For its first 55 years of existence, First Federal Bank of Louisiana exclusively served southwest Louisiana. In 2004, when the community bank had 11 locations in Lake Charles and surrounding communities, bank leaders decided to expand into central Louisiana—specifically, Alexandria, which is about 100 miles northeast of First Federal’s headquarters in Lake Charles.

The community bank got a foothold in Alexandria by acquiring a savings and loan association, but true success came by hiring local bankers with good reputations in the area.

“When we moved into the Alexandria market, that was a new market for us, and we worked hard to create a winning brand and then live up to that brand promise,” explains Samuel V. Wilkinson, president and CEO of $1.1 billion-asset First Federal. “What we ended up doing was hiring individuals to work for us from that market who were familiar with the community. So, when we opened up our location there, the customers were dealing with familiar faces, individuals who were known in the banking industry.” 

“When we enter a new community or have a new branch, … we participate in initiatives that are important to that community.”
—Samuel V. Wilkinson, First Federal Bank of Louisiana

Hire local to maintain connections

When a bank grows beyond its hometown, keeping the community bank feel can be a challenge. Hiring local staff is one strategy for dealing with that challenge. Others include establishing local decision-making power, becoming involved with the community through charities or other organizations and, of course, advertising and promotions.

“Community banks take very deliberate steps to make sure that they retain that community bank focus, that local focus, when they grow,” stresses Ron Haynie, ICBA senior vice president, housing finance policy and staff liaison for ICBA’s Large Community Bank Council. “They want those branches in other communities to operate as if that was always their community.”

The local hiring strategy has been essential to the successful expansion of $3.2 billion-asset D.L. Evans Bank, which has 39 locations across Idaho and Utah. The community bank has grown rapidly in the past five years.

CEO John “JV” Evans III says the bank’s move into Utah was not planned until a group of bankers from the community of Tremonton approached leadership and suggested the bank open a branch there.

“That started our expansion into Utah,” Evans says. “We had never been outside of Idaho at that point. So, I went through that process and then hired other bankers. And then it kind of feeds on itself as you hire people and they enjoy it. They tell their friends and colleagues to come talk to us. And so, that’s pretty well how we expanded down through Utah.”

Evans Bank
Idaho-based D.L. Evans Bank—its downtown Boise location pictured here—branched out into Utah.

Evans says persuading bankers in their new markets to switch from working at a major bank to a community bank involves showing them how much more true banking they’ll get to do. Unlike a siloed bank that requires staff to move customers from department to department if they have multiple needs, bankers at D.L. Evans’ locations handle everything from credit cards to ag operating lines.

Today, the D.L. Evans Bank has seven branches in Utah. The local hires have helped each branch there integrate smoothly into the community, and in many cases, those bankers bring clients from their previous banks. 

“It’s good business to help the community, and we get a lot of business from other board members that our employees meet serving on [local] boards.”
—James Hughes, Unity Bank

Giving each branch a stand-alone feel

Another essential element of a successful move into a new community is to make each location feel like a complete bank, not just a satellite office of a far-away megabank.

For $3 billion-asset Lake Ridge Bank, which has 18 locations spread across south-central Wisconsin, each location offers all of the bank’s services.

“Each office is a full-service bank,” explains Sue Loken, chief strategy officer for Lake Ridge Bank. “It has a commercial lender, mortgage, wealth management—every one of our offices has each of our major business line units represented, so we can offer all of our products and services to each of our communities. We don’t have our services centralized.”  

Of course, empowering the local staff to make key decisions is also important. If decision-making authority exists at the local branch level, customers will sense that the bank is truly local. 

Evans explains that his bank empowers the local managers to treat their locations as if they were the owners. “Particularly in smaller communities, we say to our managers of our branches, ‘You’ve got your own business here that we’re allowing you to grow. Do the things that you need to do to grow the business for us,’” he explains. “We try to give them as much autonomy as possible to take that branch and grow it the way they can.” 

First Federal’s Wilkinson says the value of being a truly local lender became apparent when, during the worldwide COVID pandemic, Louisiana was also struck by four major natural disasters in 2020. Mortgage customers whose homes were damaged could conveniently bring their insurance checks into any First Federal location and get them co-signed.

“But if they [had a mortgage] with a bank that’s not located in our community, then they have to maybe drive to [another market] to get the endorsement of a bank that’s housed there and not in our market,” Wilkinson says. “So that hit close to home for a lot of people to realize that, hey, we’re local, we make local decisions, and if you need assistance, you can get help locally.” 

Considering Bank Size

When community banks expand to new markets, they invariably face competition. Often, the combination of being both a community bank and relatively large can offer advantages. For example, larger banks can generally handle larger loans than smaller banks.

Growth can also allow some community banks to invest more in technology. That’s an area that has helped First Federal Bank of Louisiana in Lake Charles, La., as it has grown into new markets.

“We realized that our customers deserve cutting-edge technology, and we made some major investments in providing the latest in mobile banking and online banking,” says Samuel V. Wilkinson, president and CEO of First Federal.

He believes that this has had a significant effect on customers. “We like to think that an easier end-user-friendly online banking system gives us a little bit of an edge. It’s expensive to do that, but we made the commitment, so if that’s what sets us apart and gives us the edge, we’re willing to make that commitment and stay focused on that.”

Lake Ridge Bank in south central Wisconsin also has invested in technology to help it thrive in the communities its 18 locations serve.

“With the investments we can make in technology, we really try to deliver that client experience and make sure we’re continuing to innovate as we go forward,” says Sue Loken, chief strategy officer, who adds that artificial intelligence is one tech area Lake Ridge Bank is tapping.

“We use [AI] for a lot of different things from the business case standpoint, including for business processes or help desk functions, data analytics or simple things [such as] creating policies,” continues Loken. “And that’s been a game changer for us, making sure that we are continuing to invest in AI and also making sure we have the right partners with it. Having that scale allows us to go out and invest in different technologies.”

Connecting with local leaders

Once the local staff and structure are established, an essential next step for a bank expanding to a new community is to meet with local businesspeople, government officials and other leaders.

For example, in 2023, when $2.6 billion-asset Unity Bank opened a location in Parsippany, N.J.—about 35 miles away from its Clinton, N.J., headquarters—it made a point of connecting with stakeholders in that community.

“We met with the mayor. We met with his administration, and we already have successfully gotten some local government deposits,” says James Hughes, Unity Bank’s president and CEO. “We’ve had a restaurant evening where we invited people from the community to come for a free dinner, which was very well received. We can’t expect to just open a brick-and-mortar branch and people are going to walk in. We’ve got to meet the people who are the centers of influence in the community.”

Dig into the community spirit

Another important part of successfully integrating into a new geographic area is to engage with the community, just like any successful community bank does.

Wilkinson says his bank has an employee volunteer team called Change Makers, which encourages staff to participate in community events or initiatives that the bank supports. “When we enter a new community or have a new branch, we do a lot of those,” he says. “We participate in initiatives that are important to that community.”

The Change Makers
The Change Makers, First Federal Bank of Louisiana’s employee volunteer team

ICBA’s Haynie stresses that the community involvement banks undertake when they enter a new community should not be superficial. The involvement should demonstrate a deep commitment to the community.

“So, it’s not like they put up a tent once a year and cook hot dogs or something,” Haynie says. “No, they’re involved in the various aspects of that community with the local schools, the government, whatever it is, being an active part in that community. That’s a big expectation that they have for their staff.”

Unity Bank’s Hughes, who serves on the board of a local hospice, agrees with Haynie. He says that when local managers become active on the boards of nonprofits, they create relationships with other community stakeholders and learn their perspectives on local issues, all of which helps establish the bank in the community.

And of course, sometimes those relationships translate to business for Unity Bank. “It’s good business to help the community,” says Hughes, “and we get a lot of business from other board members that our employees meet serving on these boards.”

Harness the power of marketing

Naturally, marketing plays a large role in building a bank’s reputation in a new area. For example, when Lake Ridge Bank was formed in 2022 with the merger of State Bank of Cross Plains and Monona Bank, the new entity had to be introduced to the communities served by its 18 branches. Using press releases, LinkedIn promotions and other channels, bank leadership reassured customers that the “new” bank would continue to serve them well.

“We basically said, ‘We are going to still be your community bank,’” Loken says. “We told the story about how Lake Ridge signified two community banks and what we stood for in the past, coming together to form one community bank and that staying local, staying independent, was still the essence of our success.” 

Haynie suggests that successful marketing in a new community should be sure to tell stories. Customers—especially those who can attest to a bank’s top-notch service—can be powerful marketing advocates.

And the most ancient form of marketing—customers talking to their friends—is also essential to a bank expanding to new territory, says Evans of D.L. Evans Bank.

“We do some marketing—radio, billboards, digital marketing—in those [new market] areas,” he explains, “but it’s mostly word of mouth.” 

Unity Bank staff
Unity Bank staff meets with local leaders to establish their presence in new communities.

Relationships over transactions

According to Haynie, when a community bank expands to a new area, it is more likely to succeed if it can bring along the basic community banking values that presumably led to its growth in the first place.

“The strength of the community banking model is the fact that it is relationship-based and not necessarily transactional,” Haynie says. “So, the ability to do that as they grow is key. These banks, as they grow from under a billion to over a billion dollars and up, strive to try to maintain that feel.”

Can a community bank become too big?

When a bank is spread across multiple states and has many billions of dollars in assets, is it still a community bank? It sure can be, says Ron Haynie, ICBA senior vice president, housing finance policy and staff liaison for ICBA’s Large Community Bank Council.

“ICBA is very careful not to put an asset threshold on what’s a community bank,” Haynie says. “We have some community bank members that are over $50 billion in assets. They grew through either acquisition or organically, and they still consider themselves community banks. They operate just as if they were a small bank.”

There are regulatory issues involved with bank asset growth, of course. For example, the Community Reinvestment Act of 1977, which requires federal banking regulators to encourage banks to help meet the credit needs of their communities, has three categories of asset size—small, intermediate small and large—and each level brings about more detailed performance evaluations.

The FDIC even uses a definition of community banking that includes multiple factors, some of which are waived if a bank falls below a certain asset threshold. But for ICBA, the definition of a community bank does not involve quantity of assets.

“I think what’s important is how a bank views itself,” Haynie explains, “and how that translates to how the public sees the bank in that particular market.”