Commercial real estate loans are vulnerable as financial assistance for tenants winds down and might not be fully renewed. Late rent payments could rise, leading lenders to press landlords to pay up.
Originations in the third quarter are on pace to double what the Detroit lender reported a quarter earlier, adding more high-yielding loans to the balance sheet.
The performance of about $3 billion in hotel and other loans flagged by the Dallas company as high-risk has been a "a pleasant surprise," its chief credit officer said at an industry conference.
More consumer and commercial borrowers are paying their loans, increasing the likelihood that charge-offs will be manageable for banks despite the ongoing pandemic.
The St. Louis company is gaining a sizable Small Business Administration platform and several niche deposit teams. Keeping those specialists in the fold will be key to the acquisition's success.
Executives and boards are bracing for elevated loan losses and stagnant revenue, which will mean more conversations about belt tightening as opposed to added investment.
Criticized assets are on the rise, especially in commercial portfolios, and may be the forerunner of a wave of loan losses later this year or next year unless economic conditions strengthen.
More than a third fear the fallout from the coronavirus pandemic could drag into 2022 or later, and they are most worried about commercial real estate loans, according to a Promontory Interfinancial Network survey.
Community bank earnings are usually easy to understand, but loan deferrals and modifications as well as the complexities of the Paycheck Protection Program are skewing financial statements.
