On April 22, the FDIC published its 2026 Risk Review report, assessing the funding, interest rate, and credit risks faced by the banking industry in 2025. The FDIC reported strong earnings in the banking industry, with net income rising on higher net interest income and noninterest income, pushing the aggregate return on assets to 1.2 percent, its highest level since 2021. Net interest margins improved by eight basis points to 3.3 percent as the yield curve steepened, but the agency noted that unrealized losses on securities, while declining 36 percent, remained elevated. Deposits grew 3.9 percent, led by uninsured deposits, while wholesale funding declined as banks reduced Federal Home Loan Bank borrowings and brokered deposits. Loan growth accelerated to 5.9 percent, the fastest annual growth rate in 11 quarters, led by lending to nondepository financial institutions (NDFIs). The number of “problem banks” fell to 60 at year-end 2025, down from 66 the prior year. The FDIC reported that credit risks were generally contained but uneven across sectors. Commercial real estate loan delinquency and net charge-off ratios remained low in aggregate, though banks with more than $100 billion in assets reported higher past-due rates, driven largely by office and multifamily properties.

Bank lending to NDFIs reached $1.4 trillion, growing 35.2 percent year over year, though reporting reclassifications accounted for some of the increase, and credit quality for those loans remained favorable. The FDIC reported that business conditions in 2025 were “tepid,” noting tight underwriting standards and weak loan demand, and that while corporate default rates declined, they remained elevated with continued stress in leveraged lending. Consumer loan delinquency rates for auto and credit card portfolios remained above pre-pandemic averages, even as aggregate net charge-off rates decreased slightly. In agriculture, receipts for corn, soybeans and wheat declined 28.2 percent from their 2022 peak, eroding working capital for row crop producers and pushing farm bank agricultural loan delinquencies higher. Elevated mortgage rates — averaging 6.35 percent for a 30-year fixed-rate loan — continued to weigh on home sales and affordability, though residential mortgage credit quality remained sound, according to the FDIC.