California Banks Face Risks from High Commercial Real Estate Loan Exposure

California banks have high exposure to commercial real estate loans, with almost a third exceeding regulators' scrutiny threshold of 300% of capital
The state's banking landscape is fragmented, with only Wells Fargo as a major national bank and many small regional lenders
Property loan concentrations can be risky as rising rates make refinancing difficult, leading to more defaults
Some banks argue concentration itself isn't bad if underwriting is conservative, but regulators are closely monitoring the situation
Foreclosures are rising in California and oversight is increasing, but federal regulators play a bigger role in monitoring larger institutions