Continuing problems in the energy sector have been sapping industry momentum, according to the latest American Banker Research Index of Banking Activity.

The index fell to 52.7 in January from 55.5 in December and from 54 a year earlier. Though still indicative of expanding activity, the latest reading is the weakest since American Banker Research introduced the index in May 2012. While winter is typically a slow season, January was unseasonably mild.

Depressed oil prices had a big influence on the results.

The index components that track loan applications for commercial and consumer credit dipped below 50, marking the first time that both readings have shown a drop in demand in the same month. January was also the first month that the reading for commercial loan applications revealed any contraction.

Readings for loan approvals — 46.8 for consumer and 47.1 for commercial — also exposed retrenchment in business activity. Softer loan demand is just part of the story; a handful of survey participants indicated that stricter loan reviews and other process-related issues held back activity.

Lending activity in oil-producing states has cooled meaningfully, particularly with commercial accounts, according to data from the Federal Deposit Insurance Corp.

Commercial-and-industrial loans in the FDIC's Dallas region, which includes Oklahoma and Texas, fell 1.4% in the fourth quarter compared with the previous quarter. (C&I loans nationwide rose 2.2% over the same period.)

Bankers who operate in Texas have looked to differentiate between good and bad markets within the state.

"If you're in oil and gas territory in Texas — and we are, in eastern parts of the state — then those markets are a little strained today," Dan Rollins, chief executive of BancorpSouth in Tupelo, Miss., said during a recent conference. "If you get into parts of the state that are not in energy territory — central Texas and the Dallas/Fort Worth market — those are doing quite well."

Still, paydowns in the energy sector have led some banks to revise guidance to reflect more tempered expectations for loan growth this year.

"We absolutely believe, as we work our way through 2016, that the potential is there for a greater level of energy paydowns," Mike Achary, Hancock's chief financial officer, said during a recent conference presentation. Excluding energy-related challenges, Achary said his company's outlook for loan growth "hasn't changed at all."

At the same time, a number of regional banks have warned about broader slowdowns that go beyond energy.

"We see a little softening in the commercial market, primarily the core bank and the spotty kind of areas," Christopher Henson, BB&T's chief operating officer, said during a recent conference. He said the $210 billion-asset company expects "flat" loan growth in the first quarter compared with the previous quarter.

Another area to watch is agricultural lending; several respondents to American Banker Research's survey expressed concern about prices for beef and wheat.

Index readings above 50 indicate monthly expansion; readings below 50 point to contraction. For contrary indicators, including components that track loan delinquencies and loan-rejection rates, a reading above 50 is evidence of deteriorating business activity. The further from 50 a reading is, the stronger the indicated change.

While energy lenders have been aggressively boosting loan-loss allowances, the component that tracks commercial credit quality remains positive, though January's 51.2 reading is the lowest in the history of the index. A sub-50 reading would indicate a rise in delinquencies.

That's what happened with the IBA's component for consumer loan delinquencies, which fell to 46.8 in January. It is unclear if the reading is a seasonal blip or a sign of trouble. Conservative underwriting that took hold after the financial crisis has kept the components that track loan delinquencies steadily positive, but there has been more talk of rising delinquencies in subprime auto lending.

Deposit pricing, from the perspective of bankers, worsened. January's 43.9 reading was the lowest level in the history of the index. Several respondents expressed anxiety about the outlook for deposit pricing after the Federal Reserve Board increased interest rates by 25 basis points late last year.

Absent pressure on the energy sector, banker sentiment is still positive. Loan portfolios continued to grow, though at a slight slower rate than in prior months. Net loans rose 2.3% nationwide in the fourth quarter from the third quarter, though balances increased just 0.6% in the Dallas region, according to FDIC data.

Readings tied to business and real estate conditions remained above 50 in January, indicating a generally positive view.

The IBA is a product of American Banker Research's monthly surveys of bank executives. The latest installment of the diffusion index was based on 313 responses. The composite index is a simple average of readings on a range of indicators based on responses to survey questions on topics that include volume and pricing trends in commercial and consumer lending, loan balances outstanding and deposit-account activity.

Respondents are also asked to weigh in on staffing levels at their institutions, as well as business and real estate conditions in markets where they do business. Every effort is made to make sure that the breakdown of companies included in the executive panel is representative of the industry.

Values for individual index components are equal to the percentage of responses indicating increased activity plus half of those indicating "no change." Component scores are then averaged to arrive at a composite. When calculating the composite, contrary indicators such as delinquencies are scored inversely — the component figure is subtracted from 100.

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