Banks eager to deploy excess capital through acquisitions or loan growth continue to face two immense challenges: unrealistic price demands from sellers' and fierce competition for commercial loans.

Speaking at an investor conference in Boston Wednesday, CEOs of several regional banks said that competition for loans that first began to heat up last spring has intensified of late as banks continue to seek ways to grow revenues.

Dick Evans, the chairman and CEO at the $20.4 billion-asset Cullen/Frost Bankers Inc. in San Antonio, said that spreads are not as low as they were pre-recession, but have dipped in the last year as competition has heated up.

"The industry was just starting to get some sanity into pricing, and now it is starting to lose it again," Evans told analysts and investors at the conference hosted by Keefe, Bruyette & Woods Inc.

Philip Flynn, the chief executive at the $21.7 billion Associated Banc-Corp in Green Bay, Wis., said that while loan structures do not vary much from bank to bank, some banks have become very aggressive on pricing, particularly in the heavily banked Chicago market.

"It's always bad in Chicago, but it's worse than it used to be," Flynn said.

Unlike Frost, which has experienced little or no loan growth over the last two years, Associated has been growing loans primarily by hiring lenders away from other institutions.

Flynn said growth through acquisitions, however, is out of the question until sellers lower their price demands. Instead of making acquisitions, he said Associated intends to use excess capital to increase dividend payouts and, eventually, repurchase stock.

"There aren't many acquisitions to do because sellers are very unreasonable about what they expect," Flynn.

John A. Kanas, the chairman and CEO of the $11.2 billion-asset BankUnited Inc. in Miami Lakes, Fla., echoed Flynn's sentiments about the climate for mergers and acquisitions.

Kanas said his three-year-old company — heavily backed by private equity and flush with capital from its public offering last year — has enough resources to have made "five or six" acquisitions by now, but hasn't due largely to sellers' lofty expectations.

BankUnited has announced just one deal, for the $471 million-asset Herald National Bank in New York. That sale is expected to close by the end of this quarter.

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