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Banking Conditions Survey

August 2021
August 2021

What’s New

For this survey, respondents were asked supplemental questions on the Paycheck Protection Program and profitability. Read the special questions results.

Results Tables

Historical data are available from March 2017.

Total Loans:
Over the past six weeks, how have the following changed?
IndicatorCurrent IndexPrevious Index% Reporting Increase% Reporting No Change% Reporting Decrease

Loan volume

37.3

37.5

52.0

33.3

14.7

Loan demand

33.7

40.7

48.6

36.5

14.9

Nonperforming loans

–21.6

–17.1

5.4

67.6

27.0

Loan pricing

–31.0

–20.3

1.4

66.2

32.4

IndicatorCurrent IndexPrevious Index% Reporting Eased% Reporting No Change% Reporting Tightened

Credit standards and terms

2.8

–1.6

4.2

94.4

1.4

Commercial and Industrial Loans:
Over the past six weeks, how have the following changed?
IndicatorCurrent IndexPrevious Index% Reporting Increase% Reporting No Change% Reporting Decrease

Loan volume

1.4

16.7

18.1

65.3

16.7

Nonperforming loans

–12.5

–8.4

2.8

81.9

15.3

IndicatorCurrent IndexPrevious Index% Reporting Eased% Reporting No Change% Reporting Tightened

Credit standards and terms

1.5

–3.3

1.5

98.5

0.0

Commercial Real Estate Loans:
Over the past six weeks, how have the following changed?
IndicatorCurrent IndexPrevious Index% Reporting Increase% Reporting No Change% Reporting Decrease

Loan volume

38.0

45.0

47.9

42.3

9.9

Nonperforming loans

–15.7

–21.7

0.0

84.3

15.7

IndicatorCurrent IndexPrevious Index% Reporting Eased% Reporting No Change% Reporting Tightened

Credit standards and terms

1.4

–5.1

4.3

92.8

2.9

Residential Real Estate Loans:
Over the past six weeks, how have the following changed?
IndicatorCurrent IndexPrevious Index% Reporting Increase% Reporting No Change% Reporting Decrease

Loan volume

22.2

21.7

36.1

50.0

13.9

Nonperforming loans

–2.8

–3.3

2.8

91.5

5.6

IndicatorCurrent IndexPrevious Index% Reporting Eased% Reporting No Change% Reporting Tightened

Credit standards and terms

1.4

–3.4

1.4

98.6

0.0

Consumer Loans:
Over the past six weeks, how have the following changed?
IndicatorCurrent IndexPrevious Index% Reporting Increase% Reporting No Change% Reporting Decrease

Loan volume

6.8

4.7

20.3

66.2

13.5

Nonperforming loans

–4.0

–9.3

4.1

87.8

8.1

IndicatorCurrent IndexPrevious Index% Reporting Eased% Reporting No Change% Reporting Tightened

Credit standards and terms

1.4

1.6

1.4

98.6

0.0

Banking Outlook:
What is your expectation for the following items six months from now?
IndicatorCurrent IndexPrevious Index% Reporting Increase% Reporting No Change% Reporting Decrease

Total loan demand

47.3

69.8

58.1

31.1

10.8

Nonperforming loans

–9.6

–15.9

12.3

65.8

21.9

General Business Activity:
What is your evaluation of the level of activity?
IndicatorCurrent IndexPrevious Index% Reporting Better% Reporting No Change% Reporting Worse

Over the past six weeks

41.3

79.7

52.0

37.3

10.7

Six months from now

44.6

75.0

59.5

25.7

14.9

Next release: October 4

Data were collected August 10–18, and 75 financial institutions responded to the survey. The Federal Reserve Bank of Dallas conducts the Banking Conditions Survey twice each quarter to obtain a timely assessment of activity at banks and credit unions headquartered in the Eleventh Federal Reserve District. CEOs or senior loan officers of financial institutions report on how conditions have changed for indicators such as loan volume, nonperforming loans and loan pricing. Respondents are also asked to report on their banking outlook and their evaluation of general business activity.

Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease (or tightening) from the percentage reporting an increase (or easing). When the share of respondents reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior reporting period. If the share of respondents reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior reporting period. An index will be zero when the number of respondents reporting an increase is equal to the number reporting a decrease.

August 2021
Respondents were given an opportunity to comment on any issues that may be affecting their business.

These comments are from respondents’ completed surveys and have been edited for publication.

  • The Delta variant is a concern for the immediate future. While I don’t believe local economies will shut down, I do see a reduction in productivity due to an increase in those with illnesses in the workforce. I also see the consumer being more reluctant to travel and spend on entertainment, thus resulting in a decrease in productivity for the service-related sectors.
  • Margins are under pressure. We are very liquid and find it difficult to deploy excess funds in loans or investments that generate a good yield. We expect the Federal Reserve will begin raising rates in 2022, which could help improve margins, albeit at a slow rate. We see some businesses that are having a hard time finding workers, but it seems to be isolated to particular industries.
  • We are anticipating a slowing of GDP in 2022 due to fiscal headwinds. Nonbank financial firms are more active in competing for traditional middle-market loans, taking market share away from banks (in some cases, private equity firms raising debt funds alongside the equity fund to finance the entire capital stack) by offering higher senior leverage, looser or no covenants, longer amortizations, and/or generous EBITDA [earnings before interest, taxes, depreciation and amortization] add-backs.
  • We remain concerned about inflation and its effect on the industry. We also continue to monitor changes inside the CFPB [Consumer Financial Protection Bureau] and increased compliance changes. Inflation, the economy and consumer confidence all are of concern. We are headed into the holiday season and will monitor closely the mood of consumers.
  • The computer chip shortage is continuing to place downward pressure on auto loan demand. Excess liquidity and additional fiscal stimulus/programs are also placing downward pressure on personal and credit card loan demand.
  • The current issue of concern is the impact of the Delta variant on slowing down economic progress made to date and the associated impacts on health/safety impacting the overall environment. The impact for financial institutions could include a lower interest rate environment further impacting investment yield and pressuring loan demand and overall economic recovery.
  • Border activity is causing people to continue to be exposed to COVID-19, thus decreasing activity in retail and in the food industry. The high volume of positive cases is resulting in fewer people being out spending money.
  • Inflation and government spending could cause business to slow. Increasing tax rates could also negatively impact businesses and the overall health of the banking industry.
  • Our commercial customers’ ability to hire employees is a significant issue restricting their operations from continuing at the same level or recovering from pandemic levels.
  • With the current administration and the fear of inflation and massive new government debt, I fear our business will take a downturn beginning in the fourth quarter.
  • We continue to see record home prices in our markets. In addition, used-vehicle prices have increased dramatically. Collateral coverage may be erased when the bubble hits.
Historical Data

Historical data can be downloaded dating back to March 2017. For the definitions, see data definitions.

NOTE: The following series were discontinued in May 2020: volume of core deposits, cost of funds, non-interest income and net interest margin.

Questions regarding the Banking Conditions Survey can be addressed to Emily Kerr at emily.kerr@dal.frb.org.

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