Office of Advocacy U.S. Small Business Administration Micro-Business-Friendly Banks in the United States A Directory of Small Business Lending Reported by Commercial Banks in June 2000 Published May 2001 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. The complete study is available on the Internet at http://www.sba.gov/advo/stats/lending or on microfiche from the National Technical Information Service, Springfield, VA 22161, tel. (800) 553-6847. The NTIS publication number is PB2001-106750. Foreword The SBA's Office of Advocacy is pleased to present the 2000 edition of Micro-Business-Friendly Banks in the United States. This seventh edition provides data not available elsewhere and is designed to help small firms identify "micro-business-friendly" banks with significant lending in small amounts. Micro-business loans are defined here as commercial and industrial loans and commercial mortgage loans of less than $100,000 made by commercial banks. No information is available about the size of recipient businesses, but research has shown that most small loans go to small businesses. The study relies on data from two sources. The text provides a description of the two databases (Part 1), as well as analyses of the June 2000 call report data (Part 2) and data gathered under the Community Reinvestment Act or CRA (Part 3). Among the highlights of the call report data in Part 2, are the following: * The number of micro-business loans reported in the call reports increased by 2 million, up 26.9 percent from June 1999 to June 2000. Actually, there were decreases in the number of micro-loans in every bank asset size class, except for the banks with asset sizes over $1 billion, where there were dramatic increases. * The dollar amount of micro-loans increased by 6.7 percent, the smallest increase of all the loan size categories. Again, the largest percentage increases came from the largest banks, and in most cases the micro-loan growth was slightly greater than asset growth. * In contrast, the dollar amount of large business loans over $1 million increased by 16 percent over the period. The large increase in the larger loan categories raises questions as to whether an adequate supply of micro-loans is being made available to the smallest borrowers. * The study uses four criteria to identify and rank 423 micro-business-friendly banks with significant activity in loans of less than $100,000. The banks represent only 5 percent of the 8,459 commercial banks filing call reports in June 2000. These banks, holding some 1.8 percent of total bank assets, had 12.7 percent ($15.4 billion) of the total dollar value of micro-business loans outstanding. They made 38 percent of the number of micro-loans. * There were 118 banks with at least $100 million in micro-business loans outstanding as of June 2000. Highlights of Part 3, based on the CRA data, include the following: * Only larger banks and bank holding companies (BHCs) are required to file CRA reports. Since no other financial information is available on these banks, they are ranked only by the dollar amount of their micro-lending. * A total of 95 large banks reporting under the CRA system made at least $100 million in micro-loans in 1999 and were ranked by their micro-business friendliness based on the dollar amounts of micro-business loans. * The CRA data are especially useful in helping small businesses locate out-of-state banks that are micro-business-friendly. For example, CRA data show that 25 of the 34 active micro-lenders in Florida, including the top 14, are based out of state. In Arizona, Connecticut, and the District of Columbia, all of the CRA reporting banks are headquartered out of state. * Consequently, with the restructuring of the banking system, the CRA tables become extremely important in finding a larger financial institution to meet the credit needs of small firms. The Office of Advocacy's two annual companion reports to this study are Small Business Lending in the United States and The Bank Holding Company Study. The 2000 edition of the first report rank-orders within each state all 8,459 U.S. banks on their small firm lending, as well as large banks' small firm lending under the CRA program. The second lists BHCs that are top lenders to small firms. In both of those studies, a small business loan is a loan of less than $1 million. For those involved in financing activities in rural America, the Office of Advocacy produced last year Small Farm Lending in the United States for each state and a national edition of Small Farm Lending by Bank Holding Companies. The studies are available on the Internet at: http://www.sba.gov/advo/stats/lending. No story on micro business lending would be complete without mentioning the U.S. Small Business Administration's loan programs. During fiscal year 2000 SBA's largest lending program, the 7 (a) program, increased by 3.7 percent in the dollars of loans that were guaranteed, while the number of loans increased by 0.2 percent. According to Guaranteed Lender, the top five SBA lenders ranked by the dollar amount of lending under the 7 (a) program, as of September 20, 2000, were:1 CIT Group, Heller Financial, U.S. Bancorp, Bank United, and Wells Fargo. The top five by number of loans outstanding were Fleet Boston, Wells Fargo, Bank of America, CIT Group, and U.S. Bancorp. These financial institutions are clearly small-business-friendly. In Advocacy's ranking, banks that participate in SBA's loan programs and use secondary markets extensively will have "small business friendliness" rankings that are artificially low because only the non-guaranteed portion of guaranteed loans will appear in the bank's loan portfolio. SBA preferred or certified lenders should all be considered small-business-friendly, and small firms should certainly seek them out. A listing can be found at www.sba.gov. Thanks to all who helped fine-tune this effort. Comments and suggestions are valuable and truly welcome. Robert E. Berney Chief Economist Contents Part 1 Introduction 1 Part 2 The Call Report Data 4 Part 3 The CRA Data 7 Tables: Top Micro-Business Lenders 8 Table 1 .. using Call Report Data, June 2000 Table 2 ...under the CRA Reporting Program, 1999 Part 1 Introduction Micro-Business-Friendly Banks in the United States identifies the micro-business-friendly lenders, or banks with significant lending in loans of less than $100,000. This report is a companion to the more comprehensive study, the 2000 edition of Small Business Lending in the United States, the "small-business-friendly banks" study.2 Access to credit is vital for small business survival, and a key supplier of credit to small firms is the commercial banking system. Some 67 percent of all small firms that borrow from traditional sources obtain their money from commercial banks, according to the 1993 National Survey of Small Business Finances (NSSBF).3 Of a total of $668 billion in small business credit outstanding from traditional sources in the 1993 survey, commercial banks supplied 54 percent of the outstanding loans, a much larger share than the 13 percent supplied by finance companies, the next most prominent lender.4 A Comparison of the Data Sets Like the Office of Advocacy's earlier banking studies, this edition includes an analysis of call report data filed by commercial banks with their regulators in June.5 Again this year, the report also offers data from the Community Reinvestment Act (CRA) database. The call report and CRA data complement each other, but are not comparable, in that they provide different kinds of loan information, are identified differently by location, and cover different categories of banks (Table A). CRA data reflect the loans being made during 1999, while the call reports measure all the loans outstanding as of June 30, 2000 (flow of credit versus the stock of credit). The call reports attribute all lending of a banking organization to the state where the bank's headquarters is located, while the CRA data report actual lending in a given state. In addition, only the larger banks or bank holding companies (BHCs) are required to report under CRA. Because the CRA data do not include other information about bank performance, only the amount of loans being made can be reported.6 Basing rankings solely on the total amount of small business loans and leaving out the ratios of small business loans to bank assets or total business loans biases the results in favor of larger banks. Table A. Comparison of Call Report and CRA Databases Used in 2000 Lending Studies Call Report Data CRA Data Loan data provided Stock of business loans outstanding as of June 2000 Flow of business loans over entire calendar year 1999 How location is identified Bank headquartered in the state Lending activity in the state by all CRA reporting banks Categories of banks covered All reporting commercial banks and bank holding companies Banks with $250 million or more in assets or members of bank holding companies with more than $1 billion in assets Limitations of the Study Call report and CRA data tell only the commercial banking part of the story about lending to small firms. Small firms certainly have access to other sources of credit, including suppliers, finance companies, family and friends. The data do not reflect a major factor affecting a bank's ability to make loans to small businesses, namely the demand or lack of demand for small business loans. Some banks in a state may have strong demand for small business loans, which increases their score in comparison with other banks in the state. And some lending information may not be reported in call reports or CRA data, or may not be discernible as small firm financing; for example: * Banks may provide consumer credit cards, lines of credit, or other forms of consumer credit to small businesses for working capital (for example, to buy office equipment). Banks may report these as either small business or consumer loans or as consumer lines of credit. * Large banks may lend to small firms through their consumer loan divisions, classifying the loans as consumer loans. * Large banks may send the business owner to a subsidiary finance company that is not required to file a call report. * Small business owners may use their personal credit cards to finance their businesses.7 * Loans to small firms are often in the form of a second mortgage on the owner's home or a personal line of credit.8 * SBA-guaranteed loans sold in the secondary market are recorded in the number of small business loans made by banks, but only the non-guaranteed portion of these loans is included in the dollar value of small loans in the call report. * Call report lending statistics by state are becoming less meaningful as these banks consolidate their accounting and reporting systems. In contrast, CRA data do give a state-by-state accounting of where the loans are located. * When mergers or acquisitions occur among banks and other financial intermediaries, the reported amount of lending may appear to change, when all that is happening is that loans are being transferred among financial intermediaries. Also, when mergers occur, the lending activity of a given bank or the bank's holding company affiliate becomes difficult to track, making year-to-year comparisons questionable. Despite these limitations, the call report and CRA data provide sufficient information to present a reasonably accurate picture of commercial bank lending to small businesses in the U.S. economy. And currently, they are the only source of small business lending information publicly available on individual bank lending patterns. Suggestions Suggestions on how to improve the study are welcome. Comments may be addressed to Dr. Robert Berney, Chief Economist, Office of Advocacy, U.S. Small Business Administration, telephone (202) 205-6875, e-mail robert.berney@sba.gov or Dr. Charles Ou, telephone (202) 205-6966, e-mail charles.ou@sba.gov. Written comments may be sent to: Office of Advocacy, U.S. Small Business Administration, Mail Code 3112, 409 Third Street S.W., Washington, DC 20416, or by fax: (202) 205-6928. Accessing the Study This study and its companion studies, Small Business Lending in the United States, The Bank Holding Company Study, Small Farm Lending in the United States, and Small Farm Lending by Bank Holding Companies are on the Office of Advocacy's website at http://www.sba.gov/advo/stats/lending. The studies may also be purchased on paper or microfiche from the National Technical Information Service, 5285 Port Royal Road, Springfield, VA 22161, telephone (703) 605-6000. Part 2 The Call Report Data In 1991, the Congress, recognizing the importance of small firms to the U.S. economy, mandated that banks report small business loan information to federal banking authorities as part of their call reports. Beginning in June 1993, the banking regulators collected information from commercial banking institutions on all commercial loans under $1 million. In 1994, the Office of Advocacy first analyzed the call report information in order to help small firms locate the financial institutions most likely to make small business loans. The Advocacy reports provided state-by-state data on small business lending, as well as micro-lending for loans under $100,000. The call reports provide various bank data, including the number and dollar amount of loans outstanding by loan size for business loans of less than $100,000. These data enable researchers to evaluate commercial banks' micro-business lending activities. Four variables were used to create a score for the small business lending activities of individual banks: (1) the ratio of micro-business loans to total assets, (2) the ratio of micro-business loans to total business loans, (3) the dollar value of micro-business loans, and (4) the number of micro-business loans. A bank's score in a category is based on its decile ranking. This decile value is a measure of where the individual bank falls in the distribution of all banks within a state for any given variable. Decile values range from 1 to 10. Banks in the top 10 percent of all banks in the state receive the top ranking of 10; banks in the lowest 10 percent in the category receive a ranking of 1. To allow for a top score of 100 rather than 40, the sum of the decile rankings was multiplied by 2.5. Micro-business-friendly banks in each state are identified based on their total score (Table 1, column 1). Included in this table are the top 10 banks or the top 10 percent in each state, whichever number is smaller. Tied scores may increase the number of listings. In summary, the 2000 tables using call report data retain the major features of the 1999 study: * Four criteria are again used in the total score. * Data are provided on a state-by-state basis, a format that is most relevant to those relying on local bank credit markets. * Five bank asset size classes are used. * Total scores can range from 0 to 100. The four decile values are summed and then are multiplied by 2.5 to give a maximum score of 100. Findings: Micro-Business Friendly Banks, 2000 A total of 423 banks, or 5 percent of the 8,459 banks that filed call reports in June 2000, were identified as micro-business-friendly U.S. lenders in 2000 using call report data (Table B). 9 These banks, holding 1.8 percent of total commercial bank assets, had 12.7 percent ($15.4 billion) of the total value of micro-business loans outstanding in June 2000 (Table C). The total dollar value of micro-business loans at a listed bank range from $3.0 million to some $900 million. Sixteen banks, four of Table B. Distribution of Micro-Business-Friendly Banks Using Call Report Data, June 2000 Bank Asset Size Micro-Business-Friendly Banks All Banks MBF Banks as a Percentage of All Banks < $100 million 158 5,034 3.1 $100-$500 million 241 2,751 8.8 $500 million -$1 billion 13 302 4.3 $1-$10 billion 11 293 3.8 > $10 billion 79 Total 423 8,459 5.0 Table C. Total Assets and Micro-Business Loans Outstanding of All Banks and 423 Micro-Business-Friendly Banks, June 2000 Total Assets (Billions of Dollars) Micro-Business Loans (Billions of Dollars) Micro-Business Loans (Thousands of Loans) 423 MBF Banks 92.5 15.4 2,701 All Banks 5,229.6 121.4 9,802 MBF Banks as Percent of All Banks 1.8 12.7 27.6 which were located in Utah, had more than $100 million in micro loans in June 2000. Since the average micro-business loan size among the 423 banks is only $5,700, credit card transactions are clearly an important component. Findings: Micro-Business Lending by All Banks, 2000 The number of micro-business loans reported in the call reports increased by 2 million, or an increase of 26.9 percent from June 1999 to June 2000. The increase was comparable to that of the 1996-1997 time period (Table D). But part of this increase was attributable to the purchase by a large bank of Office Depot's accounts receivable-a transaction that amounted to converting trade credit into bank loans. The percent change in the number of loans fell in the smaller three bank classes (-10, -8, and -0.5 percent) but increased in the two larger size classes by 65 percent and 12 percent (Table E). While the number of loans under $100,000 increased by 26.9 percent, the dollar amount increased by only 6.7 percent; thus, the average size of these loans continues to decline (Table F). Again, the increase came from the larger banks. Banks with less than $100 million in assets had a decline in micro loans of 4 percent, while the intermediate asset sizes show increases of 1 percent, 6 percent, and 9 percent. The over-$10 billion size class increased its micro-loans by 18 percent (Table E). The percentage increase in micro-loan amounts was less than it was for larger loan sizes (6.7 percent vs. 16 percent for the loans over $1 million) so whether there is an adequate supply going to the smallest borrowers is an important question to ask. Fluctuations in the number and amounts of loans, the number of banks, and their change in assets by bank size reflect the churning of the banking industry because of mergers and the rapid development of credit card banks. As the number of small banks with less than $100 million in assets declines, one would expect the dollar value of their micro-loans to decline by similar percentages. Assets for banks with less than $100 million in assets fell by 4 percent while assets for Table D. Percent Change in the Number of Small Business Loans by Loan Size, 1996-2000 (Percent) Loan Sizes 1996-19971 19971-19982 19982-1999 1999-2000 <$100,000 26.6 19.3 10.1 26.9 $100,000-$250,000 8.6 1.8 5.4 20.8 $250,000-$1 Million 8.0 1.4 7.6 8.4 1 Changes for 1996-1997 and 1997-1998 were estimated based on revised estimates for Keycorp in 1997. 2 So that 1998-1999 trends could be seen, the 1998 figure for loans outstanding was revised to exclude the credit card operations of Mountain West Financial, which were purchased by a non-bank financial intermediary and disappeared from the call report database in 1999. banks with more than $10 billion in assets increased by 16 percent (Table E). Bank consolidations continued to affect the relative importance of banks of different sizes in the small firm loan market.10 The number of very small banks has been declining by about 300 banks annually; but the rate of decline seems to be diminishing recently (Table G). Very few commercial banks have failed in recent years. Most have grown into the next size class, merged, or have been acquired by other banks. The number of banks with assets between $100 million and $1 billion increased. Mergers and acquisitions led to a decline in the number of banks in the $1-$10 billion asset size class.11 Table E. Changes in Micro-Business Loans, Large Business Loans, Total Assets and Number of Banks by Bank Asset Size, 1999-2000 (Percent) Bank Asset Size <$100 Million $100 Million-$500 Million $500 Million -$1 Billion $1 Billion-$10 Billion > $10 Billion Micro-Loans ($) -4.31 1.45 5.92 8.74 18.44 Micro-Loans (#) -10.31 -8.28 -0.50 65.32 11.77 Large Business Loans ($) -0.41 15.66 21.06 4.68 18.44 Total Assets ($) -4.05 3.50 4.63 -0.33 16.48 Number of Banks -5.05 2.53 4.14 -5.18 5.33 Table F. Percent Change in the Dollar Amount of Business Loans by Loan Size, 1996-2000 (Percent) Loan Sizes 1996-19971 19971-19982 19982-1999 1999-2000 <$100,000 2.9 3.0 2.5 6.7 $100,000-$250,000 5.2 8.1 6.3 8.4 $250,000-$1 Million 5.7 7.7 11.2 11.8 >$1 Million 11.5 13.0 14.6 16.1 1 Changes for 1996-1997 and 1997-1998 were estimated based on revised estimates for Keycorp in 1997. 2 So that 1998-1999 trends could be seen, the 1998 figure for loans outstanding was revised to exclude the credit card operations of Mountain West Financial, which were purchased by a non-bank financial intermediary and disappeared from the call report database in 1999. Note: Dollar amounts are not adjusted for inflation. Table G. Number of Reporting Banks by Asset Size, 1996-2000 Bank Asset Size 1996 1997 1998 1999 2000 <$100 Million 6,465 6,047 5,644 5,302 5,034 $100 Million-$500 Million 2,548 2,590 2,656 2,683 2,751 $500 Million-$1 Billion 260 292 303 290 302 $1 Billion-$10 Billion 326 300 302 309 293 >$10 Billion 71 64 61 75 79 Total 9,670 9,293 8,966 8,659 8,459 Part 3 The CRA Data A regulatory change under the Community Reinvestment Act (CRA) made available a database that shows the geographical distribution of small loans to businesses. Enacted in 1977, the CRA is designed to encourage banks to meet the credit needs of the local communities from which they obtain deposited funds. Federal banking supervisory agencies revised the regulations implementing the CRA in 1994, adding a requirement that banks report data on small business lending by census tract.12 To minimize the paperwork burden on small banks, the bank regulatory authorities require only banks with assets over $250 million or member banks of a bank holding company with assets over $1 billion to provide this information. Some 18 percent of banks must file under this requirement, but they make some two-thirds of the loans to small businesses (Table H).13 The CRA data cover micro-lending for calendar year 1999 and, as discussed previously, differ from call report data in a number of important respects (see Table A). For example, the number of micro-loans is quite different when reported by location of the loans, as in the CRA data, rather than by location of the headquarters office of a bank, as in the call report data. In Table 2, the banks' rankings are based on the dollar amount of their micro-lending. Included in the table are all banks that make more than $10 million in micro-business loans in a given state. Consequently, a different perspective on micro-business lending, especially by large banks, emerges from the CRA data. CRA data provide information on the geographic location of small business lending by large "reporting units" (BHCs and independent banks). 430 banks or BHCs made at least $10 million in micro-business loans in a given state in 1999 (Table 2).13 Many large banks are very active in micro-business lending across the states. In fact, in many states more out-of-state than in-state banks are making micro-loans. In Florida, for example, the CRA data show 34 active micro-lenders, only nine of which are Florida-based. The first 14 banks in Florida, ranked by the dollar amount of micro-loans, are out-of-state lenders. Table H. Business Loans Outstanding as of June 30, 2000 from All Call Report and CRA-Covered Banks* (Billions of Dollars) Loan Size Call Report Banks Banks Subject to CRA CRA/CRB Percent <$100,000 $121.4 $74.0 61.0 <$250,000 209.4 137.7 65.8 <$1 Million 437.0 312.4 71.5 >$1 Million Total Business Loans 863.3 1,300.3 835.1 1,147.5 96.7 88.2 *Call report banks include all commercial banks that filed call reports as of June 2000, while CRA reporting banks are all banks with more than $250 million in assets or that are part of a bank holding company with more than $1 billion in assets that filed for calendar year 1999. A total of 95 BHCs/banks made more than $100 million in micro-business loans in one or more states in 1999. For example, six of the eight banks/BHCs lending more than $100 million in Texas were out-of-state lenders; the same was true for California, with one bank being foreign based. Even in New York, three of the nine banks that lent $100 million or more were from other states or countries. The banks covered by the CRA in 1999 made 61 percent of the value of all micro-business loans under $100,000 (Table H). And the CRA reporting banks are even more important in the larger loan categories. The Tables Table 1: Micro-Business-Friendly Banks in the United States Using Call Report Data Table 1 lists micro-business-friendly lenders in each state using call report information. Because of different banking structures in each state, as well as interstate differences in the number of banks, their size distribution, and demand for small business loans, the levels of micro-business lending for these top lenders differ greatly from state to state. States are listed alphabetically by postal abbreviations. Within each state, the top 10 or 10 percent (plus ties) are listed in descending order. The table follows the format of previous micro-business lending reports: 1. Total Score for Micro-lending under $100,000 [Total]. The total in the first column represents the bank's overall micro-business lending score within the state in which it is listed. The number is the sum of the four scores found in columns 2 through 5 multiplied by 2.5 to bring the best possible total score to equal 100. A score of 100 indicates that the bank is in the top decile-the top 10 percent-in each of the four categories. 2. Decile Value for the Ratio of Micro-Business Loans to Total Bank Assets [SBL/TA]. The bank's score for the ratio of micro-business loans to total bank assets. A score of 10 means that the bank is in the top decile or the top 10 percent of all banks in the state for this variable; a score of 1 means the bank is in the bottom 10 percent. 3. Decile Value for the Ratio of Micro-Business Loans to Total Business Loans [SBL/TBL]. The bank's score based on its decile ranking for the ratio of micro-business loans to total business loans. A score of 10 means that the bank is in the top decile of all banks in the state for this variable. 4. Decile Value for the Total Dollar Amount of Micro-Business Loans Lent by the Bank [SBL($)]. The score based on the bank's decile ranking in the state for the dollar value of micro-business loans outstanding. 5. Decile Value for the Total Number of Micro-Business Loans Issued by the Bank [SBL(#)]. The score based on the bank's decile ranking for the total number of micro-business loans. 6. Bank Asset Size Class [Bk Asset Sz]. Asset size classes include: • 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). 7. Dollar Amount of Micro-Business Loans [Dollars in SBL(<$100k)]. The dollar amount (in thousands) of micro-business loans of less than $100,000. 8. Number of Micro-Business Loans [Number of SBL(<$100k)]. The number of micro-business loans of less than $100,000 made by the bank. 9. Total Score of Small Business Loans under $1 Million [Total Score (<$1M)]. The sum of the four scores based on the decile rankings (multiplied by 2.5) for the bank's small-business-friendliness in loans of less than $1 million. A firm looking for a loan of between $250,000 and $1 million might be better served by a bank ranking high in this column. 10. Total Score of Small Business Loans under $250 Million [Total Score (<$250M)]. The sum of the four scores based on the decile rankings (multiplied by 2.5) for the bank's small-business-friendliness in loans of less than $250,000. A firm looking for a loan of between $100,000 and $250,000 might be better served by a bank ranking high in this column. Table 2: Micro-Business-Friendly Banks in the United States Using CRA Data Table 2 lists micro-business-friendly lenders in each state using CRA information. Because of different banking structures in each state, as well as interstate differences in the number of banks, their size distribution, and demand for small business loans, the levels of micro-business lending for these top lenders differ greatly from state to state. Besides listing the name of the ultimate owning bank or BHC, Table 2 lists the bank's city and home state (HQ STATE) as well as the number of states in which the bank did small business lending (States with Loans). It lists the dollar amount and number of loans under $100,000, under $250,000 and under $1 million made in 1999 by banks that made more than $10 million in micro-business loans. States are listed alphabetically by postal abbreviations. Within each state, all banks and BHCs that are subject to CRA reporting and have made more than $10 million in micro loans in that state in 1999 are listed in descending order of the volume of micro loans. The numbered columns are as follows: 1. Dollar Amount of Micro-Business Loans [SBL$(<$100k)]: The dollar amount (in thousands) of loans of less than $100,000. 2. Number of Micro-Business Loans [SBL#(<$100k)]: The number of loans of less than $100,000. 3. Bank Asset Size (BK SIZE): The total assets of the ultimate owning bank by size category: * Less than $1 billion (<$1B)$1 billion to under $10 billion ($1B-<$10B) * $10 billion to under $50 billion ($10B-<$50B) * $50 billion and over (>$50B) 4. Dollar Amount of Mid-Sized Small Business Loans [SBL$<$250k]: The dollar amount (in thousands) of mid-sized business loans (<$250,000). 5. Number of Mid-Sized Small Business Loans [SBL# <$250k]: The number of mid-sized business loans (<$250,000). 6. Dollar Amount of Small Business Loans [SBL$<$1M]: The dollar amount (in thousands) of loans of less than $1 million. 7. Number of Small Business Loans [SBL#<$1M]: The number of loans of less than $1 million. 8. Credit Card Loans to Total Assets [Cd/TA]. The ratio of the dollar value of credit card loans to total assets. When this measure exceeds 0.50, the bank is defined as a credit card bank. Credit card loans may be the credit card accounts of individual employees, including owners, of small or large firms. As the call report information does not distinguish among these types of loans, the summary total statistic in column 1 may be biased, making some banks appear more small-business-friendly than they are. (Note that ** implies data problems with a credit card bank so the ratio could not be calculated.) 1 Guaranteed Lender, November 13, 2000. 2 U.S. Small Business Administration, Office of Advocacy, Small Business Lending in the United States (Springfield, Va.: National Technical Information Service, 2001). The study ranks, state-by-state, all 8,459 U.S. commercial banks that reported small firm lending data (loan size< $1 million) in the June 2000 call reports filed with federal banking regulators. 3 Rebel A. Cole and John D. Wolken, "Financial Services Used by Small Businesses: Evidence from the 1993 National Survey of Small Business Finances," Federal Reserve Bulletin (July 1995), 629-667. The NSSBF was jointly funded by the Federal Reserve Board and the Office of Advocacy. For information on the limited release of the new survey results, see Marianne Bitler, Alicia Robb, and John Wolken, "Financial Services Used by Small Businesses: Evidence from the 1998 Survey of Small Business Finances," Federal Reserve Bulletin (April 2001), 183-205. 4 Both banks and finance companies are active participants in SBA's business loan guaranty programs. Some 400 SBA preferred lenders have full authority to issue guaranteed loans. More than 1,000 SBA-certified lenders perform the primary analyses for SBA lending but are not authorized to approve the loans. The value of SBA business loans outstanding is less than 10 percent of the total stock of commercial bank loans; that is, most small business bank loans are not SBA guaranteed loans. 5 Call reports, officially known as Consolidated Reports of Condition and Income for U.S. Banks, are quarterly reports filed by financial institutions with bank regulators. 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 annually the number and amount of small firm loans. 6 Advocacy was successful in matching the call reports with CRA information for the largest bank holding companies, which allowed the use of the four- variable ranking system with CRA data in the 2000 edition of The Bank Holding Company Study. 7The Survey of Small Business Finances found that 33 percent of small businesses used business credit cards and 45 percent used personal credit cards for business purposes in 1998. This was an increase from the 1993 survey numbers of 29 percent for business credit cards and 41 percent for the uses of personal credit cards for business purposes. 8 See "Recent Development in Home Equity Lending," Federal Reserve Bulletin, April 1998. 9 This year's number of banks (423) is not comparable to last year's (541) because the leading bank in each asset size class was automatically included last year. Some larger banks that were included last year had lower total scores than some smaller banks that were not listed. It was considered inappropriate methodology to keep listing them. For a listing of large banks that are making many micro-loans, check the CRA listings in Table 2 or Advocacy's The Bank Holding Company Study. 10 The discussion on changing banking structures should be interpreted with caution. Changes in the number of reporting banks may be caused by the financial reporting consolidation of BHCs. 11 See Loretta J. Master, "Banking Industry Consolidation: What's a Small Business to Do?" Business Review, Federal Reserve Bank of Philadelphia (January/February 1999), 3-16. 12 For more information about the history of the CRA, see "Home Purchase Lending in Low Income Neighborhoods and to Low Income Borrowers," Federal Reserve Bulletin (February 1995), 71-105, and Raphael W. Bostic and Glenn B. Canner, "New Information on Lending to Small Business and Small Farms: The 1996 CRA Data," Federal Reserve Bulletin (January 1998), 1-35. 13 All bank reporting units are consolidated under the ultimate owning BHC. Thus a BHC may be listed among the top lenders in multiple states even if the loans are made by different banks in the BHC. 10 ii Small Business Lending in the United States, June 1996 Edition 1 ii