WASHINGTON–The nation’s banks posted net income of $66.8 billion for the fourth quarter of 2024, according to the FDIC, which found ROA also was on the upswing last year, as well.

According to data from 4,487 commercial banks and savings institutions insured by the FDIC, the aggregate net income represents an increase of 2.3% from Q3 (driven by an increase in net interest income), while the RAO ratio improved to 1.11%.

The data was included in the FDIC’s latest Quarterly Banking Profile.

The Specifics

Specifically, the FDIC reported that for Q4:

• Full-Year ROA and Net Income Improved From 2023: The banking industry reported full-year 2024 net income of $268.2 billion, up $14.1 billion (5.6%) from the prior year, a level still well above the pre-pandemic average. The aggregate ROA ratio increased by three basis point to 1.12%. 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, the FDIC said.
• Community banks reported full-year 2024 net income of $25.9 billion,down $624 million (2.4%) from the prior year. The decline was caused by higher noninterest expense, up $3.9 billion (6.1%), and higher provision expense, up $671 million (20%), which offset the increases in net interest income, up $2.2 billion (2.7%), and noninterest income, up $1.1 billion (5.9%). Community banks reported full-year pre-tax ROA of 1.14%, down eight basis points from the prior year. 
• Quarterly ROA and Net Income Increased From the Prior Quarter, Driven By Higher Net Interest Income: According to the FDIC, fourth quarter net income for the 4,487 FDIC-insured commercial banks and savings institutions increased $1.5 billion (2.3%) from the prior quarter to $66.8 billion. The quarterly increase in net income was largely driven by an increase in net interest income, as declining short-term interest rates reduced interest expense more than interest income.

The banking industry reported an aggregate ROA of 1.11% in fourth quarter 2024, up 2 basis points from one quarter earlier and up 50 basis points from one year earlier.

• Community Bank Net Income Decreased Quarter Over Quarter: Quarterly net income for the 4,046 community banks insured by the FDIC was $6.4 billion in the fourth quarter, a decrease of $441 million (6.5%) from third quarter 2024. Higher noninterest expense (up $931 million, or 5.4%) and realized securities losses of $565.9 million more than offset higher net interest income (up $774 million, or 3.6%) and higher noninterest income (up $187 million, or 3.7%). The community bank pretax ROA decreased 12 basis points from last quarter to 1.09%, the FDIC said.
• The Net Interest Margin Rose Across All Asset-Size Groups in the Quarterly Banking Profile: The industry reported a quarter-over-quarter increase in net interest income of $3.8 billion as the net interest margin (NIM) increased five basis points to 3.28%. All asset-size groups in the Quarterly Banking Profile reported a higher NIM in the fourth quarter. The FDIC said the industry’s fourth-quarter NIM was three basis points above the pre-pandemic average NIM. The community bank NIM of 3.44% increased nine basis points quarter over quarter, increasing for the third consecutive quarter, but is still below the pre-pandemic average of 3.63%.  
• 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, increased six basis points from the prior quarter to 1.60% of total loans. The industry’s PDNA ratio is still below the pre-pandemic average of 1.94%. The PDNA ratio for non-owner occupied commercial real estate (CRE) loans declined five basis points to 2.02%, but the ratio remains 175 basis points above the pre-pandemic average. Despite declining slightly in the fourth quarter, the PDNA rate for non-owner occupied CRE loans remains elevated, largely driven by office loans at banks with more than $250 billion in assets.
• However, these banks tend to have lower concentrations of such loans in relation to total assets and capital than smaller institutions, mitigating the overall risk, the agency stated.  

The industry’s net charge-off ratio increased three basis points to 0.70% from the prior quarter and is five basis points higher than the year-ago quarter. This ratio is 22 basis points above the pre-pandemic average. The credit card net charge-off ratio was 4.57% in the fourth quarter, up nine basis points quarter over quarter and 109 basis points above the pre-pandemic average.   

• Loan Balances Increased Modestly From the Prior Quarter and a Year Ago: Total loan and lease balances increased $105.0 billion (0.8%) from the previous quarter. The largest portfolio increases were reported in “all other” loans and loans to non-depository financial institutions, largely due to reclassifications following the finalization of changes to how certain loan products should be reported. 

“Reclassifications also likely caused declines in other loan categories, particularly commercial and industrial (C&I) and consumer loans,” the FDIC said. “In addition to these reclassifications, credit card loans and growth in loans to non-depository financial institutions contributed to the industry’s quarterly loan growth. The industry’s annual rate of loan growth remained steady in the fourth quarter at 2.2%. 

The agency said community bank loan growth was more robust and widespread than the industry. Total loans at community banks increased 1.3% from the prior quarter and 5.1% from the prior year, led by increases in nonfarm nonresidential CRE and residential mortgage portfolios. 

• Domestic Deposits Increased From Last Quarter, Primarily Due to Higher Uninsured Deposits: Domestic deposits increased $214.0 billion (1.2%) from third quarter 2024. 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 (3.6%) from the prior quarter. 

The FDIC said Estimated insured deposits increased slightly this quarter (up $39.1 billion, or 0.4%) while estimated uninsured domestic deposits increased $218.5 billion (3.0%). Growth in estimated uninsured deposits was widespread; most banks (60.1%) reported an increase in such deposits from the prior quarter.

• The Deposit Insurance Fund Reserve Ratio Increased Three Basis Points to 1.28%: In the fourth quarter, the Deposit Insurance Fund balance increased $4.0 billion to $137.1 billion. The reserve ratio increased three basis points during the quarter to 1.28%. 
• The Total Number of Insured Institutions Declined: 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.