Executive Summary
The banking system remains sound and resilient. Most banks continue to report capital and liquidity levels above applicable regulatory requirements. Aggregate commercial bank deposit levels stabilized in the second half of 2023 and slightly increased in early 2024. Asset quality remains sound overall. However, delinquency rates for some commercial real estate loans and some consumer loans have increased to above pre-pandemic levels. Banks have boosted the allowance for credit losses in anticipation of further deterioration in asset quality.
The Federal Reserve is focused on improving the speed, force, and agility of supervision, as appropriate. This includes ensuring supervisory actions are commensurate with a banking organization's size, risk, and complexity. The Federal Reserve continues to closely monitor risks to the banking sector, including credit, interest rate, and liquidity risks.
This report focuses on developments in three areas:
- Banking System Conditions provides an overview of the financial condition of the banking sector.
- Regulatory Developments outlines the Federal Reserve's recent regulatory policy work.
- Supervisory Developments highlights the Federal Reserve's current supervisory programs and priorities.