Commercial banks and savings institutions generated $66.8 billion in net income in the fourth quarter, up 2.3 percent from the previous quarter.
For the full year, the banking industry reported net income of $268.2 billion, up 5.6 percent from the prior year. The aggregate ROA ratio increased by three basis points to 1.12 percent for 2024. The increases in net income and ROA occurred primarily because one-time events in 2023 and 2024 led to lower noninterest expense, higher noninterest income, and lower realized securities losses in 2024.
Community banks reported full-year 2024 net income of $25.9 billion, down 2.4 percent from the prior year. The decline was caused by higher noninterest expense, up 6.1 percent, and higher provision expense, up 20 percent. These offset the increases in net interest income, up 2.7 percent, and noninterest income, up 5.9 percent. Community banks reported full-year pre-tax ROA of 1.14 percent, down eight basis points from the prior year.
Further, the industry reported a $3.8 billion increase in net interest income while net interest margin (NIM) increased five basis points to 3.28 percent. All asset-size groups reported a higher NIM in the fourth quarter.
The fourth quarter NIM was three basis points above the pre-pandemic average NIM. The community bank NIM of 3.44 percent increased nine basis points quarter over quarter, but it is still below the pre-pandemic average of 3.63 percent.
In addition, the industry’s net charge-off ratio increased three basis points to 0.70 percent from the prior quarter. It is five basis points higher than the year-ago quarter and 22 basis points above the pre-pandemic average. The credit card net charge-off ratio was 4.57 percent in the fourth quarter, up nine basis points quarter over quarter and 109 basis points above the pre-pandemic average.
Also, total loan and lease balances increased 0.8 percent from the previous quarter. Community bank loan growth was more robust, increasing 1.3 percent from the prior quarter and 5.1 percent from the prior year. This was led by increases in nonfarm, nonresidential CRE and residential mortgage portfolios.
Domestic deposits increased 1.2 percent from the third quarter 2024, with both savings and transaction deposits increasing from the prior quarter. Brokered deposits decreased for the fourth straight quarter, down 3.6 percent from the prior quarter. Estimated insured deposits increased slightly this quarter, up 0.4 percent, while estimated uninsured domestic deposits increased 3.0 percent.
Finally, the Deposit Insurance Fund reserve ratio increased 3 basis points to 1.28 Percent.
“The latest FDIC Quarterly Banking Profile indicates the banking industry remains a healthy and strong driver of the U.S. economy. Lending continued to grow across the industry for the third straight quarter and was particularly robust among community banks, which boosted both commercial real estate and residential mortgage lending to businesses and families in their neighborhoods,” Sayee Srinivasan, chief economist at the American Bankers Association, said.