Thrift Involvement in Commercial and Industrial Lending.The rapid pace of mergers and acquisitions among financial institutions in recent years has heightened the need to understand competition in banking markets. Questions often arise as to the most appropriate ways to measure competition. One particular issue that has received attention from the bank regulators and antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. officials who analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. the competitive effects of proposed bank mergers is the weight that should be given to thrift institutions Thrift institution An organization formed as a depository for primarily consumer savings. Savings and loan associations and savings banks are thrift institutions. as actual or potential competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. of commercial banks in the provision of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. . The question arises because, historically, the menu of financial services offered by thrift institutions has been more limited than that offered by commercial banks. Thrift institutions (savings and loan associations savings and loan association, type of financial institution that was originally created to accept savings from private investors and to provide home mortgage services for the public. The first U.S. savings and loan association was founded in 1831. and savings banks savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. ) are financial intermediaries Financial intermediaries institution that provide the market function of matching borrowers and lenders or traders. that raise funds primarily through time and savings deposits Savings deposits Accounts that pay interest, typically at below-market interest rates, that do not have a specific maturity, and that usually can be withdrawn upon demand. and invest principally in residential mortgages and consumer loans. Their focus on consumer accounts and loans, as opposed op·pose v. op·posed, op·pos·ing, op·pos·es v.tr. 1. To be in contention or conflict with: oppose the enemy force. 2. to business accounts and loans, is largely attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to historical factors. Thrift institutions arose in the early nineteenth century to satisfy an unmet un·met adj. Not satisfied or fulfilled: unmet demands. demand for small savings accounts Savings Account A deposit account intended for funds that are expected to stay in for the short term. A savings account offers lower returns than the market rates. Notes: and home mortgages in an era when commercial banks had little interest in these lines of business. Savings and loan associations (originally called building and loan societies) were established to enable wage earners to obtain funds to build or purchase homes. Their balance sheets consisted primarily of residential mortgages on the asset side and savings shares on the liability side. Savings banks were established to encourage savings by poorer members of the working class. Their liabilities consisted mainly of savings deposits, and their assets were somewhat more diversified diversified (di·verˑ·s than those of savings and loan associations, including consumer loans in addition to residential mortgages. Subsequent regulations, at both the state and federal levels, limited the types of deposit accounts that thrifts were permitted to offer and the extent to which they were allowed to invest in non-mortgage assets. The relaxation re·lax·a·tion n. 1. The act of relaxing or the state of being relaxed. 2. Refreshment of body or mind. 3. A loosening or slackening. 4. The lengthening of inactive muscle or muscle fibers. of federal restrictions (particularly those affecting commercial and industrial lending) starting in the early 1980s has led to greater portfolio diversification Portfolio diversification Investing in different asset classes and in securities of many issuers in an attempt to reduce overall investment risk and to avoid damaging a portfolio's performance by the poor performance of a single security, industry, (or country). by many thrift institutions; however, few thrifts have taken full advantage of their expanded powers.(1) The limited range of financial services typically offered by thrift institutions compared with commercial banks raises a challenging question for those responsible for assessing the competitive effects of proposed bank mergers and acquisitions.(2) Should thrifts and commercial banks be treated as equal competitors in local banking markets, or should the role of thrifts be discounted because of their less extensive involvement in the provision of commercial and industrial (C&I) loans and other business services?(3) Although the degree of actual competition provided by thrifts in the area of C&I lending may he modest, their role as potential competitors could be important. A thrift institution that is actively involved in residential mortgage and consumer lending Consumer lending or consumer loans refers to any type of loan product that is not a mortgage; such as a car, boat, manufactured home, home equity loan, home equity line of credit, signature loan, signature line of credit, recreational vehicle, or Certificate of Deposit loans. in a local market could, at least in theory, quickly shift resources into commercial lending if it determines that the risk-adjusted profits to be derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from commercial lending exceed those associated with more traditional thrift thrift: see leadwort. activities. Likewise, a thrift that is involved in commercial lending to a very limited extent could increase its involvement in response to profitable lending opportunities. In practice, however, the specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. expertise needed to engage in C&I lending and the perceived per·ceive tr.v. per·ceived, per·ceiv·ing, per·ceives 1. To become aware of directly through any of the senses, especially sight or hearing. 2. To achieve understanding of; apprehend. need to offer a broad menu of financial services to commercial banking customers may inhibit inhibit /in·hib·it/ (in-hib´it) to retard, arrest, or restrain. in·hib·it v. 1. To hold back; restrain. 2. thrifts from aggressively pursuing commercial lending opportunities. This article assesses the role played by thrift institutions as competitors of commercial banks in the provision of commercial and industrial loans by examining variations in bank and thrift involvement in C&I lending both over time and across institutions and markets having different characteristics. Two aspects of involvement are examined. "Participation" is examined by looking at the proportions of commercial banks and thrifts that have some of their assets in C&I loans, as well as the proportions whose C&I loan-to-asset ratios are above 1 percent and above 5 percent. And "extent of involvement" is examined by looking at the average ratios of C&I loans to assets for banks and thrifts that engage in C&I lending. Also examined are the ways in which the change between 1991 and 1997 in an institution's involvement in C&I lending is related to certain institutional characteristics. PATTERNS OF C&I LENDING ACTIVITY To examine patterns of commercial and industrial lending, we looked at variations in lending activity over the period 1991 through 1997 and at the relationship between 1997 lending activity and such variables as institution size, ownership status, and get)graphic location.(4) The initial sample consisted or commercial banks and thrift institutions that filed either a midyear mid·year n. 1. The middle of the calendar or academic year. 2. a. An examination given in the middle of a school year. b. midyears A series of such examinations. Report of Condition and Income Report of Condition and Income Financial report that all banks, bank holding companies, savings, and loan associations, Edge Act and agreement corporations, and certain other types of organizations must file with a federal regulatory agency. Informally termed a call report. (Call Report) or a midyear Thrift Financial Report. With certain exceptions, an institution that filed a report was included in the sample if its total assets were reported to be greater than zero and an amount was reported for total loans. Institutions that held more than 25 percent of their assets in credit card loans were excluded because institutions that are heavily involved in such lending often specialize spe·cial·ize v. 1. To limit one's profession to a particular specialty or subject area for study, research, or treatment. 2. To adapt to a particular function or environment. in that activity and do not provide, and therefore do not compete for, many of the retail banking products and services typically provided by commercial banks. (The Federal Reserve typically excludes credit card banks from its analysis of the competitive effects of proposed bank mergers.) Data are as of June June: see month. 30 of each year. The two types of thrift institutions included in the analysis, savings banks and savings and loan associations (S&Ls), were examined separately because differences in their origins and in the regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. restrictions applied to them might have caused them to behave differently with respect to C&I lending.(5) Variations in C&I Lending Activity over Time Over the period 1991-97, the number of commercial banks and thrift institutions declined substantially as a result of mergers, acquisitions, and, particularly in the early part of the period, failures.(6) Each year, banks were four to five times as numerous as thrifts (table 1). Within the thrift population, the number of savings banks remained virtually unchanged but the number of savings and loan associations declined more than 60 percent, with many S&Ls converting to savings banks. 1. C&I lending by banks and thrift institutions, 1991-97
Institutions with
Type of institution and year Number of some assets in
institutions C&I loans
(percent)
COMMERCIAL BANKS
1991 11,933 99.0
1992 11,484 99.0
1993 11,021 99.1
1994 10,557 99.1
1995 10,008 99.1
1996 9,526 99.0
1997 9,156 98.8
SAVINGS BANK
1991 1,253 76.2
1992 1,203 74.7
1993 1,288 71.1
1994 1,308 69.7
1995 1,289 71.5
1996 1,244 74.9
1997 1,178 77.3
SAVINGS AND LOAN ASSOCIATIONS
1991 1,510 51.9
1992 1,239 48.4
1993 1,003 49.5
1994 823 48.6
1995 699 48.4
1996 642 51.1
1997 579 53.2
Institutions with Institutions with
more than more than
1 percent 5 percent
Type of institution and year of assets of assets
in C&I loans in C&U loans
(percent) (percent)
COMMERCIAL BANKS
1991 96.4 72.3
1992 96.4 69.8
1993 96.4 68.5
1994 96.8 69.9
1995 97.0 73.1
1996 97.2 74.5
1997 97.0 75.5
SAVINGS BANK
1991 41.7 13.0
1992 38.4 9.0
1993 34.9 7.9
1994 35.5 8.0
1995 38.3 9.1
1996 41.4 12.3
1997 45.2 13.9
SAVINGS AND LOAN ASSOCIATIONS
1991 20.7 4.4
1992 18.8 2.7
1993 18.1 3.2
1994 16.6 2.3
1995 16.7 2.9
1996 19.2 3.3
1997 22.5 4.1
C&I loans as a percent of assets(1)
Type of institution and year Simple Asset-weighted
average average
COMMERCIAL BANKS
1991 10.2 16.6
1992 9.6 15.0
1993 9.1 14.2
1994 9.2 14.0
1995 9.5 15.3
1996 9.9 15.3
1997 10.1 15.7
SAVINGS BANK
1991 2.6 3.4
1992 2.1 2.5
1993 2.0 1.5
1994 2.1 1.4
1995 2.2 1.7
1996 2.4 1.9
1997 2.7 2.0
SAVINGS AND LOAN ASSOCIATIONS
1991 1.6 1.6
1992 1.4 1.1
1993 1.4 .8
1994 1.2 .7
1995 1.3 .6
1996 1.4 .8
1997 1.6 1.0
(1.) For institutions with some assets in C&I loans. See text note 8 for an explanation of simple and asset-weighted averages. Nearly all banks (more than 98 percent) had some of their assets in C&I loans each year and at least 96 percent had more than 1 percent of their assets in such loans. The share of banks with at least 5 percent of their assets in C&I loans exhibited cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. behavior, declining from 72 percent in 1991 to less than 69 percent in 1993 as the economy slowed, and then rising during the recovery to reach a level of nearly 76 percent in 1997. Although the proportion of thrift institutions engaged in C&I lending was smaller than the proportion of banks, it was still substantial (approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. three-quarters Noun 1. three-quarters - three of four equal parts; "three-fourths of a pound" three-fourths common fraction, simple fraction - the quotient of two integers three-quarters npl → of the savings banks and half the S&Ls engaged in some C&I lending). However, many of these institutions had only a small share of their assets invested in C&I loans: In each year, only about half the thrifts that engaged in some C&I lending had ratios of C&I loans to assets greater than 1 percent. In contrast, the vast majority of banks that engaged in C&I lending had ratios greater than 1 percent. Moreover, the share of thrifts having ratios greater than 5 percent was quite low (less than 15 percent of savings banks and less than 5 percent of S&Ls). Each of the three C&I lending participation measures for thrift institutions generally followed a pattern of declining and then rising over the study period, in most cases reaching the highest level for the period in 1997. This pattern may simply reflect the cyclical nature of business borrowing. However, the increase in thrift participation in the mid-to-late 1990s may, to some degree, reflect a change in thrift strategy toward greater involvement in such lending. which some analysts attribute (1) In relational database management, a field within a record. (2) In object technology, a single element of data. See instance attribute and static attribute. to rising competition in residential mortgage lending from nondepository institutions. Support for the latter interpretation of the data is provided by the observation that many thrifts have in recent years eliminated the word "savings" from their organizations' names so as to convey convey v. to transfer title (official ownership) to real property (or an interest in real property) from one (grantor) to another (grantee) by a written deed (or an equivalent document such as a judgment of distribution which conveys real property from an estate). to their current and potential customers the message that they now offer a broader array of products than has traditionally been offered by "savings" institutions.(7) Of those institutions that engaged in some C&I lending, banks had annual simple average ratios of C&I loans to assets of 9.1 percent to 10.2 percent over the 1991-97 period, whereas savings banks and S&Ls had simple average ratios of only 2.0 percent to 2.7 percent and 1.2 percent to 1.6 percent respectively.(8) Like the participation ratios, the simple average ratios of C&I loans to assets first declined and then increased over the period. The annual asset-weighted average ratios of C&I loans to assets for banks were typically about 50 percent higher than the simple average ratios, while the weighted average ratios for thrifts were typically below the simple average ratios. This pattern suggests that among banks engaged in C&I lending, larger institutions are more heavily involved in commercial lending than smaller ones, while the opposite is true for thrifts. Cross-Sectional cross section also cross-sec·tion n. 1. a. A section formed by a plane cutting through an object, usually at right angles to an axis. b. A piece so cut or a graphic representation of such a piece. 2. Variations in C&I Lending Activity To get a clearer picture of commercial and industrial lending by thrift institutions, lending activity in 1997 was examined in greater detail. Of interest were several factors that might be expected to be associated with cross-sectional variations in lending activity--institution size and ownership status, geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. region, local banking market concentration and type, and firm market share. Institution Size Institution size might be expected to influence thrift involvement in C&I lending, though the direction of influence is unclear. Larger thrifts might be more likely than smaller ones to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. into nontraditional Adj. 1. nontraditional - not conforming to or in accord with tradition; "nontraditional designs"; "nontraditional practices" untraditional traditional - consisting of or derived from tradition; "traditional history"; "traditional morality" activities such as C&I lending, partly because they may have the financial resources needed to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. the substantial fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). often associated with entering a new line of business. Larger thrifts may also be more visible than smaller thrifts, so that businesses view them as more likely sources of commercial loans. However, though participation and the absolute level of involvement may increase with thrift size, C&I lending may not increase proportionally pro·por·tion·al adj. 1. Forming a relationship with other parts or quantities; being in proportion. 2. Properly related in size, degree, or other measurable characteristics; corresponding: to other aspects of an institution's business. Thus, if the extent of involvement is measured as C&I loans as a share of assets, C&I lending may not be seen to increase with size. Indeed, the data do show that although thrift participation in C&I lending increases with size, average ratios of C&I loans to assets (for those institutions engaged in C&I lending) generally decrease with size (table 2). 2. C&I lending by banks and thrift institutions, by size of institutions, 1997
Type of institution Institutions with
and level of assets Number of some assets in
(millions of dollars) institutions C&I loans
(percent)
COMMERCIAL BANKS
0-25 1,510 96.7
26-50 2,150 99.3
51-100 2,334 99.3
101-250 1,975 99.4
251-1,000 856 98.5
More than 1,000 331 98.8
SAVINGS BANK
0-25 60 42.9
26-50 128 68.0
51-100 211 73.9
101-250 322 78.3
251-1,000 311 83.9
More than 1,000 136 91.2
SAVINGS AND LOAN ASSOCIATIONS
0-25 70 21.4
26-50 111 42.3
51-100 153 52.9
101-250 145 62.1
251-1,000 81 72.8
More than 1,000 19 84.2
Institutions with Institutions with
more than more than
Type of institution 1 percent 5 percent
and level of assets of assets of assets
(millions of dollars) in C&I loans in C&I loans
(percent) (percent)
COMMERCIAL BANKS
0-25 92.8 62.5
26-50 97.5 73.4
51-100 97.9 77.0
101-250 98.1 79.6
251-1,000 98.1 84.3
More than 1,000 97.3 89.4
SAVINGS BANK
0-25 24.3 11.4
26-50 43.0 19.5
51-100 47.4 13.7
101-250 44.4 12.7
251-1,000 47.9 11.3
More than 1,000 50.0 19.1
SAVINGS AND LOAN ASSOCIATIONS
0-25 12.9 4.3
26-50 17.1 5.4
51-100 25.5 4.6
101-250 26.9 2.1
251-1,000 23.5 4.9
More than 1,000 26.3 5.3
C&I loans as a percent of assets(1)
Type of institution
and level of assets Simple Asset-weighted
(millions of dollars) average average
COMMERCIAL BANKS
0-25 8.2 8.3
26-50 9.4 9.4
51-100 10.3 10.2
101-250 10.7 10.7
251-1,000 11.6 11.6
More than 1,000 15.4 17.3
SAVINGS BANK
0-25 3.5 3.8
26-50 3.4 3.4
51-100 3.0 3.0
101-250 2.4 2.5
251-1,000 2.4 2.4
More than 1,000 2.5 1.8
SAVINGS AND LOAN ASSOCIATIONS
0-25 2.8 2.9
26-50 1.8 1.9
51-100 1.6 1.7
101-250 1.5 1.5
251-1,000 1.1 1.0
More than 1,000 1.6 .7
(1.) See note 1 to table 1. For banks having assets of more than $25 million, participation in C&I lending does not vary significantly with institution size; participation is slightly (but statistically significantly) lower for banks having assets of $25 million or less. The proportion with more than 1 percent of their assets in C&I loans also does not vary with size for banks having assets of more than $25 million; however, the proportion with more than 5 percent of assets in such loans increases monotonically with size, from a low of 63 percent to a high of 89 percent. Thrift participation in C&I lending varies far more with institution size than bank participation does. The proportion of savings banks participating in C&I lending rises with size, from a low of 43 percent for those having assets of $25 million or less to a high of 91 percent for those having assets of more than $1 billion. A similar monotonic monotonic - In domain theory, a function f : D -> C is monotonic (or monotone) if for all x,y in D, x <= y => f(x) <= f(y). ("<=" is written in LaTeX as \sqsubseteq). relationship between participation in C&I lending and institution size exists for S&Ls, with the participation rate rising from 21 percent to 84 percent with increasing size. For both types of thrifts, differences in the participation rate between the largest and smallest institutions are highly statistically significant, as are many of the differences between adjacent size categories. The share of thrifts with C&I loan-to-asset ratios greater than 1 percent and 5 percent varies somewhat irregularly ir·reg·u·lar adj. 1. Contrary to rule, accepted order, or general practice: irregular hiring practices. 2. with institution size. For banks involved in C&I lending, average ratios of C&I loans to assets (both simple and weighted) increase with size, with the ratios for the largest institutions (simple average of 15.4 percent, weighted average of 17.3 percent) being approximately double those for the smallest institutions (simple average of 8.2 percent, weighted average of 8.3 percent). (The difference in simple averages between the smallest and largest size categories is significant at the 0.01 level.) In contrast, for thrifts involved in C&I lending, average ratios of C&I loans to assets tend to decrease with size, with the simple average ratio ranging from 3.5 percent to 2.4 percent for savings banks and from 2.8 percent to 1.1 percent for savings and loan associations. (For savings banks, the difference in simple averages between the smallest and largest size categories is significant at the 0.10 level, but for S&Ls the difference is not statistically significant.) Thus, whereas the extent of bank involvement in C&I lending (as a share of assets) is positively related to institution size, the extent of thrill thrill (thril) a vibration felt by the examiner on palpation. diastolic thrill one felt over the precordium during ventricular diastole in advanced aortic insufficiency. involvement is, for the most part, negatively related to size. Ownership Status Ownership status may also influence thrift involvement in C&I lending. Thrifts owned by bank holding companies might be expected to behave more like banks, and thus to be more heavily involved in C&I lending, than independent thrifts or those owned by thrift holding companies. Managers of thrifts affiliated af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: with bank holding companies are likely either to have commercial lending expertise themselves or to have access to others in the holding company who have such expertise.(9) Bank participation in C&I lending does not vary much with ownership status, except that independent banks are less likely than banks owned by holding companies to have more than 5 percent of their assets in C&I loans (table 3). Nearly all banks, regardless of their ownership status, hold at least 1 percent of their assets in such loans. 3. C&I lending by banks and thrift institutions, by ownership status, 1997
Institutions with
Type of institution Number of some assets in
and ownership status institutions C&I loans
(percent)
COMMERCIAL BANKS
Independent 2,048 98.1
Owned by bank holding company
(no thrifts) 6,645 99.2
Owned by bank holding company
(with thrifts) 463 95.9
SAVINGS BANK
Independent 885 74.7
Owned by bank holding company 186 80.6
Owned by bank holding company 107 92.5
SAVINGS AND LOAN ASSOCIATIONS
Independent 547 51.6
Owned by bank holding company 20 75.0
Owned by bank holding company 12 91.7
Institutions with Institutions with
more than more than
Type of institution 1 percent 5 percent
and ownership status of assets of assets
in C&I loans in C&I loans
(percent) (percent)
COMMERCIAL BANKS
Independent 94.6 65.1
Owned by bank holding company
(no thrifts) 97.9 78.5
Owned by bank holding company
(with thrifts) 94.6 78.2
SAVINGS BANK
Independent 41.8 12.0
Owned by bank holding company 48.4 15.1
Owned by bank holding company 67.5 28.0
SAVINGS AND LOAN ASSOCIATIONS
Independent 21.9 4.0
Owned by bank holding company 20.0 0.0
Owned by bank holding company 50.0 16.7
C&I loans as a percent of assets(1)
Type of institution Simple Asset-weighted
and ownership status average average
COMMERCIAL BANKS
Independent 9.3 10.0
Owned by bank holding company
(no thrifts) 10.4 15.0
Owned by bank holding company
(with thrifts) 10.9 17.5
SAVINGS BANK
Independent 2.5 1.6
Owned by bank holding company 2.7 1.6
Owned by bank holding company 4.1 3.9
SAVINGS AND LOAN ASSOCIATIONS
Independent 1.6 1.0
Owned by bank holding company .9 .9
Owned by bank holding company 2.8 1.6
(1.) See note 1 to table 1. Thrift participation in C&I lending, in contrast, does vary with ownership status. Independent thrifts are less likely than those owned by holding companies ti) engage in some C&I lending; and thrifts owned by thrift holding companies are substantially less likely than those owned by bank holding companies to engage in C&I lending at each of the three participation levels.(10) Thus, the data suggest that thrift institutions that are owned by bank holding companies tend to behave more like commercial banks than those under other types of ownership. The simple average ratio of C&I loans to assets for banks operating under a holding company structure is unaffected by the presence or absence of thrift subsidiaries; the weighted average is slightly higher for banks owned by holding companies that also own thrifts than for banks owned by holding companies that do not own any thrifts. Independent banks have lower average C&I loan-to-asset ratios (simple and weighted) than do banks owned by holding companies. Average C&I loan-to-asset ratios (both simple and weighted) are higher for thrifts under a bank holding company structure than for independent thrifts and those under a thrift holding company structure. The simple average ratios for thrifts owned by bank holding companies--4.1 percent for savings banks and 2.8 percent for S&Ls-- are substantially greater than those for similar institutions not owned by bank holding companies. (Except for the difference between S&Ls owned by bank holding companies and independent S&Ls, these differences are statistically significant at the 0.05 level.) This finding provides further evidence that thrifts owned by bank holding companies behave more like commercial banks than other thrift institutions do. Geographic Region C&I lending by thrift institutions might be expected to vary across regions of the country as a result of cultural, historical, or regulatory differences that influence the behavior of depository institutions Depository institution A financial institution that obtains its funds mainly through deposits from the public. This includes commercial banks, savings and loan associations, savings banks and credit unions. or their customers. For example, the New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. states began to expand the range of activities permissible per·mis·si·ble adj. Permitted; allowable: permissible tax deductions; permissible behavior in school. per·mis for state-chartered thrifts in the early 1970s, almost a decade before federal legislation granted expanded powers to thrifts nationwide.(11) This difference might cause New England thrifts to behave more like commercial banks than thrifts in other parts of the country. For banks, participation in C&I lending varies little across geographic regions (table 4).(12) Although regional differences in C&I lending participation are more pronounced among thrift institutions than among banks, the differences are not consistent across the three participation measures. For example, whereas S&Ls headquartered in the Pacific region are the most likely to engage in some C&I lending, they are the least likely to have C&I loan-to-asset ratios greater than 1 percent and greater than 5 percent. 4. C & I lending by banks and thrift institutions, by geographic region, 1997
Type of institution Number of Institutions with
and geographic region institutions some assets in
C&I loans
COMMERCIAL BANKS (percent)
New England 144 93.9
Middle Atlantic 444 96.2
South Atlantic 1,125 98.4
East North Central 1,768 99.0
East South Central 791 98.9
West North Central 2,336 99.5
West South Central 1,579 99.6
Mountain 529 97.5
Pacific 440 97.5
SAVINGS BANKS
New England 212 90.6
Middle Atlantic 210 70.0
South Atlantic 204 76.0
East North Central 261 66.7
East South Central 64 85.9
West North Central 81 82.7
West South Central 64 89.1
Mountain 29 89.7
Pacific 53 69.8
SAVINGS AND LOAN ASSOCIATIONS
New England 25 60.0
Middle Atlantic 98 59.2
South Atlantic 87 48.3
East North Central 173 49.7
East South Central 29 41.4
West North Central 58 56.9
West South Central 50 54.0
Mountain 17 47.1
Pacific 42 64.3
Institutions with Institutions with
Type of institution more than more than
and geographic region 1 percent 5 percent
of assets of assets
COMMERCIAL BANKS in C&I loans in C&I loans
(percent) (percent)
New England 92.4 75.7
Middle Atlantic 93.2 65.5
South Atlantic 95.9 74.5
East North Central 97.2 74.4
East South Central 97.3 72.4
West North Central 98.5 77.4
West South Central 97.3 73.6
Mountain 94.9 80.9
Pacific 96.8 87.7
SAVINGS BANKS
New England 62.7 17.0
Middle Atlantic 28.1 7.6
South Atlantic 49.0 14.2
East North Central 35.6 10.3
East South Central 64.1 20.3
West North Central 49.4 25.9
West South Central 57.8 20.3
Mountain 51.7 13.8
Pacific 26.4 9.4
SAVINGS AND LOAN ASSOCIATIONS
New England 24.0 4.0
Middle Atlantic 18.4 3.1
South Atlantic 27.6 3.4
East North Central 22.0 2.9
East South Central 20.7 3.4
West North Central 27.6 10.3
West South Central 28.0 6.0
Mountain 17.6 5.9
Pacific 11.9 2.4
C&I loans as a percent of assets(1)
Type of institution Simple Asset-weighted
and geographic region average average
COMMERCIAL BANKS
New England 10.6 19.8
Middle Atlantic 9.6 14.7
South Atlantic 10.3 14.1
East North Central 10.3 19.2
East South Central 9.0 13.3
West North Central 9.5 13.3
West South Central 9.4 16.1
Mountain 12.1 11.2
Pacific 15.3 16.4
SAVINGS BANKS
New England 3.0 4.6
Middle Atlantic 2.0 1.4
South Atlantic 2.9 2.5
East North Central 2.3 1.8
East South Central 3.3 2.6
West North Central 3.6 1.8
West South Central 3.0 2.0
Mountain 2.7 1.9
Pacific 1.6 1.2
SAVINGS AND LOAN ASSOCIATIONS
New England 1.4 1.3
Middle Atlantic 1.1 .7
South Atlantic 1.7 1.1
East North Central 1.5 1.4
East South Central 2.1 2.0
West North Central 2.4 1.6
West South Central 2.0 .9
Mountain 1.6 1.8
Pacific 1.0 .7
NOTE. Geographic regions are the divisions used by the Bureau of the Census Noun 1. Bureau of the Census - the bureau of the Commerce Department responsible for taking the census; provides demographic information and analyses about the population of the United States Census Bureau . The states in each division are as follows: New England: Connecticut Connecticut, state, United States Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). , Maine Maine, ship Maine, U.S. battleship destroyed (Feb. 15, 1898) in Havana harbor by an explosion that killed 260 men. The incident helped precipitate the Spanish-American War (Apr., 1898). Commanded by Capt. Charles Sigsbee, the ship had been sent (Jan. Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. , New Hampshire New Hampshire, one of the New England states of the NE United States. It is bordered by Massachusetts (S), Vermont, with the Connecticut R. forming the boundary (W), the Canadian province of Quebec (NW), and Maine and a short strip of the Atlantic Ocean (E). , Rhode Island Rhode Island, island, United StatesRhode Island, island, 15 mi (24 km) long and 5 mi (8 km) wide, S R.I., at the entrance to Narragansett Bay. It is the largest island in the state, with steep cliffs and excellent beaches. , Vermont Vermont (vərmŏnt`) [Fr.,=green mountain], New England state of the NE United States. It is bordered by New Hampshire, across the Connecticut R. ; Middle Atlantic Adj. 1. middle Atlantic - of a region of the United States generally including Delaware; Maryland; Virginia; and usually New York; Pennsylvania; New Jersey; "mid-Atlantic states" mid-Atlantic : New jersey, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , Pennsylvania Pennsylvania (pĕnsəlvā`nyə), one of the Middle Atlantic states of the United States. It is bordered by New Jersey, across the Delaware River (E), Delaware (SE), Maryland (S), West Virginia (SW), Ohio (W), and Lake Erie and New York ; South Atlantic: Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). , District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). , Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and , Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. , Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). , North Carolina North Carolina, state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N). Facts and Figures Area, 52,586 sq mi (136,198 sq km). Pop. , South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. , Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). , West Virginia West Virginia, E central state of the United States. It is bordered by Pennsylvania and Maryland (N), Virginia (E and S), and Kentucky and, across the Ohio R., Ohio (W). Facts and Figures Area, 24,181 sq mi (62,629 sq km). Pop. ; East North Central: Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , Michigan Michigan (mĭsh`ĭgən), upper midwestern state of the United States. It consists of two peninsulas thrusting into the Great Lakes and has borders with Ohio and Indiana (S), Wisconsin (W), and the Canadian province of Ontario (N,E). , Ohio, Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee ; East South Central: Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). , Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. , Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by , Tennessee Tennessee, state, United States Tennessee (tĕn`əsē', tĕn'əsē`), state in the south-central United States. ; West North Central: Iowa, Kansas Kansas, state, United States Kansas (kăn`zəs), midwestern state occupying the center of the coterminous United States. It is bordered by Missouri (E), Oklahoma (S), Colorado (W), and Nebraska (N). , Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces , Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. , Nebraska Nebraska (nəbrăs`kə), Great Plains state of the central United States. It is bordered by Iowa and Missouri, across the Missouri R. (E), Kansas (S), Colorado (SW), Wyoming (NW), and South Dakota (N). , North Dakota North Dakota, state in the N central United States. It is bordered by Minnesota, across the Red River of the North (E), South Dakota (S), Montana (W), and the Canadian provinces of Saskatchewan and Manitoba (N). ; West South Central:
Arkansas Arkansas, river, United StatesArkansas (ärkăn`zəs, är`kənsô'), river, c.1,450 mi (2,330 km) long, rising in the Rocky Mts., central Colo. , Louisiana Louisiana (ləwē'zēăn`ə, l ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. , Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). , Texas; Mountain: Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). , Colorado Colorado, state, United StatesColorado (kŏlərăd`ə, –răd`ō, –rä`dō), state, W central United States, one of the Rocky Mt. states. , Idaho Idaho (ī`dəhō), one of the Rocky Mt. states in the NW United States. It is bordered by Montana and Wyoming (E), Utah and Nevada (S), Oregon and Washington (W), and the Canadian province of British Columbia (N). , Montana Montana (mŏntăn`ə), Rocky Mt. state in the NW United States. It is bounded by North Dakota and South Dakota (E), Wyoming (S), Idaho (W), and the Canadian provinces of British Columbia, Alberta, and Saskatchewan (N). , Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). , New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). , Utah, Wyoming Wyoming, city, United States Wyoming, city (1990 pop. 63,891), Kent co., W Mich., in the greater Grand Rapids metropolitan area, on the Grand River; settled 1832, inc. 1959. ; Pacific: Alaska Alaska (əlă`skə), largest in area of the United States but third smallest (exceeding only Vermont and Wyoming) in population, occupying the northwest extremity of the North American continent, separated from the coterminous United States , California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). , Hawaii Hawaii, island, United States Hawaii, island (1990 pop. 120,217), 4,037 sq mi (10,456 sq km), largest and southernmost island of the state of Hawaii and coextensive with Hawaii co.; known as the Big Island. , Oregon Oregon, city, United States Oregon, city (1990 pop. 18,334), Lucas co., NW Ohio, a suburb adjacent to Toledo, on Lake Erie; inc. 1958. It is a port with railroad-owned and -operated docks. The city has industries producing oil, chemicals, and metal products. , Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. . (1.) See note to table 1. For banks, the simple average C&I loan-to-asset ratio is around 9 percent or 10 percent everywhere except the Mountain (12.1 percent) and Pacific (15.3 percent) regions. The weighted average ratio is more variable, ranging from just over 11 percent in the Mountain states The Mountain States (also known as the Mountain West) form one of the nine geographic divisions of the United States that are officially recognized by the United States Census Bureau. to nearly 20 percent in New England. For thrift institutions, simple average C&I loan-to-asset ratios are highest in the East South Central and West North Central regions. Both types of averages are lowest in the Pacific and Middle Atlantic regions. For savings banks, the weighted average ratio for the New England region (4.6 percent) far exceeds that for any other region, with the East South Central region having the second highest (2.6 percent); for S&Ls, it is highest for the East South Central region. Overall, analysis reveals no consistent pattern of regional differences in the degree to which thrift institutions are involved in commercial lending. Although the weighted average ratio of C&I loans to assets suggests that New England savings banks do substantially more C&I lending than thrift institutions headquartered in other regions of the country, other measures of involvement do not support that conclusion. The unusually high weighted average ratio for New England savings banks appears to be attributable to the behavior of a small number of very large institutions.(13) This finding is particularly interesting, given that previous research on C&I lending by thrift institutions has focused on the weighted average ratio and concluded that New England thrifts behave substantially more like commercial banks than thrifts in other parts of the country do.(14) Market Concentration The generally low level of thrift institution involvement in C&I lending (compared with banks) suggests that there may be significant costs associated with thrift diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. into this line of business, even in markets in which thrifts already do a considerable amount of mortgage and other lending. If this is true, thrifts would be more likely to incur the costs associated with C&I lending in markets in which such lending is especially profitable. One source of high profitability would be high interest rates on commercial loans. Numerous empirical studies Empirical studies in social sciences are when the research ends are based on evidence and not just theory. This is done to comply with the scientific method that asserts the objective discovery of knowledge based on verifiable facts of evidence. have found bank profits or loan interest rates to be positively related to market concentration.(15) To the extent that commercial loan rates are higher (and commercial lending is more profitable) in highly concentrated markets than in less concentrated markets, we would expect to find a positive relationship between market concentration and thrift involvement in C&I lending. For this analysis, the level of market concentration was measured by the Herfindahl-Hirschman index (HHI HHI Herfindahl-Hirschman Index (measure of market concentration) HHI Heinrich Hertz Institut (Germany) HHI Hilton Head Island HHI Household Income HHI Hyundai Heavy Industries Co, Ltd ).(16) The HHI was calculated as the sum of the squares of the deposit market shares of all banks operating in a particular geographic market.(17) Ideally, the HHI would measure concentration on the basis of C&I lending rather than deposits and would be calculated using shares of the C&I lending market. However, market-level data on each institution's C&I lending activity were not available.(18) Therefore, deposit market shares were used as a proxy See proxy server. (networking) proxy - A process that accepts requests for some service and passes them on to the real server. A proxy may run on dedicated hardware or may be purely software. for C&I lending shares. Because thrift institutions generally do far less C&I lending than banks, thrift deposits were excluded from the calculation of the HHI.(19) Commercial bank participation in C&I lending is unrelated to local banking market concentration, but participation by both savings banks and S&Ls (at each of the three measured participation levels) tends to rise as market concentration increases (table 5).(20) Extent of involvement (as measured by ratios of C&I loans to assets) generally declines with increasing market concentration for banks and rises with increasing concentration for thrifts. (Differences in the simple average ratio of C&I loans to assets between institutions in markets with an HHI above 1800 and those in markets with an HHI of 1800 or less are statistically significant at the 0.01 level for all three types of institutions.) These findings are consistent with our expectations, given the well-established empirical relationship In science, an empirical relationship is one based solely on observation rather than theory. An empirical relationship requires only confirmatory data irrespective of theoretical basis. between market concentration and profits. 5. C&I lending by banks and thrift institutions, by deposit market concentration, 1997
Type of institution and Number of Institutions with
level of deposit institutions some assets in
market concentration(1) C&I loans
(percent)
COMMERCIAL BANKS
Unconcentrated 658 99.4
Moderately concentrated 2,860 98.6
Highly concentrated 1,726 98.3
Very highly concentrated 3,900 99.3
SAVINGS BANKS
Unconcentrated 75 52.0
Moderately concentrated 385 73.5
Highly concentrated 281 80.1
Very highly concentrated 435 83.2
SAVINGS AND LOAN ASSOCIATIONS
Unconcentrated 37 29.7
Moderately concentrated 222 52.0
Highly concentrated 105 54.3
Very highly concentrated 215 58.1
Institutions with Institutions with
more than more than
1 percent 5 percent
Type of institution and of assets of assets
level of deposit in C&I loans in C&I loans
market concentration(1) (percent) (percent)
COMMERCIAL BANKS
Unconcentrated 98.2 79.0
Moderately concentrated 96.7 75.3
Highly concentrated 96.8 77.5
Very highly concentrated 97.4 74.3
SAVINGS BANKS
Unconcentrated 25.3 5.3
Moderately concentrated 37.9 12.5
Highly concentrated 44.5 11.0
Very highly concentrated 55.4 18.6
SAVINGS AND LOAN ASSOCIATIONS
Unconcentrated 8.1 2.7
Moderately concentrated 20.3 2.3
Highly concentrated 21.0 2.9
Very highly concentrated 27.9 7.0
C&I loans as a percent of assets(2)
Type of institution and Simple Asset-weighted
level of deposit average average
market concentration(1)
COMMERCIAL BANKS
Unconcentrated 11.9 21.7
Moderately concentrated 10.6 15.3
Highly concentrated 10.9 16.3
Very highly concentrated 9.1 14.4
SAVINGS BANKS
Unconcentrated 2.0 9.0
Moderately concentrated 2.3 1.7
Highly concentrated 2.3 1.4
Very highly concentrated 3.3 3.5
SAVINGS AND LOAN ASSOCIATIONS
Unconcentrated 1.0 .5
Moderately concentrated 1.3 .8
Highly concentrated 1.2 .4
Very highly concentrated 2.0 1.9
(1.) Concentration categories are based on bank-only deposit-based Herfindahl-Hirschman index values, as follows: Unconcentrated, HHI values of 0-1000; Moderately concentrated, 1001-1800; Highly concentrated, 1801-2200; Very highly concentrated, 2201-10,000. (2.) See note 1 to table 1. Urban vs. Rural Markets Thrift involvement in C&I lending might be expected to differ between urban and rural markets. On the one hand urban markets are likely to provide greater commercial lending opportunities than rural markets. leading to greater C&I lending activity. On the other hand, concentration levels tend to be lower in urban markets than in rural markets, rendering See render. (graphics, text) rendering - The conversion of a high-level object-based description into a graphical image for display. For example, ray-tracing takes a mathematical model of a three-dimensional object or scene and converts it into a bitmap image. thrift involvement in C&I lending in urban markets less attractive (because of lower profitability). The data indicate that thrills Thrills is a Canadian brand of chewing gum now made by Concord Confections, but once produced by Wonka. It is well known for its distinctive rosewater flavour. Comparisons of its flavour to soap are so prevalent that recent packaging states "it still tastes like soap!" are more extensively involved in C&I lending in rural markets than in urban markets, while the opposite is generally true for banks (table 6).(21) Although most of the differences between urban and rural markets apparent in table 6 are statistically significant, they may be driven by systematic differences in concentration levels or in market shares.(22) 6. C&I lending by banks and thrift institutions, by type of market share, 1997
Type of institution Number of Institutions with
and type of marked institutions some assets in
C&I loans
(percent)
COMMERCIAL BANKS
Urban
All institutions 3,968 98.0
By market share (percent)
0.0-0.5 1,632 96.4
0.6-1.0 517 9.0
1.1-5.0 1,087 98.8
5.1-10.0 310 99.7
Greater than 10.0 422 99.5
Rural
All institutions 5,176 99.6
By market share (percent)
0.0-5.0 682 99.0
5.1-10.0 880 99.8
10.1-20.0 1,341 99.9
Greater than 20.0 2,273 99.6
SAVINGS BANKS
Urban
All institutions 857 75.6
By market share (percent)
0.0-0.5 360 63.3
0.6-1.0 109 79.8
1.1-5.0 225 78.7
5.1-10.0 105 95.2
Greater than 10.0 58 96.6
Rural
All institutions 319 81.8
By market share (percent)
0.0-5.0 44 56.8
5.1-10.0 76 82.9
10.1-20.0 125 84.8
Greater than 20.0 74 90.5
SAVINGS AND LOAN ASSOCIATIONS
Urban
All institutions 373 50.7
By market share (percent)
0.0-0.5 191 36.6
0.6-1.0 53 50.9
1.1-5.0 93 69.9
5.1-10.0 26 73.1
Greater than 10.0 10 80.0
Rural
All institutions 206 57.8
By market share (percent)
0.0-5.0 43 30.2
5.1-10.0 59 54.2
10.1-20.0 56 75.0
Greater than 20.0 48 66.7
Institutions with Institutions with
Type of institution more than more than
and type of marked 1 percent 5 percent
of assets of assets
in C&I loans in C&I loans
(percent) (percent)
COMMERCIAL BANKS
Urban
All institutions 96.4 79.4
By market share (percent)
0.0-0.5 94.4 76.9
0.6-1.0 96.7 76.8
1.1-5.0 97.3 78.2
5.1-10.0 99.4 85.5
Greater than 10.0 99.1 90.5
Rural
All institutions 97.7 72.7
By market share (percent)
0.0-5.0 95.0 63.1
5.1-10.0 97.4 71.7
10.1-20.0 98.5 75.8
Greater than 20.0 98.1 74.0
SAVINGS BANKS
Urban
All institutions 41.9 12.5
By market share (percent)
0.0-0.5 28.9 8.6
0.6-1.0 42.2 10.1
1.1-5.0 48.0 14.7
5.1-10.0 52.4 15.2
Greater than 10.0 79.3 27.6
Rural
All institutions 53.9 17.9
By market share (percent)
0.0-5.0 38.6 13.6
5.1-10.0 50.0 11.8
10.1-20.0 54.4 18.4
Greater than 20.0 66.2 25.7
SAVINGS AND LOAN ASSOCIATIONS
Urban
All institutions 18.2 2.7
By market share (percent)
0.0-0.5 14.1 1.6
0.6-1.0 15.1 .0
1.1-5.0 24.7 5.4
5.1-10.0 19.2 7.7
Greater than 10.0 50.0 .0
Rural
All institutions 30.1 6.8
By market share (percent)
0.0-5.0 11.6 2.3
5.1-10.0 33.9 8.5
10.1-20.0 35.7 5.4
Greater than 20.0 35.4 10.4
C&I loans as a percent of assets(1)
Type of institution Simple Asset-weighted
and type of marked average average
COMMERCIAL BANKS
Urban
All institutions 12.1 16.5
By market share (percent)
0.0-0.5 12.7 15.3
0.6-1.0 11.8 15.0
1.1-5.0 11.2 13.5
5.1-10.0 12.4 16.9
Greater than 10.0 12.5 17.1
Rural
All institutions 8.6 9.4
By market share (percent)
0.0-5.0 8.1 8.6
5.1-10.0 8.6 8.9
10.1-20.0 9.0 9.7
Greater than 20.0 8.6 9.4
SAVINGS BANKS
Urban
All institutions 2.5 1.9
By market share (percent)
0.0-0.5 2.2 1.7
0.6-1.0 2.1 2.1
1.1-5.0 2.7 2.1
5.1-10.0 2.4 1.4
Greater than 10.0 3.4 2.8
Rural
All institutions 3.2 3.2
By market share (percent)
0.0-5.0 3.1 2.3
5.1-10.0 2.3 1.8
10.1-20.0 3.2 3.0
Greater than 20.0 4.0 4.4
SAVINGS AND LOAN ASSOCIATIONS
Urban
All institutions 1.3 0.8
By market share (percent)
0.0-0.5 1.3 1.4
0.6-1.0 0.7 0.5
1.1-5.0 1.4 0.5
5.1-10.0 1.6 1.8
Greater than 10.0 1.7 1.7
Rural
All institutions 2.1 1.8
By market share (percent)
0.0-5.0 2.1 1.2
5.1-10.0 2.3 2.0
10.1-20.0 1.9 1.6
Greater than 20.0 2.0 2.0
NOTE. Institutions are classified as urban of the majority of their deposits are held in branches located in metropolitan statistical areas and rural if the majority of their deposits are held in branches located in non-MSA counties. Market share is based on deposits. (1.) See note to table 1. Market Share A firm's share of market deposits provides a measure of the strength of its presence in the market(s) in which it operates. A thrift institution that captures a large share of market deposits, and hence is locally prominent, may have greater commercial lending opportunities than a similar institution having only a small market share because it is more visible to commercial borrowers. Thus, we would expect to find a positive relationship between a thrift's market share and its C&I lending activity.(23) For this analysis, institutions in urban and rural markets were treated separately because the number of firms, and hence the "typical" market share, tends to be quite different in these two settings. Bank participation in C&I lending does not vary much with market deposit share (table 6). For both savings banks and S&Ls, and in both urban and rural markets, participation is higher among firms having larger shares of market deposits than among those having smaller shares. For banks and S&Ls, extent of involvement is not related to market share; among savings banks, involvement is substantially greater for those in the largest market share category than for those in any other category, with the difference being statistically significant within urban banking markets. Summary of Cross-Sectional Variations In summary, although more than two-thirds of all thrift institutions engage in some C&I lending, their level of involvement is generally quite low relative to that of banks. Their participation generally increased over the mid-to-late 1990s after having trended downward earlier in the decade. For both banks and thrifts, participation rates and levels of involvement appear to vary with institution size, ownership status, geographic region, local banking market concentration, and firm market share and between urban and rural areas. Larger thrifts, thrifts owned by bank holding companies, those operating in more concentrated banking markets, those that have captured a larger share of local market deposits, and those operating in rural areas are most likely to be involved in C&I lending. For those thrift institutions that do engage in C&I lending, the extent of their involvement, as measured by the proportion of their assets invested in C&I loans, tends to decrease with institution size, to increase with market concentration, and to be unrelated to deposit market share; involvement tends to be greater for thrifts owned by bank holding companies and for those operating in rural markets. CHANGES IN AN INSTITUTION'S C&I LENDING ACTIVITY OVER TIME Cross-sectional analysis Cross-sectional analysis Assessment of relationships among a cross-section of firms, countries, or some other variable at one particular time. of the C&I lending behavior of banks and thrift institutions leads naturally to some questions about the dynamic aspects of thrift involvement in such lending. For instance, are changes over time in charter type or ownership status associated with changes in an institution's level of C&I lending activity? To address such questions, we examined the average change between 1991 and 1997 in the ratio of C&I loans to assets for firms with different types of ownership and charters. The sample consisted of all organizations that existed in 1991 as thrifts and were still operating in 1997, either as thrifts or as commercial banks. Of the 2,664 thrifts that reported both financial and branch-level deposit data in 1991, 1,688 were still operating in 1997. Data for 123 of these 1,688 institutions were merger-adjusted, to make the 1991 and 1997 figures comparable.(24) Sixty-four Adj. 1. sixty-four - being four more than sixty 64, lxiv cardinal - being or denoting a numerical quantity but not order; "cardinal numbers" of the surviving institutions were dropped from the sample because they had engaged in at least one acquisition in which only part of an organization was purchased (data for the partial institution could not be obtained, so adjusted 1991 data that would be comparable with the 1997 data could not be constructed). The change in the ratio of C&I loans to assets from 1991 to 1997 was calculated for each of the 1,624 institutions in the final sample. The institutions were then grouped according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. their ownership status and charter type in 1991 and 1997, and the (simple) average change in the ratio for each subgroup sub·group n. 1. A distinct group within a group; a subdivision of a group. 2. A subordinate group. 3. Mathematics A group that is a subset of a group. tr.v. was calculated. For most subgroups of thrift institutions, the ratio of C&I loans to assets increased over the period (table 7). Thrifts that converted to bank charters between 1991 and 1997 showed, on average, the largest increases. Although the direction of causality causality, in philosophy, the relationship between cause and effect. A distinction is often made between a cause that produces something new (e.g., a moth from a caterpillar) and one that produces a change in an existing substance (e.g. cannot be determined (that is, whether charter changes prompted increases in C&I lending or whether a desire to do more C&I lending led to charter conversion), inspection of the annual C&I loan-to-asset ratios of individual thrifts undergoing charter conversion suggests that increased C&I lending generally followed rather than preceded charter conversion. Thrifts that in 1991 were independent or owned by a bank holding company and in 1997 were owned by a bank holding company also showed fairly large average increases in C&I loan-to-asset ratios. 7. Change from 1991 to 1997 in ratio of C&I loans to assets, by thrift institution ownership status and charter type
Savings Savings
bank bank
owned by owned by
thrift bank
Ownership status and charter Independent holding holding
type in 1991 savings bank company company
Independent savings bank .66(***) .71(*) 2.39(**)
(497) (48) (35)
Savings bank owned by
thrift holding company -.85 .77 .05
(3) (28) (5)
Savings bank owned by
bank holding company ... ... 2.65
(0) (0) (11)
Independent savings and
loan association (S&L) .51(***) .83(**) 3.16(*)
(290) (58) (12)
Savings and loan association
owned by bank
holding company ... 1.33 -1.25
(0) (5) (3)
Savings and loan association
owned by bank
holding company ... .02 2.93(*)
(0) (1) (3)
S&L S&L
owned by owned by
Ownership status and charter Independent thrift bank
type in 1991 S&L holding holding
company company
Independent savings bank ... ... ...
(0) (0) (0)
Savings bank owned by
thrift holding company ... ... ...
(0) (0) (0)
Savings bank owned by
bank holding company ... ... ...
(0) (0) (0)
Independent savings and
loan association (S&L) .26(***) .11(**) 2.36
(536) (10) (6)
Savings and loan association
owned by bank
holding company ... .50 -1.72
(0) (9) (3)
Savings and loan association
owned by bank ... ... 2.00
holding company (0) (0) (3)
Independent Commercial
commercial bank owned
bank by bank
Ownership status and charter holding
type in 1991 company
Independent savings bank 9.35 5.71(***)
(4) (22)
Savings bank owned by
thrift holding company ... 1.94
(0) (3)
Savings bank owned by
bank holding company ... 3.20(**)
(0) (5)
Independent savings and
loan association (S&L) 6.96(*) 4.40(***)
(6) (17)
Savings and loan association
owned by bank
holding company ... ...
0 0
Savings and loan association
owned by bank
holding company ... 12.80
(0) (1)
NOTE: Each table entry, consisting of a pair of figures, represents a unique combination of 1991 and 1997 ownership status and charter type. The top number in each pair if figures is the average change in the ratio of C&I loans to assets, in percentage points, across all institutions in that group; the number in parentheses See parenthesis. parentheses - See left parenthesis, right parenthesis. is the number of institutions in that group. For example, four thrift institutions in the sample that were independent savings banks in 1991 converted to independent commercial banks during the study period; the average ratio of C&I loans to assets for this group of institutions increased 9.35 percentage points over the period. (*), (**), (***) Significantly different from zero at the 0.10, 0.05, and 0.01 levels. CONCLUSION Our analysis confirms that thrift institutions are less likely than commercial banks to engage in commercial and industrial lending and that the extent of involvement of thrifts that do engage in such lending is generally low compared with that of banks. We also identified several factors that are related either to the level of thrift involvement in C&I lending at a given time or to the change over time in the level of such involvement. Among thrift institutions, savings banks are much more heavily involved in C&I lending than savings and loan associations. Ownership status is also strongly associated with the C&I lending activity of thrifts: Involvement is greater among those owned by bank holding companies than among either independent thrifts or those owned by thrift holding companies. Although larger thrifts are more likely than smaller thrifts to be involved in C&I lending, for those that are involved in such lending, the proportion of assets invested in C&I loans tends to decline with increasing institution size. Thrifts operating primarily in rural markets tend to be more heavily involved in C&I lending than those operating primarily in urban markets. Perhaps our most interesting finding is that higher levels of market concentration are associated with greater thrift involvement in C&I lending. This finding has potential implications for antitrust policy. It suggests that a merger that substantially increases concentration in a local banking market may lead to greater C&I lending activity by thrifts operating in that market, thereby mitigating mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. , to some degree, the potential competitive harm (to business customers) resulting from the merger. The effect may be particularly important if the market and the thrifts operating in it have other characteristics associated with greater thrift involvement in C&I lending. Charter type and ownership status also influence the growth of C&I lending activity over time: Conversion from a thrift charter to a bank charter is associated with a large, statistically significant increase in C&I lending relative to institutions that retain their thrift charters. Among thrifts that retained their thrift charters, those that changed from independent status to bank holding company ownership during the study period and those that were under bank holding company ownership throughout the period showed significantly greater growth in C&I lending activity than did thrifts that were independent or were under thrift holding company ownership at the end of the period. Our findings indicate that thrift institutions in general are far less involved in commercial and industrial lending than commercial banks but that the extent of involvement varies considerably and systematically with characteristics of the thrift institution and the market(s) it serves. If thrift involvement in C&I lending is taken to be a reasonable indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of the extent to which thrifts should be treated as equal competitors of commercial banks for purposes of antitrust analysis, our findings support an approach to merger analysis that generally gives reduced weight to thrifts as competitors but allows the weight to be increased for thrift institutions that are unusually active in C&I lending. APPENDIX appendix, small, worm-shaped blind tube, about 3 in. (7.6 cm) long and 1-4 in. to 1 in. (.64–2.54 cm) thick, projecting from the cecum (part of the large intestine) on the right side of the lower abdominal cavity. : REGRESSION ANALYSIS In statistics, a mathematical method of modeling the relationships among three or more variables. It is used to predict the value of one variable given the values of the others. For example, a model might estimate sales based on age and gender. In addition to the univariate univariate adjective Determined, produced, or caused by only one variable analysis presented in tables 1-6, we ran ordinary least squares (OLS OLS Ordinary Least Squares OLS Online Library System OLS Ottawa Linux Symposium OLS Operation Lifeline Sudan OLS Operational Linescan System OLS Online Service OLS Organizational Leadership and Supervision OLS On Line Support OLS Online System ) regressions to further examine the relationship between commercial and industrial lending by thrift institutions and various market and firm characteristics. Regression analysis makes it possible to determine whether the relationships observed ob·serve v. ob·served, ob·serv·ing, ob·serves v.tr. 1. To be or become aware of, especially through careful and directed attention; notice. 2. in the univariate analysis persist when the influence of other co-varying factors is taken into account. The regression equation Regression equation An equation that describes the average relationship between a dependent variable and a set of explanatory variables. was estimated tot two groups--the 1.755 thrift institutions that reported both branch (Summary of Deposits or Branch Office Survey) and financial (Call Report or Thrift Financial Report) data in 1997 and the 1,217 thrifts in that group that had some assets in C&I loans. Variables were measured as of June 30, 1997, and correspond to those examined in the univariate analysis. The results of the regression analysis (table A.1) are generally consistent with those of the univariate analysis. In every instance but one, the sign of the coefficient coefficient /co·ef·fi·cient/ (ko?ah-fish´int) 1. an expression of the change or effect produced by variation in certain factors, or of the ratio between two different quantities. 2. estimate indicates a relationship between the variable and C&I lending similar to that indicated by the univariate analysis. The exception is that regression analysis yields a positive (but statistically insignificant) coefficient on the urban market variable, indicating that thrifts operating primarily in urban areas are more involved in C&I lending than those operating primarily in rural areas, whereas univariate analysis (table 6) indicates the opposite. This discrepancy DISCREPANCY. A difference between one thing and another, between one writing and another; a variance. (q.v.) 2. Discrepancies are material and immaterial. may be due to the fact that regression analysis controls for other factors that are typically higher in rural markets than in urban markets and are positively related to the extent of C&I lending by thrifts, such as market concentration and the thrift's share of deposits in the market(s) in which it operates (tables 5 and 6). Therefore, the differences between thrift C&I lending in urban and rural areas shown in table 6 may be largely attributable to thrifts in rural markets having larger market shares and operating in more concentrated markets than thrifts in urban areas. A.1 Estimated coefficients from regression equation explaining ration ration a fixed allowance of total feed for an animal for one day. Usually specifies the individual ingredients and their amounts and the amounts of the specific nutriments such as carbohydrate, fiber, individual minerals and vitamins. C&I loans to assets for thrift institutions, 1997
Variable All thrifts
Intercept -0.004
(.01)
Institution characteristics
Savings bank(1) .935(***)
6.59
Size(2) .037
(0.67)
Ownership status
Thrift holding company(3) .282
(1.37)
Bank holding company(4) 1.763(***)
(6.87)
Market share(5) .043(***)
Geographic location(6)
Middle Atlantic -.725(***)
(2.96)
South Atlantic -.292
(1.14)
East North Central -.620(**)
(2.57)
East South Central -.257
(.76)
West North Central .264
(.85)
West South Central .004
(.01)
Mountain -.570
(1.30)
Pacific -1.069(***)
(3.24)
Market characteristics
Market concentration(7) 2.02 x [10.sup.-4](***)
(2.99)
Urban market(8) .186
(.84)
Adjusted R-square .119
Number of observations 1.755
Thrifts with some
Variable assets in
C&I loans
Intercept 2.874(***)
(2.94)
Institution characteristics
Savings bank(1) .924(***)
(4.50)
Size(2) -.186(**)
(2.46)
Ownership status
Thrift holding company(3) .362
(1.38)
Bank holding company(4) 1.542(***)
(5.05)
Market share(5) .034(**)
(2.26)
Geographic location(6)
Middle Atlantic -.488
(1.55)
South Atlantic .049
(.15)
East North Central -.340(**)
(1.10)
East South Central -.083
(.19)
West North Central .679(*)
(1.71)
West South Central .123
(.30)
Mountain -.408
(.72)
Pacific -.766(*)
(1.74)
Market characteristics
Market concentration(7) 2.47 x [10.sup.-4](***)
(2.84)
Urban market(8) .313
(1.03)
Adjusted R-square .083
Number of observations 1,217
NOTE. Numbers in parentheses are t statistics t statistic, t distribution the statistical distribution of the ratio of the sample mean to its sample standard deviation for a normal random variable with zero mean. . (1.) Dummy variable This article is not about "dummy variables" as that term is usually understood in mathematics. See free variables and bound variables. In regression analysis, a dummy variable equal to 1 if the thrift is a savings bank, and o if it is a savings and loan association. (2.) As measured by the natural log of total assets held by the thrift. (3.) Dummy variable equal to 1 if the thrift is owned by a thrift holding company, and otherwise. (4.) Dummy variable equal to 1 of the thrift is owned by a bank holding company, and otherwise. (5.) Deposit-weighted average of the thrift's market share in the market(s) in which it operates. (6.) Dummy variable equal to to 1 if the thrift is headquartered in the named region (based in divisions used by the Bureau of the Census), and 0 otherwise. New England is the omitted region. (7.) Deposit-weighted average of the bank-only deposit-based Herfindahl-Hirschman index in the market(s) in which the thrift operates. (8.) Share of thrift's total deposits held in banks located in metropolitan statistical areas. (*), (**), (***) Significantly different from zero at the 0.10, 0.05, and 0.01 levels. Interestingly, the estimated coefficient on the thrill size variable is positive (but statistically insignificant) for the full sample and negative for the sample of thrifts having at least some assets in C&I loans. These findings are consistent with the univariate analysis, which found that participation in C&I lending increases with size but that for those thrifts engaged in C&I lending, the extent of involvement, as measured by the ratio of C&I loans to assets, declines with size. (1.) Several key pieces of legislation included provisions thai expanded the commercial lending powers of federally chartered thrift institutions. The Depository Institutions Deregulation and Monetary Control Act Depository Institutions Deregulation and Monetary Control Act The 1980 federal legislation that ended the regulation of the banking industry. of 1980 permitted federally chartered savings banks to engage in commercial and industrial (C&I) lending, up to 5 percent of their assets. The Garn-St Germain Ger`main´ a. 1. See Germane. Act of 1982 empowered federally chartered savings and loan associations to engage in C&I lending, up to 10 percent of their assets, and increased the limit on federally chartered savings banks' C&I lending authority to 10 percent of their assets. More recently, the Economic Growth and Regulatory Paperwork Reduction Act The Economic Growth and Regulatory Paperwork Reduction Act of 1996 (or EGRPRA) is a United States federal law that requires the Federal Financial Institutions Examination Council and its member agencies to review their regulations at least once every 10 years to identify any of 1996 increased the C&I lending limits for federally chartered thrift institutions to 20 percent of assets, with the stipulation An agreement between attorneys that concerns business before a court and is designed to simplify or shorten litigation and save costs. During the course of a civil lawsuit, criminal proceeding, or any other type of litigation, the opposing attorneys may come to an agreement that all C&I lending in excess of 10 percent of assets must be small business loans. For a discussion of changes over time in thrift activities, see Jim Burke Jim Burke may refer to:
(2.) All proposed bank mergers and acquisitions must be approved by one of three federal banking regulators--the Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (or OCC) was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all national banks and the federal branches and agencies of foreign banks in the United States. (OCC OCC See: Options Clearing Corporation OCC See Options Clearing Corporation (OCC). ), the Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. (FDIC FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (FDIC). ), or the Federal Reserve. The charter type and Federal Reserve System membership status of the resulting institution and the type of acquiring firm (whether or not it is a bank holding company) determine which federal regulator regulator, n the mechanical part of a gas delivery system that controls gas pressure that allows a manageable flow of drug vapor to escape. regulator see reducing valve. has jurisdiction. In addition, all proposed bank mergers and acquisitions are subject to review by the Department of Justice, whose antitrust authority applies to most industries. (3.) Federal regulators do not take a uniform approach to the treatment of thrift institutions in antitrust analysis. Whereas the FDIC and the OCC tend to treat thrifts and commercial banks equally, the Federal Reserve and the Justice Department in many instances discount the role of thrifts as competitors in the market for banking services. For example, in analyzing the competitive effects of proposed bank mergers, the Federal Reserve constructs measures of market structure based on the shares of deposits hem by institutions in a local geographic market. These measures include 100 percent of commercial bank deposits, but typically only 50 percent of thrift deposits (though in certain cases, they include 100 percent of thrift deposits). (4.) The choice of time period was dictated dic·tate v. dic·tat·ed, dic·tat·ing, dic·tates v.tr. 1. To say or read aloud to be recorded or written by another: dictate a letter. 2. a. by concerns about the data. The thrift crisis of the 1980s adversely affected the quantity and quality of data available for thrift institutions for several years before 1991. (5.) Although credit unions are sometimes included in the definition of thrift institutions, they were excluded from the analysis because of their specialized nature. Credit unions are restricted to serving a group of people with a "common bond," such as membership in a fraternal fraternal /fra·ter·nal/ (frah-ter´n'l) 1. of or pertaining to brothers. 2. of twins; derived from two oocytes. fra·ter·nal adj. 1. Of or relating to brothers. organization or employment by the same employer. As such their ability to compete with commercial banks, savings banks, and savings and loan associations is somewhat limited. (6.) For brevity Brevity Adonis’ garden of short life. [Br. Lit.: I Henry IV] bubbles symbolic of transitoriness of life. [Art: Hall, 54] cherry fair cherry orchards where fruit was briefly sold; symbolic of transience. , we hereafter In the future. The term hereafter is always used to indicate a future time—to the exclusion of both the past and present—in legal documents, statutes, and other similar papers. refer to commercial banks as "banks": when the subject is savings banks, we use the full term. (7.) Matt Andrejczak, "Thrifts, Shifting Financial Roles, Find a Name Change Helps the Transition," American Banker American Banker is a daily newspaper covering the financial services industry. Founded in 1835 and based in New York, American Banker's 70 reporters and editors in six cities monitor developments and breaking news affecting banks. , July July: see month. 6, 1998. (8.) Two types of averages for the ratio of C&I loans to assets were calculated--a simple average and an asset-weighted average. The simple average is the mean of the ratios of C&I loans to assets for all institutions of each charter type that had some assets in C&I loans: it can be viewed as an unweighted average because the C&I lending ratio of each institution receives equal weight in its computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. . The asset-weighted average is total C&I loans for all institutions of each charter type divided by total assets for all institutions of each charter type that had some assets in C&I loans; it is a weighted average because an institution's influence on the average is proportional proportional values expressed as a proportion of the total number of values in a series. proportional dwarf the patient is a miniature without disproportionate reductions or enlargements of body parts. to its size, as measured by assets. (9.) In competitive analyzes of proposed bank mergers, the Federal Reserve typically treats thrift institutions owned by bank holding companies the same ax commercial banks because the expertise of managers of bank holding companies is likely to make thrifts affiliated with them strong potential competitors for many bank products and services. (10.) Among savings banks, differences between independent institutions and those owned by bank holding companies are, for two of the three participation measures, statistically significant at the 0.01 level: the same is true for differences between savings banks owned by thrift holding companies and those owned by bank holding companies, but differences between independent savings banks and those owned by thrift holding companies generally are not significant. For S&Ls, differences between independent institutions and those owned by bank holding companies are, for two of the participation measures, statistically significant at the 0.05 level, but differences between other categories of S&Ls are not statistically significant. (11.) For a detailed examination of C&I lending by New England savings banks, see Constance Constance, Holy Roman empress Constance, 1154–98, Holy Roman empress, wife of Holy Roman Emperor Henry VI; daughter of King Roger II of Sicily. She was named heiress of Sicily by her nephew King William II. Dunham Dunham is a surname, and may refer to
A state-chartered savings bank which is owned by its depositors and managed by a fiduciary board of trustees. : Are They Now or Will They Ever Be Commercial Banks?" New England Economic Review (May/June 1982), pp. 51-72. (12.) The regions are equivalent to the divisions used by the Bureau of the Census. Each institution was assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to the region in which it was headquartered. For a list of states included in each region, see the general note to table 4. (13.) The weighted average ratio for the 23 New England savings banks with assets of more than $1 billion is 6.2 percent, compared with 2.6 percent for the 189 New England savings banks with assets of $1 billion or less. (14.) See, for example, Jim Burke and Stephen A. Rhoades, "Commercial and Consumer Lending by Thrift Institutions," Journal of Commercial Bank Lending (May 1991), pp. 15-24. (15.) See, for example, Timothy Timothy, epistles in the New Testament Timothy, two letters of the New Testament. With Titus they comprise the Pastoral Epistles, in which St. Paul addresses his coworkers as the guardians and transmitters of his teaching. H. Hannan Hannan is a popular Irish surname coming from the Gaelic Ó hAnnáin or Ó hAnáin, most prevalently found in County Cork in the south-eastern portion of the Emerald Isle. [1] Hannan is also a popular first name in Arabic cultures. , "Bank Commercial Loan Markets and the Role of Market Structure: Evidence from Surveys of Commercial Lending," Journal of Banking and Finance (February February: see month. 1991), pp. 133-49; Timothy H. Hannan and J. Nellie See Sooty albatross Liang Liang The name of two Chinese dynasties, the Earlier Liang Dynasty (502-557) and the Later Liang Dynasty (907-923). . "The Influence of Thrift Competition on Bank Business Loan Rates," Journal of Financial Services Research (June 19951, pp. 107-22: Stephen A. Rhoades, Structure-Performance Studies in Banking: A Summary and Evaluation, Staff Studies 92 (Board of Governors of the Federal Reserve System Board of Governors of the Federal Reserve System The managing body of the Federal Reserve System, which sets policies on bank practices and the money supply. , 1977); and Stephen A. Rhoades, Structure-Performance Studies in Banking: An Updated Summary and Evaluation, Staff Studies 119 (Board of Governors of the Federal Reserve System, 1982). (16.) For a discussion of the HHI, see Stephen A. Rhoades, "The Herfindahl-Hirschman Index," Federal Reserve Bulletin, vol. 79 (March 1993), pp. 188-89. (17.) Banking markets were defined as metropolitan statistical areas (MSAs) or non-MSA counties. Considering markets to be local in extent is appropriate because many banking customers, including many commercial borrowers, are dependent on local institutions. For evidence supporting the local nature of retail banking markets, see Myron Myron (mī`rən), fl. 5th cent. B.C., Greek sculptor. He is supposed to have been a pupil of Ageladas of Argos, but he worked largely in Athens. L. Kwast, Martha Martha, in the New Testament, friend of Jesus, sister of Mary and Lazarus of Bethany. In Christian literature, Martha has been a symbol of the active, as opposed to the contemplative, life. Feast: July 29. Martha personification of the busy housekeeper. Starr-McCluer, and John D. Wolken, "Market Definition and the Analysis of Antitrust in Banking," Antitrust Bulletin, vol. 42 (Winter 1997), pp. 973-95; Gregory E. Elliehausen and John D. Wolken, "Banking Markets and the Use of Financial Services by Small and Medium-Sized Me´di`um-sized` a. 1. Having a medium size; as, a medium-sized man s>. Adj. 1. medium-sized - intermediate in size medium-size, moderate-size, moderate-sized Businesses," Federal Reserved Bulletin, vol. 76 (October October: see month. 1990), pp. 801-17; and Gregory E. Elliehausen and John D. Wolken, "Banking Markets and the Use of Financial Services by Households," Federal Reserve Bulletin, vol. 78 (March 1992), pp. 169-81. For firms operating in more than one local banking market, the HHI was calculated as a deposit-weighted average of the HHIs in the markets they served. (18.) Geocoded data on the small-business-lending activities, of depository institutions reporting under the Community Reinvestment Act Community Reinvestment Act (CRA) Enacted by Congress in 1977, the CRA encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations. have recently become available for analysis. Although these data do permit the calculation of HHIs based on commercial lending, they are of limited value in analyzing cross-sectional patterns of C&J lending behavior because they reflect the activities of a small fraction of depository institutions (1,460 commercial banks and 411 thrifts in 1996) and include only C&I loans of $1 million or less. See Anthony W. Cyrnak, "Bank Merger Policy and the New CRA See Community Reinvestment Act. Data." Federal Reserve Bulletin, vol. 84 (September September: see month. 1998), pp. 703--15, lot a detailed analysis employing these data. (19.) When HHIs were calculated including thrift deposits first including 50 percent of thrift deposits (as is often done in Federal Reserve Board analysis of the competitive implications of proposed bank mergers) and then 100 percent of thrift deposits--the results were similar. (20.) The analyses involving market-level variables (tables 5 and 6) are based on data on institutions that reported branch-level deposit data to the FDIC (Summary of Deposits) or the Office of Thrift Supervision The Office of Thrift Supervision (OTS) was established as a bureau of the Treasury Department in August 1989 as part of a major Reorganization Plan of the thrift regulatory structure mandated by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) (12 U.S.C.A. (Branch Office Survey). Because branch-level data were not available for all institutions that filed Call Reports or Thrift Financial Reports, the number of institutions included in these analyses is slightly smaller than the number in the preceding analyses. (21.) Local banking markets were considered urban if they were MSAs and rural if they were non-MSA counties. For an institution operating in both types of markets, the proportion of deposits held in each type was calculated and the institution was classified as operating in the type in which it held the larger share of its deposits. Assigning as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. institutions to one type of market when they had deposits in both types should not have influenced the results because most institutions operated primarily in the single market. The market in which an institution had the greatest share of its deposits was home, on average, to 92 percent of its total deposits. (22.) Regression regression, in psychology: see defense mechanism. regression In statistics, a process for determining a line or curve that best represents the general trend of a data set. results reported in the technical appendix indicate that when variations in concentration levels and market shines are controlled for, differences between urban and rural markets disappear. (23.) For firms operating in more than one local banking market, the market share was calculated as a deposit-weighted average of the firm's market share in all markets that it served. (24.) For each of the merger-adjusted institutions, the procedure involved aggregating financial data for the 1991 institution and for all institutions that were merged into it between 1991 and 1997. For example, if thrift A acquired thrift B in 1993, the 1997 data for thrift A were compared with the 1991 data for the hypothetical Hypothetical is an adjective, meaning of or pertaining to a hypothesis. See:
Steven Ste´ven n. 1. Voice; speech; language. Ye have as merry a steven As any angel hath that is in heaven. - Chaucer. 2. An outcry; a loud call; a clamor. To set steven to make an appointment. J. Pilloff and Robin A. Prager Prager is a surname, which may refer to:
Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. Howell How´ell n. 1. The upper stage of a porcelian furnace. provided research assistance. |
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