A strong uptick in consumer lending, most pronounced in the Northeast, propelled American Banker's Index of Banking Activity (IBA) sharply higher in the month of February.
The IBA, which has meandered lower in recent months, climbed to a composite reading of 58.0 in the month, up from a January level of 54.3. The composite score was the IBA's highest since March 2016.
IBA indicators that track consumer loan applications and approvals posted solid gains month-over-month, as did the component that tracks commercial loan applications. In addition, many respondents reported improvement in real estate conditions in the markets where they do business.
Most of the February upturn was the result of a sharp bullish turn in responses from the Northeast, which put up by far the strongest regional reading in the month (the composite score for the Northeast came in at 64.1). All four regions posted scores suggestive of overall expansion, with the West's 53.8 composite score alone hovering near the 50-point dividing line between growth and contraction.
The IBA often enjoys a seasonal boost in the spring, but that effect may be less evident this year. The reason: movements in the index as sharp as the one registered in the Northeast this month tend to be tempered in subsequent months.