The New York thrift company Dime Bancorp, which has been trying to reinvent itself as a commercial banking company, announced a three-year financial plan Tuesday that includes a shift away from writing residential loans.

Dime plans to increase its lending to the commercial real estate, consumer, and small-business sectors and make fewer residential loans.

In an interview Tuesday, chief executive officer Larry Toal said the shift will help Dime boost yields and increase profit margins over time.

Dime will target small and midsize business with sales of up to $50 million, Mr. Toal said. "We believe that this segment of the market is underserved," he said.

The $25.7 billion-asset company has set goals of increasing its percentage of nonresidential loans to between 65% and 70% of its portfolio within three years. Last year 51% of its loans were nonresidential.

Dime's reinvention process began in 1997 and has made some inroads, according to Mr. Toal. The company has broadened its product lines to include private banking, a proof of deposit system, TradeCard, which enables customers to complete international transactions over the Internet, and cash management system upgrades, which appeal to commercial customers.

While the thrift company will focus on changing the mix of loans and deposits, Mr. Toal was relatively cautious in his predictions for the loan business, which he said may produce "slow to modest growth."

In a written statement Tuesday, the company said it plans loan-loss reserves of between 1.2% and 1.3% for the next three years, and it wants annual earnings growth of between 11% and 14%. Last year it held reserves of 0.89%, and earnings increased 8.8% from the year before.

The company will report back to Wall Street each quarter on how well it is progressing, he said.

Dime is not the first thrift company to express interest in increasing its commercial and consumer loan profile to become more commercial bank-like.

Washington Mutual Inc. expects to close its $1.5 billion purchase of Bank United Corp. of Houston this quarter. The purchase would give Wamu a national Small Business Administration lending franchise and a growing middle-market commercial lending franchise.

Like Dime, Wamu is trying to become less mortgage oriented, and acquiring Bank United - whose balance sheet includes exposure to out-of-state commercial real estate loans - would bring it closer to that goal.

Last March, John Adam Kanas, chairman of North Fork Bancorp, said that he wanted to "dramatically grow" the Melville, N.Y., company's commercial banking business. After a short detour during which it launched a $1.89 billion Dime takeover bid that it abandoned in September, North Fork returned to focusing on building its commercial banking business.

Last week North Fork unveiled a $175 million deal for Commercial Bank of New York.

On Tuesday analysts said Dime's plan would not be easy to achieve. "It's certainly going to be a challenge" to reach the goals they have presented, said James M. Ackor, an analyst at Tucker Anthony Capital Markets.

Commercial and consumer lending comes with a higher profit because there is more risk involved, Mr. Ackor said. "It requires that much more vigilance to assure that asset quality is not sacrificed in the process. To achieve the numbers they have presented today will be challenging, but if they are successful," Dime's stock "will ultimately garner a higher" price/earnings "multiple in the process."

And while "to date, the company has done a very good job of gradually transforming its loan portfolio without lowering asset quality," Dime will have to be disciplined as it attacks its goals more aggressively, he said.

In targeting small and midsize businesses, Dime faces competition from large banking companies, including J.P. Morgan Chase & Co., Citigroup Inc., and FleetBoston Financial Corp., as well as from smaller concerns such as North Fork, Independence Community Bank Corp. of Brooklyn, and Roslyn Bancorp of New York, Mr. Ackor said.

Dime's success will depend on how it chooses to forgo lending opportunities that might lead to problem loans in the future, and how strictly it commits to high underwriting standards, he said.

"It really boils down to discipline."

Thomas F. Theurkauf of Keefe, Bruyette & Woods Inc. said his earnings projections for Dime already account for this strategy, and that though he thinks that it will be able to achieve its goals, he is expecting varying results from quarter to quarter.

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