BOCA RATON, Fla., March 11, 2025 (GLOBE NEWSWIRE) — The U.S. banking system is on a precipice as exposures to commercial real estate grow and banks grapple with high interest rates, according to an analysis by a finance professor at Florida Atlantic University<\/a>.<\/p>\n Of the 158 largest banks, 59 in the country are facing exposures to commercial real estate greater than 300% of their total equity capital, as reported in the fourth quarter 2024 regulatory data and shown by the U.S. Banks\u2019 Exposure to Risk from Commercial Real Estate\u00a0screener<\/a>.<\/p>\n The banks most at risk are Flagstar Bank, Zion Bancorp, Valley National Bank, Synovus Bank, Umpqua Bank and Old National Bank, each of which has more than $50 billion in total assets, an analysis of the screener shows.<\/p>\n \u201cRegulators have been putting pressure on banks to reduce their exposures. However, it\u2019s a very difficult thing to do without sending a signal of weakness to the market and creating more problems,\u201d said Rebel A. Cole<\/a>, Ph.D., \u00a0Lynn Eminent Scholar Chaired Professor of Finance in FAU\u2019s College of Business<\/a>. \u201cTo get around this, many banks are \u2018extending and pretending\u2019 by restructuring their loans.\u201d<\/p>\n The U.S. Banks\u2019 Exposure to Risk from Real Estate screener<\/a>, a part of\u00a0the Banking Initiative at Florida Atlantic University<\/a>, measures the risk to exposure from commercial real estate at the 158 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 (FFIEC) Central Data Repository, Cole calculates each bank\u2019s total CRE exposure as a percentage of the bank\u2019s total equity. Bank regulators view any ratio over 300% as excess exposure to CRE, which puts the bank at greater risk of failure.<\/p>\n Troubled debt restructuring for commercial construction, multifamily, owner-occupied and owner-non-occupied mortgages tripled since 2023. They reached $18 billion in the fourth quarter of 2024, up from $6 billion in Q2 2023, according to data from the FFIEC. While non-owner occupied nonfarm, non-residential accounts for more than half of these amounts, there is also serious deterioration in multifamily and commercial construction loans.<\/p>\n \u201cBanks choose to extend these loans, hoping interest rates might drop. While the Fed did cut rates,\u201d Cole said. \u201cIf a loan is maturing from five years ago in today\u2019s rate environment, rather than refinance it with today\u2019s terms, they will restructure the loan under the same terms from five years ago for another year. This all depends on interest rates falling, which is not likely to happen this year.\u201d<\/p>\n Among banks of any size, 1,788 have total CRE exposures greater than 300%, up from 1,697 in Q3; 1,077 have exposures greater than 400%, up from 971 in Q3; 504 have exposures greater than 500%, up from 426 in Q3; 216 have exposures greater than 600%, up from 166 in Q3.<\/p>\n For comparison, the aggregate industry total CRE exposure is 132% of the total, unchanged from the third quarter of 2024.<\/p>\n BOCA RATON, Fla., March 11, 2025 (GLOBE NEWSWIRE) — The U.S. banking system is on a precipice as exposures to commercial real estate grow and banks grapple with high interest rates, according to an analysis by a finance professor at Florida Atlantic University. Of the 158 largest banks, 59 in the country are facing exposures […]<\/p>\n","protected":false},"author":3,"featured_media":355612,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/ml.globenewswire.com\/Resource\/Download\/1a1091ac-c74a-4860-b572-5c080b171c9b","fifu_image_alt":"","footnotes":""},"categories":[57166],"tags":[],"class_list":["post-355611","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-globenewswire"],"acf":[],"_links":{"self":[{"href":"https:\/\/dailybanglanewspapers.com\/news\/wp-json\/wp\/v2\/posts\/355611","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dailybanglanewspapers.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dailybanglanewspapers.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dailybanglanewspapers.com\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/dailybanglanewspapers.com\/news\/wp-json\/wp\/v2\/comments?post=355611"}],"version-history":[{"count":0,"href":"https:\/\/dailybanglanewspapers.com\/news\/wp-json\/wp\/v2\/posts\/355611\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dailybanglanewspapers.com\/news\/wp-json\/wp\/v2\/media\/355612"}],"wp:attachment":[{"href":"https:\/\/dailybanglanewspapers.com\/news\/wp-json\/wp\/v2\/media?parent=355611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dailybanglanewspapers.com\/news\/wp-json\/wp\/v2\/categories?post=355611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dailybanglanewspapers.com\/news\/wp-json\/wp\/v2\/tags?post=355611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/ml.globenewswire.com\/media\/ODE4YTFmMWMtYWRkMy00YTY2LTk3NjUtOTA2Nzk4ZGUzZjEwLTExOTkxMzItMjAyNS0wMy0xMS1lbg==\/tiny\/Florida-Atlantic-University-Co.png\")
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