Small Business and Micro Business Lending in the United States, for Data Years 2007-2008 Office of Advocacy U.S. Small Business Administration Washington, D.C. May 2009 Foreword This edition of the Office of Advocacy’s annual study of lending to small and micro businesses by most depository institutions in the United States continues its expanded coverage. Included, in addition to banks, are other depository institutions, such as federal and state savings banks and savings and loan associations. The report also includes broader geographic coverage extended to the U.S. territories. The source information consists of two types of data reported by depository institutions to their respective regulating agencies—Call Reports for June 2008 and Community Reinvestment Act (CRA) reports for 2007. These represent the most current data available. The smaller number of institutions required to submit CRA reports means that the coverage of small business lending activities under CRA reporting is reduced relative to Call Report coverage. This study covers both small business lending (loans of less than $1 million) and micro business lending (loans of less than $100,000, a subset of small business lending) for all reporting institutions, and for multi-billion-dollar lending institutions for the 2007–2008 period. Some information is also provided about the subset of larger small business loans between $100,000 and $1 million. The report provides data on the top institutions lending to small businesses in each state. Advocacy’s website contains additional data listing the lending activity of all lenders in the 50 states, the District of Columbia, and U.S. territories as expanded versions of tables 3A and 3B. The information is useful to both small businesses in search of loans and lenders who seek to compare their lending with that of their competitors. I encourage readers to use this report as a resource—and I congratulate the lending institutions that are doing a good job of meeting the critical need for capital in the small business community. The lending studies may also be viewed on the Office of Advocacy’s webpage, www.sba.gov/advo/research/lending.html. If you have questions or comments, write to the Office of Advocacy, U.S. Small Business Administration, Mail Code 3112, 409 Third St., S.W., Washington, D.C. 20416, or fax (202) 205-6928. Technical questions may be addressed to Dr. Charles Ou or Ms. Victoria Williams, at (202) 205-6530 or by e-mail: charles.ou@sba.gov or victoria.williams@sba.gov. We welcome your comments and suggestions. Chad Moutray Chief Economist and Director of Economic Research Contents Introduction 1 Part One: Developments in Small and Micro Business Lending 3 I. Findings from the June 2007-June 2008 Call Reports 3 A.Small Business Loans Outstanding from all Reporting Lending Institutions 3 B.Micro Business Loans Outstanding in the United States 3 C.Small and Micro Business Loans Outstanding from Multi-billion-dollar Lending Institutions 5 II. Findings from CRA Reporting Institutions for 2007 7 A.Small Business Lending by CRA Reporting Lending Institutions 7 B.Micro Business Lending by CRA Reporting Lending Institutions 7 Part Two: Directory of Top U.S. Small and Micro Business Lenders 9 Appendix: Data Notes 12 Ranking Methodology and Table Descriptions 12 Variables used in Tables 13 Table Descriptions 14 Data Tables 22 Introduction One vital ingredient essential to small business survival is access to credit. The banking system is the key provider of credit to small businesses in the United States, and nearly 60.4 percent of all small firms borrow from a traditional source such as loans/capital leases, and credit lines; slightly more than two-thirds obtain credit from the banking sector. The health and growth of small businesses is critical and depends on knowing how lending institutions are meeting small firm credit needs and which lenders are investing in small businesses. This information not only helps small businesses save valuable time in shopping efficiently for credit; it also gives lending institutions information on the demand for and supply of small business credit and helps them learn about the competition in the markets in which they participate. This annual edition of Small Business and Micro Business Lending in the United States provides data on small and micro business loans to small firms and on the lending institutions that serve them. For the fourth consecutive year, the study provides expanded coverage of small business lending in two respects. First, in addition to commercial banks, it includes other depository institutions, such as savings banks and savings and loan associations. Second, the geographic coverage includes the territories of Guam, American Samoa, Puerto Rico, and the U.S. Virgin Islands. The study continues to examine both small business and micro business lending. The analysis is based on two types of data reported by lending institutions to their respective regulating agencies —the Call Reports for June 2008 (for information on loans outstanding) and Community Reinvestment Act (CRA) reports for 2007. Data are available only for the size of the loan and not for the size of the business, so the following definitions are used: * Small business loans are defined as business loans under $1 million. * Micro business loans are defined as business loans under $100,000 (the subset of small business loans that constitutes the smallest loans). * Larger small business loans are loans of $100,000 to under $1 million (the subset of small business loans that includes larger loans). Part One discusses developments in small and micro business lending activities by lending institutions in the United States. The first section discusses developments apparent in the Call Report data; the second discusses developments based on the CRA database. Analysis in this study covers data from June 2007 through June 2008 for Call Reports and from 2006 through 2007 for CRA reports. Part Two provides directories of the top small and micro business lenders in the states using both the Call Report and CRA data. For the reader’s convenience, national tables for multi-billion- dollar lending institutions are presented before state tables for all lending institutions, not because these giants are more important in small business lending, but because the tables for bank holding companies (BHC) are shorter. While these two databases have limitations as indicators of both the supply of loans from lending institutions and the small business demand for loans, their usefulness cannot be denied—they are the only publicly available sources of information on the small business lending activities of individual lending institutions. Note that no attempt has been made to distinguish SBA guaranteed lenders in this analysis. Lenders are ranked based on their overall lending, not lending under SBA programs. Accessing the Study The current and all previous editions of Advocacy’s lending studies are available on the Internet at www.sba.gov/advo/research/lending.html. Paper and microfiche copies are also available for purchase from the National Technical Information Service, telephone (703) 487-4650. Suggestions Send written comments or suggestions to the Office of Advocacy, U.S. Small Business Administration, Mail Code 3112, 409 Third St., S.W., Washington, D.C. 20416, or by fax to (202) 205-6928. Technical questions may be addressed to Dr. Charles Ou or Ms. Victoria Williams, at (202) 205-6530 or by email: Charles.Ou@sba.gov or Victoria.Williams@sba.gov. Part One: Developments in Small and Micro Business Lending I. Findings from the June 2007–June 2008 Call Reports A. Small Business Loans Outstanding from All Reporting Lending Institutions As the U.S. economy weakened, small business lending by banks and other lending institutions showed moderate increases in 2008, as borrowers and lenders continued to hold off new borrowing and lending in reaction to an uncertain economy. This was confirmed in the July/ October 2008 Survey of Senior Loan Officers Opinion, which stated that the demand for business loans at domestic institutions continued to weaken, on net, over the previous three months. The rate of borrowing and lending in the small business loan markets was slower than in the previous year. Small business loans (loans of less than $1 million) outstanding totaled $711.3 billion as of June 2008, an increase of $26.7 billion or 4.0 percent—half the increase of $50.6 billion or 8.0 percent the previous year (Tables A and B). The number of loans under $100,000 increased, while the number of small business loans of $100,000 to $1 million decreased by 23.3 percent, from 2.9 million to 2.2 million over the June 2007-June 2008 period (Tables A and C). The total amounts of small business loans in all loan sizes increased in a range between 3.2 percent and 6.8 percent (Table B). Large corporations continued to increase their use of external funds and contributed the most to total business borrowing because of continued increases in investments and in merger and acquisition (M&A) activity between 2007 and 2008. Borrowing by large corporations in loan sizes over $1 million increased to 12.2 percent, compared with 11.7 percent in the previous year. B. Micro Business Loans Outstanding in the United States The increase in the smallest loan sizes under $100,000, known as micro business loans in this report, was modest in 2007-2008. Micro business loans totaled $170.5 billion in June 2008, an increase of 6.8 percent, or $10.8 billion, over this period, compared with a 9.4 percent increase in June 2007. Again, the number of micro business loans increased more than the dollar amount, by 13.7 percent in 2007 and 15.7 percent in 2008, and accounted for the largest change compared with other loan sizes (Table C). Increases in both the dollar amount and volume may be attributed to continued efforts to promote small business credit cards by credit card issuers. Small Business and Micro Business Lending, 2007-2008 Table A Dollar Amount and Number of Small Business Loans, June 2005-June 2008, by Loan Size (Dollars in Billions, Numbers in Millions) __________________________________________________________________________________________________________________________ Percent change Loan size 2005 2006 2007 2008 June 2007­June 2008 __________________________________________________________________________________________________________________________ Under $100,000 Dollars 138.4 146.0 159.7 170.5 6.8 Number 19.02 19.0 21.6 25.0 15.7 $100,000 to <$1 million Dollars 462.3 487.9 524.9 540.7 3.2 Number 1.98 2.2 2.9 2.2 -23.3 Under $1 million Dollars 600.8 634.0 684.6 711.3 4.0 Number 21.0 21.3 24.5 27.3 11.1 Total business loans Dollars 1,680.8 1,848.4 2,023.9 2,270.4 12.2 __________________________________________________________________________________________________________________________ Source: U.S. Small Business Administration, Office of Advocacy, Small Business Lending in the United States, various years, and special tabulations of the June 2008 Call Reports (Consolidated Reports of Condition and Income for U.S. banks and thrift institutions prepared for the Office of Advocacy by James Kolari, Texas A&M University, College Station, Texas). Table B Change in the Dollar Amount of Business Loans by Loan Size, June 2003-June 2008 (Percent) ____________________________________________________________________________________________________________________________ Loan size June 2003-June 2004 June 2004-June 2005 June 2005-June 2006 June 2006-June 2007 June 2007­June 2008 ____________________________________________________________________________________________________________________________ Under $100,000 -0.5 1.9 5.5 9.4 6.8 $100,000 to <$1 million 7.2 4.8 5.5 7.6 3.2 Under $1 million 5.3 4.1 5.5 8.0 4.0 Over $1 million 4.6 11.1 12.4 11.7 12.2 ____________________________________________________________________________________________________________________________ Source: U.S. Small Business Administration, Office of Advocacy, Small Business Lending in the United States, various years, and special tabulations of the June 2008 Call Reports (Consolidated Reports of Condition and Income for U.S. banks and thrift institutions prepared for the Office of Advocacy by James Kolari, Texas A&M University, College Station, Texas). Table C Change in the Number of Small Business Loans by Loan Size, June 2003-June 2008 (Percent) _____________________________________________________________________________________________________________________________ Loan size June 2003-June 2004 June 2004-June 2005 June 2005-June 2006 June 2006-June 2007 June 2007­June 2008 _____________________________________________________________________________________________________________________________ Under $100,000 -11.1 24.8 0.0 13.7 15.7 $100,000 to <$1 million 6.6 5.0 12.8 31.8 -23.3 Under $1 million -9.4 22.6 1.2 15.0 11.1 _____________________________________________________________________________________________________________________________ Source: U.S. Small Business Administration, Office of Advocacy, Small Business Lending in the United States, various years, and special tabulations of the June 2008 Call Reports (Consolidated Reports of Condition and Income for U.S. banks and thrift institutions prepared for the Office of Advocacy by James Kolari, Texas A&M University, College Station, Texas). C. Small and Micro Business Loans Outstanding from Multi-billion-dollar Lending Institutions The significance of lending institutions of different sizes in the small business loan markets is continuously affected by bank consolidations. The importance of large lending institutions in the United States is shown in Table D. On net, the number of consolidated lending institutions declined by 85 between June 2007 and June 2008. In particular, the number of the smallest lenders with assets under $500 million was down by 150 (Table D). The total number of lending institutions (financial services holding companies and independent institutions) in June 2008 was 7,380. The number of multi-billion-dollar institutions with assets over $10 billion declined from 106 to 100 as a result of continued merger and acquisition activity, yet they accounted for 66.0 percent of total business loans and 76.5 percent of total assets in June 2008. The largest lenders continued to focus lending efforts in the market for loans under $100,000, where they accounted for 69.2 percent of the number of loans by the end of June 2008. Their share of the value of these loans increased from 52.7 percent in 2006 to 60.9 percent in 2008. These giants continued to concentrate in the credit card market. Large lending institutions remained passive or less active in the market for loans between $100,000 and $1 million. The share of the dollar amount outstanding in this category increased slightly, from 42.3 percent in June 2006 to 43.9 percent in June 2008, while the share of the number of loans made in this category increased from 37.8 percent to 42.0 percent. It will be important to continue monitoring this development as banking concentration continues. Table D Share of Total Assets and Business Loans by Size of All U.S. Depository Institutions, June 2006–June 2008 (Percent, Except Figures for Number of Institutions)* ___________________________________________________________________________________________________________________________________________ Asset size of institutions __________________________ Over $10 billion Over $10 $1 billion to $500 million Under $500 All institutions $50 billion to $50 billion billion $10 billion to $1 billion million and BHCs ___________________________________________________________________________________________________________________________________________ June 30, 2006 Number of institutions 34 74 108 473 591 6,391 7,563 Micro business loans (under $100,000) Amount 38.98 13.67 52.65 14.55 7.07 25.63 100.0 Number 53.11 17.74 70.85 12.44 9.47 7.23 100.0 Small business loans ($100,000-$1 million) Amount 30.29 11.99 42.28 22.46 10.17 25.00 100.0 Number 27.48 10.36 37.84 20.37 8.79 33.00 100.0 Total small business loans (under $1 million) Amount 32.30 12.37 44.67 20.66 9.45 25.22 100.0 Number 50.42 16.96 67.38 13.28 9.40 9.94 100.0 Total business loans Amount 50.68 13.33 64.02 17.56 6.12 12.31 100.0 Total domestic assets Amount 60.88 14.35 75.23 12.25 3.96 8.56 100.0 June 30, 2007 Number of institutions 32 74 106 498 617 6,244 7,465 Micro business loans (under $100,000) Amount 41.51 16.67 58.18 14.00 6.02 21.80 100.0 Number 49.00 17.40 66.39 19.85 7.62 6.40 100.0 Small business loans ($100,000-$1 million) Amount 32.48 12.17 44.65 22.27 9.98 23.10 100.0 Number 23.57 8.75 32.32 21.71 7.24 38.70 100.0 Total small business loans (under $1 million) Amount 34.59 13.22 47.81 20.33 9.05 22.80 100.0 Number 46.00 16.38 62.38 20.07 7.57 10.00 100.0 Total business loans Amount 51.31 13.9 65.21 17.57 5.90 11.30 100.0 Total domestic assets Amount 61.31 14.27 75.58 12.29 3.99 8.14 100.0 June 30, 2008 Number of institutions 34 66 100 529 657 6,094 7,380 Micro business loans Amount 48.63 12.24 60.86 13.48 5.76 19.90 100.0 (under $100,000) Number 56.17 13.00 69.18 19.40 6.23 5.20 100.0 Small business loans ($100,000-$1 million) Amount 34.20 9.71 43.91 23.06 10.49 22.54 100.0 Number 32.88 9.10 41.98 22.36 10.09 25.56 100.0 Total small business loans (under $1 million) Amount 37.66 10.32 47.97 20.76 9.35 21.91 100.0 Number 54.28 12.69 66.97 19.64 6.54 6.85 100.0 Total business loans Amount 54.89 11.12 66.01 17.49 5.99 10.52 100.0 Total domestic assets Amount 64.42 12.03 76.46 12.02 3.92 7.60 100.0 ______________________________________________________________________________________________________________________________________________ *All members of a holding company are consolidated to the extent the linked IDs permit. Credit unions excluded. Source: U.S. Small Business Administration, Office of Advocacy, Small Business Lending in the United States, various years, and special tabulations of the June 2008 Call Reports (Consolidated Reports of Condition and Income for U.S. banks and thrift institutions prepared for the Office of Advocacy by James Kolari, Texas A&M University, College Station, Texas). II. Findings from CRA Reporting Institutions for 2007 A. Small Business Lending by CRA Reporting Lending Institutions This section presents a profile of the geographic activities of small business lending by large lending institutions (institutions required to report under the Community Reinvestment Act program) in 2007. CRA data provide information on the location of loans made by a lender during a period, for example, from January 1 through December 31 of a given year. A comparison of CRA and Call Report reporting institutions appears in Table E. Because of changes in reporting requirements, the number of lending institutions that submitted CRA reports numbered 816 (slightly higher than in 2006), compared with more than 1,500 in 2004. These CRA reporting institutions accounted for 86.0 percent of the total assets, 59.0 percent of the amount of the smallest loans (micro business loans under $100,000) and 65.0 percent of the larger small business loan amount ($100,000–$1 million) in the industry. CRA-reporting institutions extended a total of $326.4 billion in small business loans (up 12.6 percent from 2006). The number of these loans was 13.5 million, up 16.1 percent from the previous year (Table F). B. Micro Business Lending by CRA Reporting Lending Institutions Lending institutions made 13.0 million micro business loans valued at $146.0 billion in 2007, compared with 11.1 million micro loans in the amount of $116.2 billion in 2006 (Table F). These lenders accounted for 44.7 percent of the dollar amount and 96.3 percent of the number of micro business loans made in 2007. Total assets for these lenders increased slightly in 2007, from $8.7 trillion in 2006 to $10.0 trillion in 2007. Table E Comparison of Assets and Business Loans Outstanding for All Lending Institutions as Reported in Call Reports and by CRA Reporting Institutions (Billions of Dollars) _____________________________________________________________________________________________________________________________________________ Call Report CRA-covered CRA/CRBs CRA/CRBs CRA/CRBs CRA-CRBs Loan size institutions institutions (percent)2007 (percent)2006 (percent)2005 (percent)2004 (CRBs) 6/2008 (CRA) 6/2007 ______________________________________________________________________________________________________________________________________________ Micro business loans <$100,000* 170.5 100.6 0.59 0.61 0.59 0.70 Small business loans $100,000 – $1 million 540.7 354.0 0.65 0.58 0.65 0.78 Small business loans <$1 million 711.3 454.6 0.64 0.6 0.64 0.76 Total business loans 2,270.4 1,634.4 0.72 0.82 0.79 0.87 Total assets 11,714.8 10,068.3 0.86 0.81 0.77 0.84 Number of lending institutions 7,380 816.0 ______________________________________________________________________________________________________________________________________________ *The figure for loans under $100,000 for CRA-reporting banks is likely to be an understatement because loans made by American Express Bank are excluded. The bank was not required to submit a CRA report after its reorganization in March 2004. Source: U.S. Small Business Administration, Office of Advocacy, Small Business Lending in the United States, various years, and special tabulations of the June 2008 Call Reports (Consolidated Reports of Condition and Income for U.S. banks and thrift institutions prepared for the Office of Advocacy by James Kolari, Texas A&M University, College Station, Texas). Table F Amount and Number of Loans made by CRA Reporting Institutions in 2004–2007 (Amounts in Billions of Dollars) _________________________________________________________________________________________________________________________ Loan Size Amount/Number 2004 2005 2006 2007 _________________________________________________________________________________________________________________________ Number of institutions/BHCs 1,506 774 791 816 Amount 95.40 97.94 116.20 146.00 Under $100,000 Number 7,532,061 7,458,720 11,115,437 12,967,774 Amount 196.89 173.17 173.60 180.43 $100,000 – $1 million Number 567,955 488,787 487,505 504,133 Amount 292.30 271.11 289.80 326.43 Under $1 million Number 8,100,016 7,947,507 11,602,942 13,471,907 Total assets Amount 8,016.59 7,947.48 8,704.00 10,068.30 Total business loans Number 1,146.31 1,465.23 1,657.20 1,634.40 __________________________________________________________________________________________________________________________ Source: U.S. Small Business Administration, Office of Advocacy, Small Business Lending in the United States, various years, and special tabulations of the June 2008 Call Reports (Consolidated Reports of Condition and Income for U.S. banks and thrift institutions prepared for the Office of Advocacy by James Kolari, Texas A&M University, and College Station, Texas). Part Two: Directory of Top U.S. Small and Micro Business Lenders Small business lending and borrowing are mostly local in nature: both the borrowers and the lending offices are located in the same community or in communities nearby. In an effort to provide information that will help small businesses shop more efficiently for credit and let lenders know about their competitors in small business lending, SBA’s Office of Advocacy prepares a directory of small and micro business lenders. The business lending performance of individual lending institutions is ranked for the national market (for multi-billion-dollar lenders) and in each state. Tables 1A through 2B rank multi-billion-dollar lenders in the national market using Call Report and CRA data. Table 3A through Table 4B list top small business lending institutions in individual states. Information for all reporting lenders (Tables 3A and 3B expanded) is available on the Advocacy website, www.sba.gov/advo/research/lending.html. Table 1A. Small Business Lending of Large Lending Institutions Based on Call Report Data, June 2008 Table 1A ranks the small business lending of the 100 largest lending institutions with total domestic assets of more than $10 billion. Each lending institution is ranked from 1 to 100, 1 being the top for each of four variables. These variables then are totaled and re-ranked from 1 to 100. The top five small business lenders in June 2008, based on Call Report data, are American Express Bank Federal Savings Bank (FSB) (first in 2007), Capital One Financial Corporation (not ranked in 2007), Regions Financial Corporation (third in 2007), Synovus Financial Corporation (third in 2007), and First Citizen Bancshares Inc. (second in 2007). Table 1B. Micro Business Lending of Large Lending Institutions Based on Call Report Data, June 2008 Table 1B ranks the micro business lending of the 100 largest lending institutions with total domestic assets of more than $10 billion. Each lending institution is ranked from 1 to 100, (one being the top) for each of four variables. These variables then are totaled and reranked from 1 to 100; the remaining lending institutions are not ranked because of missing data or lack of micro business lending activity. The top five lenders are American Express Bank FSB (first in 2007), Capital One Financial Corporation (second in 2007), JPMorgan Chase and Co. (third in 2007), GMAC Bank (88th in 2007), and Citigroup, Inc. (fifth in 2007). Table 2A. Small Business Lending of Large Lending Institutions Based on CRA Data, 2007 Table 2A ranks multi-billion-dollar lending institutions’ small business lending using CRA data. Information from Call Reports was employed in combination with the CRA data to perform the four-variable ranking. As in the previous studies, data covering the reporting members of a holding company were first consolidated to generate estimates for the owning holding company. Since CRA data provide location-specific information for a lender’s small business lending, information on the number of states (and territories) in which the lending institution has lending operations is also provided. Eighty-three of the largest lending institutions with small business loans were ranked. The five top small business lenders for 2007, using the combined ranking criteria, are American Express Bank FSB, Capital One FSB (second in 2006), Wells Fargo & Company (eighth in 2006), BBVA Puerto Rico (fourteenth in 2006), and Regions Financial Corporation (fourth in 2006). Table 2B. Micro Business Lending of Large Banks and BHCs Based on CRA Data, 2007 Table 2B ranks large lenders’ micro business lending using CRA data. Information from Call Reports was employed in combination with the CRA data to perform the four-variable ranking. As in the previous studies, data from the members of a holding company were first consolidated to generate estimates for the owning company. CRA location-specific information on lenders’ small business lending was the source for the data on the number of states in which the lender has substantial lending operations. Eighty-three large lending institutions were ranked. The five top small business lenders for 2007 using CRA data are American Express Bank FSB (first in 2006), Wells Fargo and Company (third in 2006), Capital One FSB (second in 2006), JPMorgan Chase & Co. (fourth in 2006), and Citigroup, Inc. (fifth in 2006). Table 3A. Top Lenders to Small Businesses in the State Based on Call Report Data, June 2008 Table 3A provides a list of the top institutions lending to small businesses in individual states. The list includes the top 10 or the top 10 percent, whichever number is smaller. (Ties may increase the number.) The small business lending performance of a lender in a given state is measured on four criteria. The four rankings were summed to create a score for the small business lending activities of individual banks (see Appendix: Data Notes). A lender’s total score is the sum of the four individual decile rankings multiplied by 2.5 to attain a possible score of 100. Decile rankings range from 1 to 10. A complete ranking of all lending institutions in each state is provided on the Advocacy website, www.sba.gov/advo/research/lending.html. Note again that Call Report data are keyed to the institution’s headquarters location rather than the location of the lending activity. A significant amount of lending activity by large lending institutions takes place in states other than the one in which the headquarters is located. Table 3B. Top Micro Business Lending by Lending Institutions in the State Based on Call Report Data, June 2008 Table 3B provides a list of lending institutions making micro business loans (loans under $100,000) in individual states. The list includes the top 10 lenders or the top 10 percent, whichever number is smaller. (Ties may increase the number.) The micro business lending performance of a lender in a given state is measured on four criteria. The four rankings were summed to create a score for the micro business lending activities of individual lenders. A lender’s total score is the sum of the four individual decile rankings multiplied by 2.5 to attain a possible score of 100. A complete ranking of all lending institutions in each state is provided on the Advocacy website, www.sba.gov/advo/research/lending.html. Table 4A. Top Small Business Lenders in the State Based on CRA Report Data, 2007 State lending information for large lending institutions is best captured in the CRA database. Table 4A provides a list of top small business lenders in a given state using CRA data. The list includes lending institutions with small business lending of more than $50 million in a given state in 2007. Data for the members of a holding company were consolidated first to generate estimates for the parent holding company. Consolidated estimates were then derived for each holding company in each state. Rankings are based solely on the dollar amount of small business lending (loans under $1 million) in this table because of the difficulty of generating two ratio variables for these institutions by state. Clearly, large lending institutions appear more important in the small business loan markets in many states. Table 4B. Top Micro Business Lenders in the State Based on CRA Report Data, 2007 Table 4B provides a list of top micro business lenders in a given state using CRA data. The list includes lending institutions with micro business lending of more than $10 million in a given state in 2007. Again, rankings are based solely on the dollar amount of micro business lending (loans under $100,000) in this table for the reasons discussed above. Appendix: Data Notes Ranking Methodology and Table Descriptions When possible, four variables were used to create a total score for the small business lending activities of individual lenders: (1) the ratio of small business loans to total assets, (2) the ratio of small business loans to total business loans, (3) the dollar value of small business loans, and (4) the number of small business loans. The total ranking summarizes the four individual scores. Small lending institutions tend to score higher in some categories than larger lending institutions, and vice versa. For example, smaller lenders have a higher percentage of total assets in small business loans, but larger lenders lead in the sheer number and value of small loans. Using two ratio variables and two value variables permits a more balanced measure of lending performance by lenders of different sizes. For large lending institutions in the Call Reports (Tables 1A and 1B), simple rankings from 1 up were performed for each of the four variables first, with “1” as the top ranking. The four individual rankings were summed and re-ranked from 1 up to produce a total rank. For lending institutions in the CRA data (Tables 2A and 2B), ratio information was retrieved from Call Report data and used in combination with information from the CRA to perform Advocacy’s four-variable scheme for ranking. Again, simple rankings were performed and summed to obtain total rankings. For rankings of all reporting lending institutions in a state based on Call Report data (Tables 3A and 3B), a decile ranking is used instead of a simple ranking. This is justified because of the much larger number of lending institutions in a given state. The decile ranking is a measure of where the individual lender falls in the distribution of all lenders within a state for any given variable. Decile rankings range from 1 to 10. Lending institutions in the top 10 percent of all lenders in the state receive the maximum score of 10; banks in the lowest 10 percent receive a score of 1. Lending institutions that do not lend to small businesses (loans under $1 million) receive a 0. Four top scores will sum to 40. To make the top score total 100 rather than 40, each score is multiplied by 2.5. For state lending using the CRA data (Tables 4A and 4B), banks were listed in order of the dollar amount of small business loans made in each state in the year. Obviously, large institutions appear at the top. Variables Used in Tables _______________________________________________________________________________________________ Variable Acronym Explained _______________________________________________________________________________________________ LSBL Small Business Loans (<$1 Million) SSBL Micro Business Loans (<$100,000) LSBL (2) Mid-size Small Business Loans (100,000 -<$1 Million) TBL Total Business Loans TA Total Assets CRD Credit Card ________________________________________________________________________________________________ Data Tables All data tables follow the last page of the text in the printed version, except the expanded Tables 3A and 3B, which show data for all lending institutions in the 50 states, the District of Columbia, and selected territories for which data are available.Tables 3A and 3B are found only on Advocacy’s website, www.sba.gov/advo/research/lending.html. Table 1A. Small Business Lending of Large Lending Institutions Based on Call Report Data, June 2008 Table 1B. Micro Business Lending of Large Lending Institutions Based on Call Report Data, June 2008 Table 2A. Small Business Lending of Large Lending Institutions in the United States Based on CRA Data, 2007 Table 2B. Micro Business Lending of Large Lending Institutions in the United States Based on CRA Data, 2007 Table 3A. Top Small Business Lending Institutions by State Based on Call Report Data, June 2008 Table 3A. Expanded version. All Small Business Lending Institutions by State Based on Call Report Data, June 2008 found at www.sba.gov/advo/research/lending.html. Table 3B. Top Micro Business Lending Institutions by State Based on Call Report Data, June 2008 Table 3B. Expanded version. All Micro Business Lending Institutions by State Based on Call Report Data, June 2007 found at www.sba.gov/advo/research/lending.html. Table 4A. Top Small Business Lenders by State Based on CRA Data, 2007 Table 4B. Top Micro Business Lenders by State Based on CRA Data, 2007 Table 5. Number of Reporting Institutions by Asset Size and State, 2006–2008 Endnotes [1] See Federal Reserve Bulletin, “Financial Services Used by Small Businesses: Evidence from the 2003 Survey of Small Business Finances,” October 2006, Table 10, Page A186. The SSBF provides the most comprehensive information on the patterns of credit use by small businesses and their providers for 1987, 1993, 1998, and 2003. The 2003 survey was the last to be conducted. [2] This is the 15th annual edition of this study, which began in 1994 using the Call Report data; four years later the CRA data were included as part of the report. [3] The Call Reports, officially known as the Consolidated Reports of Condition and Income, are quarterly reports filed by the financial institutions with their appropriate depository regulators. Call Reports provide detailed information on the current status of a financial institution. The CRA data are designed to encourage depository institutions to meet the credit needs of the local communities from which they obtain deposited funds. The CRA data become more important in understanding small business lending activities by lending institutions and bank holding companies (BHCs) in a given state. [4] Coverage of depository institutions in this annual study was expanded in the 2004-2005 edition to include federal and state savings banks and savings and loan associations. Lending institutions covered include commercial banks (charter types 7 and 8), federal savings banks (charter types 9 through 12), and savings and loan associations (charter types 1 through 4). Credit unions are not included. [5] The weakening demand for loans also includes loans to households. The Federal Reserve conducts the Senior Loan Officer Opinion Survey quarterly. Respondents to the survey indicated they had tightened their lending standards on commercial and industrial (C&I) loans to all firms because of the less favorable economic outlook. [6] This table is derived by combining the files for reporting institutions and consolidated holding companies/ members of a holding company. Because of missing ID links many noncommercial bank members of holding companies may not be consolidated. The number of lending institutions as of June 2007 was 7,380 of which 2,373 were independent / non-BHCs and 5,007 were comprised of banks and other financial services holding companies. The importance of the C&I loan segment of the business loan portfolio for giant lending institutions is reflected in the statistics; these lenders accounted for 70 percent of total C&I loans under $100,000. [7] Starting in 2005, fewer lenders were required to file annual CRA reports as a result of a revision in reporting requirements made by federal financial institutions’ regulatory agencies. In the criteria for the CRA program, the asset size for reporting institutions was increased from $250 million to $1 billion in assets, thus eliminating a large number of institutions that had previously reported small business loan data. [8] The 816 number includes all reporting lenders with and without balance sheet information from the Call Reports. Institutions with identified balance sheet items numbered 769. {9] Since March 2004, American Express Centurion and Capital One Bank have organized federal savings banks (FSBs) to conduct their small business credit card operations. [10] The four criteria used are the same as those for Table 1A. [11] The small business lending activities of American Express Centurion Bank were transferred to American Express Bank after its March 2004 reorganization. [12] See data notes for detailed information on decile rankings. [13] See data notes for detailed information on decile rankings. [14] The exception is those financial holding companies that organize special credit lending institutions, such as a federal savings bank or commercial bank, to conduct business lending. For example, by organizing a special business lending savings bank, American Express Savings Bank will have even higher values for the two ratio criteria used in the ranking process.