Victor A. Riley Jr., president and chief executive officer of KeyCorp, is often asked why the company purchased Commercial Security Bank in late 1987 in Utah and came west to make other acquisitions.

Although Utah hasn't been No. 1 on the economic hit parade, Riley said he tells people it's primarily because of the location and secondarily because of the economy and the state's potential for growth. He spoke to several dozen guests in the Red Lion Hotel Friday during an informational meeting."We entered Utah as someone enters a large building. We are getting on the elevator for a ride all the way to the top," Riley said, referring to his expectations that Utah's economy will rise. He said the Northwest and the Mountain West area will enjoy unprecedented prosperity in the next few years.

Riley said overbuilding of houses, condominiums and strip malls in the Northeast have put banks in financial difficulty but stressed that KeyCorp wasn't one of them. He said many banks are over-committed in extending credit.

Riley said the country's savings and loan problem began to surface five years ago, but when bankers tried to alert the public about the problem in the news media it was called sour grapes because of the competition between banks and savings and loans.

He said credit unions have much the same approach to lending as the savings and loans so they must be careful in their operations.

Another speaker was Peter A. Farrell, executive vice president of Key Trust Co. and KeyCorp's chief economist, who said figures released in January indicate that inflation is increasing. "It is risky to apply one month's figures for the entire year," he said.

Farrell said automobile sales so far in 1989 have been sluggish, leaving auto makers with large inventories that will prompt reduced prices. He said housing costs haven't gone up in the past year, which seems to indicate there will not be a big inflationary increase.

Farrell said that based on information provided by purchasing agents, the prices of many items are slowing down. He said the Federal Reserve Board has taken several actions to ensure that inflation doesn't get out of hand.

Jeff Thredgold, a KeyBank vice president and staff economist, outlined 14 myths perpetuated by the news media about the American economy that more or less spell doom in coming months.

One of those myths deals with the federal budget deficit being out of control. Thredgold said that five years ago Office of Management and Budget officials predicted the 1989 deficit would be $300 billion annually. This year it's only $130 billion.

There is a myth that the Social Security system is broke, Thredgold said. In reality, if Congress would leave the system alone, it would grow at the rate of $76,000 per minute, an indication the system is healthy.