The trend: Many US regional banks reported increases in non-performing loans within their commercial real estate (CRE) portfolios in Q3 2024.
This is further complicated by the $950 billion in CRE loans that will mature in 2024, with 10% tied to office properties—which could lead to refinancing issues or more defaults, per Reuters.
How we got here: Regional banks made 80% of the loans to commercial real estate (CRE) firms and are carrying the most CRE-related risk of any financial institutions (FIs). And while CRE is just 12.5% of larger FIs’ portfolios on average, it’s 38% for smaller regional banks.