The Securities and Exchange Commission is questioning some community and regional banks about their exposure to commercial real estate in their loan portfolios, the Wall Street Journalreported Thursday. Potential losses on the loans could spur them to further cut lending.
The agency has released four recent letter exchanges in which it questioned smaller financial firms about their CRE exposure in loan portfolios. The lenders include Alerus Financial and the holding companies behind Mid Penn Bank, Ohio Valley Bank and MainStreet Bank.
Kenneth Chin, a partner at law firm Kramer Levin Naftalis & Frankel, told the WSJ the letters signal the SEC’s growing interest in whether investors can adequately assess a bank’s financial soundness based on disclosure of their loan portfolios. “The SEC is worried that some of the banks may not be disclosing as much of their risk or exposure as they should to their investors,” said Chin.
Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 16-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 7-10 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces.
Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and GlobeSt.com at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications.
Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).