Community banks, lovingly called “neighborhood banks,” are making a comeback. Locals, immigrants, and newcomers alike crave attention, handholding, less paperwork, a friendly smile, and a “Hi, Mr. Smith.” They abhor long rows of tellers, drive-up windows, and the impersonal treatment of the megabank.

Community banks serve the little guy, the small business, the farmer, and your neighbor around the corner, while large banks serve the large corporations. The community bank will route most deposits from the Joes, Jims, and Harrys back to the neighborhood, while a large bank will lend to someone in a foreign country. The small neighborhood store can borrow from its neighborhood bank without much hassle and the ordinary worker can borrow money to buy a house, car, or kitchen appliance without too much paperwork. The small bank will lend to you because they think you are trustworthy, work hard, and don’t go out drinking and rolling the dice. The large bank will not look at the individual, but uses impersonal systems, such as credit scoring. You may not make the grade because you just don’t have the wherewithal. The community banker will take part in local community affairs, while the large bank couldn’t care less about the community it serves.

Community banks have their lobbyists in Washington, just like big banks. One of them is the Independent Community Bankers of America. ICBA represents and protects the interests of the majority of America’s community banks. Once a year, ICBA even awards, during its annual meeting in May or June, the ICBA National Community Bank Service Award.

Martin S. Lapera, President of Frederick, Maryland’s Frederick County Bank, found that many small banks have opened all over Maryland. He says, “Bank mergers are happening all over the place. Larger banks, instead of building branches, try to expand through acquisition. People lose their jobs and often pool their experience and open or join a small bank.”

Many highly experienced employees at his bank worked at FCNB, which was bought by BB&T Bank in 2000. Many customers prefer the familiar and loathe a new face every couple of months where they bank, and dislike having to deal with out-of-town service centers. Smaller banks can access resources similar to larger banks’ through outsourcing, and often at great cost savings. FCB outsources much of its services, including data processing, on-line banking, and loan review, often to a business in the community, keeping it “all in the family.”

Lapera does not believe that it is difficult to start a community bank. “There is a lot of liquidity available and with a good business plan it is not difficult to access the $8 to $15 million startup equity through private or public stock offerings,” he says. “Then, it takes about two years to break even and around three years to become a very profitable and growing company.” Many of his neighborhood bank president peers agree with his observation and tell similar stories.

Dennis Trencher, Vice President of Baltimore’s Toronto Dominion Securities, said, “More and more neighborhood banks are opening in Washington DC, New York, and Los Angeles. Even in Frederick, Maryland, new banks are springing up all over the place. Mid-sized banks are gobbled up by the likes of Bank of America and Citibank. Big banks are impersonal. Small banks may charge more for their services, but immigrants want someone who speaks their language. Locals also crave that personal touch and less paperwork. Community banks thrive in areas with a large immigrant population, such as Miami.”

Chris Harris, Vice President of the U.S. Bank National Association in Seattle, Washington, said, “We have seen an increase of community banks in the Northwest. Most of them cater to specific income levels, ethnic groups, neighborhoods, and small enterprises. Like everywhere else, there is a need for the personal touch. Entrepreneurs recognize it and capitalize on that niche. Latinos, Chinese, and Indians want that personal one-to-one care on that foreign soil. Elder parents and wives may not speak English. The small bank more often than not has the teller who speaks their language and holds their hand, leaving the son or husband freed from such chores.”

Community banks provide banking the old-fashioned way, giving a personal touch. They know their customers’ families and life histories, and speak their languages. They are lifelines for the small guy.