U.S. Banks Post Record $91 Billion Quarter — But Community Banks Are Showing the Strain

PALM BEACH GARDENS, Fla., September 24, 2026 — Weiss Ratings, the nation's leading independent provider of unbiased bank ratings, has released its U.S. Banking Q2 2026 Quarterly Analysis, finding that the industry earned $91.0 billion in the second quarter, up 12.5% from Q1 and the highest quarterly total in data going back to 2019. Yet community banks were the only size segment where problem loans rose and reserve coverage fell, with both measures at their weakest levels in that same period.

"Record profits and financial safety are not the same thing," said Gavin Magor, Director of Ratings at Weiss Ratings. "The banks serving Main Street and rural America are moving in the opposite direction from the biggest banks. Problem loans are rising, and the cushion to absorb them is getting thinner. That's precisely the kind of divergence we watch closely."

Weiss Ratings analyzed 4,267 banks holding $26.46 trillion in assets as of June 30, 2026.

Credit Quality by Bank Size, Q1 vs. Q2 2026

1. Record industry profits, with growth in every size group. Net income grew 9% or more in all four segments, led by Large banks at +15.4%. Industry return on average assets climbed from 1.27% to 1.41%, and total assets, loans and deposits all hit dataset highs.

2. Community banks break from the pack. Noncurrent loans at community banks, the 4,109 institutions under $10 billion in assets, edged up to 0.88%, their highest in the dataset. Reserve coverage slipped to 147.62%, the lowest since 2019, though still well above the 100% healthy threshold. SIBs moved the other way, with noncurrent loans falling to 0.85%, their best since Q3 2023, and coverage jumping to 195.36%.

3. Commercial real estate climbs and unrealized bond losses widen. Nonfarm, nonresidential commercial real estate loans reached $1.94 trillion, a dataset high, and median community bank CRE concentration rose to a record 15.06% of assets. The held-to-maturity (HTM) securities shortfall, the loss banks would take selling those holdings at today's prices, widened 1.2% to $216.9 billion, though it remains well below 2022–2025 levels. The 18 SIBs carry $188.3 billion of it.

"Many of these real estate loans were written when money was cheap," Magor said. "As they come due for refinancing at today's rates, some of the numbers simply won't work. Meanwhile, banks have lent $1.52 trillion to nonbank financial companies, including private credit funds, and that grew another 3.6% this quarter. If banks don't disclose how much of that is private credit, how is a depositor supposed to judge the risk?"

Because banks do not report private credit exposure explicitly, Weiss Ratings tracks loans to nondepository financial institutions (NDFI) as the best available proxy, though NDFI is far broader than private credit alone.

A record quarter does not mean every bank is equally sound. Consumers can review the full Q2 2026 analysis here before opening an account or placing deposits above insured limits.

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About Weiss Ratings: Weiss Ratings is the nation's leading independent provider of 100% unbiased ratings on stocks, ETFs, mutual funds, cryptocurrencies, banks, credit unions and insurance companies, covering more than 60,000 institutions and investments. Since its founding in 1971, Weiss Ratings has never accepted compensation from the companies it rates, and it never gives rated companies the opportunity to preview or suppress a rating before publication. All Weiss insurance company ratings are available at https://weissratings.com/en/insurance.

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