Unrealized losses on the balance sheets of US banks rose in the first quarter of 2026, marking the first quarter-on-quarter increase since the fourth quarter of 2024.
According to the latest report on institutions under the Federal Deposit Insurance Corporation (FDIC), US banks recorded a rise in unrealized losses of a little over six percent in the first quarter.
“Total unrealized losses increased $19.0 billion, or 6.2 percent, from the prior quarter to $325.1 billion. The 30-year mortgage rate remained relatively flat during the first two months of the quarter but rose in the month of March, decreasing the value of mortgage-backed securities reported by banks and increasing unrealized losses.”
Consequently, the FDIC says the elevated unrealized losses and weakness in certain loan portfolios “remain matters of ongoing supervisory attention.”
Amid the rise in the level of unrealized losses, the FDIC says that the number of financial institutions on the “Problem Bank List” fell in the first quarter.
“The number of banks on the list declined by a net of six in the first quarter to 54 banks. The number of problem banks was 1.3 percent of total banks, which is in the normal range of 1 to 2 percent for non-crisis periods. Three banks opened and one bank failed during the first quarter.”
The Problem Bank List is a list of banks that are financially troubled based on a rating system that assesses capital adequacy, asset quality, management, earnings, liquidity and sensitivity to market risk, a framework acronymized CAMELS.
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