Have over $5 TRILLION in U.S. deposits.

Account for 50% of all industrial/ commercial loans in the US.

Originate 80% of all mortgages.

Account for 45% of all personal loans.

Put simply, this is NOT a small, insignificant industry. Yes, the Big Banks (Wells, JP Morgan, Bank of America) still have an inordinate amount of clout/ power in the industry… but regional banks are systemically important and have a profound impact on the real economy.

And they also appear to be up to their eyeballs in bad loans.

The commercial real estate market is imploding in the U.S. As I write this, vacancy rates for office property have hit record highs of nearly 20%. And as of August 2025, some 7% of ALL commercial real estate loans (not just office loans) are delinquent. And that rate has gone up for six months straight.

Regional banks are on the hook for a lot of this.

According to HedgieMarkets, commercial real estate loans comprise 44% of regional bank portfolios (compared to just 13% for the big banks). And apparently there is considerable fraud in this space. Two large regional banks Zions and Western Alliance have revealed tens of billions of dollars in loan provisions and write-offs due to fraud from a single failed auto-parts manufacturer, First Brands Group.

This is why the Regional Bank ETF (KRE) is crashing: no one knows how big the problem (bad loans/ fraud) really is in the industry. Remember, we're only talking about a handful of companies (First Brands Group, subprime auto-lender Tricolor, etc.) accounting for tens of billions of dollars in bad loans/ fraud.