Credit quality improved in 4Q 2025 to its best footing in at least three years, according to S&P Global Market Intelligence. U.S. banks' reserves tipped down slightly to $222.40 billion in the last quarter of 2025, representing the first time that reserves declined sequentially since 1Q 2022. With a nearly 1% decrease in reserves and a 2% jump in gross loans, the reserves-to-gross loans ratio was 1.65%.
A separate S&P article noted that in 4Q 2025 U.S. banks posted the second-highest aggregate loan growth rate in the last three years. Total loans and leases were $13.5 trillion as of Dec. 31, 2025, up 2.0% sequentially. That growth trumped the 1.2% growth rate in 3Q 2025, and the average quarterly rate for the last three years of 0.8%. This tracks with the results of IntraFi’s most recent Bank Executive Business Outlook Survey, where just under 50% of banks noted that loan demand improved over the last 12 months, representing a period of steady improvement that began after the first quarter of 2023.