Community bank earnings fell in ’24

FDIC-insured community banks made $25.9 billion in net income last year, down 2.4 percent or $624 million from 2023, according to the agency’s Quarterly Banking Profile. .Increases in provision and noninterest expenses more than offset rises in net interest and noninterest income. Community bank net income fell 6.5 percent in the fourth quarter of last year on an annualized basis. Community banks’ pretax ROA fell 12 basis points from the third quarter to 1.09 percent. Community banks reported a 1.14 percent full-year pre-tax ROA, according to the FDIC, down eight basis points from 2023. Community bank NIM increased nine basis points on a quarterly basis to 3.44 percent, which was still below its pre-pandemic average of 3.63 percent. Community bank loan growth was considered stronger than the broader industry. Total loans at community banks increased 1.3 percent from the previous quarter and 5.1 percent from the year prior, led by increases in nonfarm nonresidential commercial real estate and residential mortgage portfolios. According to the report, return on assets and net income increased on an annual basis in 2024. Higher net interest income drove an increase in quarterly ROA and net income from the previous quarter. NIM increased across all asset sizes. Asset quality metrics continued to be “generally favorable,” according to the FDIC, despite persisting weakness in some portfolios. The nation’s 4,487 FDIC-insured commercial banks and savings institutions made $66.8 billion in aggregate net income in the fourth quarter, up 2.3 percent or $1.5 billion from the previous quarter, amid a rise in net interest income. The banking industry reported $268.2 billion in net income in 2024, up 5.6 percent or $14.1 billion in 2023. The industry’s aggregate ROA ratio increased three basis points to 1.12 percent. FDIC institutions reported a 1.11 percent return on assets ratio, up two basis points from the third quarter and 50 basis points higher than its year-earlier mark. Loans 30 or more days past due or in nonaccrual status increased six basis points to 1.60 percent of total loans in the fourth quarter, which is still below the pre-pandemic average of 1.94 percent. On a quarterly basis, NIM increased five basis points to 3.28 percent, three basis points higher than its pre-pandemic average.Other report findings included:Total loan and lease balances increased less than one percent or $105 billion in the fourth quarter. Domestic deposits increased 1.2 percent or $214 billion from the third quarter. The industry’s net charge-off ratio increased three basis points to 0.70 percent from the third quarter, which was still 22 basis points higher than the pre-pandemic average. The credit card net charge-off ratio increased nine basis points to 4.57 percent in the fourth quarter. The number of FDIC-insured institutions fell by 30 during the fourth quarter to 4,487. During the quarter, four banks opened and one bank failed.