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Construction loan delinquencies inch higher for first time since 2009

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Construction loan delinquencies inch higher for first time since 2009

After almost a decade of improving quarter-over-quarter loan performance, U.S. banks' construction loan delinquencies leaned higher in early 2018 compared with the previous quarter.

As of March 31, $2.93 billion in construction loans were delinquent or in nonaccrual status, up from $2.91 billion as of Dec. 31, 2017, according to S&P Global Market Intelligence data. That marked the first quarterly increase since the third quarter of 2009.

However, delinquent loans still accounted for only 0.85% of total construction loans at March 31, down from 0.86% at the end of 2017.

In aggregate, construction loans at American banks reached $344.19 billion as of March 31, marking both a 7.8% increase year over year and five straight years of quarterly growth. Total construction loans are still well below the pre-recession peak of $631.36 billion reached in the first quarter of 2008.

Nonresidential construction loans grew 8.1% year over year to $268.42 billion as of March 31, while residential construction loans grew 6.8% to $75.77 billion.

Wells Fargo & Co., the country's largest construction lender among banks and thrifts, posted quarterly declines in both residential and non-residential construction loans. However, the company still has more construction loans than the next two banks combined.

Goldman Sachs Group Inc., the nation's 18th-largest construction lender, posted a 539.2% quarterly increase in residential construction loans and a 22.5% jump in nonresidential construction loans, the largest gains in both categories among the top 25 lenders.

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Information about a company's specific loan types can be found on its Briefing Book page online. For aggregate asset quality information on U.S. commercial banks, click here.