WASHINGTON Banks across the country continued to see widespread signs of increased lending to consumers and businesses in the third quarter, according to a Federal Reserve report released Wednesday.
"Nearly all reporting districts indicated increasing loan volumes," said the Fed's quarterly economic survey, known as the Beige Book.
The results were a marked improvement from the previous Fed's survey released in June, which showed that two-thirds of the 12 Federal Reserve District banks indicated rising loan demand.
In the most recent quarter, loan demand was "strongest" in the New York, Chicago, and Dallas districts, while loan volumes rose "modestly" in the Richmond, Atlanta, and San Francisco districts. Philadelphia and Cleveland both cited a "slight uptick."
Still, bankers in Philadelphia and Chicago districts both expressed concerns over a rise in risky loans and leveraged lending.
"Contacts in the Philadelphia District expressed a growing concern for loans with risky terms as a result of strong competition among banks to secure new loans," according to the Fed's Beige Book.
"In addition, banking contacts in the Chicago District cited competitive pressure on structure and pricing for traditional and leveraged business lending, particularly from nonbank financial institutions willing to take on higher credit risk," the survey noted.
Bankers in Atlanta also continued to report "increased competition and aggressive rates and loan structures."
The Fed along with other regulators have raised concerns about leveraged lending, including warning of possible supervisory actions.
Separately, lending in the New York district was driven largely by commercial mortgages, although the district saw growth across all loan categories.
While in nearby Philadelphia district loan growth was being driven primarily by consumer lines of credit, such as for credit cards and auto loans.
"Home equity lines also grew, but gains were slower due to ongoing payoffs of prior balances by more cautious borrowers," according to the Fed's Beige Book.
Meanwhile, in the Cleveland district, demand for credit slowed from the second quarter with the strongest amount of business came from commercial real estate loans.
Still, bankers in the district noted that consumer credit demand was still relatively stable with applications for auto loan remaining strong, and households utilizing their home equity products more.