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Camera-ready art of "Regional Outlook" (487Kb PDF file - PDF help or hard copy)
From the Editor
In Focus This Quarter
High Loan-to-Value Lending: A New Frontier in Home Equity Lending--High loan-to-value home equity loans have grown in popularity as consumers have sought ways to consolidate credit card debt and lenders have sought ways to deal with declining profit margins on traditional home equity loans. High loan-to-value loans pose unique risks for lenders because of their hybrid nature: they combine characteristics of both a secured home equity loan and an unsecured consumer loan. Losses on such loans are increasing rapidly, and the current rate of loss raises concern about how these loans might perform in an economic recession.
By Diane Ellis
Commercial Development Still Hot in Many Major Markets, but Slower Growth May Be Ahead--Following the experience of the 1980s, the threat of an oversupply of commercial real estate is watched with keen interest by market participants and observers alike. This article highlights nine metropolitan areas that may be vulnerable to overbuilding based on the rapid pace of development occurring within those markets, various indicators of current and prospective demand, and projections by credible industry analysts. These concerns could be mitigated to the extent that reduced credit availability within the capital markets leads to a slowing in construction activity.
By Steven Burton
Recent Trends in Syndicated Lending--A strong U.S. economy, intensifying lender competition, and increasing marketability of bank loans have driven record volumes of syndicated lending in the 1990s. These factors led to several years of liberalized underwriting in the syndicated market. While evidence suggests that some banks have tightened standards and terms for loans to large commercial borrowers, market developments and underwriting trends over the past several years have implications for credit quality, earnings, and liquidity at institutions that hold or originate syndicated loans.
By Steven E. Cunningham, Ronald L. Spieker
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Regional Perspectives |
| Atlanta--Several of the Region's real estate markets rank among the nation's most active in new construction, with community bank exposure growing in the Atlanta market. |
Boston--Asset-quality indicators remain generally favorable, but delinquencies and charge-offs are increasing in credit card and consumer portfolios. |
| Chicago--Over one-third of the Region's community institutions experienced rapid growth in commercial real estate and construction loans. |
Dallas--After several years of declining office vacancy rates, large amounts of newly constructed office space are coming onto the Dallas metropolitan market, making the Dallas market vulnerable to overbuilding. |
| Kansas City--The outlook for the Region's farm economy appears unfavorable, as low commodity prices and declining farm income are expected to continue. |
Memphis--Commercial real estate markets remain active, with Nashville reporting high levels of construction starts despite signs of softening demand for office space. |
| New York--Regional commercial real estate markets remain generally subdued, with some markets reporting increased office construction activity and rising demand. |
San Francisco--Active commercial real estate development in several of the Region's markets raises concerns about potential overbuilding, while community bank exposure in some of these markets has grown significantly. |
