If tighter credit standards and weakening loan demand recently reported by banks were a harbinger of recession, from lenders’ point of view this downturn continues to be a particularly selective one.

Amid the signs of slipping demand for commercial and real estate loans is plenty of anecdotal evidence that a falloff in business conditions is sparing many pockets of the country, and many bankers report good conditions for their lending operations.

Some of this evidence is in the Federal Reserve Board’s report, released last week, from its latest quarterly survey of senior loan officers at 57 large domestic banks and 24 U.S. branches of foreign banks. Included in the poll was a question meant to gauge how businesses were reacting to a general tightening of lending terms.

The findings: About half of the executives from domestic banks said demand for commercial and industrial loans from large and middle-market borrowers had declined during the quarter. About 30% said demand from smaller business customers, those with yearly sales of less than $50 million, had fallen.

Observers said these findings are not all that surprising.

“With the economic expansion in jeopardy for the first time in seven years, it is natural for any business to cover itself in the event the worst occurs,” said Carl L. Tannenbaum, chief economist for ABN Amro/LaSalle Bank.

But interviews with executives at banks of all sizes pointed to continued steady loan demand from their mainly middle-market, commercial borrowers. All the bankers interviewed for this article said they have been on the lookout for reduced growth and lighter borrowing by their business customers, but most said they have yet to experience an alarming falloff.

Take Hibernia National Bank, the flagship of $16.7 billion-asset Hibernia Corp., New Orleans. Randall E. Howard, chief commercial banking executive, said there has not been “a noticeable drop in demand” among the bank’s commercial borrowers, most of which have sales of more than $10 million.

“I’m seeing less volume, but I think that speaks a bit to a tightening of credit standards,” Mr. Howard said.

Likewise, at Southwest Bancorp of Texas, president and chief executive officer Paul Murphy says the Houston company’s loan demand has been steady.

Behind the two banks’ healthy demand for loans is the surge in energy prices, which for their local markets spells flush economic times. Hibernia’s borrowers in the oil/gas and related maritime industries have benefited from a boom in energy prices, which may be what is keeping loan requests up. Six months ago, Hibernia’s Mr. Howard said, “we thought we might have seen something more severe.”

In the last 30 to 60 days demand for credit facilities from commercial customers of $3.3 billion-asset Southwest has actually risen, as many local gas companies’ exploration budgets have expanded.

Obviously, for every booming energy company one can find flailing in areas such as manufacturing, retailing, technology, and telecommunications; the beleaguered movie theater industry is a good example now. Expansion plans in hard-hit segments probably will stay on hold for some time.

“Borrowing to fund mergers, plants, and equipment really requires some confidence that the economy is going to be strong for some time,” said James H. Chessen, chief economist at the American Bankers Association. “I don’t think loan demand in those sectors is going to pick up until there is strong evidence that the lull is over.”

Still, the energy sector isn’t the only one with positive signs. Mark Hershey, an executive vice president of middle-market commercial banking at $87 billion-asset HSBC Bank USA, said demand overall is up at the London company’s subsidiary without any help from good oil and gas prices and despite some slowdowns, notably among apparel and jewelry business clients that were hurt by sluggish Christmas sales.

“In the greater New York City area, we’ve seen demand for loans remain strong,” Mr. Hershey said.

Mark Howell, head of commercial banking for Wells Fargo & Co.’s Intermountain region, said Wells had lowered its expectations about six months ago in anticipation of a slowdown. Even so, he said, in Idaho and Utah — states he knows well from his time at First Security Corp. of Salt Lake City, which Wells bought last year — there’s still good growth.

“I think loan demand has still been steady, both with old customers and new business,” Mr. Howell said. “It’s not as hot as it was a few years ago, but business is still good — it definitely hasn’t dried up.”

The lending activity detailed in the Fed’s survey report is most apparent in large, syndicated credit facilities. It was this product, once embraced by many regional banks eager for revenue growth and looking to diversify their portfolios geographically, that has wounded Hibernia and many others over the last year, after they reported rising nonperforming loans in their syndicated portfolios.

Greg Belanger, executive vice president for Northern California middle-market lending at Comerica Inc. in San Jose, echoed other bankers in saying that loan demand had remained strong. But he said he has noticed a changing environment among larger credits.

“I do agree with the Fed’s survey that credit conditions have really tightened across the country,” Mr. Belanger said. In the syndicated market “there has been a dramatic increase in credit standards, and we see that every day.”

One result is the recent boom in junk-bond issuance, which shows that the biggest companies have opted for nonbank financing. Smaller companies, less able to tap capital markets, continue to reach out to banks for financing.

In its quarterly Trendsetter Barometer survey borrowing by 425 of what it considers the country’s fastest-growing product and services companies, PricewaterhouseCoopers found that 25% applied for new loans in the fourth quarter of 2000, the same as the year-earlier level.

Tracy Lefteroff, global managing partner in PricewaterhouseCoopers’ private equity and venture capital division, in San Jose, said the survey focuses on companies with revenues of less than $50 million. “Because large companies can access the debt markets, to get a profile of true bank borrowing you have to look at these kinds of companies,” she said.

The faster-growing companies surveyed by PricewaterhouseCoopers did show more concern about their expansion prospects than in previous surveys. Twenty-six percent of the CEOs said they were worried that a lack of capital for expansion would hinder their growth this year, against 20% in the poll a year earlier.

One interesting finding in the PricewaterhouseCoopers study suggested that much of the Fed’s first 50-basis-point rate cut probably helped banks more than borrowers. Banks had been discounting their loan pricing fairly aggressively in recent quarters, according to the study, and were likely to revert to a more traditional profit margin given the opportunity.

It’s still too early to know whether this downturn is the start of something more ominous to banks. But for now just about everyone agrees: While the lending environment bears little resemblance to the salad days of the late 1990s, it could be worse — much worse.

“We’re not talking about credit-crunch conditions a la 1991-92, when banks virtually closed their doors,” said Wayne M. Ayers, chief economist at FleetBoston Financial Corp. “Credit is still available, albeit with tighter conditions.”

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