The delinquency rate on commercial real estate loans at U.S. banks went up in the fourth quarter of 2022 after declining sharply a quarter earlier.
Loans more than 30 days past due and those in nonaccrual status constituted 0.65% of CRE loans at the end of the quarter, up from the delinquency rate of 0.58% as of Sept. 30, 2022, according to an S&P Global Market Intelligence analysis.
Regulators define commercial real estate loans as construction and land development loans + multifamily loans + nonowner-occupied nonresidential property loans + commercial real estate loans secured by collateral other than real estate.
Despite the uptick in the fourth quarter of 2022, the CRE loan delinquency rate was down 6 basis points from the end of 2021.
More banks exceed CRE loan concentration guidance
The number of U.S. banks exceeding regulatory guidance on CRE loan concentration increased for the seventh straight quarter.
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The count climbed in the fourth quarter to reach 567 as of Dec. 31, 2022, from 539 at the end of the linked period and 421 a year ago. The number includes banks that exceed either of two thresholds: construction loans totaling at least 100% of risk-based capital; or CRE loans equal to at least 300% of risk-based capital levels, with at least 50% growth in CRE loans over the last 36 months.
Trustmark joins list of banks that exceed guidance
Mississippi-based Trustmark National Bank is the latest entrant in the list of the 20 largest U.S. banks that exceed the CRE guidance, with the bank's construction and development loan concentration at 106.0% as of Dec. 31, 2022.
New Jersey-based Valley National Bank, with $57.45 billion in total assets, was the largest bank to exceed the CRE guidance in the fourth quarter. The bank's CRE loan balance grew 72.9% in the 36 months ended Dec. 31, 2022, and CRE loans represented 439.7% of Tier 1 capital plus allowance for loan and lease losses.
