Most bankers are on the defensive, but Kelly King laid down the lending gauntlet Friday — and the BB&T Corp. chief generally drew cheers.

BB&T slightly increased lending in the fourth quarter, particularly to commercial borrowers. It seemed to be trying to get the jump on regional competitors like SunTrust Banks Inc., which said Friday that its commercial lending fell 3% in the quarter.

"We've been very fortunate that our balance sheet has been strong, so we've been very offensive in the market," said King, BB&T's chairman and CEO. "We've had very good success building relationships with really good larger companies, where we were just never in consideration before."

King has the right idea, said Sterne Agee & Leach analyst Adam Barkstrom.

"Now is the time to lend," he said. "If you're going to make loans, right now you're going to get the best pricing and the most restrictive terms."

BB&T's strong balance sheet and earnings power allow it to be a more aggressive lender, Barkstrom said, and boosting loan growth in the current market should not be construed as recklessness.

Such talk is music to the ears of Washington policymakers eager to get more money to prospective borrowers, but many bankers have been much more cautious. After all, even companies like BB&T are still cleaning up their loan books; neither BB&T nor SunTrust had made as much progress as other regional companies that reported financial results last week.

James Wells 3rd, SunTrust's chairman and CEO, echoed the resigned tone of a lot of bankers when discussing the prospect for returning to normal lending patterns. "The beginning of the recovery is just that," he said during a conference call with analysts. "What we're seeing is that sustained economic weakness has reduced demand for loans."

BB&T executives argued, though, that avenues exist to expand lending without being irresponsible.

During a call with analysts, King said the $165.8 billion-asset Winston-Salem, N.C., company had gained clients without loosening standards. It is also using its newfound heft, he said, largely due to its government-aided takeover of Colonial Bank in August, to target more corporate clients.

Daryl Bible, BB&T's chief financial officer, said in an interview that loan growth would have been even stronger were it not for efforts to purge residential construction credits. "We've been strong in small-business and middle-market, and that continues to grow," he said. BB&T is avoiding heavy industry concentrations and continues to stick with core markets as it bulks up in corporate and commercial and industrial loans. "We have very strict underwriting standards," he said. "That hasn't changed."

Total loans at BB&T rose $41 million from the third quarter, to $95.6 billion, and commercial loans rose 0.5%, to $49.8 billion. SunTrust, which also reported quarterly results Friday, reduced total loans by 2.4% from the third quarter, including a 3% decline in its commercial portfolio.

SunTrust's drop in lending was even steeper in what the $174.1 billion-asset Atlanta company considers to be "high-quality" C&I loans, where lending fell 8% compared to a quarter earlier. The decline was largely due to low credit line use among midsize and corporate borrowers, Chief Financial Officer Mark Chancy said, as clients had low capital needs and abundant access to debt markets.

Robert Patten, an analyst at Regions Financial Corp.'s Morgan Keegan & Co. Inc., said he believes BB&T's efforts are appropriately timed, based on his belief that other banks will be in a position to boost lending by midyear. As one of the few big regional banks no longer restrained by the Troubled Asset Relief Program — unlike SunTrust — BB&T has a chance to distance itself further from competitors.

"They are zeroing in on inward-focused banks," Patten said.

At BB&T, the main argument for caution remains credit quality, which continued to deteriorate in the fourth quarter. Net chargeoffs were up nearly 10%, to $488 million, and nonperforming assets rose 7% from a quarter earlier, to $4.23 billion. Foreclosed properties rose 9.4%, to $1.45 billion.

But analysts said that BB&T, which has remained profitable throughout the financial crisis, has the capital to take on a little more risk.

Craig Siegenthaler, an analyst at Credit Suisse, said many banking companies may look back with regret on missed opportunities.

"The big banks are trying to de-lever, and that's allowing BB&T" and others to gain corporate clients, he said. "When the regional banks want to turn it back on, the demand is probably there. … A lot of them will talk about how the quality borrower is still deleveraging, and that's true. C&I utilization rates are low. But you're also hearing about banks doing stupid things, ruining long-term relationships to support their balance sheet."

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