San Francisco continued to report a slowdown in venture capital and private equity activity, but contacts noted an increase in the number of private technology companies moving toward an IPO, the Beige Book reported.

Meanwhile, asset quality improved at banks in the Philadelphia, Kansas City and San Francisco districts. Philadelphia, Richmond, Atlanta and San Francisco lenders reported high competition for qualified borrowers, according to the Fed.

Borrowing standards were reported to have been loosened in some districts. Atlanta contacts noted additional loan capacity, but continued to be cautious with loan activity.

Cleveland bankers considered cost cutting measures, including layoffs, due to shrinking net interest margins, the Fed said.

New York contacts indicated a decrease in loan spreads for all loan categories, particularly residential mortgages, and bankers in the Chicago district said that very few mortgage originations were being kept on their balance sheets and that interest rate swaps were being utilized to hedge against a potential rise in interest rates.

Bankers were generally optimistic about future activity in the Philadelphia and Dallas districts for the near term, but Atlanta bankers expected activity to ease toward the middle of the year.

Analysis of the Fed's districts was prepared at the Federal Reserve Bank of Kansas City and based on information collected on or before Feb. 22.

The Fed's Beige Book is available online.