Five banks failed in November, and new data from Trepp LLC states that commercial real estate (CRE) exposure was the primary reason behind their demise.
According to Trepp, CRE loans comprised 80.8% of the total $160 million in nonperforming loans at the failed banks. Construction and land loans made up 64.4%, while commercial mortgages comprised 16.5% of the total nonperforming pool. The residential real estate loan category was a secondary source of distress, with 10.1% of the total nonperforming balance, with the remainder divided among commercial and industrial loans (5.4%) and consumer and other loans (3.7%).
Trepp also noted that regional location played no role in the banks' failures, as each was located in a different state (Georgia, Louisiana, Iowa, Nebraska and Utah). All five were on the Trepp Watchlist of troubled banks for eight or more quarters.
