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Around 4,614 banks insured by the Federal Deposit Insurance Corp. across America saw a decline in their aggregate net income in the third quarter versus the prior quarter due to lower non-interest income and higher losses on securities.

FDIC Chairman Martin J. Gruenberg said that despite being met with challenges, the banking industry showed resilience as net income remained high, overall asset quality metrics were favorable, and the industry remained well-capitalized.

“The banking industry still faces significant downside risks from the continued effects of inflation, rising market interest rates, and geopolitical uncertainty,” Gruenberg said in a statement.

“In addition, deterioration in the industry’s commercial real estate portfolio is beginning to materialize in office properties. These issues, together with funding and earnings pressures, will remain matters of ongoing supervisory attention by the FDIC,” he added.

Combined net income from commercial banks and savings institutions declined by 3.4 percent or $2.4 billion to $68.4 billion in the third quarter compared to the second quarter. The first and second quarter benefited from one-time gains from the accounting treatment for the acquisition of the three large bank failures in the spring.

Excluding the one-time gains, net income would have been roughly flat for the past four quarters, FDIC reported.

Non-interest income went down by 5.2 percent or $4.1 billion, and realized losses on securities went up by $3 billion driving the decline in net income from the previous quarter.

The third quarter net income of 4,166 community banks also decreased by 4.8 percent to $6.7 billion from a quarter ago due to higher losses on the sale of securities and higher non-interest expenses.