2023 Risk Review | 1

INTRODUCTION

1 Unless otherwise noted, “community banks” are FDIC-insured institutions that meet the criteria for community banks that was developed for the FDIC 

Community Banking Study, published in December 2012.  Thresholds for certain criteria are adjusted upward quarterly and described in “Notes to Users” for the 

FDIC Quarterly Banking Profile.  See, for example: page 35 of the FDIC Quarterly Banking Profile, First Quarter 2023. Noncommunity banks are banks that do not 

meet these criteria.

2 This report contains banking information available as of March 31, 2023. Unless otherwise noted, banking industry data are for FDIC-insured institutions from 

Consolidated Reports of Condition and Income (Call Reports), with data beginning in 1984. This report defines the pre-pandemic level as fourth quarter 2019, 

unless noted otherwise.

3 For more information on the three bank failures that occurred between March and May 2023, see “Remarks by Chairman Martin J. Gruenberg on “Oversight of 

Financial Regulators: Financial Stability, Supervision, and Consumer Protection in the Wake of Recent Bank Failures” Before the Committee on Banking, Housing, 

and Urban Affairs, United States Senate,” May 18, 2023. 

The FDIC was created in 1933 to maintain stability and 

public confidence in the nation’s financial system. A 

key part of accomplishing this mission is the FDIC’s 

work to identify and analyze risks that could affect 

banks. The Risk Review summarizes the FDIC’s 

assessment of risks related to conditions in the U.S. 

economy, financial markets, and the banking industry. 

The analysis of the banking industry pays particular 

attention to risks that may affect community banks. 

As the primary federal regulator for most community 

banks, the FDIC has a unique perspective on these 

institutions.1

The 2023 Risk Review provides an overview of banking 

conditions for 2022 through early 2023, including 

key developments that emerged from the stress in 

the banking sector in March 2023.2 The failure of 

three large banking institutions in March and May 

highlighted certain risks to the banking sector.3

The Risk Review presents key risks to banks in five 

broad categories—credit risk, market risk, operational 

risk, crypto-asset risk, and climate-related financial 

risk. The credit risk areas discussed are agriculture, 

commercial real estate, consumer lending, energy, 

housing, leveraged lending and corporate debt, 

nonbank financial institution lending, and small 

business lending. The market risk areas discussed 

are liquidity and deposits, and net interest margins 

and interest rate risk. The discussion of operational 

risk examines the potential negative impact to banks 

from cyber threats and illicit activity. Crypto-asset 

risk, a new section in the 2023 Risk Review, discusses 

the FDIC’s approach to understanding and evaluating 

crypto-asset-related markets and activities. Monitoring 

these risks is among the FDIC’s top priorities. The 

discussion of climate-related financial risk focuses on 

the physical risk of severe weather and climate events 

to the banking system.

Section 1 is an executive summary. Section 2 is an 

overview of economic, financial market, and banking 

industry conditions. Sections 3 through 7 include 

analysis of the key credit, market, operational, cryptoasset, and climate-related financial risks facing banks.