The total population of the two central Ohio towns in which Miami Valley Bank's branches lie is about 1,400, which by itself wouldn't make the bank a candidate for the fastest-growing, most profitable large community bank in the country.

Nevertheless, that's just what Miami Valley is. Using neither brokered deposits nor other borrowings, the Quincy, Ohio-based bank has grown 275% in the last three years. Meanwhile, it earned a 3.9% return on assets in 1993, making it the seventh-most-profitable community bank with assets of more than $50 million. It also reported a 53.4% return on equity and an 83% loan-to-deposit ratio.

Mortgage Niche

Miami Valley's success shows that a community bank need not be restricted by its locale. By developing a mortgage warehousing niche, the bank was able to both grow and build a war chest to diversify and strengthen traditional services.

"It's been a terrific niche for us," said Thomas J. Ossege, chief executive of the mortgage warehousing and servicing business that has fueled the bank's growth. "But we've also had real good growth in our traditional side. We've held our CDs to a pretty good rate because our earnings have been so good. It's been a super period for us."

In the 1980s, Miami Valley was a sleepy rural bank that got burned on farm loans. In 1986, a mortgage banker bought it and spent the next three years cleaning up its books.

In 1990, the bank had $19 million in assets; now, it has more than $71 million.

Its nearest competitor, in terms of internal growth, is Fidelity Bank, Fort Worth, Tex., which had a 183% three-year growth rate.

Plying the Market

Miami Valley has 100 employees who service about 30 small to midsize mortgage companies, temporarily funding the notes before they are sold in the secondary market. Its other significant operation is mortgage servicing.

Mr. Ossege said the bank has plans to expand commercial and industrial lending and revamp its computer system. But he said the bank probably won't sustain its growth in 1994.

"It will slow down on the warehousing side," he said. "But the servicing side will stay steady. If we pick up some more mortgage companies and invest in additional servicing, we could grow some. But there's not much possibility of the kind of substantial growth we've had in the past."

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