American Banker Index of Banking Activity Holds Steady as Rate Anxiety Abates

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Composite Reading of 57.5 Follows June Interest Rate Spike

The American Banker Index of Banking Activity (IBA) registered a reading of 57.5 in July, steady with June’s 57.7 reading. The most recent data is based on a survey conducted in August. (View the full article on American Banker).

The 0.2 point change in the index was the smallest registered in 2013 and came on the heels of a sharp rise in bond yields in June that had unnerved bankers.

As the overall composite index steadied, consumer lending gained slight momentum. Consumer loan applications rose from an index value of 54.2 in June to 56.6 in July, while consumer loan approvals climbed from 52.6 to 56.2 over the same months. The component that tracks consumer loan delinquencies dropped from 65.5 in June to 55.6 in July. (Delinquencies are a contrary indicator, meaning that lower readings are treated as a positive for index purposes.)

The IBA tracks the level of business activity across a range of factors that are fundamentally important to the commercial banking business. Composite readings above 50 indicate an expansion of activity and readings below 50 point to contraction. The farther from 50 a reading is, the stronger the indicated change.

The IBA is a product of American Banker's regular surveys of banking executives and is published in partnership with VantageScore Solutions. The latest installment of the index was based on 281 responses to surveys.


Commercial lending activity remained in positive territory, although the pace of expansion showed signs of easing. July’s commercial loan approval component reading was 56.6 vs. June’s 58.2. Both consumer and commercial loan pricing showed improvement from June to July. Consumer loan pricing reached 54.6 in July from June’s 53.7 and commercial loan pricing hit 52.7 in July compared to 51.4 in June.

One of the biggest improvements was in bank staffing levels, which grew from a reading of 47 in June to 52.5 in July. 15% of survey respondents reported staffing levels higher in July than June, while 75% said levels stayed the same. Only 10% said staffing levels were lower in July than June.

Bankers also were optimistic on in-market business conditions, with 21.5% reporting stronger conditions in July than in June and only 5% calling them weaker.


In addition to the quantitative elements of the survey that support the IBA, open-ended questions are posed to respondents seeking information on the factors they believe are having the biggest immediate impact on their businesses.

Lenders were lifted by the improving real estate market and economic climate. “The economic climate in our markets is improving notably,” one respondent said. “As rates increase, we are aiming to keep our loans and terms ahead of the curve.”

Another echoed those thoughts, “The economy appears to getting stronger… We are financing more home purchases than in the last several years – many of them are upgrades to existing homes.”

Some felt a brighter consumer outlook would directly impact the commercial market. “Improved real estate markets are fueling improved customer sentiment, leading to improved retail transactions, and the subsequent activity is leading to improving commercial trends,” one lender said.

“A large increase in home starts is spurring retail commercial real estate in the adjacent commercial parcels,” another commented.

As some banks already are enjoying better operating conditions, others are mired in “stability.” “Flat or dull would be the best way to describe our market,” one lender reported.

Even in a more stable environment, bankers are finding it “challenging to identify profitable transactions,” a respondent observed.


The Index of Banking activity is a diffusion index made up of 11 equally weighted sub-indicators that summarize various business activities, such as loan activity (e.g. applications, approvals, delinquencies and loans outstanding), loan pricing, deposit account activity, staffing, and business and real estate conditions.

Respondents are asked whether each sub-indicator increased, decreased or had no change from the previous month. Responses do not include opinions, intentions or expectations, although bankers were given the opportunity to comment about market conditions.


Monthly readings of American Banker's Index of Banking Activity will be presented as a time series that can be used to monitor the prevailing rate and direction of change in banking business cycles and eventually to benchmark whether an institution is operating in line with overall industry needs.

About American Banker Research
American Banker Research is a unit of American Banker, the flagship information brand of the diversified B-to-B media company SourceMedia. American Banker Research brings a full range of professional research capabilities to companies and executives in banking and payments. The unit manages the American Banker Executive Forum, a community of senior banking and payments executives who are committed to regularly sharing opinions and insights with the editorial and research groups at American Banker. Members include qualified professionals who read American Banker and its sister brands Bank Technology News and PaymentsSource, and attend their professional conferences. These include C-level executives and other senior professionals employed at commercial and community banks, bank holding companies and other financial companies across all asset classes.

About SourceMedia
SourceMedia, an Investcorp company, is a business to business media and marketing solutions company serving the financial industry and the related fields of professional services and technology. SourceMedia offers its clients and subscribers professional information services, industry-standard research, data applications, in-depth seminars and conferences, and specialized marketing services.

About VantageScore Solutions
VantageScore Solutions, LLC ( is the independently managed company that owns the intellectual property rights to the VantageScore credit scoring models, including the recently announced VantageScore 3.0 model which provides up to 25 percent predictive improvement over earlier models and has the ability to formulate a score for 30 – 35 million previously unscoreable consumers. Initially developed by America’s three national credit reporting companies (CRCs) — Equifax, Experian and TransUnion — VantageScore Solutions’ highly predictive models use an innovative, patented and patent-pending scoring methodology that provides lenders and consumers with more consistent credit scores across all three national credit reporting companies.

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Richard Melville

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