Regional banks in the US experienced lending problems in Q3 due to increased nonperforming loans and mounting costs from unpaid debts written off as losses.

Out of 18 banks, 15 reported jumps in nonperforming loans and charge-offs compared to the same period in 2022.

The KBW Nasdaq Bank Index fell by 2.3%, reaching a level last seen in September 2020.

Analyst Scott Siefers believes many of the loan problems were “idiosyncratic” issues, but it feels like the more of these could go from one-off issues to broader deterioration in credit.

Investors are bracing for credit trends to weaken, but it is not yet fully developed.