Community and regional banks headquartered in Chicago, Houston, and Denver carry the heaviest CRE exposure among the emptiest office metros — San Francisco's banks, oddly, the least

Summary

Using FDIC call-report data (Q4 2025) for banks headquartered in the ten U.S. metros with the highest office vacancy rates as of mid-2026 (Seattle ~25%, San Francisco ~23%, Denver ~29%, Houston >20%, Washington DC ~22%, Chicago ~18%, Dallas/Austin ~20%), a number of small-to-midsize community and regional banks carry commercial real estate (CRE) loan books several times larger than their total risk-based capital — well above the 300%-of-capital threshold that bank regulators (OCC/Fed/FDIC 2006 interagency guidance) flag as a CRE-concentration supervisory concern. The most exposed individual bank is Marquette Bank (Chicago, $2.1B assets), at 592% of capital; Lakeside Bank (Chicago, 585%) and three Houston community banks (Southwestern National, American First National, Golden Bank, 513-570%) follow closely. Among larger institutions, WaFd Bank (Seattle, $27.6B assets) sits at 368% and EagleBank (Bethesda/Washington DC metro, $9.6B assets) at 422%. At the metro-average level, banks headquartered in Bethesda/DC-metro, Denver, Houston and Chicago run the highest average CRE-to-capital ratios (290-390%); banks headquartered in San Francisco — despite that metro carrying among the very worst office vacancy in the country — average only 137%, the lowest of the group. This is a real and load-bearing limitation of the analysis, explained below, not a finding that SF banks are safe.

Step 1 — Which metros have the emptiest offices right now

No table in the AskAmerica corpus carries commercial office vacancy (search_catalog was checked; only residential rental_vacancy_rate exists, in econ.housing_indicators/fred_indicators, which is a different market). This is a genuine coverage gap, filled here from web sources: Yardi Matrix and Cushman & Wakefield Q2 2026 MarketBeat data. As of Q2 2026:

• Seattle: 25.2% (highest in the nation, per Yardi Matrix)
• San Francisco: 23.3% (down ~570bps y/y — the most-improved market, but still near the top)
• Denver: 28.7% (CBRE)
• Washington DC: 21.9%
• Houston: >20% (July 2026)
• Austin: 20.6%
• Dallas-Fort Worth: 19.9%
• Chicago: 18.2% (down 90bps y/y)
• Portland, OR: 24.1%

National average office vacancy was 20.1% in Q2 2026 (Cushman & Wakefield), so every metro above is at or above the national rate.

Step 2 — Bank CRE exposure, by bank headquartered in those metros

Queried banking.financials joined to banking.institutions (FDIC call-report data, repdte = 2025-12-31) for active institutions with >$250M in assets, headquartered in San Francisco/Oakland CA, Seattle/Bellevue WA, Houston TX, Chicago IL, Denver CO, Portland OR, Washington DC, Arlington VA, Bethesda MD, Austin TX, and Dallas TX. CRE exposure was computed as (nonfarm-nonresidential CRE loans + construction/land-development loans + multifamily loans) / total risk-based capital — the standard concentration ratio regulators use, sourced directly from Call Report items LNRENRES, LNRECONS, LNREMULT, and RBC.

Every one of the top ~20 banks by this ratio exceeds the 300%-of-capital interagency guidance line, several by nearly double.

Step 3 — Which metro's banking sector is most exposed, on average

Averaging across all qualifying banks headquartered in each metro (n ranges from 1 in Oakland to 15 in Chicago):

By this measure, banks headquartered in the Bethesda/DC-metro, Denver, Houston, and Chicago areas carry the heaviest average CRE concentration relative to capital — all above the 300% supervisory-attention line. San Francisco is the clear outlier at the bottom, despite the metro posting some of the worst office vacancy in the country.

Why San Francisco looks "safe" here — and why that is a data-grain limitation, not a real finding of safety

This is the most important caveat in the analysis. FDIC call reports disclose CRE loan balances only at the institution level, by the bank's charter/headquarters location — there is no field breaking a bank's loan book out by the geography where the underlying property sits. The proxy used here (which banks are headquartered in each metro) is reasonable for small community and regional banks, which concentrate lending near their branches, but it badly understates exposure for two real reasons specific to San Francisco:

• The banks most exposed to SF office CRE have already failed or relocated their remaining book off this list. First Republic Bank, the poster child of SF-CRE-linked failure, was seized and sold to JPMorgan in 2023 and no longer appears as an active FDIC-insured institution in this data.
• Large multi-market banks headquartered elsewhere (Wells Fargo, JPMorgan, Bank of America, US Bank, etc.) hold the bulk of San Francisco office CRE paper, but their national loan books are diluted across every market they serve, so their own metro-level HQ ratio (were they on this list, most are headquartered outside these metros and were excluded by the >$250M/HQ-city screen for smaller relevance) says little about SF-specific risk.

In short: San Francisco's own local community banks are lightly CRE-concentrated, but that says nothing about the exposure the largest national banks carry against San Francisco office towers specifically — the call-report data structurally cannot answer that finer question, and no metro-level loan-location breakdown exists in any public regulatory dataset used here.

Data and method notes

• Bank data: FDIC Call Reports via banking.financials joined to banking.institutions, queried live in this session (repdte = 2025-12-31, the latest quarter loaded; observed table coverage 2013-2025).
• CRE concentration ratio follows the same formula used in the 2006 interagency CRE concentration guidance (OCC/Federal Reserve/FDIC): total CRE loans (nonfarm-nonresidential + construction/land development + multifamily) as a percentage of total risk-based capital. The commonly cited supervisory-attention threshold is 300% for total CRE (or 100% for construction/land-development loans alone).
• Office vacancy figures are NOT from the AskAmerica warehouse (no table for it exists there); they come from Yardi Matrix and Cushman & Wakefield Q2 2026 U.S. Office MarketBeat web reports, accessed via WebSearch this session.
• Grain limitation: exposure is measured by bank headquarters city, not by where the underlying CRE collateral sits. This is a reasonable proxy for small/mid community banks and a poor one for large multi-market banks (e.g., WaFd Bank's book spans the whole Pacific Northwest and beyond, not just Seattle).
• Sample sizes per metro are small (n=1 to 15 banks) — a single large or small institution can swing a metro average materially (see Chicago, whose $533B combined-assets figure is dominated by BMO Bank N.A.).

Every query behind this report

5 warehouse calls ran in this session, in order. Each is reproducible against the same snapshot.

SELECT i.cert, i.name, i.city, i.state_abbr, f.repdte, f.total_assets_thousands,
  f.cre_nonfarm_nonresidential_thousands, f.cre_construction_land_dev_thousands, f.cre_multifamily_thousands,
  f.total_risk_based_capital_thousands
FROM banking.financials f
JOIN banking.institutions i ON i.cert = f.cert
WHERE f.repdte = (SELECT MAX(repdte) FROM banking.financials)
  AND i.active = true
  AND i.state_abbr IN ('CA','TX','IL','WA','CO')
  AND i.total_assets_thousands > 500000
ORDER BY f.total_risk_based_capital_thousands DESC NULLS LAST
LIMIT 5

SELECT MAX(repdte) AS max_date FROM banking.financials

SELECT i.cert, i.name, i.city, i.state_abbr, i.total_assets_thousands,
  f.cre_nonfarm_nonresidential_thousands, f.cre_construction_land_dev_thousands, f.cre_multifamily_thousands,
  (COALESCE(f.cre_nonfarm_nonresidential_thousands,0)+COALESCE(f.cre_construction_land_dev_thousands,0)+COALESCE(f.cre_multifamily_thousands,0)) AS total_cre_thousands,
  f.total_risk_based_capital_thousands,
  ROUND(100.0*(COALESCE(f.cre_nonfarm_nonresidential_thousands,0)+COALESCE(f.cre_construction_land_dev_thousands,0)+COALESCE(f.cre_multifamily_thousands,0))/NULLIF(f.total_risk_based_capital_thousands,0),1) AS cre_pct_of_capital
FROM banking.financials f
JOIN banking.institutions i ON i.cert = f.cert
WHERE f.repdte = '2025-12-31'
  AND i.active = true
  AND i.total_assets_thousands > 250000
  AND UPPER(i.city) IN ('SAN FRANCISCO','OAKLAND','SEATTLE','BELLEVUE','HOUSTON','CHICAGO','DENVER','PORTLAND','WASHINGTON','ARLINGTON','BETHESDA','AUSTIN','DALLAS')
  AND f.total_risk_based_capital_thousands > 0
ORDER BY cre_pct_of_capital DESC NULLS LAST
FETCH FIRST 40 ROWS ONLY

SELECT i.cert, i.name, i.city, i.state_abbr, i.total_assets_thousands,
  f.cre_nonfarm_nonresidential_thousands, f.cre_construction_land_dev_thousands, f.cre_multifamily_thousands,
  (COALESCE(f.cre_nonfarm_nonresidential_thousands,0)+COALESCE(f.cre_construction_land_dev_thousands,0)+COALESCE(f.cre_multifamily_thousands,0)) AS total_cre_thousands,
  f.total_risk_based_capital_thousands,
  ROUND(100.0*(COALESCE(f.cre_nonfarm_nonresidential_thousands,0)+COALESCE(f.cre_construction_land_dev_thousands,0)+COALESCE(f.cre_multifamily_thousands,0))/NULLIF(f.total_risk_based_capital_thousands,0),1) AS cre_pct_of_capital
FROM banking.financials f
JOIN banking.institutions i ON i.cert = f.cert
WHERE f.repdte = '2025-12-31'
  AND i.active = true
  AND i.total_assets_thousands > 250000
  AND f.total_risk_based_capital_thousands > 0
  AND (
    (UPPER(i.city)='SAN FRANCISCO' AND i.state_abbr='CA') OR
    (UPPER(i.city)='OAKLAND' AND i.state_abbr='CA') OR
    (UPPER(i.city)='SEATTLE' AND i.state_abbr='WA') OR
    (UPPER(i.city)='BELLEVUE' AND i.state_abbr='WA') OR
    (UPPER(i.city)='HOUSTON' AND i.state_abbr='TX') OR
    (UPPER(i.city)='CHICAGO' AND i.state_abbr='IL') OR
    (UPPER(i.city)='DENVER' AND i.state_abbr='CO') OR
    (UPPER(i.city)='PORTLAND' AND i.state_abbr='OR') OR
    (UPPER(i.city)='WASHINGTON' AND i.state_abbr='DC') OR
    (UPPER(i.city)='ARLINGTON' AND i.state_abbr='VA') OR
    (UPPER(i.city)='BETHESDA' AND i.state_abbr='MD') OR
    (UPPER(i.city)='AUSTIN' AND i.state_abbr='TX') OR
    (UPPER(i.city)='DALLAS' AND i.state_abbr='TX')
  )
ORDER BY cre_pct_of_capital DESC NULLS LAST
FETCH FIRST 25 ROWS ONLY

SELECT i.city, i.state_abbr, COUNT(*) AS n_banks,
  ROUND(AVG(100.0*(COALESCE(f.cre_nonfarm_nonresidential_thousands,0)+COALESCE(f.cre_construction_land_dev_thousands,0)+COALESCE(f.cre_multifamily_thousands,0))/NULLIF(f.total_risk_based_capital_thousands,0)),1) AS avg_cre_pct_capital,
  SUM(i.total_assets_thousands) AS total_assets_thousands
FROM banking.financials f
JOIN banking.institutions i ON i.cert = f.cert
WHERE f.repdte = '2025-12-31'
  AND i.active = true
  AND i.total_assets_thousands > 250000
  AND f.total_risk_based_capital_thousands > 0
  AND (
    (UPPER(i.city)='SAN FRANCISCO' AND i.state_abbr='CA') OR
    (UPPER(i.city)='OAKLAND' AND i.state_abbr='CA') OR
    (UPPER(i.city)='SEATTLE' AND i.state_abbr='WA') OR
    (UPPER(i.city)='BELLEVUE' AND i.state_abbr='WA') OR
    (UPPER(i.city)='HOUSTON' AND i.state_abbr='TX') OR
    (UPPER(i.city)='CHICAGO' AND i.state_abbr='IL') OR
    (UPPER(i.city)='DENVER' AND i.state_abbr='CO') OR
    (UPPER(i.city)='PORTLAND' AND i.state_abbr='OR') OR
    (UPPER(i.city)='WASHINGTON' AND i.state_abbr='DC') OR
    (UPPER(i.city)='ARLINGTON' AND i.state_abbr='VA') OR
    (UPPER(i.city)='BETHESDA' AND i.state_abbr='MD') OR
    (UPPER(i.city)='AUSTIN' AND i.state_abbr='TX') OR
    (UPPER(i.city)='DALLAS' AND i.state_abbr='TX')
  )
GROUP BY i.city, i.state_abbr
ORDER BY avg_cre_pct_capital DESC