Commercial real estate taking toll on banks.Atlantic Equities' Richard Staite has named PNC PNC Purdue University North Central (Westville, Indiana) PnC Point 'n Click PNC Police National Computer PNC People's National Congress (Guyana) PNC People's National Congress and US Bank as "underweight Underweight An situation where a portfolio does not hold a sufficient amount of securities to satisfy the accepted benchmark of the portfolio's asset allocation strategy. Notes: ," fueling speculation that the commercial real estate market will continue to ravage the banking industry. Both PNC and USB USB in full Universal Serial Bus Type of serial bus that allows peripheral devices (disks, modems, printers, digitizers, data gloves, etc.) to be easily connected to a computer. have over 50 percent of their loans in commercial real estate, compared to Bank of America
Bank of America (NYSE: BAC TYO: 8648 ) is the largest commercial bank in the United States in terms of deposits, and the largest company of its kind in the world. and JPMorgan who have around a third of their loans tied up in commercial properties, according to Bloomberg's Adam Johnson. Referring to Staite's findings, Johnson said that PNC and USB's weakness shows that the commercial real estate market is still dropping. "Commercial real estate has only begun to crack," Johnson said, "because businesses were able to hold on longer than individuals." Johnson also noted that leverage in the form of tangible common equity at the two banks is still relatively high — about 3.7 percent for PNC and 5.5 percent at USB — yet those figures aren't on par with comparable banks that maintain about 8 to 10 percent. |
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