Southeastern banks have been booking more loans than their brethren in other regions, and the trend is expected to continue at least to yearend. Surprisingly, some of the strongest gains have been in Alabama, a state not normally known for go-go growth.

"We noticed a strengthening of the Alabama economy in the spring of 1992," said Robert P. Houston, executive vice president and controller of First Alabama Bancshares Inc. "And there's been modest growth since that time."

Lehman Brothers found that the nine southeastern banks it follows -- including three in Alabama -- posted a 3.2% median loan gain in the first quarter, while their competitors in other parts of the country were in stasis or losing ground.

The three Birmingham-based banks -- SouthTrust Corp., Amsouth Bancorp., and First Alabama -- have been among the strongest performers. First Alabama itself has experienced five consecutive quarters of loan growth.

Katherine R. Hensel, a Lehman Brothers analyst, said Alabama's traditional sleepiness has proved a virtue: It tends to avoid boom-and-bust cycles, and has therefore maintained stability in the current weak economy.

Alabama banks did not load up on speculative credits during the late 1980s and ave not suffering the heavy commercial real estate writedowns and writeoffs experienced by many East Coast banks, Ms. Hensel added.

The major customers of Alabama banks -- consumers and small businesses -- also have recovered from the recession faster than large companies.

"The growth in consumer and small-business loans has been there all along," Ms. Hensel said. "It's been masked at a lot of the East Coast banks, but unmasked at the Alabama banks."

Impact of Government Growth

However, the Federal Reserve Bank of Atlanta recently offered another explanation for Alabama's relative strength coming out of the 1990-91 recession.

State and local government employment grew at twice the national pace during the period, adding 15,000jobs, according to a Fed study. Alabama's lumber, food, and textile manufacturers also did well. The Fed warned that the gains are not sustainable, since government payrolls have probably peaked.

That's one reason, according to analysts, why Alabama banks have been moving aggressively into neighboring states such as Florida, Georgia, and Tennessee.

Indeed, First Alabama's loans surged 7.2% in the first quarter, with much of the pin attributed to recent acquisitions.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.