First Citizens BancShares Inc. said it would cease originating new general office loans and diversify into other property types as concerns over weakness in the commercial real estate sector mount.
(Bloomberg) — First Citizens BancShares Inc.
said it would cease originating new general office loans and diversify into other property types as concerns over weakness in the commercial real estate sector mount.
Executives at the Raleigh, North Carolina-based bank — which acquired SVB Financial Group’s Silicon Valley Bank after that lender collapsed in March — outlined the pullback during a call discussing first-quarter results.
Commercial real estate exposure represents 11.9% of First Citizens’ $138 billion in total loans, according to a presentation accompanying its earnings.
Within that, 2.1% or $2.8 billion are for general office loans. The average loan in its general office portfolio is about $2 million, and the deliquency rate is about 6.7%, it showed.
The company said that any issues surrounding its general office loans are manageable, and that it’s working with clients directly on an individual basis to assess concerns.
Office loans have come under pressure as borrowing costs surge and the prospect of filling up office towers wanes given the rise in remote and hybrid work.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
