According to S&P Global Market Intelligence, U.S. banks saw a 20% rise in high-volatility commercial real estate (HVCRE) loans in the second quarter of 2024. This follows a four-year low balance in Q1 and brings the aggregate HVCRE loan balance for US banks to $34.93 billion, up from $29.11 billion in Q1 but down 5.2% from a year ago.
In terms of risk-weighted assets, HVCRE loans accounted for 0.24% of the sector’s total during this quarter, an increase of four basis points from the previous quarter.
Among top-tier US banks with at least $1 billion in total assets, Dublin-based Morris Bank reported the highest ratio of HVCRE loans to risk-weighted assets at 19.9%. The bank’s subsidiary Morris State Bancshares Inc., reported $265 million worth of HVCRE loans during this period.
Goldman Sachs maintained its position as top lender for three consecutive quarters with a total loan balance of $2.09 billion as June ended – representing a quarterly increase and accounting for only .3%of their risk-weighted assets.
Regulators define high-volatility commercial real estate acquisition/development/construction (ADC) loans as credit facilities used primarily to finance or refinance properties that are dependent on future income or sales/refinancing repayments after being developed into income-producing ones.
