FDIC: Banks Post Strong 2025 Earnings As ROA Climbs To 1.20%, Community Banks Outpace Industry / Fresh Today / CUToday.info

WASHINGTON—The banking industry closed 2025 with strong earnings, accelerating loan growth and improving margins, even as regulators flagged ongoing stress in certain loan categories and elevated unrealized securities losses, according to the latest Quarterly Banking Profile from the Federal Deposit Insurance Corporation.

Industry net income rose 10.2% from 2024 to $295.6 billion, lifting full-year return on assets to 1.20%. Community banks outperformed on a relative basis, posting a 1.32% pre-tax ROA and $29.9 billion in net income, up 22.5% year over year, driven largely by stronger net interest income. In the fourth quarter alone, industry earnings dipped 2% to $77.7 billion, reflecting higher noninterest expense and one-time items at several large banks, though quarterly ROA of 1.24% remained above year-ago levels.

Margins widened as funding pressures eased. The industry’s net interest margin increased 5 basis points in the fourth quarter to 3.39%—the highest level since 2019—while community bank NIM climbed to 3.77%, its strongest reading since 2018. The expansion was fueled by a faster decline in funding costs than in asset yields, offering relief after multiple quarters of deposit repricing pressure.

Balance-sheet trends also improved. Total loans grew 2% in the fourth quarter and 5.9% year over year, the fastest annual pace in nearly three years, with gains led by credit cards, loans to nondepository financial institutions, commercial real estate and C&I lending. Domestic deposits increased for the sixth straight quarter, rising $318.3 billion, while unrealized securities losses declined 9.2% from the prior quarter to $306.1 billion as mortgage rates fell. Longer-term assets continued to shrink as a share of total assets, reducing interest-rate sensitivity.

Asset quality metrics remained generally favorable but showed pockets of strain. The overall past-due and nonaccrual rate ticked up to 1.56%, still below pre-pandemic averages, though credit card, auto and certain commercial real estate portfolios remained elevated. The number of banks on the FDIC’s “Problem Bank List” increased modestly to 60 institutions—1.4% of all banks, within the normal range for non-crisis periods. Meanwhile, the Deposit Insurance Fund balance rose to $153.9 billion, pushing the reserve ratio up to 1.42%. The FDIC said strong capital and liquidity positions continue to support lending, but emphasized that commercial real estate exposure and securities losses will remain areas of supervisory focus in 2026.