5 tips for choosing a community bank

A healthy bank?
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If the financial crisis of 2008 taught us anything, it's that banks can fail. Community banks represent the bulk of those failures. But that doesn't mean there's more risk associated with community banks, says Cornett, who points out that the list skews toward community banks because they outnumber national banks by a wide margin.

"When a community bank fails, consumer deposits are insured (until January 2014) up to $250,000 per person, per bank," Cornett says, adding that in most cases, healthy institutions that are able to offer continuity of service purchase the failed banks.

But community banks that fail often collapse because of their willingness to take bigger risks on their customers, Winston warns.

"(Community) banks pride themselves on being accessible and making exceptions," Winston says. "This can lead to overconfidence in clients' ability to repay debt or handle their depository accounts satisfactory."

To guard against choosing a risky community bank, Lewis advises customers to ask for the institution's financial statements. Another option is to look at bank ratings like those offered by




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