More than 98% of banks engage in commercial real estate lending, and commercial real estate loans are the largest loan portfolio type for nearly half of all banks, the FDIC said in its report.
While dollar volume of CRE loans is at a historic high, and a growing number of banks report CRE concentrations, lending concentrations “are not by definition problematic,” the FDIC said.
“The majority of banks with CRE loan concentrations are satisfactorily rated. Nevertheless, CRE loan concentrations add dimensions of risk that necessitate continued attention from banks and their regulators, especially as the pandemic lingers and uncertainties remain,” the regulator said.
