Randomly Noted

Wells Fargo reported earnings today and in general, it said it thought the corner has been turned in terms of deterioration of credit quality in its lending portfolios – generally lower writeoffs and money set aside to cover bad loans. But, while things may be looking better, money still is being lost in these portfolios. And when it comes to commercial real estate, it continues to show stress. Wells Fargo reported that its nonperforming commercial real estate assets rose to 4.09% of total loans in the first quarter. That’s up from 3.77% in the 4Q and 3.22% in the quarter before that.

Improvement in general. But that commercial real estate market is still hurting pretty badly.

Associated Banc-Corp invites customers to learn how to put a safety net around their hard-earned money. The company is aggressively trying to do the same thing to its own financials.

The Green Bay bank reported a big loss today for hte fourth quarter ($161 million) and put all of the blame on its commercial loan portfolio. A huge chunk of the problems are in its construction loan portfolio – it charged off $124 million of those loans (which is more than half of its total charge offs). That $124 million was an 871% increase from just the third quarter of last year. Commercial real estate charge offs of $40 million were an 811% increase from the third quarter.

Continue reading…

Make time to read DJN colleague Marshall Eckblad’s latest story, “Widening Commercial Real Estate Crisis Hits U.S. Banks.” It starts this way: “When commercial-real-estate markets went bust two decades ago, bankers said they learned a hard lesson. The latest earnings reports from U.S. banks suggest it didn’t stick. Losses from loans tied to strip malls, office buildings, housing complexes and other properties are hurtling toward levels unseen since the savings-and-loan crisis.” If you read on, you’ll see some stunning nonperforming (read: uncollectible) commercial construction loan levels at regional banks. It’s sobering.