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OCC Bulletin 2015-51 | December 18, 2015

Real Estate Lending: Interagency Statement on Prudent Risk Management for Commercial Real Estate Lending


Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies; Department and Division Heads; All Examining Personnel; and Other Interested Parties


The Office of the Comptroller of the Currency (OCC), along with the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation, is issuing the attached interagency statement regarding supervisory findings about commercial real estate (CRE) lending activities. The agencies have observed substantial growth in many markets, increased competitive pressures, rising concentrations, and an easing of underwriting standards. The interagency statement reminds financial institutions of existing regulatory guidance on prudent risk management practices for CRE lending activity through economic cycles.

Note for Community Banks

This statement applies to all national banks and federal savings associations.


The interagency statement reminds financial institutions

  • to implement prudent risk management practices and capital levels commensurate with the level and nature of the institution’s CRE concentration risk.
  • of existing regulations and guidance related to CRE lending.
  • that the agencies, when conducting examinations that include reviews of CRE lending activities, focus on institutions’ adherence to guidance pertaining to the management of concentration risk and other CRE-related guidance.


The agencies have observed the following recent trends:

  • Increasing investor demand for CRE and the current interest rate environment are contributing to historically low capitalization rates and significant increases in property values in many markets.
  • CRE concentration levels have been rising at many institutions, influenced in part by continued strong demand for CRE credit, earnings pressures, and reassuring trends in asset-quality metrics, such as low rates of delinquency and charge-offs.
  • The competition for loans has resulted in an easing of underwriting standards and increases in underwriting exceptions.

Historical evidence demonstrates that financial institutions with weak risk management and high CRE credit concentrations are exposed to a greater risk of loss and failure. Maintaining underwriting discipline and exercising prudent risk management practices can help institutions succeed during difficult economic cycles.

Further Information

Please contact Grant Wilson, Director for Commercial Credit Risk, at (202) 649-6670.


Jennifer C. Kelly
Senior Deputy Comptroller and Chief National Bank Examiner

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