Community banks are beating their big-bank competitors in the battle for small-business customers, according to industry experts, by keeping product lines simple and offering more personalized service.

At a conference here this week, Kathleen C. McClave, a consultant at Tillinghast-Towers Perrin in New York, said small-business owners prefer community banks because they have access to senior managers who are knowledgeable about the banks' products and can make loan decisions quickly.

Another consultant said that large banks will not win over small- business owners simply by investing in sophisticated software.

"This is not a battle of scale but a battle of skill," said Robert Hall, chief executive officer of Dallas-based ActionSystems Inc.

The small-business banking conference, sponsored by the Consumer Bankers Association, drew about 150 bankers, most of them from the nation's largest banks.

Mr. Hall said many community banks have picked off large banks' small- business customers when the big banks automate or consolidate.

One example is BankAtlantic Bancorp, a thrift company in Fort Lauderdale, Fla. The $3.4 billion-asset company had never focused on small- business lending until Barnett Banks Inc., the dominant Florida banking company, was bought by NationsBank Corp. in 1997.

Hoping to take advantage of Barnett customers' unrest, BankAtlantic set up its own small-business banking unit a year ago by hiring ex-Barnett lenders.

So far, BankAtlantic has attracted $78 million of deposits and $119 million of small-business loans using only a few products and stressing personalized service, said Stacy Pedersen, senior vice president of small- business banking.

Frost National Bank in Houston, a subsidiary of San Antonio-based Cullen/Frost Bankers Inc., has also recently entered the small-business banking arena. It, too, hopes small-business customers will leave consolidating large banks for a smaller bank with better customer service.

"The bigger you get, the harder it is to deliver good service," said Elizabeth B. Everts, Houston market president of $6.4 billion-asset Cullen/Frost.

Some large banks are picking up on the smaller-is-better strategy. Chase Manhattan Bank in New York has spent the past year restructuring the way it serves small-business customers by moving the focus to the branch.

Chase put 129 small-business bankers in branches most frequented by entrepreneurs. The bankers, known as "relationship managers," navigate business owners through the bank's product line and act as a single point of contact to avert inconsistency.

For example, the relationship manager would help a customer fill out a loan application and then shepherd it through the lending department so the customer only associates with one bank representative, said Frank Vella, senior vice president of small-business financial services.

And Chase is not stopping there. This year, the $366 billion-asset company plans to open six branches in market areas with high concentrations of small business.

Still, Chase and other large banks face a major obstacle: Many small- business owners prefer to support small banks, said Roger D. Blackwell, professor of marketing at Ohio State University.

"A lot of entrepreneurs don't think it's a good idea to bank with a really big bank," he said.

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