Of course, such exercises should vary according to the size of the organization and the level of the concentration. All of these are key elements of a sound strategy to manage concentrations. In evaluating the impact of their CRE concentrations, bankers should also pay attention to geographic factors.
Many banks conduct successful CRE lending within a certain geographic area, but problems can arise when banks begin to lend outside their market or "footprint" for which they normally have better market intelligence. In recent years, supervisors have observed banks lending outside their established footprint, to maintain a customer relationship, into real estate markets with which they have less experience.