LA QUINTA, Calif. - Bankers from California and Texas say they are prepared to weather an economic slowdown if one hits their region - but the wolf is not at the door just yet.

At a conference here sponsored by the New York research firm Sandler O'Neill & Partners, officials from Californian thrifts and Texas banks cited strong loan growth, good asset quality - and little pressure from legislators.

Some said that, having learned some lessons, they have put measures in place to deal with a recession, should it occur.

Banks are taking on less risk, said Simone Lagomarsino, president and chief executive officer of Hawthorne Financial Corp. in El Segundo, Calif. They have cut their underwriting risks, created more conservative lending criteria, and diversified their loan portfolios, Ms. Lagomarsino said.

She added that she did not expect any long-term effects from California's ongoing utility crisis.

Frederic McGill, president and CEO of Quaker City Bancorp in Whittier, Calif., said his company has focused on smaller loans and has made cash flow a high priority. "In the late 1980s people ignored fundamentals," he remarked.

As for Texas, "We have more than energy here now," said J. Downey Bridgwater president of Sterling Bank in Houston. "We have distribution, medical, and construction."

Recent loan demand seems to suggest little reason to worry, bankers said. Loans on Sterling's books grew by 14% last year, and Mr. Bridgwater predicted double digits this year too, despite a slowdown during the first quarter.

"We have not seen an overall deterioration," he said.

Bob Scott, executive vice president and chief operating officer of Summit Bancshares in Fort Worth, said demand should remain strong, though loans are unlikely to grow at last year's 18% to 20%.

The expectation of healthy demand may make acquisitions expensive. Mr. Bridgwater, who has been in several recent negotiations, said seller expectations were simply too high.

Nevertheless, bankers said they expect more merger and acquisition opportunities to appear. "More banks than ever are calling us to merge," said David Zalman, director of Prosperity Bancshares in Houston.

Mr. Scott of Summit said that prices would have to come down but that he would continue to look for deals.

Zions Bancorp. of Salt Lake City is one western bank with its eye on acquisitions. "We are clearly back in the game," said CEO Dale Gibbons.

He considers California the best growth market and said that the company is eager to expand its market share in all "rapidly growing" areas.

Though Zions stumbled last year in trying to take over First Security - Wells Fargo & Co. got it - Mr. Gibbons said his company has "successful acquisition track record" and would consider opportunities that would not dilute earnings growth.

Zions operates geographically, not functionally, he noted, keeping subsidiaries independent rather than merging them into one franchise with a set of product lines.

California accounts for 34% of Zions' loans and 27% of its deposits, followed by Utah and Idaho. The company does not operate in Texas, but the state might well appear on Mr. Gibbons' radar screen because of its strong population and economic growth.

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