Relationship-driven balance sheet lending with competitive pricing and portfolio flexibility for the right sponsors.
Bank and credit union lending is the origination of commercial real estate mortgages from regulated depository institutions that hold loans on their own balance sheets. Unlike CMBS or agency lenders that securitize loans and sell them to investors, banks and credit unions retain their CRE loans as portfolio assets, maintaining a direct relationship with the borrower throughout the loan term. This portfolio lending model gives banks and credit unions flexibility in underwriting, pricing, and structuring that securitized lenders cannot match.
Banks hold approximately $1.8 trillion in commercial real estate mortgages — the largest share of any capital source at 37% of total outstanding CRE debt. After a period of retrenchment driven by rising interest rates and heightened regulatory scrutiny, bank lending has rebounded sharply, with origination volumes increasing 167% year-over-year in 2025. This resurgence reflects improving bank earnings, reduced competition from other capital sources during the rate adjustment period, and continued demand from relationship borrowers who value the flexibility and pricing advantages of balance sheet execution.
Credit unions — member-owned cooperative financial institutions — have emerged as increasingly active CRE lenders, particularly for multifamily, affordable housing, and owner-occupied commercial properties. Their cooperative structure (no profit-driven shareholders) and Community Reinvestment Act (CRA) motivations allow credit unions to offer competitive pricing and flexible terms for community-oriented projects.
The bank lending market is fragmented — thousands of institutions with varying appetites, pricing methodologies, and approval processes. A community bank in the Southeast prices and underwrites differently than a West Coast credit union or a national money-center bank. George Smith Partners maintains active lending relationships across the full spectrum of depositories, from the largest national banks to regional institutions and credit unions with specific geographic or asset-class mandates.
Our advisory is most valuable in structured transactions where bank appetite is not immediately obvious: construction loans requiring coordinated takeout commitments, recapitalizations with complex ownership structures, or portfolio financings where the sponsor's broader banking relationship drives preferential pricing. We understand how to position borrowers as relationship clients rather than one-off loan applicants — leveraging deposit potential, treasury management, and cross-sell opportunities to achieve terms that go beyond what a standalone loan request would produce.
George Smith Partners has arranged billions in bank and credit union financing for projects ranging from single-asset acquisitions to multi-property portfolio recapitalizations. Our team knows which institutions are actively seeking CRE production, which credit committees respond to specific asset classes, and how to structure transactions that align borrower objectives with lender mandates.
Bank and credit union lending is particularly well suited for owner-occupied commercial properties, stabilized income-producing assets, construction projects with strong pre-leasing, and relationship-driven transactions where the borrower's broader banking activity creates pricing advantages. Credit unions are especially active in lending for multifamily, affordable housing, and community-oriented projects. Banks are also a strong fit for sponsors who value direct lender relationships, structural flexibility, and the ability to negotiate terms throughout the loan term — advantages that securitized execution does not offer.
Banks originate commercial real estate loans from their deposit base and hold those loans on their balance sheet (portfolio lending) or, less commonly, sell them into the secondary market. Balance sheet lending gives banks flexibility to structure terms based on the borrower relationship, property quality, and deposit activity. Banks evaluate creditworthiness through traditional underwriting metrics — debt service coverage ratio (DSCR), loan-to-value (LTV), borrower net worth, and liquidity — and typically require personal recourse guarantees, particularly for smaller loans.
Bank loans are held on the lender's balance sheet and serviced by the originating institution, providing borrowers with a direct relationship throughout the loan term. CMBS loans are securitized and sold to bond investors, with servicing transferred to a third-party master servicer. Banks offer more structural flexibility — adjustable rates, shorter terms, and easier prepayment — while CMBS provides non-recourse execution, longer fixed-rate terms, and generally higher leverage for stabilized assets. The choice depends on the borrower's priorities: relationship and flexibility (bank) versus leverage and non-recourse (CMBS).
Most bank CRE loans require some form of personal recourse, particularly for loans under $20M. Full recourse means the borrower is personally liable for the entire loan balance in the event of default. Partial recourse may include a completion guarantee (for construction loans), a burn-off provision where recourse reduces over time, or a limited guarantee capped at a percentage of the loan amount. Larger loans from money-center banks may offer non-recourse structures similar to CMBS or life company loans, typically for institutional-quality assets with strong sponsorship.
Credit unions offer several advantages for CRE borrowers: competitive pricing due to their cooperative structure (no profit-driven shareholders), flexible underwriting for community-oriented projects, CRA (Community Reinvestment Act) motivated lending for affordable housing and community development, and often lower fees than commercial banks. Credit unions are particularly active in lending for multifamily properties, owner-occupied commercial real estate, and smaller construction projects. Their portfolio lending approach allows for more customized term structures.
Bank qualification criteria typically include: a minimum DSCR of 1.20x to 1.30x (net operating income divided by annual debt service), a maximum LTV of 65-75% (depending on property type), borrower net worth at least equal to the loan amount, demonstrated liquidity of 6-12 months of debt service, and relevant experience in the property type. Banks also evaluate the borrower's deposit relationship, business operations, and overall banking activity. For construction loans, banks evaluate the development team, pre-leasing or pre-sales, and the takeout financing strategy.