Interest rates and an earthquake influenced shifts in market share in California for 1994.

In general, thrifts moved up in rank from 1993 levels because they were more successful with adjustable rate loans when interest rates went up.

Large lenders increased their combined market share, according to The Dataquick Report's ranking of California lenders.

"The top 10 lenders have 30% of the market," said John Karevoll, financial editor. The top 10 usually account for 20%, he said.

"With strong marketing and the market shrinking, smaller lenders are falling by the wayside," Mr. Karevoll said.

A strong presence in the California market, Countrywide Funding Corp. dropped in rank to fifth from third.

As part of a long-term marketing strategy, the lender is concentrating on markets outside California. In 1993, 40% of the branches were in California. Last year, only 30% to 35% of Countrywide's 335 branches were in California.

Expansions into markets with robust economies, such as Texas, Florida, Colorado, and Utah, are part of the current strategy, said Laura Lippman, first vice president.

"If the real estate market goes down the tubes in one geographical area, we don't want to go down with it," Ms. Lippman said. "Our goal is to originate in all 50 states."

Because of the popularity of ARMs, thrifts gained in the market where traditional mortgage companies could not compete, Mr. Karevoll said.

One lender that jumped significantly in rank was the U.S. Small Business Administration. It ranked 10th in 1994, up from 253d in 1993. Mr. Karevoll said the increase in business was attributed to the Northridge earthquake in January 1994, after which the SBA made large numbers of rehabilitation loans.

Some mortgage banks that were in the top 10 last year have dropped out. They include Directors Mortgage, which went from No. 5 to No. 11, and Plaza Funding, which fell from No. 9 to No. 23. Directors was acquired by Norwest last year, and Fleet Mortgage is completing a takeover of Plaza.

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