Wells Fargo & Co.'s strategy to solicit loans nationally helped it edge past Bank of America Corp. for the top spot among small-business lenders on this year's American Banker survey.

San Francisco-based Wells Fargo, which is only one-third the asset size of Bank of America, held $9.883 billion in small-business loans on June 30. That was just enough to finish above Charlotte, N.C.-based Bank of America, which had a $9.866 billion portfolio. It's the first time since 1994 that $620 billion-asset Bank of America or NationsBank Corp., its predecessor, did not finish at the top of the list. The survey, based on data from Thomson Financial Sheshunoff Information Services, tracks commercial and industrial loans of less than $1 million. Nonbank lenders such as American Express Co. and Merrill Lynch & Co. are not included.

Charles Wendel, president of Financial Institutions Consulting in New York, said $207 billion-asset Wells Fargo has an advantage because it is one of the few banks that markets its products in areas where it has no branches. Fear of fraud keeps most institutions from lending to businesses outside their home areas, he said.

"Wells has been doing mailings for so long, they have made mistakes and have learned from them," said Mr. Wendel, who specializes in helping banks win small-business customers. "They are ahead of everyone else in terms of detecting fraud and figuring out what is a good loan to make."

Bank One Corp. in Chicago jumped two spots, to No. 3, followed by U.S. Bancorp. Minneapolis-based U.S. Bancorp, which finished 13th in 1997 and sixth in 1998, attributed its 45.9% portfolio gain from 1998 to 1999 to a credit-line product introduced last year.

All numbers are adjusted to reflect mergers.

First Union Corp. dropped from fourth place to eighth, as its portfolio fell 32%, to $2.9 billion. A spokeswoman said the 1998 number was artificially high because at that time First Union was reorganizing its loans as part of its merger with CoreStates Financial Corp. of Philadelphia. Indeed, First Union was ranked 10th in 1997.

New to the list this year is First Citizens Bancshares in Raleigh, N.C. The company's portfolio grew by 33% in the last 12 months, to $773 million, enough to finish 40th.

Small-business loans make up 90% of First Citizens' overall commercial and industrial portfolio, representing the highest concentration among the banks surveyed. James B. Hyler Jr., vice chairman of the $10 billion-asset banking company, said First Citizens decided a few years ago to push hard to gain small-business customers.

"North Carolina and Virginia do not have a lot of Fortune 500 businesses, so the competition for loans to them is intense," he said. "Small business is our entire focus on the commercial side, and I think we do it well."

For more information related to this article, see the following table in our Ranking the Banks section:Note: This link opens a new browser window

Top 50 Banking Companies in Small Business Lending at Midyear 1999 http://www.americanbanker.com/RankingBanksnet/1999/Holding/Top50BankSBQ299.html

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