American Hartford Gold’s Post

How is CRE concentration measured and evaluated by regional banks? According to public guidelines from the FDIC, CRE holdings as a proportion of total risk-based capital above 300% may indicate a lender is exposed to significant risk of CRE concentration. Check out the article for more details. #Distresseddebt #CRE #NPLs #commercialrealestate https://lnkd.in/e6aGX_4R

Ohhh this is interesting...now the higher interest rates are starting to affect banks that have large portfolios of its assets yeilding 3% from the ZIRP (Zero Interest Rate Policy) era ⤵ 1️⃣ BofA has an $840 billion securities portfolio that's still yielding less than 3% 2️⃣ Majority of BofA mortgage portfolio, which includes a lot of mortgages priced at less than 3%, has a projected average life of more than 15 years 3️⃣ BofA is also charging off more than $1 billion per quarter in bad loans. 4️⃣ All the same, it's hard for any bank to make money if its assets are yielding 3% while its funding cost is north of 6%. 😲 Per Independent Bank analysts @christopher whallen "If your asset returns are below peer and your credit losses are above peer, then where does that leave you? In a very bad place."

https://lnkd.in/gmHZR9ci The results from the nation's second-largest lender offer the latest example of how even the biggest banks are increasingly challenged by high interest rates.

Most large U.S. banks are well-prepared to handle potential CRE losses in 2024, thanks to a focus on selective lending and strong credit protection. And though overall confidence about CRE lending remains muted, credit loss forecasts among top banks with CRE exposure have not spiked in recent weeks. But how will this outlook evolve as the market continues to shift? https://bit.ly/3M9Gu1o #CRE #BankingResilience #MarketInsights

This is a great graphic highlighting the commercial real estate exposure of the top U.S. banks. The average range for the Regionals is between 10% and 15%.

📉 **ECB's April 2024 Survey on Bank Lending Distribution in the Eurozone** On Tuesday, April 9, the European Central Bank revealed the results of its survey on bank lending distribution in the Eurozone for April 2024. 🔍 **Key Findings**: - Eurozone banks reported a slight net tightening of their credit standards, reflecting stricter loan approval criteria. - Despite banks' expectations of a recovery, the demand for loans from businesses saw a significant decline. For more details, check out the full survey here: 🔗 [April 2024 euro area bank lending survey](https://lnkd.in/ei9r9YmY) #ECB #BankLending #Eurozone #Survey #Economy

Real estate and pain for regional/small banks? Will this roil into interest rates and inventory and other investment needs?

🏛 📈 I shared our winter bank lending forecast on Monday, which I’m afraid reports low growth across the eurozone this year and next, especially for the mortgage market. For a deeper dive into the data, I spoke to our Chief Economist Martin Beck about how well the banking sector is coping with weakened loan demand and the outlook for European financial markets. Have a listen and leave any comments below 👇 https://lnkd.in/ex3VDy6b #EYFinancialServices #Eurozone #Banking

REGIONAL BANK STOCKS UNDER RENEWED PRESSURE Regional bank stocks are again under pressure. Indeed, yesterday KRE, the SPDR S&P Regional Banking ETF, fell 1.69% and closed at 49.54, its lowest since Tuesday, December 12. And at last look KRE was down another 1.01% today.   Probable reasons for the renewed weakness include the following:   · Yesterday the benchmark long bonds, the 10- and the 30-, also closed at their lowest since December 12. Not a coincidence! On the contrary, the new low revived investor fears about yet-to-be-resolved mismatches in bank loan portfolios and more specifically about the magnitude of unrealized losses in “risk free” treasuries still held by some regionals.      · Yesterday the Mortgage Bankers Association (MBA) reported that delinquency rates on mortgages backed by commercial properties increased in the fourth quarter of last year. The delinquency rate on loans backed by office properties jumped to 6.5%, the rate on loans backed by lodging properties to 6.1%. Happily the delinquency rate on loans backed by retail properties was unchanged in the quarter but remained elevated relative to pre-pandemic levels.   The increase in commercial delinquencies must have reminded attentive investors of a concern expressly noted in the minutes of the mid-December meeting of the Federal Open Market Committee (FOMC). Turn to page 7 of the minutes, second paragraph on the left, where several members of the committee expressed their concern that due to the combined effect of a) higher interest rates, b) continued weakness in the office sector and c) pressures on the balance sheets of some lenders a “significant share of commercial real estate loans would need to be refinanced in 2024.” Further increases in rates will only increase the cost of any necessary refinancings.      

Cantonal banks were the winners of the interest rate turnaround: The fact that Swiss banks were able to expand their net interest margins with rising interest rates is not a new insight. A survey now shows who benefited the most and who is most vulnerable to changes. #interestmargin #cantonalbanks