Small-business banking, which helped lead the profitability parade while the economy was growing, can cushion any slide.

Though profits from small businesses may shrink during a slowdown as companies curb expansion plans and manage their cash more carefully, analysts and consultants still expect banks to pour more resources into this market-for good growth reasons.

"If banks are doing well on the credit side, there is no reason they should not continue to do well," said Charles Wendel, president of Financial Institutions Consulting, New York. "Banks do relatively conservative lending in this area."

KeyCorp of Cleveland has been anything but conservative in expanding its small-business product line to include health insurance, leasing, on-line banking, and discount long-distance telephone services. It is convinced, based on experience, that small-business banking profits can be sustained through hard times.

"We've been through the bad times," said vice chairman Sandra Maltby.

She said KeyCorp sticks to disciplined underwriting standards and diversifies its small-business customer base, both by industry and geography.

"The success of small businesses depends on the local economy and the given industry," said Ben B. Crabtree, analyst at Dain, Rauscher Inc. in Minneapolis. "If there is weakness in the oil economy in Texas or the agriculture economy in North Dakota, there is nothing you can do about it."

Others suggest that banks focus on their own customer bases as sales prospects. An economic slowdown would "put a premium on banks that can cross-sell, especially fee-based products" such as insurance or brokerage, said Mr. Wendel.

Les Dinkin of the consulting firm Oliver Wyman & Co. said banks should sell additional products to the customers that have the most profit potential over time. Then they should launch marketing campaigns tailored to attract similar new clients, while avoiding the undifferentiated mass marketing that can attract the unprofitable.

"The economy will push this sector down, so you need to be very selective about who you bring in," he said. "You need to go after the people you expect will do the best for you over time."

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