- March 28, 2024
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The amount of institutions on federal regulators' troubled bank watch list is at a three-year low, yet the national bank lending scene, at least in commercial real estate, remains flat.
That's the analysis from CoStar Group, a Washington, D.C.-based real estate data firm. CoStar, in a new report, says multifamily lending nationwide increased 1% in the third quarter, while investment property lending was up about one-quarter of a percent. Multifamily lending is close to its previous pace, of year-over-year increase of 5%, the report also shows. But investment property lending “is way off its 9% a year growth over the last four quarters.”
The data falls further in construction and development loans. Loans in that area, CoStar says, decreased 3.3% in the third quarter over the second quarter, and are down 17.3% year-over-year.
CoStar notes that the flat report defies some of the rosier news coming out of the national banking industry. For example, the Federal Reserve Board says construction and commercial real estate, especially office and industrial space, were generally improving, though “gains were modest in most cases.” The Fed, in its most recent credit conditions survey, added that some businesses reported “holding back on expansions due to uncertainty.”
The bank failure rate, moreover, continued to fall. There were 12 FDIC bank failures in the third quarter — the lowest amount of quarterly failures since the 2008 fourth quarter. The third quarter failures include The Royal Palm Bank of Florida, a Naples-based lender. First National Bank of the Gulf Coast, also based in Naples, acquired Royal Palm's $85.1 million in deposits and most of its $87 million in assets.
The FDIC's highly watched problem bank list, further, also continues to shrink. It's now at 694 banks, the first time it dropped to fewer than 700 in 11 consecutive quarters, or the second quarter of 2009.