Commercial real estate exposure was the main driver behind problem loans for the five banks that failed in March, according to new data from Trepp LLC.
The combined exposure to problematic commercial mortgages was $167.6 million, or 81.6% of the total $205.4 in nonperforming loans at the failed banks. Commercial mortgages accounted for $123.7 million (60.2%), while construction and land loans were $43.9 million (21.4%) of the nonperforming total. Residential mortgages were a distant second, with $19.6 million (9.5%) of the total nonperforming loans.
Trepp notes that two of March's bank failures were in Georgia, which it dubbed ‘ground zero’ for bank failures in the current cycle – 79 Georgia banks have failed since 2007, placing the state in first place for failures. Two other failed banks in March were in Illinois, which has seen 49 failures since 2007. The fifth bank was in Michigan, which has seen 13 bank failures since 2007.