FDIC-Insured Institutions Reported Return On Assets Of 1.16 % And Net Income Of US$70.6 Billion In The First Quarter
The Deposit Insurance Fund Reserve Ratio Increased Three Basis Points to 1.31 Per cent
By Godson Umejiego, Bureau Chief, The Americas
The Federal Deposit Insurance Corporation (FDIC) today released the results of its latest Quarterly Banking Profile, a comprehensive summary of financial results based on reports from 4,462 insured commercial banks and savings institutions. In the first quarter 2025, Insured depository institutions reported a return on assets (ROA) ratio of 1.16 per cent and aggregate net income of US$70.6 billion, an increase of US$3.8 billion (5.8 per cent) from the prior quarter. An increase in noninterest income drove the quarterly increase in net income.
Highlights from the First Quarter 2025 Quarterly Banking Profile
First Quarter 2025 Quarterly Banking Profile
Net Income Increased From the Prior Quarter, Led by Higher Noninterest Income: For the 4,462 FDIC-insured commercial banks and savings institutions quarterly net income totaled US$70.6 billion, up US$3.8 billion (5.8 per cent) from the prior quarter. The banking industry reported an aggregate ROA of 1.16 per cent in first quarter 2025, up from 1.11 per cent in fourth quarter 2024 and 1.09 per cent in the year-ago quarter. The quarterly increase in net income was led by higher noninterest income (up US$5.4 billion, or 7 per cent). Gains in noninterest income were due to market movements and volatility as several large firms reported mark-to-market gains on certain financial instruments in the quarter. Lower losses on the sale of securities also contributed to an increase in net income.
Community Bank Net Income Increased From Last Quarter: Quarterly net income for the 4,022 community banks insured by the FDIC totaled US$6.8 billion in the first quarter, an increase of US$621.0 million (10 per cent) from fourth quarter 2024. The community bank pretax ROA increased 11 basis points from last quarter to 1.18 per cent. Higher net interest income (up U$315.7 million, or 1.4 per cent) and lower losses on the sale of securities (up US$313.7 million, 54.8 per cent) along with lower provision expenses (down US$249.7 million, or 19 per cent) and noninterest expenses (down US$423.2 million, or 2.3 per cent) more than offset lower noninterest income (down US$476.6 million, or 9.1 per cent).
Quarterly Net Interest Margin Ticked Down From the Prior Quarter: The industry reported a modest quarterly decline in net interest income (down US$278.3 million, or 0.2 per cent), as interest income decelerated slightly more than interest expense. The net interest margin (NIM) fell by two basis points to 3.25 per cent, equal to the pre-pandemic average. [1] The community bank NIM of 3.46 per cent increased two basis points quarter over quarter, increasing for the fourth consecutive quarter, but is still below the pre-pandemic average of 3.63 per cent.
Asset Quality Metrics Remained Generally Favorable, Though Weakness in Certain Portfolios Persisted: Past-due and nonaccrual (PDNA) loans, or loans that are 30 or more days past due or in nonaccrual status, fell one basis point from the prior quarter to 1.59 per cent of total loans. The industry’s PDNA ratio is still below the pre-pandemic average of 1.94 per cent. While banks reported quarterly decreases in PDNA of credit card loans (down US$2.7 billion, or 9 basis points to 3.22 per cent), and auto loans (down US$2.6 billion, or 48 basis points to 2.84 per cent), weaknesses persisted in certain portfolios. The PDNA rate for commercial real estate (CRE) portfolios is the highest it has been since the fourth quarter of 2014 at 1.49 per cent. Multifamily CRE PDNAs have grown the most in the past year, up 88 basis points to 1.47 per cent.
The industry’s net charge-off ratio decreased three basis points to 0.67 per cent from the prior quarter and is one basis point higher than the year-ago quarter. This ratio is 19 basis points above the pre-pandemic average. Most portfolios had net charge-off rates above their pre-pandemic averages including credit card loans, 123 basis points above the pre-pandemic average at 4.71 per cent.
Loan Growth Remains Modest: Total loan and lease balances increased $62 billion (0.5 per cent) from the previous quarter. The largest portfolio increases were reported in loans to non-depository financial institutions, in part due to continued reclassifications following the finalization of changes to how certain loan products should be reported. In addition to these reclassifications, commercial and industrial, and multifamily CRE contributed to the industry’s quarterly loan growth. The industry’s annual rate of loan growth in the first quarter was 3.0 per cent, below the pre-pandemic average of 4.9 per cent.
Total loans at community banks increased 0.8 per cent from the prior quarter and 4.9 per cent from the prior year, led by increases in nonfarm nonresidential CRE loans and 1-4 family residential mortgage portfolios.
Domestic Deposits Increased for the Third Consecutive Quarter: Domestic deposits increased US$180.9 billion (1 per cent) from fourth quarter 2024, rising for a third consecutive quarter. Savings deposits increased, with declines in small time deposits partially offsetting the increases. Brokered deposits decreased US$14.9 billion (1.2 per cent) from the prior quarter, declining for the fifth consecutive quarter. Estimated insured deposits increased this quarter (up US$110.5 billion, or 1 per cent).
The Deposit Insurance Fund Reserve Ratio Increased Three Basis Points to 1.31 Per cent: In the first quarter, the Deposit Insurance Fund balance increased US$3.8 billion to US$140.9 billion. The reserve ratio increased three basis points during the quarter to 1.31 per cent. Change in Number of Insured Institutions: The total number of FDIC-insured institutions declined by 25 during the first quarter to 4,462. During the quarter, one bank opened, one bank failed and did not file a Call Report in the prior quarter, one bank was sold to an uninsured institution, and 25 institutions merged with other banks
