You might have heard about regional banks when searching for the right financial institution for a checking, savings, or money market account.
But what exactly is a regional bank, and how does it differ from other types of banks like national or community banks? This guide aims to simplify the concept of regional banks, helping you make an informed decision based on your personal finance needs.
What is a regional bank?
A regional bank is a financial institution limited to serving a specific geographic area, which is typically comprised of several states. These banks play a unique role in the American financial landscape by combining some of the best features of both community banks and larger national banks.
While they offer many of the same services that you would expect from a larger institution—like checking accounts, savings accounts, and various loan products—they tend to have a more localized focus. They are experts in the local economy, which often allows them to provide personalized services tailored to the needs of the community they serve.
To quantify what a regional bank is, the Federal Reserve often categorizes these institutions based on their total assets. Generally speaking, a bank is considered “regional” if it holds between $10 billion and $100 billion in total assets. This distinguishes them from community banks, which usually hold less in assets and are more localized, and national banks, which have assets often exceeding $100 billion and can operate across the entire country or even internationally.
This specific asset size enables regional banks to offer a broad range of financial services while maintaining the local touch. Whether you’re a small business seeking a loan or an individual looking for competitive rates on deposit accounts, you’ll find a range of services at regional banks. Meanwhile, they maintain a personal connection to their local communities while offering a breadth of products.
The History of Regional Banks
Regional banks have a storied past that traces back to the early days of America. In times when crossing state lines was a significant challenge due to limited transportation and communication, these banks served as financial pillars within their communities.
They were essential in providing the capital needed for local industries and public works that spurred economic development. As the world moved into the digital age, regional banks also evolved. They embraced advancements in online and mobile banking, making it easier for customers to manage their finances while the financial institutions maintained their essence of local community support.
What services do regional banks offer?
Regional banks offer a broad spectrum of financial products, much like their national counterparts. Customers can open checking accounts, savings accounts, money markets, CDs and more.
Many regional banks have diversified their services to include investment options as well as business banking services, such as small business loans and commercial real estate financing. What makes these banks special is their deep understanding of the local market.
They are often better positioned to offer loan products tailored to the specific needs of local industries, whether it’s agriculture, manufacturing, or small businesses. This targeted approach makes them invaluable partners in the financial well-being of the communities they serve.
Regulatory Landscape for Regional Banks
While regional banks are typically governed by state regulations, they are also part of the Federal Reserve system. This dual oversight ensures that these banks adhere to financial stability and consumer protection standards.
Regional banks are also FDIC-insured, providing security for depositors with coverage up to $250,000 per account holder, per account type. Though they might not be under the same intense regulatory spotlight as larger national banks, they are nonetheless subject to rules and audits designed to ensure their financial stability and the well-being of their customers.
How do regional banks impact local economies?
Regional banks are pivotal players in local economic landscapes. Their specialized loan products are often designed to meet the unique needs of local businesses and industries, thereby channeling capital directly into the communities they serve.
This targeted financial support helps stimulate economic activities, ranging from business expansion to job creation. By tailoring their services to the economic pulse of their communities, regional banks play an indispensable role in fostering local growth and prosperity.
Regional Banks vs. National Banks
When it comes to personalization, regional banks often have the edge over national banks. Their smaller geographic reach allows them a deeper understanding of local needs and cultural nuances. This results in services that are closely aligned with the communities they serve.
However, the trade-off is usually a smaller network of branch locations and ATMs, which can be a limitation for those who value widespread access to banking services.
Pros and Cons: Is a regional bank right for you?
When considering whether to bank with a regional institution, it’s essential to weigh the advantages and disadvantages to determine if it’s the right fit for your financial needs.
Pros
Personalized Service
Regional banks often excel in delivering a more personalized customer experience. Because they focus on smaller communities, you’re likely to interact with familiar faces and perhaps even develop relationships with the bank staff. This can make your banking experience more pleasant and personalized.
Community Focus
If you’re concerned about ethical investing, or supporting causes that are important to you with your money, you might appreciate the community investments often made by regional banks. They tend to be more involved in local community initiatives such as sponsoring local events, funding small businesses, and contributing to local charities.
Cons
Limited Geographic Reach
One notable drawback of regional banks is their limited geographic footprint. If you’re someone who travels frequently, either for work or pleasure, you may find fewer branch locations and ATMs inconvenient. Some regional banks try to offset this by reimbursing ATM fees, but that’s not a universal practice.
Less Diverse Offerings
While regional banks do provide many of the same services as larger national banks, such as savings and checking accounts, they might not offer as wide a range of specialized financial products. For instance, you might not find as many options for investment banking services or specialized loan products tailored for niche industries.
Popular Regional Banks in the U.S.
Selecting the right regional bank can be a bit overwhelming given the myriad of choices. To help you in your decision, here are some popular regional banks that excel in different aspects of banking and serve various parts of the U.S.
- Fifth Third Bank: Primarily serving the Midwest, Fifth Third Bank is a significant name in the retail banking sector. They offer a variety of financial products, including checking and savings accounts, as well as mortgage and loan options tailored for the communities they serve.
- KeyBank: If you’re based in the Northeast, KeyBank could be a viable option for you. They offer a broad range of personal finance options including wealth management, financial planning, and various deposit accounts like checking and savings accounts.
- Regions Bank: For those in the South, Regions Financial Corporation stands out as a robust option. They offer a multitude of deposit accounts, from standard checking and savings accounts to money market accounts. Additionally, they provide various investment services that can help you diversify your financial portfolio.
- Zions Bank: Operating mainly in the Western U.S., Zions Bancorporation has a strong focus on business banking services. But that’s not all; they also provide a comprehensive set of retail banking options, including checking and savings accounts, loans, and investment opportunities.
- Huntington National Bank: Huntington Bank is another Midwest powerhouse, offering a suite of personal finance solutions, from checking and savings accounts to loans and credit cards. They are particularly known for their customer service and community involvement.
- M&T Bank: Serving areas primarily in the Northeast and Mid-Atlantic, M&T Bank provides various financial services, including personal finance options, commercial banking solutions, and wealth management services. They pride themselves on building long-term relationships with their customers.
- Comerica Bank: Focused on serving the needs of businesses, Comerica Bank operates in states like Texas, Michigan, and California. However, they also provide retail banking services including checking accounts, savings accounts, and personal loans.
How to Choose Between a Regional and National Bank
The choice between a regional and national bank largely hinges on your individual banking requirements and lifestyle. If you’re someone who prioritizes a personalized touch, appreciates a focus on community, and mainly stays within a specific geographic area, a regional bank might be an excellent fit for you.
On the other hand, if your life or business requires frequent travel, or if you’re seeking a broader array of financial products, a national bank may be more suited to your needs. National banks often have larger ATM networks and more diverse financial services, which can be advantageous for some customers.
Another point to consider is the types of financial services you’ll need. Are you in the market for more specialized investment banking services, or are basic checking and savings accounts your primary concern? Some larger national banks offer niche services like international wire transfers or complex investment products that regional banks might not offer.
Also, take note of technological capabilities. While many regional banks have caught up with the technological advancements that national banks offer, like mobile banking, some may still be in the process of developing a robust online banking system.
Lastly, it can be helpful to look at reviews and ask for recommendations. Customer feedback can provide real-world insight into a bank’s reputation, customer service, and reliability, helping you make a more informed choice.
By weighing these variables, you’ll be better equipped to decide which type of bank aligns best with your financial needs and personal lifestyle.
Conclusion
Understanding the banking sector is key to making sound financial decisions. This article aims to offer a comprehensive look at regional banks, from their history to the services they offer and how they fit into the larger financial system.
By considering all these factors, you can make an informed decision that aligns with your personal finance goals. At the end of the day, your bank should cater to your specific needs and lifestyle.
