Regional Perspectives

Signs of Economic Slowing Are Emerging, but the Condition of Insured Institutions in the San Francisco Region Remains Stable--However, commercial and industrial loan delinquency levels increased at some insured institutions, and loan growth continues to be funded with noncore liabilities.

An Economic Slowdown Could Increase Consumer Loan Losses--Subprime and specialty credit card lenders, which manage most of the Region's consumer credit, would likely be affected disproportionately by consumer credit quality deterioration.

By the San Francisco Region Staff

In Focus This Quarter

Outlook for Three Industries Facing Uncertainty--Industries as diverse as telecommunications, health care, and textiles have been experiencing problems, despite the economic expansion that began nine years ago. Although the sources of their difficulties are quite different, these industries share some common concerns and challenges. Fierce competition characterizes their operating environment. Armed with a better grasp of the origins of stress in these industries, we will have a better basis for understanding the lending risks associated with a changing policy and economic environment in the years to come.

To the Reader:

The goal of the Regional Outlook is to provide useful risk-related information to bankers, banking agency staff, and other interested readers. To do this more effectively, the second quarter 2001 edition will have a new look. We will publish a single national edition that will provide an overview of economic and banking risks and discussions of these risks as they relate to insured institutions in each FDIC Region. We will tell the national story and, at the same time, alert the reader to specific trends and developments at the regional level.

After considering our experience with this new format, we may adopt it permanently for the second and fourth quarters of each year. The first and third quarter editions will continue to feature in-depth coverage of the economy and banking industry in each Region. Trying new formats will help us find the right balance between regional coverage of specific topics and analysis of economic and banking issues that cut across regional lines.

After you have read the next edition of the Regional Outlook, we would like to hear from you. Does this new approach provide a more effective vehicle for reporting on banking and economic trends? What other suggestions do you have for improving our presentation of risk-related information? Call us with your comments at (877) 275-3342 or (800) 925-4618 (TDD) or e-mail them to lnejezchleb@fdic.gov.

Sincerely,

George E. French
Executive Editor