Some two dozen banks in the US had portfolios of commercial real estate loans in late 2023 that federal regulators felt would merit greater scrutiny. It’s a sign that more lenders may face pressure from authorities to bolster reserves amid a brewing commercial real estate crisis—a parting gift from the coronavirus pandemic and its aftermath. A trio of regulators publicly warned the industry last year to carefully assess any large exposures to debt on office buildings, retail storefronts and other commercial properties. At the time, authorities said they would pay closer attention to banks that rapidly piled up such loans worth more than three times their total capital.

While New York Community Bancorp, which set off a cascade of stock drops in recent weeks, was the biggest US bank that came close to fitting that criteria, many smaller lenders went further. That’s because they amassed outsize concentrations even faster, according to a Bloomberg analysis. The three watchdogs—the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency—indicated that among those banks they would zero in on portfolios that had grown dramatically: at least 50% in the past three years. “We’re at the warning stage,” said Keith Noreika, who was acting comptroller of the currency in 2017. “There’s a light going off on the dashboard and now people are opening up the hood to see: Is it really wrong or do we just need to keep our eye on it?”

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