Community bank net income increased in Q1

Community banks made $8.1 billion in net income in the first quarter, up nearly 4 percent from the end of last year, according to the FDIC’s Q1 Quarterly Banking Profile. .More than half of community banks had a quarterly increase in net income as lower provisions and noninterest expenses offset lower noninterest income and net interest income. Pretax ROA increased seven basis points from the fourth quarter of 2025 to 1.42 percent. Community banks’ net operating revenue fell 1.1 percent to $28.7 billion due to drops in net interest income and noninterest income. NIM decreased six basis points from the previous quarter but was still up 24 basis points on an annualized basis to 3.71 percent. Domestic deposits at community banks increased 1.2 percent to $2.3 trillion, with nearly 70 percent reporting an increase in insured deposits. The share of loans and leases 30 days or more past due for community banks increased nine basis points to 1.44 percent. Total loans and leases increased nearly 1 percent from late last year, and 5.4 percent on an annual basis. “Nearly 58 percent of community banks reported quarterly growth in total loan balances,” according to the FDIC. “Growth was broadbased across all major portfolios except agricultural production and auto loans.” The country’s approximately 4,300 FDIC-insured commercial banks and savings institutions made $80.5 billion in quarterly net income in the first quarter. That was up 3.6 percent from the Q4 2025, as growth in noninterest income at larger banks was partially offset by increased noninterest expenses and lower net interest income. The industry’s ROA was 1.26 percent, up from 1.23 percent the previous quarter and 1.16 percent in the first quarter of 2025. More than half of banks had higher net income than Q4 2025. Quarterly net income increased 14.3 percent or $10.1 billion from Q1 2025 amid higher net interest income and noninterest income. Quarterly domestic deposits rose 1.2 percent, its seventh straight increase, amid an increase in domestic deposits. Other Q1 report findings included:Industry NIM fell eight basis points to 3.31 percent as the yield on earning assets dropped faster than the cost of funds. Noninterest expenses increased 1.6 percent from the previous quarter and 7.1 percent from the first quarter of 2025 to $159.8 billion. The Deposit Insurance Fund Ratio increased a single basis point to 1.43 percent. The DIF balance increased $3.6 billion to $157.4 billion. The number of FDIC-insured institutions fell by 60 to 4,278.