REOC San Antonio
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Kim Gatley
enior Vice President & Director of Research at REOC San Antonio

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CRE Lending Expected To See Greater Scrutiny

Commercial real estate lending volume appears to be slowing as the broader U.S. economy cools.  Earlier this month, the Federal Deposit Insurance Corp. (FDIC) signaled it would exercise greater scrutiny over banks that have significant exposure to commercial real estate loans.

The volume of commercial real estate loans held by banks recently peaked at more than $2.7 trillion, according to the FDIC.

While most commercial real estate-concentrated banks felt some stress from the pandemic, loan delinquencies in the sector remain at historically low levels, and aggregate loan losses have been nominal.

Where issues may be forthcoming from the pandemic are longer-lasting effects on specific property types because of permanent life and work changes, such as larger adoption and acceptance of remote work. The FDIC says that raises concerns around property values, risk ratings, specific geographic markets, data reporting and other measures.

The FDIC says some banks with significant commercial real estate portfolios haven’t performed sufficient risk analysis, despite having an elevated risk profile.

Read entire article: FDIC to Exercise Greater Scrutiny in Commercial Real Estate Lending as Deal Volume Slows (San Antonio Business Journal, 8.17.22)


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