School of business commercial real estate conference march 6 2012
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School of Business Commercial Real Estate Conference March 6, 2012. The End of Extend and Pretend A Look at the Recent CRE Loan Experience of Connecticut’s Community Banks. Martin J. Geitz, President & CEO. Agenda. Community Bank Profile Market Conditions

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School of Business Commercial Real Estate Conference March 6, 2012

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School of business commercial real estate conference march 6 2012

School of BusinessCommercial Real Estate Conference March 6, 2012

The End of Extend and Pretend

A Look at the Recent CRE Loan Experience of Connecticut’s Community Banks

Martin J. Geitz, President & CEO


Agenda

Agenda

  • Community Bank Profile

  • Market Conditions

  • Commercial Real Estate Loan Exposure

  • Loan Quality Trends

  • Conclusions


School of business commercial real estate conference march 6 2012

Profile of Connecticut’s Community Banks


Statistical profile

Statistical Profile

  • 46 community banks headquartered in Connecticut

  • Often the largest bank in their home town

  • Connecticut community bank deposit market share: approximately 22%

  • 31 community banks’ data available for this analysis

    • Total Assets $23.0 billion

    • Total Loans $16.6 billion

    • Total Deposits $17.8 billion

  • Community banks account for over 50% of small business loans in US


Cre experience

CRE Experience

  • CRE loans are significant balance sheet concentrations for many banks

  • Concentrations have declined slowly since 2009 peak

  • Loan quality indicators are still elevated

  • Expect continued impact of workouts: loan write-downs, foreclosures, distressed sales


School of business commercial real estate conference march 6 2012

CRE Market Trends


Commercial real estate u s price trends

Commercial Real Estate U.S. Price Trends


U s home prices trends

U.S. Home Prices Trends


U s new home sales

U.S. New Home Sales


U s housing starts

U.S. Housing Starts


Ct housing permits

CT Housing Permits


School of business commercial real estate conference march 6 2012

Community Bank

CRE Loan Concentrations


Total cre loans total loans

Total CRE Loans / Total Loans

Percentage

Data from FDIC UBPR Reports


Total cre loans total loans1

Total CRE Loans / Total Loans

Number of CT Community Banks in each tier


Total cre loans total loans median

Total CRE Loans / Total LoansMedian

Percentage


Non owner occupied cre total loans

Non-Owner Occupied CRE / Total Loans

Percentage


Non owner occupied cre total loans median

Non-Owner Occupied CRE / Total LoansMedian

Percentage


Owner occupied non farm non residential cre loans average loans

Owner Occupied Non-farm Non-residential CRE Loans / Average Loans

Percentage


Owner occupied non farm non residential cre loans average loans median

Owner Occupied Non-farm Non-residential CRE Loans / Average LoansMedian

Percentage


Median comparison

Median Comparison

Percentage


Cre construction and development loans total loans

CRE Construction and Development Loans / Total Loans

Percentage


Cre construction and development loans total loans median

CRE Construction and Development Loans / Total LoansMedian

Percentage


1 to 4 family construction loans total loans

1 to 4 Family Construction Loans / Total Loans

Percentage


1 to 4 family construction loans total loans median

1 to 4 Family Construction Loans / Total LoansMedian

Percentage


Total cre loans capital

Total CRE Loans / Capital

Percentage


Total cre loans capital1

Total CRE Loans / Capital

Number of CT Community Banks in each tier


Total cre loans capital median

Total CRE Loans / CapitalMedian

Percentage


Non owner occupied cre loans capital

Non-Owner Occupied CRE Loans / Capital

Percentage


Non owner occupied cre loans capital median

Non-Owner Occupied CRE Loans / CapitalMedian

Percentage


School of business commercial real estate conference march 6 2012

Community Bank

CRE Loan Quality


Delinquency trends

Delinquency Trends

  • Loan delinquencies typically forecast loan workouts and, ultimately, charge-offs

  • Delinquencies plateauing for many CT community banks

  • Delinquencies remain high for commercial real estate loans


All loans 90 days past due

All Loans 90+ Days Past Due

Percentage


All loans 90 days past due median

All Loans 90+ Days Past DueMedian

Percentage


1 to 4 family construction loans 90 days past due

1 to 4 Family Construction Loans 90+ Days Past Due

Percentage


1 to 4 family construction loans 90 days past due median

1 to 4 Family Construction Loans 90+ Days Past DueMedian

Percentage


Real estate loans 90 days past due

Real Estate Loans 90+ Days Past Due

Percentage


Real estate loans 90 days past due median

Real Estate Loans 90+ Days Past DueMedian

Percentage


Construction land development loans 90 days past due

Construction & Land Development Loans 90+ Days Past Due

Percentage


Construction land development loans 90 days past due median

Construction & Land Development Loans 90+ Days Past DueMedian

Percentage


School of business commercial real estate conference march 6 2012

Final Thoughts


Fdic overall loan delinquency trend

FDIC Overall Loan Delinquency Trend


Fdic cre loan delinquency trend

FDIC CRE Loan Delinquency Trend


Conclusions

Conclusions

  • CT community bank CRE exposure has not declined significantly, though C&D loan exposure is down

  • CRE delinquencies appear to be leveling off – but is it a trend?

  • Weak economic growth offers little reason to expect quick improvement in community bank CRE loan conditions


Thanks

School of BusinessCommercial Real Estate Conference November 1, 2011

Thanks


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