"Despite what you may be hearing, Commercial Real Estate credit problems are affecting big and small banks alike," said the Federal Deposit Insurance Corp. Chairman Sheila Bair in a prepared speech delivered at a Commercial Mortgage Securities Association conference in Washington, D.C.
All banks and thrifts are having problems with commercial real estate loans, not just small community banks, according Bair.
"The annualized net charge-off rate of 6% on C&D loans in the third quarter significantly exceeds the highest rate of the last crisis, which was about 4%," Bair said.
As of October 2009, FDIC-insured institutions held $1.3 trillion Commercial Real Estate and Multifamily mortgages - nearly 18% of total loans. And $44.8 billion are classified as noncurrent meaning 90-days or more past due or considered uncollectible.
Banks and thrifts hold another $500 million in construction and development loans and 15% of these are noncurrent.
The FDIC expects delinquencies and charge-offs will move higher in the coming quarters.
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