Office of Advocacy - U.S. Small Business Administration - Women-owned Businesses Chronological List research web page, provided by the Office of Advocacy, Economic Research

The Bank Holding Company Study, 1996
A Directory of Small Business Lending Reported by Commercial Banks in June 1996

--------------------------------------------------------------------------------

This report contains research prepared by the Office of Advocacy of the U.S. Small Business Administration. The opinions and recommendations made herein do not necessarily reflect official policies or statements of the U.S. Small Business Administration or any agency of the U.S. Government. For further information, contact the Office of Advocacy, U.S. Small Business Administration, Mail Code 3112, Washington, DC 20416. Published February 1997.
The complete study is available on the Internet's World Wide Web at http://www.sba.gov/advo/stats/ or on microfiche from the National Technical Information Service, Springfield, VA 22161, tel. (703) 605-6000 or 1-800-553-6847.

--------------------------------------------------------------------------------

Foreword

The Office of Advocacy is pleased to release The Bank Holding Company Study, 1996. This study-the second of its kind-provides information not otherwise available in the marketplace and helps small businesses identify bank holding companies that are "small-business-friendly."

The study lists banks with small business loans outstanding in excess of $1 billion. Small business loans are defined here as business loans of less than $250,000.

Four of the top five lenders in 1995 remained in the top five in 1996.
The number of banks with more than $1 billion in loans outstanding to small businesses increased from 23 to 27.
The dollars in small business loans outstanding in these 27 banks increased 24.2 percent, compared with a 28.4 percent increase in their assets.
The study also includes a listing of the top three lenders to small business in each state.

The Office of Advocacy has published two companion reports, Small Business Lending in the United States, and Micro Business Lending in the United States. The first study rank-orders - that is, lists in descending order - banks in terms of their small business lending within each state. The latter study lists in descending order the top banks in each state in terms of their micro-lending (loans of $100,000 or less).

Our readers have made many helpful suggestions with respect to format; a number of them have been incorporated in this edition to improve its usefulness while preserving comparability with earlier editions. Thanks to those who have helped fine-tune this effort. Further comments and suggestions are welcome.

For those with access to the Internet, the studies are available at http://www.sba.gov/advo/stats/lending/1996/.

--------------------------------------------------------------------------------
Introduction
This report is a companion to a more comprehensive study, Small Business Lending in the United States, 1996 Edition, the Office of Advocacy's "small-business-friendly banks" study. The small business lending study ranks all 9,670 U.S. commercial banks that were required to provide small business lending data in the June 1996 "call reports" filed with federal banking regulators.1/ Identified here are the 27 bank holding companies with small business loans outstanding in excess of $1 billion (Table 1), as well as the top three small business lenders in each state (Table 2).

What's New in the 1996 Report
Several new columns were added to this year's Table 1. Percent changes in total assets and in small business loans from 1995 to 1996 are included to provide a better perspective of the growth of small business lending in large bank holding companies. Information on lending to micro businesses (loan sizes under $100,000) and to larger small businesses (loan sizes under $1 million) is also included. Additional columns provide background on the number of banks owned by the bank holding companies and on the states in which they operate.

Four of the five most "small-business-friendly" bank holding companies in the 1995 study remained in the top five in 1996. Key Bank moved to first place with a 25 percent increase in small business loans. The growth of Key Bank's small business loan portfolio was especially impressive given minimal growth in the bank's assets over the period. Wells Fargo's movement from eighth to second was accomplished by acquisition and merger: its assets increased 132 percent over this time period. The greater prominence of Fleet National Bank and Corestates also can be attributed primarily to mergers and acquisitions.

The total number of banks with more than $1 billion in loans outstanding to small businesses increased by four, from 23 in 1995 to 27 in 1996 (Table 1). As a group, these 27 bank holding companies had $48.8 billion in small business loans and accounted for 28 percent of the $172 billion in small business lending by all banks. They control 49 percent of total bank assets.

The 27 bank holding companies increased loans to small businesses by 24.2 percent, from $39.3 billion in 1995 to $48.8 billion in 1996. Loans to small businesses increased less, however, than the banks' total assets (28.4 percent) or total business loans (24.7 percent).

Assets, Loans, and Small Business Lending of 27 Bank Holding Companies, 1995-1996

Small business loan volume in the top three small-business-friendly banks in each state ranged from a high of $3 billion for Wells Fargo in California to a low of $27.6 million by First Security Bank of Wyoming (Table 2). New names have appeared on the list since 1995 and some old names have disappeared. Large banks within giant bank holding companies changed positions in some states. Some of the changes resulted from mergers and acquisitions; others occurred because of the consolidation of reporting and accounting by parent bank holding companies. For example, Fleet of Connecticut, Boatmans of Arkansas, Nationsbank of Florida, and others disappeared as the top small business lenders in their respective states because their financial reports were consolidated and reported in the call reports for other states. These banks may still be the major lenders in their states, but their lending statistics are reported elsewhere. The statistical problem is likely to increase as bank holding companies continue to consolidate their operations in different states.

Table 1: Leading Bank Holding Companies in Small Business Lending, June 1996
Table 1 lists bank holding companies (BHCs) with more than $1 billion in small business loans outstanding in descending order of the total amount of small business loans outstanding (see column 1).

Explanation of Columns for Table 1
Column 1, Total Dollar Amount of Small Business Lending by the BHC (SBL($)). This column lists the dollar amount (in billions) of small business loans of less than $250,000.

Column 2, Total Number of Small Business Loans (SBL(#)). This column lists the number of small business loans of less than $250,000 made by the bank holding company.

Column 3, Ratio of Small Business Loans to Total Assets (SBL/TA). This column displays the ratio of small business loans to total bank assets for each bank holding company. It ranges from 0.6 percent to 11.8 percent for these BHCs. (For all banks in the United States, the average small business loan-to-asset ratio ranged from 2.3 percent for large banks with assets over $10 billion to a high of 12.3 percent for the smallest banks-those with assets under $100 million.)

Column 4, Ratio of Small Business Loans to Total Business Loans (SBL/TBL). The ratio ranges from 3.6 percent to 66.0 percent for these BHCs. (For all banks, the average small business loan to total business loan ratio ranged from 16 percent for the largest banks to 83 percent for the smallest banks.)

Column 5, Total Assets (TA(D)). The bank holding company's total domestic assets are listed (in billions of dollars).

Columns 6, Percent Growth in Total Assets (TA96/95). This indicates the percentage growth of the BHC's total assets from 1995 to 1996.

Columns 7, Percent Growth of Small Business Loans (SBL$96/95). This measure indicates the percentage growth in the BHC's small business loan dollars from 1995 to 1996.

Column 8, Total Dollar Amount of Super Small Business Loans (SSBL($)). This column lists the dollar amount (in billions) of the BHC's small business loans under $100,000 (also called micro-loans).

Column 9, Total Dollar Amount of Large Small Business Loans (LSBL($)). This column displays the dollar amount (in billions) of the BHC's small business loans under $1 million.

Column 10, Number of States in which the BHC Operates (No. of States). This shows the number of states in which the BHC operates.

Column 11 , Number of Banks the BHC Owns (No. of Banks). This shows the number of banks the BHC owned in June 1996.

Table 2: Top Lending Banks in the State
The second table lists the top three small-business-friendly banks in each state in descending order of the total amount of small business loans outstanding (see column 4). Because of differences in banking structures across the states-that is, differences in the total number of banks, their size distribution, and the demand for small business loans-small business lending by the top lenders differed considerably from state to state.

Explanation of Columns in Table 2
Column 1, Rank Total. The "total" in this column is the summary ranking of the bank for the state as listed in Small Business Lending in the United States, 1996 Edition. This summary ranking is a total of the bank's decile rankings in each of four categories. (A decile ranking is a measure of where the individual bank falls in the distribution of banks within a state for any given variable. Those in the top 10 percent receive a score of 10; those in the bottom 10 percent have a score of 1.) For this column, a summary statistic value of 40 indicates that the bank is in the top decile in each of four categories. A value of 4 indicates that the bank is in the bottom decile in each of the categories.

Column 2, Ratio of Small Business Loans to Total Assets (SBL/TA). This column indicates the bank's ratio of small business loans to total assets. For all banks in the United States, the average small business loan-to-asset ratio by bank size ranged from 2.3 percent for banks with assets over $10 billion to 12.3 percent for the smallest size group with assets under $100 million.

Column 3, Ratio of Small Business Loans to Total Business Loans (SBL/TBL). This column lists the banks' ratios of small business loans to total business loans. For all banks, the average small business loan to total business loan ratio ranged from 16 percent for the largest banks to 83 percent for the smallest banks.

Column 4, Dollar Amount of Small Business Loans (SBL($)). This column indicates (in thousands) the dollar amount of small business loans of less than $250,000 made by the bank.

Column 5, Total Number of Small Business Loans Lent by the Bank (SBL(#)). This column lists the number of small business loans of less than $250,000 made by each bank.

Column 6, Bank Asset Size Class. Here the asset size class of the bank is defined.

Under $100 million (<100M)
$100 million to under $500 million (100M-500M)
$500 million to under $1 billion (500M-1B)
$1 billion to under $10 billion (1B-10B)
$10 billion and over (>10B)
(Note: Since an additional bank asset size category has been added to this year's study, it will be difficult to make comparisons with the previous studies.)

Columns 7, Ratio of Super Small Business Loans to Total Assets (SSBL/TA). This column indicates the ratio of small business loans under $100,000 (also called micro-loans) to the bank's assets.

Columns 8, Ratio of Larger Small Business Loans to Total Assets (LSBL/TA). Displayed here is the ratio of larger small business loans (loans under $1 million) to assets.

Column 9, Ratio of Small Business Loans and Farms Loans to Total Assets (SBL&FL/TA). This column lists the ratios of total small business and small agricultural loans (under $250,000) to the banks' total assets.

Column 10, Credit Card Banks. A double asterisk in this column means that the bank has a significant amount of business credit card activity. Many of the loans made by these banks may be credit card accounts to individual employees of large firms or small firm credit card accounts. Because the call report information does not distinguish between these two types of loans, the total rank in column 1 may be biased, making some banks appear more small-business-friendly than they are. However, a few of these credit card banks are making loans to small business with credit cards. Thus, the double asterisk is a caution flag.

Limitations of the Study
It is important to note that the call report data tell only a part of the story about lending to small business, namely the commercial bank part. (Small businesses certainly have access to other sources of credit, such as family and friends.) The user should remember that some lending information may not be reported in call reports or may not be discernible as small business financing, for example:

Banks may provide lines of credit to small firms in their region. If the line of credit is not used, it may not be reported.
Banks may issue consumer credit cards or other forms of consumer credit to small businesses for working capital (e.g. to buy office equipment). These may be categorized by a bank as lines of credit or consumer loans.
Large banks may make loans to small businesses under their consumer loan divisions, classifying the loans as consumer loans.
Large banks may send the business person to its subsidiary finance company.
SBA loans sold in the secondary market will be recorded in the number of loans made by banks. It is believed, however, that only the non-guaranteed portion of these loans is included in the dollar value of small loans in the call reports.
Loans to small businesses are often made in the form of a second mortgage on the business owner's home and/or personal lines of credit.
Small business owners may use their personal credit cards to finance their business.
Multi-state banks' statistics on lending are becoming less meaningful.
Moreover, call reports do not reflect a major factor affecting a bank's small business lending activities: the demand or lack of demand for small business loans. Banks with a similar capacity to lend, but responding to less regional demand for small business loans, may have a lower "small-business-friendliness" rating than banks responding to more demand.

Despite these limitations, call report data provide sufficient information to present a fairly accurate picture of lending to small businesses in the U.S. economy. And they are currently the only source of small business lending information available to the public.

Suggestions
Suggestions on how to improve the study are welcome. Send written comments to: Office of Advocacy, U.S. Small Business Administration, Mail Code 3112, 409 Third Street, S.W., Washington, DC 20416. Or fax your request to (202) 205-6928. Comments and technical questions may be addressed to Dr. Charles Ou, Office of Advocacy, U.S. Small Business Administration, telephone (202) 205-6966.

Accessing the Study
You may access the 1996 edition of The Top Small Business Lending Banks in the United States on the Internet's World Wide Web at the following address:

The three editions of Small Business Lending in the United States are available at:

Paper and microfiche copies of all of these banking studies are available for purchase from the National Technical Information Service, Springfield, VA 22161, telephone (703) 605-6000 or 1-800-553-6847.

----------------------------------------
1/ Call reports, officially known as Consolidated Reports of Condition and Income for U.S. Banks, are quarterly reports filed by financial institutions with their appropriate bank regulators. The call reports provide detailed information on the current status of a financial institution. Section 122 of the Federal Deposit Insurance Corporation Improvement Act of 1991 requires financial institutions to report on an annual basis the number and amount of small business loans.