Financing child-care services offers banks the chance to serve their communities with safe and profitable loans.

First is the fact that the 30-year fixed rate mortgage, the highly profitable loan that is Fannie Mae's stock in trade, appears to be losing some appeal among homeowners.

It also narrowed NCNB's base of profitable loans to about $11 billion.

Loan departments are interested in expert systems for mortgages because of the growing cost of labor which makes the handling and acceptance of relatively small loans less profitable.

That is in addition to commitment and financing fees that make such loans quite profitable - if they get paid back.

Every new issue of bank stocks further destabilized them, since more of the capital was invested in maintaining the adjustment regime, instead of profitable loans.

Further, writing one jumbo loan has turned out to be many times as profitable as taking in dozens of smaller, conforming loans.

And until recently, it had a good record of making profitable loans.

"The principal reason we purchase an acquisition is to convert it to a more profitable loan," the memo stated.

But with that market shrinking, it had to stretch further and further to make profitable loans, often taking on greater risks.