Construction loans continue to be a huge problem for banks. In fact construction loan problems at US banks top $85 Billion in the most recent report. Construction loans make up about 30% of the total problem loan and bank owned property balances with banks nationally.
While you might expect to see lenders from Florida, Nevada and California on the list, the banks on this top ten are mostly national lenders, with a few big exceptions. Many local and regional banks went heavy into construction loans during the boom as it because more difficult to compete with larger lenders for residential loans and the CMBS market for commercial mortgages.
Only one of the lenders that made this top ten list is reporting low capital adequacy. Construction loan default rates are high across the country. Many banks are reporting non-current percentages in the high teens. Corus Bank which was recently shut down by the FDIC reported construction loans as 71% non-current.
Nationally banks reported $13,467,709,000 in construction REO and $64,844,478,000 in non-accrual. These numbers point to banks taking back large amounts of troubled construction projects over the next few quarters. Banks will be looking for services to sell these non-performing notes or else hiring firms to assess, recover, manage, repair and liquidate these assets over the next 12-24 months.
|Branch Banking and Trust Company||Winston Salem||NC|
|Bank of America, National Association||Charlotte||NC|
|M&I Marshall and Ilsley Bank||Milwaukee||WI|
|U.S. Bank National Association||Cincinnati||OH|
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