trending Market Intelligence /marketintelligence/en/news-insights/trending/JfBGjDAoYOYy_kexC8cSJg2 content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us
In This List

CU Bancorp discloses 300% CRE concentration

Banking Essentials Newsletter - November Edition

University Essentials | COVID-19 Economic Outlook in Banking: Rates and Long-Term Expectations: Q&A with the Experts

Estimating Credit Losses Under COVID-19 and the Post-Crisis Recovery

StreetTalk – Episode 70: Banks' Liquidity Conundrum Could Fuel M&A Activity

CU Bancorp discloses 300% CRE concentration

Los Angeles-basedCU Bancorp disclosed thatits commercial real estate concentration had surpassed 300% of total risk-basedcapital for the first time, according to the bank's Form 10-Q filed May 6.

Loanssecured by real estate and made to the real estate industry exceeded 300% of totalrisk-based capital at the end of March 31. The bank, which had $2.74 billion inassets at the end of the first quarter, said it uses a relationship-based lendingapproach that has yielded "nominal" charge-offs in the CRE portfolio.

The disclosurecomes in the wake of regulatorspaying "special attention" to commercial real estate as the lending segment hasgrown substantially in recent years. Other institutions have said in company filingsthat they expect regulators to impose higher minimum capital ratios due to commercialreal estate exposure. But Hovde Group analyst Brian Zabora wrote that he does notbelieve breaching the CRE concentration threshold will negatively impact loan growthin a May 9 report.

"[M]anagementindicated they are comfortable with ratio trending higher from the current level,"he wrote. "Our total loan growth estimate is 11% for 2016. We anticipate investorCRE will continue to be an important contributor to growth, increasing 12%, whichis similar to the growth rate in 2015."