Small banks struggling under new regulations

photo Cornerstone Bank President Frank Hughes

Community bankers long have argued that they've taken a bad rap for the misdeeds of big banks in the country's financial crisis.

Though Dodd-Frank and subsequent laws were designed to regulate the financial industry's biggest players, those same rules have hurt the ability of community lenders to make loans, which in turn hurts their ability to offer free checking, officials say.

"We're getting closer to becoming a utility," said Larry Kuglar, senior consultant for Peachtree City, Ga.-based SouthCrest Financial, which owns the Bank of Chickamauga. "We've had to adjust our account offerings, because without loans we're having to produce revenue from other sources, including the consumer."

Community banks -- which are technically exempt from many financial reform provisions -- have worked hard to differentiate themselves from impersonal big banks and their big fees.