Some News from the FDIC. "Nearly three out of four of Atlanta-based banks are heavily weighted in construction and development loans and could face trouble if the housing market continues to cool. Eighty-seven of the 118 banks with headquarters in Atlanta have high concentrations of construction and development loans, the vast majority for residential projects, according to the Federal Deposit Insurance Corp."

"Atlanta banks are significantly more invested in real estate than they were during the last real estate downturn. In 1991, only 29 percent of Atlanta banks, versus 74 percent today, had C&D loans totaling more than 100 percent of their capital."

"New data released from the FDIC shows that the same banks have concentration of real estate-related loans that are well above that of previous boom years. More than half, or 56 percent of community banks in Florida had an exposure of construction and development loans that were 100 percent or more of capital. In contrast, just 22 percent of banks had such exposure during 1987, the last boom period."

"Construction and development loans grew 66 percent during 2005, a record increase and the 10th consecutive year of double-digit growth. 'The majority of C&D lending is for residential housing, and continued strong absorption of new housing units will be a crucial factor,' the FDIC said."

"At 421 percent, the median commercial real estate exposures (CRE) loan-to-Tier 1 capital concentration among California-based institutions ranked fourth highest among the states as of year-end 2005. Elevated concentrations of CRE loans may leave institutions more vulnerable to adverse changes in market conditions."

"Innovative mortgages and investors may be buoying California housing demand. Interest-only and negative amortization loans accounted for 69 percent of non-prime mortgage originations in California in the first 11 months of 2005. During the same period, investors and second-home purchasers accounted for 15 percent of California Alt-A mortgage originations."

"Residential permit activity declined in 2005 for the first time in ten years, possibly signaling a change in housing markets with important implications for the state’s construction-dependent job growth."