Commercial & Industrial (C&I) Loan

A commercial & industrial (C&I) loan is a loan to a business for working capital, equipment finance, or general corporate purposes — explicitly excluding loans secured primarily by real estate, which fall under CRE. Reported on bank Schedule RC-C item 4, C&I represents the bank's exposure to operating-company credit risk: revolving credit lines, term loans for equipment, syndicated leveraged loans, and asset-based lending facilities. At most U.S. banks, C&I is 15-25% of the total loan book — second only to residential mortgages by volume at large banks and second to CRE at community banks. The classification matters because C&I behaves very differently from real-estate-secured exposure in stress — see non-performing loan for the broader secondary-market context.

What Counts as a C&I Loan?

The Schedule RC-C item 4 definition captures:

• Revolving credit facilities (working-capital lines)
• Term loans not secured by real estate
• Equipment financing and equipment-leasing receivables
• Asset-based lending against accounts receivable or inventory
• Syndicated leveraged loans held in the bank's portfolio

C&I explicitly excludes loans secured by real estate (which go to RC-C item 1) and consumer loans (item 6). The boundary case is owner-occupied CRE — a loan to a business secured by the building it operates from. Owner-occupied CRE behaves economically like C&I (the bank is underwriting the operating company's cash flow) but is classified as CRE because of the collateral. Analysts evaluating C&I exposure often consolidate owner-occupied CRE with the headline C&I number to capture the bank's full operating-company credit exposure.

How Does C&I Differ from CRE?

The structural differences flow from how each loan type is underwritten and how default behavior plays out:

C&I distress tends to cluster around economic recessions because operating-company default is correlated with the business cycle. CRE distress tends to cluster around property-type-specific shocks — a CRE-heavy bank can experience severe office-tower losses while its retail or multifamily book performs normally.

For note investors, C&I pools are a different operational lift than residential or CRE. The workout toolkit involves restructuring covenants, negotiating with borrowers' senior lenders, and pursuing collateral that depreciates rapidly (equipment) or is hard to liquidate (receivables, inventory). Most C&I disposition flows to specialty distressed-debt funds rather than to generalist note investors.

C&I Volume and Concentration

A typical mid-sized community bank's C&I book runs in the 15-25% range. Larger regional and money-center banks may run higher (25-35%) reflecting deeper corporate-banking relationships. Community credit unions are structurally limited in C&I exposure by the MBL cap, which counts non-real-estate-secured business loans toward the 12.25%-of-total-assets statutory cap.

A Worked Example

A community bank reports $2.4B in total loans, with C&I outstanding at $480M:

C&I Concentration = $480M / $2,400M = 20.0% of loans

20% is within the normal community-bank range. The bank's C&I exposure becomes more analytically interesting when paired with two trend signals: (1) C&I charge-off ratio trajectory and (2) C&I outstanding growth rate. A bank growing C&I at 20%+ year-over-year while charge-offs are climbing is typically late-cycle and at elevated risk of an earnings shock when the credit cycle turns.

C&I and Bank-Distress Signals

The C&I book is the most economically sensitive line on the call report. Charge-off rates here move first and fastest in recession, and recover first as conditions improve. For note investors monitoring banks for forced-seller signals, C&I trends are the leading indicator: a bank whose C&I charge-off ratio is jumping while CRE is still flat is signaling that the broader credit cycle is turning and CRE deterioration will follow within two to four quarters. Pair the trend read with ACL coverage and the Texas Ratio trajectory for the full distress picture.

Capital-pressured banks under 12 CFR §324 typically dispose of C&I more readily than other asset classes because the bid-ask spread for performing C&I paper is tight — buyers like business-development companies and direct-lending funds are active and pricing is transparent. For the broader supervisory framework that drives these disposition decisions, see the FDIC Bankers Resource Center.

See current top 50 banks by rising NPL trends, which include C&I-driven distress → Rising NPLs.