A recent report from S&P Global Market Intelligence noted that large banks had more exposure to CRE loan risk than had been publicly perceived.

This has been a recognition building over time. In November 2023, it looked as though small banks were increasing their number of CRE loans while large banks turned more cautious. And all the statistics and monitoring metrics seemed to show that the biggest concentration of CRE loans was among small and regional banks.

But by mid-May this year, clearly something wasn't adding up. Distress levels jumped while the extend-and-pretend practice of lenders continued. That certainly included large ones when the distress rate increase "was significantly affected by one large loan which impacted the segment distress rate in a fairly dramatic fashion," according to CRED iQ. That magnitude of transaction is not one within the capacity of a small bank.