Credit quality

M&T Bank, Citizens Financial and Huntington Bancshares are playing it safe even as some of their counterparts have started to trim allowances in response to government stimulus efforts and rapid progress in the rollout of the coronavirus vaccine.

Community banks, which for years have relied heavily on commercial real estate lending, have been tightening underwriting standards, conducting more frequent loan reviews and stepping back from certain subsectors to minimize their credit exposure.

The California company said the issue involves a line of credit it funded earlier this year and that it is working with law enforcement authorities on the matter.

Unsecured personal lending has fallen as many consumers have stashed away cash and paid down credit card balances during the pandemic. The trend probably won’t reverse course anytime soon.

The move will force the Pennsylvania company to report a bigger loss for its fiscal fourth quarter and restate its annual report with the Securities and Exchange Commission.

The paucity of distressed-loan sales indicates that most bankers are confident about the underlying health of their portfolios even as the pandemic lingers and loss reserves remain elevated.

Some big banks trimmed their stockpiles that guard against loan losses in the fourth quarter, but overall allowances fell less than many observers predicted. The trend will likely continue given uncertainties surrounding vaccine distribution and the economy.

For now, banks say they have no plans to curtail lending to oil and gas firms, but recent moves by the new administration — including a halt in drilling on federal land and an effort to stop the Keystone XL Pipeline — could cause them to re-evaluate their long-term commitment to the fossil fuel industry.

The Indiana company, which had relied on internal processes that focused on large loans, has bought a suite of software tools to begin looking at relationships based on underlying risk.

The Atlanta company joins a small list of banks that have sold loans to companies struggling with the coronavirus pandemic.