News

Bank CRE Concentration Noted by Federal Reserve Report

November 14, 2022. 

On November 10, the Fed published its semiannual Supervision and Regulation Report, with the following key findings:

• The vast majority of banks maintained capital above regulatory minimums, high liquidity levels, and low loan delinquencies.
• However, in response to growing economic uncertainty, banks increased credit loss provisions during the first half of 2022.

The report included a spotlight on CRE, stating:

“Federal Reserve supervisors remain focused on monitoring banks with concentrations in CRE loans because these banks could be adversely affected by stress in the CRE sector. Supervisors are particularly focused on assessing whether risk management at these banks is commensurate with the level of concentration and the loan composition of a bank’s CRE loan portfolio.”

The Fed also noted that as of June 30, 2022, approximately 28% of insured depository institutions reported a concentration in CRE lending, lower than during the financial crisis but rising over the past year. In Q2, “most CRE-concentrated banks” were regional and community banks.

On November 10, the Fed published its semiannual Supervision and Regulation Report, with the following key findings

News Archive