It is a tricky situation.

First Union Corp. expects to complete its $2.1 billion purchase of Money Store this month. Money Store is the top-ranked SBA lender, First Union a distant 44th.

The purchase would considerably boost First Union's standing as a small- business lending powerhouse. But the $172 billion-asset banking company is committed to letting Money Store operate independently for at least the next year.

The idea is to give First Union, based in Charlotte, N.C., time to figure out how exactly to integrate the Union, N.J., finance company, given the vastly different cultures at work in each organization.

Money Store, which has been the largest SBA lender nationwide for the last 15 years, typically serves less creditworthy business owners than the bank does, according to Martha Hayes, the senior vice president who heads First Union's small-business banking division.

"There's a big opportunity" in the merger, she acknowledged. But until the two companies are fully integrated, "the goal is not to cannibalize the market."

So far, the acquisition of the Money Store has been handled by executives in First Union's home equity lending division, because those loans comprise the bulk of the finance company's business.

Last week Ms. Hayes got involved. Her job is to find a way to bring bank customers to the Money Store, and First Union products to the finance company's borrowers.

"The goal is to expand who we can lend to and the products we can offer them," she said.

While Ms. Hayes is implementing her cross-selling strategy with Money Store, she also intends to tweak the way First Union does small-business banking companywide.

The new focus, she said, is to build relationships with entrepreneurs, rather than crank out loans.

But observers said that line of thinking may be difficult for lenders at Money Store to swallow. The finance company is very good at producing loan volume but currently offers no other small-business products.

What may make things even more difficult for Ms. Hayes is that Money Store and First Union were formerly keen rivals-even though Money Store had 1,763 SBA loans, totaling $784 million, last Sept. 30, and First Union only 124, totaling $33.5 million.

"They are basically asking for two groups of people who don't really know each other and previously competed to become buddies," said Les Dinkin, director of Oliver Wyman & Co. in New York. "That's not easy to do."

However, Mr. Dinkin said that Ms. Hayes' strategy can work as long as the two companies develop clear procedures and come up with an inventive plan to reward employees for referring customers.

Along with the pending acquisition of Money Store, First Union's small- business banking operation has benefited from the recently completed purchases of CoreStates Financial Corp., Philadelphia, and Signet Banking Group, Richmond. The three deals together would more than double First Union's small-business loans outstanding (of which the SBA loans constitute only a part), to some $5 billion.

To bolster its new emphasis on building relationships rather than loan volume, First Union is also trying to sell a broader array of products to small-business customers.

"We don't think we have done as good a job as we can providing all the financial services small businesses need," said Ben Maffitt, First Union executive vice president and head of commercial banking. "A lot of them just had loans and deposits."

To that end, the bank has begun selling small-business insurance through a relationship with Hartford Financial Service Group, and 401(k) retirement plans through an alliance with Fidelity Investments. It has also undertaken a revamping of its sweep accounts.

Ms. Hayes said the improved product offerings will help First Union hold on to former CoreStates and Signet small-business customers. This is important because some research-including an April study by PSI Global of Tampa, Fla.-has found that more than a third of entrepreneurs surveyed would switch banks if theirs were acquired.

"I don't want to be naive and say we aren't going to lose any customers," Ms. Hayes said. "But in the long run, people will see that we have more products and services."

In addition to rounding out its roster of products, First Union recently hired a new small-business marketing manager, Wade M. Nield, from Barnett Banks Inc.

Mr. Nield, who joined in January, said he plans to beef up the bank's Internet offerings for small businesses, develop a newsletter for small- business customers, and create marketing materials to help bank employees promote products.

In April the bank set up a telephone call center in Charlotte to focus on selling North Carolina entrepreneurs all kinds of small-business products, rather than just loans. The plan is to expand that service to the rest of the bank's market this summer.

First Union also holds informational seminars for small-business owners in Virginia, as part of an effort to retain former Signet customers. The bank plans to hold the same kind of seminars in Philadelphia for CoreStates customers.

Ms. Hayes said absorbing Signet was relatively easy because the Virginia bank had a clear small-business strategy that was similar to First Union's.

As a result of the Signet acquisition, First Union retained Gary Klein, the Richmond bank's director of small-business banking, to head the same kind of operation in Virginia.

The company also retained Pamela Davis, CoreStates' SBA lending manager, to oversee First Union's activities in this specialty.

Ms. Hayes is selecting other executives to take charge of small-business lending in the 12 states where the company operates, and in Washington.

Though these two bank acquisitions further expand First Union's market share along the Eastern Seaboard, Money Store would give the bank the ability to reach customers nationwide.

However, the cultural differences between First Union and its merger partner still raise doubts among its rivals about the difficulty of integration.

"The banking industry, being more highly regulated, is going to be more conservative and more concerned about quality than quantity," said Anthony J. Feraro, manager of SBA lending at Zions First National Bank. Salt Lake City-based Zions is No. 21 in SBA lending, with 227 loans totaling $69.2 million as of Sept. 30.

Mr. Feraro said that problems might arise for First Union and Money Store if the finance company's employees want to lend outside the bank's traditional geographic territory or to industries First Union is not accustomed to serving. He said his company would try to take advantage of the rough patches First Union hits in its Money Store integration.

"I think it definitely presents an opportunity for lenders to aggressively compete in the market the Money Store served when it operated independently," he said.

Difficulties between the finance company and the bank could become more even acute as First Union shifts its focus to selling multiple products, said Charles Wendel, president of Financial Institutions Consulting in New York.

"The Money Store people don't really think about relationships," Mr. Wendel said. "They are very good at selling their product and moving on to the next customer."

But Ms. Hayes said she is not worried that First Union's new small- business banking approach would stifle Money Store's style.

"The Money Store has a dedicated sales unit that has been very effective, so maybe we can learn from them," she said. "But they have centralized underwriting, so it's not like there are people out in the field making loan decisions."

Ms. Hayes said she is also interested in using the Money Store's nationwide crew of lenders to sell additional products in states where First Union has no presence.

"We haven't put that in our strategy because there is so much opportunity right now within our existing franchise, but that doesn't mean we won't do it in a few years," she said.

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