With $1.4 trillion in commercial real estate loans coming due the next four years, someone's going to take a bath — and the water isn't warm.

In absolute terms, three of the country's biggest lenders have the industry's largest CRE books: Wells Fargo, Bank of America Corp. and JPMorgan Chase. But these banks may also have the fewest problems when it comes to the waves of office-building owners, apartment landlords, retailers and other business borrowers that could have a hard time servicing their debts.

Industry watchers are much more worried about regional lenders whose loan books are a fraction of the size of the financial giants' — but have a greater percentage of their assets tied up in CRE loans. Small and midsize banks, which branched heavily into the asset class in recent years, are more vulnerable to local real estate trends, and they don't have muscular credit card or investment banking operations to offset CRE losses. All banks have to cope with high unemployment, rising vacancy rates and depressed real estate values, but the megabanks have the financial heft to handle the pain, market watchers say.

The giants "are far better diversified than some of these smaller institutions. They have their commercial, residential [mortgage] exposure. However, they have their proprietary trading desk. They have their credit card loans," said David Dietze, chief investment strategist at Point View Financial Services in Summit, N.J. "I think that is going to help them better weather the storm than some of these smaller institutions that really got overboard in this area."

In recent weeks, a number of market watchers have said that a storm is brewing on the CRE front. The Congressional Oversight Panel said in a report Thursday that CRE is a "crisis on the horizon" that "could touch the lives of nearly every American." A flood of foreclosures could depress the job market for years to come, the panel said in a 189-page report. It estimates that CRE losses could reach $300 billion in coming years, causing more bank failures and possibly hindering scores of lenders that received bailout money from returning their federal aid.

The panel said banks with assets of $1 billion to $10 billion have the highest exposure to CRE, followed by those with assets of $100 million to $1 billion.

Dietze said national lenders like Wells Fargo, Bank of America and JPMorgan Chase may have a "little bit more sway" than local lenders when it comes to recovering CRE loans. Business borrowers tend to have multiple lenders, and they may be quicker to burn a community bank than risk hurting their relationship with a major institution, he said.

When it comes to lending, those three banking companies are in a class of their own. According to SNL Financial, Wells Fargo had $98 billion in CRE loans at the end of the third quarter. Bank of America had $96 billion and JPMorgan Chase, $67 billion.

The other institutions rounding out the top five CRE lenders — MetLife Inc. and PNC Financial Services Group Inc. — had about $31 billion and $30 billion in CRE loans, respectively. Citigroup Inc., the third-largest U.S. banking company by assets, ranks No. 10 in CRE loans, with about $21 billion.

While the biggest banks have huge portfolios, their actual exposure to CRE is considered quite low when taken as a percentage of their total loans and leases. Wells Fargo's CRE loans are about 11.6% of loans, versus 10% for both Bank of America and JPMorgan Chase. The percentage tends to rise the further you move down in asset size.

Among the large regionals, PNC's CRE percentage of loans is about 18%; U.S. Bancorp, 15%; Regions Financial Corp., 27%.

Others may be even more vulnerable.

"It is the small regionals or super community banks that have this excessive exposure to commercial real estate," said Keith Leggett, senior economist at the American Bankers Association. "What happens is the larger institutions, just by definition, have a whole lot more commercial real estate loans. That doesn't necessarily mean that they have greater risk."

Jamie Cox, managing partner at Harris Financial Group in Colonial Heights, Va., said the size of a bank's CRE portfolio doesn't always matter when it comes to determining losses. The location of the borrower and a lender's underwriting standards are the key factors, he said. For instance, New York Community Bancorp in Westbury has roughly 94% of its loans in CRE, but its losses have been well below its peers', since it tends to extend conservative loans to New York-area landlords, who rarely default.

"The absolute amount of CRE exposure is sometimes misleading," Cox said. "You have to look at the location."

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