New York Banks

Return on assets for New York banks reached 0.88% in Q1 2026, up 3 basis points from 0.86% in Q4 2025 and up 14 basis points from 0.74% in Q1 2025. The YoY improvement marks the strongest profitability in the year-over-year series shown, but the QoQ pace of improvement is decelerating: the 3-basis-point QoQ gain is less than a quarter of the 14-basis-point YoY gain. At 0.88%, New York banks trail the national ROA benchmark of 1.20% by 31 basis points, a gap that reflects structural margin and efficiency headwinds relative to the broader FDIC-insured banking universe.

Two drivers account for the profitability improvement. First, net interest margin rose 7 basis points QoQ to 3.45% from 3.37% in Q4 2025, and 23 basis points YoY from 3.22% in Q1 2025. The YoY NIM expansion is the primary engine of the ROA gain, but the QoQ pace is slowing: 7 basis points QoQ versus 23 basis points YoY. At 3.45%, New York banks trail the national NIM benchmark of 3.82% by 37 basis points. The NIM gap is concentrated among the state's larger institutions and Mortgage specialists (7.3% of the cohort), where Mortgage-bank NIM nationally stands at 3.19%, 76 basis points below the Commercial-bank NIM of 3.92%. Second, the efficiency ratio improved 109 basis points QoQ to 68.26% from 69.36% in Q4 2025, and 344 basis points YoY from 71.70% in Q1 2025. The YoY efficiency improvement is the largest in the series shown, reflecting sustained cost discipline or revenue growth outpacing expense growth. Yet at 68.26%, New York banks remain 412 basis points above the national efficiency benchmark of 64.14%, indicating that noninterest expense consumes a larger share of revenue than at the typical FDIC-insured bank.

The profitability gradient across specializations is stark. Credit Card specialists nationally post a NIM of 13.80%, 999 basis points above the national benchmark of 3.82%, and an efficiency ratio of 54.43%, 971 basis points below the national benchmark. Mortgage specialists face the opposite profile: NIM of 3.19% (63 basis points below national) and efficiency ratio of 76.96% (1281 basis points above national). Agricultural specialists, representing 21.3% of the national cohort, post ROA of 1.37% and NIM of 3.84%, both above the New York-bank figures. If New York's efficiency ratio continues to improve at the current quarterly pace of 109 basis points, the state will close the 412-basis-point gap to the national benchmark by year-end 2026.

Asset growth for New York banks accelerated to 4.02% on a year-over-year basis in Q1 2026, up from 3.72% in Q4 2025 and 2.81% in Q1 2025. The QoQ acceleration was 801 basis points; the YoY acceleration was 4276 basis points, marking the sharpest year-over-year growth acceleration in the series shown. At 4.02%, New York banks trail the national asset-growth benchmark of 5.15% by 114 basis points, indicating that the state's banks are expanding balance sheets more slowly than the broader FDIC-insured banking universe.

The acceleration is driven by both loan and deposit growth, though the mix shifted in the quarter. Loan growth accelerated to 4.70% YoY in Q1 2026 from 3.74% in Q4 2025 (a 2554-basis-point acceleration in the growth rate) and from 4.41% in Q1 2025 (a 662-basis-point acceleration). Deposit growth accelerated to 3.90% YoY from 3.54% in Q4 2025 (a 1006-basis-point acceleration) but decelerated from 4.01% in Q1 2025 (a 293-basis-point deceleration). The YoY deposit deceleration is the first in the series shown, signaling that funding-side momentum is slowing even as loan demand picks up. At 4.70%, New York loan growth trails the national loan-growth benchmark of 6.20% by 150 basis points; at 3.90%, New York deposit growth trails the national deposit-growth benchmark of 5.02% by 112 basis points. The loan-deposit growth gap (loan growth 80 basis points faster than deposit growth) mechanically explains the QoQ compression in the loan-to-deposit ratio from 81.83% to 78.05%: deposit inflows in absolute dollar terms exceeded loan originations in the quarter, compressing the ratio despite faster annualized loan growth.

The growth gradient across specializations is meaningful. Agricultural specialists nationally show efficiency-ratio improvement of 345 basis points YoY (to 59.51%), the second-largest improvement among specializations, suggesting cost discipline is supporting balance-sheet expansion in that category. Mortgage specialists face the opposite dynamic: efficiency ratio of 76.96% (down 543 basis points YoY but still 1281 basis points above the national benchmark), indicating that revenue growth is not keeping pace with expense growth. Commercial banks, representing 56.1% of the national cohort, post asset growth consistent with the New York-bank pace. If deposit growth continues to decelerate at the current YoY pace of 293 basis points per year, New York banks will face a funding constraint by Q1 2027 unless loan growth also decelerates.

Delinquency for New York banks rose to 0.86% in Q1 2026, up 6 basis points from 0.80% in Q4 2025 and stable at 2 basis points above the 0.84% posted in Q1 2025. The QoQ increase marks the first quarterly rise in the series shown, breaking a streak of stable or declining delinquency. At 0.86%, New York banks sit 16 basis points above the national delinquency benchmark of 0.70%, indicating modestly higher credit stress than the broader FDIC-insured banking universe. The YoY stability (just 2 basis points) suggests the QoQ uptick may be seasonal or portfolio-specific rather than a structural deterioration.

The nonperforming-asset ratio was stable at 0.57% in Q1 2026, up 3 basis points QoQ from 0.55% in Q4 2025 and up 1 basis point YoY from 0.56% in Q1 2025. At 0.57%, New York banks sit 6 basis points above the national NPA benchmark of 0.51%. The NPA ratio is moving in tandem with delinquency, and both metrics remain well below the levels that would signal systemic credit deterioration. Tier 1 capital fell 28 basis points QoQ to 16.22% from 16.50% in Q4 2025, but rose 17 basis points YoY from 16.05% in Q1 2025. The QoQ decline is the sharpest in the series shown, reflecting either dividend distributions, share repurchases, or risk-weighted-asset growth outpacing retained earnings. At 16.22%, New York banks hold 196 basis points more Tier 1 capital than the national benchmark of 14.26%, a cushion that remains substantial despite the QoQ compression.

The risk gradient across specializations is wide. Credit Card specialists nationally post delinquency of 2.57%, 187 basis points above the national benchmark of 0.70%, reflecting the unsecured nature of credit-card portfolios. Agricultural specialists post delinquency of 0.63%, 7 basis points below the national benchmark, indicating relatively stable farm-sector credit quality. Mortgage specialists post delinquency of 0.57%, 13 basis points below the national benchmark, consistent with the collateralized nature of mortgage lending. The Tier 1 capital cushion of 196 basis points above the national benchmark provides New York banks with meaningful capacity to absorb credit losses if delinquency continues to rise at the current QoQ pace of 6 basis points per quarter. If the QoQ delinquency pace holds, New York banks will reach the national benchmark of 0.70% by Q4 2023, though the YoY stability suggests the QoQ uptick may not persist.

The loan-to-deposit ratio for New York banks fell to 78.05% in Q1 2026, down 378 basis points from 81.83% in Q4 2025, marking the sharpest quarterly decline in the series shown. Year-over-year, the ratio rose just 32 basis points from 77.73% in Q1 2025. The QoQ move is an order of magnitude larger than the YoY move, signaling a sharp rebalancing in the quarter driven by deposit inflows outpacing loan deployment. At 78.05%, New York banks now sit 168 basis points above the national benchmark of 76.38%, a position that reflects stronger loan utilization relative to the broader FDIC-insured banking universe.

The QoQ compression is mechanically explained by the growth-rate divergence: deposit growth accelerated to 3.90% YoY in Q1 2026 from 3.54% in Q4 2025 (a 1006-basis-point acceleration in the growth rate), while loan growth accelerated to 4.70% YoY from 3.74% QoQ (a 2554-basis-point acceleration). Despite loan growth outpacing deposit growth on an annualized basis, the absolute dollar inflow of deposits in the quarter was sufficient to compress the ratio by 378 basis points. Noninterest-bearing deposit share edged down 8 basis points QoQ to 21.13% from 21.21% in Q4 2025, and rose 28 basis points YoY from 20.85% in Q1 2025. At 21.13%, New York banks trail the national NIB share of 21.60% by 47 basis points, indicating a deposit mix tilted toward interest-bearing accounts. Net interest income as a percentage of revenue fell sharply to 0.21% in Q1 2026 from 0.84% in Q4 2025, a 63-basis-point QoQ decline; YoY, the metric was stable at 0.19% versus 0.21% currently. The QoQ volatility suggests a revenue-mix shift in the quarter, with noninterest income rising as a share of total revenue.

The engagement picture is mixed. The LDR compression reflects a deposit franchise that strengthened in the quarter, but the NIB share remains below the national benchmark and the net interest income share of revenue is volatile. New York banks with $1 billion to $10 billion in assets and those in the Commercial specialization category (56.1% of the cohort) are likely driving the deposit-gathering momentum, given their scale and relationship-banking posture. If deposit growth continues to outpace loan growth at the current quarterly pace, the LDR will fall below the national benchmark by Q3 2026, signaling excess liquidity that may pressure NIM if not deployed into earning assets.