Bank credit analysts in the Southeast, like others around the country, are bracing for the end of good times - what one banker here called "the best I can remember."

But while they see problems looming in their portfolios, lenders do not expect conditions to deteriorate to the depths experienced in the 1990-91 recession, when real estate losses savaged bank profits.

Nor does the Federal Reserve's latest Beige Book survey see major hazards ahead. Loan demand is still rising in most of the country, it said in its summary of economic conditions, though at a moderating pace. (See page 3.)

James R. Lientz Jr., president of NationsBank of Georgia, sounded a good news-bad news theme last week at the Southeast Bank Lending Conference, sponsored by the Philadelphia-based commercial lending trade group Robert Morris Associates.

Mr. Lientz said the last five years of economic expansion had brought "extraordinarily positive days" to the banking industry, reflected in many companies' record profits, strong balance sheets, abundant capital, and superior credit quality.

But the Georgia banker went on to say the seeds of future trouble are being sown.

"The problem loans of the next down cycle are going to be made this year," he warned, often by young lenders who have yet to experience a major recession.

"They don't believe how bad it can be when we tell them," said Mr. Lientz, a 27-year industry veteran.

Robert Morris Associates chairman Thomas F. Ripke saw competitive pressures undermining credit standards. He said favorable Libor pricing - interest rates benchmarked to the London interbank offered rate - is no longer available only to the most creditworthy large corporations. It has become prevalent even on middle-market and below-middle-market loans.

"Pricing is as low and as fierce as I've ever seen it," said Mr. Ripke, who is executive vice president and chief credit administrator at West One Bank, Boise, Idaho. "Customer loyalty seems to be at an all-time low."

Lenders are also lengthening maturities on loans, reducing covenants, and generally offering more liberal terms, according to Mr. Ripke.

Much of the concern expressed at the conference focused on consumer lending. Eric Stone, executive vice president of credit policy at Wachovia Bank of Georgia, observed: "Consumer lending, and in particular the credit card, is where a lot of the money has gone this time around."

He noted: "The debt load is now in excess of 16% of personal income and rising. That is where it was just before the last downturn in 1990 and 1991."

The imbalance, Mr. Stone said, is reflected in rising consumer chargeoffs, particularly in credit cards.

"We're seeing deterioration in some relatively good times, which to me does not augur well for what is going to happen when that next downturn comes," he said.

Contradicting the conventional wisdom that bankers learned important lessons from the last real estate debacle, Amsouth Bancorp. senior vice president Sloan Gibson said commercial real estate could become a problem again.

"On general economic weakness, we will see greater weakness in the retail segment of commercial real estate than other segments," Mr. Gibson said. He particularly cited shopping centers.

The fact that federal regulators were attending the one-day conference occasioned a few moments of comic relief. Mr. Gibson, when he took the podium, commented on "being able to look right at eye level" at the examiners in charge of going through the books of his own company.

"I've been busily rewriting my remarks to conserve about 30 seconds worth of material," he said, provoking general laughter.

But the regulators said their agencies are currently focused more on legal and administrative issues than on safety and soundness.

"Even in terms of credit card lending, where everybody is concerned about the numbers, the systems that are involved with those functions have improved and the quality of the internal controls has improved," said Donald G. Coonley, deputy comptroller in Atlanta of the Office of the Comptroller of the Currency.

"We feel pretty good that things at least are under control," he said.

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