Senior Loan Officer Opinion Survey on Bank Lending Practices
January 2013

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 January 2013)

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	20	90.9
Eased somewhat	1	4.5
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	1	4.5
Remained basically unchanged	17	77.3
Eased somewhat	4	18.2
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	2	9.1
Remained basically unchanged	20	90.9
Eased somewhat	0	0.0
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	4.5
Remained basically unchanged	18	81.8
Eased somewhat	3	13.6
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	2	9.1
Remained basically unchanged	12	54.5
Eased somewhat	8	36.4
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	1	4.5
Remained basically unchanged	18	81.8
Eased somewhat	3	13.6
Eased considerably	0	0.0
Total	22	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	22	100.0
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	22	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	4.8
Remained basically unchanged	19	90.5
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

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

b. Less favorable or more uncertain economic outlook

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

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

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

e. Reduced tolerance for risk

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

f. Decreased liquidity in the secondary market for these loans

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

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

	All Respondents
	Banks	Percent
Not important	4	80.0
Somewhat important	1	20.0
Very important	0	0.0
Total	5	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	9	81.8
Somewhat important	2	18.2
Very important	0	0.0
Total	11	100.0

b. More favorable or less uncertain economic outlook

	All Respondents
	Banks	Percent
Not important	7	63.6
Somewhat important	4	36.4
Very important	0	0.0
Total	11	100.0

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

	All Respondents
	Banks	Percent
Not important	11	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	11	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	4	36.4
Somewhat important	2	18.2
Very important	5	45.5
Total	11	100.0

e. Increased tolerance for risk

	All Respondents
	Banks	Percent
Not important	9	81.8
Somewhat important	2	18.2
Very important	0	0.0
Total	11	100.0

f. Increased liquidity in the secondary market for these loans

	All Respondents
	Banks	Percent
Not important	7	63.6
Somewhat important	4	36.4
Very important	0	0.0
Total	11	100.0

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

	All Respondents
	Banks	Percent
Not important	10	90.9
Somewhat important	1	9.1
Very important	0	0.0
Total	11	100.0

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

	All Respondents
	Banks	Percent
Not important	11	100.0
Somewhat important	0	0.0
Very important	0	0.0
Total	11	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	18.2
About the same	18	81.8
Moderately weaker	0	0.0
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	3	75.0
Somewhat important	1	25.0
Very important	0	0.0
Total	4	100.0

b. Customer accounts receivable financing needs increased

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

c. Customer investment in plant or equipment increased

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

d. Customer internally generated funds decreased

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

g. Customers' precautionary demand for cash and liquidity increased

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

h. Customers transitioned from commercial real estate loans to C&I loans

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

b. Customer accounts receivable financing needs decreased

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

c. Customer investment in plant or equipment decreased

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

d. Customer internally generated funds increased

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

e. Customer merger or acquisition financing needs decreased

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

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

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

g. Customers’ precautionary demand for cash and liquidity decreased

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

h. Customers transitioned from C&I loans to commercial real estate loans

	All Respondents
	Banks	Percent
Not important	0	--
Somewhat important	0	--
Very important	0	--
Total	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	3	13.6
The number of inquiries has stayed about the same	19	86.4
The number of inquiries has decreased moderately	0	0.0
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 to 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	0	0.0
Remained basically unchanged	13	100.0
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	13	100.0

For this question, 8 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	2	15.4
About the same	10	76.9
Moderately weaker	1	7.7
Substantially weaker	0	0.0
Total	13	100.0

For this question, 8 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	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	12	92.3
Eased somewhat	1	7.7
Eased considerably	0	0.0
Total	13	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	3	23.1
Moderately stronger	4	30.8
About the same	6	46.2
Moderately weaker	0	0.0
Substantially weaker	0	0.0
Total	13	100.0

Question 11 focuses on changes in your bank's policies on CRE loans over the past year. If your bank's lending policies have not changed over the past year, please report them as unchanged even if they are either restrictive or accomodative relative to longer-term norms. If your bank's policies have tightened or eased over the past year, please report these changes regardless of how your bank's policies stand relative to longer-term norms.

11. Over the past year, how has your bank changed the following policies on CRE loans?

a. Maximum loan size

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	10	83.3
Eased somewhat	2	16.7
Eased considerably	0	0.0
Total	12	100.0

b. Maximum loan maturity

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

c. Spread 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	2	16.7
Remained basically unchanged	5	41.7
Eased somewhat	5	41.7
Eased considerably	0	0.0
Total	12	100.0

d. Loan-to-value ratios

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	1	8.3
Remained basically unchanged	9	75.0
Eased somewhat	2	16.7
Eased considerably	0	0.0
Total	12	100.0

e. Requirements for take-out financing

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

f. Debt-service coverage ratios

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	1	8.3
Remained basically unchanged	9	75.0
Eased somewhat	2	16.7
Eased considerably	0	0.0
Total	12	100.0

Questions 12-13 ask about your bank's expectations for the behavior of loan delinquencies and charge-offs in 2013. Question 12 asks about C&I loans to large and middle-market firms and to small firms. (Please refer to the definitions of large and middle-market firms and of small firms below. If your bank defines firm size differently from the categories suggested below, please use your definitions and indicate what they are.) Question 13 asks about CRE loans.

12. Assuming that economic activity progresses in line with consensus forecasts, what is your outlook for delinquencies and chargeoffs on your bank's C&I loans to large and middle-market firms and to small firms in 2013?

A. Outlook for loan quality on C&I loans to large and middle-market firms (annual sales of $50 million or more):

	All Respondents
	Banks	Percent
Loan quality is likely to improve substantially	0	0.0
Loan quality is likely to improve somewhat	6	27.3
Loan quality is likely to stabilize around current levels	14	63.6
Loan quality is likely to deteriorate somewhat	2	9.1
Loan quality is likely to deteriorate substantially	0	0.0
Total	22	100.0

B. Outlook for loan quality on C&I loans to small firms (annual sales of less than $50 million):

	All Respondents
	Banks	Percent
Loan quality is likely to improve substantially	0	0.0
Loan quality is likely to improve somewhat	1	10.0
Loan quality is likely to stabilize around current levels	5	50.0
Loan quality is likely to deteriorate somewhat	4	40.0
Loan quality is likely to deteriorate substantially	0	0.0
Total	10	100.0

For this question, 12 respondents answered “My bank does not originate this type of loan.”

13. Assuming that economic activity progresses in line with consensus forecasts, what is your outlook for delinquencies and chargeoffs on your bank's commercial real estate loans in 2013?

	All Respondents
	Banks	Percent
Loan quality is likely to improve substantially	0	0.0
Loan quality is likely to improve somewhat	5	45.5
Loan quality is likely to stabilize around current levels	6	54.5
Loan quality is likely to deteriorate somewhat	0	0.0
Loan quality is likely to deteriorate substantially	0	0.0
Total	11	100.0

For this question, 9 respondents answered “My bank does not originate this type of loan.”

1. As of September 30, 2012, the 22 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 PracticesJanuary 2013

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 January 2013)

Senior Loan Officer Opinion Survey on Bank Lending Practices
January 2013

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