The Senior Loan Office Survey revealed some interesting movement this quarter, especially in CI and CRE lending (see charts below). Demand, credit tightening and spread to COFs all had big reversals in the 4th quarter. The levels that they fell to have not been seen since the pandemic or 2008. We highlighted a few relevant charts below. The full survey is linked at the bottom. The Senior Loan Office Survey has been conducted four times a year since 1992 and it poses questions about the domestic loan market and breaks the results down into small and large banks.
C&I Loan Credit Standards – The percentage of banks tightening credit standards jumped to almost 40%, which dates back to 2020 and 2008.
C&I Loan Demand – After continued growth since 2020 the 4th quarter saw a very large pullback.
C&I Loan Spread above COF – This is very important. Spreads and NIM have widened a good bit this year. This is why we have been so focused on call protection and structured duration in the bond portfolio. The ability to lock in this spread/NIM has been rare over the past 15.
CRE Credit Standards – The percentage of banks tightening credit standards jumped to almost 60%, mirroring 2020 and 2008.
CRE Loan Demand – Big drop in CRE Demand, again not seen since 2020 and 2008.
