A.M. Best Spotlights Construction Loans

Nearly 2,000 banks and thrifts -- 22% of all such institutions -- have construction loans on their books that exceed 100% of total capital, and 24 banks have concentrations that exceed 500% of capital, according to A.M. Best & Co.The insurance rating agency also reported that banks in the Southeast have the highest concentrations of construction loans. Over 50% of Georgia and Florida banks have construction loans that exceed total capital, while nine banks in Georgia and three in Florida have construction loans that exceed 500% of capital, the company said. "These two states, which had the highest numbers of banks exceeding the 100%, accounted for nearly 18% of the 1,956 banks with construction lending concentrations," the rating agency said. The A.M. Best report estimates how many banks might be affected by concentration thresholds that federal regulators have proposed for construction and commercial real estate loans. The comment period on the proposed CRE guidance ended April 13.