Regional banks will continue to see an "unfavorable U.S. operating environment" into 2024, according to a new Fitch Ratings report.

Not that any banking institution has it easy. "All U.S. banks will need to take defensive measures to conserve capital and provision for higher expected losses, given scarcer opportunities for revenue growth amid a restrictive rate environment, rising regulatory requirements and capital costs, and less benign credit quality," the company wrote. At the same time, under a higher-for-longer scenario and with greater scale, larger banks will likely take market share, according to the analysis.

This is not good news for commercial real estate. According to Steven Blitz, chief U.S. economist and managing director of global macro for TS Lombard, the banking industry is seeing small and large banks moving in two opposite directions. The smaller banks are growing loans and large deposits while the larger banks have become more cautious and are holding more cash. Given that regional banks have become an important source of CRE lending, seeing them lose market share isn't a positive move.