Asset Quality
Commercial Real Estate Loans
Also known as CRE Loans
Commercial real estate (CRE) loans are credit secured by income-producing or owner-occupied commercial property: office, retail, multifamily, industrial. They are the largest asset class at many community banks and the focus of intense supervisory attention since 2023.
How is Commercial Real Estate Loans calculated?
Schedule RC-C breaks real estate lending into categories that aggregate to CRE. Supervisors track CRE both as a dollar total and as the CRE concentration ratio (CRE loans relative to capital) which flags banks that may warrant heightened risk management.
Why does Commercial Real Estate Loans matter?
CRE is where community-bank credit risk concentrates, and the post-pandemic stress in office and some retail property has made it the sector regulators watch most. A large CRE dollar book matters most when it is large relative to the bank's capital.
How do you interpret Commercial Real Estate Loans?
The dollar CRE figure is the input to the metric that really drives supervision, the CRE concentration ratio. Read the two together, and look at property-type mix: an office-heavy book carries different risk than one weighted to multifamily or owner-occupied space.
What do Commercial Real Estate Loans levels indicate?
| Range | Label | Interpretation |
|---|---|---|
| Diversified, < 100% of capital | Strong | CRE well within supervisory concentration guidance. |
| Moderate | Adequate | CRE a normal share of a community-bank book. |
| Concentrated | Watch | Approaching the 300%-of-capital supervisory threshold. |
| Office-heavy / > 300% of capital | Concern | High concentration in a stressed property sector. |
Worked example
Frequently asked
What counts as a commercial real estate loan?
CRE includes loans secured by nonfarm nonresidential property, multifamily housing, and construction and land development. Owner-occupied commercial property is sometimes analyzed separately because it is repaid from business operations rather than property income.
Why is CRE under so much scrutiny?
Post-pandemic remote work hit office property values, and CRE is highly concentrated at community banks. Supervisors use the CRE concentration ratio to identify banks whose CRE exposure is large relative to capital.
Sources
See Commercial Real Estate Loans across 4,193 US banks
BankRegReports ranks every FDIC-insured institution by commercial real estate loans, refreshed each quarter as new FFIEC filings land.