Regional banks went quiet on commercial property loans. They’re turning up the volume again.

Major U.S. regional banks are projecting renewed growth in commercial real estate lending after years of reducing risk, citing lower interest rates and credit quality stabilizing across properties.

Banks including Regions Financial, PNC, M&T Bank, First Horizon, U.S. Bancorp and KeyCorp told investors during fourth-quarter earnings calls that they expect commercial lending to contribute to their portfolios in 2026.

The shift marks a potential turning point for commercial real estate finance after regional banks pulled back from the sector following the pandemic. Midsized lenders reduced exposure, as office valuations collapsed and interest rate increases made new deals uneconomical. Now, executives have said in recent days, the prospect of risk-adjusted returns signals renewed confidence.

The outlook follows Federal Reserve interest rate cuts that began in September 2024. Lower rates improved banks' ability to cover total debt payments with their operating income and made new commercial real estate projects economically viable.

"We've been very successful when things mature to be being able to refinance" commercial property loans, Regions Chief Financial Officer David Turner said on his company's earnings call. "The rate environment's helping a bit more on growth in that space."

That is particularly true in multifamily housing, where, as rates have come down, the math is starting to work, Turner added.

Regions had demanded larger down payments when rates were higher, creating friction with developers, Turner said. Lower rates, though, have brought balance back to the market.

Regions said elevated capital markets refinancing activity during 2025 constrained loan growth, but this headwind has largely passed.

Here's a look at other regional banks:

PNC reported that commercial real estate loans have come back after years of decline. The Pittsburgh-based bank anticipates moderate growth in 2026 across its $328 billion loan portfolio.

"Notably, we believe that our [commercial real estate] balances have largely stabilized, and we anticipate moderate growth in 2026," PNC Chief Financial Officer Robert Reilly said on a call. "Ideally, real estate will inflect at some point here in the first half of '26."

M&T Bank saw commercial real estate loans decline just 1% to $24.1 billion in the fourth quarter, "reflecting a slowing pace of decline in the portfolio of continued payoffs and paydowns and higher originations," Daryl Bible, chief financial officer of Buffalo, New York-based M&T Bank, told analysts.

M&T reduced problem commercial loans by 27% during 2025. Nonaccrual loans, or those that are in such serious trouble that the bank has stopped expecting to receive interest payments on them, decreased 26% for the year. The bank's nonaccrual ratio reached 90 basis points, the lowest level since 2007.

First Horizon reported commercial real estate portfolio declines of just $111 million in the fourth quarter, an improvement from prior quarters. The Memphis, Tennessee-based bank saw a slight increase in commercial real estate commitments during the quarter.

"Within the CRE portfolio, the pace of paydowns slowed as the decline of period-end balances improved versus the prior quarters with a $111 million reduction," First Horizon Chief Financial Officer Hope Dmuchowski said. "Additionally, we saw a slight increase to commitments in our [commercial real estate] portfolio during the quarter, providing momentum entering 2026."

First Horizon highlighted pricing improvements in market-based commercial real estate lending. Yields on new loans in 2025 improved 34 basis points year over year, CEO Bryan Jordan said.

Commercial real estate loans showed "modest growth" at Minneapolis-based U.S. Bancorp after 11 quarters of decline, CEO Gunjan Kedia said during a conference call Tuesday.

"It's the continuation of the pipeline building, particularly as it relates to multifamily and industrial," John Stern, chief financial officer at U.S. Bancorp, said during the call. "I would also say that paydowns have actually slowed down as well. Our CRE office [portfolio] has dropped $3 billion over the last three years and at a pretty rapid pace."

Stern added that U.S. Bancorp's commercial real estate loan books have minimal exposure to data centers.

Any growth of lending will be slow at first, Christopher Gorman, chairman and CEO of KeyCorp, said Tuesday on a call. Most of KeyCorp's commercial real estate lending recently has supported property refinancing, he said, but is poised to grow as property sales pick up.

 "What we're saying is that it will be flat on an average basis this year," Gorman said. "It will be up 3% from the fourth quarter of '25 to the fourth quarter of '26."

CoStar News reporter Andy Peters contributed.