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Small-business lending down in 2012

SNL Report: Large banks leading market

Small-business lending down in 2012

By Harish Mali, SNL Financial staff writer

The largest banks continued their reign over small-business lending in 2012. Aggregate small nonfarm business loans at U.S. commercial and savings banks stood at $539.7 billion at the end of 2012, down by $10.9 billion, or 2%, compared to 2011.

Banks with greater than $10 billion in assets remained the largest holders of nonfarm small-business debt with a market share of 45% at Dec. 31, 2012, compared to 39% at June 30, 2005, and 22% at June 30, 1995.

Most of that growth in market share came at the expense of smaller banks with less than $1 billion in assets. Their market share stood at 34% in 2012, down significantly from 41% at June 30, 2005, and 51% at June 30, 1995.

http://www.ababj.com/images/SNL/32113_exhibit1shareofsmallnonfarmloanspiechart.jpg

For a larger version of the pie charts, please click on the image or click here.

Aggregate small-business loans at banks with total assets between $1 billion to $10 billion grew by 3.75% in 2012. However, those banks with more than $10 billion in assets actually saw a decline in their aggregate balances of 1.79% for the year. The smallest banks, those with less than $1 billion in assets, reported a 1.03% gain for the year with most of that growth coming from loans of between $250,000 and $1 million.

http://www.ababj.com/images/SNL/32113_exhibit2smallbusinessloangrowthbarchart.jpg

For a larger version of the bar chart, please click on the image or click here.

SNL's analysis shows that commercial and savings banks with greater than $10 billion in assets have more than quadrupled their nonfarm business loans portfolio since 1993. Aggregate nonfarm business loans at these banks amounted to $1.5 trillion at Dec. 31, 2012, compared to $283.4 billion in 1993. On the contrary, the growth rate for midsized banks with $1 billion to $10 billion of assets and smaller banks with less than $1 billion in assets is only 60.4% and 67.1%, respectively.

http://www.ababj.com/images/SNL/32113_exhibit3largebankscontinuelinechart.jpg

For a larger version of the chart, please click on the image or click here.

The number of small nonfarm business loans has also more than quadrupled since June 30, 1995. 18.2 million loans were outstanding at Dec. 31, 2012, up from 15.7 million in 2011 and 15.1 million in 2010.

http://www.ababj.com/images/SNL/32113_exhibit4numberofsmallnonfarmbusinessloansbarchart.jpg

For a larger version of the table, please click on the image or click here.

Perhaps not surprisingly then, the top 15 small nonfarm business lenders are large banks. Wells Fargo Bank NA continued atop the rankings with a small nonfarm business loan portfolio of $32.8 billion at Dec. 31, 2012, followed by Bank of America NA and JPMorgan Chase Bank NA, with $26.2 billion and $19.8 billion, respectively.

http://www.ababj.com/images/SNL/32113_exhibit5top15smallnonfarm.jpg

For a larger version of the table, please click on the image or click here.

Wells Fargo Bank NA also holds the second position on the list of largest small farm lenders, while the top slot is occupied by Madison, Wis.-based John Deere Financial F.S.B., a banking subsidiary of the heavy equipment manufacturer, Deere & Co. John Deere Financial's $1.3 billion small farm loan portfolio represented more than two-thirds of its total assets at the end of 2012. Interestingly, more than half of the companies on the list were midsize companies with total assets of $1 billion to $10 billion at Dec. 31, 2012.

http://www.ababj.com/images/SNL/32113_exhibit6smallfarmlenders.jpg

For a larger version of the table, please click on the image or click here.

SNL Financial

SNL Financial is the premier provider of breaking news, financial data, and expert analysis on business sectors critical to the global economy: Banking, Insurance, Financial Services, Real Estate, Energy, Media & Communications and Metals & Mining. SNL's business intelligence service provides investment professionals, from leading Wall Street institutions to top corporate management, with access to an in-depth electronic database, available online and updated 24/7. This article originally appeared on the subscriber side of SNL Financial's website in slightly different form and appears on www.ababj.com as part of a cooperative venture. Each week a selected SNL article will be brought to our readers. Click here to learn more about SNL Financial and to obtain a free trial subscription. 

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