High-flying Texas thrift operators turned the franchise into a mess. Under federally subsidized caretakers, it became a political football.

Larry McNabb wants to turn it into a money machine.

The operation in question is Bank of America Texas, an amalgam of failed Texas thrifts that already includes Sunbelt Savings and soon will encompass First Gibraltar Bank. The man of the hour is Mr. McNabb, who will become chairman and chief executive of BankAmerica Corp.'s growing Texas empire.

The task before Mr. McNabb is converting what will shortly be one of the largest Texas banking franchises into a living, breathing operation capable of competing with heavyweights that have been bulking up in Texas for years: Banc One Corp.; Chemical Banking Corp.; First Interstate Bancorp; and NationsBank Corp.

"BankAmerica is last to the party and is working with thrifts, to boot," said Stephens Inc. analyst Frank Anderson. "So Mr. McNabb faces a bigger challenge than other market entrants."

Mr. McNabb is unfazed, however. Having survived the rigors of melding the California branch operations of BankAmerica and merger partner Security Pacific Corp., "nothing scares me anymore," he says.

The executive, who is 43, will assume his new duties in Texas after BankAmerica completes the purchase of First Gibraltar.

California Systems to Be Imported

After presiding over BankAmerica's 825 California branches in 1990 and 1991, Mr. McNabb is upbeat about the 260 branches Bank of America Texas will have.

He plans to transplant California systems, procedures, and products. The company has already begun a mass-marketing campaign in the Lone Star State.

Mr. McNabb views the Texas transformation as fairly routine. "Once you get the model down, repeating it is not that difficult," he said. Still, Mr. McNabb faces some stiff challenges. Though inheriting $11 billion of Texas deposits, he will be hitting the ground with only $3 billion of loans.

Doubt on Loan Demand

"First Gibraltar and Sunbelt have vibrant consumer franchiser on the deposit side, but the question is whether BankAmerica can translate that into loan demand," said Richard Kneipper, a lawyer in the Dallas offices of Jones, Day, Reavis & Pogue.

One handicap: Texas law does not permit home equity loans - a cornerstone of consumer lending in most other states. Although Mr. McNabb says he will go right to work campaigning for a change, he is at the end of a long parade of Texas newcomers who have failed to sway state lawmakers.

And he will be working with branches that have not placed a serious emphasis on lending in at least half a decade. Before he puts his foot on the gas, there are people to be trained and systems to be installed.

The Backing of a Colossus

But the beauty of Mr. McNabb's situation is that he has the backing of a $170 billion-asset company, which seemingly would remove the Texas incursion from the realm of a make-or-break transaction.

And with Texas expected to become the nation's second-most-populous state in a few years, "you couldn't ask for a more spirited marketplace," said Mr. Anderson of Stephens.

The situation poses a fitting challenge for Mr. McNabb, a professed optimist who apparently loves to go to extremes of the sort he exhibited on his recent vacation in Hawaii, during which he played 162 holes of golf in just seven days.

Ignoring all of the difficulties that major players such as Banc One and First Interstate have faced in making a go of it in Texas, Mr. McNabb says the state "is doing incredibly well."

Though it seems obvious that Mr. McNabb is overstating his case, even skeptics would have to concede this point to the executive: "Selling a house in California and buying one in Texas is a pleasant experience."

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