Target: Small Business; How Seven Community Banks Cater to This Key Market. (Community Banking) (2003)

Small business customers and community banks go together like coffee and donuts...or whatever analogy you like. But that affinity doesn't mean succeeding in that market is a slam dunk. In fact, the small business market is a demanding one from many respects. On top of which, everyone and his brother, it seems, now wants to be in that space. Last fall, we gathered together seven community bankers from institutions ranging in size from $170 million in assets to $3.8 billion. Executive Editor Steve Cocheo posed a series of questions to the group regarding small business customers to get a better sense of the challenges and opportunities of this market. The participants were: P. James Dowe, Jr., president and CEO, Bangor Savings Bank, Bangor, Me. ($1.4 billion) Ronald W. Heaton, president and CEO, State Bank of Southern Utah, Cedar City ($326 million) Patrick D. Redmond, president and CEO, Viking Bank, Seattle, Wash., ($205 million) David Richards, president and CEO, Nittany Bank, State College, Pa. ($170 million) David T. Taber, president and CEO, American River Holdings, parent of American River Bank and North Coast Bank, Sacramento, Calif. ($331 million) Doug Tippens, community bank president-El Reno, Gold Banc Corp., Leawood, Kan. ($3.8 billion) Huey L. Townsend, president and CEO, Guaranty Bank & Trust Co., Belzoni, Miss. ($240 million) What follows is an edited recount of the conversation. What The Small Business Customer Wants Q. What does the small business customer want nowadays? Huey Townsend: They want everything. They want low prices, good terms, no down payment. They want whatever they can get. And there are a lot of people soliciting their business. They get unsecured lines of credit in the mail continually. And the brokerage houses are really pushing their working capital management accounts. It's very competitive. Pat Redmond: They are bombarded with all these opportunities but when you come right down to it the most important thing they want is a relationship. They want an experienced banker that can help them with their business problems. David Richards: We're sensing a swing of the pendulum back toward more service-oriented business. A few in-market mergers left some of our small business customers feeling a little disenfranchised and we found a nice niche by providing good service and putting some relationships with these people. Doug Tippens: Competition has become a very big factor in our area. Businesses have learned that they can use that competitive force to get repriced, and they have really worked us over this past year. David Taber: Innovation in today's market is a prerequisite, you have to have the tools that businesses want. But like Pat Redmond suggested, our clients still want real people that take the time to understand their business and be available on a consultative basis. So when they have business challenges, believe it or not, they are still talking to their banker first, whether it involves a lending opportunity for us or not. Ron Heaton: They will beat us down on the prices if they can, but if they have a relationship with us, they will always gives us a chance to meet or beat the price. Some of them-especially the younger ones-are demanding things like online banking and billpay, and ACH origination. Jim Dowe: We find they certainly want the sophistication, the technology, and the products and services of the bigger banks. But the opportunity we think we have is that they also want a local banker and local decision making. They also want--and they qualify this right up front, which is kind of scary--to make sure that we're going to be there when things get a little tougher. Hiring For Small Business Lending Q. Have the kind of factors you have just been talking about led to any change in the type of person you hire for the job of working with the small business customer? …