Bank United Corp. of Houston said it plans to make guaranteed rural development loans nationwide through a program sponsored by the U.S. Department of Agriculture.

Bank United, a $14.9 billion-asset thrift holding company, would make loans of up to $25 million for projects designed to revitalize communities with fewer than 50,000 people, such as manufacturing businesses or entertainment complexes. The USDA, under its business and industry guaranteed loan program, would back as much as 90% of each loan.

With this initiative, Bank United joins a cadre of lenders who are moving into the nascent but fast-growing market for federally backed rural development loans.

Since 1994 the USDA has guaranteed about $3.1 billion of these loans. Annual originations swelled from $250 million in 1994 to $1.18 billion last year, a spokesman for the USDA said. The program is authorized to guarantee up to $1 billion of loans per year.

Doug Harker, senior vice president and business banking director at Bank United, said the USDA program is underused and offered a niche opportunity similar to that offered by Small Business Administration-guaranteed loans. Bank United makes about $100 million of SBA-guaranteed loans annually, making it the leading SBA lender in Texas.

"We have the critical mass to offer this in all 50 states," Mr. Harker said. "We're planning on going out there and educating the marketplace."

So far Bank United has closed one $5 million development loan in Texas and has three other deals pending, in Georgia, South Carolina, and Tennessee.

The thrift plans to close $3 million to $5 million pf guaranteed loans per month, Mr. Harker said. The loans are popular with lenders because their terms may be spread over 30 years instead of the traditional 15, he said.

Bank United will face a handful of competitors that have already made inroads into the market for guaranteed business and industry loans. The top lender, B&I Lending LLC-a Georgia company specializing in the guaranteed loans-made $42.8 million of business and industry loans last year nationwide.

Other leaders include Hartford, Conn.-based First International Bancorp's First National Bank of New England, which made $36.6 million of guaranteed loans last year. (First International's banking assets have since been sold, however, to Hudson United Bancorp of Mahwah, N.J.) Bank of America Corp. made 11 guaranteed loans in 1998 that were valued at $34.5 million, according to the USDA.

Despite the program's surge in popularity and interest from lenders, Mr. Harker said, the loan guarantees are still relatively unknown among municipalities and economic development councils in rural areas. Bank United plans to change that by holding meetings to inform community groups about the program. In turn, the community groups would refer local developers to the thrift, Mr. Harker said.

Marni Pont O'Doherty, a bank analyst at Keefe, Bruyette & Woods Inc. in New York, said the push for business and industry loans would complement Bank United's other national lending niches, in mortgage banking and health-care finance.

"This is more of the same," she said. "They are leveraging their lending expertise."

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