American Banker Index of Banking Activity: Lowest Reading Since January Ends Springtime Boomlet

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Diminishment in momentum partially driven by economic, international concerns

July IBA

The slide suggests that banks on balance lost whatever modicum of pricing power they had coming into the month.

The recent momentum of the American Banker’s Index of Banking Activity (IBA) slowed with the June reading, which was the weakest since January.

The composite index score of 54.9, though a mark of modest expansion, was a significant decrease from the previous month’s 57.0.

“Most components of the index declined from their May levels and two of them—both of which track pricing on new lending—slipped below 50,” said Rich Melville, Group Editorial Director for SourceMedia. “The slide suggests that banks on balance lost whatever modicum of pricing power they had coming into the month.”

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-june-iba-at-549-1090120-1.html for more details.

BANKING INDUSTRY CONDITIONS
The month’s results point to the industry’s more guarded outlook brought on by worries about events at home (the upcoming elections) and abroad (Brexit). These events would likely further postpone interest rate increases by the Federal Reserve.

Not surprisingly, consumer and commercial loan applications suffered generally weaker readings, as did loan approvals.

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

Northeast: The region showed signs that the quality of loan applicant and the performance of loan portfolios improved this month.

Midwest: After months of robust expansion, the region saw a loss of momentum, especially in commercial lending where applications and approvals flattened.

South: Consumer and commercial loan delinquency components registered solid gains in the month and loans outstanding also tallied better-than-average gains across the region.

West: Feeling the impact of local economic uncertainty, bankers in the region reported an increased willingness to turn away consumer loan applicants.

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. American Banker Magazine is a monthly print publication of American Banker, focusing on the ideas, the people, and the companies that are changing the way bankers do business.

ABOUT SOURCEMEDIA RESEARCH
SourceMedia Research is a unit of SourceMedia, providing research solutions for marketers, agencies and others targeting business sectors such as banking, payments, mortgage, accounting, insurance, employee benefits and wealth management. SourceMedia Research specializes in reaching senior and C-level decision makers through access to its large proprietary opt-in databases and panels. 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 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 Observer Capital company, is a business-to-business Digital Marketing Services, Subscription Information, and Event company serving senior-level professionals in the financial, technology and healthcare sectors. Brands include American Banker, PaymentsSource, The Bond Buyer, Financial Planning, Accounting Today, Mergers & Acquisitions, National Mortgage News, Employee Benefit News and Health Data Management.

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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