Despite cleaner balance sheets and an economic recovery that looks robust compared with the pace in much of the nation, Texas bankers would be happier if they were making more loans.

"We're definitely coming out of the doldrums here in Texas," said Tom C. Frost, chairman of Cullen/Frost Bankers Inc. in San Antonio. "But we're coming out of it with a very low loan volume."

Like bankers everywhere, Texas executives complain that loan demand - despite record-low rates that should stimulate refinancings and a resurgent state economy - is only spotty.

"The demand is still not growing at the rate you'd expect at this point in the recovery," said Kevin Yeats, an economist at the Federal Reserve Bank of Dallas. "At least it's not declining."

Through the-first quarter, commercial banks in Texas reported $79.8 billion in loans and leases, up a slight $2.6 billion from yearend 1992. At the same time, the 1,051 banks in the state reported an average loan-to-deposit ratio of 53.14%, down from 54% a quarter earlier, according to Ferguson & Co.

Whether slack demand, tight-fisted lending policies or both are to blame for the stagnant numbers is hard to know. But bankers said they don't need hard data to figure that some of the problems come from unprecedented competition for loan business.

Wall Street continues to court good corporate credits, they said, while finance companies chase the home mortgage business and credit unions battle for the auto-loan customers.

At the same time, energy and real estate lending - the historical mainstays of Texas banks - never fully rebounded from the economic collapse of the 1980s that shuttered hundreds of banks and thrifts.

"Texas is viewed as terribly attractive by just about everyone lending money," said Robert E. Harris, president of the Texas Bankers Association.

Observers of the bank scene in the Lone Star State said progress is difficult to measure. That's because the state's biggest banks are owned by out-of-state giants who shift assets in and out of their Texas subsidiaries.

"In Texas, it's hard to tell what's really happening. There is a lot of shuffling of paper and the refinancings are driving that," said Frank Anderson, a bank analyst at Stephens Inc. in Little Rock, Ark. "Overall, the second quarter looked better than the first, but it was negligible."

Nevertheless, there is one constant in the Texas banking picture - strong profitability. With an average 1.99% return on assets in this year's first quarter, Texas banks are prospering at levels unseen since the years before the economic collapse.

Texas Commerce Bancshares, for example, had record pretax earnings of $68 million in the second quarter, 14% higher than its previous best quarter nine years ago - just before the economic crash.

John Adams, vice chairman of the Chemical Banking Corp. subsidiary, said the bank has had 20 consecutive quarters of decline in nonperforming assets. But he is nevertheless a bit gloomy about the loan side of his business.

"I think it's slightly greater than three or four years ago," he said. "But it's flat when you compare it to last year."

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