Regional bank executives doused anyone bullish on loan demand with a bucket of cold water this week. Their message at an industry confab: loan demand remains tepid or, in some cases, has worsened.

Perhaps the most pessimistic among the bank executives appearing at the Barclays Global Financial Services Conference in New York was Kelly King, the chairman and chief executive of BB&T (BBT). The $183 billion-asset company, which has branches in the Southeast and Mid-Atlantic, expects loan growth to be sluggish for the next two or three years.

"It's not appropriate to be doom and gloom — it's just appropriate to be careful," King said.

Recent economic figures have shown that rising rates have put a damper on borrowing, and the feeling that lending is off was widespread at the conference among King's peers.

"Loan growth is not robust by any means," said Kevin Kabat, the vice chairman and CEO of $123 billion-asset Fifth Third Bancorp (FITB) in Cincinnati.

Investors will likely be "underwhelmed" by the rate of loan growth that regional banks report for the third quarter, said Brett Rabatin, an analyst at Sterne Agee. And the little growth that does happen is mostly cannibalized from competitors.

"If you're growing your book, you're taking market share," Rabatin said in an interview. "It's not like there are customers out there expanding rapidly."

In most cases, bankers at regional and superregional institutions reiterated the loan-growth projections they had made during discussion of second-quarter earnings, or in more recent presentations. But the scarcity of new rays of hope, with only a couple of weeks left in the third quarter, fed the pessimism.

King argued that his opinions are formed by speaking directly with borrowers, not from "what I read from Wall Street economists." King said he speaks to between 400 and 500 business people each year about their business plans.

"They are very, very concerned about the future of the economy, about taxes, regulation, insurance," King said. "Add on to that Syria and it leaves them with a great deal of hesitation and the memories are still very clear about where we were two or three years ago."

BB&T, in Winston-Salem, N.C., projects third-quarter loan growth of between 2% and 4%, from a year earlier.

At least one bank could see a drop in lending. Average loans at Comerica (CMA), which has branches in California, Michigan and Texas, have declined 6.2% this quarter compared with last quarter, says Scott Siefers, an analyst at Sandler O'Neill & Partners. He said his calculations were based on data provided by the Dallas bank in its conference presentation.

That is worse than the 3% decline Siefers had projected. "The magnitude of weakness disclosed in [Comerica's] update may still catch investors off guard," Siefers wrote in a research note.

The $63 billion-asset Comerica is facing its biggest challenges in the areas of mortgage warehouse lending and auto loans, Rabatin said. "In the last quarter their growth was impacted to some degree by large corporate lending rates that had gotten ridiculous," Rabatin said in an interview, elaborating that Comerica bowed out of some lending opportunities because rivals gave too many concessions to borrowers on terms and rates.

Comerica CEO Ralph Babb sought to manage expectations Tuesday.

"Based on preliminary results, our loan growth has moderated so far in the third quarter," Babb said at the conference. The slowdown is "broad based in the markets that we serve and the businesses where we are. It may be what I refer to as a pause here. It's hard to tell with just a couple of months really versus a longer term, but we've seen it before."

Other bankers projected slight loan growth, despite weak demand from borrowers. Don Kimble, the chief financial officer at KeyCorp (KEY), reiterated that the Cleveland company expects loan growth to increase by "mid-single digits" from 2013 to 2014. The growth will come primarily in commercial, financial and agricultural loans, while commercial real estate lending at the $91 billion-asset bank remains soft, he said.

"We are still seeing challenges," Kimble said. "Our commercial customers are a little bit more conservative and a little less likely to pull the trigger as far as taking on that additional expansion or the additional capital needs that we might be able to help support."

FirstMerit (FMER), in Akron, Ohio, reiterated its projection of consumer loan growth between 2.5% and 3.5% for the remainder of 2013, and commercial loan growth of 5% to 6%. Paul Greig, chairman, president and CEO, noted that the $24 billion-asset FirstMerit has hired 21 commercial bankers in Michigan and eight in Wisconsin to feed loan growth.

"We've seen a robust pickup in the manufacturing sector across the Midwest and that's really diversified across industries," Greig said.

Some regional bankers singled out areas of potential strength. David Turner, chief financial officer at $119 billion-asset Regions Financial (RF), said the Birmingham, Ala. company had recently seen some growth in small business loans. The strongest areas for loan growth in the second quarter had been equipment finance, real estate corporate banking, healthcare, transportation and technology. Regions continues to project low single-digit percentage loan growth for the full year, Turner said.

Most positive signs have come from the "upper end of the middle market," Turner said. "We are seeing deleveraging. We're seeing recovery in asset classes. We are seeing an improvement in credit cards. This is all incremental," Turner said.

BB&T's King was not wholly negative on the economy. Business owners have delayed making capital investments while the economy struggled, King said. That's created "huge pent-up demand," he said.

"A lot of baby boomers are leading these companies," King said. "When we get some positive leadership out of Washington, you could see several years of way-above-trendline growth and it could be a boom period for our country."

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