12:16 PM EDT, 08/26/2025 (MT Newswires) -- The Federal Deposit Insurance Corporation said Tuesday that the US bank sector generated $69.9 billion in profits in Q2, down 1% from the prior quarter, as merger-related provisions tied to a "large bank" acquisition weighed on industry earnings.

The FDIC didn't name the companies involved in the acquisition but Reuters said it refers to the merger between Capital One (COF) and Discovery Financial.

The industry's return on assets edged down to 1.13% from 1.16% in Q1, as provision expenses climbed by $7.6 billion, and that excluding this one-time charge, profits would have increased on stronger net interest and noninterest income, the agency said.

According to the FDIC, net income of community banks totaled $7.6 billion in Q2, increasing 12.5% quarter-on-quarter as higher net interest income and noninterest income more than offset higher noninterest expenses and provision expenses.

Despite the Capital One-Discover merger dragging on Q2 bank profits, the lenders' asset quality metrics remained relatively good, though delinquency rates in commercial real estate and credit card loans were above pre-pandemic levels, Reuters said, citing a prepared statement from Acting FDIC Chairman Travis Hill.

Price: 223.14, Change: +2.04, Percent Change: +0.92