The move is another signal that banks are more willing to start growing their CRE loan portfolios as they have in other lending areas.

The banking sector overall also has substantially improved its liquidity position over the past few years. Indeed, large banks in the aggregate have more than doubled their holdings of cash and securities since 2009, according to remarks last week by Ben S. Bernanke, chairman of the Federal Reserve System. The credit quality of large banks’ assets is looking better as well, although the improvements have been uneven across types of loans.

In the aggregate, delinquency rates on loan portfolios at large banks have declined substantially from their peaks. However, while delinquencies on commercial and industrial (C&I) loans and consumer loans have fallen to the lower end of their historical ranges, delinquencies on loans backed by commercial or residential real estate have declined only moderately and remain elevated, Bernanke said.

Notwithstanding the various headwinds, credit conditions in the United States have improved significantly in a number of areas. Many–though certainly not all–businesses and households are finding it easier to borrow than they did a few years ago, in part because of better conditions in financial markets more broadly.

“In a market that has been in flux for the last few years, the lending environment continues to be the shining beacon of hope,” said Gary Goss, senior vice president debt placement services at Cassidy Turley San Diego. “The abundance of competitive lending sources and very low interest rates, combined with an absence of significantly damaging global economic news over the past few months, has created an excellent environment to finance commercial real estate.”

“Twelve months ago, lenders (for the most part) were seeking permanent debt for multi-family, industrial, retail and office property types alone,” Goss said. “In recent months, we have noticed a rise in multiple lending sources offering programs for construction, hospitality and special use properties and we expect them to continue to expand their lending types as a way to satisfy their huge appetite for accumulating loans. Mezzanine debt and Joint Venture Equity financing is also plentiful and is playing a major role in making up for the downward shift in lower leverage senior debt.”

Overall, at this point in time, the debt markets appear to be in a very good state as clients see this as an opportunity to capitalize on favorable financing conditions, Goss added.

Signs of improvement notwithstanding, the boost in loan growth is not without a potential downside.

While loan growth adds to a bank’s earning assets, growing loans faster than deposits can also put pressure on banks’ liquidity, according to Moody’s Investors Service.

“Despite our favorable view of recent loan growth, as the economy recovers, history suggests that underwriting standards will deteriorate,” Moody’s analyst wrote in their most recent weekly credit markets report. “Already, a number of banks mentioned in their recent quarterly earnings teleconferences that loan pricing competition has increased. Our experience has been that after affecting price, competition typically weakens loan structures and covenants. Once that occurs, it will translate into asset quality problems down the road. Therefore, a leading indicator for banks’ asset quality will be the pace of their loan growth relative to overall economic growth.”

For now, though, Moody’s said that is not a worry because U.S. banks’ are in the enviable position of having more deposits than loans.

The recent loan growth is also positive because it typically represents customer growth. An indication that this is particularly true now is the fact that most banks have not reported an increase in credit line utilization rates.

By Mark Heschmeyer, Costar.com

• The number of people filing for unemployment checks declined modestly in the latest week.  The latest figure of 367,000 new first-time filers is close to being normal in a dynamic economic economy like the U.S. where there are lay-offs and firings even during good economic times.  However, the pool of people on the unemployment dole (not the first-timers, but continuing filers) still remains high.
• In separate data news, imports and exports both increased in March.  However, slightly faster growth in purchases of foreign products by U.S. consumers compared to sales growth of U.S. goods to foreigners widened the trade deficit.  Imports shot up 8.4% from one year ago, while exports grew by 7.3%.
• The increase in international trade activity is good news for commercial practitioners, particularly affiliated with SIOR.  Leasing and purchasing demand for industrial and warehouse spaces will be rising.  Rising international trade is also good news for REALTORS® selling homes to foreign nationals.  For example, there are increasingly more German homebuyers in Greenville, South Carolina because of the expanding BMW factory nearby.
• Though the widening trade deficit will hold back current economic growth by a few decimal points, the broad increases in international trade is critical to a long-term rise in standard of living.  Extra international competition always forces companies to shape up and drive towards efficiency while consumers are exposed to better products.
• The falling international trade in 2008 and 2009 were due to the harsh economic recession, when the U.S. economy lost 8 million jobs and the number of people filing for unemployment checks skyrocketed.  The Great Depression of the 1930s was also associated with a major collapse in international trade.  Many European countries after the First World War sunk into terrible economic hardship as many newly created small-sized countries started to impose foreign tariffs (say between Croatia and Austria) which previously had not existed as part of the Austrian-Hungarian Empire.  The disintegration of Soviet Union and its equivalent of the Great Depression in the 1990s was also associated the sudden collapse in border trade, say between Ukraine and Russia.  In a more recent example, North Korea today is one of the poorest countries in the world because it believes principally in domestic production without foreign competition.

Interesting read from CNBC. I have thought for the last few years (while observing all of the bank closings in Florida) that eventually there will be value in acquiring a small community bank, simply for the bank’s state charter. It can be argued that the State of Florida will not be handing out any new ones for some time – and if could be difficult to obtain one and start a new bank in the future once we are past the down phase of the business cycle.

Community banks have a lot to fear from the Dodd-Frank financial reforms, which could put half of them out of business, former FDIC Chairman Bill Isaac told CNBC Wednesday.

Earlier Wednesday, Federal Reserve Chairman Ben Bernanke said most of the provisions in the 2010 law were aimed at the largest financial institutions and not community banks.“The bigger banks can absorb it, the smaller banks can’t,” Isaac, who is now chairman of Fifth Third Bancorp, told Larry Kudlow. “I would not be surprised to see half of the community banks in this country go out of business if we don’t give some relief from Dodd-Frank for them.”

“We will work to maintain a clear distinction between the community banks and larger institutions in application of the new regulations,” Bernanke said in prerecorded remarks played at a convention of community bankers.

However, Isaac called the sweeping reforms a burden on community banks.

“I think that Dodd-Frank is a terrible piece of financial legislation, he said. “It didn’t address any of the causes of the crisis that we just went through. It won’t prevent the next crisis. It’s heaped volumes and volumes of regulations.”

Isaac is also not a fan of the way the Fed’s current stress tests which are mandated under Dodd-Frank, are being done. Since banks are required to capitalize on a depression-era scenario, they either have to raise capital or slow their growth or balance sheets, which he said many are now doing.

“What they’re missing here is that when you require banks to capitalize for a depression, it’s going to be awfully hard to get this economy moving,” he said.

The new banking regulations have also lead to the tightening of lending standards, despite the fact that banks have a lot of excess capital right now. “Loan growth has almost been non-existent for the past three years,” he said. “It’s hurting the people who need the money the most. It’s hurting small business. I think it is impeding economic growth.”

Nice little bit from the WSJ this morning:

CoStar Group, Inc. announced today that it has completed its acquisition of LoopNet, Inc. previously announced on April 27, 2011, creating the premier information, marketing and analytics company in commercial real estate. CoStar is commercial real estate’s leading provider of information and analytic services and LoopNet is the leading online commercial real estate marketplace.

“We are very pleased that we can begin integrating these two successful companies that have been at the forefront of innovation in the commercial real estate industry,” said Andrew C. Florance, Founder and Chief Executive Officer of CoStar. “We believe our products and services, diversified client base, comprehensive geographic footprint and economies of scale will drive significant synergies, which we believe can lead to increased stockholder value and a stronger, integrated platform for our customers.” CoStar plans to continue to operate LoopNet as a separate brand. LoopNet.com has 5.8 million registered members and currently has approximately 3.6 million unique monthly visitors. “The LoopNet brand is important,” stated Florance. “Our strategy is to invest in strengthening LoopNet’s products and services.” The combined company will retain the name CoStar Group, Inc. and will continue to trade on the NASDAQ Global Select Market under the ticker symbol CSGP.

Found this small report online this morning – geared toward residential, but fosters some hope for commercial real estate -

“Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

We have already seen several similar “big box” stores go under, notably Circuit City in this case for its similarity. It makes me wonder what relevance this style of retail has in our future. I’m writing this blog post on an computer that I bought on apple.com and reading it on a monitor I bought via eBay. I’ve been in a Best Buy store recently, but it was to look at the products, I bought nothing. Maybe I am on outlier, but it seems we just need electronic showrooms, with 1-3 day delivery to your home.

But Americans also crave instant gratification, so they may always need to carry a 60″ television on the door. We shall see.

Full article that spawned my curiosity today HERE