Choosing The Right Bank

What is a "niche bank"? Simply a bank that deals with particular industries.

What are the advantages of dealing with a niche bank?

• They have fewer customers but know them well.
• The bankers know the particular industries they serve well, so they're usually more comfortable riding out a firm's inevitable economic dips .
• Niche banks typically don't mass-advertise. Instead, they connect with trade associations, advertise in industry publications and rely on customer referrals

Here a few things to consider when looking for a niche bank:

• Evaluate the bankers' experience. Officers should be business bankers with at least three to five years' experience.
• Check loan turnaround times. If a niche bank has a stable office staff, they've taken time to get to know customers and their businesses and should respond quickly.

If there's a downside to choosing a niche bank, it's size. They tend to be smaller and local or regional, which means customers could outgrow the bank. And if you think the rash of mergers and acquisitions have rendered niche banks an endangered species, think again. As larger banks get more efficient at serving broad-based markets, this will clear a path for tightly focused smaller institutions that can spend more time on customers than on bank-buying.