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FDIC: U.S. banking industry showed resilience in Q3; net income down after prior quarter’s one‑time gains
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Summary
The FDIC reported that third‑quarter industry net income fell to $65.4 billion from the prior quarter, a decline driven mainly by about $10 billion in one‑time gains reported previously; net interest income and margins rose, loan growth continued, and certain credit categories showed modest deterioration.
FDIC Chair Martin Gruenberg said during the agency’s Q3 2024 Quarterly Banking Profile briefing that the U.S. banking industry "continued to show resilience" in the third quarter even as reported net income fell versus the prior quarter.
The FDIC reported industry net income of $65.4 billion in Q3, a decline of about $6.2 billion (roughly 8.8%) from the previous quarter. Gruenberg said that fall was ‘‘mainly due to the absence of one‑time gains on equity security transactions of about $10 billion that occurred last quarter.’’ He added that net interest income rose about $4.5 billion in Q3, partially offsetting the impact of those absent gains.
The agency said the industry’s net interest margin increased seven basis points to 3.23%, reversing a three‑quarter downward trend. Community banks also recorded margin gains, with smaller banks seeing sequential improvement.
Loan growth continued: total industry loans rose roughly $77 billion, or 0.6%, in Q3. The largest increases were in loans to non‑depository financial institutions and consumer credit‑card lending; community bank loan portfolios were led by commercial real estate and residential mortgage loans.
On asset quality, Gruenberg said metrics ‘‘deteriorated modestly but remained generally favorable.’’ The overall past‑due and nonaccrual loan rate rose six basis points to 1.54% (still below the pre‑pandemic 1.94%), while credit‑card, auto, CRE and multifamily past‑due rates rose from the prior quarter and in some cases exceeded pre‑pandemic averages. He singled out non‑owner‑occupied commercial real estate — particularly office loans — as a driver of rising past‑due balances at larger banks.
Deposit trends were mixed: domestic deposits grew by about $195 billion (1.1%) in Q3, the FDIC said, driven by an increase in estimated uninsured deposits; insured deposits were largely flat. Brokered deposits fell by about $47 billion (3.6%), which the agency said contributed to the stability in insured deposit levels.
The number of banks on the FDIC’s ‘‘problem bank’’ list (CAMELS composite 4 or 5) rose by two to 68 institutions during the quarter, with assets held by those banks increasing to roughly $87 billion. The FDIC characterized that level as within the historical 1–2% range for non‑crisis periods.
Gruenberg also reported the Deposit Insurance Fund balance rose about $3.9 billion to $133.1 billion on Sept. 30, and that the DIF reserve ratio increased four basis points to 1.25% — on a trajectory the FDIC said remains consistent with reaching a 1.35% minimum by 2026 and before the statutory 09/30/2028 deadline.
Gruenberg closed by warning of downside risks, citing inflation, market interest‑rate volatility and geopolitical uncertainty as factors that could pressure credit quality, earnings and liquidity going forward. He invited media questions and noted that this was his last QBP presentation.
