Commercial real estate lending weighed on the financial results of three of the nation’s four largest banks in the final quarter of 2023.

JPMorgan Chase, Bank of America and Wells Fargo on Friday all reported higher levels of charge-offs of bad loans tied to commercial real estate, especially office properties. The banks also increased the money they set aside to cover future loan defaults.

The reports aren’t surprising as banks have warned for months that declining values of commercial properties were hitting their bottom lines, and they expect the trend to continue.

“As expected, losses started to materialize in our commercial real estate office portfolio as market fundamentals remained weak,” Wells Fargo Chief Financial Officer Mike Santomassimo said during a conference call Friday.

The persistent weakness in the office market is likely to force banks to foreclose on more properties and modify loans with struggling borrowers, according to a Charles Schwab research report.

At JPMorgan Chase, the bank said “a deterioration in the outlook related to commercial real estate valuations” led it to add $240 million to its loan-loss reserves.

Bank of America said that nonperforming loans — loans where the borrower is past due on payments by at least 90 days — rose 13% in the fourth quarter to $5.5 billion from the previous quarter.

That was “driven primarily by commercial real estate,” according to a statement from Bank of America.

The $5.5 billion figure also includes business loans, residential mortgages, credit card loans and other types of credit.

At Wells Fargo, the provision for credit losses increased 7% to $1.28 billion in the fourth quarter compared to the third quarter, “driven by credit card and commercial real estate loans,” the bank said in a statement.

Net loan charge-offs rose 46% to $1.26 billion, mainly because of commercial office properties.

Goldman Sachs and Morgan Stanley are the next large banks scheduled to report, with their fourth-quarter earnings slated for release on Jan. 16.