Anthony J. Feraro has a goal to reach before he retires in 10 years.

The senior vice president of Zions Bancorp.'s lead subsidiary says he is hell-bent on turning the Salt Lake City-based company's small-business finance unit into one of the top five Small Business Administration lenders in the country.

"We're here to set the world on fire," he said in a recent interview.

But it won't be an easy task. Money Store Inc. of Union, N.J., is in the top spot, a place it has held for 15 years, according to the SBA. Newcourt Credit Inc.'s recently acquired subsidiary, AT&T Capital Corp., holds the No. 2 spot, and Fuji Bank's Heller Capital Inc. is third. San Diego-based Bank of Commerce and Dallas-based Independence Funding Co. are numbers 4 and 5, and Zions is a distant 18.

Still, Mr. Feraro said he thinks 10 years is a reasonable time for the St. Louis-based unit to climb the rankings ladder. And he won't be forced into doing it any quicker than that, he said.

"Nobody is going to push me into moving up the time frame, because that's how people get into trouble, and I'm too old to get into trouble," he said.

Mr. Feraro, 50, founded ITT Corp.'s SBA lending division and built it into the nation's third-largest SBA lender before it was acquired by General Electric Capital Corp. in 1995. He then went to Zions to start its SBA division, and brought four of his top ITT officers with him. Because he was already living in St. Louis, Zions allowed him to base its small- business lending unit there.

Zions was one of the first banks to make SBA loans in areas where it had no branches. Similar to nonbanks, Zions securitizes half of its SBA loans. It also forms alliances with other banks, to lend to their customers.

The small-business lending unit is "not a major contributor to our earnings yet, but they are building up a significant business," said Harris H. Simmons, Zions' president and chief executive officer. "It's become a very competitive business."

In addition to Zions, BankAmerica Corp. and a handful of community banks, such as San Diego-based Bank of Commerce and Truckee, Calif.-based SierraWest Bancorp., also make SBA loans outside of their traditional branches.

In the last year, major regional banks such as KeyCorp and PNC Bank Corp. have increased their emphasis on SBA lending, while community banks and thrifts have also become more aggressive.

"There's no reason why more banks can't go nationwide, but most banks don't seem to have the expertise," said Eugene F. Clement, president and chief executive officer of First National Bank of Northwest Florida, an active SBA lender. "Zions has been acknowledged as one of the big lenders with a lot of expertise."

Zions has 17 small-business lending offices scattered across the West and Southeast. It has plans to gradually expand in the Midwest and Rocky Mountain states. So far, Mr. Feraro said Zions has no interest in the East Coast.

"A lot of lenders will go out and hire bodies and put them in offices," he said. "We don't want to hit the whole U.S. at one time. We want slow, methodical growth."

Just two years ago, Mr. Feraro's goals were even more ambitious. He had planned to have a lender active in each of the SBA's 69 districts around the country within 15 months.

But Mr. Feraro eventually backed off that idea, as he watched other lenders expand too quickly and grapple with increased delinquency problems. Zions now lends in 28 districts.

"We're focused on quality loans," Mr. Feraro explained.

Last year, the Zions unit lent $65 million through the SBA's 7(a) program, to finance major equipment purchases. That was up 38% from the $47 million in 7(a) loans that the Zions unit made in 1996.

The group also lent $123 million through the agency's 504 real estate financing program, up 35% from the $91 million in 504 loans of two years ago.

And it made $3.6 million in loans guaranteed by the Department of Agriculture's Business and Industrial Loan Guarantee program in 1997, the first year it offered such loans.

Zions Bancorp., with $9.5 billion of assets, also offers small-business insurance and leasing, and it makes conventional small-business loans through its bank branches.

In addition, its National Bank of Arizona subsidiary makes and processes its own SBA loans.

But the St. Louis-based division has been particularly successful at forming alliances to make SBA loans for other banks, Mr. Feraro said.

Last year, it went into business with California Federal Bank, which recently announced plans to merge with Glendale Federal Bank.

The unit also recently signed an alliance with the North American subsidiary of Deutsche Bank AG, to make real estate loans to operators of Brunswick Bowling Centers, a subsidiary of Lake Forest, Ill.-based Brunswick Corp.

These alliances are "a way for us to make more loans and expand our sales force without spending any money," said Scott Stapert, Zions' vice president of sales and marketing.

Mr. Feraro said Zions chooses not to compete for some loans, especially in highly competitive markets such as California, where other lenders are apt to lower interest rates to win customers.

"Too many lenders will forgo earnings for the sake of getting a deal, but we just won't take a loan like that," he said. "We're in this for the long term."

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