The final quarter of 2010 saw an overall reduction of late and non-performing commercial real estate loans and Commercial REO (distressed bank assets) by about 2.3% or $1.43 Billion dollars.
The most significant improvement in conditions was a 29% decrease in owner occupied commercial real estate loans being reported as 90+ days late.
Numbers improved for 30-89 day late, 90+ day late and non accrual owner-occupied commercial property loans.
Non-owner occupied did not fair as well with a 10.7% increase in 90+ day late loans though 6% fewer institutions had said loans to report.
While overall ‘as reported’ distressed commercial real estate loans and REO improved this likely does not tell the whole distressed commercial property inventory story. From September 2010 to December 2010 the total number of banks tracked in BankProspector decreased by 1.3%, a reduction by 95 banks.
Thirty of these 95 banks are listed on the FDIC’s failed bank list presumably the other 65 merged or were acquired. In the case of the failed institutions most of the assets transfer to the acquiring institution with loss sharing according to the Assumption and Purchase Agreements, the FDIC however is still acquiring assets and these assets would obviously no longer be reported by any institution leaving a sort of ‘ghost’ inventory.
The updated Commercial REO Report is now available for download. Look for the upcoming Non-Performing Loans Reports as well as the Multifamily REO Report due out shortly.