U.S. Banks Show 6% Annual Increase in CRE Lending
Arizona Banks Leading Resurgence in CRE Lending, Multifamily Lending Up 15% Nationally
June 2, 2014
The amount of commercial real estate loans on U.S. bank books has swelled by $93.4 billion in the past year, a 6% increase and now totals $1.6 trillion.
Banks in the heavily populated states have lead the way with the largest dollar volume increases. New York and California banks have added more than $14 billion to their totals; Ohio banks were third with a $9.5 billion increase; Texas, $6.1 billion; and New Jersey and Pennsylvania with $4.8 billion and $4.1 billion growth respectively.
On the other hand, banks in Louisiana, Rhode Island, Oregon and Nevada are still going in the opposite direction, with bank CRE loan totals down about $1 billion in each of those states year-over-year.
Going by percentages, Arizona banks increased their CRE loans outstanding by 50% year-over-year. Utah followed at a 27% increase.
Banks in both Arizona and Utah could see their increasing CRE loan totals continue to grow. Nevada banks’ outstanding CRE loans have declined 33%, an indication that the commercial real estate recovery may have yet to take hold there.
Western Alliance Bancorporation a regional Phoenix-based bank said last month in its quarterly earnings conference call that it expects to see its Nevada pipeline grow in the second half of this year and that it is bigger now than it has been for four to five years.
“Nevada is doing okay. The gain in revenue has still not bounced back real strong,” Robert Sarver, chairman and CEO of Western Alliance said. “Loan demand is still not real robust but the market there in terms of real estate values and business operations is gradually improving.”
Based on dollar volume, loans outstanding for non-residential, non owner-occupied properties increased the by largest amount $40.3 billion more than a year ago. Multifamily property loans outstanding increased $35.9 billion.
The increase in non-residential, non owner-occupied properties represented a year-over-year increase of 7% while the multifamily increase was a 15% change.
Arizona banks again showed the highest percentage increase in multifamily lending, 49%; banks in Pennsylvania showed the second highest percentage increase, 44%.
Nevada, Rhode Island and South Carolina banks showed the largest percentage decrease in multifamily loans outstanding, -30%, -23%, and -13% respectively.
Utah and Arizona banks posted the highest percentage growth in nonresidential non owner-occupied loans outstanding at 90% and 67% respectively. Nevada and Oregon posted the largest decreases, -28% and -15% respectively.
Construction and development loan totals increased $12.8 billion nationally with Arizona banks leading the way with the largest percentage increase and Nevada banks with the largest percentage decrease, 43% vs. -51% respectively.
Owner-occupied CRE lending jumped $4.5 billion year-over-year nationally. Arizona banks again showed the highest percentage growth at 38%. Nevada and Oregon again came in with the largest percentage decreases at -43% and -16% respectively.
Interestingly, all of the owner-occupied increase came from loans to large corporations. In fact, bank CRE lending was up from the first quarter of 2013 this past quarter in every category except small business where total loan dollars were down $12 billion.
The value of foreclosed upon properties on banks’ books declined about 25% from $20.8 billion to $15.3 billion from one year ago. Overall though, U.S. banks lost $25.3 million from the sale of such assets in the past quarter. However, that is a substantial improvement from the sale of such assets in the year earlier period when they lost $158 million from the sale of REO properties.
Banks based in South Dakota posted $37.8 million in gains from the sales of such properties last quarter, followed by California, $9.6 million and Texas, $6.9 million. Banks in Ohio and North Carolina posted the largest dollar losses at $17.4 million and $16.6 million respectively.