Office of Advocacy

Explanation of the Data

the dollar value of small business loans relative to total bank assets;
the dollar value of small business loans relative to total business loans;
the dollar value of small business loans relative to total deposits;
the dollar value of small business loans; and
the total number of small business loans.

An explanation of the data follows. Readers may find it beneficial to refer to the sample table on page 9.

Column 1. The summary statistic found in the first column is an aggregate measure of small business lending activity, the sum of the decile rankings found in columns 2 through 6. (A decile ranking is a measure of where the individual bank falls in the distribution of the statistic defined by the column. Decile rankings range from 1 to 10, with 10 meaning the individual bank is in the top 10 percent of all banks within the state.) A summary statistic value of 50 indicates that the bank is in the top decile in each of the five categories. A value of 5 indicates that the bank is in the bottom decile in each of the categories. The average value for all states for this statistic is 27 out of a possible 50.

Column 2. This column measures the ratio of small business loans to total bank assets. A ranking of 10 means that the bank is in the top decile of the state loan-to- asset distribution. The bank has an outstanding record in lending to small business; it is willing to risk a larger portion of its assets in small business lending. If the number is a 2, it means the bank falls in the next to the lowest decile for this variable, that is, among the lowest 20 percent of all banks in the state. The conclusion to be drawn is that this bank has not committed much of its capital to small loans. The average small business loan-to-asset ratio for all states is 11 percent (see Table 1).

The highest loan-to-asset ratio for any bank in 1995 was 66 percent, clearly an outstanding record in supporting smaller firms. At the opposite end of the distribution, 75 percent of the banks had loan-to-asset ratios of less than 1 percent.

Column 3. The third column measures the decile ranking of the ratio of small business loans to total business loans. The sample table entry 9 means this bank falls within the second highest decile. Between 80 and 90 percent of the bank s lending is in small loans. The maximum value of this ratio is one, meaning that all loans are small loans of less than $250,000, and this is the case for many small banks. The average small business loan to total business loan ratio for all states is 66 percent (Table 1).

Column 4. This column gives the decile ranking of the ratio of small business loans to bank deposits. If the number is close to 10, it means that the bank ranks near the top in reinvesting its deposits in the community s small firms. Technically, there is no geographical information about the borrower, but most researchers accept that if the loan is small, it is more likely to be invested locally.

The maximum small business loan to deposit ratio is 75 percent; however, the average is only 13 percent (Table 1).

Column 5. This column shows the decile ranking of a bank's dollar value of small business loans outstanding.

Column 6. This column measures the bank s decile ranking for the total number of small business loans.

To repeat, the summary statistic is the sum of the decile rankings found in columns 2 through 6. A summary statistic value of 50 indicates that the bank ranks in the top 10 percent in all categories of small business lending (where small business lending is defined as all commercial, industrial, and commercial real estate loans of less than $250,000). A value of 5 indicates the bank ranks in the bottom 10 percent in all categories.

Additional Data

Column 7. Here the asset size class of the bank is defined. The classes are:

Under $100 million
$100 million to under $300 million
$300 million to under $500 million
$500 million to under $3 billion
$3 billion and over

The average decile values of the summary statistic for the different bank size categories are:

Under $100 million26.8
$100 million to $300 million29.4
$300 million to $500 million28.5
$3 billion and over24.5

Column 8. This column measures how well a bank is doing in its own asset size class relative to the summary ranking found in column 1. Thus, a 1 in this column means that the bank ranks first in its asset size class. A 10 means that it ranks 10th in its asset size class. The number of banks in each asset size class can be found at the end of this report. The total includes all commercial banks filing call reports.

Columns 9 and 10. These two columns list measures of the dollar amount of small business loans in thousands (column 9) and the number of small business loans made by the bank (column 10) for loans of less than $100,000.

Columns 11 and 12. Displayed here are two additional decile rankings of loan-to- asset ratios: column 11 shows the ratio of loans under $100,000 to the bank s assets; and column 12 displays the ratio of loans under $1 million to the bank s assets.6 This information allows a small business to find a bank that ranks high in the desired loan size category. A firm looking for a $50,000 loan might be better served by banks making more loans under $100,000 than a bank concentrating on $1 million loans.

Column 13. This column is the decile ranking for the ratio of total small business and small agricultural loans (under $250,000) to the bank s total assets.