Senior Loan Officer Opinion Survey on Bank Lending Practices
July 2012

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 July 2012)

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	2	8.7
Remained basically unchanged	21	91.3
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	23	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	4	17.4
Remained basically unchanged	17	73.9
Eased somewhat	2	8.7
Eased considerably	0	0.0
Total	23	100.0

b. Maximum maturity of loans or credit lines

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	2	8.7
Remained basically unchanged	20	87.0
Eased somewhat	1	4.3
Eased considerably	0	0.0
Total	23	100.0

c. Costs of credit lines

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	3	13.6
Remained basically unchanged	19	86.4
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	22	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	4	18.2
Remained basically unchanged	15	68.2
Eased somewhat	3	13.6
Eased considerably	0	0.0
Total	22	100.0

e. Premiums charged on riskier loans

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	4	18.2
Remained basically unchanged	17	77.3
Eased somewhat	1	4.5
Eased considerably	0	0.0
Total	22	100.0

f. Loan covenants

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	1	4.3
Remained basically unchanged	20	87.0
Eased somewhat	2	8.7
Eased considerably	0	0.0
Total	23	100.0

g. Collateralization requirements

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	23	100.0
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	23	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	1	5.0
Remained basically unchanged	18	90.0
Eased somewhat	1	5.0
Eased considerably	0	0.0
Total	20	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	5	83.3
Somewhat important	1	16.7
Very important	0	0.0
Total	6	100.0

b. Less favorable or more uncertain economic outlook

	All Respondents
	Banks	Percent
Not important	1	16.7
Somewhat important	2	33.3
Very important	3	50.0
Total	6	100.0

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

	All Respondents
	Banks	Percent
Not important	3	50.0
Somewhat important	3	50.0
Very important	0	0.0
Total	6	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	4	80.0
Somewhat important	0	0.0
Very important	1	20.0
Total	5	100.0

e. Reduced tolerance for risk

	All Respondents
	Banks	Percent
Not important	4	66.7
Somewhat important	1	16.7
Very important	1	16.7
Total	6	100.0

f. Decreased liquidity in the secondary market for these loans

	All Respondents
	Banks	Percent
Not important	4	66.7
Somewhat important	2	33.3
Very important	0	0.0
Total	6	100.0

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

	All Respondents
	Banks	Percent
Not important	4	66.7
Somewhat important	2	33.3
Very important	0	0.0
Total	6	100.0

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

	All Respondents
	Banks	Percent
Not important	3	50.0
Somewhat important	3	50.0
Very important	0	0.0
Total	6	100.0

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	5	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	5	100.0

b. More favorable or less uncertain economic outlook

	All Respondents
	Banks	Percent
Not important	5	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	5	100.0

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

	All Respondents
	Banks	Percent
Not important	5	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	5	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	3	75.0
Somewhat important	0	0.0
Very important	1	25.0
Total	4	100.0

e. Increased tolerance for risk

	All Respondents
	Banks	Percent
Not important	5	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	5	100.0

f. Increased liquidity in the secondary market for these loans

	All Respondents
	Banks	Percent
Not important	5	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	5	100.0

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

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

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

	All Respondents
	Banks	Percent
Not important	5	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	5	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	0	0.0
About the same	17	77.3
Moderately weaker	5	22.7
Substantially weaker	0	0.0
Total	22	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	0	--
Somewhat important	0	--
Very important	0	--
Total	0	--

b. Customer accounts receivable financing needs increased

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

c. Customer investment in plant or equipment increased

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

d. Customer internally generated funds decreased

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

e. Customer merger or acquisition financing needs increased

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

b. Customer accounts receivable financing needs decreased

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

c. Customer investment in plant or equipment decreased

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

d. Customer internally generated funds increased

	All Respondents
	Banks	Percent
Not important	2	40.0
Somewhat important	1	20.0
Very important	2	40.0
Total	5	100.0

e. Customer merger or acquisition financing needs decreased

	All Respondents
	Banks	Percent
Not important	2	40.0
Somewhat important	2	40.0
Very important	1	20.0
Total	5	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	3	60.0
Somewhat important	1	20.0
Very important	1	20.0
Total	5	100.0

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	0	0.0
The number of inquiries has stayed about the same	20	90.9
The number of inquiries has decreased moderately	2	9.1
The number of inquiries has decreased substantially	0	0.0
Total	22	100.0

The ongoing fiscal and financial strains in Europe may have affected lending conditions and funding options for banks headquartered in Europe and their affiliates and subsidiaries. Question 7 addresses changes in your bank's lending policies toward these banking organizations over the past three months. Question 8 addresses changes in these organizations’ demand for funding.
In answering these questions, please consider banks headquartered in Europe and affiliates and subsidiaries of European banks regardless of the location of those affiliates and subsidiaries.

7. Over the past three months, how have your bank's credit standards and terms for approving applications for loans or credit lines for banks headquartered in Europe and their affiliates and subsidiaries (as described in the introduction to these special questions) changed?

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	6	42.9
Remained basically unchanged	8	57.1
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	14	100.0

For this question, 6 respondents answered “My bank does not make loans or extend credit lines to banks headquartered in Europe or their affiliates or subsidiaries.”

8. Over the past three months and apart from normal seasonal variation, how has demand for loans at your bank from banks headquartered in Europe and their affiliates and subsidiaries (as described in the introduction to these special questions) changed? (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	0	0.0
About the same	13	92.9
Moderately weaker	1	7.1
Substantially weaker	0	0.0
Total	14	100.0

For this question, 6 respondents answered “My bank does not make loans or extend credit lines to banks headquartered in Europe or their affiliates or subsidiaries.”

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	1	6.3
Tightened somewhat	0	0.0
Remained basically unchanged	14	87.5
Eased somewhat	1	6.3
Eased considerably	0	0.0
Total	16	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	0	0.0
Moderately stronger	1	6.7
About the same	10	66.7
Moderately weaker	3	20.0
Substantially weaker	1	6.7
Total	15	100.0

Question 11 asks you to describe the current level of lending standards at your bank relative to the range of standards that has prevailed between 2005 and the present. For each of the loan categories listed below, please consider the points at which standards at your bank were tightest and easiest during this period.

11. Using the range between the tightest and the easiest that lending standards at your bank have been between 2005 and the present, for each of the loan categories listed below, how would you describe the current level of standards relative to that range?

A. C&I loans:

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
Near the easiest level that standards have been during this period	0	0.0
Significantly easier than the midpoint of the range that standards have been during this period	1	4.8
Somewhat easier than the midpoint of the range that standards have been during this period	5	23.8
Near the middle of the range that standards have been during this period	8	38.1
Somewhat tighter than the midpoint of the range that standards have been during this period	5	23.8
Significantly tighter than the midpoint of the range that standards have been during this period	0	0.0
Near the tightest level that standards have been during this period	2	9.5
Total	21	100.0

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

	All Respondents
	Banks	Percent
Near the easiest level that standards have been during this period	0	0.0
Significantly easier than the midpoint of the range that standards have been during this period	0	0.0
Somewhat easier than the midpoint of the range that standards have been during this period	4	21.1
Near the middle of the range that standards have been during this period	6	31.6
Somewhat tighter than the midpoint of the range that standards have been during this period	5	26.3
Significantly tighter than the midpoint of the range that standards have been during this period	2	10.5
Near the tightest level that standards have been during this period	2	10.5
Total	19	100.0

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

	All Respondents
	Banks	Percent
Near the easiest level that standards have been during this period	0	0.0
Significantly easier than the midpoint of the range that standards have been during this period	0	0.0
Somewhat easier than the midpoint of the range that standards have been during this period	0	0.0
Near the middle of the range that standards have been during this period	7	50.0
Somewhat tighter than the midpoint of the range that standards have been during this period	3	21.4
Significantly tighter than the midpoint of the range that standards have been during this period	2	14.3
Near the tightest level that standards have been during this period	2	14.3
Total	14	100.0

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

	All Respondents
	Banks	Percent
Near the easiest level that standards have been during this period	0	0.0
Significantly easier than the midpoint of the range that standards have been during this period	0	0.0
Somewhat easier than the midpoint of the range that standards have been during this period	0	0.0
Near the middle of the range that standards have been during this period	4	50.0
Somewhat tighter than the midpoint of the range that standards have been during this period	0	0.0
Significantly tighter than the midpoint of the range that standards have been during this period	1	12.5
Near the tightest level that standards have been during this period	3	37.5
Total	8	100.0

B. Loans secured by commercial real estate:

a. For construction and land development purposes

	All Respondents
	Banks	Percent
Near the easiest level that standards have been during this period	0	0.0
Significantly easier than the midpoint of the range that standards have been during this period	0	0.0
Somewhat easier than the midpoint of the range that standards have been during this period	0	0.0
Near the middle of the range that standards have been during this period	2	18.2
Somewhat tighter than the midpoint of the range that standards have been during this period	1	9.1
Significantly tighter than the midpoint of the range that standards have been during this period	3	27.3
Near the tightest level that standards have been during this period	5	45.5
Total	11	100.0

b. For nonfarm nonresidential purposes

	All Respondents
	Banks	Percent
Near the easiest level that standards have been during this period	0	0.0
Significantly easier than the midpoint of the range that standards have been during this period	0	0.0
Somewhat easier than the midpoint of the range that standards have been during this period	0	0.0
Near the middle of the range that standards have been during this period	3	30.0
Somewhat tighter than the midpoint of the range that standards have been during this period	2	20.0
Significantly tighter than the midpoint of the range that standards have been during this period	3	30.0
Near the tightest level that standards have been during this period	2	20.0
Total	10	100.0

c. For multifamily purposes

	All Respondents
	Banks	Percent
Near the easiest level that standards have been during this period	0	0.0
Significantly easier than the midpoint of the range that standards have been during this period	0	0.0
Somewhat easier than the midpoint of the range that standards have been during this period	0	0.0
Near the middle of the range that standards have been during this period	3	30.0
Somewhat tighter than the midpoint of the range that standards have been during this period	3	30.0
Significantly tighter than the midpoint of the range that standards have been during this period	1	10.0
Near the tightest level that standards have been during this period	3	30.0
Total	10	100.0

1. As of March 31, 2012, the 23 respondents had combined assets of $1.1 trillion, compared to $2.1 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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Senior Loan Officer Opinion Survey on Bank Lending PracticesJuly 2012

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 July 2012)

Senior Loan Officer Opinion Survey on Bank Lending Practices
July 2012

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