SOURCE: SourceMedia

SourceMedia

December 17, 2012 10:00 ET

American Banker Index of Banking Activity Surpasses Previous High Point

Index of Banking Activity Composite Reading: 55.7

NEW YORK, NY--(Marketwire - Dec 17, 2012) - The American Banker Index of Banking Activity (IBA) registered a reading of 55.7 for the month of October, as commercial lending activity accelerated and credit quality continued to improve. The index, continuing an upward trend, improved from its previous level of 55.4 in September.

The results for October, the latest month for which information is available, were the highest since the IBA was launched in June, when the overall reading was 54.4 percent. (To view the entire article, visit: http://www.americanbanker.com/issues/177_236/index-of-banking-activity-rises-on-improved-commercial-lending-1055058-1.html.)

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 composite number has been above 50 in each of the four months that it has been tabulated.

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 derived from 235 responses to surveys.

BANKING INDUSTRY CONDITIONS

Improved commercial lending activity was one of the highlights of the October IBA. Commercial loan applications appeared to arrive at banks at a brisker rate than in the previous month; October's reading of 60.1 compared to 52.7 in September. Approvals for those applications picked up momentum, logging a reading of 59, up from September's rate of 55.

Meanwhile, the pace of consumer applications moderated slightly, registering a reading of 50.3 in October, down slightly from 50.9 a month earlier. However, the reading for approvals rose to 59 from 55 in September.

Also leading to the improved overall IBA reading in October was the fact that bankers took a more positive view of overall business conditions. That reading increased to 58 from 55 a month earlier, with the exception of real estate. The October reading for real estate fell to 60.6 from 61.4 in September.

WHAT RESPONDENTS ARE SAYING

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.

Several respondents noted their markets suffered severely from Hurricane Sandy as power outages and gas shortages brought business activity to a complete halt, albeit at the tail end of the month. Others pointed to uncertainty surrounding the so-called fiscal cliff, when tax reductions enacted under President George W. Bush expire and $1.2 trillion in government spending cuts begin phasing in.

HOW THE INDEX WORKS

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.

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 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. www.americanbanker.com.

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. www.sourcemedia.com.

About VantageScore Solutions

Stamford, Conn.-based VantageScore Solutions, LLC (www.vantagescore.com) is an independently managed company that holds the intellectual property rights to the VantageScore model, a generic credit-scoring model introduced in March 2006. Created by America's three major credit reporting companies (CRCs) -- Equifax, Experian and TransUnion -- VantageScore's highly predictive model uses an innovative, patented and patent-pending scoring methodology to provide lenders and consumers with more consistent credit scores across all three major credit reporting companies and the ability to score more people. www.vantagescore.com.

Contact Information