U.S. Banks Maintain Strong Capital and Liquidity Positions in First Half of 2025, Fed Says
Most U.S. banking organizations entered the second half of 2025 with robust capital, stable liquidity, and healthy credit performance, according to the Federal Reserve Board’s latest Supervision and Regulation Report. As of the second quarter, more than 99% of banks were classified as well capitalized.
Regulatory capital ratios remained broadly stable, with aggregate CET1 capital ratios holding near 13% for both large and small banks—roughly unchanged from mid-2024. The Fed noted that the 2025 stress test results reaffirmed that large banks could withstand a severe recession while still meeting minimum capital thresholds and continuing to lend across business and household sectors.
Tangible common equity (TCE) also strengthened but remains slightly below pre-pandemic norms. Aggregate TCE rose to $2.2 trillion, up from $2.0 trillion a year earlier. Banks reported $143 billion in unrealized losses on available-for-sale securities and $250 billion in unrealized losses on held-to-maturity portfolios—both modest improvements from late 2024 as rates stabilized.
Liquidity positions remained solid across the system. Banks subject to the Liquidity Coverage Ratio (LCR) maintained liquid assets well above regulatory minimums, while smaller banks reported stable liquidity cushions.
Credit growth accelerated meaningfully: commercial bank loans expanded more than 5% year-over-year in Q2. Nearly all major loan categories grew, with commercial real estate (CRE) lending picking up modestly and loans to non-depository financial institutions expanding further as banks deepened partnerships with nonbank lenders. Regulators, however, remain focused on rising exposures to nonbanks. Although recent defaults increased supervisory attention, realized losses remain contained, and many banks are reassessing underwriting standards.
Delinquency rates remained historically low. Overall delinquencies held near 1.5%, below the 10-year average of 1.7% and well under the decade peak of 2.5%. CRE and consumer loan delinquencies, while improving, stayed elevated relative to historical norms. Office loan delinquencies at large banks remained close to 10%, and multifamily delinquencies—though off their 10-year high—remain steady at large institutions, reflecting ongoing property-sector stress.