US banks with the most exposure to commercial real estate
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There is currently roughly $5.7 trillion in outstanding commercial real estate debt, with U.S. banks holding roughly half of this total on their balance sheets.
The commercial real estate sector, which includes office, retail, healthcare and multifamily properties, is facing increasing pressure from high interest rates and declining occupancy rates. Those headwinds are creating risk of rising defaults and big loan losses in a sector that has not fully recovered since the collapse of Silicon Valley Bank last year.
This chart shows which U.S. banks have the highest exposure to the commercial real estate sector, based on UBS analysis.
Large US banks, by share of commercial real estate loans
The banks with the highest commercial real estate loan concentrations as of Q3 2023 are:
Banking Commercial Real Estate
Percentage of total loan amount Commercial real estate total amount
Loan Assets Bank OZK 68.6% $17.4B $32.8B Home BancShares, Inc. 63.0% $9.0B $22.0B Pacific Premier Bancorp, Inc. 63.0% $8.4B $20.3B International Bancshares Corporation 59.3% $4.7B $14.9B New York Community Bancorp Inc 57.0% $49.0B $111.2B Independent Bank Group, Inc. 56.1% $8.0B $18.5B Valley National Bancorp 54.9% $27.5B $61.2B CVB Financial Corp. 50.2% $4.5B $15.9B Independent Bank Corp. 48.9% $7.0B $19.4B Axos Financial, Inc. 48.6% $8.3B $20.8B Simmons First National Corporation Class A48.2%$81B$276B United Bankshares, Inc.46.2%$98B$292B WaFd, Inc.45.9%$81B$225B ServisFirst Bancshares Inc44.9%$52B$160B WesBanco, Inc.43.4%$49B$173B Banner Corporation42.9%$46B$155B TowneBank42.6%$48B$167B Renasant Corporation42.4%$53B$172B FB Financial Corporation42.3%$40B$125B Glacier Bancorp, Inc.42.0%$68B$281B
As the table above shows, most of the banks with the largest exposure are small and mid-sized financial institutions.
Arkansas-based OZK Bank has the highest percentage of commercial real estate loans, accounting for 68.6% of its total loans. As the nation's leading lender to Manhattan real estate developers, its stock price has outperformed the S&P 500 index by a factor of 10 since it went public 27 years ago.
The only large bank on the list, New York Community Bancorp, had $49 billion in commercial real estate loans, or 57% of its total loans. At the height of the regional banking turmoil last year, one of New York Community Bancorp's subsidiaries bought the failed Signature Bank in a multibillion-dollar deal.
The stock has plummeted about 68% since the bank reported a $2.7 billion loss for the fourth quarter of 2023. The loss was revised down from an initial estimate of $252 million, but the unexpected loss prompted the bank to seek a $1 billion bailout from investors to restore confidence. One of the main investors in the deal was former U.S. Treasury Secretary Steven Mnuntchin.
Like New York Community Bancorp, many other regional banks have seen their share prices fall as a result.
Commercial real estate debt concentrated in small banks
Below we show how the majority of commercial real estate loans are concentrated in smaller US banks with assets under $20 billion.
Smaller banks in the U.S. account for 56.1% of all commercial real estate loans and face the highest risk compared to their larger peers.
Given their high share of loans, banks may be at risk of failure, especially if credit losses accelerate and valuations fall. At the same time, a deterioration in valuations could make it more difficult to refinance their debt.
These problems began to surface last year, but losses could continue for years to come: Credit losses peaked two years after delinquency rates hit their highest point since the global financial crisis.