After several years of retreat, regional banks are dipping their toes back into commercial real estate lending—signaling fresh confidence as interest rates ease and underwriting tightens. The change marks a notable reversal from the pullback that followed the Federal Reserve’s rapid rate hikes in 2022, when looser underwriting standards and rising costs made CRE lending, particularly in the office sector, a risky proposition.
Now that the federal funds rate is down and deal structures are more conservative, bank executives say they’re ready to compete again. On recent earnings calls obtained by S&P Global Market Intelligence, several lenders described a cautiously improving lending climate and early signs of growth ahead.
Regions Financial Chief Financial Officer David Turner said refinancing activity has strengthened as borrowing costs come down, particularly in multifamily.
“We’ve been very successful when things mature … being able to refinance those,” Turner said, adding that “the math is starting to work” again for developers as lower down payments make projects feasible. Even after years of derisking the portfolio, he said, the bank remains positioned to grow “when we get paid for the risk that we take.”
At First Horizon, CEO D. Bryan Jordan pointed to a 34-basis-point year-over-year improvement in yields for market-based CRE lending on new or forthcoming 2025 originations. CFO Hope Dmuchowski added that CRE spreads have stayed “consistent,” generally ranging from the mid-100s to upper-200 basis points.
KeyCorp CEO Christopher Gorman described a gradual comeback, expecting growth to accelerate next year.
“Our real estate platform is probably one of our very best platforms,” he said. “It will be flat on an average basis this year and up 3% from the fourth quarter of ’25 to the fourth quarter of ’26,” as transaction activity begins to recover after a long lull.
M&T Bank’s CRE portfolio slipped 1% in 2025 to $24.1 billion, but CFO Daryl Bible framed that as a sign of stabilization, citing “a slowing pace of decline … with continued payoffs and paydowns and higher originations.” Similarly, PNC Financial Services CFO Robert Reilly said the bank believes “CRE balances have largely stabilized” and anticipates moderate growth in 2026.
U.S. Bancorp also reported its first uptick in CRE lending in nearly three years. CFO John Stern said growth was led by multifamily and industrial deals, with paydowns slowing and office exposure shrinking.
“Our office numbers … have dropped $3 billion over the last three years, and that has started to slow down,” he said. “That has been helpful.”
Source: “Regional Banks Return to CRE Lending as Rates Ease”
