Economic news

Factbox-US regional lenders’ commercial real estate exposure in spotlight after carnage

2024.02.05 12:16


© Reuters. Midtown Manhattan is seen from one of many high flooring of the newly constructed 30 Park Place in the Tribeca neighborhood of New York January 21, 2015. REUTERS/Brendan McDermid/File Photo

(Reuters) – A sell-off in regional U.S. financial institution shares triggered by New York Community Bancorp (NYSE:) final week has introduced the group’s exposure to commercial real estate (CRE) in focus for analysts and traders alike.

The trade has grappled with looming losses on CRE mortgage books since early 2023, because the sector confronted the dual challenges of financing difficulties amid excessive rates of interest and decrease workplace occupancy on account of widespread adoption of distant work.

Investors concern weak demand for places of work may set off a wave of defaults and put stress on banks and different lenders, that are hoping to keep away from promoting CRE loans at important reductions.

The CRE worries lengthen throughout the banking sector, with a number of giants together with Wells Fargo shoring up rainy-day funds over the past 12 months. Meanwhile, smaller lenders have sought to cut back the chance by elevating their mortgage loss provisions and shedding these portfolios via gross sales to non-public fairness corporations.

Here is the commercial real estate exposure of some outstanding U.S. regional banks:

Bank Assets CRE Construction

focus focus

ratio as of Q3 ratio as of

2023 Q3 2023

New York Community $116.3 bln 477% 30%

Bancorp’s

subsidiary,

Flagstar Bank

Valley National $61.18 bln 472% 66%

Bancorp

Columbia Banking $52.17 bln 323% 58%

Systems’ Umpqua

Bank

Bank OZK (NASDAQ:) $34.24 bln 345% 200%

City National Bank $26.14 bln 310% 46%

of Florida

BCI Financial Group $26.05 bln 309% 46%

WaFd subsidiary, $22.64 bln 371% 113%

Washington Federal (NASDAQ:)

Bank

Axos Financial (NYSE:) $20.83 bln 356% 135%

Pacific Premier $20.28 bln 312% 17%

Bancorp

Independent Bank (NASDAQ:) $19.37 bln 302% 45%

Corp

* Note: Data as of the third quarter of 2023

* CRE focus ratio refers back to the extent to which a financial institution’s mortgage portfolio consists of commercial and multifamily mortgages

* Source: Real estate information supplier Trepp, utilizing a mixture of financial institution SEC filings and name sheets

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