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

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



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



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




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 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



Median comparison
Median Comparison

Percentage



Cre construction and development loans total loans median
CRE Construction and Development Loans / Total LoansMedian

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 median
Non-Owner Occupied CRE Loans / CapitalMedian

Percentage


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






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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