Bank Earnings Show Resilience Amid Credit Concerns in Q3 2025

Loan pipelines are healthy, with several banks guiding to continued CRE and C&I growth into early 2026, even amid tighter pricing and intense competition from private lenders.
Credit stress remains episodic, not systemic. Office remains a key pain point, but broader credit quality is stable, with isolated charge-offs tied to individual borrowers or sectors.
Underwriting discipline is holding despite pricing pressure. Many banks remain selective, with conservative structures and low LTVs in CRE portfolios, suggesting risk management is intact.

Key Takeaways

A Mixed Quarter, Not a Meltdown

As Q3 2025 earnings rolled in, investors and analysts focused less on top-line numbers and more on warning signs of credit stress—especially in commercial real estate, per Trepp. The question: Are we on the verge of broader contagion, or simply dealing with a few isolated “cockroaches,” to borrow Jamie Dimon’s now-famous analogy?

A review of 10 CRE-exposed regional and community banks shows modest but encouraging signs of recovery, even as stress in office and select C&I sectors continues to pop up.

Lending Is Heating Up Again

Loan demand is rebounding. Banks like East West, Old National, Wintrust, and Ameris reported strong pipelines heading into Q4 and early 2026. While pricing is tightening—especially as private credit players bid more aggressively—many banks are holding the line on structure, maintaining amortization requirements and covenant discipline.

Wintrust and Ameris highlighted competition most notably on pricing, not terms. Zions and Cadence also posted steady loan growth, with some credit to recent acquisitions and organic expansion across C&I, energy, and mortgage segments.

CRE Credit Quality: A Known Overhang, But Not Systemic

The good news: CRE credit issues are still largely contained, with office as the primary pain point.

First Citizens took a notable $82M charge-off tied to a bankruptcy, while reiterating ongoing pressure in office through 2026.
Western Alliance saw a steep rise in non-performing loans, driven by a single mortgage-linked borrower. Management emphasized the issue was isolated.
Zions disclosed a $50M charge-off linked to borrower fraud—again, a one-off, not part of a broader trend.

Meanwhile, other banks posted more benign results:

East West, Cadence, and Ameris all reported stable credit metrics, with conservative CRE portfolios featuring low loan-to-value ratios and solid debt service coverage.
Wintrust and Old National improved or held steady in nonaccruals and criticized assets, suggesting that any deterioration remains manageable.

Office Still the Weak Link

Multiple banks reiterated their expectation for elevated office-related losses through 2026. But outside of that segment, banks appear more comfortable with other CRE exposures. Ameris, for example, posted no non-performing office loans this quarter, highlighting its largely Class A/medical-focused portfolio.

Expect office credit issues to remain lumpy and episodic, not systemic—at least across this sample set..

What Comes Next

Absent a macro shock, banks are positioned to grow selectively in 2026. The return of competition suggests confidence in future demand, even if margin compression is likely.

Key signals to watch:

Selective acceleration in loan production
Persistent but isolated credit events, particularly tied to private-credit borrowers
Continued office-related provisioning into 2026.

Bottom Line: Cracks Are Real, But So Is Resilience

This earnings season didn’t paint a picture of broad systemic risk—it showed a patchwork of isolated credit issues, mostly well-contained by strong capital buffers and conservative underwriting. Loan demand is firming, credit governance appears sound, and bank-led lending looks poised to slowly regain ground lost to private lenders.

Yes, there are cockroaches. But the house lights are back on—and they’re not swarming.