Banks in the Middle Atlantic region, if ever so gingerly, are starting to make more loans.

In the third quarter, loans at banks in the region followed by Wheat, First Securities Inc. in Richmond, Va., grew for the first time in nearly two years. The total for 30 banks rose to $266.8 billion from $265.3 billion on June 30.

The increase, though less than 1%, is a sign that consumers and bankers are growing more confident with the economy, according to bankers and industry observers.

"There has definitely been an uptick in the last three to four months," said Anthony Davis, a bank analyst with Wheat First. "I don't think there is any question that people are more optimistic."

Car Lending a Major Factor

Loans at First Virginia Banks Inc., a Falls Church-based company with $6.7 billion in assets, increased by $62 million in the latest quarter, to $3.7 billion. Loan growth is more accentuated in the year-to-year jump of 8% since Sept. 30, 1991.

Paul H. Geithner Jr., president and chief administrative officer, said increased demand for automobile and residential real estate loans is fueling the growth.

"There are more creditworthy people coming in," he said. "People feel more comfortable."

Loans at KeyCorp of Albany, N.Y., grew 8% in the quarter and 12% over 12 months to $16.4 billion.

MNC Has a Gain

Even ailing MNC Financial Inc. of Baltimore has $300 million in loans pending to medium-size businesses. That pipeline was dry last winter.

"It looks like the trend is breaking," said Frank P. Bramble, MNC president and chief executive. "We are getting enough new loan volume to almost offset our loans that are paying off. I think we may be a quarter away from real core loan growth."

In general, earnings for Middle Atlantic banks have bee bust. They were fueled by wide net interest margins, which have grown to 4.65% in the Wheat First Group, compared to 4.43%.

Return on assets averaged a strong 1.15%, up from 1.08% in June and 0.82% in the 1991 third quarter. Return on equity was up to 14.4% from 13.6% in June and 10.8% a year ago.

On a per-share basis, the banks earned 80 cents, up from 52 cents a year earlier.

Central Fidelity Banks Inc. of Richmond, Va., was one of several setting an earnings record, rising 33% from the 1991 figure to $20.7 million in the third quarter. The $8.3 billion-asset bank recorded $43.8 million in noninterest income in the third quarter, almost tripling the comparable $14.9 million in 1991.

The bank made $28.6 million from selling long-term mortgage-backed securites.

Wilmington Trust Corp., which has $4.2 billion in assets, earned $21 million in the quarter, up 7% from the level a year earlier.

"Our business is going to continue to grow," Leonard W. Quill, chairman and chief executive of the company, one of the industry's most profitable with an annualized 1.89% return on assets and 20.57% on equity.

Tougher Year Seen

Mr. Quill said 1993 was looking good as well, but he said it would be tougher to make money as margins shrink.

First Fidelity Bancorp. of Lawrenceville, N.J., with $28.9 billion in assets, continued to recover from its loan problems. It earned $82.3 million, compared with $55.3 million in the third quarter a year ago. The net interest margin grew to 4.73% from 4.29%.

"It s going to be extremely difficult for banks to duplicate their performance of 1992," said First Virginia's Mr. Geithner. whose bank earned a record $25.6 million, up 43%. "The margin expansion is close to its peak. By the middle of next year it will be on its way down."

Credit quality has continued to improve.

Crestar Financial Corp.'s nonperforming assets fell by nearly $50 million in the quarter to $266.1 million, or 3.94% of loans and foreclosed properties, from $416 million in nonperforming assets a year ago.

First Fidelity's nonperforming assets shrunk to $751.2 million, or 4.45% of total loans and foreclosures, from $971.8 million.

Meantime, MNC which has been reeling from bad loans since 1990, saw nonperforming loans and foreclosed properties fall by 33% to $1.2 billion.

Mr. Bramble said the bank would continue to shed bad loans, especially since more potential buyers are now inquiring about the troubled real estate. "God knows, it's been a long time since I've been able to say anything positive," Mr. Bramble said.

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