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FDIC-Insured banks' Q3 earnings rose to $79.4B as revenues and deposits strengthened.
Net interest income hit $189.6B, while non-interest income grew 11%.
Credit quality improved with lower NCOs and reduced provisions.
The Federal Deposit Insurance Corporation (“FDIC”)-insured commercial banks and savings institutions reported third-quarter 2025 earnings of $79.4 billion, which increased 21.4% year over year.
Banks, with assets worth more than $10 billion, accounted for a major part of earnings in the June-ended quarter. Such banks constitute only 3% of the total number of FDIC-insured institutes, these account for approximately 80% of the industry’s earnings. Some notable names in this space are JPMorgan (JPM - Free Report) , Bank of America (BAC - Free Report) , Citigroup (C - Free Report) , and Wells Fargo (WFC - Free Report) .
FDIC-Insured banks’ earnings benefited from a rise in net interest income (NII), non-interest income and lower provisions. Also, sequential growth in loan and deposit balances offered support. However, an increase in non-interest expenses was concerning.
Community banks, constituting 91% of all FDIC-insured institutions, reported a net income of $8.4 billion, up 26.2% year over year. This was mainly due to an increase in NII and non-interest income.
The return on average assets in the third quarter of 2025 rose to 1.27% from 1.09% as of Sept. 30, 2024.
FDIC-Insured Banks' Net Operating Revenues Up, Expenses Rise
Net operating revenues came in at $275.1 billion, up 8.5% year over year.
NII was $189.6 billion, representing a 7.5% year-over-year increase. Net interest margin (NIM) was 3.34%, up 9 basis points (bps) and above the pre-pandemic average of 3.25%. Banks like WFC and JPM recorded a contraction in NIM, while BAC and C’s NIM expanded during the reported quarter.
Non-interest income grew 11% to $85.5 billion.
Total non-interest expenses were $144.8 billion, up 5.2%.
FDIC-Insured Banks’ Credit Quality Improves
Net charge-offs (NCOs) for loans and leases were $20.1 billion, down 3.8% year over year.
The NCO rate was 0.61% in the third quarter, down 5 bps. The NCO rate was 13 basis points above the pre-pandemic average of 0.48% but significantly below the peaks during the Great Financial Crisis.
Provisions for credit losses were $20.8 billion during the third quarter, down 11.7% on a year-over-year basis.
Loans & Deposits Rise for FDIC-Insured Banks
As of Sept. 30, 2025, total loans and leases were $13.2 trillion, up 1.2% from the prior quarter. The largest portfolio increases were reported in loans to non-depository financial institutions and loans to purchase or carry securities, including margin loans. Growth in consumer and non-farm non-residential CRE portfolios also contributed to the increase. The industry’s annual rate of loan growth in the third quarter was 4.7%, below the pre-pandemic average of 4.9%.
Total deposits amounted to $19.7 trillion, up marginally on a sequential basis. This marked the fifth consecutive quarter of increase.
Unrealized losses on securities were $337.1 billion, down 7.4% from the prior quarter.
As of Sept. 30, 2025, the Deposit Insurance Fund (DIF) balance increased 3.3% from the June 2025 level to $150.1 billion. A rise in the DIF was largely driven by an assessment income of $3.3 billion.
FDIC-Insured ‘Problem’ Banks Decline
During the reported quarter, no new bank was added, while four banks were sold to non-FDIC-insured institutions and 38 institutions merged with other banks.
As of Sept. 30, 2025, the number of ‘problem’ banks was 57, a decrease of 2 from June 2025-end.
Parting Thoughts on FDIC-Insured Banks
Strong NII and non-interest income growth and a reduction in provisions drove the quarterly increase in earnings. Deposits and loan growth continued. Asset quality metrics remained generally favorable despite weakness in certain portfolios.
Though decent loan demand, stabilizing deposit costs, and a changing revenue mix will offer much-needed support to banks’ top line, the industry still faces challenges, such as weakness in certain loan portfolios and elevated unrealized losses.
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FDIC-Insured Banks' Q3 Earnings Rise, Asset Quality Improves
Key Takeaways
The Federal Deposit Insurance Corporation (“FDIC”)-insured commercial banks and savings institutions reported third-quarter 2025 earnings of $79.4 billion, which increased 21.4% year over year.
Banks, with assets worth more than $10 billion, accounted for a major part of earnings in the June-ended quarter. Such banks constitute only 3% of the total number of FDIC-insured institutes, these account for approximately 80% of the industry’s earnings. Some notable names in this space are JPMorgan (JPM - Free Report) , Bank of America (BAC - Free Report) , Citigroup (C - Free Report) , and Wells Fargo (WFC - Free Report) .
At present, JPMorgan, Wells Fargo, Bank of America, and Citigroup carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quarterly Net Income
FDIC-Insured banks’ earnings benefited from a rise in net interest income (NII), non-interest income and lower provisions. Also, sequential growth in loan and deposit balances offered support. However, an increase in non-interest expenses was concerning.
Community banks, constituting 91% of all FDIC-insured institutions, reported a net income of $8.4 billion, up 26.2% year over year. This was mainly due to an increase in NII and non-interest income.
The return on average assets in the third quarter of 2025 rose to 1.27% from 1.09% as of Sept. 30, 2024.
FDIC-Insured Banks' Net Operating Revenues Up, Expenses Rise
Net operating revenues came in at $275.1 billion, up 8.5% year over year.
NII was $189.6 billion, representing a 7.5% year-over-year increase. Net interest margin (NIM) was 3.34%, up 9 basis points (bps) and above the pre-pandemic average of 3.25%. Banks like WFC and JPM recorded a contraction in NIM, while BAC and C’s NIM expanded during the reported quarter.
Non-interest income grew 11% to $85.5 billion.
Total non-interest expenses were $144.8 billion, up 5.2%.
FDIC-Insured Banks’ Credit Quality Improves
Net charge-offs (NCOs) for loans and leases were $20.1 billion, down 3.8% year over year.
The NCO rate was 0.61% in the third quarter, down 5 bps. The NCO rate was 13 basis points above the pre-pandemic average of 0.48% but significantly below the peaks during the Great Financial Crisis.
Provisions for credit losses were $20.8 billion during the third quarter, down 11.7% on a year-over-year basis.
Loans & Deposits Rise for FDIC-Insured Banks
As of Sept. 30, 2025, total loans and leases were $13.2 trillion, up 1.2% from the prior quarter. The largest portfolio increases were reported in loans to non-depository financial institutions and loans to purchase or carry securities, including margin loans. Growth in consumer and non-farm non-residential CRE portfolios also contributed to the increase. The industry’s annual rate of loan growth in the third quarter was 4.7%, below the pre-pandemic average of 4.9%.
Total deposits amounted to $19.7 trillion, up marginally on a sequential basis. This marked the fifth consecutive quarter of increase.
Unrealized losses on securities were $337.1 billion, down 7.4% from the prior quarter.
As of Sept. 30, 2025, the Deposit Insurance Fund (DIF) balance increased 3.3% from the June 2025 level to $150.1 billion. A rise in the DIF was largely driven by an assessment income of $3.3 billion.
FDIC-Insured ‘Problem’ Banks Decline
During the reported quarter, no new bank was added, while four banks were sold to non-FDIC-insured institutions and 38 institutions merged with other banks.
As of Sept. 30, 2025, the number of ‘problem’ banks was 57, a decrease of 2 from June 2025-end.
Parting Thoughts on FDIC-Insured Banks
Strong NII and non-interest income growth and a reduction in provisions drove the quarterly increase in earnings. Deposits and loan growth continued. Asset quality metrics remained generally favorable despite weakness in certain portfolios.
Though decent loan demand, stabilizing deposit costs, and a changing revenue mix will offer much-needed support to banks’ top line, the industry still faces challenges, such as weakness in certain loan portfolios and elevated unrealized losses.