CRE Concentration Ratio (the 300% Guideline)

The CRE concentration ratio measures a bank’s total commercial real estate loans against its total risk-based capital. Under interagency guidance issued in 2006 (and re-emphasized since), a bank whose non-owner-occupied CRE loans exceed 300% of risk-based capital — and whose CRE book has grown more than 50% over three years — is flagged for heightened supervisory attention. A companion threshold flags construction and land loans above 100% of capital. These are screening criteria, not hard caps, but examiners treat them seriously.

Borrowers should care because concentration drives appetite. A bank cruising past 300% often slows new CRE originations, lets loans run off, or quotes defensively — not because your deal is weak, but because their balance sheet is full. Conversely, a well-capitalized bank far below the guideline has room to grow and is more likely to compete on terms. Asking "how is your CRE concentration?" is one of the more revealing questions a borrower can put to a loan officer.

We compute this ratio for every tracked bank from its quarterly FFIEC Call Report and display it on the lender’s profile, flagged against the 300% guideline. The "Who’s Lending Right Now" index pairs it with quarter-over-quarter growth, since the combination — high concentration plus a shrinking book — is the classic signature of a lender pulling back.