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CONFIDENTIAL SUMMARY OF SPECIAL REPORTS ON LOANS TO COMMERCIAL AND INDUSTRIAL BUSINESSES Y.ITF MATURITIES OF ONE YEAR OR MORE, SUBMITTED BY WEEKLY REPORTING MEMBER BANKS IN 101 LEADING CITIES (Preliminary) June 1 , 1939 I t should be bcrne in mind that the reports cover only such loans as are represented by notes with maturities of one year or more; they do not include advances on notes given f o r shorter periods or on demand notes even i f the banks and the borrowers have an understanding t h a t , in the absence of unforeseen developments, the advances w i l l be extended for periods of a year or more. Furthermore, t h i s i s the f i r s t time data of t h i s type have been asked f o r , and i t is quite probable that a l l of the banks have not interpreted the questionnaire uniformly* One large bank stated that i t was impracticable f o r i t to segregate i t s small business loans from other loans made by the personal loan department. If other banks had the same d i f f i c u l t y the number of loans as reported may be considerably understated. It i s b e l i e v e d , however, that the d o l l a r amount of loans as reported represents a f a i r picture of the volume of loans extended t o commercial and industrial businesses on notes with maturities of one year or more. NUMBER AMD ORIGINAL OR FACE AMOUNT OF LOANS TO COMMERCIAL AND INDUSTRIAL BUSINESSES ITF MATURITIES OF ONE YEAR OR MORS HELD ON APRIL 19. 1939* BY ABOUT UOO WEEKLY REPORTING MEMBER BANKS IN 101 LEADING CITIES Number of loans Installment loans Non-installment loans Total Size of loans; Less than $100,000 $100,000 t o $999,909 $1,000,000 and over Maturities of loans: 1 year or more but less than 3 years 3 years or more Amount 21,800 2,800 $950,000,000 Ii.60,000,000 2l<,600 1,L10,000,000 22,600 170,000,000 ij.50,000,000 790,000,000 113,000 l.]20,000,000 990,000,000 1,700 300 6,600 Examination of the reports and data compiled therefrom shows that — 1. Of the t o t a l commercial, i n d u s t r i a l , and a g r i c u l t u r a l loans of weekly reporting member banks outstanding on April 19, 1939, nearly $1,000,000000 or about 25 por cent had a maturity when o r i g i n a l l y iiiade of one year or more. In a d d i t i o n the banks held on the same date about $175,000,000 of loans secured by r e a l estate made t o commercial and i n d u s t r i a l businesses. B-1239 2« The o r i g i n a l or f a c e amount of these intermediate and l o n g term loans to commercial and i n d u s t r i a l businesses was $1,1.1.00,000,000. Of t h i s t o t a l , somewhat more than 50 per cent represented loans made by New York City banks; in f a c t , 6 banks in New York and 6 outside of New York accounted f o r $860,000,000 of the t o t a l . 3. Of the approximately I4-OO weekly reporting banks, 65 reported no intermediate or long-term loans t o commercial or i n d u s t r i a l businesses, and 70 reported l e s s than 5 such l o a n s . As p r e v i o u s l y pointed out, however, some of the banks have extended a s u b s t a n t i a l volume of such c r e d i t on the b a s i s of demand or short-term n o t e s . II. The t o t a l number of intermediate and long-term loans reported by the weekly r e p o r t i n g banks was approximately 2i).,600. Of t h i s t o t a l , L\0 per cent represents loans by the 9 banks which reported 500 or more loans. The i n d i c a t e d c o n c e n t r a t i o n in the number of loans doubtless i s due in part t o d i f f e r e n c e s in methods of reporting"". Some banks, f o r example, may have considered that a l l notes discounted under a s i n g l e l i n e of c r e d i t c o n s t i t u ted one loan, while other banks counted each customer's, note discounted f o r a borrower as a separate loan. At l e a s t one bank, a l s o , excluded small business loans made through i t s personal loan department. 5. Of the 2lj,600 intermediate and long-term l o a n s , about 22,600 amounting t o $170,000,000 were f o r l e s s than $100,000 each, approximately 1,700 amounting t o $[£0,000,000 were f o r $100,000 or more but l e s s than $1,000,000, and about 300 loans amounting t o $790,000,000 were f o r $1,000,000 or more. 6. The average s i z e of the loans in the group of loans of l e s s than $100,000 each was $7,000, and ranged from $[j00 t o $20,000 at the 9 banks which reported 1>0 per cent of these l o a n s . 7 . About 75 per cent of the t o t a l number of intermediate and. l o n g term loans t o commercial and i n d u s t r i a l businesses matured in l e s s than three y e a r s , but measured in d o l l a r s only 30 per cent matured in l e s s than three y e a r s . At New York banks, about 50 per cent of the number and 25 per cent of the d o l l a r amount had maturities of l e s s than three y e a r s . Apparently the large l o a n s , made mostly by the New York banks, are f o r longer maturities than the small loans made mostly by banks outside of New York. 8. Approximately 90 per cent of the t o t a l number and 67 per cent of the d o l l a r amount of loans wore made on an installment or amortization b a s i s . 9* About 800 of the loans wore made in p a r t i c i p a t i o n with other banks (some apparently in p a r t i c i p a t i o n with the R e c o n s t r u c t i o n Finance Corporation or the Federal Reserve banks). 10. Approximately 100 of the 1;00 weekly r e p o r t i n g banks ansv/ercd a f f i r m a t i v e l y the question whether or not they knew of any commercial or i n d u s t r i a l b u s i n e s s e s , in the t e r r i t o r i e s served by the r e s p e c t i v e banks, which had requested but were unable t o obtain intermediate or long-term c r e d i t f o r working c a p i t a l or other purposes. Nearly a l l of these 100 banks indicated that there was no reasonable- basis f o r bank c r e d i t in the cases coming t o t h e i r a t t e n t i o n and that what was needed in most cases was equity c a p i t a l . Poor earnings and unfavorable prospects were the p r i n c i p a l reasons given why bank c r e d i t could not be extended. B-lc09
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