Eleventh District Banking Trends
Fourth Quarter 2024
This report tracks the financial performance of Eleventh District banks in comparison with national averages, looking at profitability, loans, deposits and other key metrics. It is updated quarterly.
Highlights
- Banking conditions remained satisfactory through fourth quarter 2024.
- Profitability improved on higher revenue.
- Asset quality metrics remained relatively benign despite slight increases in both net charge-off rates and noncurrent loan rates, which were driven by troubled commercial and industrial (C&I) and commercial real estate (CRE) credits.
- Loan growth slowed—both overall and for most major loan categories.
- Eleventh District banks’ C&I loans registered the first year-over-year increase since fourth quarter 2023, while consumer loans declined for both Eleventh District and U.S. banks.
- Banks’ deposit mix was stable, although the share of interest-bearing deposits and CDs remains elevated relative to before 2022, when the Fed began raising interest rates.
- Equity capital ratios fell as higher retained earnings were offset by additional unrealized losses on available-for-sale securities.
Charts
Select a metric to go directly to the related chart below.
Return on average assets
- Eleventh District banks earned a return on average assets (ROAA) of 1.25 percent in fourth quarter 2024, up from 1.08 percent in third quarter 2024 and 0.88 percent in fourth quarter 2023.
- U.S. banks earned an ROAA of 1.06 percent in fourth quarter 2024, up from 1.03 percent in third quarter 2024 and 0.87 percent in fourth quarter 2024.
Net income breakdown
- Net interest income and noninterest income, as a percent of average assets, increased in fourth quarter 2024, both quarter over quarter and year over year.
- Higher profitability for Eleventh District banks relative to U.S. peers can be traced to lower provision expense.
Net interest margins
- Net interest margins (NIMs) increased again in fourth quarter 2024, as declines in interest expense outpaced declines in interest income.
- Eleventh District banks' NIM was 3.40 percent in fourth quarter 2024, 10 basis points (bps) higher than third quarter 2024 and 16 bps higher than fourth quarter 2023.
- U.S. banks’ NIM was 3.49 percent, 6 bps higher than third quarter 2024 and 12 bps higher than fourth quarter 2023.
Provision expense
- Eleventh District banks’ provision expense has trended below their U.S. peers since late 2021.
- For fourth quarter 2024, Eleventh District banks’ provision expense relative to average assets was 12 basis points lower than the U.S peer value.
Net loan losses
- Eleventh District banks’ net charge-off rate has trended below their U.S. peers since 2020.
- Rates for both groups increased slightly in fourth quarter 2024, to 0.21 percent for Eleventh District banks (up 8 basis points (bps) quarter over quarter but down 1 bps year over year) and 0.35 percent for U.S. banks (up 7 bps quarter over quarter and 4 bps year over year).
- C&I and CRE loans are driving increases in net charge-off rates.
Net charge-offs by loan type
- For Eleventh District banks, C&I and CRE account for most of the quarter-over-quarter increase in the net loan charge-off rate.
- For U.S. banks, C&I and CRE loans account for the bulk of both quarter-over-quarter and year-over-year increases in the net loan charge-off rate.
Noncurrent loans
- Eleventh District banks’ noncurrent loan rate has consistently trended below their U.S. peers.
- Noncurrent loan rates increased slightly in fourth quarter 2024, to 0.73 percent for Eleventh District banks (up 1 basis point (bps) quarter over quarter and 14 bps year over year) and 0.84 percent for U.S. banks (up 4 bps quarter over quarter and 15 bps year over year).
Noncurrent loans by type
- For Eleventh District banks, CRE and C&I account for most of the year-over-year and quarter-over-quarter increases, respectively, in the noncurrent loan rate.
- For U.S. banks, CRE accounts for most of the quarter-over-quarter and year-over-year increases in the noncurrent loan rate.
Loan growth
- The pace of loan growth slowed somewhat in fourth quarter 2024 with U.S. banks just outpacing Eleventh District banks.
- For Eleventh District banks, growth slowed for all but C&I loans.
- For U.S. banks, growth slowed for all major loan categories.
Loan growth by type
- Eleventh District banks’ C&I loans registered the first year-over-year increase since fourth quarter 2023.
- Consumer loans declined year over year for both Eleventh District and U.S. banks.
Funding mix
- For both Eleventh District and U.S. banks, total liabilities increased slightly in fourth quarter 2024, with increases in deposits offsetting declines in other borrowings.
Deposit mix
- Banks’ shares of interest-bearing and noninterest-bearing deposits were generally unchanged in fourth quarter 2024.
- While the deposit mix has stabilized in recent quarters, the share of interest-bearing deposits and CDs remains elevated relative to before 2022, when the Fed began raising interest rates.
Equity capital ratios
- Capital ratios dipped in fourth quarter 2024 as higher retained earnings were offset by additional unrealized losses on available-for-sale securities.
- As interest rates rose in the fourth quarter, the market value of banks’ securities holdings fell, leading to an increase in unrealized losses, which reduce equity capital through accumulated other comprehensive income.
NOTES: Analysis excludes banks with assets greater than $100 billion (one bank in the Eleventh District and 33 banks nationwide).
The Eleventh Federal Reserve District includes Texas, northern Louisiana and southern New Mexico. Banks headquartered in the Eleventh District may also operate elsewhere.
About Eleventh District Banking Trends
For more information about this report, contact Emily Greenwald.