Federated States of Micronesia Banks

Return on assets fell to 1.32% in Q1 2026 from 1.52% in Q4 2025 and 1.53% in Q1 2025, a 21-basis-point decline quarter-over-quarter and a 22-basis-point decline year-over-year. The institution remains 12 basis points above the national ROA benchmark of 1.20%, but the year-over-year pace of decline matches the quarter-over-quarter pace, suggesting profitability compression is stable rather than accelerating. This marks the first quarterly decline in ROA in the data shown. The institution's profitability advantage over the national average has narrowed from 33 basis points a year earlier to 12 basis points today.

Net interest margin compressed to 4.26% in Q1 2026 from 4.54% in Q4 2025, a 28-basis-point decline, and from 4.34% a year earlier, a 7-basis-point decline. The quarter-over-quarter pace of contraction is four times the year-over-year pace, indicating margin pressure accelerated sharply in the most recent quarter. The institution's NIM remains 45 basis points above the national 3.82%, but the gap has narrowed from 52 basis points a year earlier. The efficiency ratio rose to 66.12% in Q1 2026 from 62.73% in Q4 2025 and 62.47% in Q1 2025, a 3.39-percentage-point increase quarter-over-quarter and a 3.66-percentage-point increase year-over-year. The current ratio sits 1.98 percentage points above the national 64.14%. The year-over-year pace of efficiency deterioration slightly exceeds the quarter-over-quarter pace, suggesting operating expense growth or revenue compression has been consistent over the past four quarters. The combination of narrowing NIM and rising efficiency ratio accounts for the ROA decline.

As a single-institution jurisdiction, the Federated States of Micronesia exhibits no tier or specialization gradient. The institution's profitability profile—ROA above national, NIM well above national, efficiency ratio slightly above national—resembles the national Commercial specialization category (ROA 1.20%, NIM 3.92%, efficiency 64.09%) more than the high-NIM Credit Card specialists (NIM 13.80%, efficiency 54.43%) or the low-ROA Mortgage specialists (ROA 0.66%, NIM 3.19%, efficiency 76.96%). If the current quarterly pace of NIM contraction (28 basis points) continues, the institution would fall below the national NIM of 3.82% within two quarters. The efficiency ratio deterioration, if sustained at the current 3.39-percentage-point quarterly pace, would push the institution into the bottom quartile of national efficiency performance within three quarters.

Asset growth decelerated to 7.50% year-over-year in Q1 2026 from 8.70% in Q4 2025 and 16.73% in Q1 2025, a 13.85-percentage-point deceleration quarter-over-quarter and a 55.17-percentage-point deceleration year-over-year. The institution remains 2.34 percentage points above the national asset growth rate of 5.15%, but the deceleration is sharp—the year-over-year pace has fallen by more than half over the past four quarters. The quarter-over-quarter deceleration of 13.85 percentage points is smaller than the year-over-year deceleration of 55.17 percentage points, indicating the slowdown began earlier in the year and has moderated in recent quarters. This marks the first deceleration in the data shown.

Loan growth decelerated to 6.96% year-over-year in Q1 2026 from 7.13% in Q4 2025, a 2.42-percentage-point deceleration quarter-over-quarter. Year-over-year comparison to Q1 2025 is unavailable due to insufficient data. The institution remains 76 basis points above the national loan growth rate of 6.20%. Deposit growth decelerated to 7.61% year-over-year in Q1 2026 from 8.14% in Q4 2025 and 17.58% in Q1 2025, a 6.50-percentage-point deceleration quarter-over-quarter and a 56.72-percentage-point deceleration year-over-year. The institution remains 2.59 percentage points above the national deposit growth rate of 5.02%. The year-over-year deposit growth deceleration of 56.72 percentage points closely matches the asset growth deceleration of 55.17 percentage points, indicating deposits are the primary driver of balance-sheet expansion. Loan growth at 6.96% trails deposit growth at 7.61%, mechanically compressing the loan-to-deposit ratio and contributing to the institution's liquidity surplus.

As a single-institution jurisdiction, the Federated States of Micronesia exhibits no tier or specialization gradient. The institution's growth profile—asset growth above national, loan growth above national, deposit growth above national, but all decelerating sharply—resembles the deceleration pattern observed nationally among Agricultural specialists (efficiency ratio down 3.45 percentage points year-over-year) and Commercial specialists (efficiency ratio down 2.91 percentage points year-over-year) in the TOP SPECIALIZATION MOVERS block. If the current quarterly pace of asset growth deceleration (13.85 percentage points) continues, the institution would fall below the national asset growth rate of 5.15% within one quarter. The deposit growth deceleration, if sustained at the current 6.50-percentage-point quarterly pace, would bring the institution to the national deposit growth rate of 5.02% within two quarters.

The delinquency rate rose to 4.95% in Q1 2026 from 3.57% in Q4 2025 and 1.45% in Q1 2025, a 1.38-percentage-point increase quarter-over-quarter and a 3.50-percentage-point increase year-over-year. The current rate stands 4.25 percentage points above the national benchmark of 0.70%, marking the institution as a significant asset-quality outlier. The year-over-year increase of 3.50 percentage points is more than double the quarter-over-quarter increase of 1.38 percentage points, indicating delinquency pressure has been building over the past four quarters but accelerated in the most recent quarter. This marks the highest delinquency rate in the data shown and the first increase above 4.00%.

The nonperforming asset ratio rose to 1.15% in Q1 2026 from 0.82% in Q4 2025 and 0.34% in Q1 2025, a 33-basis-point increase quarter-over-quarter and an 81-basis-point increase year-over-year. The current ratio stands 64 basis points above the national 0.51%. The year-over-year increase of 81 basis points is more than double the quarter-over-quarter increase of 33 basis points, indicating nonperforming assets have been accumulating over the past four quarters. The NPA ratio at 1.15% is less than one-quarter of the delinquency rate at 4.95%, suggesting a significant portion of delinquent loans remain in accrual status rather than classified as nonperforming. Tier 1 capital rose to 49.00% in Q1 2026 from 48.78% in Q4 2025, a 22-basis-point increase, but fell from 49.77% in Q1 2025, a 78-basis-point decline year-over-year. The current ratio stands 34.74 percentage points above the national 14.26%, providing substantial cushion against the elevated delinquency and NPA levels.

As a single-institution jurisdiction, the Federated States of Micronesia exhibits no tier or specialization gradient. The institution's risk profile—delinquency at 4.95%, NPA at 1.15%, Tier 1 capital at 49.00%—is structurally distinct from any national specialization category. The national Credit Card specialists report delinquency of 2.57%, less than half the Federated States of Micronesia rate, despite Credit Card being the highest-delinquency specialization nationally. The institution's Tier 1 capital ratio of 49.00% is more than triple the national average and exceeds every national specialization category in the SPECIALIZATION MIX block. If the current quarterly pace of delinquency increase (1.38 percentage points) continues, the institution would reach 6.33% delinquency by Q2 2026. The Tier 1 capital cushion, however, provides substantial capacity to absorb losses—even a 10-percentage-point delinquency rate with 50% loss severity would consume only 5 percentage points of the 49.00% capital ratio.

The Federated States of Micronesia bank reported a loan-to-deposit ratio of 26.72% in Q1 2026, up 35 basis points from 26.37% in Q4 2025 but down 16 basis points from 26.88% a year earlier. The current ratio sits 49.66 percentage points below the national benchmark of 76.38%, marking the institution as distinctively deposit-rich and loan-light. The quarter-over-quarter increase suggests modest lending expansion relative to deposits, but the year-over-year decline indicates the institution has grown deposits faster than loans over the past four quarters. This liquidity posture is consistent with a cautious lending stance or limited loan demand in the jurisdiction.

Noninterest-bearing deposits represented 36.42% of total deposits in Q1 2026, up 2.39 percentage points from 34.03% in Q4 2025 but down 1.58 percentage points from 38.00% a year earlier. The current share stands 14.83 percentage points above the national 21.60%, indicating a deposit franchise less reliant on interest-bearing funding than the broader U.S. banking industry. The quarter-over-quarter increase is notable—rising noninterest-bearing share in a single quarter suggests either seasonal commercial deposit inflows or a shift in depositor behavior. The year-over-year decline, however, points to gradual migration toward interest-bearing products over the past four quarters, consistent with depositor rate-seeking behavior observed nationally. Net interest income as a percentage of revenue fell to 0.10% in Q1 2026 from 0.37% in Q4 2025, a 27-basis-point drop, and remained stable year-over-year at a 3-basis-point decline from 0.13%. The metric sits 22 basis points below the national 0.32%.

As a single-institution jurisdiction, the Federated States of Micronesia exhibits no tier or specialization gradient. The institution's deposit franchise is structurally distinct from the U.S. mainland, with a noninterest-bearing share that would rank in the top decile nationally and a loan-to-deposit ratio that would rank in the bottom decile. The quarter-over-quarter rise in the loan-to-deposit ratio, while modest, is the first increase in the data shown and may signal a shift in lending posture. If the current quarterly pace of loan-to-deposit expansion (+35 basis points) continues, the institution would reach the national average of 76.38% in approximately 35 quarters—an implausible trajectory absent structural change in loan demand or deposit outflows.