Senior Loan Officer Opinion Survey on Bank Lending Practices
April 2015

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 April 2015)

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	4.3
Remained basically unchanged	20	87.0
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	0	0.0
Remained basically unchanged	20	87.0
Eased somewhat	3	13.0
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	0	0.0
Remained basically unchanged	22	100.0
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	19	86.4
Eased somewhat	2	9.1
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	1	4.5
Remained basically unchanged	18	81.8
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	2	9.1
Remained basically unchanged	17	77.3
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	0	0.0
Remained basically unchanged	19	95.0
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

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	3	75.0
Somewhat important	1	25.0
Very important	0	0.0
Total	4	100.0

b. More favorable or less uncertain economic outlook

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

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

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

e. Increased tolerance for risk

	All Respondents
	Banks	Percent
Not important	2	50.0
Somewhat important	2	50.0
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	3	75.0
Somewhat important	1	25.0
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	4	100.0
Somewhat important	0	0.0
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	2	8.7
About the same	18	78.3
Moderately weaker	3	13.0
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

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. Customers' 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. Customers’ 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	2	8.7
The number of inquiries has stayed about the same	18	78.3
The number of inquiries has decreased moderately	3	13.0
The number of inquiries has decreased substantially	0	0.0
Total	23	100.0

Recent declines in oil prices may have led to strains in firms involved in oil and natural gas drilling/extraction and in the companies that provide support to those firms. Question 7 asks you to indicate what fraction of C&I loans held on your books are made to firms in the oil and natural gas drilling/extraction sector. Question 8 asks about your outlook for delinquencies and charge-offs on such loans. Question 9 asks about changes in credit policies made by your bank in response to developments in the oil and natural gas drilling/extraction sector.

7. Approximately what fraction of C&I loans currently outstanding on your bank's books were made to firms in the oil and natural gas drilling/extraction sector?

	All Respondents
	Banks	Percent
More than 30 percent	0	0.0
More than 20 but less than 30 percent	0	0.0
More than 10 but less than 20 percent	9	45.0
Less than 10 percent	11	55.0
Total	20	100.0

For this question, 1 respondent answered “My bank does not make loans or extend lines of credit to firms in the oil and natural gas drilling/extraction sector.”

8. Assuming that economic activity progresses in line with consensus forecasts, and energy commodity prices evolve in line with current future prices, what is your outlook for delinquencies and charge- offs on your bank's loans to firms in the oil and natural gas drilling/extraction sector over the remainder of 2015?

	All Respondents
	Banks	Percent
Loan quality is likely to improve substantially	0	0.0
Loan quality is likely to improve somewhat	2	10.0
Loan quality is likely to remain around current levels	9	45.0
Loan quality is likely to deteriorate somewhat	9	45.0
Loan quality is likely to deteriorate substantially	0	0.0
Total	20	100.0

For this question, 1 respondent answered “My bank does not hold loans to firms in the oil and natural gas drilling/extraction sector.”

9. Please indicate how important each of the following actions are in your bank's efforts to mitigate risks of loan losses from loans made to firms in the oil and natural gas drilling/extraction sector. (Please rate each possible action using the following scale: 1=not important, 2=somewhat important, 3=very important).

a. Tightening underwriting policies on new loans or lines of credit made to firms in this sector

	All Respondents
	Banks	Percent
Not important	3	15.0
Somewhat important	11	55.0
Very important	6	30.0
Total	20	100.0

b. Enforcing material adverse change clauses or other convenants to limit draws on existing credit lines to firms in this sector

	All Respondents
	Banks	Percent
Not important	8	40.0
Somewhat important	8	40.0
Very important	4	20.0
Total	20	100.0

c. Reducing the size of existing credit lines to firms in this sector

	All Respondents
	Banks	Percent
Not important	3	15.0
Somewhat important	8	40.0
Very important	9	45.0
Total	20	100.0

d. Restructuring outstanding loans to make them more robust to the revised outlook for energy prices

	All Respondents
	Banks	Percent
Not important	8	40.0
Somewhat important	6	30.0
Very important	6	30.0
Total	20	100.0

e. Requiring additional collateral to better secure loans or credit lines to firms in this sector

	All Respondents
	Banks	Percent
Not important	7	35.0
Somewhat important	9	45.0
Very important	4	20.0
Total	20	100.0

f. Tightening underwriting policies on new loans or credit lines made to firms in other sectors

	All Respondents
	Banks	Percent
Not important	14	70.0
Somewhat important	6	30.0
Very important	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	1	8.3
Remained basically unchanged	10	83.3
Eased somewhat	1	8.3
Eased considerably	0	0.0
Total	12	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	3	25.0
About the same	7	58.3
Moderately weaker	2	16.7
Substantially weaker	0	0.0
Total	12	100.0

12. Over the past year, how has your bank changed the following policies on CRE loans? (Please assign each policy 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. Maximum loan size

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	1	9.1
Remained basically unchanged	8	72.7
Eased somewhat	2	18.2
Eased considerably	0	0.0
Total	11	100.0

b. Maximum loan maturity

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	11	100.0
Eased somewhat	0	0.0
Eased considerably	0	0.0
Total	11	100.0

c. 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	5	45.5
Eased somewhat	5	45.5
Eased considerably	1	9.1
Total	11	100.0

d. Loan-to-value ratios

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	10	90.9
Eased somewhat	1	9.1
Eased considerably	0	0.0
Total	11	100.0

e. Debt-service coverage ratios

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	10	90.9
Eased somewhat	1	9.1
Eased considerably	0	0.0
Total	11	100.0

f. Market areas served (reduced market areas=tightened; expanded market areas=eased)

	All Respondents
	Banks	Percent
Tightened considerably	0	0.0
Tightened somewhat	0	0.0
Remained basically unchanged	10	90.9
Eased somewhat	1	9.1
Eased considerably	0	0.0
Total	11	100.0

13. If your bank has tightened or eased its credit policies on CRE loans over the past year (as described in question 12), please select the 4 most important reasons among all the possible reasons listed below and rank them in order of importance. (Please respond to either 13A, 13B, or both as appropriate and rank the 4 most important reasons using a scale ranging from 4=the most important to 1=the least important.)

A. Possible reasons for tightening credit policies on CRE loans over the past year:

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

B. Possible reasons for easing credit policies on CRE loans over the past year:

	All Respondents
	Mean
More favorable or less uncertain outlook for CRE property prices	4.0
More favorable or less uncertain outlook for vacancy rates or other fundamentals on CRE properties	2.8
More favorable or less uncertain capitalization rates (the ratio of current net operating income to the original sale price or current market value) on CRE properties	3.0
More aggressive competition from other banks or non-bank lenders (other financial intermediaries or the capital markets)	2.0
Increased tolerance for risk	3.0
Increased ability to securitize CRE loans	-
Decreased concerns about capital adequacy, liquidity position, or regulation more broadly	1.0
Other	1.0
Number of respondents	5

14. For each of the following categories of CRE lending, and assuming economic activity progresses in line with consensus forecasts, please indicate how you expect your bank's pace of loan originations during 2015 will change relative to its pace in 2014. (Please assign to each category a number between 1 and 6 using the following scale: 1=I expect the pace of originations at my bank will decline substantially; 2=I expect the pace of originations at my bank will decline somewhat; 3=I expect the pace of originations at my bank will be about the same; 4=I expect the pace of originations at my bank will increase somewhat; 5=I expect the pace of originations at my bank will increase substantially; 6=My bank does not originate this type of loan.)

a. Loans secured by nonfarm nonresidential properties

	All Respondents
	Banks	Percent
I expect the pace of originations at my bank will decline substantially	0	0.0
I expect the pace of originations at my bank will decline somewhat	1	8.3
I expect the pace of originations at my bank will be about the same	4	33.3
I expect the pace of originations at my bank will increase somewhat	4	33.3
I expect the pace of originations at my bank will increase substantially	1	8.3
My bank does not originate this type of loan	2	16.7
Total	12	100.0

b. Loans secured by multifamily (5 or more) residential properties

	All Respondents
	Banks	Percent
I expect the pace of originations at my bank will decline substantially	0	0.0
I expect the pace of originations at my bank will decline somewhat	0	0.0
I expect the pace of originations at my bank will be about the same	6	54.5
I expect the pace of originations at my bank will increase somewhat	1	9.1
I expect the pace of originations at my bank will increase substantially	1	9.1
My bank does not originate this type of loan	3	27.3
Total	11	100.0

c. 1-4 family residential construction loans

	All Respondents
	Banks	Percent
I expect the pace of originations at my bank will decline substantially	0	0.0
I expect the pace of originations at my bank will decline somewhat	0	0.0
I expect the pace of originations at my bank will be about the same	3	27.3
I expect the pace of originations at my bank will increase somewhat	0	0.0
I expect the pace of originations at my bank will increase substantially	0	0.0
My bank does not originate this type of loan	8	72.7
Total	11	100.0

d. Other construction loans and all land development and other land loans

	All Respondents
	Banks	Percent
I expect the pace of originations at my bank will decline substantially	0	0.0
I expect the pace of originations at my bank will decline somewhat	1	8.3
I expect the pace of originations at my bank will be about the same	4	33.3
I expect the pace of originations at my bank will increase somewhat	2	16.7
I expect the pace of originations at my bank will increase substantially	1	8.3
My bank does not originate this type of loan	4	33.3
Total	12	100.0

1. As of December 31, 2014, the 23 respondents had combined assets of $1.3 trillion, compared to $2.5 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 PracticesApril 2015

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 April 2015)

Senior Loan Officer Opinion Survey on Bank Lending Practices
April 2015

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