BB&T Corp. is spreading its risk, joining the migration of bigger banks toward small business and smaller individual loan exposures. Really small, in BB&T's case.

Ricky Brown, BB&T's banking network manager, said it is encouraging its branch managers to think "micro" — companies with annual sales of less than $500,000. The loans will be relatively and equally minute, topping out at $100,000. The company has been busy training branch managers on credit, products and calling style.

The strategy makes sense from the perspective of diversifying credit to avoid having big concentrations of loans with one client, said Kevin Fitzsimmons, an analyst at Sandler O'Neill & Partners LP. It's an interesting move, "especially for a bank of their size," he said. "If one of those loans goes bad, it is still a granular portfolio for them."

With its diversification strategy, BB&T is joining what is becoming a crowded field, and one where Washington wants to see more loans made. Bank of America Corp. in December pledged a $5 billion hike in loans to small and midsize companies in 2010. Huntington Bancshares Inc. said this month that it would make $350 million in small-business loans over the next three years, hiring commercial bankers to aid the push.

"The biggest opportunity for us going forward involves refining and improving on our small-business strategy," Brown said.

Ken Thomas, an independent bank consultant and economist in Miami, said he favors BB&T's plan to focus on companies that are generally smaller than those applying for Small Business Administration loans. He said it is likely to lure professionals such as physicians' practices and law firms that remain loyal to their bank.

"This is one of the most attractive ways to go after commercial loans, without a doubt," Thomas said. "If you can get those customers at the right stage, they will not forget you."

The White House has encouraged banks to lend more to small businesses, which employ about half of the private-sector work force, according to Federal Reserve data. Those companies rely on banks for 90% of their financing, compared with 30% for midsize companies and corporations.

The total amount of loans to small businesses at yearend was down 0.5% from the third quarter and 2.2% from a year earlier, at $756 billion, according to data from the Federal Deposit Insurance Corp. Loans of $100,000 or less, the type targeted by BB&T, made up a fourth of that amount.

Kelly King, BB&T's chairman and CEO, has been touting the Winston-Salem, N.C., company's relative strength as a differentiator this year. "We've been very fortunate that our balance sheet has been strong, so we've been very offensive in the market," he said during a conference call last month.

BB&T, which repaid funds to the Troubled Asset Relief Program last year and was among a few big banks to increase lending in the fourth quarter, said it has its own reasons for making a push, Washington aside. The $165.8 billion-asset bank expects to hook clients over time with fee-based services, such as insurance products.

"We are also taking a consultative approach," Brown said. He said BB&T views smaller businesses as fertile ground for deposits, because they historically move over a dollar in deposits for every dollar they borrow.

Brown said an effort directed at smaller clients should work well at branches BB&T gained in August from the FDIC-assisted takeover of Colonial Bank. BB&T has worked with Colonial's commercial lenders to shift their focus away from commercial real estate lending. So far, BB&T has been pleased with the transition. "The quality of the people is extraordinary and client loyalty has been high," Brown said.

BB&T's biggest test for Colonial will take place Memorial Day weekend, when it converts all of the bank's branches. Brown said it plans to keep 279 of the 355 branches it picked up from the purchase. "We have our fingers crossed for no hitches," he said. "If we get that done smoothly, then the first nine months of the deal should be rated an A-plus."

BB&T has taken other steps to increase decision-making on the front line, including an effort to eliminate budgeting at a branch level, Brown said. Managers will be more attentive to loan volume, deposit gathering and fee-based income. Branches will still have to produce financial statements, and BB&T will maintain budgets on city and regional levels.

"This should produce more focused goal-setting," while eliminating the daunting annual task of creating and reviewing more than 1,800 individual budgets, Brown said. "This move is consistent with our community bank strategy."

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