are now scrambling to ensure their customers will survive the date change as well. Nervous bankers are out in full force, educating customers about computer perils and quizzing them on their progress. "First and foremost, it's an awareness issue," said Margaret A. Torres, chief financial officer of $210 million-asset Antelope Valley Bank, Lancaster, Calif. "Other industries are way behind banks in preparing for this." Borrower risk is the second edge of the millennium-problem sword. Even if a bank gets by unscathed, it could face serious losses should an important client be driven out of business by technology glitches. The risk is greater for community banks, many of which lack people qualified to assess a business' exposure. And smaller institutions, which have fewer borrowers, would be harder hit if just a few key customers failed. "There is clearly a reason for concern," said Robert L. Levin, president of $55 million-asset Normandy Bank, St. Louis. "Many people still do not understand how far-reaching this problem could be." Year-2000 issues are "creating a new level to the relationship between banker and borrower," added Theodore A. Rosen, chief operating officer of Market Partners, a King of Prussia, Pa.-based technology consulting firm. "Banks are having to dig deeper into the businesses they lend to." Their concern is well founded. A survey conducted in May by Wells Fargo & Co. found that 75% of small-business owners were aware of year-2000 dangers, but only about 50% said they planned to act on these concerns before 2000. Regulators are prepared to help. The Federal Financial Institutions Examination Council is offering banks a questionnaire that assesses borrower risk. At the same time, trade groups are trying to promote awareness. The American Bankers Association is selling a video banks can use to educate customers. And the California Bankers Association persuaded the Los Angeles Times to write an editorial urging small businesses to address possible computer problems. With 2000 still more than 400 days away, bankers say they are not denying loans out of fear that customers are not year-2000 compliant. But they are not sitting still either. Representatives from $500 million-asset Adams County National Bank, Gettysburg, Pa., began meeting with borrowers about two months ago, with the Examination Council's questionnaire in hand. "We are making personal visits, making sure they are aware of the situation," said Ronald L. Hankey, president and chief executive officer. Banks are also examining their customers' collateral. After all, "a loan backed on real estate is very different than a loan backed on receivables if that business fails," said Jeffrey W. Leeds, chief lending officer at $345 million-asset Lawrence Savings Bank, North Andover, Mass. Mr. Levin of Normandy Bank said his customers appreciate the time the bank has spent working with them. "So much has been made of year-2000 that people are scared out of their wits hearing this stuff," he said. "They are looking for help understanding what will happen." But others say it has not been easy prying information out of their customers. Southwest Bank of Texas, for example, received very few responses to its initial survey of customer readiness. So the $2 billion-asset Houston-based bank hired a consulting firm to talk to borrowers. Dave Koto, executive vice president of Brintech Inc., a New Smyrna Beach, Fla., technology consulting firm, estimated that fewer than half of the small banks he has spoken to have discussed year-2000 concerns with their customers. With loan competition so heated, banks fear angering customers by probing too deeply, he said. And some businesses are still in denial. "There is still a lot of apathy in mom-and-pop businesses," he said. "They don't think they will have a problem and don't appreciate being asked. Banks only need to get shot down a couple of times to lose their incentive to keep calling." Britton & Koontz First National Bank, Natchez, Miss., has developed a form to certify that new borrowers are dealing with the year-2000 problem. But W. Page Ogden, president and chief executive officer of the $168 million-asset bank, said he is not yet requiring customers to sign the form, "out of concern for the backlash." The key is to ask in a way that is not intrusive. "We try to make them see we are looking out for them, making sure they have a healthy business," said C. Donald Allen, chairman and chief executive officer of $570 million-asset Cupertino (Calif.) National Bank and Trust. "People appreciate that."

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