U.S. Banks With the Most Commercial Real Estate Exposure
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Today, there is roughly $5.7 trillion in commercial real estate debt outstanding—with U.S. banks holding approximately half of this total on their balance sheets.
The commercial property sector, which includes office, retail, healthcare, and multi-family properties, has faced mounting pressures amid high interest rates and lower occupancy levels. Given these headwinds, it poses the risk of higher defaults and steep loan losses in a sector that has not fully recovered since the collapse of Silicon Valley Bank last year.
This graphic shows the U.S. banks with the highest exposure to the commercial real estate sector, based on analysis from UBS.
Top U.S. Banks, by Share of Commercial Property Loans
Here are the banks with the greatest concentration of commercial property loans as of the third quarter of 2023:
Bank
Commercial Real Estate
Share of Total Loans
Total Commercial Real Estate
Loans
Total Assets
Bank OZK
68.6%
$17.4B
$32.8B
Home BancShares, Inc.
63.0%
$9.0B
$22.0B
Pacific Premier Bancorp, Inc.
63.0%
$8.4B
$20.3B
International Bancshares Corporation
59.3%
$4.7B
$14.9B
New York Community Bancorp Inc
57.0%
$49.0B
$111.2B
Independent Bank Group, Inc.
56.1%
$8.0B
$18.5B
Valley National Bancorp
54.9%
$27.5B
$61.2B
CVB Financial Corp.
50.2%
$4.5B
$15.9B
Independent Bank Corp.
48.9%
$7.0B
$19.4B
Axos Financial, Inc.
48.6%
$8.3B
$20.8B
Simmons First National Corporation Class A
48.2%
$8.1B
$27.6B
United Bankshares, Inc.
46.2%
$9.8B
$29.2B
WaFd, Inc.
45.9%
$8.1B
$22.5B
ServisFirst Bancshares Inc
44.9%
$5.2B
$16.0B
WesBanco, Inc.
43.4%
$4.9B
$17.3B
Banner Corporation
42.9%
$4.6B
$15.5B
TowneBank
42.6%
$4.8B
$16.7B
Renasant Corporation
42.4%
$5.3B
$17.2B
FB Financial Corporation
42.3%
$4.0B
$12.5B
Glacier Bancorp, Inc.
42.0%
$6.8B
$28.1B
As the above table shows, the vast majority of banks with the greatest exposure are small and medium-sized financial institutions.
Bank OZK, based in Arkansas, has the highest proportion of commercial property loans, at 68.6% of total loans. As one of the country’s most prominent lenders to Manhattan property developers, its share price has outperformed the S&P 500 by tenfold since going public 27 years ago.
New York Community Bancorp, the only big bank on the list, has $49 billion in commercial property loans, making up 57% of its overall loans. At the height of regional banking turmoil last year, one of New York Community Bancorp’s subsidiaries took over the failed Signature Bank in a multi-billion dollar deal.
Since the bank reported $2.7 billion in losses in the fourth quarter of 2023, its share price has plummeted roughly 68%. The surprise loss—which was revised from $252 million—prompted the bank to seek a $1 billion lifeline from investors to help shore up confidence in the institution. Former U.S. Treasury Secretary Steven Mnunchin was a major investor in the deal.
Like New York Community Bancorp, a number of other regional banks have seen their share prices lag due to its fallout.
Commercial Property Debt Concentrated in Small Banks
Below, we show how the majority of commercial real estate loans are found in small U.S. banks, which are those with assets of $20 billion and under:
With 56.1% of all commercial property loans, small U.S. banks face the highest risk compared to other bigger banks.
Given the high share of loans, banks may run the risk of failure especially if credit losses accelerate and valuations decline. At the same time, it could be more challenging to refinance debt as valuations deteriorate.
While these troubles have begun to emerge over the last year, there is also the likelihood that losses could continue over the next several years. In fact, after the global financial crisis, credit losses peaked two years after delinquencies hit their highest point.
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
