During Q4 2025, CEIS client community banks observed a continued decline in credit quality, reflected by incremental deterioration in commercial real estate (CRE) metrics. This trend has predominantly resulted from higher loan rates and reduced property values due to increased vacancies and higher capitalization rates, as indicated by recent appraisals. Consequently, CEIS noted a greater number of risk rating variances across client portfolios and ongoing covenant pressures. Provisioning and reserves have been adjusted to reflect these developments; however, criticized credits are now categorized at higher levels of risk, while underwriting exceptions for new loans are above historical norms.
About This Report
The CEIS Review Commercial Credit Observations (CCO) Report is published quarterly and reflects aggregated findings from active loan review engagements conducted across more than 100 community banks nationwide. Unlike peer analyses derived from call reports or regulatory filings, this report draws on loan-level data accessible only through independent credit review — including covenant compliance rates, credit policy exceptions, risk rating variances, and origination underwriting quality metrics. The Q4 2025 edition reflects portfolio conditions as of December 31, 2025.
For additional information, please contact CEIS Review.
