Several banks with high hotel exposure increased their lending in the second quarter


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Several banks with notable hotel portfolios increased their exposures in the second quarter despite heightened uncertainty as the COVID-19 pandemic continues to weigh on tourism.

Western Alliance Bancorporation, Simmons First National Corp. and WesBanco Inc. were among the major banks with the highest exposure in the second quarter to US hotels, an asset class devastated by the pandemic.

Western Alliance reported quarterly hotel credit outstanding of $ 2.01 billion, or 8.0% of total gross credit outstanding. Simmons’ $ 1.03 billion hotel loans accounted for 7.0% of gross loans outstanding, and WesBanco’s $ 729.2 million hotel loans accounted for 6.6% of gross loans outstanding.

Both Western Alliance and Simmons First increased their hotel loan books 1.7% and 1.4%, respectively, from the first quarter.

On a results conference call on July 17, Kenneth Vecchione, President and CEO of Western Alliance, noted the $ 2 billion increase, in part because it is less reliant on corporate and group travel.

Nearly 85% of Western Alliance’s hotel borrowers either paid as originally agreed or with deferred payment plans through 2021, Vecchione said.

Many U.S. hotels closed in the first few months of the novel coronavirus in the country and the industry has been reluctant to recover, with business and group travel still largely dormant and virus cases still high in several key states. Nearly a quarter of US hotel-linked loans in commercial mortgage-backed securities were at least 30 days past due in June.

As in the first quarter, Wells Fargo & Co. was the leading hotel loan provider, with $ 12.25 billion in hotel loans accounting for 1.3% of gross loans outstanding.

WSFS Financial Corp. and BancorpSouth Bank were among the banks with the highest increases in hotel loan outstanding during the quarter, up 11.5% and 8.8% respectively.

A handful of banks pulled back in the quarter, with KeyCorp’s hotel loan book shrinking 12.6% and First Hawaiian Inc.’s exposure declining 12.1% in the quarter.

Todd Clossin, President and CEO of WesBanco, said on a conference call on July 23 that he was “curious” to see hotel performance data for the entire month of July as viral infections increased in some states. While encouraged by the resilience of many hotel borrowers, Clossin noted that hotels are likely to be more reliant on business travel in the fall, when the summer vacation ends.

“I would expect the next few months to be very enlightening for this portfolio [and] Hotels in general, ”he said.

Click here to view the property’s exposure data in Excel.

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