Banks' Unrealized Losses Surge $118.4 Billion Amidst Profit Rise
1min read The Federal Deposit Insurance Corporation (FDIC) has released its Quarterly Banking Profile for the fourth quarter of 2024, revealing a significant surge in unrealized losses on American banks' balance sheets. The total amount of unrealized losses on securities has increased by $118.4 billion, reaching $482.4 billion.
The FDIC attributes this surge to spikes in longer-term interest rates, such as the 30-year mortgage and 10-year Treasury rates, which have lowered the value of bank securities. Unrealized losses represent the difference between the price banks paid for securities and their current market value.
This development comes amidst a 2.3% rise in banking profits. However, the FDIC has placed 66 banks on its "problem bank list," a slight decrease from the previous quarter. These banks have received a rating of 4 or 5 on the CAMELS rating system, indicating financial, operational, or managerial weaknesses that could threaten their soundness if unresolved.
In 2024, the United States has witnessed one bank failure so far. In January, regulators shut down Pulaski Savings Bank due to suspected fraud. The specific cause of the bank's collapse was not explicitly named.
The FDIC's report highlights the ongoing challenges faced by the banking sector, with unrealized losses and problem banks remaining a concern. As the banking industry navigates these issues, regulators and financial institutions must work together to ensure the stability and resilience of the sector.
