- Key insight: Banks made $295.6 billion in net income in 2025.
- Supporting data: Banks' net interest margin hit 3.39%.
- Forward look: Shortly after the data window, which showed no bank failures in Q4 2025, a small Chicago bank failed in January.
Banks closed 2025 profitably, with higher rates of lending and stable credit conditions, according to the Federal Deposit Insurance Corp.'s final quarterly report of the year.
In the Quarterly Banking Profile released Tuesday, the agency reported banks made $295.6 billion in net income during the full-year 2025, a 10.2% jump from 2024, driven by higher interest margins and fees.
"The increase was driven by higher net interest income and higher non-interest income," said an FDIC official in a briefing on the report, "which offset higher non-interest expense."
The industry's quarterly net income was $77.7 billion in the fourth quarter, a 2% drop from the third quarter, partially a result of higher operating costs. Quarterly net earnings were still 16.5% higher than in the fourth quarter of 2024.
The industry's net interest spread increased to 3.39%, the highest level since early 2019, as interest paid on deposits fell at a slower rate than yields banks recouped on assets. The high profitability may partially be a result of more lending by firms. The fourth quarter report showed total loans and leases, which reached a total of $13.5 trillion, grew $267.8, or 2.0% from the third quarter to the fourth quarter of 2025. Loans grew 5.9% on a yearly basis from 2024 to 2025. Loan growth largely occurred in the credit card, nonbank lending and commercial real estate sectors.
Total domestic deposits rose $318.3 billion, marking the sixth quarterly increase in a row. Falling mortgage rates also reduced unrealized securities losses on bank balance sheets by 9.2%, settling at $306.1 billion.
Credit conditions at firms showed positive and negative results. While FDIC Chairman Travis Hill expressed optimism that the industry was not seeing imminent deterioration, the rate of delinquent loans increased by 1.56%. Delinquencies were at high levels in credit card, auto-loan and commercial real estate portfolios. Hill said credit conditions remain stable overall.
"This was another strong quarter for the industry. Strong results, both in the fourth quarter and for the year," Hill said. "From a credit quality perspective, we still have no, no evidence of any deterioration, so still favorable conditions."
Three additional banks were added to the FDIC's problem bank list, which hit 60 banks, or 1.4% of all banks, compared with 57 in the prior quarter. The Deposit Insurance Fund, a depositor rescue fund into which banks pay fees, crept up to $153.9 billion.
In line with the long-term trend of consolidation in the banking industry, the total number of banks fell by 43 institutions in late 2025, with 4,336 total banks left standing. 36 banks merged during this time, four were sold to nonbanks and two voluntarily liquidated, while one bank opened.
No banks failed in the fourth quarter of 2025. In late January, the FDIC and local regulators
