5 tips for choosing a community bank

A healthy bank?
5 of 7

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




Show Bankrate's community sharing policy
          Connect with us

Learn the latest trends that will help grow your portfolio, plus tips on investing strategies. Delivered weekly.

Ask Dr. Don

Quickest path toward $1 million?

Dear Dr. Don, This question involves how best to make for a better life for my family. How can I make a one-time investment of $5,000 grow into $1 million or more over 60 years? One of my broader goals is to encourage my... Read more

Partner Center

Connect with us