FDIC: U.S. banks report $80.5 billion in Q1 net income; ROA 1.26%

The Federal Deposit Insurance Corporation said U.S. banks reported $80.5 billion in net income in the first quarter of 2026 and a return on assets of 1.26%, figures Chairman Travis Hill described as “another strong quarter.” Andy Felton, director of the FDIC’s Division of Insurance and Research, told reporters the industry’s quarterly net income rose $2.8 billion, or 3.6%, from the prior quarter.

Felton said higher non‑interest income — up $5 billion, or 5.8% quarter over quarter and concentrated at the largest banks — was the primary driver of the increase, partially offset by higher non‑interest expenses and lower net interest income. “Gains in non‑interest income were attributable to larger institutions,” he said.

The agency reported annual loan growth accelerated to 7.1%, the fastest pace since the first quarter of 2023, with the largest dollar increases in commercial and industrial loans and loans to non‑depository financial institutions. At the same time, the industry’s average net interest margin fell eight basis points from the prior quarter to 3.31%, the FDIC said, because yields on earning assets decreased more than the cost of funds.

FDIC officials also flagged rising unrealized losses on securities after longer‑term rates increased in March: unrealized losses on held‑to‑maturity and available‑for‑sale portfolios rose by $19 billion to $325 billion. Felton tied the move to a pickup in 30‑year mortgage rates that reduced the market value of mortgage‑backed securities held by banks.

On credit quality, Felton said the past due and nonaccrual (PDNA) rate declined to 1.53% and the quarterly net charge‑off rate fell to 0.59%, though he cautioned that certain portfolios — including multifamily CRE, non‑owner occupied CRE, credit card and auto loans — remain elevated in some cases. Non‑owner occupied CRE PDNA for banks with assets over $250 billion fell to 3.40%, down from a recent peak of 4.99% in 2024, the FDIC said.

Domestic deposits rose for the seventh consecutive quarter, up $390 billion (2.1%), led by an estimated $234 billion increase in uninsured domestic deposits; non‑deposit liabilities rose by $394 billion, driven by repurchase agreements and trading liabilities.

The FDIC reported the Deposit Insurance Fund balance was $157 billion on March 31, 2026, up $3.6 billion from the prior quarter, driven mainly by assessment revenue and interest earnings and partially offset by $280 million in unrealized securities losses and $526 million in operating expenses. The agency said the reserve ratio was 1.43%.

The briefing concluded with questions from reporters; officials did not announce any policy or supervisory actions at the session. The FDIC will release its full Quarterly Banking Profile report and datasets for further detail.