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North America: Small-town banks with big ideas

A romantic, old-fashioned style of banking business is enjoying a revival in the US. Smaller banks are gaining customers who are disillusioned with their bigger, national competitors. The White House is encouraging the trend. But should they be worried about banks that are too small to be saved?

KENNY MARTIN, PRESIDENT of First Bank of Lincoln, knows every one of his customers. They have his personal email, and they call him at home on a weekend if they need to. He knows their houses, their jobs and their families. "Say hi to Kenny from me," says the waitress in the local diner. As does the owner of the town hotel, the grocery store checkout woman, the gas pump attendant... They pop in to the bank for coffee and a "chit-chat". They bring their dogs with them. They can even ride their horses up to the drive-through banking counter – it’s Montana after all. First Bank of Lincoln is one of the 3,000 US banks that have less than $100 million in assets. With all of First Bank of Lincoln’s $12 million in assets it would be hard to even invest in a hedge fund.

These small banks, or community banks as they are called, are becoming increasingly attractive to US retail customers. Disillusioned with a recession led by large banks with their alarmingly high salaries and taxpayer bailouts, US banking customers are looking for traditional banks with plain-vanilla banking and models that have barely advanced since the early 1900s.

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