Every day is Mardi Gras for Louisiana lenders.

Riding a wave of economic prosperity thanks in part to a revitalized oil market, companies like Hibernia Corp., First Commerce Corp., and Whitney Holding Corp. are enjoying a surge of commercial loan demand.

But like the visitors that flood New Orleans every February for Mardi Gras, big-name out-of-state banking companies are beating a path to Louisiana, forcing a banking battle in the bayou.

"The competition for rates and terms is fierce," said Peter K. Gwaltney, chief operating officer of the Louisiana Bankers Association. "The borrower is in a very good position. It's a sign of the strength of the economy. A borrower can stand back and choose the lenders he wants."

At Hibernia, which has about $9.3 billion of assets, commercial loans grew 34%, to $2.6 billion, in the second quarter, pushing total loan growth up 26%.

First Commerce, also with $9.3 billion of assets, reported commercial loan growth of 29%, to $2.7 billion.

At $3.8 billion-asset Whitney, commercial loans were up 32%.

Grabbing a piece of the action are an increasing number of out-of-state lenders, including Columbus, Ohio-based Banc One Corp.; Charlotte, N.C.- based NationsBank Corp.; and more recently First Union Corp., also of Charlotte.

These banks have stepped up their efforts in Louisiana - and in New Orleans in particular - in an effort to take advantage of the economic resurgence.

Banc One bought its way into the market 18 months ago with the acquisition of $5.5 billion-asset Premier Bancorp of Baton Rouge. NationsBank opened a loan production office in New Orleans last December. And First Union, though still without a location in the state, is trying to make its presence felt in commercial lending.

"Louisiana is a market we are targeting aggressively," said Mark Stubblefield, a senior vice president in First Union's corporate banking group.

Mike Sonnier, who runs NationsBank's New Orleans loan production office, said his company initially tried to serve the market from Austin, Tex., but the competition and volume of business necessitated a physical presence.

"I couldn't have timed the opening of this office better," he said. "The economy is booming."

Of course, competition has its downside: Margins are being squeezed, and terms are being stretched to their limits.

"Everybody keeps running into each other on deals," said Omer Davis, executive vice president/commercial lending for Banc One in New Orleans.

"You'd think with more volume we'd be able to pick and choose the deals. But that is not the case."

Moreover, longstanding client relationships mean little with so many lenders vying for a piece of the pie.

"Nothing is safe," said Mr. Sonnier.

But the commercial loan growth driving the competition is a welcome relief to Louisiana bankers who watched quality credits go belly up in the 1980s oil bust.

Kenneth A. Lawder Jr., executive vice president/commercial banking at Whitney, said the resurgence in the market is made more dramatic because the market downturn hit so hard.

"In the early 1990s there was not a whole lot going on. That was back when they were calling the Gulf the Dead Sea," said Mr. Lawder. "It's gone from people saying no one will ever drill another well to some legitimate, strong activity going on."

He and other bankers attribute the growth to many factors. The energy business is back on track, drilling deep into the Gulf of Mexico. Oil and gas extraction created 3,400 new jobs within the last year, leading to a flood of business for ship- and barge-building firms as well as the fabricating companies that make drilling towers and platforms.

Indeed, the Port of New Orleans recently completed a $215 million upgrade and renovation, the largest capital improvement project at a port in U.S. history. Another $200 million is being invested in the port's expansion.

The chemical and construction industries are also fueling growth.

To accommodate the burgeoning commercial activity, New Orleans is undertaking a $247 million expansion of its convention center, which would make it the one of the largest such facilities in the nation. The lodging industry is also on a tear. New Orleans now has 16 hotels under construction.

"The state is doing very well," said Loren Scott, a professor of Economics at Louisiana State University, Baton Rouge. "It's just a nice time to be a banker in Louisiana."

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