The Index of Banking Activity (IBA) Composite Index declined just slightly in September—down 0.7 percent to 56.5 from the August reading of 56.9—but that relatively flat figure belies more dramatic changes in some of the 16 component measurements that feed into the Composite Index.
The In-Market Real Estate Conditions index, for example, fell 4.7 percent to 53.1, down from its August reading of 55.7, and reached its lowest reading since the Index of Banking Activity survey began in September 2012. This measure has slid since peaking in May, when the In-Market Real Estate Conditions index stood at a record 70.5.
Helping to offset this decline in real estate conditions has been an increase in the Consumer Loan Delinquencies component index. Like all IBA components, the Consumer Loan Delinquencies index is a higher-is-better number, so an increase in the index reflects a decrease in loan delinquencies. The Consumer Loan Delinquencies index rose 3.8 percent to 65.9, up from 63.5 in August. This extends an increase that started in July, when the Consumer Loan Delinquencies index was 59.2, the lowest reading since January.
Source: American Banker and VantageScore Solutions, LLC
Compiled from surveys of executives at hundreds of financial institutions across the United States, the index is an industry bellwether that tracks 16 distinct business indicators, such as volume of deposits, loan applications and loan delinquencies, and how they change month over month. Measurements of each of these components are combined into a single Composite Index, in which readings above 50 indicate business expansion, and those below 50 signify contraction. Find more information about the Index and its component measurements at AmericanBanker.com.