New Jersey Banks

Return on assets among New Jersey banks reached 0.72% in Q1 2026, up 16 basis points from 0.56% a year earlier—the strongest YoY profitability gain in the period shown. Quarter-over-quarter, ROA was stable at 71 basis points, up just 1 basis point from Q4 2025. The YoY expansion of 16 basis points versus the QoQ stability of 1 basis point signals the improvement is decelerating, not accelerating. Despite the YoY gain, the cohort remains 48 basis points below the national 1.20% benchmark, a gap that has persisted across both QoQ and YoY comparisons.

Two drivers explain the profitability improvement. First, the efficiency ratio fell 4.33 percentage points YoY to 70.08%, down from 74.41% in Q1 2025; QoQ the ratio declined 1.10 percentage points from 71.18%. The YoY pace of efficiency improvement is four times the QoQ pace, so the trend is decelerating. Second, net interest margin widened 19 basis points YoY to 3.07%, up from 2.89% in Q1 2025; QoQ the margin was stable at 3.05%, rising just 2 basis points. The YoY NIM expansion of 19 basis points versus the QoQ stability of 2 basis points indicates the margin is plateauing. Noninterest income as a percentage of assets was stable YoY at negative 3 basis points but fell sharply QoQ from 1.54% to 0.39%, a 115-basis-point decline that likely reflects seasonal fee-income compression.

Mortgage specialists in New Jersey posted a 76.96% efficiency ratio, 12.81 percentage points above the national 64.14%, while Credit Card specialists delivered a 13.80% NIM—9.99 percentage points above national—though the latter represents just 0.2% of the cohort. Commercial banks, at 56.1% of the cohort, posted a 64.09% efficiency ratio, closer to the national benchmark. If the current YoY pace of efficiency improvement (4.33 percentage points) holds, New Jersey banks will close the 5.94-percentage-point gap to the national 64.14% benchmark by Q1 2027, though the QoQ deceleration to 1.10 percentage points suggests the pace may moderate.

Asset growth among New Jersey banks decelerated to 2.90% in Q1 2026, down from 3.20% in Q4 2025 (a 9.25-percentage-point deceleration QoQ) and from 3.46% a year earlier (a 16.17-percentage-point deceleration YoY). The YoY deceleration of 16.17 percentage points is nearly twice the QoQ deceleration of 9.25 percentage points, so the slowdown is accelerating, not stabilizing. The cohort's 2.90% asset growth trails the national 5.15% benchmark by 2.25 percentage points, a gap that has widened both QoQ and YoY.

The asset-growth deceleration is driven by a sharp deposit-growth slowdown, partially offset by loan-growth acceleration. Deposit growth decelerated to 3.09% YoY in Q1 2026, down from 4.53% in Q4 2025 (a 31.89-percentage-point deceleration QoQ) and from 4.30% a year earlier (a 28.17-percentage-point deceleration YoY). Loan growth, by contrast, accelerated to 5.51% YoY, up from 5.08% in Q4 2025 (an 8.42-percentage-point acceleration QoQ) and from 5.35% a year earlier (a 2.87-percentage-point acceleration YoY). The divergence between deposit deceleration (28.17 percentage points YoY) and loan acceleration (2.87 percentage points YoY) mechanically compressed the loan-to-deposit ratio and constrained asset growth. Loan growth at 5.51% trails the national 6.20% benchmark by 69 basis points; deposit growth at 3.09% trails the national 5.02% by 1.93 percentage points.

The deposit-growth deceleration is concentrated in the QoQ comparison, where the 31.89-percentage-point slowdown suggests a sharp Q1 2026 funding headwind. Loan growth, meanwhile, has accelerated both QoQ (8.42 percentage points) and YoY (2.87 percentage points), indicating sustained lending demand. If deposit growth continues to decelerate at the current pace while loan growth holds steady, New Jersey banks will face liquidity pressure by Q3 2026, requiring either wholesale-funding reliance or loan-growth moderation. The 2.25-percentage-point asset-growth gap to the national benchmark, if sustained, positions the cohort as a slower-growth regional cluster within the FDIC-insured universe.

Delinquency among New Jersey banks remained stable at 0.46% in Q1 2026, up just 1 basis point from 0.45% in Q4 2025 and unchanged from 0.46% a year earlier. The QoQ stability and YoY flatness mark the lowest volatility in the series shown. The cohort's 0.46% delinquency rate sits 24 basis points below the national 0.70% benchmark, a favorable gap that has held steady across both QoQ and YoY comparisons. Nonperforming assets as a percentage of total assets stood at 0.38%, up 5 basis points QoQ from 0.33% and up 2 basis points YoY from 0.37%—both stable moves within normal variance. The NPA ratio remains 12 basis points below the national 0.51%, a modest cushion that has persisted.

The stable delinquency and NPA metrics indicate credit quality is neither improving nor deteriorating. The 5-basis-point QoQ NPA increase from 0.33% to 0.38% is the largest sequential move in the series shown, though it remains well below the national benchmark. The YoY NPA increase of 2 basis points is negligible. Tier 1 capital declined 23 basis points QoQ to 14.81% from 15.04%, the first sequential decline in the series shown, though YoY the ratio increased 7 basis points from 14.75%. The QoQ capital decline of 23 basis points versus the YoY increase of 7 basis points suggests Q1 2026 brought modest capital deployment, likely tied to the 5.51% YoY loan-growth acceleration. The cohort's 14.81% Tier 1 capital ratio remains 55 basis points above the national 14.26%, a comfortable cushion.

Credit Card specialists in New Jersey posted a 2.57% delinquency rate, 187 basis points above the national 0.70%, though the category represents just 0.2% of the cohort. Commercial banks, at 56.1% of the cohort, posted a 0.72% delinquency rate, 2 basis points above the national benchmark. Agricultural banks, at 21.3% of the cohort, posted a 0.63% delinquency rate, 7 basis points below national. If the current stable delinquency trajectory holds and the QoQ Tier 1 capital decline of 23 basis points does not repeat, New Jersey banks will maintain their 24-basis-point delinquency advantage over the national benchmark through year-end 2026, though the QoQ NPA uptick of 5 basis points warrants monitoring for sustained asset-quality pressure.

New Jersey banks' loan-to-deposit ratio stood at 86.89% in Q1 2026, down 1.17 percentage points from 88.06% in Q4 2025 but up 14 basis points from 86.75% a year earlier. The QoQ decline marks the first sequential contraction in the series shown, driven by deposit growth outpacing loan growth in the quarter. Year-over-year, the modest 14-basis-point increase signals stable liquidity posture, though the cohort remains 10.51 percentage points above the national 76.38%—a meaningful funding-intensity gap that persists across both timeframes.

The move is mechanically explained by diverging growth rates. Loan growth accelerated to 5.51% YoY (up from 5.08% QoQ), while deposit growth decelerated sharply to 3.09% YoY (down from 4.53% QoQ). The QoQ deposit-growth deceleration of 31.89 percentage points—versus a loan-growth acceleration of 8.42 percentage points—mechanically compressed the ratio. Noninterest-bearing deposit share rose 16 basis points QoQ to 15.15%, the first sequential increase in the series shown, though it remains 6.44 percentage points below the national 21.60%. Year-over-year, NIB share declined 17 basis points, so the QoQ uptick represents a reversal rather than a sustained trend. Noninterest income as a percentage of assets fell sharply QoQ from 1.54% to 0.39%—a 115-basis-point decline—though YoY the metric was stable at negative 3 basis points.

The high loan-to-deposit ratio relative to the national benchmark suggests New Jersey banks are deploying deposits more aggressively than peers, a posture that may constrain liquidity if deposit growth continues to lag loan growth. The QoQ NIB-share uptick of 16 basis points, if sustained, would ease funding costs, but the YoY decline of 17 basis points indicates the cohort is still managing a structural shift toward interest-bearing deposits. If deposit growth continues at the current 3.09% YoY pace while loan growth holds at 5.51%, the loan-to-deposit ratio will widen further, potentially requiring wholesale-funding reliance or loan-growth moderation by Q3 2026.