June 6 (Reuters) - Ratings agency Moody's placed ratings

of six U.S regional banks on review for downgrade on Thursday

due to their substantial exposure to commercial real estate

(CRE) loans.

The long-term ratings of First Merchants Corp ( FRME ),

F.N.B. Corp, Fulton Financial Corp ( FULT ), Old

National Bancorp ( ONB ), Peapack-Gladstone Financial Corp ( PGC )

and WaFd ( WAFD ) were placed on review.

These banks have substantial concentration in CRE loans,

which are facing asset quality and profitability pressures with

higher-for-longer interest rates raising longstanding risks,

especially during cycle downturns, Moody's said in separate

statements.

During the low-interest-rate environment prior to the onset

of the Federal Reserve's rate-hike cycle, many regional banks

chose to build and maintain substantial concentrations in CRE,

which is a volatile asset class, Moody's said.

Regional banks with exposure to the beleaguered commercial

real estate sector have come under investor scrutiny after New

York Community Bancorp's ( NYCB ) recent turmoil.

Non-performing CRE loans as a percentage of U.S. banks'

portfolios doubled to 0.81% by the end of 2023 from a year

earlier, the International Monetary Fund said in its semi-annual

Global Financial Stability report in April.

Banks have continued to increase provisions for bad CRE

loans, the IMF noted in its report.

(Reporting by Akanksha Khushi and Gursimran Kaur in Bengaluru;

Editing by Alan Barona and Varun H K)