Smaller Banks Are Stealing Commercial Loan Market Share From the Money Center Banks

Seven months ago the money center banks were making lots and lots of commercial real estate loans.  By money center banks I mean the big nationwide banks, like Citicorp, Bank of America, JP Morgan Chase, Wells Fargo Bank and Wachovia.

Unfortunately for most of the money center banks, they were participants in the residential mortgage backed securities pipeline.  They made alt-A home loans and subprime home loans, and they briefly held these loans in their portfolio until the loans were ready to be securitized. 

Then the music stopped.  The market for residential mortgage-backed securities secured by alt-A and subprime home loans suddenly dried up.  There were no more buyers. 

As a result, the money center banks found themselves stuck with tens of billions of dollars of these risky home loans on their books.  They lost a lot of their liquidity, and they are all terrified of future loans losses.

The end result is that the money center banks have largely frozen their balance sheets.  They aren't making a lot of loans of any type, so their commercial real estate loan volume is down sharply.

Fortunately most of the smaller commecial banks were not involved in securitizing subprime home loans.  Therefore they were not stuck with billions of dollars of crumby home loans when the music stopped, and they still have an appetite for new commercial real estate loans.

So if you need a commercial real estate loan today, and your deal is clearly bankable, look for a smaller bank to make the deal.

You can also apply to 750 different banks for a commercial loan in just four minutes using C-Loans.com.