- Delinquent commercial loans held steady or improved at major US banks in Q1 2026.
- Bank of America saw a 44% drop in nonperforming commercial real estate loans year-over-year.
- Banks cite strong credit quality, though cautious due to ongoing inflation and global uncertainty.
- Most large banks continue to maintain or slightly increase reserves for potential loan losses.
Commercial Loans Remain Resilient
Major US banks including Wells Fargo, Bank of America, and PNC reported that commercial loans, especially in commercial real estate, are holding up well so far in 2026, reports CoStar. Despite higher inflation, shaky consumer sentiment, and global tensions, delinquencies showed little sign of worsening among these lending portfolios. Bank of America, the nation’s second-largest bank, recorded the most visible improvement, reporting a significant decline in nonperforming commercial real estate loans compared to last year.
Key Metrics Point to Improvement
Bank of America’s nonperforming commercial loans fell 44% year-over-year to $1.19B in Q1. Wells Fargo’s portfolio improved 2.6% with nonperformers now at $3.78B, while PNC’s delinquent loans dropped 26% to $630M. First Horizon, a regional player, saw a minor 1.7% uptick in nonperformers, but described its commercial loan pipeline as strong.
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Reserves and Cautious Optimism
Despite concerns around inflation and global events, banks generally expressed cautious optimism. Wells Fargo’s CEO emphasized strong credit quality, even as March’s inflation rate hit 3.3%. This resilience aligns with broader signs that property fundamentals are beginning to stabilize, supporting expectations for stronger performance into 2026. Notably, Bank of America reduced some of its reserves for loan losses in Q1—contrary to the industry norm—citing confidence in its loan book quality. Most analysts expect large banks to maintain or build reserves as a precaution against volatility in commercial loans.
What’s Ahead
Additional banks including Citizens Financial, KeyCorp, and US Bancorp will soon report earnings, providing more clarity on trends in commercial loans. Analysts and regulators remain focused on credit quality as banks navigate an environment marked by inflation, economic uncertainty, and global risk factors. For now, commercial loans at major banks appear to be withstanding the storm.
