Small community banks should exploit what's left of their aging core market while they can, a Chicago banker told a group of accountants and consultants.

"Given the age of the small bank's current target market, experts say this opportunity won't last forever - probably not much past the next decade," said John F. Timmer, senior vice president and manager of the community banking group for First Chicago NBD Bank. "So savvy bank ownership or management should act now."

The key to this strategy - and remaining independent - is retaining a personal touch as banks ease their customers into new technologies.

"For smaller community banks, exploiting niche opportunities can help keep them independent for the time being," Mr. Timmer said.

He was speaking to 20 people at a meeting of the Community Banking Advisory Network, a Chicago-based association started last year for accounting firms that specialize in services for community banks.

He stressed that community banks need to heed opportunities with core markets of older, affluent customers while they exist.

Banks with long-term strategies need to address more immediate concerns as well, Mr. Timmer said.

"Banks should not stand on the sidelines waiting for long-term planning to be finalized before taking action," he said. Increasing fee income and reducing costs can be effective in sustaining revenue growth, he said.

Each bank also should decide how it will address technology.

"An often-asked question is whether technology requirements will overwhelm smaller institutions," Mr. Timmer said. "The answer is maybe." Small banks can outsource to take advantage of new technologies in many cases, but some can find it hard to justify the costs of upgrading existing systems, he said.

Although banks can compete against growing nonbank competition, consolidation within the industry remains unavoidable, he said.

Still, the smallest community banks aren't primary acquisition targets for larger banks, Mr. Timmer said. Many are just too small, and large banks know that customers who sought out a community bank can take their business elsewhere after an acquisition, he said.

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