A 20-foot-tall purple inflatable dinosaur sat atop Peoples Bank of Mount Washington, Ky., for a couple of weeks recently. An Alabama bank has started its own radio station.

And in Anchorage, a small bank produced an award-winning television commercial featuring a dump truck driver named Sally whose trailer home it had financed.

These are just a few examples of the aggressive, creative, and sometimesoffbeat forays community banks are making into the world of advertising. Once content with humdrum ads in their local newspapers, community banks are promoting themselves in ways they would not have considered only a few years ago.

"The senior management of these banks have become aware that they can no longer operate their banks as their father or grandfather did before them," said Craig Eversole, director of community bank marketing at Hannon & Associates, an advertising firm in Jackson, Miss.

"Ten years ago you just had community bank A against community bank B, but now you have the money-center banks competing against them," he said. "So they have to go up against the big fellas, and they're suddenly realizing that marketing is the key to doing that."

The luxury of being the only bank in town is ending for many community banks across the country, as interstate banking laws go into effect. Many small banks are acknowledging now that they can no longer rely on their good name to keep their customers.

They also cannot compete with the marketing muscle of the superregionals, but some independents are finding innovative and enterprising ways of getting their message out:

*United Bank in Atmore, Ala., recently installed a low-frequency radio transmitter in one of its drive-through branches.

A sign on the $135 million-asset bank tells customers to tune in to the bank's own AM station, which broadcasts a 90-second commercial. The transmitter, which has a range of 50 feet, cost about $200.

"Some people were confused and thought it was a new radio station in town," said Robert R. Jones, chief executive of United. "But I think it has some real potential. It's another opportunity for us to communicate with our customers."

The technique is commonly used by real estate agents to give passing motorists information about homes for sale. Mr. Jones heard such a broadcast one day when he was driving in nearby Montgomery, and thought it might work for his bank.

*Interchange State Bank, a $483 million-asset bank in Saddle Brook, N.J., is in the process of getting its name registered on the Internet. After further study, it likely will get a World Wide Web site on the Internet as well, said Linda Obsuth, vice president of marketing for the bank.

"I think this is somewhat unusual for a bank of our size," she said. "Most of the ones on the Net seem to be the bigger banks. But it's not very expensive, and it gets our name out there."

Interchange State has been using another medium that is increasingly attractive - cable television. Cable is becoming an inexpensive and effective way for small banks to reach their customers, most of whom live in the suburbs where cable channels abound.

Interchange State has been running a cable TV ad featuring a group of singing schoolchildren assembling huge block letters that spell out the bank's name.

This sort of innovation does not necessarily mean more expense. In fact, the banks interviewed said they are not spending any more money on advertising than they used to - they're just spending it more wisely.

Industry numbers back them up. Banks in the $100 million to $250 million-asset range, for example, spent on average about $125,000 on marketing in 1994, according to a recently released study by the Bank Marketing Association. In 1989, banks in the same category spent slightly more, about $137,000 on average.

Though these are still modest amounts, small banks spend much more than big ones on marketing - about twice as much, in fact - when measured as a percentage of total assets, according to the study.

"Before, marketing just had to do with a bank's image in the community," said W. Paul Nance, an account executive with Steve Diggs & Friends, an advertising firm in Nashville that specializes in small-bank marketing.

"But now customers are being given choices on different rates and products from the bigger banks," he said. "So small banks have to be product specific in advertising. They have to be smarter in how they invest their advertising money."

Mr. Nance cited the example of one of his clients that sent out 210 VCR remote controls and a dinner invitation to realty agents in its market area.

More than 95% of the real estate agents came to the dinner, where one of them won a home entertainment center. The bank hopes this courting will translate into referrals from the agents and more mortgage loans.

Other direct-mail gifts sent by banks to prospective customers included a whisk broom, to promote a new "sweep" account for commercial customers, and a stopwatch, to emphasize how quickly a bank decides on loan applications.

Of course, a bank can always just throw an inflatable dinosaur on its roof, like $89 million-asset Peoples Bank did.

"Our message was, 'Rates have never been lower since prehistoric times,'" said Patricia L. Owen, a cashier, who dressed up as dinosaur for the campaign.

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