U.S. Bank Profit Analysis – Q3 2024

By Pete Schroeder

WASHINGTON (Reuters) – U.S. bank profits dipped 8.6% in the third quarter of 2024 to $65.4 billion, following a one-time surge in the prior quarter, as reported by the Federal Deposit Insurance Corporation (FDIC) on Thursday.

The dip in profits was primarily attributed to one-time gains on equity security transactions reported in the second quarter. However, this was somewhat mitigated by strong net interest income and growing revenue, according to the regulator’s quarterly profit report. Compared to the first quarter, bank profits saw a slight increase.

FDIC Chairman Martin Gruenberg noted, "The banking industry continued to show resilience in the third quarter. Net interest income and the net interest margin increased substantially this quarter."

Some caution signals were evident in the latest figures, with the ratio of past-due or nonaccrual loans in the commercial real estate sector rising to 2.07%, the highest level since 2013. This increase reflects the ongoing challenges borrowers face, particularly due to elevated office vacancies post-pandemic.

Additionally, two more banks were added to the FDIC's "problem bank" list, raising the total to 68 firms. Remarkably, total assets at problem banks surged from $3.9 billion to $87.3 billion, indicating that one or more larger banks may have been added.

Despite these concerns, the FDIC report overall indicates stability in the banking sector. Net interest income rose by $4.5 billion in the quarter, with net interest margins improving across banks of all sizes. Deposits increased by 1.1% to $194.6 billion, while unrealized losses on securities fell by 29% as overall interest rates declined.