U.S. banking profits soared 79.5% to $64.2 billion in the first quarter of 2024, largely as big banks didn’t absorb billions of dollars in extraordinary charges to cover the costs of bank failures last spring. The FDIC said the profit increase was largely due to banks not being aware of the review, which led to lower bank profits at the end of 2023.
Specifically, the FDIC said banks’ noninterest expenses fell by $22.5 billion in the first quarter, which was the main reason for the profit increase. The decline in special assessment fees accounted for more than half of these declining fees. Overall, the FDIC said asset quality measures remained generally good but noted deterioration in credit card and commercial real estate (CRE) portfolios. In particular, the FDIC said the illiquid rate on non-owner-occupied CRE loans is currently at 1.59%, the highest level since the fourth quarter of 2013, driven primarily by the office portfolios of large banks.
The FDIC also said its “list of problem banks” expanded from 52 companies to 63 in the first quarter, with the banks’ total assets rising to $82.1 billion. Currently, 1.4% of banks are considered “problem banks,” a number the FDIC says is within the normal range. Bank deposits rose 1.1%, or $190.7 billion, for the second consecutive quarter. Uninsured deposits are expected to grow 0.9%, the first increase since late 2021.
