Banking conditions in Minnesota improved slightly between the first and second quarters of the year but remain weak.
A key measure of troubled loans improved, but was still slightly worse than a comparable national figure in the second quarter said Ron Feldman at the Federal Reserve Bank of Minneapolis.
Commercial real estate loans is one particular area of lending still isn't rebounding well, Feldman said.
"That is, loans to firms that are backed by commercial real estate as collateral that improved to a lesser degree than the overall number," Feldman said. "For most banks that are struggling a bit, it's those kinds of loans that are usually the most problematic."
Until commercial real estate loan performance improves, the state's banks will be weighed down, he said.