Banking

As measured by aggregate return on average assets (ROAA), U.S. commercial bank performance weakened slightly from the second quarter but remained improved from a year ago (see chart 1).

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The deterioration in quarterly results was the result of a drop in ROAA among banks with assets greater than $10 billion, where increases in noninterest expense and modest declines in revenue more than offset declines in provisions (see chart 2).

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The increase in noninterest expense was largely attributable to Bank of America's $10.4 billion goodwill impairment charge applicable to its Global Card Services segment (FIA Card Services). Performance of mid-tier banks (assets between $1 billion and $10 billion), though still lagging other asset sizes, continued to improve on a quarterly and year-ago basis. Nearly 20 percent of commercial banks continued to lose money in the third quarter while asset quality issues persisted with the share of total loans that were more than 90 days past due or nonaccrual remaining stubbornly above 5 percent.