UNB Corp. took a flier on the aircraft lending business three years ago when it bought Banc One Corp.’s $35 million aviation portfolio for an undisclosed sum — and it hasn’t looked back.

Since then, the Canton, Ohio, company has more than tripled its book of airplane loans, to $145 million by the end of 2000, establishing itself as one of the few community bank players in the $9.8 billion general aviation business. UNB’s earnings jumped 29% in 1999, the first full year of operations for its aircraft financing group. And though growth slowed in 2000 and its stock price still is not exactly robust, profits at the $1.1 billion-asset holding company for United National Bank and Trust Co. have topped $14 million two straight years, against $9 million in 1997.

Roger Mann, UNB’s chairman, chief executive officer, and president, said aircraft lending meshes nicely with his company’s strategy of serving midsize companies, a growing number of which are purchasing corporate aircraft. Corporate aviation is gaining acceptance at many companies — even small ones — said Shelly Simi, a spokeswoman with the General Aviation Manufacturers Association in Washington.

Its aerospace success has UNB eyeing other specialty businesses.

“Aircraft lending has been a real nice niche, but we’re looking for more,” Mr. Mann said, adding that his company is “in discussions” about acquiring a new business line. He would not elaborate, but Terry McEvoy, a research analyst at Tucker Anthony Sutro in Portland, Maine, said he expects UNB to announce a business-line addition in the next 12 months.

UNB makes loans to private pilots, firms seeking to buy a corporate jet, and small passenger services. The company entered the business a few years after airplane lending hit bottom, in 1994, when just 928 new planes were sold. But since that year the general aviation industry began a recovery that is expected to last into the next decade, Ms. Simi said.

Last year manufacturers sold 2,818 general aviation aircraft. And according to the Federal Aviation Administration, the size of the nation’s general aviation fleet will grow 10% between now and 2012, to 246,000 aircraft.

Mr. Mann became UNB’s chairman in May 1997 and previously worked at Banc One, the predecessor to Chicago’s Bank One Corp.

“I had no direct authority” for aircraft lending but I knew the sales staff, “and I knew they were successful,” he said.

And that success has continued at UNB, where, despite the slowing economy, the aircraft finance group continues to do a brisk business, Mr. Mann said.

“We’re seeing a little drop-off, but not as much as I thought we would, considering the economy,” he said. “We just haven’t seen a slowdown.”

Ms. Simi said the industry should weather anything short of a severe recession with relative ease, since most planes are ordered years in advance of their delivery.

And despite the downturn, the asset quality of UNB’s aircraft portfolio has not deteriorated. Last year chargeoffs equaled 0.17% of the portfolio, slightly less than the banking company’s overall chargeoff rate of 0.19%.

“They are definitely more conservative” in aircraft lending “than the others that are out there,” Mr. McEvoy said.

Aircraft loans make up about 17% of UNB’s $859.3 million portfolio. Though that share has been rising, Mr. McEvoy said the company probably will not let it surpass 20%.

Meanwhile, UNB’s stock price remains mired in the low teens and its trading volume rarely exceeds 12,000 shares.

Mr. McEvoy said that could change if UNB hits its growth target. It had 2000 earnings of $14.3 million, up 12.3% excluding one-time gains from the sale of securities, and projects a 2001 earnings increase of 9% to 11%.

“If they can achieve those results, it will definitely satisfy bank investors,” Mr. McEvoy said. “That is strong growth, particularly in this economy.”

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