Fed’s Outstanding Supervisory Findings Fall as Banks Remain ‘Sound and Resilient’

The banking system is “sound and resilient,” Federal Reserve Board Vice Chair for Supervision Michelle W. Bowman said Tuesday (Dec. 2).

Bowman said this while testifying before the House Financial Services Committee on the Federal Reserve’s supervisory and regulatory activities. She also shared the Fed’s latest Supervision and Regulation Report, which found that the number of outstanding supervisory findings at financial institutions fell during the first half of the year.

“Banks continue to report strong capital ratios and significant liquidity buffers, which position them well to support economic growth,” Bowman said in her testimony. “The overall health of the banking sector is demonstrated by continued growth in lending, a decline in non-performing loans across most categories, and strong profitability.”

The Supervision and Regulation Report, which was released Monday (Dec. 1), said that in the first half of the year, the “vast majority” of banking organizations reported capital levels above applicable regulatory requirements, with over 99% of banks being well capitalized in the second quarter, and that tangible capital equity ratios were solid and growing, though below pre-pandemic levels.

In addition, aggregate liquidity levels remained “solid,” funding risk was in line with historical norms, deposits grew to a record high, and uninsured deposits as a percentage of total assets and as a percentage of total deposits remained below where they were at the end of 2022, according to the report.

Aggregate loan growth across commercial banks was “strong,” with most major loan categories growing, while loan delinquency rates decreased across most loan categories, the report said.

The number of outstanding supervisory findings at community banking organizations (CBOs) and regional banking organizations (RBOs) as well as large financial institutions fell during the first half, per the report.

For CBOs and RBOs, the two most common categories of outstanding issues were IT/operational risk findings together with risk management and internal controls, according to the report.

Among large financial institutions, which have total assets of at least $100 billion, the most common components identified by supervisors as less than satisfactory included governance and controls, capital planning and positions, and liquidity risk management and positions, per the report.

“The distribution of supervisory findings by category also remained largely stable over the first of 2025,” the report said.

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