CRE concentration is the measure of a bank's commercial real estate exposure relative to its capital, monitored under the 2006 interagency guidance through two supervisory screens: construction, land development, and other land loans of 100% or more of total risk-based capital; or total CRE loans of 300% or more of total risk-based capital where the CRE portfolio has also grown 50% or more over the prior 36 months. The total-CRE criterion counts non-owner-occupied lending; owner-occupied commercial real estate is excluded because repayment depends on the operating business rather than the property's income. The screens are monitoring criteria, not limits — crossing them violates no rule, but identifies the institution for heightened supervisory analysis of its risk-management practices.
A bank over the screens faces examiner expectations for enhanced risk management, stress testing, and capital planning — and often concludes the cleanest response is reducing the numerator. Whole-loan sales and participations shrink concentration immediately, which is why concentration management is a common, non-credit reason a CRE loan comes to market; see how to sell a commercial loan.
Why credits like this reach a workout desk: bank noncurrent commercial real-estate loans have risen while reserve coverage slips at community banks (FDIC Quarterly Banking Profile), and roughly $957 billion of commercial and multifamily mortgage debt was scheduled to mature in 2025 — against a total market of about $4.8–5.0 trillion, ~38% of it held by banks and thrifts (Mortgage Bankers Association). See the CRE distress statistics hub for the full figures and sources.
Primary sources: FDIC Quarterly Banking Profile, Mortgage Bankers Association, and interagency (FDIC / OCC / Federal Reserve) guidance on CRE loan accommodations and workouts. Figures are directional and updated periodically; confirm the latest release before relying on a specific number.
No. The guidance explicitly establishes no limit or cap; the criteria identify institutions whose CRE concentration risk management may warrant further supervisory analysis.
Construction and land development, multifamily, non-owner-occupied nonfarm nonresidential loans, and other loans where repayment depends on the real estate. Owner-occupied CRE is excluded from the total-CRE criterion, though construction loans count toward the 100% screen regardless of eventual occupancy.
Portfolio run-off, participations, and whole-loan sales — the fastest lever; Standing Bid Capital purchases individual CRE notes and small portfolios from banks managing concentration — Request a confidential review.