1. Excess Reserve Surge Douglas Downing Robert Nielsen Seattle Pacific University

4. 1) slowdown causes less loan demand? 2) bank lending cutback causes slowdown? Lending cutback because of 2a) increased caution / fear of default 2b) Fed paying interest on reserves

8. Loan to asset ratio (sample)

9. BankAmerica annual report ² We’ve also pledged to increase our own spending with small- and medium- sized companies by $10 billion over the next five years, because many small businesses told us their biggest challenge is not access to credit, but lack of demand*** for their products and services.

10. Our primary liquidity objective is to ensure adequate funding for our businesses throughout market cycles, including periods of financial stress. To achieve that objective, we analyze and monitor our liquidity risk, maintain ***excess liquidity and access diverse funding sources including our stable deposit base.

11. US Bank annual report However, although we are growing commercial loan commitments, business customers remain cautious, and many are not fully utilizing their lines of credit

12. US Bank In 2009, the Company grew its loan portfolio and increased deposits significantly, both organically and through acquisition,

13. US Bank Excluding acquisitions, average loans and deposits increased $7.7 billion (4.7 percent) and $19.0 billion (14.2 percent), respectively, over 2008.

14. U.S. Bank Despite this activity, the Company has experienced a decrease in average commercial loan balances as customers continued to pay down their credit lines and strengthen their own balance sheets.

15. Sentiment analysis Challenges: spin and boilerplate language

16. Summary weak loan demand. strong loan demand. stricter standards.. excess liquidity... Total Reports Year: 2007 9 2 20 7 29 Year: 2009 22 5 23 13 35 Year: 2011 22 3 29 21 43

17. Weak loan demand phrases weak loan demand slowdown in loan demand absence of robust loan demand soft\&loan demand softened\&loan demand weaker\&loan demand moderate loan demand reduced loan demand sluggish\&loan demand low loan demand lower loan demand challenging market environment

18. Weak loan demand phrases weakness\&economy weak economic conditions loan demand down loan demand was down declining loan demand meager loan demand tepid\&loan demand softness\&loan demand limited\&loan demand tempering loan demand customer demand\&decreased loan demand\&subdued lower customer demand

19. Weak loan demand phrases reduced appetite for credit products weak market conditions lower industry sales suppress loan demand credit line utilization\&low

20. Tighter loan standards: phrases not aggressively pursue\&loans exit from lending activities suspended\&lending discontinue stricter approval requirements tighten\&underwriting tightened\&underwriting tightening\&underwriting more stringent underwriting standards stricter underwriting

21. Tighter loan standards: phrases underwriting standards\&were tightened underwriting standards became more disciplined conservative underwriting standards raised underwriting standards underwriting standards\&reduce credit risk enhanced underwriting standards underwriting standards are higher de-risking efforts more stringent credit