Brian White became fed up with his bank about six months ago.

The Riverside, Calif., furniture dealer said that after his original bank, First Interstate Bancorp, was acquired by Wells, Fargo & Co., his tiny store fell through the cracks and his checking account was badly mishandled during the system conversion.

"It was just a nightmare," he said.

But instead of switching to another bank, he took his business to a thrift - Glendale Federal Bank. He's glad he did.

"They treated me like I was important," he said of his new bankers.

In fact, customers like Mr. White are becoming very important to Glendale and the other large California thrifts. In recent months, three of the Los Angeles area's largest savings and loans have tried to recast themselves as small-business hotshots - hiring hundreds of displaced commercial bankers to crack the lucrative niche.

Executives of the big California thrifts - and by extension those at any thrift with small business ambitions - think their biggest challenge is selling themselves to the market as full-service financial providers and not mere home lenders. To do that, they're overhauling corporate strategy and spending big bucks on infrastructure, people, and advertising.

H.F. Ahmanson & Co.'s Home Savings of America, the country's largest thrift, just spent an exhausting four months creating from scratch a small- business program that includes a menu of more than 40 products. Now comes the hard part.

"Our biggest challenge ... is changing the customer's view that we're just an S&L," said Carl W. Forsythe, executive vice president and director of retail services for Irwindale-based Home Savings.

Bankers, who have perennially owned the small business niche, aren't exactly quaking in their wing tips. While some are wary, others can't conceal their contempt. "They just want to build up their franchise so they can be sold at a higher price," one banker said,

John Rossell, chief executive of $154 million-asset Heritage Bank of Commerce in San Jose, said that he hasn't yet encountered thrift competition and isn't expecting to see any soon.

"It's a new area for them and they're going to have to learn the business," he said. "It's an area fraught with risk and peril."

The thrifts know they have a burden on their hands. They also know both sides of the balance sheet demand they break from tradition. On the asset side, they need more lucrative business lines than mortgage lending; on the liability side they need funds that come cheaper than certificates of deposit.

The small-business market, particularly in a state teeming with more than a million companies, is a logical new frontier.

Home Savings, Great Western Financial Corp., and Glendale Federal all have been explicit about their intentions to become more banklike in the past few years. And although former Home Savings executives expressed misgivings about the repositioning, all three have aggressively pushed into retail banking - and small business is seen as a key component of that.

Mr. Forsythe said that Home Savings couldn't retreat from small business if it wanted.

"We have spent untold millions and million of dollars in small-business and cash-management services," he said. "We have crossed the road and can't go back."

The California thrifts, like others getting involved in small business (see story on facing page), have been stockpiling talent from banks. Home Savings hired both Mr. Forsythe and its director of business banking, Susan G. Holt, away from Banc One Corp., Columbus, Ohio.

Former First Interstate bankers are a dime a dozen at thrifts trying to crack into small business. For example:

*Great Western hired senior vice president Daniel J. Morefield and eight other First Interstate bankers to lead its small-business program;

*Glendale Federal has been hiring former First Interstate branch personnel and relationship officers;

*Home Savings picked up a whopping 90 employees from the acquired Los Angeles-based bank to staff various aspects of its small-business operation - in addition to the hundreds of branch employees that came with the 61 former First Interstate offices it purchased from Wells.

Besides acquiring experienced teams that have worked together in the past, the thrifts also pick up relationships when they hire bankers.

Susan Shapiro, owner of a small law firm in Morgan Hill, near San Jose, followed her personal banker from First Interstate to, briefly, Wells and finally to Glendale Federal. The reason: "It was a combination of bank services and personal relationship," she said.

The thrifts also have been trying to change popular perception through marketing. Home Savings has been pitching itself in the media as a full- service provider for more than a year now, and is piggybacking its small- business message on that campaign, thrift officials said.

For a year Glendale Federal has targeted former First Interstate customers with ads that knock Wells and portray the thrift as a cozier financial provider.

"We're starting to become known," said Glenfed executive vice president Terry D. Hess. "As we continue our sales efforts and buy other institutions we will get our name into the business world."

In a sales campaign that started last month, the thrift started offering small businesses a loan rate of one percent above prime if they shift accounts from competing bank.

The three newcomers insist that they have some advantages in pursuing the market.

For one thing, the big thrifts already have a sizable number of entrepreneurs within their customer base. Mr. Morefield of Great Western estimated that 96,000 of the Chatsworth-based thrift's depositors are merchants; cross-selling small-business products to them is a priority.

"We already have a pretty good customer base," Mr. Morefield said. "We have to leverage the strengths of the institution."

Another advantage comes with being new to the market, Home Savings' Ms. Holt said. Thrifts have been able to create small-business units without having to contend with jealousy from balkanized product groups.

Further, small businesses have shown they are willing to go to nontraditional companies for their financial needs; witness the rise of nonbanks in the market.

After all, Brian White and Susan Shapiro both were willing to trust beginners, or they wouldn't have taken their business to a thrift in the first place.

"It wasn't a concern," Ms. Shapiro said.

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