Despite signs of stabilization identified by some executives, preliminary data from the Federal Reserve suggests that lending continued to decrease in the second quarter.

According to estimates based on a sample of institutions, commercial bank loans fell $106 billion from March 31, to a seasonally adjusted $6.3 trillion at June 16. If that level holds for the last two weeks in the month, balances will have contracted at an annual rate of 7% during the period, after backing out the consolidation of $361 billion of assets and liabilities under new securitization accounting rules.

Meanwhile, deposits, which in recent periods have been helped in part by a steady buildup of corporate transaction accounts, continued to climb and were on course for an annual growth rate of 3.4%.

Trends appear to have been a bit worse at the 25 largest banks by assets, which were headed toward an annual rate of contraction of 8.4% in loans and an annual rate of growth of 3.2% in deposits, than for the rest of the industry, which was headed toward an annual rate of contraction of 3% in loans and an annual rate of growth of 3.9% in deposits. (Figures for the large and small groups have not been adjusted to reverse the effect of the accounting consolidation, which appeared in the data on March 31.)

Small banks actually increased commercial and industrial loans by $3 billion from March 31, to a seasonally adjusted $394 billion at June 16, though their commercial mortgages fell $14.6 billion, to $950.4 billion. (Loans in both categories decreased at large banks.)

A 7% rate of contraction in loans across the industry would be brisk, but lower than the 10.6% rate registered in the first quarter.

At a presentation on June 2, Brian Moynihan, Bank of America Corp.'s chief executive, said that a relentless slide in the use of business lines of credit had ended, a development he characterized as "more than hopeful signs — stability."

At the same conference, PNC Financial Services Group Inc. Chief Exexcutive Officer James Rohr also cited "signs of stabilization," although the company had reached "an all-time low in utilization rates of credit facilities."

But, he said, if loan demand continues to weaken, the company will simply focus on continuing "to take costs out" and "to push on fee income."

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