Competitive loan pricing and a decline in loan delinquencieshave helped create more demand for commercial real estateloans.

According to the Federal Reserve Board's Beige Book released Wednesday, several of the districtsreported steady or slightly stronger loan demand.

Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City,Minneapolis, New York, Philadelphia, Richmond, Va., San Franciscoand St. Louis make up the Fed's12 districts.

Demand for commercial real estate loans was generally reportedto be stronger in the Atlanta District, according to the Fed.

Several bankers in the Richmond district said the volume ofsmall business loan applications was markedly higher with the bulkof demand coming from energy, healthcare and commercial real estate.

The New York district noted a decrease in spreads of loan ratesover the cost of funds, particularly for commercial mortgages.

A number of districts, including Cleveland, Atlanta, Chicago,Dallas, and San Francisco, said loan pricing remained quitecompetitive. Several districts noted increased demand for capitalspending loans.

The Fed said lending standards were relatively unchanged toslightly easier across districts and loan types. Most districtbanks said loan delinquencies continued to decline as creditquality remained solid and loan quality improved.

“Given the woes from the past couple of years, whetherintellectually or emotionally perceived, the reports should be seenas good news for the industry,” according to Brian Turner, director and chief strategist at CatalystStrategic Solutions, a subsidiary of Catalyst Corporate FederalCredit Union in Plano, Texas, in his latest analysis.

Second quarter data from the NCUA shows loan growth at anannualized pace of 0.4% so far this year as a 3.1% increase invehicle loans and a 1.5% increase in real estate loans were offsetby a 13.5% decline in unsecured credit cards, Turner said.

Still, weak consumer spending induced by job insecurity, fallingvalues and volatile stock market performance have all contributedto modest loan growth, Turner noted, adding nationally, this hassent consumer spending growth down to 1.4%.

Prepared at the Federal Reserve Bank of Dallas and based oninformation collected on or before May 25, the Beige Book containscurrent economic conditions by district through reports from bankand branch directors and interviews with key business contacts,economists, market experts, and other sources, according to theFed.