Banks reported a return on assets (ROA) of 1.16% in the first quarter of the year, the federal bank deposit insurance agency said Wednesday, the highest quarterly level among the last three.
According to the Federal Deposit Insurance Corp. (FDIC) the ROA number – which the agency has termed the basic yardstick of bank profitability – is up five basis points from year-end 2024 (1.11%) and 7 bp from the first quarter of 2024.
Additionally, the agency reported, net income increased in the first quarter of 2025 to $70.6 billion, up $3.8 billion (5.8%) from the prior quarter.
“The quarterly increase in net income was led by higher noninterest income (up $5.4 billion, or 7%),” the FDIC said in a release. “Gains in noninterest income were due to market movements and volatility as several large firms reported mark-to-market gains on certain financial instruments in the quarter. Lower losses on the sale of securities also contributed to an increase in net income.”
However, the agency reported, net interest margin (the difference between the interest income a bank earns from loans and investments and the interest expense it pays out on deposits and other liabilities) was down from year-end 2024 to 3.25%. The FDIC said that was equal to the pre-pandemic average. The agency pointed to a “modest quarterly decline” in net interest income (down $278.3 million, 0.2%). It said that resulted from interest income slowing slightly more than interest expense.
The quarterly report shows “generally favorable” results for asset quality metrics, the FDIC said –with one exception: past-due and nonaccrual (PDNA) loans for commercial real estate portfolios. The agency said PDNA rates (that is, loans that are 30 or more days past due or in nonaccrual status) for CRE portfolios “is the highest it has been since the fourth quarter of 2014 at 1.49%.” The FDIC said multifamily CRE PDNAs have grown the most in the past year, up 88 bp to 1.47%.
Overall, however, the FDIC noted that PDNA loans fell 1 bp from the prior quarter to 1.59% of total loans. It noted that banks’ PDNA ratio is still below the pre-pandemic average of 1.94%.
The agency said banks reported quarterly decreases in PDNA of credit card loans (down $2.7 billion, or 9 bp to 3.22%), and auto loans (down $2.6 billion, or 48 bp to 2.84%).
In other areas from the first quarter report, the FDIC said:
- Total loan and lease balances increased only 0.5% ($62 billion) (0.5 percent) from the previous quarter. The largest portfolio increases were reported in loans to non-depository financial institutions, which the agency said was in part due to continued reclassifications following the finalization of changes to how certain loan products should be reported.
- The number of insured banks declined by 25, all through mergers. One bank opened, one bank failed and did not file a Call Report in the prior quarter, and one bank was sold to an uninsured institution, the agency reported.
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