On the other hand, many banks are no longer benefiting from record-low interest rates. They still pay almost nothing to depositors and on money borrowed from other banks or the government. But steadily lower rates on loans other than credit cards have reduced how much banks earn."This interest-rate pressure on the banks becomes very difficult to overcome," says Fred Cannon, chief equity strategist and director of research at Keefe, Bruyette & Woods. "It's a big headwind for banks." Many banks have reported lower net interest margin â¿¿ the difference between the income they receive from loans and the interest they pay depositors and other lenders. It's a key measure of a bank's profitability. The industry's average net interest margin fell to 3.43 percent in the third quarter from 3.56 percent a year earlier. Some big banks have also cautioned that their earnings are up mainly because they've shed jobs, bad loans and weak businesses rather than because of an improved economy. They include JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. All managed to recover from the financial crisis in part because of federal aid. Small and midsize banks have taken longer to rebound. They held risky commercial real estate loans used to develop malls, industrial sites and apartment buildings. Many such loans weren't repaid. But as the economy has strengthened, fewer such loans have soured, and many small and medium-size banks have recovered. For example, at M&T Bank Corp., a regional institution based in Buffalo, N.Y., net income soared in the third quarter. M&T attributed its gain to reduced loan losses and higher mortgage revenue. The bank repaid the remaining $381 million of the $600 million in bailout aid it had received during the crisis. Yet analysts say regional banks are still feeling squeezed from reduced borrowing by companies.