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ANNAPOLIS — Although some recent signs point to an end of the recession, a Maryland bank executive told a government panel Thursday that any recovery will face "strong headwinds."

William Couper, president for the mid-Atlantic region for Bank of America, said he believes the economy is recovering, but his bank also foresaw chronic budget deficits, slower growth and above-normal unemployment.

Couper was one of several business leaders who addressed the Board of Revenue Estimates, a three-member body that officially presents Gov. Martin O'Malley (D) with projections on state tax collections.

The board offered the governor more bad news. For fiscal 2009, which ended June 30, tax receipts fell about $350 million short and the revenues in the current financial year will come in $683 million below projections.

State budget cuts already have anticipated about $400 million in revenue write-downs.

The executives offered little good news. Couper said his bank has seen a "troubling number" of borrowers who have already adjusted their mortgages fall delinquent again because of job losses or illnesses.

And Michael Harreld, president of the greater Washington, D.C. region for PNC Bank, noted a statistic few people track — the number of people who are paying down their home equity loans.

Such loans are typically used for big-ticket purchases such as cars, college tuition and home improvements.

"That's the middle-America way they spend," Harreld said.

But many people fear they'll lose the loan because of the value of their home has declined, and then they will have to find the cash to pay off the debt, he said.

"So home equity loan capacity individually we measure very carefully to see if people have the ability to spend," he said. "That's something we watch to see if there's going to be a recovery."

U.S. banks reported $672.9 billion in outstanding home equity loans at the end of the second quarter, down from $674.3 in the first quarter, according to the Federal Deposit Insurance Corp. The value of noncurrent home equity loans fell for the first time in three years, declining by $1.7 billion.

Commercial real estate is also posing a difficulty for banks. Vacancy rates are up, which means developers have trouble securing loans for projects.

"Most banks are being very selective at this point in the cycle," Couper said.

Robert A. Manekin, senior vice president of Columbia real estate developer Manekin LLC, said he was not aware of any effect that the American Recovery and Reinvestment Act — the $787 billion in federal stimulus money — was having on commercial real estate.

The Pentagon's Base Realignment and Closure process and a new 538,000-square-foot Social Security Administration building on land sold by the state to the U.S. General Services Administration would have a greater impact, he said.

Manekin also suggested that the government should lease existing excess space in the market.