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Banks are starving for new revenue sources these days. Some are responding to fierce competition in mainstream lending markets by looking further afield, to financing ventures like improving energy efficiency and the building of manufactured housing. Following are examples of banks that are creating daylight between themselves and their rivals by focusing on unique businesses.

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ESOP Financing

Already a national player in mortgage and asset-based lending, Taylor Capital (TAYC) in Rosemont, Ill. recently launched a unit to finance employee stock-ownership plans for midsize businesses. Taylor executives' thinking is that as baby boomer business owners retire, employees will want to team up to buy out their shares - and they will need financing. "There's not a lot of loan demand, so we have to create our own demand," explains Lawrence Ryan, the chief lending officer at Taylor's bank subsidiary, Cole Taylor Bank.

Related Article: Taylor Capital Seeks Edge with ESOP Financing Unit

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Seeing Green in Energy-Efficient Lending

Many companies are doing their part for the environment - and cutting their energy bills - by investing in more efficient heating, air conditioning and overhead lighting systems. Heartland Financial USA (HTFL) in Dubuque, Iowa is capitalizing on this trend by working with the San Francisco firm Blue Path Finance to fund such projects. On the consumer side, U.S. Bancorp (USB) is providing financing to in nine states homeowners who lease rooftop solar panels from the California firm SunPower.

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U.S. Bancorp, SunPower to Finance Rooftop Systems in Nine States

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Revving Up in Motorcycle Lending

Profits at Evergreen Bank Group in Oak Brook, Ill., more than doubled in 2012, thanks in large part to strong growth in its nationwide motorcycle financing business. The $460 million-asset bank has preferred arrangements with dealers of Ducati and Triumph bikes, and its chief executive recently told Crain's Chicago Business that he expects to announce a partnership with another high-end brand this year.

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Cleaning up with Septic Systems

Admirals Bank in Provident, R.I., is a niche lender if there ever was one. The $646 million-asset bank has long been a leading home-improvement lender, and in the past year it has expanded into renewable energy. Its newest business line is financing the replacement or installation of residential wastewater and septic systems. Many state and local governments now mandate upgrades for old or malfunctioning systems, which can catch homeowners off guard and leave them scrambling for funds. "These mandatory repairs often come at a cost that many homeowners have not included in their household budgets," Admirals said when it launched the unit in April.

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A Start-Up's Niche Play

A group of investors in Pennsylvania Dutch country has filed an application with regulators to start a bank that seeks to cater to Amish and Mennonite farmers. The investors, many of them Amish, say the region needs its own bank because the mostly out-of-town institutions serving it are failing to meet local needs. If its application is approved, Bank of Bird-in-Hand will become the first brand new bank to open in the U.S. since late 2010.

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Team Approach

Originating mortgages is hardly unique for a bank, but doing so through a retail store certainly is. For the past year, the retail giant Costco has been offering its members home loans via partnerships struck with nine bank and nonbank lenders. Among its partners is Bank of Internet in San Diego, which was recently cited by Costco as a top service provider. The bank's total mortgage portfolio increased by more than 60% in 2012 from a year earlier, to $1.3 billion.

Related Article: Small Lenders Find an Unexpected Ally in Costco

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Manufactured Housing: A Niche Waiting to Happen

Bank 2, a community development bank in Oklahoma City, is practically alone in the industry in extending loans for manufactured homes. Banks generally steer clear of such loans because the collateral is limited to the structures themselves and excludes the land beneath them. That has left the business dominated by the manufacturers' finance arms. Bank 2 may soon have lots of company, however. A bipartisan group of Congressional representatives has introduced a bill that aims to adjust the way manufactured housing loans are classified in a bid to encourage traditional banks to get into the market.

Related Article: Banks Urged to Make Manufactured Housing Loans

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