Prosecutors in the conspiracy and bank fraud trial of former budget director Bert Lance in Atlanta moved yesterday to have one of their witnesses declared hostile to the government.

Justice Deapartment attorney Edwin Tomko made the motion after defense attorneys for Lance and three codefendants finished their cross-examination of Northwest Georgia Bank President Wesely Smith.

Smith, 34, was a vice president of the Ringgold, Ga., bank when Lance and codefendants Thomas Mitchell and Richard Carr bought a controlling interest in the bank in early 1973 and installed Carr as president.

For two days, Smith testified as a prosecution withness about a series of loans the bank made to Carr, Lance, Mitchell and a fourth codefendant, former Calhoun, Ga., pharmacist Jack Mullins.

In addition, Smith outlined the circumstances surrounding loans the bank made to four of Lance's inlaws and convicted embazzler Billy Lee Campbell, Lance's former banking protege.

According to Smith, some of the loans were written off as losses, and Lance was still trying to pay off the others only two weeks before his trial began here on Jan. 14.

Under direct examination by defense attorneys, however, Smith testified that the loans made good banking sense and expanded the bank's business in the small Ringgold community.