nation's largest bank holding companies have been making more small business loans, according to an annual American Banker survey. Such loans outstanding at the nation's 31 largest banking companies totaled $55.7 billion on June 30, nearly 10% more than a year earlier, the survey found. And the number of such loans - defined for survey purposes as commercial loans of $1 million or less - jumped nearly 17%, to 1.4 million. The survey is based on data supplied by Sheshunoff Information Services Inc. Charlotte, N.C.-based NationsBank Corp. ranked at the top of the list in terms of dollar volume for the second year in a row, followed by Keycorp, Cleveland; Banc One Corp., Columbus, Ohio; Minneapolis-based Norwest Corp.; and BankAmerica Corp., San Francisco. The ranking is identical to last year's except for a trading of positions between Keycorp and Banc One. "We appreciate being No. 1, but we can do better and we will do better," said Don Lecky, a senior vice president in NationsBank's business banking unit. "Our focus on this market has become even more intense over the past 12 to 18 months." NationsBank reported a huge jump - 119% - over a year earlier in the number of small business loans made, but the dollar outstandings remained flat. Mr. Lecky attributed this to a larger number of smaller loans within the small business category, combined with a natural runoff from the portfolio. One of the largest percentage surges in outstandings, 30.3%, came from San Francisco-based Wells Fargo & Co., which is often cited as an industry model for small-business banking. Wells Fargo, with $50 billion of assets, is the nation's 17th-largest bank holding company but the 11th-largest in small business lending. Senior vice president Lucy Reid attributed Wells Fargo's 1995 growth to a national marketing program that began in the first quarter. Using data base marketing and direct mail, Wells Fargo now makes small-business loans in all 50 states. "We're trying to take what we learned in California and apply it to the rest of the country and reach the businesses that other banks have just not been able to reach efficiently," Ms. Reid said, adding that the company has achieved its biggest gains in Florida. Ms. Reid said Wells Fargo has targeted the low end of the small-business market, with auto repair shops constituting one of its largest groups. "The average size line of credit for us is $20,000 and the average outstanding on those lines is about $10,000," she said. In the Midwest, Norwest is also making a strong push, posting a 15% increase in outstandings, to $3.1 billion. Michael R. McHugh, a senior vice president for Norwest Bank Minnesota, said the holding company's structure as an amalgamation of community banks promotes a small-business focus. "Most businesses in those towns are by nature small business, so it is a primary focus for lenders in those communities," Mr. McHugh said. In the Twin Cities area, for example, Norwest counts more than 70,000 small businesses with annual revenues under $1 million, he said. "We continue to focus on those small businesses as large corporate America continues to downsize," Mr. McHugh added. "Many of those people who lose their positions as layoffs occur start their own businesses in the retail and service industries." With small-business banking becoming a kind of fad in the industry - virtually every bank claims to be focusing on it - one might expect the increased competition to have a negative effect on pricing. But Mr. McHugh doesn't see that happening yet. "We find very little resistance to the interest rates we're charging," the Norwest banker said. "Business owners themselves are interested in the availability of credit much more than the price of credit. Mr. McHugh said Norwest expects its small-business outstandings to continue growing next year, even in the face of a possible economic slowdown. The key to growth, he said, is to sell business banking products to small-business owners who currently rely on their credit cards or home equity lines for financing. Ms. Reid, at Wells Fargo, also expressed optimism about the future due to her bank's strength in technology, particularly credit scoring and data base marketing. "We feel like we can maintain the current level of production, regardless of the economic environment, through innovation," she said. "I think we're more concerned at this point in time about competitors entering the market rather than the economy."

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