SAN FRANCISCO - The crisis atmosphere of last year has lifted, but the mood is hardly likely to be upbeat as commercial loan and credit officers convene here today.

Sluggish loan demand, a swarm of incoming federal regulations, and the uncertainty created by the accelerating consolidation of the banking industry are certain to cast a par over the annual fall conference, sponsored by the trade group Robert Morris Associates.

"It's not a bed of roses out there," said Robert E. Greene, executive vice president and chief credit officer of First Interstate Bancorp in Los Angeles. Mr. Greene just completed a one-year term as the trade group's president.

Last year, at the height of the banking industry's credit problems, chastened conference goers acknowledged past mistakes in what amounted to a mea culpa by the commercial lending establishment.

"I don't think it will be as gloomy as it was last year," said Martin Strischek, executive vice president of Barnett Bank of Palm Beach County, West Palm Beach, Fla.

Indeed, the industry appears to have put the worst of its credit losses behind it. And profits have been bolstered by higher net interest margins, further raising bankers' spirits.

At the same time, though, commercial real estate values continue to fall, bedeviling banks that financed the reckless buildup of the 1980s.

Question on Recovery

And even if the economy gathers some momentum, that will not necessarily give much of a lift to loan demand.

"I'm not sure we can just assume that this recession will be like every other one we've had in the past," said Edgar M. Morsman, chief lending officer at Norwest Bank Minnesota and a past president of the trade group.

Absent a return of high inflation rates, businesses will not jump to finance a buildup of inventories this time around, because of changes in the way inventories are managed.

That, in turn, will keep a lid on business loan demand, which is largely driven by inventory financing needs.

Price War Is Feared

"Anyone who isn't thinking about this could be making some strategic errors," Mr. Morsman said.

With too many banks chasing too few creditworthy borrowers, there is also concern that banks will slash prices to gain market share, or loosen credit standards to accommodate more risky borrowers.

With that in mind, the trade group is continuing a campaign launched last year, dubbed Focusing on Fundamentals."

"We're still saying the industry has to pay attention to credit quality," said Keith E. Lawder, senior vice president of Wachovia Bank of Georgia and a director of the trade group.

In a sign that the association's almost messianic approach to credit quality is gaining adherents, attendance at this year's conference will be about 11% higher than it was last year, based on registration figures.

Meanwhile, the lending process itself is coming under assault by a wave of new federal regulations arising mainly from the Federal Deposit Insurance Corp. Improvement Act.

"The regulations probably are going to slow down the lending process dramatically," said William J. Rossman, president of Mid-State Bank and Trust Co. of Altoona, Pa., and newly elected president of Robert Morris Associates.

A Heavy Impact

T. Lincoln Morison, chairman of First Ipswich Bancorp in Massachusetts, said the cost and effort of complying with the new law can be "overwhelming."

The legislation, enacted last year, directed regulators to establish guidelines covering virtually all aspects of banking, from the setting of underwriting standards for loans to the compensation of bank officers and directors.

Mr. Strischek at Barnett Bank said the extra work required to comply with the new regulations comes at a time when banks are under pressure to pare employment levels.

"To the extent there is not enough staff to keep track of the regulations, there is a pressure point at which this could slow us down" in making new loans, he said.

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