Boland said mostly large community banks and credit unions in the $100 million to $500 billion asset categories were surveyed. Sageworks has been monitoring bank announcements and noticed many are continuing to resolve problems with asset and credit quality. Distressed loans and nonperforming assets are still the norm for most. One bright spot is an uptick in commercial loans among small regional banks, Boland noted.

“This certainly a positive sign, but future growth is going to be tied to loan demand and if businesses will have the confidence to borrow,” Boland said.

Sageworks plans to revisit views on commercial lending include other surveys on the sector going forward.

Meanwhile, states such as foreclosure-laden Florida and California may need another five years to recover, said Joe Hill, president/CEO of CEIS Review Inc. a New York-based firm that provides loan reviews and credit portfolio management to financial institutions. The company also has offices in Florida and Maine and oversees portfolios ranging from $35 million to several billion dollars, according to its website.

“In the community bank environment, nearly all the losses are being cause by real estate,” Hill said. “Down in Florida is particularly devastating. It's the one area of the country that will need three to five years to make up losses. It's the same in California.”

Hill said states such as New York, New Jersey, Pennsylvania, Maine and Vermont, essentially the Northeast region of the country, will fare better in 2011 in commercial lending. These states tend to have a delayed relation and do not respond as aggressively to the real estate pendulum as others have.

“Classically, the wave might start somewhere like Florida and then it affects everyone else,” Hill explained. “In a market like Florida, there are going to be major swings. When you have a 300% increase in housing, then 300% on the down side, you don't have swings like that in the Northeast.”

If it is any consolation, credit unions and banks have reached the bottom when it comes to commercial lending losses, Hill said. The pace of slippage in loan portfolios has slowed down and financial institutions are identifying the issues and making repairs, he added.

“This year was rough and next year will continue to be rough. There's no question we want to see more lending but most banks are saddled with some problems that will not go away quickly. Depending on where you are in the country, real estate is pulling lending down.”