As business lending slid, some bucked trend.

Though bank lending to businesses fell last year, a handful of large banks expanded their portfolios by double-digit percentages, according to an American Banker survey.

How did these banks buck a mostly recession-induced drop in corporate loan demand?

At Wachovia Bank of Georgia, a 12.44% rise in outstanding commercial and industrial loans was generated internally.

"We're just kind of pressing on with the customers we have and trying to expand our base a little bit," said Keith Lawder, senior vice president for corporate loan administration at the Atlanta-based unit of Wachovia Corp., Winston-Salem, N.C.

Mr. Lawder also sounded fairly upbeat about the present environment.

"We are optimistic that we will continue to have some above-average growth" in business loans, he said.

In central Florida, Orlando-based SunBank is focusing on niche lending to bolster its business-loan portfolio, which rose 10.9% last year to $952 million.

"This year, we've got double-digit growth continuing," said Jack Prevost, executive vice president for commercial lending.

SunBank, a unit of Atlanta-based SunTrust Banks Inc., concentrates on areas that other banks tend to avoid, such as lending to municipalities.

Still, the growth in the bank's business loan portfolio has not come easily.

"It's been a struggle," Mr. Prevost acknowledged.

Majority Show Declines

Whatever the method, these banks stand in stark contrast to the vast majority of the nation's top 100 business lenders. (See tables beginning on page 8.)

Just seven of the top 100 banks in business lending registered double-digit increases in outstanding commercial and industrial loans last year, according to data comiled for American Banker's annual survey. That compares to 38 banks that recorded double-digit decreases.

The total amount of business loans held by the top 100 banks fell 7.22% last year to $364.44 billion, from $392.82 billion as of Dec. 31, 1990.

For all banks, outstanding business loans fell an even steeper 9.18% to $558.96 billion, from $615.44 billion a yearend 1990. (See tables beginning on page 8.)

Shift for Japanese Bank

In New York, Bank of Tokyo Trust Co. continued to expand its base of U.S. corporate customers last year, increasing its loan portfolio by 10.8% to $2.9 billion.

Hiroshi Akiyama, a vice president in the bank's planning department, said the reluctance of U.S. banks to make loans meant more business for Bank of Tokyo Trust.

This year, though, the tables have turned on Japanese banks, whose capital levels are being eroded by the plunge in the Japanese stock market.

"Tokyo is more strict than before in asking subsidiaries worldwide to control assets," said Mr. Akiyama, referring to Bank of Tokyo's head office. "I'm afraid we cannot expand so much this year," he added.

Little Pickup in Demand

So far this year, the sluggish economic recovery has failed to produce a broad pickup in business-loan demand, though scattered anecdotal evidence suggests a modest uptick could materialize.

John Mitchell, president of First Union National Bank of Florida in Jacksonville, said his bank has had six consecutive weeks of growth in its business portfolio, marking the first sustained increase in 18 months.

Last year, First Union had a whopping 39% increase in outstanding business loans, but that came about mainly through acquisitions. The bank is a unit of First Union Corp., Charlotte, N.C.

The rise in First Union's portfolio resulted largely from its federally assisted takeover of Miami-based Southeast Banking Corp. in September.

Absent the Southeast deal and other acquisitions, First Union's business loans probably would not have registered any increase in 1991.

"Realistically, we probably were about flat, discounting acquisition activity," Mr. Mitchell said.

A Glitch in Reporting

Similarly, First Tennessee Bank in Memphis built its portfolio by 15.6%, to $1.34 billion, through the acquisition of Valley Fidelity Bank of Knoxville in September.

One of the big gainers in 1991, IBJ Schroder Bank and Trust Co. in New York, was a special case.

Last year, the bank's business loans rose by 22.4% to $1.24 billion. But business loans fell back to $1.13 billion as of the end of the first quarter of 1992.

"We've had some fairly large loans paid back," said an official in the bank's financial control area.

Moreover, the increase was really artificial.

Based on a misreading of instructions from the Federal Reserve, IBJ removed $183 million of loans for highly leveraged transactions from its commercial and industrial loans in 1990. The HLTs were put in another category called "other loans."

Following a regulatory exam last year, the Fed told the bank to put the HLT loans back in the C&I category, resulting in the big increase.

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