The Federal Deposit Insurance Corporation (FDIC) has added two banks to its “problem bank” list during the third quarter of 2024, bringing the total to 68 institutions, or 1.5% of all U.S. banks. The combined assets of these banks rose by $3.9 billion to $87.3 billion, according to the FDIC’s latest report.
Although the FDIC does not disclose the names of banks on the list, FDIC Chairman Martin Gruenberg described the current level as “not atypical.”
Banking Sector Profits See Modest Decline
The overall banking industry reported an 8.6% decline in quarterly profits, attributed primarily to the absence of one-time equity security transaction gains recorded in the second quarter. Despite this, net interest income and growing revenues provided partial offsets, with quarterly profits slightly higher than first-quarter figures.
“The banking industry continued to show resilience in the third quarter. Net interest income and the net interest margin increased substantially this quarter,” Gruenberg stated.
Mixed Signals in Banking Health
The report highlighted areas of concern, particularly in commercial real estate (CRE). The ratio of past-due or non-accrual loans in the CRE sector rose to 2.07%, the highest level since 2013, reflecting ongoing struggles with office vacancies in the post-pandemic economy.
However, other indicators suggest stability:
- Net interest income rose by $4.5 billion.
- Deposits increased by 1.1% to $194.6 billion.
- Unrealized losses on securities fell by 29% due to easing interest rates.
- The net interest margin improved across banks of all sizes.
Overall, the FDIC’s third-quarter report underscores the banking industry’s resilience, even amid emerging challenges in certain sectors.
