Federal officials worry that many banks are carrying more real estate loans today than during the 1980s boom as commercial real estate sales and construction surge across the country

The guidance sets thresholds: Banks with construction or development loans totaling 100 percent or more risk-based capital would have what regulators call a potential concentration. Banks with construction, multifamily housing and commercial real estate loans totaling 300 percent or more also could be overly dependent on such loans. This is to identify whether a bank's portfolio is becoming overly dependent on commercial real estate loans

Bill MaGrini, senior project manager at the Office of Thrift Supervision said that once found that thresholds are met or exceeded, a bank would need heightened risk-management practices, such as establishing clear risk standards, increasing oversight by their bank boards, having adequate capital and reserves, and planning for downturns.

Alan Rowe, president of the First Commercial Bank of Florida said that their concern is, look, don't paint all the banks with the same brush. Craig Polejes, president of Florida Bank of Commerce, which has 50 percent of its loan portfolio tied to commercial real estate said that it is also important to look at the types of commercial loans a bank is making. He added that if the nature of the loan is more high-risk or low-risk, then they need more capital. Billy Bishop of Bishop Realty and Development added that Central Florida community banks -- which investigate loans carefully -- have little to worry about. He also said that he does not think this guidance will really affect them.

By M. Sese
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