Business boomed in the fourth quarter.

Growth in commercial and industrial borrowing accelerated for the fourth consecutive period to a torrid 18% annual rate, rescuing bank loan volumes from an otherwise lackluster showing, according to preliminary data.

Total loan growth slowed 1.1 percentage points from the third quarter to a 3.5% annual pace, seasonally adjusted estimates published by the Federal Reserve indicate.

Commercial mortgages, which account for about one-fifth of loans, fell at a 1.5% annual rate to about $1.4 trillion, though that was slower than the roughly 5% to 9% rate of decline that had prevailed since the second quarter of 2009.

Meanwhile, growth in single-family home loans slowed by 2.8 percentage points to about a 1% annual rate.

The estimates are based on information provided by a sample of domestically chartered commercial banks calibrated to quarterly regulatory reports.

Businesses have set the pace for the recovery in borrowing as real estate markets continue to languish. At about $1.1 trillion at yearend, however, total commercial and industrial loans were still about 15% below their late-2008 peak.

Consumer borrowing remains constrained by the weakened state of household finances. Nevertheless, credit card debt posted a surprise jump late last year, and total consumer loans increased at a 4.1% annual rate in the fourth quarter, the Fed estimates indicate.

Most of the new business loan volume has gone to the nation’s 25 largest banks, which posted a 22% annual rate of increase in the fourth quarter, or more than twice the pace for the rest of the industry.

For the first time since total loans started growing again (excluding a spike in the first quarter of 2010 caused by the consolidation of about $350 billion of receivables under new accounting rules), however, smaller banks outperformed overall. Total loans at small banks grew at an annual rate of 4% in the fourth quarter, compared with 3.2% for the big banks. Small banks ratcheted up their holdings of single-family home loans, excluding home equity lines, at a 12% annual rate, while big banks slightly reduced their exposure to such assets.

Total assets at large and small banks fell as both groups reduced cash holdings.

Pressure to find places to put money to work eased as deposit growth at big banks fell to an annual rate of 6.5% in the fourth quarter from 19% to 27% in the second and third quarters. Small banks’ deposits actually fell at about a 1% rate in the fourth quarter after growth in the 9% to 12% range in the preceding two periods.

Banks large and small continued in the fourth quarter to rotate out of time deposits with balances of more than $100,000, which are considered relatively flighty, At year’s end, deposits excluding such accounts made up about 75% of liabilities at both groups.

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