Jun 6, 2024
Moody’s May Cut Six US Banks on Commercial Real Estate Exposure
Bloomberg News
,![A pedestrian walks along Wall Street near the New York Stock Exchange (NYSE) in New York, US, on Thursday, March 21, 2024. Reddit Inc. shares jumped as much as 67% over their initial public offering price after the social media company and its shareholders raised $748 million priced at the top of a marketed range, sending a strong signal that the window for US IPOs is reopening. Photographer: Michael Nagle/Bloomberg, Bloomberg A pedestrian walks along Wall Street near the New York Stock Exchange (NYSE) in New York, US, on Thursday, March 21, 2024. Reddit Inc. shares jumped as much as 67% over their initial public offering price after the social media company and its shareholders raised $748 million priced at the top of a marketed range, sending a strong signal that the window for US IPOs is reopening. Photographer: Michael Nagle/Bloomberg](/polopoly_fs/1.2082258.1717719791!/fileimage/httpImage/image.jpg_gen/derivatives/landscape_620/a-pedestrian-walks-along-wall-street-near-the-new-york-stock-exchange-nyse-in-new-york-us-on-thursday-march-21-2024-reddit-inc-shares-jumped-as-much-as-67-over-their-initial-public-offering-price-after-the-social-media-company-and-its-shareholders-raised-748-million-priced-at-the-top-of-a-marketed-range-sending-a-strong-signal-that-the-window-for-us-ipos-is-reopening-photographer-michael-nagle-bloomberg.jpg)
(Bloomberg) -- Moody’s Ratings said at least six US regional banks with a substantial exposure to commercial real estate loans are at risk of having their debt ratings downgraded.
The long-term ratings of First Merchants Corp., F.N.B. Corp., Fulton Financial Corp., Old National Bancorp, Peapack-Gladstone Financial Corp. and WaFd were placed on review for downgrade by the ratings provider.
Regional banks with a substantial concentration in commercial real estate loans face ongoing asset quality and profitability pressures as higher-for-longer interest rates heighten longstanding risks, especially during cycle downturns, Moody’s said in separate statements.
During the low-interest-rate environment that prevailed prior to the onset of the Federal Reserve’s rate-hike cycle, many regional banks chose to build and maintain meaningful concentrations in commercial real estate, which is a “volatile asset class,” according to Moody’s. At Fulton, for example, the asset class represents 267% of tangible common equity as of March 31, Moody’s said.
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