By Ian McKendry

WASHINGTON (MNI) – The decline in U.S bank loan delinquencies
slowed in the first quarter, according to estimations by Trepp, a data
analytics firm, in a recent report.

Using earnings and call report filings, Trepp estimated that
delinquencies for residential and commercial mortgages fell slightly in
the first quarter as did commercial and industrial, non-real estate loan
delinquencies, while construction loan delinquencies increased.

Trepp’s findings come ahead of the U.S. Federal Deposit Insurance
Corporation’s Quarterly Banking Profile report to be released in May.

According to Trepp’s preliminary first quarter estimates, the
delinquency rate for single family first-lien mortgages at U.S banks
decreased a tenth from 12.8% to 12.7%, while non-accrual or seriously
delinquent loan rates remained flat at 4.8%.

Trepp cited the high volume of home foreclosures and the continued
downward pressure on housing prices as a primary reason single family
first-lien mortgages continue to struggle.

On the commercial side, Trepp said the delinquency rate for
commercial mortgages fell from 5.4% to 5.3%. The results were more
varied with some banks experiencing improvements while others saw
declines.

Trepp said the non-accrual rate for commercial mortgages did go up
a tenth to 4.0% and that the overall decline in the delinquency rate
“highlights the lackluster nature of the economic recovery so far.”

The only loan category to deteriorate further in the first quarter
was construction loans which went from a delinquency rate of 18.0% to
18.3%. The non-accrual rate increased from 14.0% to 14.5%.

Trepp said the delinquency rate increased despite an rise in
originations because the amount of outstanding loan balances has
declined.

As for commercial and industrial, as well as non-real estate loans,
Trepp estimated the delinquency rate declined from 3.1% to 2.9%, which
would be the lowest for that category since the fourth quarter of 2008.
The non-accrual delinquency rate is expected to improve from 2.2% to
2.1%.

“Recent data indicate that loan volumes in the C&I segment have
finally turned the corner,” the Trepp report said.

Trepp said its estimates for fourth quarter U.S bank loan
delinquencies overshot the FDIC’s figure by 10 basis points while the
non-accrual rate estimate was nearly spot on.

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