N.C. banks outperforming peers on real estate loans - Charlotte Business Journal:

zemlyanikiyri.blogspot.com
Those are among the finding of a new reportfrom Charlotte-based . It shows that banka based in North Carolina lead the Southeastwith $720 billioj in real estate loans, aboutr 15.3% of the nation’s total. But only 2.18%% of those loans are 90 days or morepast due. That placesa North Carolina third-best among the sevehn Southeastern states, behind Virginia and the report says. It’es also better than the nationall rateof 2.74%. Northh Carolina-based banks are more exposed to development loan s than theirSoutheastern peers.
Those loans are consideredx riskier than other realestate lending, such as home But so far, development loans by banka in North Carolina are performing well, despiter experts’ concerns. Financial analyst Matthew Jones, principap at Forum Capital, says his research reflects recent realestate trends. Because North Carolina didn’t see propertyu values skyrocket as fast as they did in states such as Floridaand Georgia, the N.C. decline hasn’tr been as drastic. “We just don’rt have the highs and lows,” Jones says. “And banks here seem to have done a good job managingh their portfolios and keepingloans There’s still cause for concern.
Because banks basedf in North Carolina hold so much real they remain exposed if another wave of real estates losses hitsthe market. Jonexs says one common denominatore for banks that have failed during the recession is a heavy exposure to riskyreal estate. “That stuft just hangs around on the balance and it cancausd trouble. It’s not even that some of these guys didanythinyg wrong. But the market materially changed.” The next dangert spot for bank portfolios is lendin g for construction andland development, analysts and bankerz say. Federal regulators’ recent strese test of the nation’s largest banks considered C&D loans among the riskiest for lenders.
Regulators estimated 18% losses on that grou p of loans if the recession wereto worsen. At Northu Carolina’s institutions, about 20% of all loanas fall into the C&D twice the national average and second-highest in the Southeast. Georgia has the highesr rate in the Southeastat 21.37%. C&D loanes are often structured with balloonb payments that can be paid or dependingon sales. But the downturbn has nearly halted major realestatew purchases. Tony Plath, finance professor at , says that will make it difficul t for some developers to stay current ontheir payments. Tighter lending requirements also will make it hard for developerz to refinance before big paymentscome due.
Right now, 4.3% of all constructiohn and development loans issued in North Carolina are severelypast due, accordingt to Forum Capital’s report. “I’mn really worried about developer performance,” Plath says. And loca community bankers havesaid they’re concernedr developers that have survived so far may be nearinb the end of their reserves and will run into trouble if sale s don’t pick up. Jones, the Forum Capital analyst, says North Carolina’s exposure to higher-risk loanas doesn’t mean the properties are all located withinthe state. He says national banks in Charlotte — Bank of Americza Corp.
and Wachovia, now owned by Wellx Fargo & Co. — hold a large number of loansa secured by property inothef states. That includes deals in distressed markets such as Floridsand California. The high exposure doesn’yt necessarily mean banks here are headed forimmediatew trouble. Of all the bank failures in the Southeastrsince August, the average failed bank had more than 46% of its net loana in the C&D category, Forum Capital’sx report shows.
And, on average, nearlyg 33% of those loans were past due or in But inNorth Carolina, only four banks exceed 40% of net loanse in the C&D categorg — Blue Ridge Savings Bank, Cooperative Bank, Trustg Atlantic Bank and Wake Forest Federal Savings and Loan. And they all are well below theaverage past-due rates of the failed