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TREASURY DEPARTMENT MONTHLY LENDING AND

INTERMEDIATION SNAPSHOT

Summary Analysis for February 2009

Snapshot Design

The snapshot contains quantitative information on three major categories of lending – consumer,

commercial, and other activities – based on banks’ internal reporting, as well as commentary to

explain changes in lending levels for each category. In addition, the Snapshot contains a

qualitative section that provides market color on lending demand and credit standards generally

to help Treasury and the public meaningfully and accurately interpret the quantitative data.

Why base the quantitative data on internal reporting? Treasury believes that it is critical to

provide the public and Congress with as much information as possible about the programs we

are implementing to stabilize the financial system. In this spirit, the snapshot has been designed

to collect new information on a more frequent basis from banks. In order to do this, Treasury

must utilize banks’ internal reporting. This Snapshot complements the detailed quarterly reports

provided by banks on activities and financial condition to regulators, which is also publicly

available. The Treasury snapshot is focused on lending activities and will be issued on a

monthly basis. This information will also help guide policy making going forward as Treasury

and the federal regulators continue to coordinate to develop a comprehensive response to the

unprecedented financial markets crisis.

Why include both commentary and a qualitative section? Lending levels are a function of

credit availability, which is in banks’ control, as well as a host of factors outside of banks’

control: loan demand, borrower creditworthiness, capital markets liquidity, the macroeconomic

environment, etc. The purpose of the commentary and qualitative section is to allow banks to

provide color on the interaction of these variables so that readers can put the banks’ information

in context and draw meaningful conclusions from the quantitative data.

What are the limits of the snapshot? The Snapshot’s reliance on internal reporting means that

aggregation by loan category and comparisons of asset and origination levels across firms may

be imperfect. Snapshot readers should focus on trends within a firm across time, particularly in

percentage change terms, a fact that is reflected in Treasury‘s summary analysis.

Summary Analysis

The contraction of the economy and its effect on consumers and businesses in the beginning of the

year posed several challenges to the lending environment. Consumer confidence in the U.S. remained

near its lowest level in almost 30 years in February. The recession that began in December 2007 is now

both affecting loan demand and also reflecting the effects of the sharp reduction in credit that

occurred last fall. The unemployment rate reached the highest rate since late 1983 in February, rising
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0.5 percentage point to 8.1 percent, while nonfarm payrolls dropped by 651,000 in February.

Compared to a year earlier, business shipments of capital goods in February were down 11 percent and

U.S exports were down 17 percent, reflecting the world-wide economic slowdown. These negative

trends are reducing demand for consumer goods and services and causing businesses to slow or to

cease operations entirely. Many businesses are unwilling to expand their operations in this climate.

This has cut sharply into the demand for new loans.

Notwithstanding difficult economic conditions, the lending and intermediation survey of the

top 21 CPP recipients demonstrated that banks continued to originate, refinance and renew

loans in the period from January to February 2009. Lending levels increased from January

primarily in residential mortgage lending which was driven by attractive mortgage rates. With

the historically high application months in December and January, Treasury expects the high

level of originations to continue throughout the first quarter of 2009. The commercial lending

segment remained constrained in February, as demand for additional debt remains weak.

 First mortgage origination rose significantly from January to February, as falling

mortgage interest rates spurred growth in mortgage refinancing activity. The median

percentage change in mortgage refinancing was an increase of 42 percent between

January and February. Of the eighteen banks that are active in the residential mortgage

business, 16 experienced an increase in originations while only two banks experienced

decreases in originations. In addition, home equity lines of credit (HELOC) experienced

a seasonal increase in volume. Most borrowers seek bank credits in the spring and

summer to remodel homes or for other home-related projects. The median change in

HELOC originations was an increase of 18 percent from January to February.

 Loan origination for other consumer lending products, including auto, student, and other

consumer loans, decreased from January to February. The median percentage change in

consumer loan originations was a decrease of 47 percent. The lower origination levels

reflect several factors, including the typical seasonal decline for student loans during the

month of February, as well as weak auto demand.

 Credit card lending activity declined slightly in February compared to January, due both

to the economic slowdown as well as the usual seasonal factors related to paying down

balances from holiday spending. The median percent change in the average loan balance

was a decrease of 1 percent from January to February while the median change in new

account originations was a decrease of 3 percent.

 Commercial and Industrial (C&I) lending activity continued to weaken across all

categories. Uncertain economic conditions have resulted in borrowers reducing

expenses, paying down debt, and delaying capital expenditure. The median decrease in

renewal of existing loans was 14 percent and the median change in new commitments

was a decrease of 13 percent. Companies continued to focus on preserving liquidity and

strengthening their balance sheets. Also contributing to the lower demand was lower

overall merger and acquisition activity.
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 In commercial real estate, renewals of existing accounts increased, while new

commitments decreased from January to February. The median change in renewals of

existing accounts was an increase of four percent. The median change in new

commitments was a decrease of 23 percent. The increase in renewals was due to the lack

of liquidity in the commercial mortgage backed securities market as borrowers continue

to utilize bank financing. New loan demand remains low due to the lack of new

construction activity; developers are reluctant to begin new projects or purchase existing

projects under current economic conditions.

 The chart on page 5 shows the range of changes in lending activity among the 21

institutions. The bar on the far right, for example, indicates that the median volume of

loan originations of all types fell by 2.2 percent in January, while originations of all types

fell by 12.6 percent for the institution at the 25th percentile and rose by 9.3 percent for the

institution at the 75th percentile. There was considerable variability in lending activity

across banks, especially within Commercial Real Estate (CRE) and mortgage

originations.
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Name First Mortgage HELOC (Lines

and Increases)

US Card

(Managed):

Initial Line

Amount

Other Consumer

Lending

C & I: Renewal of

Existing Accounts

C & I: New

Commitments

CRE: Renewal of

Existing Accounts

CRE: New

Commitments

American Express N/A N/A $845 N/A N/A N/A N/A N/A

Bank of America $28,690 $1,256 $1,668 $1,263 $11,704 $10,166 $2,052 $1,403

BB&T $2,856 $93 $154 $290 $614 $843 $1,169 $379

Bank of New York Mellon $276 $16 N/A $4 $251 $157 $112 $0

Capital One $2 $14 $749 $620 $310 $404 $67 $109

CIT N/A N/A N/A $0 $2,798 $699 $0 $0

Citigroup $6,958 $209 $5,151 $1,042 $752 $416 $143 $20

Comerica $63 $14 $9 $23 $1,100 $174 $140 $138

Fifth Third $1,972 $141 $135 $317 $1,654 $634 $471 $143

Goldman Sachs $88 $0 N/A $9 $225 $422 $0 $0

JPMorgan Chase $13,015 $278 $3,293 $2,632 $10,701 $8,942 $547 $274

KeyCorp $148 $133 $0 $56 $709 $525 $583 $87

Marshall & Ilsley $357 $51 $5 $72 $240 $78 $36 $59

Morgan Stanley $51 $0 N/A $348 $175 $2,040 $0 $0

Northern Trust $85 $110 N/A $142 $306 $593 $7 $36

PNC $2,359 $402 $202 $274 $2,444 $1,134 $631 $545

Regions $1,084 $107 N/A $100 $1,117 $359 $1,788 $312

State Street N/A N/A N/A N/A $411 $725 $34 $0

SunTrust $4,573 $143 $32 $288 $1,186 $667 $381 $316

U.S. Bancorp $4,642 $440 $818 $733 $2,819 $2,388 $1,030 $386

Wells Fargo $34,819 $613 $1,481 $1,909 $8,984 $4,777 $1,956 $1,512

First Mortgages

HELOC

US Card (Managed)

C & I

CRE

N/A

Commercial real estate

Denotes recipient is not active in this category

NOTE: Reliance on internal reporting means that aggregation by loan category varies for each

reporting bank. Because of the differences in loan category definitions, comparisons of

origination levels across firms may be imperfect.

Loan Originations, February 2009

($ Millions)

Loan Category Key

Loans secured by first liens on residential real estate

Home equity lines of credit

US credit cards (managed)

Commercial and industrial
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-65%

-50%

-35%

-20%

-5%

10%

25%

40%

55%

70%

85%

25% Quartile 74.2% 26.1% 12.5% -5.4% 5.6% 24.8% 9.3%

75% Quartile 8.1% 1.3% -18.9% -63.1% -28.3% -41.0% -12.6%

Median 35.4% 17.7% -2.7% -47.0% -12.7% -23.4% -2.2%

Mortgage Total

Originations

HELOC Originations

(New

Lines+Increases)

U.S. Card New

Account

Originations

Other Consumer

Originations

C & I New

Commitments

CRE New

Commitments

Total Originations

Growth in Lending in February 2009

75 percent of the banks reported slower growth than this number.

75 percent of banks

reported faster

growth than this

number.

Median growth