In the latest example of talent's flowing to smaller companies as the banking industry consolidates, former managers from NationsBank Corp. and Citicorp are adding muscle to a Rochester, N.Y., community bank's mortgage arm.

American Home Funding, a unit of Rochester Savings Bank, hired Jane D. Hoffman, a senior vice president at Citibank, to develop telemarketing and affinity lending programs.

The Richmond, Va., unit also brought in Jacqueline A. Dreyer as compliance officer. She had handled similar responsibilities at NationsBank.

American Home Funding chose executives from high-profile institutions, said Paul Reid, president, because "we're committed to broadening our reach and we wanted very experienced people."

The executives, along with new loan programs and technology, will help American Home increase originations by $500 million this year, to $2 billion, he said.

American Home is the latest lender to benefit from recent mergers and a general restlessness that have made managers from large banks available, industry observers said.

"There has been a wonderful flow of executives" in recent months, said Lisa Brandt, an executive recruiter at M.H. Springer & Associates, Woodland Hills, Calif.

Indeed, unrest at Fleet Mortgage Group prompted a number of executives to leave, and they have been hired by Dime Savings Bank of New York and Homeside Inc., among other lenders.

And mergers-like the pairing of Chase Manhattan Corp. and Chemical Banking Corp.-have pushed some experienced managers into the job market.

American Home Funding, primarily a retail lender, is using the newly acquired talent to expand into areas like wholesale lending, subprime loans, and telemarketing.

Mr. Reid, who last year was president of the Mortgage Bankers Association of America, said his tenure had put him in touch with lenders all over the country, prompting him to recognize that a broad lending approach is best.

Ms. Hoffman has taken a newly created post as vice president of direct consumer lending and will develop telephone-based programs and lending relationships with organizations.

The company has just spent $5 million on a front-end processing system and is outfitting its 180 loan officers with laptop computers to better automate lending.

"We're looking at 1997 as the year we put new businesses on our plate," Mr. Reid said.

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