U.S. banks posted a modest improvement in profitability in the first quarter of 2026, with aggregate net earnings rising 3.6% to $80.5 billion, the Federal Deposit Insurance Corporation reported on Wednesday. The FDIC attributed the uptick to a combination of renewed deposit inflows and lenders taking slightly larger allowances against potential loan losses.
The regulator noted that bank deposits increased for the seventh straight quarter, a trend that supported liquidity across the industry. At the same time, bank provision expenses - the funds set aside to cover potential loan defaults - were up 2.3% in the quarter. Despite that quarterly rise, provisions remained lower than they were a year earlier, according to the FDIC.
On asset quality, the FDIC described the overall picture as favorable. The aggregate level of past due loans edged downward, signaling a slight improvement in delinquencies at the industry level. However, the report highlighted unevenness beneath that headline: past due levels for residential loans and commercial real estate rose slightly over the period, even as other categories improved.
Separately, the FDIC called attention to persistent elevation in delinquencies for specific consumer and property loan types. Loans for credit cards, autos, and multifamily commercial real estate continued to show higher-than-normal levels of past due balances, the report said.
FDIC Chairman Travis Hill commented in a statement that banks entered the period with robust capital and liquidity positions. The agency's assessment underscored that, while certain loan categories showed strain, overall capital and funding profiles remained strong across the banking system.
The agency's findings paint a mixed but largely stable snapshot of the sector: profits improved and deposit growth resumed, while lenders modestly increased reserves and some loan categories demonstrated renewed stress. The FDIC's report flags specific pockets of elevated delinquencies even as the aggregate metrics appear sound.
Clear summary
The FDIC reported that U.S. banks earned $80.5 billion in the first quarter of 2026, a 3.6% increase from the prior period, supported by a seventh consecutive quarter of deposit growth and a small rise in provision expenses. Overall past due loan balances fell slightly, but past due levels moved higher for residential loans and commercial real estate, and remained elevated for credit card, auto, and multifamily commercial real estate loans. FDIC Chairman Travis Hill said capital and liquidity remained strong.