WASHINGTON– FDIC-insured institutions reported return on assets of 1.16% and net income of $70.6 billion in the first quarter, while loan growth was “modest.”
The data was released as part of the FDIC’s Quarterly Banking Profile, a comprehensive summary of financial results based on reports from 4,462 insured commercial banks and savings institutions.
Among the key findings from Q1:
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 $70.6 billion, up $3.8 billion (5.8%) from the prior quarter. The banking industry reported an aggregate ROA of 1.16% in first quarter 2025, up from 1.11% in fourth quarter 2024 and 1.09% in the year-ago quarter, the FDIC said.
“The quarterly increase in net income was led by higher noninterest income (up $5.4 billion, or 7%),” the agency stated. “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 the Prior Quarter
Quarterly net income for the 4,022 community banks insured by the FDIC totaled $6.8 billion in the first quarter, an increase of $621.0 million (10%) from fourth quarter 2024. The community bank pretax ROA increased 11 basis points from last quarter to 1.18%.
The FDIC report reveals higher net interest income (up $315.7 million, or 1.4%) and lower losses on the sale of securities (up $313.7 million, 54.8%) along with lower provision expenses (down $249.7 million, or 19%) and noninterest expenses (down $423.2 million, or 2.3%) more than offset lower noninterest income (down $476.6 million, or 9.1%).
Quarterly Net Interest Margin Ticked Down From the Prior Quarter
The industry reported a modest quarterly decline in net interest income (down $278.3 million, or 0.2%), as interest income decelerated slightly more than interest expense, the FDIC said. The net interest margin (NIM) fell by two basis points to 3.25%, equal to the pre-pandemic average.
The community bank NIM of 3.46% increased two basis points quarter over quarter, increasing for the fourth consecutive quarter, but is still below the pre-pandemic average of 3.63%, the FDIC added.
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% of total loans, the data show.
“The industry’s PDNA ratio is still below the pre-pandemic average of 1.94%,” the FDIC said. “While banks reported quarterly decreases in PDNA of credit card loans (down $2.7 billion, or 9 basis points to 3.22%), and auto loans (down $2.6 billion, or 48 basis points to 2.84%), 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%. Multifamily CRE PDNAs have grown the most in the past year, up 88 basis points to 1.47%, the FDIC said.
The data further show industry’s net charge-off ratio decreased three basis points to 0.67% 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%,” according to the FDIC.
Loan Growth Remains Modest
Total loan and lease balances increased $62 billion (0.5%) 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,” the FDIC said. “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%, below the pre-pandemic average of 4.9%.”
Total loans at community banks increased 0.8% from the prior quarter and 4.9% 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
According to the FDIC, domestic deposits increased $180.9 billion (1%) 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 $14.9 billion (1.2%) from the prior quarter, declining for the fifth consecutive quarter.
Estimated insured deposits increased this quarter (up $110.5 billion, or 1%).
The Deposit Insurance Fund Reserve Ratio Increased Three Basis Points to 1.31%
In the first quarter, the Deposit Insurance Fund balance increased $3.8 billion to $140.9 billion. The reserve ratio increased three basis points during the quarter to 1.31%, the FDIC reported.
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, the FDIC said.
