On January 31, Comptroller of the Currency John C. Dugan informed members attending a Florida banking conference that the Office of the Comptroller of the Currency (OCC) is paying increased attention to certain commercial real estate transactions.

In particular, the Comptroller stated problems arising from “high community bank concentrations in commercial real estate at a time of significant market disruptions and declining house and condominium sales and values” were a major concern for the agency.

According to the accompanying press release, in the area of construction and development loans, nonperforming loans in community national banks amounted to 1.96% of the total at the end of the third quarter. This rate was approximately double that of the year before.

The Comptroller stated that the OCC will undertake numerous steps to address this issue, including more frequent interaction between supervisors and banks with concentrations in commercial real estate loans that are declining in quality and increased scrutiny of assets. The Comptroller also discussed the agency’s expectation that banks with commercial real estate concentrations make realistic assessments of their portfolio based on current market conditions.