Banks see rising ROA, net income in third quarter – but also expanding delinquencies among several portfolios

A strong 1.27% return on assets was reported by the nation’s banks in the third quarter, the federal bank deposit insurance agency said Monday, with an increase in net income of 13.5% from the previous quarter.

The Federal Deposit Insurance Corp. (FDIC) said the increase in net income – which totaled $79.3 billion, up $9.4 billion from midyear – was fueled by lower provisions for loan losses and higher net interest income overall.

The ROA is up from mid-year when it posted 1.13% and is also up from the previous year’s third quarter ROA of 1.09%.

“Strong net interest income growth and a reduction in provision expense, primarily related to last quarter’s large bank acquisition, drove the quarterly increase in earnings,” the FDIC said of the bright points in its quarterly report.

The FDIC noted that the quarterly decrease in provision expense was largely attributable to expenses associated with the acquisition of one large bank in the prior quarter. “Absent this large provision expense, net income still would have increased, as the industry experienced a $7.6 billion increase in net interest income and a $1.1 billion increase in noninterest income,” the FDIC said.

However, the agency noted there was a gloomier spot in the third-quarter numbers: weakness in certain portfolios. That includes past-due and nonaccrual loans (PDNA) in the areas of non-owner-occupied commercial real estate (CRE), multifamily CRE, auto, and credit card portfolios. The agency said delinquencies in these portfolios are up and “well above their pre-pandemic averages.”

Also, the FDIC reported, the industry’s net charge-off ratio of 0.61% was up 1 basis point from the prior quarter. But, it added quickly, the charge-off ratio is down from the same quarter last year when it was 0.66%. This current ratio, the agency said, is 13 basis points above the pre-pandemic average. Most portfolios, FDIC said, have net charge-off rates above their pre-pandemic averages.

Even so, the FDIC asserted that asset quality metrics were generally favorable across the banking industry.

FDIC-Insured Institutions Reported Return on Assets of 1.27 Percent and Net Income of $79.3 Billion in Third Quarter 2025