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M&A drives some major US lenders' commercial real estate balances higher


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M&A drives some major US lenders' commercial real estate balances higher

Some US banks greatly expanded their exposure to commercial real estate loans in recent months as a result of M&A transactions.

Commercial real estate (CRE) loans at US banks rose to $2.436 trillion as of March 31, up 0.54% from $2.423 trillion at the end of 2022. On a year-over-year basis, CRE loans were up 10.51%.

Among CRE loan types, only multifamily loans declined, falling to $593.09 billion as of March 31 from $598.40 billion at the end of 2022. Construction and land development loans, nonowner-occupied nonresidential property loans, and CRE loans secured by collateral other than real estate all rose from their year-end 2022 totals.

2022 was itself big for banks' CRE lending, with loans in the segment rising 12.07% at year-end from the end of 2021.

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Some US banks posted sharp year-over-year increases in their CRE loan portfolios at the end of the first quarter as a result of completed M&A transactions.

BMO Harris Bank NA's CRE loan portfolio grew 104% year over year to $24.51 billion at the end of the first quarter, an S&P Global Market Intelligence analysis found. The bank, a subsidiary of Bank of Montreal, completed its acquisition of San Francisco-based Bank of the West on Feb. 1.

Citizens Bank NA, a subsidiary of Citizens Financial Group Inc., grew its CRE loans 94.9% annually to $30.25 billion at quarter-end. Short Hills, NJ-based Investors Bank merged with Citizens Bank following Citizens Financial Group's merger with Investors Bancorp Inc. in April 2022.

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At Valley National Bank, a subsidiary of Valley National Bancorp., CRE loans were up 43.5% year over year as of March 31. Valley National Bancorp acquired New York-based Bank Leumi USA in April 2022, and the latter merged with and into Valley National Bank.

Manufacturers and Traders Trust Co., a unit of M&T Bank Corp., and First-Citizens Bank & Trust Co. Inc., a subsidiary of First Citizens BancShares Inc., had year-over-year gains in their CRE portfolios of 30.7% and 29.6%, respectively, as of March 31.

Manufacturers and Traders Trust completed its acquisition of Bridgeport, Conn.-based People's United Bank NA in April 2022, and the latter merged with and into Manufacturers and Traders Trust. First-Citizens Bank & Trust acquired substantially all loans and certain other assets and assumed all customer deposits and certain other liabilities of Silicon Valley Bridge Bank NA, which was formed following the collapse of Silicon Valley Bank.

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Top lenders

Wells Fargo Bank NA had the largest CRE portfolio among the top 20 CRE lenders at the end of the first quarter. Its CRE loans climbed 4.2% year over year to $141.86 billion at quarter-end, while JPMorgan Chase Bank NA's CRE loans rose 3.2% to $134.59 billion.

Bank of America NA's total CRE loans rose 10.5% year over year to $75.78 billion, while PNC Bank NA's CRE portfolio rose 7.7% to $50.77 billion.