Community banks serve an important role in the U.S. economy. With an emphasis on local relationships and personalized lending decisions, community banks are vital drivers of economic growth. Unlike larger national banks, community banks prioritize serving businesses and individuals in their local geographic area with traditional banking services.

Community banks are supervised by the Federal Reserve system. Specifically, they are regulated by the Office of the Comptroller of the Currency (OCC), an independent bureau of the U.S. Department of Treasury. The Federal Deposit Insurance Corporation (FDIC) publishes the criteria for being considered a qualifying community banking organization.

The Community Reinvestment Act (CRA) of 1977 is a federal law that regulates community banks. It was designed to improve access to credit, particularly in underserved communities. Under the CRA, community banks have an ongoing obligation to help meet the credit needs of their local community, including the credit needs of low- and moderate-income (LMI) neighborhoods in their area. Institutions regulated by the CRA are subject to periodic examinations.

In order to be considered a qualifying community banking organization, a community bank isexpected to have less than $10 billion in average total consolidated assets. Less than 25% of their total consolidated assets should be off-balance sheet. Off-balance sheet arrangements enable entities to appear less leveraged by recording certain debt obligations outside the main balance sheet. Additionally, the trading assets plus trading liabilities of a community bank cannot exceed 5% of its total consolidated assets. These entities also are generally required to maintain a “community bank leverage ratio” (CBLR) of at least 9%. This means that the ratio of capital to average total consolidated assets must exceed 9% in order to be considered well-capitalized.

A number of ongoing disclosure requirements are imposed on community banks. Community banks are required to provide quarterly and annual financial reports to bank regulators and shareholders. Like other types of financial institutions, community banks are subject to extensive anti-money laundering (AML) compliance requirements. They are required to submit suspicious activity reports (SAR) when transactions are suspected to involve money laundering or other illicit activities.

Some of the largest community banks in the United States include Parkside Financial Bank & Trust (Missouri), Modern Bank (NYC), Falcon National Bank (Minnesota), Prime Alliance Bank (Utah), Saint Louis Bank (Missouri), West Town Bank & Trust (Illinois), Oakwood Bank (Texas), Firstar Bank (Oklahoma), and Nano Banc (California).

In January 2026, U.S. representatives French Hill and Andy Barr introduced legislation intended to reduce regulatory burdens for community banks. Known as the Main Street Capital Access Act, the legislation aims to facilitate the formation of new community banks and enhance the ability of small businesses to access capital by cutting down excessive regulations.

There has been an increasing number of community bank mergers in recent years. This merger activity is being driven by a desire to expand geographic footprints and improve efficiencies. For example, Community West Bancshares and United Security Bancshares announced plans to merge in November 2025. The merger is anticipated to boost capabilities for servingcommunities in central California. However, such community bank mergers may face regulatory scrutiny from the FDIC and OCC.