Home Savings of America used its Sept. 23 purchase of 61 First Interstate branches to trigger a small-business lending frenzy.

Besides picking up $450 million in business deposits and $200 million in loans, the nation's largest thrift began peddling more than 40 small-business products it had built during the past four months.

The result: Last Monday, the first day the branches opened under the Home Savings logo, the $49.8 billion-asset thrift took in more than $600,000 in applications for business loans, its officials said.

This gives Home Savings executives reason to think that the thrift can claw a spot for itself in the competitive California small- business banking market, and diversify into lines of business more profitable than mortgages.

"We think that over the next five years we can bring $3 billion to $5 billion of assets under management," said Carl W. Forsythe, executive vice president and director of retail services for Home Savings, the principal subsidiary of H.F. Ahmanson & Co.

Home Savings will rely on several tools to reach this goal.

Besides the 550 branch employees the thrift picked up, it hired about 100 experienced staff - 90% of them from First Interstate - dedicated to small-business marketing, lending, cash management, and support.

"Home Savings is new to small business but the staff is not," said Susan G. Holt, a senior vice president and director of business banking. She said the average experience of the small-business personnel is 16 years.

Ms. Holt and Mr. Forsythe both come from Banc One Corp.

Although Home Savings will follow the latest direct marketing fads pioneered by large regional banks, it plans to focus on relationship banking, Mr. Forsythe said.

Relationship managers and branch personnel will fill that role. There are six relationship managers now, and that number will grow.

"Our differentiating point is that we will be relationship focused," Mr. Forsythe said.

Home Savings' next goal is for its 262 other California branches to start selling products, an effort that will begin Oct. 19, Ms. Holt said. Home Savings branches in Arizona, Florida, and Texas will join the small- business effort in the second quarter of 1997.

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