CHICAGO - First National Bank of Chicago said it has made a $1 billion, five-year lending commitment to small businesses.
The pledge is the biggest part of a $2 billion loan program announced by Richard Thomas, chairman of the bank's parent, First Chicago Corp.
Mr. Thomas said the bank would also make $750 million in new consumer and single-family mortgage loans to moderate- and low-income neighborhoods by the year 2000. The remaining $200 million will go toward investments and grants to community and municipal organizations.
Senior vice president Christopher Sandvig said First Chicago's efforts are an attempt to change the bank's image among small business borrowers.
"We have been perceived as a megabank in Chicago that does monster deals, but we have also been a leading retail bank and had a lot of small business loans as well," he said. "There's clearly going to be an increased focus on soliciting and booking more new profitable loans to closely held businesses in the future."
In particular, First Chicago will direct $700 million in loans to companies with annual revenues of $5 million or less. An additional $350 million is earmarked for commercial loans guaranteed by the Small Business Administration and for loans to finance the purchase and rehabilitation of multifamily housing in low- and moderate-income neighborhoods.
Though the bank's announcement is a way to get a jump on the competition in the fragmented Chicago market, it will not cause any earthquakes in the stock for the bank's parent.
Ron Mandle of Sanford C. Bernstein & Co. said the investment community does not consider the move very significant.
The announcement highlights a reorganization in the bank's underwriting and small business marketing systems.
Nine months ago, the bank created a team of 20 executives to focus strictly on companies with less than $1.5 million in annual revenues. To streamline the underwriting of loans to these companies, the bank centralized processing at a center in the Chicago suburb of Mount Prospect.
Chuck Ponicki, a senior credit officer in charge of the underwriting center, said it can handle this year's anticipated volume of 200 new applications per month.
