Banks insured by the Federal Deposit Insurance Corporation (FDIC) posted combined net income of $79.3 billion in the third quarter, up 13.5% compared with the previous quarter, and up 21.2% compared with the same quarter of 2024.
Return on assets, a key metric in the banking industry, for the banks was 1.27%, up from 1.13% in the second quarter of 2025, and up from 1.09% in the same quarter of 2024, the FDIC announced Monday (Nov. 24).
“Strong net interest income growth and a reduction in provision expense, primarily related to last quarter’s large bank acquisition, drove the quarterly increase in earnings,” the FDIC noted in the report. “The quarterly decrease in provision expense was largely attributable to expenses associated with the acquisition of one large bank in the prior quarter. Absent this large provision expense, net income still would have increased, as the industry experienced a $7.6 billion increase in net interest income and a $1.1 billion increase in noninterest income.”
Third-quarter net income for the 3,953 community banks insured by the FDIC totaled $8.4 billion, up $756.9 million, or 9.9%, from the second quarter 2025.
FDIC-insured banks posted a combined third quarter increase in net interest income of $7.6 billion, or 4.2%, as interest income accelerated more than interest expense, according to the report.
Past-due and nonaccrual loans (PDNA) – loans that are 30 or more days past due or in nonaccrual status – remained the same as the prior quarter at 1.49% of total loans. The industry’s PDNA ratio is below the pre-pandemic average of 1.94%. However, the PDNA rate for non-owner-occupied commercial real estate (CRE), multifamily CRE, auto, and credit cards are “well above their pre-pandemic averages,” according to the FDIC.
Total loan and lease balances increased $159 billion, or 1.2%, from the prior quarter. The industry’s annual rate of loan growth in the third quarter was 4.7%, below the pre-pandemic average of 4.9%. Total loans at community banks increased 1.3% from the prior quarter and 5.2% from the prior year, led by increases in nonfarm nonresidential CRE loans and 1-4 family residential mortgage portfolios.
Domestic deposits rose $92.2 billion, or 0.5%, from the second quarter. It was the fifth consecutive quarter for a deposit increase.
The total number of FDIC-insured institutions declined by 42 during the third quarter to 4,379. During the quarter, four banks were sold to uninsured institutions and 38 institutions merged or consolidated with other banks.
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