The Road to Recovery : Survey Finds Some Industries Rolling Along but Others Are Stalled : BANKING

So you hear banking is in the doldrums? In San Jose, Pacific Western Bancshares had to hire five new officers last month--and wants to hire another four--to handle a surge of loan requests from small and medium-sized firms.

“It’s everyone from the corner barbershop to reasonably good-sized manufacturers,” said Phillip R. Boyce, chief executive.

Despite such anecdotes, the banking and thrift industries are expected to recover only slowly. Many institutions remain plagued by bad real estate loans, the legacy of a commercial construction frenzy in the 1980s.

Most of the major New York money center banks, such as Citicorp, Chemical Bank and Manufacturers Hanover, still struggle with real estate problems and also see a troubling increase in bad consumer loans. Major California thrifts, such as CalFed Inc., GlenFed Inc. and HomeFed Inc., also feel the real estate pinch.

In fact, federal regulators say some big thrifts and more than 300 banks could fail nationwide in the next two years.

Still, a number of banks report brisk demand for new commercial and home loans in an intriguing sign of rising public expectations for the economy. “I don’t look for a booming recovery, but I think the activity is solid,” said William S. Mortensen, chief executive of FirstFed Financial in Santa Monica, which foresees 30% to 40% growth in home loan business in the second half of the year.