By Pete Schroeder
WASHINGTON (Reuters) – U.S. bank profits dipped 8.6% in the third quarter of 2024 to $65.4 billion, after enjoying a one-time surge the prior quarter, the Federal Deposit Insurance Corporation reported Thursday.
The slightly lower profits were primarily due to the fact that banks reported one-time gains on equity security transactions in the second quarter, and were partially offset by strong net interest income and growing revenue, the regulator said in its quarterly profit report. Bank profits were up slightly when compared with first quarter numbers.
“The banking industry continued to show resilience in the third quarter. Net interest income and the net interest margin increased substantially this quarter,” said FDIC Chairman Martin Gruenberg in a prepared statement.
There were some signs of caution in the latest figures. The ratio of past-due or nonaccrual loans in the commercial real estate sector ticked up to 2.07%, the highest level recorded since 2013, as borrowers continue to grapple with high levels of office vacancies following the pandemic.
Furthermore, the FDIC said two more banks joined its “problem bank” list, taking it to 68 firms. Notably, the amount of total assets at problem banks surged from $3.9 billion to $87.3 billion, suggesting one or more larger banks joined the list.
Overall though, the latest FDIC report suggests stability in the banking sector. Net interest income rose by $4.5 billion in the quarter, the net interest margin was up for banks of all sizes, and deposits rose 1.1% to $194.6 billion. Unrealized losses on securities fell 29%, as overall interest rates fell.