These Banks Increased Their Commercial Real Estate Exposure In Q1
Banks and traditional lenders remain cautious in their commercial real estate lending practices despite the new administration's push for financial deregulation and the dismantling of Dodd-Frank.
As commercial valuations continue to rise, exceeding pre-recession levels reached in 2007, regulators are worried inflated commercial real estate prices will lead to the next bubble. Regulators have recommended lenders keep no more than 300% of risk-based capital in commercial real estate, Trepp reports. Below are three banks that increased their commercial property exposure the most in Q1.
In the large bank category, banks with at least $500M in CRE holdings on the books prior to Q1, Trepp found First National Bank of Pennsylvania, Goldman Sachs and Citizens Bank increased their commercial property holdings by the highest amount last quarter. First National Bank's commercial holdings jumped by $3.2B or 62.7%; Goldman Sachs increased its CRE exposure by $1.1B, or 27.3%; and Citizens Banks' commercial property assets increased by $1.09B, or 10.5%.
Trepp notes many of the banks that posted sizable increases in CRE exposure did so through acquisitions. First National Bank experienced a boost in its CRE portfolio after buying out Yadkin Bank for $7.2B. Enterprise Bank & Trust, the midsize bank that posted the highest increase in CRE exposure in Q1, rose 37.3%, or $409M. Enterprise bank acquired Missouri's Eagle Bank & Trust, increasing its CRE exposure by $350M in loans.
CORRECTION, MAY 16, 9:17 a.m. ET: An earlier version of this story incorrectly listed the dollar increases by the banks and has been updated.