Financial Services - January 2009Data and Analysis
District lending conditions continued to tighten during mid-November and December. Lending standards have been raised and loan covenants strengthened; some banks are having difficulty finding customers with financial positions strong enough to qualify for loans. Worsening economic conditions also caused banks to restrict lending to specific industries. Especially hard hit were those segments related to the housing and the automobile industries. Banks also appeared less willing to take on new commercial projects and instead focused on serving their existing customers.
In all Sixth District states, the percentage of seriously delinquent subprime mortgage loans (those 90 days past due or in foreclosure) increased from the second quarter to the third quarter of 2008: from 12.4 percent to 14.0 percent in Alabama; from 26.3 percent to 30.3 percent in Florida; from 15.0 percent to 16.2 percent in Georgia; from 13.8 percent to 15.2 percent in Louisiana; from 16.1 percent to 17.7 percent in Mississippi; and from 12.6 percent to 14.1 percent in Tennessee. (Subprime mortgage loans account for 10 to 15 percent of all mortgages outstanding.)
Commercial and Industrial Lending
Commercial and industrial lending to customers with U.S. addresses for banks headquartered in the Sixth District increased by 20.0 percent in the third quarter of 2008 compared to a year earlier. This increase is due in part to mergers between District banks and out-of-District banks in early 2008, resulting in the consolidation of loans to head office locations in the Sixth District.