Small Banks Quickly Shed Commercial Real Estate Risk

Under pressure from federal regulators and weighed down by an unhealthy exposure to commercial real estate, small banks — or those in the $1 billion to $100 billion asset range — are making haste to clean up their balance sheets, according to Oakland, Calif.-based Foresight Analytics, a unit of Trepp LLC. In the fourth quarter alone, the nation’s small banks cut the total outstanding balance of commercial real estate construction and land loans by about 13%, while large banks with assets of $100 billion or more only trimmed back by about 4%, says Matt Anderson, managing director for Foresight.

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