Dime Bancorp is one of the few large thrifts trying to break into small-business banking.

Last year Dime president and chief executive Lawrence J. Toal assembled a crew of 11 small-business sales officers to offer credit and deposit accounts as well as asset-based lending and equipment leasing. Expanded cash management accounts and a 24-hour telephone service center will soon be available to Dime's small-business customers.

Offering small-business banking "leverages our existing relationships with customers and uses our branch network," Mr. Toal said in an interview last week.

Small-business banking ranks with consumer lending and mortgages among the $20 billion-asset thrift's five key focuses.

Dime's small-business division generated enough revenue to offset start- up costs in 1997, Mr. Toal said, adding that he expects the department to have a 15% return on equity this year.

In 1996, Congress doubled the amount of commercial lending a thrift may do, to 20% of assets, provided that half is made up of small-business loans. By mid-1997 about 2.5% of Dime's assets, or $50 million, were in commercial loans, according to Sheshunoff Information Services. By comparison, commercial loans made up 6.7%, or $23.7 billion, of assets controlled by Chase Manhattan Corp., according to Sheshunoff.

Donald P. Schwartz, Dime's executive vice president and small-business manager, declined to say how many small-business loans the company had made. Its small-business deposits increased more than tenfold last year, he said, but he declined to give a total.

Until last year, most of what Dime had to offer small businesses was commercial checking designed for middle-market customers.

"The branches were turning away good customers," Mr. Schwartz said. "The branches were handling the customers' personal accounts and sending them down the street for their business needs."

Before joining Dime in October 1996, Mr. Schwartz spent 19 years with National Westminster, whose U.S. retail operations Fleet Financial Group bought that year. His last position with Natwest was as a senior vice president of the U.S. unit and division head of small business.

To start Dime's small-business division, Mr. Schwartz and a team of executives from the underwriting, operations, and marketing divisions studied the New York market and refined products that worked well at Natwest or Fleet.

For example, one of the first products Dime introduced was a $35,000 revolving credit line like one Natwest offered but $10,000 larger. Other services include retirement planning and a daily fax of account activity.

"We put everything in place before we went out after the businesses," Mr. Toal said.

Mr. Schwartz hired executives from National Westminster and small- business sales officers from Chase, PNC Corp., Citicorp, and Bank of New York Co. to start the thrift's small-division. He also recruited two Dime employees-a branch manager and mortgage broker-to the small-business division.

Attracting sales officers and new customers was made easier by a wave of mergers in 1995 and 1996, Mr. Schwartz said. "With all the consolidation that was going on, even the bankers who stayed with their banks were unhappy," he said. "It was a captive audience for me."

Many small-business customers followed when their bankers joined the thrift, Mr. Schwartz said. "Customers were ready to follow them, because those bankers knew and understood their businesses," he said.

Charlie Suh, the Dime mortgage broker who became a small-business sales officer, said he serves many of his former customers. They do not care whether their business loans come from a thrift, traditionally a mortgage lender, or a bank, he said.

"When the customers look at you, they don't see a mortgage banker or a business banker," Mr. Suh said. "They just see you as a banker."

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