Q1 2010 CRE OREO and Non-Performing Loans
Commercial real estate problems at US banks soared by 10.6% in the first quarter of 2010 over Q4 2009.
Commercial real estate loans being reported as 30-89 days late increased 16.3% indicating that the trouble in the commercial real estate sector is increasing rather than abating. Reports for 90 Day Late Loans but still accruing increased by 8.5%. Non-accrual commercial real estate loans, a loans last stop on the way to foreclosure, increased 8.9% Commercial OREO balances, commercial real estate acquired by a bank through the foreclosure process increased 14.1%.
The pace at which banks took back commercial real estate through foreclosure kept pace with the prior quarter with REO accounting for about 12.7% of the total pot in Q4 2009 and about 13.1% in the most recent report.
Overall (late, non performing loans, and REO) commercial real estate problems at US banks marched up 11% from $62.2B to $69.1B from Q4 2009 to Q1 2010.The pace of trouble was up with a total increase of 11.03% over the previous quarterly change which was 10.88% which was a slower pace than the 14.6% from the prior quarter.
The 50 Banks with the Top Commercial Real Estate REO Balances made up 40% of all commercial REO held at US banks while the top 50 banks with commercial non-accrual own 45% of those problems.
While the pace of problem loans and REO remains more or less the same the balances continue to grow. This growth in troubled balances shows a failure to act on the part of lenders struggling to workout their CRE loans and avoid write-downs.
With pressure continuing to build it seems highly likely that the commercial real estate market will have to see more distressed deals hitting the market.
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Top 50 US Banks CRE REO Report