Episode 248: Is a CRE concentration a bad thing?

This episode examines an article from Bank Director titled “Capitalizing on disruption: California’s entrepreneurial Five Star Bancorp.” We ask the question is a concentration in commercial real estate (CRE) a bad thing? Five Star Bancorp has a niche in financing manufactured housing. This niche makes up 86% of their loan portfolio and resulted in a value of 682% of its risk-based capital, which is way above the regulatory guidance of 300%. However, the bank’s performance is phenomenal! They have been able to show investors, regulators, and customers that this niche is a strategic advantage, not a major concern. A link to the article is included below.

Link: Capitalizing on Disruption: California’s Entrepreneurial Five Star Bancorp | Bank Director