Overdue Commercial and Industrial Loan Balances Register Sharp Increase

The FDIC’s first-quarter Quarterly Banking Profile report shows an uptick in delinquent commercial and industry (C&I) loans. (The report provides a comprehensive summary of the financial results for all FDIC-insured institutions.)

Noncurrent loans of 90 days or more past due in the C&I sector rose $3.3 billion (2.4%) during the first three months of the year, according to FDIC data. This is the first quarterly increase in total past-due loan balances in 24 quarters and the largest since first-quarter 1987, “driven by a $9.3 billion (65.1%) increase in noncurrent C&I loans,” the agency said. Loans to the energy sector—especially oil and gas—accounted for a large part of the increase.

C&I loans grew by $71.2 billion (3.9%), “with the acquisition of a commercial finance business from outside the industry contributing to the strong growth in reported C&I loan balances,” the FDIC noted. And the average noncurrent rate for C&I loans rose from 0.78% to 1.24%. “This is the highest noncurrent rate for C&I loans since year-end 2011,” it said.

On balance, the Federal Reserve’s April Senior Loan Officer Opinion Survey shows that a moderate number of banks tightened lending standards for C&I loans to large- and middle-market firms and a modest number, to small firms over the three months prior to the survey.

- Diana Mota, associate editor

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