In April, Citicorp's senior retail executive, James L. Bailey, gave the banking industry a Paul Revere-type warning about the threat posed by nonbank credit cards.

The annual American Banker survey of the top card issuers shows he had good reason to speak up.

For the 12 months through March 31, 13 issuers owned by nonbanks ranked among the top 50 banks in credit card lending, and their portfolios grew almost four times as fast as those of the 37 banks and thrifts. (See tables on pages 20 and 21.)

Gaining Market Share

The nonbank entities boosted their share of the market by 380 basis points, to 20.5% of all revolving credit outstanding in the country.

As of March 31, the largest of the diversified nonbank companies in the card business was Sears, Roebuck and Co. Its credit card portfolio soared 48% to $15.2 billion on March 31, nudging Chase Manhattan Corp. out of second place.

Citi's Strategy

Included in the Sears total were businesses that have since been spun off to Dean Witter, Discover & Co., including the Discover card and some private-label credit programs.

The largest of all card issuers, Citicorp, responded to the charge of the nonbanks by committing itself to a segmentation strategy that included the co-branded Ford Motor Co. Visa card. Its outstandings grew $405 million to $36.8 billion.

For the first time, American Banker has a two-year comparison of the total credit card portfolios - loans on the books plus securitizations - of the top companies in bank card lending.

Prior to last year, data on securitized loans outstanding at commercial banks were not available. In addition, the survey has been expanded to include the top 50 companies issuing cards through banks, compared with previous surveys that identified only the top 25.

The top 50, which include commercial banking companies, savings institutions, credit unions, and diversified companies, hold almost three quarters of the nation's revolving credit, while the top 25 hold about 65%.

Outstandings of the top 50 rose $22.6 billion, to $190.2 billion. The 13.5% rate substantially outpaced that of the revolving credit industry as a whole.

Concentration Rises

According to the Federal Reserve Board, total revolving debt outstanding rose only 6.3% over the year ended March 3 1, to $257.5 billion. The stronger growth at the top 50 enabled them to increase their share of the credit card market by 470 basis points, to 73.9%.

The card portfolios of the 13 nonbanks soared 30%, to $52.8 billion, and accounted for 54% of the gain for the entire top 50. The card portfolios of the top 37 banks and thrifts rose 8.1%, to $137.5 billion.

Meanwhile, chargeoffs at the top 50 were down 11% in the first quarter of 1993, compared with the first quarter of 1992, to $1.28 billion. The banks in the top 50 did better than the nonbanks, charging off card loans at an annualized rate of 4.06% in the first quarter, compared with 4.68% at the nonbanks.

"Nonbanks are continuing to play a role in the larger payment services business," said Robert Hammer, chairman and chief executive of R.K. Hammer Investment Bankers, Newberry Park, Calif.

He attributed the nonbank growth in outstandings to the steady acquisition of portfolios, and said the dip in chargeoffs reflects a commitment to business and an investment in technology, credit scoring, and bankruptcy protection.

Three nonbanks joined Sears in the top 10 in credit cards:

* Household International, Prospect Heights, I11. Its Household Bank unit issues the co-branded General Motors MasterCard. Household's portfolio tripled to $6.9 billion.

* American Express Travel Related Services Inc. Outstandings on its bank-issued Optima card dipped to $6.7 billion from $7.1 billion.

* American Telephone & Telegraph Co., whose portfolio grew $600 million to $6.6 billion. AT&T Universal Cards are issued by an affiliate of Synovus Financial Corp., Columbus, Ga., but the receivables get swept into an AT&T unit.

Dillard Department Stores Inc., The Limited Inc., and J.C. Penney Co. - national retailers that own banks issuing private label cards - each ranked in the top 50.

First of America Bank Corp. had the highest rate of credit card loan growth - 190.7%. The Kalamazoo, Mich., banking company acquired Security Bancorp, which had a bigger card portfolio than its own.

Household international was next in growth, at 137.1%. and Dillard third, at 127%.

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