Financial Services - March 2008Data and Analysis
Tighter lending conditions were evident across the Sixth District. Lending requirements were more stringent than six months ago, and the availability of credit was expected to get tighter in forthcoming months. According to some District contacts, small businesses and speculative building projects were the hardest hit. Some pockets in the District, mainly along the coastal rebuilding zone, noted tighter conditions but reported some strength in commercial lending related to post-Katrina rebuilding activity. Credit quality had deteriorated further in most parts of the District.
Data from the Mortgage Bankers Association show the percentage of seriously delinquent loans in the subprime mortgage segment increased significantly in all states during the fourth quarter of 2007 compared to the third quarter. As the fourth quarter maps indicate, delinquency rates in this segment were greater than 10 percent in many parts of the country and more than 20 percent in Ohio and Michigan.
The percentage of seriously delinquent loans in the subprime mortgage segment was higher than 10 percent in all the District states during the fourth quarter of 2007: 11.9 percent (up from 9.9 percent in the third quarter) in Alabama; 17.5 percent (up from 12.2 percent) in Florida; 13.6 percent (up from 11.9 percent) in Georgia; 13.2 percent (up from 12.1 percent) in Louisiana; 16.4 percent (up from 13.8 percent) in Mississippi; and 12.2 percent (up from 9.9 percent) in Tennessee. The increase in Florida was the largest among District states—a 5 percentage point increase over the third quarter and a more than threefold increase from the fourth quarter of 2006, when the percentage was 5.2 percent.
Commercial and Industrial Lending
Data from the Federal Deposit Insurance Corporation for banks headquartered in the Sixth District indicate that both total deposits and commercial and industrial lending declined in the third quarter of 2007 compared to the second quarter. Loans secured by real estate were essentially unchanged in the third quarter of 2007 compared to the third quarter of 2006, while credit card loans by District banks increased.