Several banks that issue government-backed loans are taking their programs far afield in an effort to keep pace with leading nonbank competitors.

In recent months a handful of banks - including BankAmerica Corp, Utah's Zions Bancorp., and San Diego's Bank of Commerce - have opened loan production offices far from their home bases.

Furthermore, more are expected to follow as the industry gets a better handle on reducing the costs of originating small-business credits.

For years, nonbank financial institutions such as the Money Store Investment Corp. and AT&T Capital Corp. have originated loans nationwide that are backed by the Small Business Administration.

But the competition should heat up as banks, eager to a new source of loan earnings and desirous of improved Community Reinvestment Act ratings, plunge into this area.

"If done properly, it can be a pretty profitable way of lending," said David Bartram, senior executive vice president at Bank of Commerce, which has loan offices in Nevada and Arizona and just opened one in Oregon.

Over the past eight months, San Francisco-based BankAmerica has used its thrift arm to make inroads into Atlanta; Baltimore; Birmingham, Ala.; and Washington and its Maryland and northern Virginia environs.

The San Francisco banking company's desire for eastward expansion has yet to be satisfied, said Michael Mantle, president of the Bank of America Community Development Bank.

"We're absolutely looking around the Midwest, looking to see what may or may not be available, and we're looking in the Southeast," he said. "But there's nothing on the drawing board for the next 60 to 90 days."

So far BankAmerica's expansions and sharpened marketing efforts appear to have paid off in terms of loan originations. According to Mr. Mantle, BankAmerica last year originated $193 million in various government- guaranteed loan programs; so far this year it has originated $240 million and is on track to hit $450 million.

BankAmerica's eastward march started three years ago, when it started a government-guaranteed small-business and affordable housing operation in Chicago, just prior to its acquisition of Continental Corp.

Mr. Mantle said the bank started looking eastward because it saw an unfilled demand for its specialty, long-term, fixed-asset SBA loans. Diversification of its portfolio was another issue.

Also, its home state was saturated with government lenders; about 10% of the SBA loans made in 1995 were in California. There was concern that the SBA might frown on one state hogging the funding.

"How much of a slice of the pie is the SBA going to let California have?" Mr. Mantle said.

Since the Chicago effort, BankAmerica has moved into other markets at an accelerated pace. Eighteen months ago it began offering loans in Denver, and in January of this year it entered the District of Columbia, where it also will lend to businesses in Virginia and Maryland. Three months ago, the bank moved into Atlanta and Birmingham.

BankAmerica has just launched a sales blitz in the District of Columbia, pricing loans at the prime rate - as much as 2.5 percentage points below the competition's.

"We're sending a message," Mr. Mantle said.

Carroll Markley, chief executive of Patriot National Bank, Reston, Va., said with a sneer that BankAmerica is trying to buy the market. But he admitted he would like to follow its example of cracking new markets.

"Right now I don't have the capital to put loan production offices in other states," said the SBA niche lender. "If I could, I would. It's a hell of an idea."

Bank of Commerce has been an active SBA niche lender for six years. Within the past three years it has established loan production offices in the three states bordering California. The bank has $310 million in assets and $420 million in SBA-backed loans.

Zions Bancorp. of Salt Lake City is another company taking its SBA lending practice outside traditional boundaries. Besides lending in its three-state territory, the banking company has extended its reach to an additional 14 states through a subsidiary, St. Louis-based Zions Small Business Finance.

Anthony J. Feraro, the senior vice president who runs the unit, has 20 years of experience in government-guaranteed lending. He helped found ITT Small Business Finance, which was the country's second-largest SBA lender until it was spun off to General Electric Capital Corp. last year.

ITT Small Business was a nationwide lender, and Zions is heading in the same direction. Mr. Feraro's advice for banks looking to follow suit is simple: Be committed and be prepared to weather bad times.

"Sometimes you see banks getting into an area that's a fad," Mr. Feraro said. "They like the good times, but when there's a falloff, they - for lack of a better word - bail."

"Small businesses remember that," he added.

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