The third quarter saw a significant increase in the number of noncurrent bank loans, according to the Federal Deposit Insurance Corporation's Quarterly Banking Profile for Q3 2023.
"Looking more closely at commercial real estate portfolios, we are beginning to see concerning trends in non–owner–occupied property loans," said FDIC Chairman Martin Gruenberg in prepared remarks. "The volume of noncurrent non–owner occupied CRE loans increased by $4.1 billion, or 36.4 percent, quarter over quarter. In addition, these loans had a noncurrent rate of 1.31 percent in the third quarter, up from 0.96 percent last quarter and 0.54 percent a year ago. This is the highest noncurrent rate reported for this loan portfolio since third quarter 2014."
These trends are being driven primarily by deterioration in office loans, according to the agency.
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