The Federal Reserve's Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) reports from January and April show that bank optimism on CRE is fading as lenders adjust to new risks.
Trepp Chief Economist Rachel Szymanski saw something additionally in the April 2026 SLOOS, noting a "different lens" in a report on the question of exposures of bank lending to non-depository financial institutions (NDFIs), whether they are sufficiently transparent and if they "create correlated risk across the banking system,
Any risk across the banking system could ultimately affect the availability of credit, including for CRE.
The April survey had, for the first time, special questions on NDFI lending, with borrowers in this space getting branched into five categories: mortgage credit intermediaries, business credit intermediaries, private equity funds, consumer credit intermediaries and other NDFIs.
According to Szymanski's reading of the April SLOOS, banks have tightened lending standards for all five. The tightening was sharpest for loans to business credit intermediaries, consumer credit intermediaries and other NDFIs. There were also more restrictions on mortgage credit intermediaries and private equity funds, but to a lesser extent.
Some of the loan terms associated with the changes were higher premiums on riskier loans, stricter covenants, shorter maximum maturities, more collateral and lower maximum credit line sizes. The given reasons for the tightening were a more uncertain economic outlook and increased borrower credit risk.
Simultaneously, there was a stronger demand for NDFI loans in all categories. The demand was strongest from private equity funds. Even as NDFIs were more interested in bank funding, these financial institutions grew more selective.
Super regional banks said their NDFI portfolios were strong performers with minimal historical losses. Credit data supported that, which makes sense as banks are becoming more discerning moving forward.
Some examples of NDFI exposure at selected financial institutions during the first quarter were 26% at First Citizens, 21% at PNC Financial, 12% at Truist Financial, 7% at Fifth Third and 3% at U.S. Bancorp, based on 2026 earnings presentations and 8-K filings.
Overall, as a share of total loans, NDFI ranged from low single digits to more than 20% at super regional banks.
"Q1 earnings disclosures add that backward-looking NDFI performance remains clean and that concentration ranges widely across super regional banks," Szymanski wrote.
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