competitors don't offer.

That was the theme of a panel discussion at BAI Retail Delivery titled "Winning Strategies For Community Banks." The three panelists, all CEOs of small banks, stressed the importance of focusing on what community banks can provide that larger institutions cannot.

"When you're competing with big banks there's a great opportunity to take advantage of what they don’t want to do," said Dwight Utz, CEO of East Carolina Bancorp. "They don’t want to be in small rural markets. They don’t want to do the things we do very well, and that is having deep relationships with customers."

Will Hileman, CEO of Farm Bureau Bank, agreed with that sentiment, and said the personal and local touch a community bank can offer will help differentiate it from competitors. Hileman's bank has a bit of a different operating model, he explained, as it has only one branch and relies on agents in each community to deliver products to its customers. The bank, which is owned by a conglomerate of various state farm bureaus, also has a large insurance business.

"Our agents were born and raised in these communities, they were probably the high school football star and they know these markets," he said. "Large banks can't find people to work many of these markets."

One thing all the panelists agreed on was that small banks still must invest in technology in order to be successful. Charles Sulerzyski, CEO of Ohio-based Peoples Bank, said his institution offers mobile banking, mobile RDC, mobile bill pay and is soon to be launching a P2P payments offering.

"We are fast followers" he said. "We are buying off-the-shelf products and we focus on having a broad contemporary set of offerings. We can do anything a large bank can do."

All three panelists indicated that regulatory pressures and raising capital are among the biggest challenges when it comes to running a community bank.

"You can't grow without capital," said Utz. "Without capital, particularly in the smaller markets we are in, it's very difficult to expand your footprint."

Added Sulerzyski, "Unless a bank can grow revenue meaningfully over time, its ability to survive will be challenged."

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio