Texan C. Jack Bean had no model for turning a family-owned loan company with oddball products into a community bank. So he whipped one up himself.

And in the process, Mr. Bean wrote a recipe more small banks must follow if they want to flourish - a concoction of niches, aggressiveness, and salesmanship to create a community bank that is unique.

The result is Surety Capital Corp., a $103 million-asset holding company in the tiny town of Hurst, Tex. Surety's business lines are a mixture of insurance premium financing, medical receivables factoring, used car lending, and old-fashioned community banking products.

"I'm always skeptical when I see something that's too good to be true," said Steve Didion, a bank analyst at Hoefer & Arnett in San Francisco. "But I've looked this bank up and down, and I find no fault with the strategy."

Mr. Bean, a brawny, white-haired Texan with a booming voice and an incongruous affection for Woody Allen movies, says he's got his loan machine humming. All he needs are banks with deposits, and he's willing to pay cash for them.

"We are not lucky," he said. "We know our strategy works. God help a community bank that doesn't have a niche - something, anything, that they can do better than the competition."

The business started with Mr. Bean's father, cashier at a rural electric cooperative in the '20s and '30s. During the Depression, customers often couldn't pay their electricity bills. Times being what they were, the elder Mr. Bean just started lending money to them.

"Before he knew it, he had a loan company," his son said. The company developed a specialty in used car loans. "At that time, bankers thought he was crazy for lending money on a used car."

The younger Mr. Bean held onto the old loan company charter, which was grandfathered in after a Texas law later barred such companies from doing certain types of business in the state.

In the 1980s, he went into the banking business as chairman of a troubled rural Texas bank. After selling the bank in 1988, he revived his father's loan company and started making used car loans again, adding a specialty in insurance premium financing.

Problem was, the Texas banks he borrowed from to fund the business kept failing, "like a bunch of dominoes," Mr. Bean said.

So in 1990, after a dozen applications to the Office of the Comptroller of the Currency had been rejected, Mr. Bean's loan company bought a near- dead, $11 million-asset bank in Lufkin.

"The Comptroller was scared to death of us, like the sky was going to fall in on them or something," he recalled. "They came in and investigated the hell out of us until they finally figured out we had a good thing going here."

In five months, Surety Bank was in the black. In five years, its assets had grown more than ninefold. With the help of a Bean-designed, computer- aided loan servicing system for its insurance premium financing - and 400 independent insurance agents on board in 32 states - Surety was able to book loans as fast as it could get deposits.

Still in start-up mode, Surety has booked profits that have been up and down but respectable. In the second quarter, its annualized return on assets reached 0.7% on a 100% increase in earnings compared with the same 1994 quarter.

In the last four years, its net chargeoffs have averaged only 1% of total loans.

Since 1992, Surety has bought three banks and a few branches. Mr. Bean's strategy is to buy small-town Texas banks with about a 40% loan-to-deposit ratio. He then bulks up their community lending and plows the balance of the deposits into his company's specialty businesses.

"The only risk I see in their business is if an insurer goes bankrupt," said Mr. Didion, the Hoefer & Arnett analyst. "The only other risk they have is if they can't buy enough banks to reach the size they want."

Mr. Bean wants Surety to be a $500 million company.

"When we reach that point," he said, "there's no reason on God's green earth why we shouldn't be the most profitable bank in the United States."

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