Banking Conditions Survey

Special Questions

August 2023

For this survey, respondents were asked supplemental questions about their outlook concerns, deposits, commercial real estate lending, and lending standards. Data were collected August 8-16, and 68 bankers responded to the survey.

1. What are the top three concerns around your institution’s outlook over the next six months, if any? Please rank in order of importance.

	May '23	Jun. '23	Aug. '23
	Total (percent)	Total (percent)	Total (percent)	Rank 1 (percent)	Rank 2 (percent)	Rank 3 (percent)
Liquidity/deposit volume	61.3	54.8	57.4	23.5	17.6	16.4
Net interest margin	46.8	54.8	42.6	20.6	16.2	6.0
Regulatory burden	35.5	29.0	42.6	17.6	11.8	13.4
Financial/economic uncertainty	46.8	43.5	33.8	11.8	10.3	11.9
Loan demand	19.4	12.9	25.0	2.9	14.7	7.5
Cybersecurity	22.6	19.4	23.5	5.9	5.9	11.9
Overall profitability	17.7	16.1	19.1	1.5	5.9	11.9
Competition for loans	8.1	3.2	11.8	7.4	2.9	1.5
Noncurrent loans	4.8	11.3	11.8	2.9	1.5	7.5
Difficulty hiring and/or retaining employees	11.3	14.5	11.8	1.5	5.9	4.5
Commercial real estate risks	6.5	12.9	10.3	1.5	4.4	4.5
Unrealized losses on securities portfolio	14.5	16.1	7.4	2.9	1.5	3.0
Other	1.6	3.2	1.5	0.0	1.5	0.0

NOTE: 68 responses.

2. Over the past six weeks, how has your volume of core deposits changed?

	Jun. '23 (percent)	Aug. '23 (percent)
Increased slightly	26.2	31.3
Increased significantly	0.0	3.0
No change	23.0	20.9
Decreased slightly	45.9	41.8
Decreased significantly	4.9	3.0

NOTE: 67 responses.

3. Over the next six weeks, how do you expect your volume of core deposits to change?

	Jun. '23 (percent)	Aug. '23 (percent)
Increase slightly	30.6	35.8
Increase significantly	1.6	3.0
No change	33.9	34.3
Decrease slightly	33.9	26.9
Decrease significantly	0.0	0.0

NOTE: 67 responses.

4. How concerned are you about the performance of the following categories in your commercial real estate (CRE) loan portfolio, on a scale of 1 (not concerned at all) to 5 (extremely concerned)?

	1 (not concerned at all)	2	3	4	5 (extremely concerned)
	Percent of responses
Construction and land development	24.6	41.5	26.2	7.7	0.0
Industrial	30.8	38.5	23.1	7.7	0.0
Retail	20.3	40.6	25.0	14.1	0.0
Multifamily	27.0	47.6	15.9	9.5	0.0
Office	25.0	25.0	26.6	14.1	9.4
Hotels/lodging	27.0	34.9	23.8	11.1	3.2

NOTES: 65 responses. This question was also posed in May; view the results.

5. Assuming that economic activity progresses in line with consensus forecasts, how does your institution expect its lending standards for the following loan categories to change over the remainder of 2023 compared to its current standards, apart from normal seasonal variation?

	Ease considerably	Ease somewhat	Remain basically unchanged	Tighten somewhat	Tighten considerably
Commercial and industrial	0.0	0.0	76.9	16.9	6.2
Commercial real estate	0.0	0.0	64.1	28.1	7.8
Residential real estate	0.0	0.0	83.3	16.7	0.0
Consumer	0.0	1.5	77.6	19.4	1.5

NOTE: 67 responses.

5a. If your institution expects to tighten lending standards for any of the loan categories reported in question 5, how important are the following possible reasons for the expected tightening?

	Not important	Somewhat important	Very important
Less favorable or more uncertain economic outlook	7.4	40.7	51.9
Increased concerns about the adverse effects of future legislative changes, supervisory actions, or changes in accounting standards	22.2	25.9	51.9
Increased concerns about your institution's funding costs	21.4	39.3	39.3
Expected deterioration in, or desire to improve, your institution's liquidity position	11.5	57.7	30.8
Increased concerns about deposit outflows at your institution	7.4	63.0	29.6
Expected deterioration in credit quality of commercial real estate loans	14.8	55.6	29.6
Expected deterioration in customers' collateral values	22.2	48.1	29.6
Expected deterioration in credit quality of loans other than commercial real estate loans	18.5	63.0	18.5
Expected deterioration in, or desire to improve, your institution's capital position	40.7	44.4	14.8
Increased concerns about declines in the market value of your institution's fixed-income assets	48.1	44.4	7.4
Expected reduction in competition from other banks or nonbank lenders	70.4	22.2	7.4
Expected reduction in risk tolerance	33.3	63.0	3.7
Expected reduction in ease of selling loans in the secondary market	74.1	22.2	3.7

NOTES: 28 responses. This question only posed to those who indicated any expected tightening in lending standards in question 5.

Questions regarding the Banking Conditions Survey can be addressed to Emily Kerr at emily.kerr@dal.frb.org.