**US Banks Report 13% Increase in Net Income Amid Improved Conditions**
Net income at US banks surged over 13% in the third quarter, driven by a rise in the deposit insurance fund and a decrease in the number of troubled banks, according to the Federal Deposit Insurance Corporation (FDIC). The net income climbed by $9.4 billion from the previous quarter, reaching $79.3 billion, primarily due to reduced provision expenses and increased net interest income, as highlighted in the FDIC’s quarterly banking assessment.
The deposit insurance fund’s balance increased by $4.8 billion, totaling $150.1 billion, while the number of banks under heightened regulatory scrutiny fell from 59 to 57. Travis Hill, the acting chairman of the FDIC, noted that asset quality metrics remained generally positive, despite some weaknesses in specific portfolios that are being closely monitored. He pointed out that unrealized paper losses on bank holdings, a lingering concern from the industry’s turmoil in 2023, have decreased but are still at elevated levels. Unrealized losses on securities fell nearly 15% from the previous quarter and 7.4% year-over-year, now standing at $337.1 billion.
The number of institutions insured by the FDIC dropped by 42 to 4,379, following the sale of four banks to uninsured entities and the merger of 38 firms with other lenders. During a recent news conference, Hill mentioned that the agency is developing new guidance on bank mergers, aiming to adopt a more flexible approach to partnerships between banks and other types of firms. Industry experts have been advocating for clearer regulations regarding bank acquisitions by private equity firms and cryptocurrency buyers.
The FDIC protects depositors against losses from bank failures, covering up to $250,000 for each account type. Since 2020, the agency has been working to rebuild its Deposit Insurance Fund (DIF) after a surge in deposits caused the reserve ratio to fall below the legally required level. The DIF has become a contentious issue, as it is funded by healthy banks through quarterly fees. However, the FDIC announced in May that the DIF is on track to meet its legal target ratio by the end of 2025, approximately three years ahead of schedule.
**FAQ**
**What is the current status of the FDIC’s Deposit Insurance Fund?**
The FDIC’s Deposit Insurance Fund has increased to $150.1 billion and is expected to meet its legal target ratio by the end of 2025, three years ahead of schedule.