Community Banks Restrict Credit

NEW YORK - Six out of 10 community bankers say they are applying more stringent lending standards than they did a year ago, according to a survey by an accountants' group.

In the survey, 2,000 community bank loan officers nationwide were asked about lending practices and the economy.

Of the 311 respondents, 93% represented banks with assets $50 million to $200 million, said the group, the Private Companies Practice Section of the American Institute of Certified Public Accountants.

The loan officers appeared tighter-fisted than their counterparts at larger banks, which recent Federal Reserve surveys have shown are increasingly inclined to loosen up after a period of tight credit.

The imbalance between large and small banks "may be one significant reason for the economy's uneven recovery," said Jerrell A. Atkinson, chairman of the private companies section and partner in the Albuquerque-based firm of Atkinson & Co.

About two-thirds of the small-bank lenders said they were demanding more collateral from small-business customers, while more than half said they were employing more restrictive covenants and requiring more personal guarantees.

Almost one lender in 10 indicated that creditworthy borrowers had been turned away.

In one survey of senior bank loan officers early this year, the Federal Reserve found that one-third of executives from large banks had tightened standards in the most recent three months, Mr. Atkinson said.

Asked when credit would become more available, 35% of the community bankers predicted the third quarter of 1991, while 33% said by the first quarter of 1992. Only 4% said it would take as long as the second quarter of 1993.

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