CenterState Bank Corp., People's United Financial Inc. and Pinnacle Financial Partners Inc. are among the U.S. banks with significant exposure to commercial retail borrowers as the group continued to report lending activity in first-quarter filings.
CenterState's $1.6 billion in outstanding loans to retail commercial real estate represented 13.4% of its gross loans, according to S&P Global Market Intelligence data. People's United and Pinnacle Financial both reported exposure representing more than 10% of their total loan portfolios.
Among reporting lenders, Bank of America Corp., Wells Fargo & Co. and U.S. Bancorp had high retail exposure by total loan balance.
During first-quarter earnings season, many banks have disclosed their lending activity around industries particularly vulnerable to the economic fallout from the coronavirus pandemic. The bulk of the nation's shopping centers and regional malls went dark as state and local authorities closed nonessential businesses and implemented stay-at-home orders.
Simon Property Group Inc., the leading retail landlord in the U.S., on May 1 began reopening retail properties it had closed. But while some signs of a potential retail renaissance have emerged, there is uncertainty about when and to what extent consumer behavior will return to the previous normal, and industry experts expect a glut of retail store closures and bankruptcies in the months ahead. Ross Prindle, managing director and global head of the real estate advisory group at Duff & Phelps, said his retail operator clients are consumed with tenant negotiations at present, working with retailers on rent relief, rent deferment and lease restructuring.
"Market rents are declining. Leasing is pretty much nonexistent," Prindle told S&P Global Market Intelligence. "Anywhere between 10% and 15% of tenants may not even return despite rent relief. I think that's even going to be higher in the restaurant space."
Among banks that have disclosed figures, First Financial Bancorp. and Wintrust Financial Corp., had high proportional exposure to the restaurant industry — one the hardest-hit retail segments. First Financial's $455 million in franchise restaurant loans represented 4.9% of its gross loans at quarter-end.
Wintrust's $1.2 billion in loans to restaurants and food services operators represented 4.2% of its gross loans.
Wells Fargo, Citizens Financial Group Inc. and Truist Financial Corp. had high exposure to restaurants by total loan balance, with outstanding gross loans totaling $5.8 billion, $2.9 billion and $2.5 billion, respectively.
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