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5/13/2020

Treasury Releases February Monthly Bank Lending Survey

U.S. DEPARTMENT OF THE TREASURY
Press Center

Treasury Releases February Monthly Bank Lending Survey
4/15/2009

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TG-90b
Residential Mortgage Lending Continued to Grow Among Top 21 Banks Receiving Government Funds, Showing that
Homeowners Are Accessing Loans
WASHINGTON-- The U.S. Department of the Treasury today released results from its monthly bank lending survey for February with data
from the top 21 recipients of government investment through the Capital Purchase Program (CPP). February data point to a bright spot in
the housing lending, but illustrate the continued negative impact of the economic downturn and financial crisis on credit markets and on
the demand for loans by consumers and businesses. Against a difficult economic backdrop, banks extended approximately the same level
of loan originations in February as in January. The relatively steady overall lending levels observed in February likely would have been
lower absent the capital provided by Treasury through the CPP, an indication of the critical role this program has played in stabilizing
markets and restoring the flow of credit to consumers and business.
The contraction of the economy and its effect on consumers and businesses in the beginning of the year posed several challenges to the
lending environment. Consumer confidence in the U.S. remained near its lowest level in almost 30 years in February. The recession that
began in December 2007 is now both affecting loan demand and also reflecting the effects of the sharp reduction in credit that occurred
last fall. The unemployment rate reached the highest rate since late 1983 in February, rising 0.5 percentage point to 8.1 percent, while
nonfarm payrolls dropped by 651,000 in February. Compared to a year earlier, business shipments of capital goods in February were
down 11 percent and U.S exports were down 17 percent, reflecting the world-wide economic slowdown. These negative trends are
reducing demand for consumer goods and services and causing businesses to slow or to cease operations entirely. Many businesses are
unwilling to expand their operations in this climate. This has cut sharply into the demand for new loans. Within this challenging
environment, the February survey shows that banks extended only a slightly smaller total volume of loan originations in February than
January. The median growth in total lending was -2 percent in February, with nine banks posting increases in lending and 12 banks
reporting declines. However, within this overall picture lending levels varied significantly by category.
Banks have been extending credit to homeowners and have enabled them to access affordable loans and reduce their borrowing costs, as
reflected in the median increase in residential mortgage originations across the 21 banks by a healthy 35 percent. The increase in
mortgage origination volume in February mainly consisted of the refinancing of existing mortgages. The median change in mortgage
refinancing was an increase of 42 percent from January survey results to the February 2009 results. This translates to lower mortgage
payments for families across the U.S. Similarly, home equity origination increased in February due to seasonality factors, such as spring
remodeling efforts or other home-related projects. The median percentage change in home equity originations was an increase of 18
percent.
Survey results for commercial real estate lending over this same period were not as bright and generally reflected the poor conditions in
the commercial real estate markets, the commercial mortgage-backed securities (CMBS) markets, as well as the cautious outlook by
businesses. Renewals of existing accounts increased due to the lack of liquidity in the CMBS market, while new loan commitments by
banks decreased from January to February 2009. The median percent change in renewals of existing loan accounts in February was an
increase of 4 percent. The median percent change in new commitments was a decrease of 23 percent.
Commercial and industrial (C&I) lending moved lower again in February, at least partly due to weakening demand for loans by businesses.
Banks specifically cited softened demand for capital expenditure loans and loans to finance acquisitions, plants, equipment, inventory and
accounts receivable. The February decline extended January's downward trend, with businesses continuing to cite the challenges posed
by the economic downturn on their need for working capital along with their focus on strengthening their own balance sheets. The median
percentage change in the renewal of existing accounts for commercial and industrial lending was a decrease of 14 percent, and the
median percent change in new commitments was a decrease of 13 percent.
The monthly survey is one measure of Treasury's commitment to greater transparency and is designed to provide frequent and accessible
information on banks' lending activities in order to help taxpayers easily assess the lending and other activities of banks receiving
government investments through the CPP.
https://www.treasury.gov/press-center/press-releases/Pages/tg90b.aspx

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5/13/2020

Treasury Releases February Monthly Bank Lending Survey

Through the CPP, Treasury invests in viable banks as a means to stabilize the financial system and grow the economy. Strong capital
levels enable banks to continue to play their vital roles as providers of credit to businesses and consumers. Since the inception of the
CPP, Treasury has funded 547 banks of all sizes in 48 states, Puerto Rico and the District of Columbia.

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LINKS
Individual Bank Reports
Intermediation Snapshot

https://www.treasury.gov/press-center/press-releases/Pages/tg90b.aspx

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