First Glance 12L provides a quarterly look at banking and economic conditions within the 12th District. Wider net interest margins and lower income tax rates continued to lift bank earnings on a year-over-year basis. Annual and quarterly loan growth cooled slightly compared with 2Q18, and nonmaturity deposit gathering slowed further. Favorably, stronger earnings and slower balance sheet growth benefited regulatory capital ratios. Bank credit loss and delinquency ratios were low, but average growth in the dollar volume of noncurrent loans turned positive for the first time since late 2010, suggesting the District may be near a trough in the ratio of seriously delinquent loans. The annual pace of job growth notched higher, contributing to strong CRE fundamentals in most markets. However, commercial rent growth may come under pressure prospectively. Among residential markets, increases in interest rates tempered mortgage originations and slowed annual home price appreciation, particularly in coastal areas. The combination of higher home prices and interest rates caused weak housing affordability to slip further. Surveys by various government and industry groups noted broad but cooling optimism about current conditions and some concern about forward trends. The report briefly discusses these and other “Hot Topics.”
