Senior Loan Officer Opinion Survey on Bank Lending Practices
October 2005

Table 1

Senior Loan Officer Opinion Survey on Bank Lending Practices
at Selected Large Banks in the United States ¹

(Status of policy as of October 2005)

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--to large and middle-market firms and to small firms changed? (If your bank defines firm size differently from the categories suggested below, please use your definitions and indicate what they are.)

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

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Tightened considerably	0	0.0	0	0.0	0	0.0
Tightened somewhat	0	0.0	0	0.0	0	0.0
Remained basically unchanged	52	91.2	29	87.9	23	95.8
Eased somewhat	5	8.8	4	12.1	1	4.2
Eased considerably	0	0.0	0	0.0	0	0.0
Total	57	100.0	33	100.0	24	100.0

b. Standards for small firms (annual sales of less than $50 million):

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Tightened considerably	0	0.0	0	0.0	0	0.0
Tightened somewhat	0	0.0	0	0.0	0	0.0
Remained basically unchanged	54	94.7	31	93.9	23	95.8
Eased somewhat	3	5.3	2	6.1	1	4.2
Eased considerably	0	0.0	0	0.0	0	0.0
Total	57	100.0	33	100.0	24	100.0

2. For applications for C&I loans or credit lines--other than those to be used to finance mergers and acquisitions--from large and middle-market firms and from small firms that your bank currently is willing to approve, how have the terms of those loans changed over the past three months? (Please assign each term a number between 1 and 5 using the following scale: 1=tightened considerably, 2=tightened somewhat, 3=remained basically unchanged, 4=eased somewhat, 5=eased considerably.)

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

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Maximum size of credit lines	3.19	3.21	3.17
Maximum maturity of loans or credit lines	3.21	3.30	3.08
Costs of credit lines	3.32	3.33	3.29
Spreads of loan rates over your bank's cost of funds (wider spreads=tightened, narrower spreads=eased)	3.47	3.42	3.54
Premiums charged on riskier loans	3.07	3.21	2.88
Loan covenants	3.19	3.27	3.08
Collateralization requirements	3.09	3.12	3.04
Other (please specify)	3.00	0.00	3.00
Number of banks responding	57	33	24

b. Terms for small firms (annual sales of less than $50 million):

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Maximum size of credit lines	3.07	3.06	3.08
Maximum maturity of loans or credit lines	3.12	3.12	3.13
Costs of credit lines	3.23	3.24	3.21
Spreads of loan rates over your bank's cost of funds (wider spreads=tightened, narrower spreads=eased)	3.37	3.27	3.50
Premiums charged on riskier loans	3.02	3.18	2.79
Loan covenants	3.11	3.18	3.00
Collateralization requirements	3.05	3.12	2.96
Other (please specify)	3.00	0.00	3.00
Number of banks responding	57	33	24

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? (Please respond to either A, B, or both as appropriate and rate each possible reason using the following scale: 1=not important, 2=somewhat important, 3=very important.)

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

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Deterioration in your bank's current or expected capital position	1.00	1.00	1.00
Less favorable or more uncertain economic outlook	1.62	1.75	1.40
Worsening of industry-specific problems (please specify industries)	1.54	1.67	1.25
Less aggressive competition from other banks or nonbank lenders (other financial intermediaries or the capital markets)	1.00	1.00	1.00
Reduced tolerance for risk	1.38	1.13	1.80
Decreased liquidity in the secondary market for these loans	1.08	1.13	1.00
Increase in defaults by borrowers in public debt markets	1.00	1.00	1.00
Other (please specify)	2.67	3.00	2.50
Number of banks responding	15	9	6

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

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Improvement in your bank's current or expected capital position	1.09	1.05	1.15
More favorable or less uncertain economic outlook	1.27	1.30	1.23
Improvement in industry-specific problems (please specify industries)	1.03	1.05	1.00
More aggressive competition from other banks or nonbank lenders (other financial intermediaries or the capital markets)	2.74	2.95	2.43
Increased tolerance for risk	1.52	1.70	1.23
Increased liquidity in the secondary market for these loans	1.21	1.35	1.00
Reduction in defaults by borrowers in public debt markets	1.21	1.30	1.08
Other (please specify)	1.00	1.00	0.00
Number of banks responding	35	21	14

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.)

a. Demand for C&I loans from large and middle-market firms (annual sales of $50 million or more):

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Substantially stronger	1	1.8	0	0.0	1	4.2
Moderately stronger	15	26.8	9	28.1	6	25.0
About the same	32	57.1	17	53.1	15	62.5
Moderately weaker	8	14.3	6	18.8	2	8.3
Substantially weaker	0	0.0	0	0.0	0	0.0
Total	56	100.0	32	100.0	24	100.0

b. Demand for C&I loans from small firms (annual sales of less than $50 million):

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Substantially stronger	1	1.8	0	0.0	1	4.2
Moderately stronger	12	21.4	6	18.8	6	25.0
About the same	35	62.5	21	65.6	14	58.3
Moderately weaker	8	14.3	5	15.6	3	12.5
Substantially weaker	0	0.0	0	0.0	0	0.0
Total	56	100.0	32	100.0	24	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? (Please respond to either A, B, or both as appropriate and rate each possible reason using the following scale: 1=not important, 2=somewhat important, 3=very important.)

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

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Customer inventory financing needs increased	2.00	2.00	2.00
Customer accounts receivable financing needs increased	2.06	2.00	2.13
Customer investment in plant or equipment increased	1.65	1.56	1.75
Customer internally generated funds decreased	1.33	1.40	1.25
Customer merger or acquisition financing needs increased	1.67	1.90	1.38
Customer borrowing shifted to your bank from other bank or nonbank sources because these other sources became less attractive	1.59	1.67	1.50
Other (please specify)	3.00	3.00	0.00
Number of banks responding	18	10	8

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

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Customer inventory financing needs decreased	1.63	1.60	1.67
Customer accounts receivable financing needs decreased	1.38	1.60	1.00
Customer investment in plant or equipment decreased	1.88	2.20	1.33
Customer internally generated funds increased	1.38	1.40	1.33
Customer merger or acquisition financing needs decreased	1.56	1.83	1.00
Customer borrowing shifted from your bank to other bank or nonbank credit sources because these other sources became more attractive	1.75	2.00	1.33
Other (please specify)	2.67	2.50	3.00
Number of banks responding	11	7	4

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 C&I lines as opposed to the refinancing of existing loans.)

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
The number of inquiries has increased substantially	2	3.6	1	3.1	1	4.2
The number of inquiries has increased moderately	10	17.9	5	15.6	5	20.8
The number of inquiries has stayed about the same	40	71.4	25	78.1	15	62.5
The number of inquiries has decreased moderately	4	7.1	1	3.1	3	12.5
The number of inquiries has decreased substantially	0	0.0	0	0.0	0	0.0
Total	56	100.0	32	100.0	24	100.0

Questions 7-8 ask about commercial real estate loans at your bank, including construction and land development loans and loans secured by nonfarm nonresidential real estate. Question 7 deals with changes in your bank's standards over the last three months. Question 8 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.

7. Over the past three months, how have your bank's credit standards for approving applications for commercial real estate loans changed?

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Tightened considerably	0	0.0	0	0.0	0	0.0
Tightened somewhat	5	8.8	4	12.1	1	4.2
Remained basically unchanged	44	77.2	26	78.8	18	75.0
Eased somewhat	8	14.0	3	9.1	5	20.8
Eased considerably	0	0.0	0	0.0	0	0.0
Total	57	100.0	33	100.0	24	100.0

8. Apart from normal seasonal variation, how has demand for commercial real estate loans changed over the past three months?

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Substantially stronger	1	1.8	0	0.0	1	4.2
Moderately stronger	11	19.3	5	15.2	6	25.0
About the same	40	70.2	27	81.8	13	54.2
Moderately weaker	5	8.8	1	3.0	4	16.7
Substantially weaker	0	0.0	0	0.0	0	0.0
Total	57	100.0	33	100.0	24	100.0

Questions 9-12 ask about residential mortgage loans at your bank. Question 9 deals with changes in your bank's credit standards over the past three months, and question 10 deals with changes in demand over the same period. Question 11 deals with changes on terms on residential mortgage loans over the past two years. Question 12 asks about the response of your bank to the recent Federal regulatory guidance on home-equity lines of credit. If your bank's credit standards have not changed over the relevant period, please report them as unchanged even if the standards are either restrictive or accommodative relative to longer-term norms. If your bank's credit standards 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 from individuals for mortgage loans to purchase homes changed?

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Tightened considerably	0	0.0	0	0.0	0	0.0
Tightened somewhat	3	5.6	2	6.3	1	4.5
Remained basically unchanged	46	85.2	25	78.1	21	95.5
Eased somewhat	5	9.3	5	15.6	0	0.0
Eased considerably	0	0.0	0	0.0	0	0.0
Total	54	100.0	32	100.0	22	100.0

10. Apart from normal seasonal variation, how has demand for mortgages to purchase homes changed over the past three months? (Please consider only new originations as opposed to the refinancing of existing mortgages.)

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Substantially stronger	0	0.0	0	0.0	0	0.0
Moderately stronger	5	9.3	3	9.4	2	9.1
About the same	32	59.3	19	59.4	13	59.1
Moderately weaker	17	31.5	10	31.3	7	31.8
Substantially weaker	0	0.0	0	0.0	0	0.0
Total	54	100.0	32	100.0	22	100.0

11. Over the past two years , how have the following terms changed for mortgage loans to purchase homes originated by your bank? (Please assign each term a number between 1 and 5 using the following scale: 1=tightened considerably, 2=tightened somewhat, 3=remained basically unchanged, 4=eased somewhat, 5=eased considerably.)

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Maximum size of primary mortgage	3.40	3.41	3.40
Maximum size of second mortgage	3.31	3.35	3.24
Maximum maturity	3.15	3.09	3.24
Maximum loan-to-value ratio including all outstanding loans for that property	3.26	3.28	3.24
Loan origination fees (higher fees=tightened, lower fees=eased)	3.11	3.03	3.24
Spreads of mortgage rates over an appropriate market base rate (wider spreads=tightened, narrower spreads=eased)	3.28	3.34	3.19
Maximum length of extended interest-rate locks	3.08	3.00	3.19
Maximum debt-service ratio including all other debt payments	3.19	3.22	3.14
Minimum required credit score	3.09	3.16	3.00
Other (please specify)	3.00	3.00	3.00
Number of banks responding	53	32	21

12. Because of rapid growth in home equity lending that has involved products with higher embedded risk, federal bank regulators released, on May 16, 2005, joint guidance on home-equity lines of credit (SR 05-11). In light of the concerns expressed in the supervisory letter, how has your bank changed its lending standards and terms for home equity lines of credit? (Please assign each term a number between 1 and 5 using the following scale: 1=tightened considerably, 2=tightened somewhat, 3=remained basically unchanged, 4=eased somewhat, 5=eased considerably.) Note: The text of the letter is available from the Board's public website:
http://www.federalreserve.gov/boarddocs/srletters/2005/sr0511.htm

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Credit standards	2.95	2.97	2.92
Price-related terms (higher fees and wider spreads=tightened; lower fees and narrower spreads=eased)	2.91	2.90	2.92
Non-price-related terms	2.95	2.94	2.96
Number of banks responding	55	31	24

Questions 13-18 ask about consumer lending at your bank. Question 13 deals with changes in your bank's willingness to make consumer loans over the past three months. Questions 14-17 deal with changes in credit standards and loan terms over the same period. Question 18 deals with changes in demand for consumer loans over the past three months. 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.

13. Please indicate your bank's willingness to make consumer installment loans now as opposed to three months ago.

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Much more willing	0	0.0	0	0.0	0	0.0
Somewhat more willing	4	7.5	2	6.7	2	8.7
About unchanged	47	88.7	27	90.0	20	87.0
Somewhat less willing	2	3.8	1	3.3	1	4.3
Much less willing	0	0.0	0	0.0	0	0.0
Total	53	100.0	30	100.0	23	100.0

14. Over the past three months, how have your bank's credit standards for approving applications for credit cards from individuals or households changed?

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Tightened considerably	0	0.0	0	0.0	0	0.0
Tightened somewhat	2	6.1	1	6.7	1	5.6
Remained basically unchanged	28	84.8	11	73.3	17	94.4
Eased somewhat	3	9.1	3	20.0	0	0.0
Eased considerably	0	0.0	0	0.0	0	0.0
Total	33	100.0	15	100.0	18	100.0

15. Over the past three months, how have your bank's credit standards for approving applications for consumer loans other than credit card loans changed?

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Tightened considerably	0	0.0	0	0.0	0	0.0
Tightened somewhat	1	1.9	1	3.4	0	0.0
Remained basically unchanged	48	92.3	25	86.2	23	100.0
Eased somewhat	3	5.8	3	10.3	0	0.0
Eased considerably	0	0.0	0	0.0	0	0.0
Total	52	100.0	29	100.0	23	100.0

16. Over the past three months, how has your bank changed the following terms and conditions on new or existing credit card accounts for individuals or households? (Please assign each term a number between 1 and 5 using the following scale: 1=tightened considerably, 2=tightened somewhat, 3=remained basically unchanged, 4=eased somewhat, 5=eased considerably.)

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Credit limits	3.07	3.15	3.00
Spreads of interest rates charged on outstanding balances over your bank's cost of funds (wider spreads=tightened, narrower spreads=eased)	2.97	2.85	3.06
Minimum percent of outstanding balances required to be repaid each month	2.90	2.77	3.00
Minimum required credit score (increased score=tightened, reduced score=eased)	3.03	3.08	3.00
The extent to which loans are granted to some customers that do not meet credit scoring thresholds (increased=eased, decreased=tightened)	3.00	3.08	2.94
Other (please specify)	3.00	3.00	3.00
Number of banks responding	31	13	18

17. Over the past three months, how has your bank changed the following terms and conditions on consumer loans other than credit card loans? (Please assign each term a number between 1 and 5 using the following scale: 1=tightened considerably, 2=tightened somewhat, 3=remained basically unchanged, 4=eased somewhat, 5=eased considerably.)

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Maximum maturity	3.02	3.00	3.04
Spreads of loan rates over your bank's cost of funds (wider spreads=tightened, narrower spreads=eased)	2.98	2.97	3.00
Minimum required downpayment	3.00	3.00	3.00
Minimum required credit score (increased score=tightened, reduced score=eased)	3.00	3.00	3.00
The extent to which loans are granted to some customers that do not meet credit scoring thresholds (increased=eased, decreased=tightened)	2.96	2.97	2.96
Other (please specify)	2.50	2.50	0.00
Number of banks responding	53	30	23

18. Apart from normal seasonal variation, how has demand for consumer loans of all types changed over the past three months?

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Substantially stronger	0	0.0	0	0.0	0	0.0
Moderately stronger	6	11.3	3	10.0	3	13.0
About the same	30	56.6	16	53.3	14	60.9
Moderately weaker	16	30.2	10	33.3	6	26.1
Substantially weaker	1	1.9	1	3.3	0	0.0
Total	53	100.0	30	100.0	23	100.0

19. How has the bankruptcy reform legislation changed your bank's lending policies for businesses and households? (Please assign each term a number between 1 and 5 using the following scale: 1=tightened considerably, 2=tightened somewhat, 3=remained basically unchanged, 4=eased somewhat, 5=eased considerably.)

a. For loans to businesses:

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Credit standards	3.00	3.00	3.00
Price-related terms (higher fees and wider spreads=tightened; lower fees and narrower spreads=eased)	3.00	3.00	3.00
Non-price-related terms	3.00	3.00	3.00
Number of banks responding	55	32	23

b. For loans to households:

	All Respondents	Large Banks	Other Banks
	Mean	Mean	Mean
Credit standards	2.98	3.00	2.96
Price-related terms (higher fees and wider spreads=tightened; lower fees and narrower spreads=eased)	3.00	3.00	3.00
Non-price-related terms	3.00	3.00	3.00
Number of banks responding	54	31	23

20. After accounting for changes in standards and terms, and assuming economic activity progresses in line with consensus forecasts, how is the bankruptcy reform legislation expected to affect your bank's credit losses on new loans to businesses and households?

a. For loans to businesses:

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Substantially higher	0	0.0	0	0.0	0	0.0
Moderately higher	2	3.6	1	3.1	1	4.2
About the same	43	76.8	22	68.8	21	87.5
Moderately lower	11	19.6	9	28.1	2	8.3
Substantially lower	0	0.0	0	0.0	0	0.0
Total	56	100.0	32	100.0	24	100.0

b. For loans to households:

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Substantially higher	0	0.0	0	0.0	0	0.0
Moderately higher	3	5.5	1	3.2	2	8.3
About the same	32	58.2	19	61.3	13	54.2
Moderately lower	20	36.4	11	35.5	9	37.5
Substantially lower	0	0.0	0	0.0	0	0.0
Total	55	100.0	31	100.0	24	100.0

21. After accounting for changes in standards and terms, how is the bankruptcy reform legislation expected to change demand for credit from businesses and households that are existing customers of your bank?

a. For loans to businesses:

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Substantially stronger	0	0.0	0	0.0	0	0.0
Moderately stronger	1	1.8	1	3.1	0	0.0
About the same	54	96.4	31	96.9	23	95.8
Moderately weaker	1	1.8	0	0.0	1	4.2
Substantially weaker	0	0.0	0	0.0	0	0.0
Total	56	100.0	32	100.0	24	100.0

b. For loans to households:

	All Respondents		Large Banks		Other Banks
	Banks	Percent	Banks	Percent	Banks	Percent
Substantially stronger	0	0.0	0	0.0	0	0.0
Moderately stronger	0	0.0	0	0.0	0	0.0
About the same	53	96.4	30	96.8	23	95.8
Moderately weaker	2	3.6	1	3.2	1	4.2
Substantially weaker	0	0.0	0	0.0	0	0.0
Total	55	100.0	31	100.0	24	100.0

1. The sample is selected from among the largest banks in each Federal Reserve District. In the table, large banks are defined as those with total domestic assets of $20 billion or more as of June 30, 2005. The combined assets of the 33 large banks totaled $4.44 trillion, compared to $4.69 trillion for the entire panel of 57 banks, and $7.61 trillion for all domestically chartered, federally insured commercial banks.

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Senior Loan Officer Opinion Survey on Bank Lending PracticesOctober 2005

Table 1

Senior Loan Officer Opinion Survey on Bank Lending Practices at Selected Large Banks in the United States 1

(Status of policy as of October 2005)

Senior Loan Officer Opinion Survey on Bank Lending Practices
October 2005

Senior Loan Officer Opinion Survey on Bank Lending Practices
at Selected Large Banks in the United States ¹