Wells Fargo & Co., U.S. Bancorp, M&T Bank Corp. and others extended more business property loans during the last three months of the year, taking advantage of a modest improvement in a once-toxic field that smaller rivals have all but abandoned.
Wells Fargo — in increasing its CRE book for the first time in at least a year, by about $100 million, or 1% — made a $6 million mortgage to the owner of a shopping strip outside of Chicago that used to do business with the now-defunct Bear Stearns.
U.S. Bancorp extended $4 million in real estate-secured credit to a Chicago metal-bar maker that had taken a $5 million mortgage from rival Harris NA five years ago. Its CRE lending was up 3%.
And M&T extended new credit to manufacturers and health care businesses from Philadelphia to Washington on the way to booking $600 million, or 3%, more business property loans last quarter, its first quarter-over-quarter growth in at least a year, too.
Other big banks like Regions Financial Corp. and First Horizon National Corp. made more business mortgages in parts of Texas and Tennessee even as CRE loans ran off the books elsewhere.
"It's really just a reflection of the economy," said Rene Jones, the chief financial officer of M&T, of Buffalo N.Y. "It's across the board — what you see is a lot of activity on the commercial front."
The fact big banks like M&T are happy to take advantage of that activity is a reminder that commercial real estate — a catchall term used to describe everything from a mortgage on a supermarket to a home builder's construction loan — can still be lucrative, experts say. Most of the 157 banks that failed in 2010 went under because they had made too many poorly underwritten business property loans in boom times that went bust.
The growth also illustrates the competitive edge big banks have over community lenders as the economy recovers slowly, observers say. Superlarge banks now have the opportunity to dominate a lending market that became the favorite asset class of smaller institutions last decade.
