American Banker Index of Banking Activity: Commercial Businesses Rebound from April Lows

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Period of relative strength continues despite easing of consumer-sensitive indicators

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April’s sharp downturn in components linked to commercial business lines appears to have been short-lived

Business activity for the U.S. banking sector expanded in May, according to the latest reading of American Banker’s Index of Banking Activity (IBA).

The composite index score of 57.0 in May essentially matched the 57.1 level posted in April.

“The May survey extended a period of relative strength for the IBA, said Rich Melville, Group Editorial Director for SourceMedia. “In addition, April’s sharp downturn in components linked to commercial business lines appears to have been short-lived.”

The IBA is the leading indicator tracking potential changes in 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 monthly surveys of more than 300 banking executives, conducted by SourceMedia Research. Visit http://www.americanbanker.com/special-reports/index-of-banking-activity-may-iba-at-570-1081570-1.html for more details.

BANKING INDUSTRY CONDITIONS
Among the biggest differences month-over-month was a narrowing of the divergence between consumer-sensitive indicators, which retreated from exceptionally high readings, and indicators that track commercial-lending activity, which recovered from depressed levels in April.

The component of the IBA tracking consumer loan approvals registered the largest pullback of any component in May, although at 56.6 it did maintain an expansionary level.

REGIONAL RESPONSES
The Index of Banking Activity monitors regional trends as well. Following are some of the regional highlights from the monthly survey.

Northeast: After a very strong April, this region’s activity leveled off as bankers in several markets noted that competition for new loans was intensifying.

Midwest: This region outperformed in almost every category of activity in May. Bankers here were among the most upbeat when it came to real estate conditions in their local markets.

West: Within the West’s energy-sensitive states, there were signs that pressure on commercial credit activity was beginning to extend to consumer activity as well.

South: May renewed April’s sentiment of positive growth at a somewhat less robust pace of expansion.

HOW THE INDEX WORKS
The index comprises a number of selected sub-indicators that summarize various business activities in banking, such as loan activity, loan pricing, deposit account activity, staffing, and business and real estate conditions.

Each sub-indicator is based on survey responses that describe a change from the previous month (e.g., higher, lower, or no change). Respondents are also asked to elaborate on any of the changes.

FUTURE INDEX READINGS
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
American Banker, a SourceMedia brand, is the essential resource for senior executives in banking and financial services, keeping its users updated on vital developments and focusing sharply on their most important concerns. Financial industry professionals turn to American Banker to stay maximally informed and engage with an authoritative community of analysts, practitioners and innovators through opinion content, research reports, social media, and live events.

ABOUT SOURCEMEDIA RESEARCH
SourceMedia Research, a unit of SourceMedia, provides research solutions for marketers, agencies and others targeting business sectors such as banking, payments, mortgage, accounting, insurance, employee benefits and investment advisor / wealth management. SourceMedia Research specializes in reaching senior and C-level decision makers through access to its large proprietary opt-in databases and panels.

ABOUT SOURCEMEDIA
SourceMedia, an Observer Capital company, is a diversified business-to-business digital media company serving senior professionals in the financial, technology, and healthcare sectors. Brands include American Banker, The Bond Buyer, Mergers & Acquisitions, Financial Planning, On Wall Street, Accounting Today, Health Data Management, and Employee Benefit News.

Contact
For more information, please contact:

Dana Jackson
dana.jackson(at)sourcemedia(dot)com
212.803.8329

Richard Melville
richard.melville(at)sourcemedia(dot)com
212.803.8679

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