DOWN ON THE BAYOU, the economic news is not good.

Loan demand in Louisiana is likely to remain that way for the next year or so, bankers and analysts said. That could put pressure on interest margins as banks with maturing investment portfolios rind it hard to put their funds to work.

The Federal Reserve Bank of Atlanta recently summed up Louisiana's long-term prospects as "worrisome," noting that the state's economy "is not expected to match that of the region or the nation in the foreseeable future."

You don't see the robust employment growth that leads to market growth," said R.Neil Williams, chief financial officer of Premier Bancorp, parent of the state's second-largest bank. "I would agree that loan demand is going to be pretty weak, certainly for the rest of this year and probably next year as well."

The outlook contrasts markedly with the mini-boom of 1990 and 199 1, when Louisiana's economy, based on oil and gas, flourished while most of the country was sinking into recession.

But energy prices plummeted following the Gulf War. In the 12 months that ended March 30, nearly every metropolitan area in

Louisiana suffered a significant drop in employment. Louisiana's bank companies, like most around the nation, have been getting by because of low interest rates that have improved their spreads between funding and investing. They also have benefited from the interest-related surge in residential mortgage refinancings and a slight pickup in consumer loans.

But core commercial lending business remains stagnant. First Commerce Corp. of New Orleans and Baton Rouge-based Premier, the healthiest of Louisiana's largest banks, reported anemic loan growth of 3. 1 % and 5.6% respectively in the 12 months ending March 31. New Orleans-based Hibernia Corp. and Whitney Holding Corp., which are both still struggling with loan problems, registered double-digit declines.

Interest Rate Risk

Making the outlook still worse is the prospect of rising interest rates. Until now. the state's banks have been helped by some of the nation's lowest deposit costs. That created an average net interest margin for Louisiana banks of 4.68%, higher than in neighboring states.

But with little borrower demand, the banks will be hard pressed to maintain their margin advantage.

"Louisiana banks are a little more susceptible to getting their margins squeezed than banks elsewhere," said Peter W. Tuz said, a bank analyst at Morgan Keegan Inc. in Memphis.

Banking on Gambling

There is one bright spot in Louisiana:the tourism industry, primarily in New Orleans.

Plans to build the nation's largest casino in the Big Easy have fueled a revival in the city's commercial real estate market. Economist are predicting about $750 million of related construction over the next few years.

"There is a tremendous demand for infrastructure loans associated with gambling and casinos," said David B. Kelso, chief financial officer of First Commerce.

But the impact is not expected to extend much beyond New Orleans. And analysts contend that weak loan demand may mar the profit picture at most Louisiana banks for many

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