Jim Dobbs

Borrowers expect the Federal Reserve to raise interest rates next year to contain soaring prices and are locking in favorable terms now, bankers say.

With its agreement to buy KS StateBank’s residential mortgage operation, Kansas-based Armed Forces is going all in on home lending.

The San Francisco bank reported a 26% increase in its third-quarter earnings, thanks to robust single-family, multifamily and commercial real estate loan activity in New York, Boston and its home city.

Consumers are booking rooms at levels not seen since early 2020 and loan delinquencies have fallen sharply as a result. Still, business travel remains sluggish and new COVID variants are spreading, threatening the hotel industry’s recovery.

Even as lockdowns ease, the trend toward remote work poses challenges for building owners and the banks that lend to them.

Kerry Killinger, former CEO of Washington Mutual, says the asset bubbles and increased consumer debt that contributed to his company's failure are reappearing.

At first the deal seemed an unlikely marriage of two mortgage-heavy companies. But acquiring the Michigan company would help New York Community accomplish its two chief goals — reducing deposit costs and its concentration of multifamily loans — while giving it the scale to pursue more deals.

The Michigan company recently paid $70 million to close the books on a matter dating to the last financial crisis.

Deferrals may be hiding credit issues, leading lenders to track deposit flows, property maintenance and other factors to gauge the true health of their portfolios.

Low rates and intense competition might lead some banks to ease underwriting standards in 2021, when the economy may not yet have recovered.

Commercial real estate loans are vulnerable as financial assistance for tenants winds down and might not be fully renewed. Late rent payments could rise, leading lenders to press landlords to pay up.

The company also found a buyer for its portfolio of equipment finance loans as it tries to clean up credit and refocus on middle-market lending.

As revenue-starved retailers fall further behind on rent payments, landlords' cash flow will be strained, and defaults on commercial real estate loans could rise.

By helping borrowers now, banks hope customers can quickly catch up on payments once the coronavirus pandemic ends. If they can’t, interest income will remain low and charge-offs could pile up if the crisis drags on.

Commercial real estate lenders have to consider not only how they’ll weather the COVID-19 downturn, but whether worker and consumer habits have changed for good.

Bankers say they understand the need for an extraordinary government response to the coronavirus outbreak, but worry that even slashing interest rates won’t stimulate demand.

Such credits, which reflect borrowers with financial challenges, increased significantly during the third quarter.

Shares in the lender fell after it reported lower third-quarter profits, said nonperforming assets rose and cautioned that it had lost multifamily loan deals to competitors offering easier terms.