US Federal Banking Profitability Hits Two-Decade High, OCC Says
The OCC says lower charges for expected loan losses supported profits, while higher rates pose risks.
In the first half of 2026, the US federal banking system recorded its strongest profitability in over 20 years, the Office of the Comptroller of the Currency (OCC) said in its 12th November release. Banks with less than $30 billion in assets also reached that milestone, the regulator said.
The finding applies to the banks the OCC supervises, rather than every US bank. Its Fall 2026 Semiannual Risk Perspective generally reflects data as of 30th June, so the profitability assessment describes the first half of the year.
Net income grew more than 20% from the same period in 2025, the report said. Loan growth and higher income from sources other than interest supported revenue. So did a modest expansion of net interest margins. Lower charges for expected loan losses also helped lift earnings.
The OCC said banks' capital and liquidity remained high by historical standards, leaving balance sheets able to absorb unexpected stress. As the Federal Reserve explains, capital cushions losses, while liquidity measures resources available for short-term payments.
The OCC described the overall risk of borrowers failing to repay loans at the banks it supervises as modest.
FDIC Data Show Broader Earnings Growth
Separately, the Federal Deposit Insurance Corporation (FDIC) said in a 25th August press release that its insured institutions earned $90.1 billion in the second quarter of 2026, up 12% from the preceding quarter. Its Quarterly Banking Profile drew on reports from 4,238 insured commercial banks and savings institutions, a broader population than the OCC-supervised system.
The FDIC also reported loan growth of 1.8% during the quarter and 6.8% over a year. Measures of overdue loans and loans written off as losses improved from the previous quarter.
Higher Rates Remain A Risk
The OCC warned that higher interest rates could make it harder for commercial borrowers to refinance and could reduce the value of banks' securities holdings. Its report said commercial property borrowers facing approaching loan maturities, variable interest rates or high debt levels could experience greater financial stress if rates stayed high.
The regulator also said that borrowing costs and essential living expenses were limiting some households' financial flexibility, particularly those on lower incomes. Our reports on US household debt and October consumer prices cover the separate borrowing and inflation backdrop.
