CHARLOTTE, N.C. -- Not too many NCNB Corp. executives would dare challenge chairman Hugh L. McColl, Jr., but Fredric J. Figge 2d has seen his career flourish by doing just that.

As NCNB's chief credit officer, Mr. Figge has spent the past four years imposing some controls on the company's explosive growth. Much of that effort involved reining in Mr. McColl, who is famous for his damn-the-torpedoes management style.

A Source of Discipline

"Fred sticks to his guns," said Mr. McColl with a chuckle. "He brought discipline and organization to us that we did not have."

As NCNB, with $69.9 billion in assets, prepares to nearly double again in size with its pending acquisition of Atlanta-based C&S/Sovran Corp., Mr. Figge, as chairman of the credit policy committee, is expected to take an even higher profile.

NationsBank, the merged entity, will adopt NCNB's credit policies and Mr. Figge will be responsible for maintaining credit quality at what will become the nation's third-largest banking company.

The 55-year-old executive acknowledges he has his work cut out for him. "It'll take us, I think, several years to really absorb what we've got on our plate right now," he said.

Some observers believe that Mr. Figge's credit controls made NCNB's acquisition of C&S/Sovran possible since one potential deal buster was concern about NCNB's credit quality.

A Problem with Risk

Indeed, when Charlotte-based NCNB made its first run at Atlanta-based Citizens and Southern Corp. in March 1989, Citizens chairman Bennett A. Brown cited NCNB's "higher risk profile" as one of the reasons he rejected the offer.

"The pleasant surprise for the C&S/Sovran people was that the credit processes and systems that had been put in place by Fred Figge were far more sophisticated and far better than anybody anticipated," said John E. McKinley, Jr., who headed a C&S/Sovran due diligence team that combed through NCNB's books early this summer.

A 25-year veteran of Chase Manhattan Corp., Mr. Figge was lured to NCNB four years ago to establish a new credit culture. At the time, NCNB had $29.9 billion in assets, but was clearly on a growth binge.

Keeping an Eye on Growth

"I told my staff the first week I was here that we had to think of ourselves as a $50 billion company," recalled Mr. Figge.

Indeed, 11 months after Mr. Figge came on board, NCNB bought Dallas-based First RepublicBank Corp., nearly doubling its size to $50 billion in assets. But the company's credit policy was still more suitable for a smaller bank, where loans were approved individually without much regard for portfolio strategy or concentrations.

One of Mr. Figge's main innovations was to form a partnership between line and credit officers.

Under this system, loan officers are responsible for generating business, but credit policy officers have a hand in structuring actual loans. This has tended to equalize the balance of power at NCNB, which traditionally favored line functions over credit policy, Mr. Figge said.

Portfolios Goals Enforced

Depending on their risk and size, some loans must also be approved by committees of line and credit executives. These committees not only scrutinize credits but also make sure they fit in with portfolio management goals.

While Mr. Figge's credit quality reforms have been greeted with much applause, some observers charge the NCNB has simply followed industry trends in the wake of recent regulatory crackdowns.

In 1989, two years after Mr. Figgie arrived at NCNB, the Office of the Comptroller of the Currency criticized the bank's methodology for reporting earnings and its loan documentation practices.

"They asked for certain changes and we did it, but it was not a reprimand," an NCNB spokeswoman said, explaining that NCNB was one of the first major banks examined under the OCC's more rigorous standards.

Nonperformers Surge

NCNB's weakness surfaced again late last year, when the company's nonperforming assets zoomed to $948.3 million; at the end of the third quarter, they reached $1.1 billion, or 2.9% of total loans and foreclosed real estate.

Part of the problem was a $5.2 billion exposure in commercial real estate, of which about $800 million involved hotel and motel properties.

Mr. Figge said most of NCNB's loan concentrations came from its acquisitions rather than internal growth. But he concedes the company needed to do a better job of following its written policies, particularly restrictions on making loans over $100 million.

Since taking up his post at NCNB, Mr. Figge has pushed for syndicating loans over $100 million, allowing NCNB to reduce its credit exposure significantly. Nowadays, the company won't even take a syndication unless it can bring its own share down to between $60 million and $75 million, depending on the risk.

"Essentially, you're putting more salami through the slicer and you make money off fees rather than taking principal risk," Mr. Figge said.

Mr. Figge has been through acquisitions before and he isn't letting the C&S/Sovran purchase disrupt his daily routine, which involves getting up every morning at 4:30 for a five-mile run. The training shows up in his slender physique.

He arrives at the office around 6:30 and leaves 12 hours later, his day usually having been spent in one meeting after another. "I'm a morning person," he said. "I don't last late into the night."

Along with his disciplined work habits, Mr. Figge is unpretentious, almost shy. He rarely grants press interviews.

The Iowa native, who is a connoisseur of fine wines, oriental carpets, and antique furniture, is said to be most comfortable in small groups, away from the public eye.

Both Sides of the Fence

At Chase, Mr. Figge gained expertise in both line and credit functions. After eight years in New York making loans, he served as Chase's credit officer for Latin America and later managed all its Asian business from Hong Kong.

He was chief credit officer for Chase's consumer business when NCNC approached him in late 1987 after conducting a nationwide search.

Mr. Figge's reforms haven't always been popular with NCNB's loan officers, who chafe under the restrictions he has imposed. "Anybody who's a line banker and is out there making loans wants cheaper pricing and looser rules by which to extend credit," said Ralph Carestio Jr., the former head of NCNB's real estate bank.

"But that's natural. If there wasn't grumbling there, it would suggest to me the credit policy or loan review functions aren't doing a very good job."

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