The number of U.S. banks and thrifts considered concentrated in commercial real estate lending fell by 7.2% in the second quarter to 413, down from 445 in the first quarter and 447 a year ago.

Total CRE loans continued to grow in the second quarter, rising 1.6% quarter over quarter and 5.4% year over year to $1.874 trillion. Delinquent CRE loans fell to 0.51% as of June 30, down 8 basis points since March 31 and 6 basis points from the year-ago quarter.

Since 2006, U.S. banking regulators have advised banks that CRE loan concentrations above a certain threshold could lead to increased regulatory scrutiny. In 2015, the guidance was reissued in light of substantial CRE loan growth.
The guidance states that banks may be considered "concentrated" in CRE loans if one of two thresholds is met: first, if CRE loans are greater than 300% of risk-based capital and CRE loans have grown by more than 50% over the last three years; or second, if construction and land development loans are more than 100% of risk-based capital.
The regulatory definition of CRE lending includes four categories: construction and land development loans; multifamily loans; loans secured by nonowner-occupied commercial properties; and loans used to finance CRE or construction and development activities not secured by real estate.
Conway, Ark.-based Centennial Bank was the largest bank by assets to become concentrated in CRE in the second quarter after its construction and land development concentration ratio jumped to 107.2% from 92.6% in the first quarter.
At $6.30 billion in assets, Walnut Creek, Calif.-based Mechanics Bank was the second-largest bank to breach the threshold in the second quarter. On March 15, Mechanics Bank agreed to acquire Roseville, Calif.-based Rabobank NA, excluding its food and agribusiness assets, in a deal that will more than double Mechanics' total assets.
Santa Ana, Calif.-based Banc of California NA dropped below the threshold in the second quarter after its CRE loans fell below 300% of its risk-based capital.

Note: Data reported in this article may not match data reported in prior articles due to company restatements.
Click here to access an Excel spreadsheet that lists companies concentrated in CRE as of June 30, 2019.
