Big US Banks Saw Assets Decline in 4th Quarter 2024

The headquarters of JPMorgan Chase bank rises over Park Avenue in midtown Manhattan on July 13, 2012, in New York City. Photo by John Moore/Getty Images

Assets held by large U.S. banking institutions fell in the fourth quarter of 2024 from the previous quarter, according to S&P Global.

Total assets of U.S. commercial banks, savings banks, and savings and loan associations stood at $24.1 trillion as of Dec. 31, 2024, down 0.5 percent from the third quarter, the company said in a Feb. 14 statement. This is the “second-highest quarter-end level since the Federal Reserve was established,” according to S&P Global. Assets, however, have registered a decline in seven out of the previous 11 quarters.

“The majority of institutions with greater than $100 billion in total assets as of year-end 2024 reduced the size of their balance sheets in the fourth quarter,” the report reads.

“Most notably, JPMorgan Chase & Co unit JPMorgan Chase Bank NA, the largest bank in the country with 14.4 percent of the industry’s assets, reported a $124.84 billion decrease in total assets.”

Meanwhile, U.S. banks were able to raise deposits while shedding some higher-cost funding.

Total non-brokered U.S. deposits were up 1.6 percent on a quarterly basis in the fourth quarter. Non-brokered deposits are deposits at banks held by individuals, such as savings and checking accounts. They differ from brokered deposits made through a third-party deposit broker.

During the fourth quarter, total wholesale funding was down by more than $213 billion. Wholesale funding refers to money other than core demand deposits (such as checking accounts and savings accounts) sourced by banks for funding their operations. This includes federal funds, brokered deposits, and foreign deposits.

Wholesale funding tends to be a more expensive source of financing for banks than options such as core demand deposits.

“JPMorgan Chase Bank’s wholesale funding decreased $97.20 billion, or 15.5 percent,” the report reads.

“In the regional bank sector under $100 billion in assets, Cadence Bank and Hancock Whitney Corp. unit Hancock Whitney Bank—both of which announced a bank acquisition in January—reduced their wholesale funding by approximately 50 percent.”

The decreased reliance on wholesale funding translated to higher margins for banks in the fourth quarter, S&P Global stated.

The net interest margin (NIM), which measures the profitability of banking institutions, was up by four basis points (bps) in the fourth quarter from the previous quarter on a fully taxable-equivalent basis.

“Standouts among regional and large banks included Comerica Inc. unit Comerica Bank, which reported a NIM expansion of 24 bps, and KeyCorp unit KeyBank NA, which reported a NIM expansion of 23 bps,” the report reads.

Outlook for 2025

Business consulting company Deloitte expects geopolitical and macroeconomic uncertainties to “keep bank executives on their toes” this year, it stated in a report.

“Higher deposit costs will keep net interest income in check,” its report reads. “Noninterest income could offer a bright spot for topline growth.”

Expenses are expected to remain elevated because of investments in technology and higher compensation costs.

Credit rating agency Fitch revised its outlook for U.S. banks in 2025 to “neutral” from “deteriorating” last year, according to a Dec. 3, 2024, report.

The revised outlook “reflects signs of stabilization in capital, funding, and liquidity metrics and Fitch’s expectations for core asset quality and profitability ratios to follow in 2025, despite weaker economic growth and a softer labor market,” the agency stated.

Fitch said it foresees that improved business confidence will support investment banking, growth in loans, and activity in the capital markets.

“A shift to a more neutral monetary policy stance will ease funding costs, improve debt-repayment capacity, and gradually reverse unrealized losses on securities portfolios in 2025,” it stated.

Meanwhile, the dwindling number of community banks has raised concerns. These are small financial institutions that are locally owned and operated, unlike large banking entities.

In the past 25 years, the number of community banks in the United States has fallen from more than 8,500 to 4,000.

“Community banks know their communities best, and research shows that when they close their doors, Americans suffer,” House Financial Services Committee Chairman French Hill (R-Ark.) said during a recent hearing.

The decline in numbers has been attributed to various factors such as high compliance costs, regulatory burdens, and high capital requirements.

Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America, cited the implementation of Section 1071 of the Dodd–Frank Act as negatively affecting community banks.

The act requires financial institutions to collect, maintain, and report data regarding applications for credit made by minority- or women-owned businesses.

While the objective of the act is to reportedly ensure fairer lending, it has boosted compliance costs for financial institutions, Rainey said.