CA and NV Lenders: Growth Leading into Uncertainty

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Financial institutions of all types in California, Nevada and other western states were mostly experiencing an increase in lending leading into late February. However, the Coronavirus pandemic spreading across the United States was starting to economically impact some industries, including travel, tourism, and manufacturing.

That’s according to the Federal Reserve Board’s latest Beige Book report, an anecdotal summary of local current economic conditions published every two months.

“Lending activity grew further. Reports noted stronger demand for new mortgages, refinancing credit, and auto loans,” states page L-2 of the report, the second of two pages that focuses on lenders and businesses within the San Francisco Federal Reserve Bank’s district. “Lending to the commercial sector also increased relative to the previous reporting period, especially for industrial real estate.”

However, agricultural lending weakened in the Pacific Northwest. Overall, “capital levels and asset quality remained high. Tighter competition for loans narrowed net interest margins and profitability. Credit

availability was generally stable, and underwriting standards tightened somewhat. An investment financier in California reported stable private equity conditions.”

The district's synopsis also includes anecdotal details regarding employment, wages, prices, retail trade and services, manufacturing, agriculture, resource-related industries, real estate, and construction.

The Beige Book report is a Federal Reserve System publication about current economic conditions across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety of mostly qualitative information, gathered directly from district sources. The qualitative nature of the Beige Book creates an opportunity to characterize dynamics and identify emerging trends in the economy that may not be readily apparent in available economic data.

Because this information is collected from a wide range of business and community contacts through a variety of formal and informal methods, the Beige Book can complement other forms of regional information gathering.

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