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From Banking and Finance Law Daily, March 5, 2015

Banking sector showing improved conditions at start of year

By Andrew A. Turner, J.D.

Banking conditions generally improved and credit quality remained largely unchanged from early January through mid-February, according to reports from the 12 Federal Reserve Districts. The commentary on economic conditions included in the Federal Reserve Board’s latest Beige Book notes an increase in overall loan demand in all reporting Districts, with the exception of Kansas City.

Commercial real estate loan demand was strong in Philadelphia and Cleveland. Commercial loan demand increased in New York, was particularly strong in Cleveland and Atlanta, was steady in Kansas City, and was mixed in Richmond. Residential lending was positive at all reporting banks, with bankers in Cleveland, Richmond, Chicago, and San Francisco noting an increase in refinancing activity.

Bankers in most Districts reported no change in their own lending standards. However, several bankers in the Richmond and St. Louis Districts reported relaxed standards. Bankers in the Philadelphia, Richmond, and San Francisco Districts noted that competition is lowering lending standards more generally.

Economic activity continued to expand across most regions and sectors. Consumer spending rose in most Districts, and contacts were generally optimistic about near-term sales. Both the New York and Boston Districts reported that harsh winter weather negatively affected retail business in their Districts.

Home sales increased in most Districts, while reports on residential construction were mixed. Commercial real estate market conditions remained stable or improved across the Districts.

Formally known as the Summary of Commentary on Current Economic Conditions by Federal Reserve Districts, the Beige Book is published eight times per year, in advance of each regularly scheduled meeting of the Federal Open Market Committee. Each Federal Reserve bank gathers anecdotal information on current economic conditions in its district through reports from bank and branch directors, as well as through interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by district and sector.

MainStory: TopStory FederalReserveSystem

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