30 Oct 2024 1:35 pm
US banks are sitting on $750 billion in real estate losses—an eye-watering figure that exceeds losses during the 2008 financial crisis. The banking sector’s exposure to real estate losses weakens its stability and signals deeper issues within the commercial property market.Blackvegetable » 30 Oct 2024, 1:02 pm » wrote: ↑ How many americans are counted on private payrolls?
Data Analysis: More Banks at Risk of Failure as CRE Loans Reprice
More than 60 of the largest banks in the country are at increased risk of failure due to their commercial real estate (CRE) exposures, according to a data analysis from a finance expert at Florida Atlantic University.
Sixty-seven banks have exposure to commercial real estate greater than 300% of their total equity, as reported in their first quarter 2024 regulatory data and shown by the U.S. Banks’ Exposure to Risk from Commercial Real Estate screener.“This is a very serious development for our banking system as commercial real estate loans are repricing in a high interest-rate environment,” said Rebel Cole, Ph.D., Lynn Eminent Scholar Chaired Professor of Finance in FAU’s College of Business. “With commercial properties selling at serious discounts in the current market, banks eventually are going to be forced by regulators to write down those exposures.”The U.S. Banks’ Exposure to Risk from Real Estate screener, a part of the Banking Initiative at Florida Atlantic University, measures the risk to exposure from commercial real estate at the 157 largest banks in the country with more than $10 billion in total assets. Using publicly available data released quarterly from the Federal Financial Institutions Examination Council Central Data Repository, Cole calculates each bank’s total CRE exposure as a percentage of the bank’s total equity. Bank regulators view any ratio over 300% as excess exposure to CRE, which puts the bank at greater risk of failure.
https://www.fau.edu/newsdesk/articles/c ... University.