by Calculated Risk on 12/07/2009 08:57:00 AM

From Bloomberg: No Escape From TARP for U.S. Banks Choking on Real Estate Loans

... mounting defaults on commercial property may keep regional lenders from repaying bailout funds until at least 2011.

... regional banks ... are almost four times more concentrated in commercial property loans than the nation’s biggest lenders, according to data compiled by Bloomberg on bailout recipients.

The concentration makes regulators less likely to let regional lenders ... leave the Troubled Asset Relief Program, analysts said.
...
The stakes for taxpayers include whether they’ll get back $36.6 billion held by 35 of the largest regional lenders that received TARP money.
...
Among 35 of the biggest regional lenders that retain TARP funds, commercial real estate and construction loans average 37 percent of total loans, compared with 9.5 percent at Citigroup Inc. and Wells Fargo & Co., the two biggest U.S. banks that haven’t announced plans to repay the government, according to data compiled by Bloomberg....

Basically small and regional banks were over concentrated in C&D (Construction and Development) and CRE (Commercial Real Estate) loans - and those areas are still under severe stress (CRE will get worse). This is why the FDIC is busy every Friday, and also why many of these small and regional banks will be stuck with TARP for some time (or even fail owing money to the Treasury).