Like most everyone these days, the five-year-old Community National Bank in Austin is feeling strained by the economy — first quarter numbers from the FDIC show the bank losing $207,000. But optimism abounds that this and other community banks can survive the times.

“We’re well capitalized; we’ll remain well capitalized,” Bob Cooper, president and CEO of the bank, said. “We’re continuing to work with (customers).”

Cooper has plenty of reason for optimism. Their losses are down from the last three quarters, and significantly so since the previous quarter, when the FDIC reported losses of more than $1.7 million. And compared with many other smaller banks across Minnesota, Community National’s losses this quarter are much less, though Cooper said the bank hates to “lose even a dollar.”

In light of the situation, Cooper said Community National is working on reducing expenses by more than $150,000 in 2009. To do so, he said they received a reduced deal on data processing and have taken over second service operations previously done outside the company, such as stocking ATMs.

There is also a hiring freeze in place, and a few jobs have left the bank through attrition, though Cooper said he didn’t know of any pending layoffs.

Cooper said federal funding, like what larger banks received via bailouts or the stimulus package, could help his smaller bank. To date, however, Community National in Austin has not received any, though the bank’s holding company has applied.

“We need to get it down to Main Street Austin. We need to get it down to Main Street U.S.A.,” Cooper said. “That’s the frustration.”

Kevin Boynton, a principal with the Monticello-based consulting firm River Group, said community banks are vital to the economy and society.

“I think community banks are the place to be. I have a lot of faith in them,” he said. “They’re still the American way.”

As part of his work at River Group, Boynton studies quarterly data from small banks, like Community National, and contacts those who he feels could use some help analyzing their situations.

“Community banks are the good guys,” he said.

Boynton said this is the case because community banks generally know how to properly price things, such as loans, and work well with customers.

He offers a less glowing review of larger banks. To Boynton, bailing out larger banks didn’t teach them to stop bad lending practices. And because of their size and significant power, he said they can often kick smaller banks around.

Cooper said having the much larger Wells Fargo only a few blocks away isn’t a huge problem.

“I tell my staff, ‘Every bank offers the same service. We have to do it better,’ ” he said. “There is a niche out there (for small banks).”

Tracey Beaver, manager at that Wells Fargo, said the bank is “big, yet doesn’t act big.”

“We want to help our customers and satisfy their needs,” she said.

Though criticism, like that from Boynton, is often directed at the lending practices of larger banks, Beaver said Wells Fargo acts conservatively with loans.

Beaver added that business has been strong in Austin for Wells Fargo.

Joe Witt, president of the Minnesota Bankers Association, said in an e-mail that it’s up to customers to determine where they feel most comfortable — whether that be at a big bank or a small one.

As for the overall state of banking in Minnesota, Witt said loans and deposits at Minnesota banks are up from last quarter, a good sign.

“The fact that lending and deposits are up at any rate while in the midst of a recession is quite impressive,” he said in his e-mail.

The business future for Community National in Austin remains to be seen. Boynton said he wasn’t in a position to speak about the bank’s chance of closing, nor was Witt, as MBA policy prohibits commenting on an individual bank’s performance. President Cooper said they can simply continue to work hard serving customers and operate responsibly along the way.

“That’s the best I can say for now,” he said.