School of business commercial real estate conference march 6 2012
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School of Business Commercial Real Estate Conference March 6, 2012 PowerPoint PPT Presentation


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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 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

  • Community Bank Profile

  • Market Conditions

  • Commercial Real Estate Loan Exposure

  • Loan Quality Trends

  • Conclusions


Profile of Connecticut’s Community Banks


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 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


CRE Market Trends


Commercial Real Estate U.S. Price Trends


U.S. Home Prices Trends


U.S. New Home Sales


U.S. Housing Starts


CT Housing Permits


Community Bank

CRE Loan Concentrations


Total CRE Loans / Total Loans

Percentage

Data from FDIC UBPR Reports


Total CRE Loans / Total Loans

Number of CT Community Banks in each tier


Total CRE Loans / Total LoansMedian

Percentage


Non-Owner Occupied CRE / Total Loans

Percentage


Non-Owner Occupied CRE / Total LoansMedian

Percentage


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

Percentage


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

Percentage


Median Comparison

Percentage


CRE Construction and Development Loans / Total Loans

Percentage


CRE Construction and Development Loans / Total LoansMedian

Percentage


1 to 4 Family Construction Loans / Total Loans

Percentage


1 to 4 Family Construction Loans / Total LoansMedian

Percentage


Total CRE Loans / Capital

Percentage


Total CRE Loans / Capital

Number of CT Community Banks in each tier


Total CRE Loans / CapitalMedian

Percentage


Non-Owner Occupied CRE Loans / Capital

Percentage


Non-Owner Occupied CRE Loans / CapitalMedian

Percentage


Community Bank

CRE Loan Quality


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

Percentage


All Loans 90+ Days Past DueMedian

Percentage


1 to 4 Family Construction Loans 90+ Days Past Due

Percentage


1 to 4 Family Construction Loans 90+ Days Past DueMedian

Percentage


Real Estate Loans 90+ Days Past Due

Percentage


Real Estate Loans 90+ Days Past DueMedian

Percentage


Construction & Land Development Loans 90+ Days Past Due

Percentage


Construction & Land Development Loans 90+ Days Past DueMedian

Percentage


Final Thoughts


FDIC Overall Loan Delinquency Trend


FDIC CRE Loan Delinquency Trend


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


School of BusinessCommercial Real Estate Conference November 1, 2011

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