Our work on Saferbankingresearch.com has identified a cluster of material risks on U.S. bank balance sheets. Using these risk factors, together with additional bank-specific weaknesses and minimum trading-liquidity requirements, we selected 15 U.S. banks. We also identified five non-U.S. banks listed on the NYSE that combine balance-sheet vulnerabilities with adequate trading liquidity.
Below, we summarize the core risk factors. Each is examined in greater detail in our previous articles.
Commercial real estate
Commercial real estate remains one of the clearest pressure points. Nearly 1,600 U.S. banks have CRE exposure above 300% of equity; more than 800 exceed 400%; nearly 350 exceed 500%; and more than 100 exceed 600%. According to a Florida Atlantic University screener, 114 of 154 large U.S. banks — institutions with more than $10B in assets — had total CRE exposure above 100% of equity. With rates still elevated and property values sharply lower in key segments, the approaching refinancing wall could turn these exposures into substantial losses over the next two to three years.
Shadow banking
U.S. bank exposure to non-bank financial institutions (NBFIs), or shadow banks, has surged since the 2007–09 financial crisis. Regulators in the U.S. and globally have repeatedly warned about the sector's opacity, limited transparency, and elevated risk. Yet lending continues to expand, supported by the attractive returns that limited regulation can offer. In 2025, lending to shadow lenders appears to have accounted for all U.S. bank lending growth. About fifty U.S banks had total credit exposure to NBFI obligors — on-balance-sheet loans plus undrawn commitments — exceeding 100% of Tier 1 equity capital; the most extreme exposures reached four to six times that amount. Most were larger banks, with more than $10B in assets. Recent defaults at Tricolor and First Brands highlight a central risk: collateral may be difficult to verify, pledged more than once, or ultimately worth less than lenders expect.
Unsecured retail lending
Stress in unsecured retail lending is already visible despite a relatively benign economic backdrop. Credit quality in credit cards and auto loans continues to deteriorate. The share of credit card loans that are 90+ days delinquent is just below its global financial crisis (GFC) peak, while the equivalent measure for auto loans is already above its GFC high. The implication is uncomfortable: if defaults are elevated before a downturn, a weaker economy could drive a far larger wave of losses.
Large losses from securities
Many banks built large securities portfolios when interest rates were much lower. As rates rose, those portfolios accumulated sizeable unrealized losses. While these losses may remain on paper in normal conditions, they reduce balance-sheet flexibility. In a liquidity event, forced sales can crystallize losses quickly and erode capital.
High risk in commercial and industrial lending
Recent data suggest that default risk in commercial and industrial (C&I) lending is at multi-year highs. C&I credit is inherently cyclical and exposed to borrower-specific shocks. At a concentrated lender, even a small number of large defaults can materially damage earnings and capital.
Weakness in funding structure
A number of larger U.S. banks have funding profiles that leave little room for error: high reliance on wholesale funding, interest-sensitive deposits, and elevated loan-to-deposit ratios. In a stressed market, this combination can turn funding pressure into a serious liquidity problem.
These factors form the core of our screening framework. Individual bank reports also assess additional vulnerabilities.
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