Fannie Taps Lawrence Small Of Citicorp for No. 2 Post
Lawrence M. Small has resigned as vice chairman of Citicorp to become president and chief operating officer of the Federal National Mortgage Association, the mortgage agency said on Tuesday.
The departure of Mr. Small, a 27-year veteran of the nation's largest banking company, was not unexpected. Seventeen months ago, he was relegated to the largely ceremonial posts of vice chairman and chairman of the executive committee of the board of directors.
His move to Fannie Mae, however, raised some eyebrows since Mr. Small's expertise has long been as a corporate banker.
"His responsibilities have narrowed this past year, so I'm not surprised that he's leaving Citi," said Carole Berger, an analyst at C.J. Lawrence Inc. "He's taking a very important job at Fannie, but it is more limited. At Fannie, the chief operating officer's job is just that -- operations. He is not a strategist."
Fannie Mae, a thriving quasi-governmental agency, operates a secondary market for residential mortgages, buying loans from lenders, holding some in its portfolio, and reselling the rest as securities.
Will Become President
Mr. Small, 49, will join Fannie Sept. 3 as chief operating officer. He will assume the title of president Jan. 31, upon the retirement of Roger E. Birk.
Mr. Small said he is well qualified for the job, noting that in his long Citicorp career, he has been a chief data processing officer, a chief personnel officer, and run various marketing and operation functions.
His principal reason for leaving Citicorp, he said, is to find new challenges as he approaches his 50th birthday.
Looking to Make a Mark
"One's got to take a look at one's entire working life, and I have a desire to be as productive as I can be," the Bronx, N.Y.-born executive said in a telephone interview. "When I evaluated the continuation of my work at Citi versus the excitement of the opportunities in front of Fannie Mae, the job just can't be beat."
Mr. Small said he was contacted about two months ago by James Johnson, the recently installed chief executive of the Washington-based mortgage agency. The referral came from Eli Broad, a Fannie Mae board member who is a long-time friend of Mr. Small and whose company, Kaufman & Broad, is a Citicorp client.
At Citicorp, Mr. Small developed a reputation as a smart manager with a prickly personality. He presided over the corporate bank in North America from 1977 to 1985. John S. Reed, who had recently been appointed chairman, then promoted Mr. Small to sector executive in charge of all institutional banking.
As a member of Mr. Reed's inner circle, Mr. Small survived a number of reorganizations and turf battles between his group, which originated corporate loans, and Citicorp's investment banking group, which distributed them. But when Mr. Reed elevated consumer chief Richard Braddock to the long-vacant post of president 17 months ago, Mr. Small shed his line responsibilities.
As vice chairman, his chief function was described as "enhancing customer relations" with chief executives of major U.S. corporations.
A Citicorp spokeswoman said the bank has no plans to replace Mr. Small. Citicorp has one remaining vice chairman, Paul Collins, who is based in London where his chief focus is to help raise capital for Citi's depleted coffers.
Mr. Small, who has earned an average of $912,000 a year at Citicorp over the past three years, is expected to take some cut in pay, though not a substantial one. Mr. Birk earned $713,840 in 1990, while David O. Maxwell, who retired early this year as Fannie's chairman, made $1.23 million. Mr. Reed earned $1.2 million last year.
In addition to his annual compensation, Mr. Small at yearend held $1.8 million of restricted Citicorp stock granted as an incentive award over the past decade. He also collected $240,000 of dividends on the stock last year. However, he also holds almost 270,000 worthless stock options in Citicorp. They are exercisable at $21.47 cents a share, more than $5 over the price at which the shares trade the open market.
Analysts appeared to be split about Mr. Small's departure. The exit is "a visible reminder that there's housecleaning going on among senior executives as part of the cost-cutting throughout the whole organization," said one bank analyst who asked for anonymity.
Size of Company Emphasized
But thrift analysts said they were impressed by the status of Mr. Small's new post.
"Fannie Mae is the largest financial institution in the world," said Jonathan Gray, an analyst at Sanford C. Bernstein & Co. "It's twice the size of Citicorp with three times the earning power and three times the market capitalization."
Fannie Mae posted a $1.2 billion profit last year. Mr. Gray expects the agency to earn $1.4 billion this year and $1.6 billion next year.
The mortgage agency also announced Tuesday that it was apointing Franklin D. Raines to the new post of vice chairman. Mr. Raines, 42, is a municipal finance specialist at Lazard Freres & Co., where he has worked for the past 12 years.
PHOTO : Lawrence M. Small Will succeed Roger Birk
PHOTO : Roger E. Birk Retiring as president