Senior Loan Officer Opinion Survey on Bank Lending Practices
October 2009

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 2009)

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	0	0.0
Remained basically unchanged	21	91.3
Eased somewhat	2	8.7
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	1	4.3
Remained basically unchanged	22	95.7
Eased somewhat	0	0.0
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	3	13.0
Remained basically unchanged	19	82.6
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	2	8.7
Remained basically unchanged	18	78.3
Eased somewhat	3	13.0
Eased considerably	0	0.0
Total	23	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	1	4.3
Remained basically unchanged	18	78.3
Eased somewhat	4	17.4
Eased considerably	0	0.0
Total	23	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	87.0
Eased somewhat	3	13.0
Eased considerably	0	0.0
Total	23	100.0

f. Loan covenants

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	3	13.0
Remained basically unchanged	19	82.6
Eased somewhat	1	4.3
Eased considerably	0	0.0
Total	23	100.0

g. Collateralization requirements

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	1	4.3
Remained basically unchanged	22	95.7
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	23	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	2	66.7
Somewhat important	1	33.3
Very important	0	0.0
Total	3	100.0

b. Less favorable or more uncertain economic outlook

	All Respondents
	Banks	Percent
Not important	1	33.3
Somewhat important	1	33.3
Very important	1	33.3
Total	3	100.0

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

	All Respondents
	Banks	Percent
Not important	1	33.3
Somewhat important	0	0.0
Very important	2	66.7
Total	3	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	0	0.0
Somewhat important	1	33.3
Very important	2	66.7
Total	3	100.0

e. Reduced tolerance for risk

	All Respondents
	Banks	Percent
Not important	1	33.3
Somewhat important	2	66.7
Very important	0	0.0
Total	3	100.0

f. Decreased liquidity in the secondary market for these loans

	All Respondents
	Banks	Percent
Not important	1	33.3
Somewhat important	0	0.0
Very important	2	66.7
Total	3	100.0

g. Increase in defaults by borrowers in public debt markets

	All Respondents
	Banks	Percent
Not important	1	33.3
Somewhat important	2	66.7
Very important	0	0.0
Total	3	100.0

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

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

b. More favorable or less uncertain economic outlook

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

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

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

e. Increased tolerance for risk

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

g. Reduction in defaults by borrowers in public debt markets

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

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

	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	4	17.4
About the same	14	60.9
Moderately weaker	5	21.7
Substantially weaker	0	0.0
Total	23	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	2	50.0
Somewhat important	2	50.0
Very important	0	0.0
Total	4	100.0

b. Customer accounts receivable financing needs increased

	All Respondents
	Banks	Percent
Not important	1	25.0
Somewhat important	2	50.0
Very important	1	25.0
Total	4	100.0

c. Customer investment in plant or equipment increased

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

d. Customer internally generated funds decreased

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

e. Customer merger or acquisition financing needs increased

	All Respondents
	Banks	Percent
Not important	1	25.0
Somewhat important	3	75.0
Very important	0	0.0
Total	4	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	1	25.0
Somewhat important	3	75.0
Very important	0	0.0
Total	4	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	1	20.0
Somewhat important	4	80.0
Very important	0	0.0
Total	5	100.0

b. Customer accounts receivable financing needs decreased

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

c. Customer investment in plant or equipment decreased

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

d. Customer internally generated funds increased

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

e. Customer merger or acquisition financing needs decreased

	All Respondents
	Banks	Percent
Not important	1	20.0
Somewhat important	0	0.0
Very important	4	80.0
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	1	25.0
Somewhat important	1	25.0
Very important	2	50.0
Total	4	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 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	26.1
The number of inquiries has stayed about the same	12	52.2
The number of inquiries has decreased moderately	5	21.7
The number of inquiries has decreased substantially	0	0.0
Total	23	100.0

According to the Federal Reserve’s H.8 statistical release, “Assets and Liabilities of Commercial Banks in the United States," C&I loans have contracted at an annual rate of about 15 percent over the first eight months of 2009. Question 7 asks about the possible reasons for this decline.

7. If C&I lending has declined at your bank this year, how important have the following possible sources of contraction been?

a. Paydowns of bridge loans that were originated during the market disruptions last fall and winter

	All Respondents
	Banks	Percent
Not important	12	70.6
Somewhat important	3	17.6
Very important	2	11.8
Total	17	100.0

b. Increased paydowns of other bridge loans

	All Respondents
	Banks	Percent
Not important	13	76.5
Somewhat important	4	23.5
Very important	0	0.0
Total	17	100.0

c. Increased incidence of term loans that matured and were not rolled over or extended (please exclude loans that your bank classified as bridge loans)

	All Respondents
	Banks	Percent
Not important	6	35.3
Somewhat important	11	64.7
Very important	0	0.0
Total	17	100.0

d. Increased prepayments of term loans (please exclude loans that your bank classified as bridge loans)

	All Respondents
	Banks	Percent
Not important	10	58.8
Somewhat important	6	35.3
Very important	1	5.9
Total	17	100.0

e. Decreased originations of term loans

	All Respondents
	Banks	Percent
Not important	2	11.1
Somewhat important	8	44.4
Very important	8	44.4
Total	18	100.0

f. Paydowns of draws on revolving credit lines that were taken down as precautionary liquidity during the market disruptions of last fall and winter

	All Respondents
	Banks	Percent
Not important	6	35.3
Somewhat important	10	58.8
Very important	1	5.9
Total	17	100.0

g. Increased paydowns of other draws on revolving credit lines (including draws made last fall and winter other than those as described in f, above)

	All Respondents
	Banks	Percent
Not important	7	41.2
Somewhat important	10	58.8
Very important	0	0.0
Total	17	100.0

h. Decreased draws on revolving credit lines

	All Respondents
	Banks	Percent
Not important	10	58.8
Somewhat important	7	41.2
Very important	0	0.0
Total	17	100.0

i. Increased sales or syndications of outstanding loans

	All Respondents
	Banks	Percent
Not important	15	83.3
Somewhat important	2	11.1
Very important	1	5.6
Total	18	100.0

j. Increased writedowns of the value of outstanding loans

	All Respondents
	Banks	Percent
Not important	8	44.4
Somewhat important	7	38.9
Very important	3	16.7
Total	18	100.0

Questions 8-9 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 8 deals with changes in your bank's standards over the past three months. Question 9 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.

8. 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	3	20.0
Remained basically unchanged	12	80.0
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	15	100.0

9. 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	1	6.7
Substantially weaker	3	20.0
Total	15	100.0

Question 10 asks about the resolution of two types of CRE loans at your bank, construction and land development loans and loans secured by nonfarm nonresidential real estate, that were on your bank's books as of January 1, 2009, and were scheduled to mature by September of this year.

10. For CRE loans at your bank as of the beginning of 2009 that were scheduled to mature by September of this year, approximately what percentage (by dollar volume) of each of these two types of CRE loans fell into the following categories?

A. Construction and land development loans

a. Maturing loans that have been refinanced this year

	All Respondents
	Banks	Percent
Zero	7	63.6
Between 1 and 10 percent	1	9.1
Between 10 and 25 percent	3	27.3
Between 25 and 50 percent	0	0.0
Between 50 and 75 percent	0	0.0
75 percent or more	0	0.0
Total	11	100.0

b. Maturing loans that have been extended this year

	All Respondents
	Banks	Percent
Zero	1	9.1
Between 1 and 10 percent	2	18.2
Between 10 and 25 percent	5	45.5
Between 25 and 50 percent	0	0.0
Between 50 and 75 percent	0	0.0
75 percent or more	3	27.3
Total	11	100.0

c. Maturing loans that have been paid off this year

	All Respondents
	Banks	Percent
Zero	4	36.4
Between 1 and 10 percent	5	45.5
Between 10 and 25 percent	1	9.1
Between 25 and 50 percent	1	9.1
Between 50 and 75 percent	0	0.0
75 percent or more	0	0.0
Total	11	100.0

d. Maturing loans that have become delinquent this year, but have not been associated with foreclosure

	All Respondents
	Banks	Percent
Zero	3	27.3
Between 1 and 10 percent	3	27.3
Between 10 and 25 percent	3	27.3
Between 25 and 50 percent	2	18.2
Between 50 and 75 percent	0	0.0
75 percent or more	0	0.0
Total	11	100.0

e. Maturing loans that have been associated with foreclosure this year

	All Respondents
	Banks	Percent
Zero	5	50.0
Between 1 and 10 percent	4	40.0
Between 10 and 25 percent	1	10.0
Between 25 and 50 percent	0	0.0
Between 50 and 75 percent	0	0.0
75 percent or more	0	0.0
Total	10	100.0

B. Loans secured by nonfarm nonresidential real estate

a. Maturing loans that have been refinanced this year

	All Respondents
	Banks	Percent
Zero	3	33.3
Between 1 and 10 percent	3	33.3
Between 10 and 25 percent	1	11.1
Between 25 and 50 percent	1	11.1
Between 50 and 75 percent	0	0.0
75 percent or more	1	11.1
Total	9	100.0

b. Maturing loans that have been extended this year

	All Respondents
	Banks	Percent
Zero	2	22.2
Between 1 and 10 percent	1	11.1
Between 10 and 25 percent	2	22.2
Between 25 and 50 percent	0	0.0
Between 50 and 75 percent	2	22.2
75 percent or more	2	22.2
Total	9	100.0

c. Maturing loans that have been paid off this year

	All Respondents
	Banks	Percent
Zero	4	44.4
Between 1 and 10 percent	4	44.4
Between 10 and 25 percent	1	11.1
Between 25 and 50 percent	0	0.0
Between 50 and 75 percent	0	0.0
75 percent or more	0	0.0
Total	9	100.0

d. Maturing loans that have become delinquent this year, but have not been associated with foreclosure

	All Respondents
	Banks	Percent
Zero	3	33.3
Between 1 and 10 percent	3	33.3
Between 10 and 25 percent	1	11.1
Between 25 and 50 percent	2	22.2
Between 50 and 75 percent	0	0.0
75 percent or more	0	0.0
Total	9	100.0

e. Maturing loans that have been associated with foreclosure this year

	All Respondents
	Banks	Percent
Zero	7	77.8
Between 1 and 10 percent	1	11.1
Between 10 and 25 percent	1	11.1
Between 25 and 50 percent	0	0.0
Between 50 and 75 percent	0	0.0
75 percent or more	0	0.0
Total	9	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	9	100.0
Decreased somewhat	0	0.0
Decreased considerably	0	0.0
Total	9	100.0

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

	All Respondents
	Banks	Percent
Increased considerably	0	0.0
Increased somewhat	0	0.0
Remained basically unchanged	17	73.9
Decreased somewhat	6	26.1
Decreased considerably	0	0.0
Total	23	100.0

c. Commercial construction lines of credit

	All Respondents
	Banks	Percent
Increased considerably	0	0.0
Increased somewhat	0	0.0
Remained basically unchanged	7	53.8
Decreased somewhat	3	23.1
Decreased considerably	3	23.1
Total	13	100.0

d. Lines of credit for financial firms

	All Respondents
	Banks	Percent
Increased considerably	0	0.0
Increased somewhat	0	0.0
Remained basically unchanged	11	68.8
Decreased somewhat	3	18.8
Decreased considerably	2	12.5
Total	16	100.0

1. As of June 30, 2009, the 23 respondents had combined assets of $1.0 trillion, compared to $1.9 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 PracticesOctober 2009

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 2009)

Senior Loan Officer Opinion Survey on Bank Lending Practices
October 2009

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