Defaults on commercial real estate loans are beginning to play a larger role in the failure of FDIC-insured institutions than construction loans, according to Trepp.
Six banks closed by the government on Friday – three of which were in Georgia – had $152 million of nonperforming loans, 44% of which were CRE mortgages. Roughly 37% of the NPLs were construction loans.
"We have seen a shift over the last several quarters with commercial mortgages contributing to a larger portion of the distress" said Matt Anderson of Foresight Analytics and a resident CRE expert at Trepp.
The failure of the six banks brings the total for this year up to 125. Last year the Federal Deposit Insurance Corp. (FDIC) closed 140 bank institutions.
As of June 30, banks and thrifts held $1.01 trillion of CRE loans (not including multifamily loans) on their books with 4.28% considered seriously delinquent, up from 2.89% a year ago, according to FDIC figures.
Banks also held $383 billion of construction and development loans with 16.9 % considered seriously delinquent (90-days or more past due), compared to 13.5% a year ago.
Meanwhile, FDIC has 829 banks with $403 billion in assets on its "problem" list.
Trepp is a New York-based firm that tracks the performance of CMBS.