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TREASURY DEPARTMENT MONTHLY LENDING AND INTERMEDIATION

SNAPSHOT

Summary Analysis for June 2009

Summary Analysis

Economic Environment

Treasury’sseventhsurveyofbanks’activitieswasconductedastheeconomy continued to

contract, albeit at a slower pace than earlier in the year. Payrolls continued to shrink, though the

unemployment rate was essentially unchanged. Housing starts rose 3.6 percent in June; this is

more than 20 percenthigherthanApril’srecordlow,butisabout75percent below the

January 2006 peak. Consumer sentiment moved higher in June according to the University of

Michigan survey. Financial market strains continued to ease in June as short-term credit spreads

continued to narrow and securitization continued to improve. Even with the modest

improvement in many indicators, the economy remained very weak; most forecasters see the

unemployment rate rising throughout 2009.

June Survey Results

The overall outstanding loan balance (of all respondents) fell 1 percent from May to June at the

top 22 participants in the Capital Purchase Program (CPP).1 Total origination of new loans at the

22 surveyed institutions increased 13 percent from May to June. In June, the 22 surveyed

institutions originated approximately $312 billion in new loans. Total originations of loans by

all respondents rose in five categories (mortgages, home equity lines of credit (HELOCs),

commercial and industrial (C&I) renewals and new commitments, and commercial real estate

(CRE) renewals), and fell in three loan categories (credit cards, other consumer lending products,

and CRE new commitments). Attractive rates contributed to growth in mortgages. Renewals in

C&I and CRE sectors were largely due to seasonality, as June is the start of the peak renewal

season.

Many respondents reported strong mortgage application volume in the month of June, but

indicated that applications were down slightly compared to May as rates began to rise in June.

HELOCs saw an increase in total originations, although institutions indicated that demand is

below 2008 levels. Declining home values also contributed to lower home equity demand.

Households are facing growing pressures from a weakening labor market and further declines in

their wealth. In this context, overall consumer spending fell and the savings rate increased.

Outstanding credit card balances held by the surveyed institutions were flat in June, indicating

stagnant spending. Other consumer lending saw mixed growth in June across institutions; some

institutions indicated that an uptick in demand for auto loans was offset by the seasonal decline

in demand for student loans.

1 The Hartford Financial Services Group began reporting Snapshot information in July 2009, which included results

from April 2009 to June 2009.
2

Banks again reported that demand in both the commercial real estate (CRE) market and the C&I

market is well below normal levels. As firms continue to downsize, cut costs, and reduce

inventories, banks predict that lower demand will persist through the beginning of the third

quarter of 2009.

 The total average outstanding balance of all loans decreased 1 percent from May to June.

The median change in total average outstanding balances was also a decrease of 1

percent. Of the 22 respondents, 4 reported increases in total outstanding balances from

May to June (the largest increase was 15 percent) while 18 respondents experienced

decreases in total outstanding balances (the largest decrease was 3 percent).

Total originations of all loans increased by 13 percent from May to June. Across all

institutions, the median change in total originations was an increase of 18 percent. Of the

22 respondents, 19 experienced increases in total originations from May to June, 2

experienced decreases in total originations and 1 experienced no change in total

originations.

 In general, new mortgage lending increased from May to June, while the total

outstanding mortgage balance fell 1 percent. Total mortgage originations by all

respondents increased by 12 percent. The median change in total mortgage originations

was an increase of 14 percent. New home purchases were particularly strong in June,

with all 18 banks that were active in mortgage lending reporting increases in new home

purchase originations. The median change in new home purchases in June was an

increase of 30 percent, in part due to attractive rates and falling home prices. New home

purchases also tend to rise in June, as summer is the peak season for home buying. There

was a slight decline in demand (although still strong) for refinancing as rates began to

rise during June. The median percentage change in mortgage refinancing was an increase

of 6 percent between May and June.

 The total outstanding balance of HELOCs fell by 1 percent from May to June, as a

number of respondents reported that they experienced run-offs in HELOCs during June.

Total HELOC originations increased by 2 percent in June. The median change in

originations was an increase of 13 percent from May to June. Of the 16 entities active in

the HELOC market, 13 experienced increases in originations and only 3 experienced

declines in originations. While most respondents experienced monthly growth in

originations, many noted that demand was below 2008 levels. Monthly changes in

demand varied across respondents.

 The total credit card outstanding balance of all respondents was flat in June, indicating

stagnant spending. Increased job losses, generally lower levels of consumer spending

and higher savings rates contributed to flat credit card balances. Of the 14 respondents

active in the credit card business, 8 experienced increases in outstanding balances, 5

experienced decreases in outstanding balances, and 1 experienced no change in

outstanding balances. Similarly, origination activity was split; 7 of the respondents

making originations experienced increases, while 6 of the respondents making
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originations experienced decreases. Total credit card originations by all respondents

decreased by 3 percent in June. The median change in credit card originations was flat.

 Other consumer lending saw mixed growth in June across institutions; some institutions

indicated that an uptick in demand for auto loans was offset by the seasonal decline in

demand for student loans. The total outstanding balance of other consumer lending

products decreased by 1 percent in June. Of the 19 institutions active in other consumer

lending, 13 institutions experienced decreases in outstanding balances, while 6

institutions experienced increases in outstanding balances. Total other consumer loan

originations decreased by 2 percent from May to June. The median percentage change in

other consumer loan originations was a decrease of 8 percent. The changes in

originations at the institution level, however, were split; 10 of the 18 respondents active

in other consumer lending experienced increases in originations while 8 experienced

decreases in originations.

 The total outstanding balance of C&I loans fell 2 percent; the median change in average

outstanding C&I balances was also a decrease of 2 percent. Economic uncertainty has

caused borrowers to downsize, cut costs, reduce inventories, and delay capital

expenditures. Lower overall merger and acquisition activity further contributed to the

decreased demand for C&I credit. Nearly all respondents indicated that, throughout the

recession, demand in C&I lending has remained well below pre-recession levels.

Companies continued to focus on preserving liquidity, strengthening their balance sheets,

and paying down existing debt rather than taking on new debt. Despite these overall

conditions, some respondents indicated that specific business lines showed signs of

improvement in June, including the middle market, global corporate, specialty

businesses, institutional bank, and not-for-profit and public sectors.

Total renewals of existing C&I accounts increased by 17 percent in June, and the median

change in renewals was an increase of 41 percent. The large increases in renewals can be

attributed to seasonal patterns, as June is the peak season for renewals. Total new C&I

commitments increased 20 percent in June, with 14 banks reporting increases in new

commitments and 6 banks reporting decreases. The median change in new commitments

was an increase of 17 percent.

 In commercial real estate (CRE), new loan demand remains low due to the lack of new

construction activity. Real estate developers are reluctant to begin new projects or

purchase existing projects under current poor economic conditions, which include a rising

supply of office space, as firms downsize and vacancies rise. Finally, nearly all

respondents indicated that they are actively reducing their exposure to CRE loans, as

banks expect CRE loan delinquencies to increase over the coming year. The outstanding

balance of CRE loans of all respondents decreased by 1 percent, and the median change

in outstanding balances was a decrease of 1 percent.

Total renewals of existing CRE accounts increased 19 percent from May to June. Similar

to increases in C&I renewals, the large increases in CRE renewals can be attributed to

seasonal patterns, as June is the peak season for renewals. The median change in CRE

renewals from May to June was an increase of 21 percent. Total new CRE commitments
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decreased 4 percent from May to June, although the median change in new commitments

was an increase of 7 percent. Of the 17 institutions making new CRE commitments, 11

experienced increases in new commitments, 5 experienced decreases in new

commitments, and 1 experienced no change in new commitments.

 The June survey included the third month of memoranda information on small business

lending. In June, total small business outstanding balances decreased by 1 percent. Total

small business originations increased by 26 percent. The median change in small

business outstanding balances was a decrease of 1 percent and the median change in

small business originations was an increase of 27 percent. As most small business

originations are included in either C&I or CRE originations (renewals plus new

commitments), this trend is in line with overall trends in C&I and CRE originations in

June.

 Equity underwriting was down slightly in June compared to May, but respondents

indicated that in general, the market exhibited overall stability in June. Positive earnings

results from some companies and a general rally during the end of the second quarter

contributed to stability.

 Thechartonpage6(“GrowthinLoan Originations, June 2009 vs. May 2009”)illustrates

the range of changes in lending activity among the 22 institutions. The bar on the far

right, for example, indicates that the median change of loan originations of all types was

an increase of 18 percent in from May to June; originations of all types rose by 9 percent

for the institution at the 25th percentile, and originations of all types rose by 31 percent for

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

across banks, especially within other consumer lending products, C&I lending, and CRE

lending.
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Name First Mortgage HELO C (Lines

and Increases)

US Card

(Managed):

Initial Line

Amount

O ther

Consumer

Lending

C & I:

Renewal of

Existing

Accounts

C & I: New

Commitments

CRE: Renewal

of Existing

Accounts

CRE: New

Commitments

Small

Business1

Total

O riginations 2

Change in Total

Originations 3

American Express N/A N/A $1,384 N/A N/A N/A N/A N/A N/A $1,384 41%

Bank of America $42,020 $1,063 $1,560 $1,296 $16,466 $10,271 $2,124 $469 $1,716 $75,268 9%

Bank of New York Mellon $113 $4 N/A $2 $116 $127 $198 $21 N/A $581 19%

BB&T $3,143 $85 $196 $401 $543 $1,284 $1,452 $400 $1,143 $7,504 6%

Capital O ne $260 $33 $422 $506 $210 $421 $66 $88 $202 $2,006 -1%

CIT N/A N/A N/A $0 $2,783 $609 $0 $0 $10 $3,392 -1%

Citigroup $11,701 $135 $7,250 $1,077 $2,068 $1,380 $149 $103 $169 $23,864 16%

Comerica $48 $13 $17 $57 $3,215 $363 $469 $54 $430 $4,236 38%

Fifth Third $2,854 $140 $168 $371 $2,111 $2,434 $764 $206 $352 $9,048 49%

Goldman Sachs $31 $0 $0 $17 $641 $1,504 $264 $0 $1 $2,457 131%

Hartford $0 $0 N/A $0 $1 $0 $1 $0 $0 $2 0%

JPMorgan Chase $15,090 $196 $3,389 $2,586 $14,005 $12,887 $838 $975 $956 $49,966 5%

KeyCorp $225 $106 $0 $24 $1,625 $830 $266 $94 $40 $3,170 47%

Marshall & Ilsley $368 $78 $7 $100 $408 $76 $166 $86 $38 $1,289 27%

Morgan Stanley $68 $0 N/A $412 $1,019 $3,190 $0 $0 $179 $4,689 20%

Northern Trust $123 $100 N/A $112 $910 $326 $24 $72 $34 $1,667 10%

PNC $2,021 $517 $309 $233 $5,227 $2,394 $763 $284 $389 $11,748 33%

Regions $1,100 $129 N/A $114 $1,774 $1,159 $2,187 $446 $702 $6,909 21%

State Street N/A N/A N/A N/A $976 $263 $3 $0 N/A $1,242 16%

SunTrust $6,255 $147 $16 $401 $1,462 $881 $377 $306 $91 $9,845 12%

U.S. Bancorp $6,304 $549 $763 $909 $4,949 $2,974 $1,549 $382 $682 $18,379 25%

Wells Fargo $45,074 $613 $1,225 $1,931 $13,407 $7,328 $2,505 $1,332 $2,894 $73,415 8%

Total (All Institutions) $136,798 $3,908 $16,705 $10,550 $73,916 $50,700 $14,165 $5,317 $10,027 $312,061 13%

Change in Total (All Institutions) 3 12% 2% -3% -2% 17% 20% 19% -4% 26% 13%

First Mortgages

HELO C

US Card (Managed)

C & I

CRE

Small Business

N/A

1 These loans are already accounted for in either consumer lending, commercial lending, or a combination of both.

2 Total Originations does not include the "Small Business Originations" column.

3 Percentage changes are calculated versus May 2009 figures.

Loan Originations, June 2009

($ Millions)

Loan Category Key

NO TE: 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.

US credit cards (managed)

Loans secured by first liens on residential real estate

Home equity lines of credit

Commercial and industrial

Commercial real estate

Denotes recipient is not active in this category

Loans to small businesses
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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

Small Business

Originations Total

75th Percentile 23% 29% 17% 16% 74% 64% 99% 36% 41% 31%

25th Percentile 2% 5% -10% -20% 6% -6% -2% -7% 12% 9%

Median 14% 13% 0% 8% 41% 17% 21% 7% 27% 18%

Total (Across All Institutions) 12% 2% -3% -2% 17% 20% 19% -4% 26% 13%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%

Growth in Loan Originations

June 2009 vs. May 2009