According to S&P Global Market Intelligence, U.S. banks saw a 20% increase 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 last year’s total of $36.83 billion.
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%. The bank’s subsidiary Morris State Bancshares Inc., reported a total loan balance of $265 million during this period.
Goldman Sachs maintained its position as the top lender for HVCRE loans with a total loan balance reaching $2.09 billion as June ended – representing an increase by one percent compared to last quarter and accounting for only .3%of their risk-weighted assets.
High-volatility commercial real estate ADC (acquisition, development or construction) loans are defined by regulators as credit facilities used primarily to finance or refinance properties that will generate future income through sales or refinancing repayments after being developed into income-producing properties.
