WASHINGTON (Reuters) -The U.S. banking industry saw its profits jump 13.5% to $79.3 billion in the third quarter of 2025, the Federal Deposit Insurance Corporation reported Monday.

The FDIC said the stronger profits were primarily due to growth in non-interest income expense, as well as banks booking smaller loss provision expenses. In the second quarter, the banking sector reported higher provision expenses, primarily thanks to the completed merger of Capital One and Discover Financial.

While the banking sector remained healthy overall, the regulator flagged the industry is still grappling with historically high past-due rates on some types of loans, notably commercial real estate, auto and credit card loans.

Banks with over $250 billion in assets reported a past-due rate of 4.18% for non-owner occupied commercial real estate loans. That figure is down from a 4.99% peak of a year prior, but still well above the pre-pandemic average of 0.59%. The overall past-due rate held steady at 1.49% of total loans, which is below the pre-pandemic average of 1.94%.

"The banking industry continued to have strong capital and liquidity levels, which support lending and protect against potential losses," said acting FDIC Chairman Travis Hill in prepared remarks. 

Banks reported a fifth straight quarter of higher deposits, boosted by $88.6 billion more in additional uninsured deposits, a 1.1% jump from the prior quarter. The number of "problem banks," which are banks that have low supervisory ratings, dropped by 2 to 57 banks, and the total number of banks in the country fell by 42 due to sales or mergers.