On K Street between 16th and 17th streets, in the heart of downtown Washington's robust lobbying industry, is a branch of Sequoia Bank, a tiny institution by financial-service-industry standards.

Many of the bank's clients are the very lobbying firms and individual lobbyists who helped push through the legislation that President Clinton signed last month to revamp financial service law and make it easier for banks, insurance firms and securities companies to merge and invade one another's turf. The bill was the biggest news in the financial world this year.

But ask Sequoia executives what the new bill holds for small institutions such as theirs and, like many of their peers, they shrug their shoulders and yawn.

"It has nothing for us," said Sequoia President J. Paul McNamara. "Nothing good, nothing bad. I'd say we're indifferent." Executive Vice President John V. Pollock adds, only half-jokingly, "Except of course that we're glad a lot of our good customers made a lot of good lobbying fees out of it."

Sequoia is a Bethesda-based bank with seven branches in the District and Montgomery County and $210 million in assets. That makes it an itsy-bitsy speck on the financial horizon in the eyes of giants such as Citigroup and Bank of America, which have assets in the $600 billion to $700 billion range.

That suits McNamara and Pollack just fine. Big banks and mega-mergers have grabbed headlines as the big gainers from the new bank bill and, in the process, in the emerging realm of one-stop financial shopping. But underneath the hoopla, the nation's smallest banks, especially those in urban areas such as Washington, have quietly mined a lucrative niche serving small businesses that bigger rivals find too little to bother with.

In Washington these include nonprofit groups, lobbying and law firms, builders and store owners.

In fact, many analysts believe that the long-term survivors in banking, once the merger dust settles in a few years, will largely be the giants and the tiny banks.

Big banks, they reason, will prosper by offering everything under one roof at low prices, using high volume to make up for the slim profit margins many consumer products yield. They will, for that reason, be the main beneficiaries of the new bank law, which essentially facilitates mergers and the creation of volume-driven financial superstores.

Small banks, by contrast, won't try to be all things to all people. While they won't push consumer business away, they won't aggressively pursue it. Instead, they will focus, as Sequoia does, on the small businesses. And they will do that by offering personal, one-on-one local service.

"It's cliched but true that people want to know their banker," said Tod Davenport at SNL Securities LC, an independent financial research firm based in Charlottesville. "Banking and money are such hugely important issues to people. What's more important?"

Davenport said larger institutions aren't interested in loans or credit lines of less than $5 million. The result, he said, is that "the small banks are feasting on small-business lending."

The United States has nearly 8,000 small banks and thrifts, which are defined by analysts as institutions with assets of less than $1 billion. About 50 of them are in the greater Washington metropolitan area, according to SNL data. And while five years ago no new banks were were being started in the Washington area, in the last three years investors have started 11 new banks and have charters pending for four others. Almost all of these new banks have a stated strategy of targeting small business, industry executives and analysts say.

Some of those institutions, to be sure, will disappear through mergers, but some, analysts and industry executives predict, will survive with ample room to grow for quite some time on street corners adjacent to some of the biggest names in banking.

It's a trend that Sequoia officials say they know well. In 1988, when the privately held Sequoia was bought by McNamara and a small group of investors, the bank had assets of $18 million. Assets grew to $100 million by 1993, to $120 million in 1996 and to $210 million today.

"Our niche is to the business person who doesn't mind driving 10 miles to get personal service," Pollock said. He says that is why Sequoia's branches are in business centers, such as K Street, downtown Bethesda, Silver Spring and Rockville, rather than in residential areas.

In 1994, the same year the bank made its first profit under its new owners, the bank sold off three branches in Baltimore after deciding it was too far afield geographically. "For us, foreign trade is Loudoun County," McNamara said.

The bank also decided not to stray far from traditional banking services either. Unlike big banks, which want to own or be owned by insurance and brokerage firms, Sequoia has arrangements with independent companies to which it can refer clients who want life or casualty insurance, investment advice or even help administering their payroll.

The bank earns fees from those referrals, but doesn't have to invest time or capital in running these related financial businesses, investments that Sequoia executives say would simply detract from the bank's focus on making loans and providing other bank products to small businesses.