The FDIC issued an advisory to reemphasize the importance of strong capital, appropriate credit loss allowance levels, and robust credit risk-management practices for institutions with commercial real estate concentrations.
Details: The advisory:
Conveys several key risk management practices for institutions to consider in managing CRE loan concentrations in the current economic environment.
Reemphasizes the importance of effectively managing liquidity and funding risks, which can compound lending risks, particularly for CRE-concentrated institutions.
Replaces the March 2008 “Managing Commercial Real Estate Concentrations in a Challenging Environment” advisory.