That’s according to the Federal Deposit Insurance Corp.’s (FDIC) 2026 Risk Review, which noted that outstanding balances of bank loans to so-called nondepository financial institutions (NDFIs) have increased at a compound growth rate of 22.7%.
That’s more than triple the rate of the next largest category (multifamily lending), the banking regulator said in its report, issued Thursday (April 23). The FDIC said entities classified as NDFIs include private equity/private credit firms, insurers and mortgage lenders. The FDIC says there’s a risk here, though an indirect one.
“In an economic downturn, NDFIs may need to sell assets, causing downward pressure on asset values that can affect valuations for assets pledged for collateral or held by other NDFIs and banks,” the report said.
“NDFIs that rely on less stable funding sources could also face significant liquidity stress due to margin calls on collateral pledged under their bank facilities.”
By the end of 2025, outstanding balances to NDFIs reached $1.4 trillion, representing 5.6% of total industry assets. While 2025 saw a 35.2% year-over-year growth, the FDIC noted that part of this spike was driven by revised reporting requirements.
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These new rules provide a granular look at where the money is going: roughly 57% of NDFI lending is now directed toward credit intermediaries that provide mortgage, business and consumer loans.
The report underscores a deep interconnectivity between traditional banks and the “shadow banking” sector. This lending is heavily concentrated among the nation’s largest players; 86% of NDFI loan balances are held by banks with more than $100 billion in assets.
At the very largest institutions (those with assets of more than $250 billion), NDFI loans have surged from just 1.2% of total loans in 2010 to 15.6% today.
The FDIC also noted figures from the Federal Reserve, as covered here last year, showing that bank loans to NDFIs reached roughly $1.14 trillion last year.
The findings come amid an ongoing debate over the rise of private credit, as PYMNTS wrote recently. Private credit funds have attracted investors seeking higher yields than those available in public bond markets.
“The asset class exists largely outside the transparency standards applied to traditional banking or public debt markets,” PYMNTS wrote last month.
“Loans are normally held in private portfolios and valued internally by the funds that originate them, which can mask deteriorating credit conditions until stress becomes impossible to ignore.
“The overarching concern may not herald an imminent crisis, but the structure of the market could amplify shocks if credit conditions deteriorate.”
