Magazine article American Banker

Commercial Lending Sets the Pace for February's IBA

Magazine article American Banker

Commercial Lending Sets the Pace for February's IBA

Article excerpt

Byline: Paul Davis

The banking industry's pace of expansion accelerated in February, according to the most recent American Banker Index of Banking Activity.

The overall index reading for February was 56.3, rising from 53.8 a month earlier and marking the highest monthly reading since the IBA debuted last June. Interestingly, January's reading was the lowest on record.

Increased momentum in commercial lending paced the IBA' monthly improvement, as readings for both loan applications and approvals increased. The IBA is a product of American Banker's monthly surveys of bank executives. The index is published in partnership with VantageScore Solutions.

The latest installment was based on 265 responses.

"The improvements in February over January were modest, but these days any improvement is a positive sign," one banker said.

February's reading for commercial loan applications rose to 61.5, compared to 54.2 a month earlier, suggesting accelerated demand. Approvals for commercial loans also grew at an faster pace; the reading rose to 60.6 from 52.1 in January.

Bankers suggested that the improvement was a function of getting better applicants. "We are seeing more quality applications and subsequently, our approval percentages are higher," another respondent observed.

Seasonality could have also played a contributory role in January's results, along with lingering concern about potential intervention by lawmakers and regulators. Still, plenty of apprehension remained in February as the banking industry navigates its way through 2013.

"Local conditions are stable, but uncertainty reigns supreme," one banker cautioned. "We see several new projects coming to the area, but time will tell. The national scene, particularly the fiscal situation, is producing a lot of uncertainty. …

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