First Trust is making plans to launch a new exchange-traded fund tied to the community banking industry, according to new papers filed at the Securities & Exchange Commission.

The Wheaton, Ill.-based funds provider filed a prospectus for a new ETF that would track the NASDAQ ABA Community Bank Index, which captures small- and mid-cap community banks listed on the NASDAQ Stock Exchange.

The index has a variety of exclusion criteria designed to maintain a pure-play focus on the community banking sector. Companies entering the index, for example, cannot be among the 50 largest banks or thrifts based on asset size; cannot focus on international servicing; cannot specialize in credit cards; etc. In other words, they are supposed to be local banks.

Community banks follow a different economic paradigm than the New York-centered financial giants; they’re even quite different from the regional banking companies captured by ETFs such as the SPDR KBW Regional Banking ETF (NYSE Arca: KRE). When well-run, they tend to be steady, low-risk performers, with limited upside but similarly limited volatility.

The new ETF will charge 0.60 % in annual expenses.

The filing is available here.