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Senior Loan Officer Opinion Survey on Bank Lending Practices
October 2016

Survey | Full report (PDF)
Table 1 | Table 2 |Chart data
Table 1 (PDF) | Table 2 (PDF) | Charts (PDF)

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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 2016)

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	4.8
Remained basically unchanged	20	95.2
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	21	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	21	100.0
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	21	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	21	100.0
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	21	100.0

c. Costs of credit lines

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	1	4.8
Remained basically unchanged	17	81.0
Eased somewhat	3	14.3
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	18	85.7
Eased somewhat	3	14.3
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	1	4.8
Remained basically unchanged	20	95.2
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	21	100.0

f. Loan covenants

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

g. Collateralization requirements

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

h. Use of interest rate floors (more use=tightened, less use=eased)

	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

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

Responses are not reported when the number of respondents is 3 or fewer.

b. Less favorable or more uncertain economic outlook

Responses are not reported when the number of respondents is 3 or fewer.

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

Responses are not reported when the number of respondents is 3 or fewer.

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

Responses are not reported when the number of respondents is 3 or fewer.

e. Reduced tolerance for risk

Responses are not reported when the number of respondents is 3 or fewer.

f. Decreased liquidity in the secondary market for these loans

Responses are not reported when the number of respondents is 3 or fewer.

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

Responses are not reported when the number of respondents is 3 or fewer.

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

Responses are not reported when the number of respondents is 3 or fewer.

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	4	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	4	100.0

b. More favorable or less uncertain economic outlook

	All Respondents
	Banks	Percent
Not important	3	75.0
Somewhat important	1	25.0
Very important	0	0.0
Total	4	100.0

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

	All Respondents
	Banks	Percent
Not important	4	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	4	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	20.0
Somewhat important	2	40.0
Very important	2	40.0
Total	5	100.0

e. Increased tolerance for risk

	All Respondents
	Banks	Percent
Not important	4	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	4	100.0

f. Increased liquidity in the secondary market for these loans

	All Respondents
	Banks	Percent
Not important	2	50.0
Somewhat important	2	50.0
Very important	0	0.0
Total	4	100.0

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

	All Respondents
	Banks	Percent
Not important	3	75.0
Somewhat important	1	25.0
Very important	0	0.0
Total	4	100.0

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

	All Respondents
	Banks	Percent
Not important	4	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	4	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	0	0.0
Moderately stronger	1	4.8
About the same	19	90.5
Moderately weaker	1	4.8
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

Responses are not reported when the number of respondents is 3 or fewer.

b. Customer accounts receivable financing needs increased

Responses are not reported when the number of respondents is 3 or fewer.

c. Customer investment in plant or equipment increased

Responses are not reported when the number of respondents is 3 or fewer.

d. Customer internally generated funds decreased

Responses are not reported when the number of respondents is 3 or fewer.

e. Customer merger or acquisition financing needs increased

Responses are not reported when the number of respondents is 3 or fewer.

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

Responses are not reported when the number of respondents is 3 or fewer.

g. Customer precautionary demand for cash and liquidity increased

Responses are not reported when the number of respondents is 3 or fewer.

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

a. Customer inventory financing needs decreased

Responses are not reported when the number of respondents is 3 or fewer.

b. Customer accounts receivable financing needs decreased

Responses are not reported when the number of respondents is 3 or fewer.

c. Customer investment in plant or equipment decreased

Responses are not reported when the number of respondents is 3 or fewer.

d. Customer internally generated funds increased

Responses are not reported when the number of respondents is 3 or fewer.

e. Customer merger or acquisition financing needs decreased

Responses are not reported when the number of respondents is 3 or fewer.

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

Responses are not reported when the number of respondents is 3 or fewer.

g. Customer precautionary demand for cash and liquidity decreased

Responses are not reported when the number of respondents is 3 or fewer.

6. At your bank, apart from normal seasonal variation, 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	1	4.8
The number of inquiries has stayed about the same	20	95.2
The number of inquiries has decreased moderately	0	0.0
The number of inquiries has decreased substantially	0	0.0
Total	21	100.0

Questions 7-8 follow up on your bank's responses regarding whether stronger (weaker) demand for C&I loans was in part a result of customer borrowing shifting to (from) your bank from (to) other bank or nonbank sources because these other sources became less (more) attractive (as described in question 5).

7. If your bank responded that demand for C&I loans has strengthened over the past three months and that customer borrowing has shifted to your bank from other bank or nonbank sources because those other sources became less attractive (answer 2 or 3 to question 5A.f), how important have been the following possible reasons for the change? When considering price terms, please consider the cost of credit lines, spreads of loan rates over your bank’s cost of funds, premiums charged on riskier loans, the use of interest rate floors, or other price terms. When considering nonprice terms, please consider the maximum size of credit lines, the maximum maturity of loans or credit lines, loan covenants, collateralization requirements, or other nonprice terms.

a. Other commercial banks' price terms became less attractive

Responses are not reported when the number of respondents is 3 or fewer.

b. Other commercial banks' nonprice terms became less attractive

Responses are not reported when the number of respondents is 3 or fewer.

c. Nonbanks' (such as insurance companies, pension funds, and other nonbank financial institutions) price terms became less attractive

Responses are not reported when the number of respondents is 3 or fewer.

d. Nonbanks' (such as insurance companies, pension funds, and other nonbank financial institutions) nonprice terms became less attractive

Responses are not reported when the number of respondents is 3 or fewer.

e. Corporate bond market price terms became less attractive

Responses are not reported when the number of respondents is 3 or fewer.

f. Corporate bond market nonprice terms became less attractive

Responses are not reported when the number of respondents is 3 or fewer.

8. If your bank responded that demand for C&I loans has weakened over the past three months and that customer borrowing has shifted from your bank to other bank or nonbank sources because those other sources became more attractive (answer 2 or 3 to question 5B.f), how important have been the following possible reasons for the change? When considering price terms, please consider the cost of credit lines, spreads of loan rates over your bank’s cost of funds, premiums charged on riskier loans, the use of interest rate floors, or other price terms. When considering nonprice terms, please consider the maximum size of credit lines, the maximum maturity of loans or credit lines, loan covenants, collateralization requirements, or other nonprice terms.

a. Other commercial banks' price terms became more attractive

Responses are not reported when the number of respondents is 3 or fewer.

b. Other commercial banks' nonprice terms became more attractive

Responses are not reported when the number of respondents is 3 or fewer.

c. Nonbanks' (such as insurance companies, pension funds, and other nonbank financial institutions) price terms became more attractive

Responses are not reported when the number of respondents is 3 or fewer.

d. Nonbanks' (such as insurance companies, pension funds, and other nonbank financial institutions) nonprice terms became more attractive

Responses are not reported when the number of respondents is 3 or fewer.

e. Corporate bond market price terms became more attractive

Responses are not reported when the number of respondents is 3 or fewer.

f. Corporate bond market nonprice terms became more attractive

Responses are not reported when the number of respondents is 3 or fewer.

Question 9 asks about your bank's outlook for the demand for C&I loans over the next six months compared to current conditions.

9. Assuming that economic activity progresses in line with consensus forecasts, what is your outlook for the demand for C&I loans over the next six months compared to current conditions, apart from normal seasonal variation?

	All Respondents
	Banks	Percent
Substantially stronger	0	0.0
Somewhat stronger	3	15.0
About the same	16	80.0
Somewhat weaker	1	5.0
Substantially weaker	0	0.0
My bank does not originate this type of loan	0	0.0
Total	20	100.0

Questions 10-11 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 10 deals with changes in your bank's standards over the past three months. Question 11 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.

10. 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	2	14.3
Remained basically unchanged	12	85.7
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	14	100.0

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

	All Respondents
	Banks	Percent
Substantially stronger	0	0.0
Moderately stronger	6	42.9
About the same	5	35.7
Moderately weaker	3	21.4
Substantially weaker	0	0.0
Total	14	100.0

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1. As of June 30, 2016, the 21 respondents had combined assets of $1.2 trillion, compared to $2.4 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.

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Last update: November 7, 2016