Many community banks are family owned, and many more are closely held, which means there is minimal pressure on quarterly earnings performance. Comparisons of community and large banks naturally raise the broader question of how small banks can compete successfully with large banks. To answer this question, one needs to stratify these banks on the basis of profitability.
This stratification reveals that, in nearly every area of bank performance, the financial results of the best-performing community banks match up well with results of the big banks--most notably in the area of efficiency. One might expect large banks to operate more efficiently because of their scale of operations.