January 2, 2018 Keep an Eye on Regional Banks in 2018, Especially in Chicago and New York
Big national lenders tend to lock in the bulk of commercial real estate financing, but regional banks should certainly not be overlooked in 2018 just because they’re typically smaller.
That’s especially true in Chicago, where regional banks issued a particularly large share of commercial real estate loans originated by the market’s top 20 originators – 39% – compared with 20% for in-state lenders in New York City and 21% in Los Angeles, according to a CrediFi analysis of the first six months of 2017.
Financing from regional banks in Chicago, primarily from Illinois-based lenders, closely rivals the 41% originated by U.S. national banks in the Windy City.
[Get CrediFi’s full Chicago lending report for free here.]
Leading Chicago-based lenders in the first half of 2017 included Wintrust Bank and other in-state lenders such as Lakeside Bank and First Midwest.
Wintrust Financial Corp., the parent company of Wintrust Bank, Lake Forest Bank & Trust Company, Wheaton Bank & Trust and several other subsidiaries, originated over $400 million for more than 100 commercial real estate loans in the Chicago market in H1.
Non-Illinois banks financing Chicago commercial properties include Delaware-based PNC Bank and Arkansas-based Bank of the Ozarks, which were also among the top out-of-state banks active in Los Angeles.
In New York and Los Angeles, regional banks accounted for about a fifth of the commercial real estate loans issued by each city’s top 20 originators in H1.
In the Big Apple, most of the regional CRE financing comes from local lenders Signature Bank and New York Community Bank.
Indeed, local banks could see their share of commercial real estate financing rising in New York City in 2018.
New York Community Bank significantly increased its New York City CRE origination in the third quarter of 2017, rising 62% quarter-over-quarter and 34% year-over-year, CrediFi found in its NYC Lending Spotlight for Q3 2017.
NYCB had previously indicated it was holding back on growth in a bid to stay under the $50 billion asset threshold that would make the bank a systemically important financial institution, or SIFI, and subject to additional regulatory and capital requirements.
But the bank said in its Q3 earnings call that it now has the flexibility to grow its balance sheet by approximately $5.9 billion without breaching the SIFI threshold, and projected continued loan growth.
Will regional lenders continue to be active in Chicago commercial real estate finance in 2018? Will they up their game in New York City? As we begin the new year, these are just a few of the questions we’ll be asking.
To download the full New York City Lending Spotlight for Q3 2017, click here.