|
OCC Twelfth Annual Survey Of Credit Underwriting
The Office of the Comptroller of the Currency (OCC) conducted its twelfth annual survey of credit underwriting practices during the first quarter of 2006. The survey identified trends in lending standards and credit risk for the most common types of commercial and retail credit products offered by national banks.
The 2006 survey included results from the 73 largest national banks and covered the 12-month period ending March 31, 2006. Although mergers and acquisitions have altered the survey population, the survey has covered substantially the same group of banks for the past 10 years. All companies in the 2006 survey have assets of $2 billion or greater, and their aggregate loan portfolio was approximately $3 trillion as of year-end 2005, which represented over 90 percent of all outstanding loans in the national banking system.
The OCC examiners-in-charge of the surveyed banks were asked a series of questions concerning overall credit trends for 18 types of commercial and retail credit products. For purposes of this survey, the OCC groups commercial credit into 11 categories of loans: agricultural, asset-based, commercial construction, residential construction, other commercial real estate, commercial leasing, international, large corporate, leveraged, middle market, and small business. Retail credit consists of 7 categories of loans: affordable housing, credit card, indirect consumer paper (loans originated by others, such as car dealers), conventional home equity, high loan-to-value (HLTV) home equity, other direct consumer, and residential real estate mortgages.
The term “underwriting standards,” as used in this report, refers to items such as collateral requirements, loan maturities, facility pricing, and covenants that banks establish when originating and structuring loans. Conclusions about “easing” or “tightening” of underwriting standards are drawn from the OCC examiners’ judgment about observations since the 2005 survey. A conclusion that the underwriting standards for a particular loan category have eased or tightened does not indicate that all the standards for that particular category have been adjusted, or that all banks have eased standards. It indicates that the adjustments that did occur had the net effect of easing or tightening underwriting criteria.
|
Financial Markets
Did You Know?