Harold Zarker, a veteran officer of New Jersey's Princeton Bank and Trust, used to brag that the bank had a major advantage over its only competitor-First National Bank of Princeton-when both were local organizations.

"They are closer to the Princeton University campus, so they get all the trouble of handling the student accounts," Mr. Zucker would say. Student balances were small, overdrafts frequent, and the traffic of collegians cashing $10 and $20 checks an expensive nuisance.

Today, however, some banks are seeing tremendous opportunities on college campuses. Citibank, for example, recently signed an agreement with Columbia University in New York to provide low-cost or free checking to students and allow their identification cards to work in the bank's automated teller machines. So the cards that students use to check out library books, make long-distance calls, pay for campus meals, and gain entrance to residence halls can also be used for banking.

The bank has similar programs for the 85 campuses of 500,000-student State University of New York, and plans to establish satellite branches on campuses where there is no Citibank branch nearby.

Naturally, there is the question of whether students will remain customers after they graduate. But by linking bank services with student ID cards, Citi and other institutions such as Charlotte's First Union National Bank and Pittsburgh's PNC Bank hope these students will remain loyal.

Community bankers may look at this with skepticism. The way they see it, most students are not going to become permanent residents of their communities, so local banks will get the small account now and another bank will get the larger one later.

But this is not always true. In most of these communities, the local hospital and the local educational institutions are the main employment centers. The notion that students will leave town as soon as they get their diplomas is as obsolete as the shibboleth that a bank should not hire women for anything but entry-level jobs because most will get married and stay home raising children.

How can a community bank near a college or a research-oriented graduate university make the most of this situation and fend off the likes of Citibank?

Create strong links to the college through attractive rate and service programs for faculty and other employees, as well as students.

Offer speakers for college classes and intern programs for students- with pay and without. You will be amazed at how many good students will work for nothing in their spare time for the opportunity to put something meaningful on their resumes. And the bankers often report they learn a lot from students' unconventional ideas and questioning.

If the bank is truly a community organization and the college is one of the stellar parts of the community, a true bond can be developed at little cost. And remember, the community bank has a further advantage over the larger, distant rival-the same advantage that brings students to the college: They are both right there!

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