All is Fair Game

Update 10/29/2009
October 29th, 2009 5:33 AM

Commercial Mortgage News

OAKLAND, CA-The total delinquency rate for commercial mortgages expanded 60 basis points in the third quarter to 4.7%, according to an early estimate by locally based Foresight Analytics. While final figures for the third quarter are not due out until late November, the real estate market analysis and forecasting specialist uses earnings reports and call report filings from many smaller banks to produce its quarterly estimates.

The commercial mortgage delinquency rate has been rising at an accelerated rate ever since Lehman Brothers’ collapse in September 2008 and the ensuing severe credit crunch and economic downturn. While more than double the commercial mortgage delinquency rate from the same year-earlier period, the 4.7% delinquency rate is still well below the 8% rate in the third quarter of 2001. However, given a weak economy, severely constrained credit availability and a high volume of commercial mortgages coming due during the next several years, Foresight Analytics principal Matthew Anderson calls the increasing delinquency rate "worrisome."

The delinquency rate for other commercial and industrial loans--loans to businesses typically unsecured and separate from commercial mortgage lending--rose 50 basis points in the third quarter to 4.2%. Anderson says the rate has been trending up by 50 basis points a quarter as the The lack of credit is most apparent in the C&I loan category," Anderson says. "We estimate a 6% decline in the volume of loans outstanding during Q3, following several quarters of contraction. The volume of loans outstanding has contracted by approximately 15% since peaking in Q3 2008."

The delinquency rate in construction lending, including both residential and commercial, jumped 190 basis points in the third quarter to 18.2%. The last recession's peak came in the first quarter of 2001 when construction loan delinquency hit 19.2%, according to AA.

"While for-sale residential construction loans [single family and condo] are by far the main source of problems, our estimates indicate that delinquency rates for other construction sectors, including apartments and commercial properties, are on the rise, too," Anderson says. "Worsening fundamentals and reduced liquidity in the commercial real estate sector will likely contribute to further rises in the delinquency rate."

Residential mortgage delinquencies rose 80 basis points in the third quarter to 11%. Aside from an approximately 200 basis point increase in the final three months of 2008, the delinquency rate has been rising by approximately 100 basis points per quarter since the first quarter of 2008. One year ago the rate was 6.4%.

"We have been expecting the rate of increase to slow, but clearly this has not yet occurred," Anderson says. Weak economy and reduced credit availability have put pressure on borrowers’ finances.

Source Loopnet

Market Commentary

RealtyRates.com Investor Survey Cap Rate Indices Increase For All Property Types During 2nd Quarter 2009

Consistent with a 42 basis point jump in Treasury rates to which most commercial mortgage interest rates are indexed, the RealtyRates.comTM Investor Survey Weighted Composite (Cap Rate) IndexTM increased 23 basis points, from 9.62% to 9.85% during the 2nd Quarter of 2009.

All 11 property sectors surveyed recorded quarter-over-quarter index increases with the greatest recorded by the Golf sector, up 27 basis points, followed by the Lodging sector, up 26 basis points.

The smallest increases were recorded by the Industrial and Mobile Home/RV Park/Campground sectors, both up 21 basis points from the previous quarter.

The deterioration in the commercial real estate market, as evidenced by the indicated increase in the Weighted Composite (Cap Rate) Index™ during the 2nd quarter, was further compounded by continuing declines in net operating income across virtually all markets, nationwide.



Press Releases



Ameris Bank, Moultrie, Georgia, Assumes All of the Deposits of American United Bank, Lawrenceville, Georgia

FOR IMMEDIATE RELEASE
October 23, 2009

Media Contact:
Greg Hernandez (202) 898-6984
Cell: (202) 340-4922
Email: ghernandez@fdic.gov



American United Bank, Lawrenceville, Georgia, was closed today by the Georgia Department of Banking & Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Ameris Bank, Moultrie, Georgia, to assume all of the deposits of American United Bank.

The sole branch of American United Bank will reopen on Monday as a branch of Ameris Bank. Depositors of American United Bank will automatically become depositors of Ameris Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branch until they receive notice from Ameris Bank that it has completed systems changes to allow other Ameris Bank branches to process their accounts as well.

This evening and over the weekend, depositors of American United Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of August 11, 2009, American United Bank had total assets of $111 million and total deposits of approximately $101 million. Ameris Bank will pay the FDIC a premium of 1.02 percent to assume all of the deposits of American United Bank. In addition to assuming all of the deposits of the failed bank, Ameris Bank agreed to purchase essentially all of the assets.

The FDIC and Ameris Bank entered into a loss-share transaction on approximately $92 million of American United Bank's assets. Ameris Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html.

Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-913-3058. The phone number will be operational this evening until 9:00 p.m., Eastern Daylight Time (EDT); on Saturday from 9:00 a.m. to 6:00 p.m., EDT; on Sunday from noon to 6:00 p.m., EDT; and thereafter from 8:00 a.m. to 8:00 p.m., EDT. Interested parties also can visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/americanunited.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $44 million. Ameris Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. American United Bank is the 101st FDIC-insured institution to fail in the Nation this year, and the twentieth in Georgia. The last FDIC-insured institution closed in the state was Georgian Bank, Atlanta, on September 25, 2009.




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Posted by Greg Shelley Phd on October 29th, 2009 5:33 AMPost a Comment

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