Tomorrow's 'super' institution: look. Up in the sky! No, it's not a bird or a plane, but a 'Super Community Bank' of the future. According to a sampling of Northeast community bankers, tomorrow's successful business model will feature increased flexibility and collaboration, more outsourcing, enhanced customer service, tighter ties to the community--as well as a stronger entrepreneurial spirit.

• Author: Graham, John
• Position: Community Banks

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Despite the unrelenting drive to create ever-bigger banking companies, community banks retain value as financial institutions that are deeply rooted in the soil of local communities. This is the view of Ralph Shulansky, Esq., Connecticut's former banking commissioner and the chairman of the board of directors at Bankers' Bank Northeast of Glastonbury, Conn.. Even so, this staunch community bank advocate is concerned about the future.

"Will the community bank's destiny be that of the corner drug store?" he asks.

From one viewpoint, the picture is not very bright. The number of community banks dropped from about 10,000 in 1994 to roughly 7,200 in 2005, largely due to mergers and acquisitions, which continue. From 2000 through 2005, there were about 1,200 mergers alone. Overall, banking industry assets for community banks fell from 20 percent in 1994 to 12 percent in 2005, as the big banks continued to grow market share.

That's only one part of the picture, however. From 2000 through 2005 some 700 new community banks opened their doors--and the pace continues today.

The creation of new community banks is dearly market-driven. The Federal Reserve Board's Survey of Small Business Finances, which included responses from 4,200 small businesses, supports the need for community-based banking.

Commenting on the survey's findings, Fed Chairman Ben S. Bernanke noted that small businesses are increasingly "heavy users of financial services." He indicated that 'Tmancial management services" are particularly in demand, including "activities such as check clearing, cash management, letters of credit and credit card processing." And then he added. "Community banks remain an important provider of these services, albeit in an increasingly competitive marketplace."

Here are a few of the community bank's strengths:

* A deep sense of community responsibility. While many other banking institutions are writhing from the effects of subprime lending, it's a notable fact that community banks overwhelmingly avoided the temptation to become involved in this costly and disruptive financial sector. This reflects the genuine--and across-the-board commitment these banks have to their communities and their customers.

* True "relationship banking." Although a pemonal relationship with a bank is appealing to ever/one--even the average customer--it is of critical importance to small businesses, which fred themselves "under the radar" of large banks. Community bankers and their boards possess the first-hand information that more often than not cannot be reduced to writing, but can serve as valuable, "on the scene" intelligence that assists in the underwriting and monitoring of loans. Without the community bank, small businesses are often at a loss for the services they need to operate and to grow.

* Customer satisfaction focus. Not only is it common for community banks to pride themselves on the quality of their customer servme, they also often deliver on the promise. Informa Research Services' second annual Branch Customer Satisfaction Survey of 2,865 consumers confirms that smaller community banks get better marks for customer satisfaction than their large counterparts. The survey points out specifically...