OCC reports strong bank profitability and outlines key risks for federal banking system

The Office of the Comptroller of the Currency (OCC) released its Semiannual Risk Perspective for Fall 2026, identifying key risks facing the federal banking system.

The report highlights credit, market, compliance, and operational risks as primary concerns for banks nationwide, according to the OCC.

Profitability for both the federal banking system and community banks with assets under $30 billion rose to levels not seen in over 20 years during the first half of 2026.

This profitability growth was driven by loan growth, modest expansion of net interest margins, and increased non-interest income, with lower provisioning for credit losses supporting net income.

The OCC has adjusted its risk tolerance and supervisory policies, including codifying unsafe or unsound practices and expanding eligibility for an 18-month exam cycle for community banks with assets up to $6 billion.

These changes aim to focus supervision on material financial risks and reduce examination burdens, particularly for community banks.