Blog Series Part 4: Southeast & South-Central Shifts

06.12.25 11:30 AM - Comment(s) - By Stuart Brock

Why Growth May Be Masking Risk in Atlanta, Richmond, and Dallas Districts

Introduction

In Part 4 of our Beige Book series, we move to the Southeast and South-Central U.S., focusing on the Federal Reserve Districts of Atlanta (Sixth), Richmond (Fifth), and Dallas (Eleventh). While these regions reported relatively steady activity, that stability may be deceptive. Underneath the surface, Community Banks are navigating slowing momentum in services, softening tourism, and pricing shifts that signal mounting stress. Examiners are likely to question whether banks in these markets are relying too heavily on previous year growth assumptions.

Regional Highlights

Atlanta (Sixth District): Slight growth overall. Employment remained steady, but wage pressures eased. Retail and auto sales were flat. Travel and tourism declined modestly, and commercial construction slowed.
Richmond (Fifth District): Modest growth with signs of softening in manufacturing and transportation. Some firms reported challenges in passing through price increases. Labor markets were stable but showed signs of cooling.
Dallas (Eleventh District): Little change in economic activity. Nonfinancial services were steady but manufacturing decelerated. Business sentiment weakened, and many firms noted uncertainty tied to tariffs and input costs.

Key Implications for Community Banks

Growth May Be Decelerating Under the Surface – While top-line numbers suggest stability, regional soft spots in tourism, logistics, and construction point to areas of emerging risk.
Examiners Will Question Assumptions – Banks that continue to rely on prior year growth models may be seen as failing to adapt to current regional realities.
Pricing Discipline Is Being Tested – Input cost volatility and customer pushback on rate increases are already pressuring margins. Fee income and relationship pricing strategies should be reevaluated.
Loan Demand May Shift, Not Disappear – While total credit demand may hold, composition is changing. Look for shifts toward short-term working capital and away from fixed investment.

📌 Next Up: Western & Plains Outlook

We will take a look at San Francisco and Kansas City, districts where activity is slowing and localized risks are rising.

Stay with us as we help Community Banks navigate examiner expectations before they become enforcement actions.