The motto at National Bank of Indianapolis should be "bigger is better."

The start-up raised a hefty $14 million in initial capital and has amassed about $60 million of assets in its first 14 months of operation.

National, mining a small business lending niche that presented itself after Indianapolis' three largest banks were acquired by out-of-state regionals, is shooting for $100 million by yearend.

"I don't hear anything but favorable comments about what they've done," said Jeffrey L. Davis, an analyst with Indianapolis-based Raffensperger, Hughes & Co., which helped run National's private placement.

But John Reed, a consultant with David A. Noyes & Co., Indianapolis, cautioned against too-rapid expansion by start-up banks. "One hundred million (in assets), $200 million, $500 million doesn't mean anything if they're not making any money," he said.

National lost $1 million in the first nine months of 1994, but is operating at break-even level on a monthly basis, management said.

Start-ups typically don't make money until after about three years.

"Is being in the black more important, or is sustaining rapid growth more important?" asked president and chief executive Morris L. "Morrie" Maurer. "Growing our market share and our critical mass is more important right now."

But while National's rapid asset growth could raise eyebrows, management and observers said the bank has not sacrificed credit quality for growth.

"They're not going out and making bad loans just to get volume," Mr. Davis said.

In fact, the bank has no past-due loans, nonaccruals, or nonperforming loans, Mr. Maurer said.

Because the bank sought investors who also would be customers, management knows many loan applicants well, Mr. Davis said.

"We made a commitment right from the start that we were going to stick to high-quality credits," said Philip B. Roby, executive vice president and chief lending officer. Mr. Roby specialized in commercial lending in his 27 years at Indiana National Bank, whose holding company was acquired by NBD Bancorp in 1992.

He said National hired experienced in-market lenders to focus on its niches: businesses with annual sales of less than $30 million, affluent executives and professionals, and not-for-profit organizations.

Yearend loans were $32 million and deposits were $47 million, Mr. Maurer said.

Opening in downtown Indianapolis, National entered a dramatically changed banking market in a healthy economy.

Several large regionals from Ohio and Michigan have moved into town in recent years, leaving just one locally based independent bank and two savings banks besides National.

"We knew this marketplace was vibrant and capital accessible," Mr. Maurer said.

Mr. Maurer, his cousin, Indianapolis businessman Michael S. Maurer, and other organizers put up $5.5 million for the venture. They sold $7.5 million of stock in a private placement and raised an additional $1 million later.

"We found that there were only a small amount of de novos (nationwide) with capital in excess of $12 million and we would really distinguish ourselves," Mr. Maurer said.

National, which has about 35 employees, opens its second location this week and plans another by fall, he said.

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