The banking industry reported return on assets ratio of 1.11% and aggregate net income of $66.8 billion in the fourth quarter of 2024, an increase of $1.5 billion or 2.3% from the prior quarter, according to the FDIC’s most recent Quarterly Banking Profile released today. The increases in net income and ROA occurred primarily because one-time events in 2023 and 2024 led to lower noninterest expense, higher noninterest income and lower realized securities losses in 2024.
Quarterly net income for the 4,046 community banks insured by the FDIC was $6.4 billion in Q4, a decrease of $441 million or 6.5% from third quarter 2024. Higher noninterest expense and realized securities losses of $565.9 million more than offset higher net interest income and higher noninterest income.
Domestic deposits increased $214.0 billion or 1.2% from Q3 2024, according to the FDIC. Both savings and transaction deposits increased from the prior quarter, with declines in time deposits partially offsetting the increases. Brokered deposits decreased for the fourth straight quarter, down $46.0 billion or 3.6% from the prior quarter.
The Deposit Insurance Fund balance increased $4 billion to $137.1 billion. The reserve ratio increased three basis points during the quarter to 1.28%.
The total number of FDIC-insured institutions declined by 30 during the quarter to 4,487. During the quarter, four banks opened, one bank failed, one bank failed after quarter end and did not file a Call Report, three banks did not file a Call Report after selling a majority of their assets to credit unions, one bank otherwise closed and 28 institutions merged with other banks.
FDIC ends reporting on aggregate assets of problem banks
In an accompanying statement, FDIC Acting Chairman Travis Hill said that for the first time since 1990, the agency will not disclose the aggregate assets of banks on the “Problem Bank List.” Changes in the industry over the past 35 years have made it easier to identify a large bank that is added to the list, resulting in a number of potentially negative consequences for those institutions, he said.
“Upon becoming acting chairman, I issued a statement that noted the FDIC would ‘expand transparency in areas that do not impact safety and soundness or financial stability,'” he said. “We will continue to seek to enhance transparency in areas that do not negatively impact safety and soundness or financial stability.”
ABA: Banks remain strong drivers of U.S. economy
The latest Quarterly Banking Profile indicates the banking industry remains a healthy and strong driver of the U.S. economy, American Bankers Association Chief Economist Sayee Srinivasan said. He noted that lending continued to grow across the industry for the third straight quarter and was particularly robust among community banks, “which boosted both commercial real estate and residential mortgage lending to businesses and families in their neighborhoods.”
“Banks boasted strong capital and liquidity levels, which helped them make loans and safeguard against potential losses,” Srinivasan said. “While asset quality remained healthy overall, banks increased provisioning as part of their prudent risk management. The industry’s net interest income and net interest margin increased in the fourth quarter, helping banks maintain strong balance sheets as reflected in Tier 1 capital, which has grown to $2.2 trillion.
“At this stage of the U.S. economic cycle, the banking industry is well positioned to continue supporting customers, clients and communities with the financial services they want and need,” he added.
