(Reuters) - A sell-off in regional U.S. bank stocks triggered by New York Community Bancorp (NYSE:NYCB) last week has brought the group's exposure to commercial real estate (CRE) in focus for analysts and investors alike.
The industry has grappled with looming losses on CRE loan books since early 2023, as the sector faced the twin challenges of financing difficulties amid high interest rates and lower office occupancy due to widespread adoption of remote work.
Investors fear weak demand for offices could trigger a wave of defaults and put pressure on banks and other lenders, which are hoping to avoid selling CRE loans at significant discounts.
The CRE worries extend across the banking sector, with several giants including Wells Fargo shoring up rainy-day funds over the last 12 months. Meanwhile, smaller lenders have sought to reduce the risk by raising their loan loss provisions and shedding these portfolios through sales to private equity firms.
Here is the commercial real estate exposure of some prominent U.S. regional banks:
Bank Assets CRE Construction
concentration concentration
ratio as of Q3 ratio as of
2023 Q3 2023
New York Community $116.3 bln 477% 30%
Bancorp's
subsidiary,
Flagstar Bank
Valley National $61.18 bln 472% 66%
Bancorp
Columbia Banking $52.17 bln 323% 58%
Systems' Umpqua
Bank
Bank OZK (NASDAQ:OZK) $34.24 bln 345% 200%
City National Bank $26.14 bln 310% 46%
of Florida
BCI Financial Group $26.05 bln 309% 46%
WaFd subsidiary, $22.64 bln 371% 113%
Washington Federal (NASDAQ:WAFD)
Bank
Axos Financial (NYSE:AX) $20.83 bln 356% 135%
Pacific Premier $20.28 bln 312% 17%
Bancorp
Independent Bank (NASDAQ:INDB) $19.37 bln 302% 45%
Corp
* Note: Data as of the third quarter of 2023
* CRE concentration ratio refers to the extent to which a bank's loan portfolio consists of commercial and multifamily mortgages
* Source: Real estate data provider Trepp, using a combination of bank SEC filings and call sheets