Even as the New England economy improves, State Street Boston Corp.'s new executive vice president of commercial banking services, William Reghitto, admits he has his work cut out for him.

Promoted last week, Mr. Reghitto replaces Norton Q. Sloan, who retired in January.

"The economy tends to be fine. It's a question of what the increases in (interest) rates have done," Mr. Reghitto said. "They've taken a bit of steam out of the business. The competition is fierce."

State Street is generally known for the trust and investment services it supplies to institutions and wealthy individuals. But of its $22 billion in assets, a full 12% comes from lending to companies with $10 million to $150 million of annual sales.

Mr. Reghitto, 50, takes over the commercial banking reins just as New England institutions are showing about 10% to 12% annual growth in commercial lending. He had been senior vice president in charge of the corporate banking division.

Outstanding loans at State Street jumped to $1.6 billion by the end of 1994, 10% more than the year before, Mr. Reghitto said.

The regional economy is improving enough for companies to want loans, but it is not a climate that fosters start-up companies. That means more banks are fighting over the same companies, and competition on pricing and credit policies is heating up.

"Given the environment, I think, if we grew 10% net this year, that would mean a couple hundred thousand (dollars). I would be pleased," he said.

Mr. Reghitto, who grew up in Cambridge, Mass., began his career at State Street in 1969 as a credit trainee. In his new post, he will be responsible for 280 employees in commercial lending, asset-based finance, real estate, and specialized lending.

The communications industry has been an important business in Boston, and that will continue to be where State Street sees potential for loan growth. Mr. Reghitto said popular businesses include cable television, cellular telephone companies, and small newspaper and magazine publishing houses.

Jacquelyn A. Chermesino will replace Mr. Reghitto as senior vice president in charge of the corporate banking division.

David Gaffney was named senior vice president and head of the specialized lending division. Both Mr. Gaffney and Ms. Chermesino will report to Mr. Reghitto.

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