Senior Loan Officer Opinion Survey on Bank Lending Practices
October 2010

Table 2

Senior Loan Officer Opinion Survey on Bank Lending Practices
at Selected Branches and Agencies of Foreign Banks in the United States ¹

(Status of policy as of October 2010)

Questions 1-6 ask about commercial and industrial (C&I) loans at your bank. Questions 1-3 deal with changes in your bank's lending policies over the past three months. Questions 4-5 deal with changes in demand for C&I loans over the past three months. Question 6 asks about changes in prospective demand for C&I loans at your bank, as indicated by the volume of recent inquiries about the availability of new credit lines or increases in existing lines. If your bank's lending policies have not changed over the past three months, please report them as unchanged even if the policies are either restrictive or accommodative relative to longer-term norms. If your bank's policies have tightened or eased over the past three months, please so report them regardless of how they stand relative to longer-term norms. Also, please report changes in enforcement of existing policies as changes in policies.

1. Over the past three months, how have your bank's credit standards for approving applications for C&I loans or credit lines—other than those to be used to finance mergers and acquisitions—changed?

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	1	4.5
Remained basically unchanged	19	86.4
Eased somewhat	2	9.1
Eased considerably	0	0.0
Total	22	100.0

2. For applications for C&I loans or credit lines—other than those to be used to finance mergers and acquisitions—that your bank currently is willing to approve, how have the terms of those loans changed over the past three months?

a. Maximum size of credit lines

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	16	72.7
Eased somewhat	6	27.3
Eased considerably	0	0.0
Total	22	100.0

b. Maximum maturity of loans or credit lines

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	17	77.3
Eased somewhat	5	22.7
Eased considerably	0	0.0
Total	22	100.0

c. Costs of credit lines

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	1	4.8
Remained basically unchanged	14	66.7
Eased somewhat	6	28.6
Eased considerably	0	0.0
Total	21	100.0

d. Spreads of loan rates over your bank's cost of funds (wider spreads=tightened, narrower spreads=eased)

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	11	52.4
Eased somewhat	10	47.6
Eased considerably	0	0.0
Total	21	100.0

e. Premiums charged on riskier loans

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	20	95.2
Eased somewhat	1	4.8
Eased considerably	0	0.0
Total	21	100.0

f. Loan covenants

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	20	90.9
Eased somewhat	2	9.1
Eased considerably	0	0.0
Total	22	100.0

g. Collateralization requirements

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	21	95.5
Eased somewhat	1	4.5
Eased considerably	0	0.0
Total	22	100.0

3. If your bank has tightened or eased its credit standards or its terms for C&I loans or credit lines over the past three months (as described in questions 1 and 2), how important have been the following possible reasons for the change?

A. Possible reasons for tightening credit standards or loan terms:

a. Deterioration in your bank's current or expected capital position

	All Respondents
	Banks	Percent
Not important	0	0.0
Somewhat important	0	0.0
Very important	1	100.0
Total	1	100.0

b. Less favorable or more uncertain economic outlook

	All Respondents
	Banks	Percent
Not important	1	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	1	100.0

c. Worsening of industry-specific problems (please specify industries)

	All Respondents
	Banks	Percent
Not important	1	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	1	100.0

d. Less aggressive competition from other banks or nonbank lenders (other financial intermediaries or the capital markets)

	All Respondents
	Banks	Percent
Not important	1	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	1	100.0

e. Reduced tolerance for risk

	All Respondents
	Banks	Percent
Not important	1	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	1	100.0

f. Decreased liquidity in the secondary market for these loans

	All Respondents
	Banks	Percent
Not important	0	0.0
Somewhat important	1	100.0
Very important	0	0.0
Total	1	100.0

g. Increase in defaults by borrowers in public debt markets

	All Respondents
	Banks	Percent
Not important	1	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	1	100.0

h. Deterioration in your bank's current or expected liquidity position

	All Respondents
	Banks	Percent
Not important	1	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	1	100.0

i. Increased concerns about the potential effects of legislative changes, supervisory actions, or accounting standards

	All Respondents
	Banks	Percent
Not important	0	--
Somewhat important	0	--
Very important	0	--
Total	0	--

B. Possible reasons for easing credit standards or loan terms:

a. Improvement in your bank's current or expected capital position

	All Respondents
	Banks	Percent
Not important	6	60.0
Somewhat important	4	40.0
Very important	0	0.0
Total	10	100.0

b. More favorable or less uncertain economic outlook

	All Respondents
	Banks	Percent
Not important	5	55.6
Somewhat important	4	44.4
Very important	0	0.0
Total	9	100.0

c. Improvement in industry-specific problems (please specify industries)

	All Respondents
	Banks	Percent
Not important	8	88.9
Somewhat important	1	11.1
Very important	0	0.0
Total	9	100.0

d. More aggressive competition from other banks or nonbank lenders (other financial intermediaries or the capital markets)

	All Respondents
	Banks	Percent
Not important	1	10.0
Somewhat important	5	50.0
Very important	4	40.0
Total	10	100.0

e. Increased tolerance for risk

	All Respondents
	Banks	Percent
Not important	6	60.0
Somewhat important	4	40.0
Very important	0	0.0
Total	10	100.0

f. Increased liquidity in the secondary market for these loans

	All Respondents
	Banks	Percent
Not important	5	55.6
Somewhat important	4	44.4
Very important	0	0.0
Total	9	100.0

g. Reduction in defaults by borrowers in public debt markets

	All Respondents
	Banks	Percent
Not important	7	77.8
Somewhat important	2	22.2
Very important	0	0.0
Total	9	100.0

h. Improvement in your bank's current or expected liquidity position

	All Respondents
	Banks	Percent
Not important	9	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	9	100.0

i. Reduced concerns about the potential effects of legislative changes, supervisory actions, or accounting standards

	All Respondents
	Banks	Percent
Not important	8	88.9
Somewhat important	1	11.1
Very important	0	0.0
Total	9	100.0

4. Apart from normal seasonal variation, how has demand for C&I loans changed over the past three months? (Please consider only funds actually disbursed as opposed to requests for new or increased lines of credit.)

	All Respondents
	Banks	Percent
Substantially stronger	1	4.8
Moderately stronger	4	19.0
About the same	14	66.7
Moderately weaker	2	9.5
Substantially weaker	0	0.0
Total	21	100.0

5. If demand for C&I loans has strengthened or weakened over the past three months (as described in question 4), how important have been the following possible reasons for the change?

A. If stronger loan demand (answer 1 or 2 to question 4), possible reasons:

a. Customer inventory financing needs increased

	All Respondents
	Banks	Percent
Not important	3	60.0
Somewhat important	2	40.0
Very important	0	0.0
Total	5	100.0

b. Customer accounts receivable financing needs increased

	All Respondents
	Banks	Percent
Not important	3	60.0
Somewhat important	2	40.0
Very important	0	0.0
Total	5	100.0

c. Customer investment in plant or equipment increased

	All Respondents
	Banks	Percent
Not important	1	20.0
Somewhat important	4	80.0
Very important	0	0.0
Total	5	100.0

d. Customer internally generated funds decreased

	All Respondents
	Banks	Percent
Not important	4	80.0
Somewhat important	1	20.0
Very important	0	0.0
Total	5	100.0

e. Customer merger or acquisition financing needs increased

	All Respondents
	Banks	Percent
Not important	1	20.0
Somewhat important	3	60.0
Very important	1	20.0
Total	5	100.0

f. Customer borrowing shifted to your bank from other bank or nonbank sources because these other sources became less attractive

	All Respondents
	Banks	Percent
Not important	2	40.0
Somewhat important	3	60.0
Very important	0	0.0
Total	5	100.0

B. If weaker loan demand (answer 4 or 5 to question 4), possible reasons:

a. Customer inventory financing needs decreased

	All Respondents
	Banks	Percent
Not important	2	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	2	100.0

b. Customer accounts receivable financing needs decreased

	All Respondents
	Banks	Percent
Not important	2	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	2	100.0

c. Customer investment in plant or equipment decreased

	All Respondents
	Banks	Percent
Not important	1	50.0
Somewhat important	1	50.0
Very important	0	0.0
Total	2	100.0

d. Customer internally generated funds increased

	All Respondents
	Banks	Percent
Not important	0	0.0
Somewhat important	1	50.0
Very important	1	50.0
Total	2	100.0

e. Customer merger or acquisition financing needs decreased

	All Respondents
	Banks	Percent
Not important	2	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	2	100.0

f. Customer borrowing shifted from your bank to other bank or nonbank credit sources because these other sources became more attractive

	All Respondents
	Banks	Percent
Not important	0	0.0
Somewhat important	0	0.0
Very important	2	100.0
Total	2	100.0

6. At your bank, how has the number of inquiries from potential business borrowers regarding the availability and terms of new credit lines or increases in existing lines changed over the past three months? (Please consider only inquiries for additional or increased C&I lines as opposed to the refinancing of existing loans.)

	All Respondents
	Banks	Percent
The number of inquiries has increased substantially	0	0.0
The number of inquiries has increased moderately	6	28.6
The number of inquiries has stayed about the same	13	61.9
The number of inquiries has decreased moderately	2	9.5
The number of inquiries has decreased substantially	0	0.0
Total	21	100.0

According to the Federal Reserve’s statistical release H.8, ``Assets and Liabilities of Commercial Banks in the United States,'' C&I loans appear to have declined significantly less in the third quarter of this year than they did in the first two quarters. Questions 7-8 ask about the role of loan originations and other factors in this development.

7. For each of the C&I loan market segments listed below how has the pace of loan originations by your bank changed over the past three months?

a. New syndicated or club loans (large loans originated by a group of relationship lenders) to investment-grade firms (or unrated firms of similar creditworthiness)

	All Respondents
	Banks	Percent
Originations picked up significantly	0	0.0
Originations picked up somewhat	7	36.8
Originations are unchanged	11	57.9
Originations are down somewhat	1	5.3
Originations are down significantly	0	0.0
Total	19	100.0

For this question, 2 respondents answered “My bank does not originate loans in this segment.”

b. New syndicated or club loans to below-investment-grade firms (or unrated firms of similar creditworthiness)

	All Respondents
	Banks	Percent
Originations picked up significantly	1	4.8
Originations picked up somewhat	10	47.6
Originations are unchanged	8	38.1
Originations are down somewhat	1	4.8
Originations are down significantly	1	4.8
Total	21	100.0

For this question, 1 respondent answered “My bank does not originate loans in this segment.”

c. Other new loans to large and middle-market firms (annual sales of $50 million or more)

	All Respondents
	Banks	Percent
Originations picked up significantly	0	0.0
Originations picked up somewhat	6	33.3
Originations are unchanged	12	66.7
Originations are down somewhat	0	0.0
Originations are down significantly	0	0.0
Total	18	100.0

For this question, 2 respondents answered “My bank does not originate loans in this segment.”

d. New loans to small firms (annual sales of less than $50 million)

	All Respondents
	Banks	Percent
Originations picked up significantly	0	0.0
Originations picked up somewhat	0	0.0
Originations are unchanged	9	100.0
Originations are down somewhat	0	0.0
Originations are down significantly	0	0.0
Total	9	100.0

For this question, 9 respondents answered “My bank does not originate loans in this segment.”

e. New loans for other classes of C&I loans not listed above (please specify)

	All Respondents
	Banks	Percent
Originations picked up significantly	0	0.0
Originations picked up somewhat	0	0.0
Originations are unchanged	7	100.0
Originations are down somewhat	0	0.0
Originations are down significantly	0	0.0
Total	7	100.0

For this question, 2 respondents answered “My bank does not originate loans in this segment.”

8. How have the following other factors affecting C&I loan growth changed over the past three months?

a. Terms loans that matured and were rolled over or extended rather than paid down

	All Respondents
	Banks	Percent
Increased significantly	0	0.0
Increased somewhat	4	20.0
Were about unchanged	15	75.0
Decreased somewhat	1	5.0
Decreased significantly	0	0.0
Total	20	100.0

b. Draws on existing revolving credit lines

	All Respondents
	Banks	Percent
Increased significantly	0	0.0
Increased somewhat	0	0.0
Were about unchanged	16	76.2
Decreased somewhat	4	19.0
Decreased significantly	1	4.8
Total	21	100.0

c. Early paydowns

	All Respondents
	Banks	Percent
Increased significantly	0	0.0
Increased somewhat	1	4.8
Were about unchanged	18	85.7
Decreased somewhat	2	9.5
Decreased significantly	0	0.0
Total	21	100.0

d. Charge-offs

	All Respondents
	Banks	Percent
Increased significantly	0	0.0
Increased somewhat	2	11.1
Were about unchanged	14	77.8
Decreased somewhat	2	11.1
Decreased significantly	0	0.0
Total	18	100.0

Questions 9-10 ask about commercial real estate (CRE) loans at your bank, including construction and land development loans and loans secured by nonfarm nonresidential real estate. Question 9 deals with changes in your bank's standards over the past three months. Question 10 deals with changes in demand. If your bank's lending standards or terms have not changed over the relevant period, please report them as unchanged even if they are either restrictive or accommodative relative to longer-term norms. If your bank's standards or terms have tightened or eased over the relevant period, please so report them regardless of how they stand relative to longer-term norms. Also, please report changes in enforcement of existing standards as changes in standards.

9. Over the past three months, how have your bank's credit standards for approving applications for CRE loans changed?

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	1	8.3
Remained basically unchanged	10	83.3
Eased somewhat	1	8.3
Eased considerably	0	0.0
Total	12	100.0

10. Apart from normal seasonal variation, how has demand for CRE loans changed over the past three months?

	All Respondents
	Banks	Percent
Substantially stronger	1	9.1
Moderately stronger	2	18.2
About the same	7	63.6
Moderately weaker	1	9.1
Substantially weaker	0	0.0
Total	11	100.0

11. Over the past three months, how has your bank changed the size of credit lines for existing customers with the following types of accounts? Please consider changes made to line sizes during the life of existing credit agreements as well as changes made to line sizes upon renewal or renegotiation of existing agreements.

a. Business credit card accounts

	All Respondents
	Banks	Percent
Increased considerably	0	0.0
Increased somewhat	0	0.0
Remained basically unchanged	4	100.0
Decreased somewhat	0	0.0
Decreased considerably	0	0.0
Total	4	100.0

b. C&I credit lines (excluding business credit card accounts)

	All Respondents
	Banks	Percent
Increased considerably	0	0.0
Increased somewhat	7	33.3
Remained basically unchanged	11	52.4
Decreased somewhat	3	14.3
Decreased considerably	0	0.0
Total	21	100.0

c. Commercial construction lines of credit

	All Respondents
	Banks	Percent
Increased considerably	0	0.0
Increased somewhat	1	10.0
Remained basically unchanged	7	70.0
Decreased somewhat	1	10.0
Decreased considerably	1	10.0
Total	10	100.0

d. Lines of credit for financial firms

	All Respondents
	Banks	Percent
Increased considerably	0	0.0
Increased somewhat	2	14.3
Remained basically unchanged	10	71.4
Decreased somewhat	1	7.1
Decreased considerably	1	7.1
Total	14	100.0

12. If your bank’s current level of lending standards remains tighter than its average level over the past decade for any of the loan categories listed below, when do you expect that your bank’s lending standards will return to their long-run norms, assuming that economic activity progresses according to consensus forecasts?

A. C&I loans:

a. To large and middle-market firms (annual sales of $50 million or more)

	All Respondents
	Banks	Percent
In the first half of 2011	2	10.5
In the second half of 2011	1	5.3
In 2012	0	0.0
After 2012	0	0.0
I expect my bank’s lending standards to remain tighter than their longer-run average levels for the foreseeable future	4	21.1
My bank’s current level of lending standards is not tighter than its average level over the past decade	12	63.2
Total	19	100.0

b. To small firms (annual sales of less than $50 million)

	All Respondents
	Banks	Percent
In the first half of 2011	1	11.1
In the second half of 2011	0	0.0
In 2012	0	0.0
After 2012	0	0.0
I expect my bank’s lending standards to remain tighter than their longer-run average levels for the foreseeable future	0	0.0
My bank’s current level of lending standards is not tighter than its average level over the past decade	8	88.9
Total	9	100.0

B. Loans secured by commercial real estate:

a. For construction and land development purposes

	All Respondents
	Banks	Percent
In the first half of 2011	1	11.1
In the second half of 2011	0	0.0
In 2012	0	0.0
After 2012	0	0.0
I expect my bank’s lending standards to remain tighter than their longer-run average levels for the foreseeable future	4	44.4
My bank’s current level of lending standards is not tighter than its average level over the past decade	4	44.4
Total	9	100.0

b. For other purposes (including the financing of multifamily residential properties and nonfarm nonresidential properties)

	All Respondents
	Banks	Percent
In the first half of 2011	1	11.1
In the second half of 2011	3	33.3
In 2012	2	22.2
After 2012	0	0.0
I expect my bank’s lending standards to remain tighter than their longer-run average levels for the foreseeable future	0	0.0
My bank’s current level of lending standards is not tighter than its average level over the past decade	3	33.3
Total	9	100.0

1. As of June 30, 2010, the 22 respondents had combined assets of $0.9 trillion, compared to $1.8 trillion for all foreign related banking institutions in the United States. The sample is selected from among the largest foreign-related banking institutions in those Federal Reserve Districts where such institutions are common.

Return to text

Senior Loan Officer Opinion Survey on Bank Lending PracticesOctober 2010

Table 2

Senior Loan Officer Opinion Survey on Bank Lending Practices at Selected Branches and Agencies of Foreign Banks in the United States 1

(Status of policy as of October 2010)

Senior Loan Officer Opinion Survey on Bank Lending Practices
October 2010

Senior Loan Officer Opinion Survey on Bank Lending Practices
at Selected Branches and Agencies of Foreign Banks in the United States ¹