Construction loan delinquencies at U.S. banks stayed roughly flat in the fourth quarter of 2022, while total construction loan balances continued their upward trajectory.

Delinquencies flatten

There were $2.54 billion in nonresidential construction loan delinquencies in the fourth quarter of 2022, down slightly from $2.57 billion in the previous quarter and from $2.80 billion in the fourth quarter of 2021. Delinquencies represented 0.70% of total nonresidential construction loans, the lowest level in more than three years, according to S&P Global Market Intelligence data.

Delinquencies on residential construction loans reached about $584.7 million in the quarter, up from $535.5 million in the third quarter and $464.2 million in the fourth quarter of 2021. As a percentage of total residential construction loans, residential construction delinquencies rose to 0.56%.

Loans continue to rise

Construction loan balances at U.S. banks continued to rise in the fourth quarter. Banks reported roughly $467.64 billion in the quarter, up from $447.24 billion in the third quarter and $401.59 billion in the fourth quarter of 2021. Construction loans were 3.82% of gross loans and leases, up from 3.73% in the third quarter and from 3.57% in the fourth quarter of 2021. As a percentage of gross loans and leases, construction loans reached their highest level since the second quarter of 2011.

Wells Fargo, US Bancorp book most construction loans

Wells Fargo & Co. continued to carry the most construction loans of any U.S. bank, at about $22.26 billion, including $20.95 billion nonresidential and $1.31 billion residential loans. The quarter-over-quarter rise in Wells Fargo's nonresidential loans was bigger than the decline in its residential loans.

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U.S. Bancorp rose to the second place with about $11.15 billion in construction loans. That resulted from a 17.4% spike in nonresidential loans and a 12.9% increase in residential loans quarter over quarter. Bank of America Corp. had a decrease in both loan subtypes quarter over quarter, falling to third place with a total of about $9.67 billion. It had 9.1% fewer nonresidential construction loans and 1.3% fewer residential sequentially.

Of the 20 banks with the most construction loans, Bank OZK had the highest concentration in the segment, with construction loans accounting for 39.9% of gross loans and leases.