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C&I loans tick past $2 trillion, delinquencies down in Q4'17

Commercial and industrial loans at U.S. banks and thrifts hit $2.013 trillion at year-end 2017, marking a new all-time high and a 1.2% gain from the third quarter. Meanwhile, C&I delinquencies fell to 1.18% of total C&I loans, down 9 basis points from the previous quarter and 38 basis points from a year earlier.

As of Dec. 31, 2017, C&I loans accounted for 20.7% of total loans and leases, down from 20.8% at Sept. 30, 2017, and the lowest mark since the fourth quarter of 2014 when C&I loans were 20.6% of total loans and leases.

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According to the Federal Reserve's January Senior Loan Officer Opinion Survey, 16% of the 70 responding banks reported that C&I lending standards for large and middle-market firms "eased somewhat" in the fourth quarter. Meanwhile, 91.0% of the 67 responding banks reported that standards for small firms "remained basically unchanged." In the survey, the banks said that competition was the most important reason for lowered standards, which included lower rate spreads, higher credit lines and less stringent loan covenants.

On the demand side, 13 of 70 banks reported "moderately stronger" demand for C&I loans among large and middle-market firms, 11 reported "moderately weaker" demand and 46 reported that demand remained "about the same." For 2018, 22 of the banks expect demand for C&I loans for large and middle-market firms to "strengthen somewhat," while only three expect it to be "weaker somewhat" and the rest expect it to "remain basically unchanged."

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Citigroup Inc. added $5.15 billion in C&I loans during the fourth quarter, the most of any bank or thrift in the country. JPMorgan Chase & Co. came in second with a $3.99 billion increase in C&I loans, while the nation's largest C&I lender, Bank of America Corp., added $2.49 billion. Delinquent C&I loans as a percentage of total C&I loans also fell year over year for all three banks, by 46 basis points, 34 basis points and 28 basis points, respectively.

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Approximately 7.46% of C&I loans were delinquent at New York-based Signature Bank at the end of 2017, the highest mark among any bank or thrift with at least $1 billion in C&I loans. Helped by a rebound in the U.S. oil sector, Plano, Texas-based Beal Financial Corp.'s C&I delinquency ratio fell by half year over year to 5.80% as of Dec. 31, 2017. For multiple quarters, Beal was the only large C&I lender with a delinquency ratio in the double digits.

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S&P Global compiles C&I data based on loans reported in call reports and in Form Y-9. Click here to see the aggregated data for commercial banks.

For other Data Dispatches on loan growth in the fourth quarter, click here for a look at community banks and here for an analysis of larger institutions.