FDIC Boosting C&D Surveillance

The Federal Deposit Insurance Corp. is accelerating its on-site reviews of insured banks with high concentrations of construction and development loans, according to Sheila Bair, chairman of the Federal Deposit Insurance Corp. Targeted examinations of 27 FDIC-supervised banks earlier this year found that some institutions with C&D concentrations in formerly high-growth markets are "experiencing a rapid increase in problem loans that may translate into losses this year," Ms. Bair told the Senate Banking Committee. As of March 31, 2,535 insured institutions had C&D loan concentrations of 100% or greater to Tier One capital. Nearly 5% of the $632 billion in outstanding C&D loans are 89 days or more past due. Bank chargeoffs on C&D loans skyrocketed from $106 million in the fourth quarter to $1.6 billion in the first quarter.