Top-ten mortgage originator U.S Bank ($10.67 0%) is passing on commercial real estate opportunities in certain markets at risk of overheating because of new construction.
Speaking Wednesday on a conference call, Chief Executive Richard Davis said U.S. bank is walking away form commercial real estate deals in markets where the housing stock is too high. The bank determined this position after considering foreclosed properties await placement into the marketplace and an impending construction boom of multifamily properties.
?We are not engaging in overheated markets like Boston and Chicago,? Davis said. ?We just think it?s just too risky. We are passing on opportunities not because the credit quality doesn?t look good. We just the future as we see it won?t be strong enough to account for.?
Commercial mortgage and construction and development nonperforming assets declined nearly 50% in the second quarter from a year earlier, as the Minneapolis-based bank continued to resolve and reduce exposure to problem assets.
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