UPDATE:Treasury July Survey:Loan Balances Down 1% At 22 TARP Lenders
September 15 2009 - 6:46PM
Dow Jones News
Outstanding loan balances at 22 U.S. banks receiving federal
assistance fell by 1% in July from June, according to a survey
issued Tuesday by the U.S. Treasury Department.
Total origination of new loans fell by 10% at the 22 surveyed
lenders, the survey also showed. Of the 22 lenders in the survey,
total loan originations declined at 19 in July; just three saw them
increase.
The Treasury Department attributed the declines to decreased
demand from borrowers, payment of outstanding debt and charge-offs
by banks. Its survey is the eighth monthly report tracking lending
activities by banks getting federal assistance under the Troubled
Asset Relief Program, or TARP.
On mortgage loans, the report showed mixed results, with an 8%
increase in lending for new home purchases offset by an 18% decline
in refinancings, a drop the Treasury Department attributed to
declining home values and a weak job market. The total outstanding
balance of mortgage loans at banks covered by the survey fell
2%.
Demand for commercial and industrial loans and for loans for
commercial real estate were "well below normal levels," the survey
also found. The Treasury Department pointed to a lack of new
commercial construction and the fact that banks are trying to
reduce their exposure to commercial real-estate loans, where
delinquencies are expected to mount. Outstanding credit-card
balances at the surveyed lenders fell by 1% in July, showing
consumers are spending conservatively and paying down existing
debt, according to the Treasury Department.
Small business lending was another soft spot, as the survey
found a 1% decline in outstanding loan balances to small business,
and a 14% drop in loan originations to such firms. Since many small
business loans are included as commercial and industrial loans, or
commercial real estate loans, the trend is in line with declines in
those areas, the Treasury Department said.
Firms covered by the survey include Bank of America Corp. (BAC),
Capital One Financial Corp. (COF), Citigroup Inc. (C), Goldman
Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), KeyCorp.
(KEY), Morgan Stanley (MS) and Wells Fargo & Co. (WFC).
- By Judith Burns, Dow Jones Newswires, 202-862-6692;
Judith.Burns@dowjones.com