Unrealized Losses in Banking

Extracted Attributes

• US Prime Rate (2024)

  8%

• US Federal Debt (2024)

  $35 trillion

• Unrealized Loss Ratio (Q2 2025)

  6.8% of total securities

• Peak Unrealized Loss Ratio (Q3 2023)

  12.2% of total securities

• Estimated Total Unrealized Losses (March 2023)

  $1.7 trillion

• ECB System-level Net Unrealized Losses (February 2023)

  €73 billion

• Total Unrealized Losses (Banks >$25B assets, Year-end 2022)

  $620 billion

Timeline

• U.S. banks with at least $25 billion in assets report a total of $620 billion in unrealized losses. (Source: GARP)

  2022-12-31

• European Central Bank reports system-level net unrealized losses of €73 billion for significant institutions. (Source: ECB Report)

  2023-02-01

• Silicon Valley Bank fails after a bank run triggered by the sale of its Treasury bond portfolio at a significant loss. (Source: Wikipedia)

  2023-03-10

• Signature Bank is closed by regulators; Federal Reserve establishes the Bank Term Funding Program (BTFP). (Source: Wikipedia)

  2023-03-12

• FDIC Chairman Martin Gruenberg testifies before the Senate Banking Committee regarding rising unrealized losses. (Source: GARP)

  2023-03-28

• First Republic Bank is closed by the FDIC and sold to JPMorgan Chase. (Source: Wikipedia)

  2023-05-01

• The ratio of unrealized losses to total securities at U.S. banks reaches a peak of 12.2%. (Source: St. Louis Fed)

  2023-09-30

• The ratio of unrealized losses to total securities at U.S. banks declines to 6.8%. (Source: St. Louis Fed)

  2025-06-30

• St. Louis Fed publishes analysis confirming the continued decrease of unrealized losses in the U.S. banking system. (Source: St. Louis Fed)

  2025-11-06

2023 United States banking crisis

The 2023 United States banking crisis was a series of bank failures and bankruptcies that took place in early 2023, with the United States federal government ultimately intervening in several ways. Over the course of five days in March 2023, three small-to-mid size U.S. banks failed, triggering a sharp decline in global bank stock prices and swift response by regulators to prevent potential global contagion. Silicon Valley Bank (SVB) failed when a bank run was triggered after it sold its Treasury bond portfolio at a large loss, causing depositor concerns about the bank's liquidity. The bonds had lost significant value as market interest rates rose after the bank had shifted its portfolio to longer-maturity bonds. The bank's clientele was primarily technology companies and wealthy individuals holding large deposits, but balances exceeding $250,000 were not insured by the Federal Deposit Insurance Corporation (FDIC). Silvergate Bank and Signature Bank, both with significant exposure to cryptocurrency, failed in the midst of turbulence in that market, especially following major losses during the bankruptcy of FTX. In response to the bank failures, the three major U.S. federal bank regulators announced in a joint communiqué that extraordinary measures would be taken to ensure that all deposits at Silicon Valley Bank and Signature Bank would be honored. The Federal Reserve established a Bank Term Funding Program (BTFP) to offer loans of up to one year to eligible depository institutions pledging qualifying assets as collateral. To prevent the situation from affecting more banks, global industry regulators, including the Federal Reserve, the Bank of Canada, Bank of England, Bank of Japan, European Central Bank, and Swiss National Bank intervened to provide extraordinary liquidity. By March 16, large interbank flows of funds were occurring to shore up bank balance sheets and some analysts were talking of a possibly broader U.S. banking crisis. The Federal Reserve discount window liquidity facility had experienced approximately $150 billion in borrowing from various banks by March 16. Soon after the bank run at SVB, depositors quickly began withdrawing cash from San Francisco-based First Republic Bank (FRB), which focused on private banking to wealthy clientele. Like SVB, FRB had substantial uninsured deposits exceeding $250,000; such deposits constituted 68% of the bank's total at year-end 2022, declining to 27% by the end of March, as $100 billion in uninsured deposits were withdrawn. Despite a $30 billion capital infusion from a group of major banks in March, FRB continued to destabilize and its stock price plummeted as the FDIC prepared to take it into receivership and find a buyer on April 29. On May 1, the FDIC announced that First Republic had been closed and sold to JPMorgan Chase.

Web Search Results

• Banking Analytics: Unrealized Losses Decrease Again at U.S. Banks

  # Banking Analytics: Unrealized Losses Decrease Again at U.S. Banks November 06, 2025 By Michelle Clark Neely , Raelene Angle-Graves SHARE THIS PAGE: Link Copied This series is part of ongoing work by the Supervisory Policy and Risk Analysis team to highlight key banking metrics in monitoring the health of the banking system, a function of the St. Louis Fed’s Supervision, Credit and Learning Division. The ratio of unrealized losses to total securities held by U.S. banks declined again in the second quarter of 2025, to 6.8%. That was down significantly from its recent peak of 12.2% in the third quarter of 2023. (See the figure below.) While these potential losses are not as large as they were several years ago, they remain a risk factor for some banks. [...] Banks hold securities—primarily fixed-rate Treasuries and mortgage-backed securities—for a variety of reasons. As liquid assets, they can be sold quickly to bolster bank balance sheets and cover credit losses or deposit outflows. They also serve as a source of bank income, supplementing what’s earned on loans. Unrealized losses are “paper” losses, so banks don’t lose money unless they sell the underlying securities prior to maturity. U.S. Banks’ Unrealized Gains and Losses on Investment Securities as a Percentage of Their Securities Holdings SOURCES: Consolidated Reports of Condition and Income (Call Report) and authors’ calculations. [...] Many banks loaded up on long-term investment securities during the COVID-19 pandemic, when deposits were plentiful and loan demand and yields were weak. When interest rates began rising in the spring of 2022, the value of banks’ securities holdings declined, in some cases dramatically. This resulted in growing unrealized losses, the difference between the purchase price and the current market value of investments when the market value is lower. The failures of Silicon Valley Bank, Signature Bank and First Republic Bank in the first half of 2023 can be traced, in part, to the sharp rise in unrealized losses in their investment portfolios.

• What Are the Characteristics of Banks with Large Unrealized Losses?

  ## Unrealized Losses in the U.S. Banking System The figure below shows net unrealized gains in billions of dollars for all banks from the first quarter of 2001 to the second quarter of 2025.1The St. Louis Fed’s Supervisory Policy and Risk Analysis team tracks this measure, along with other key banking metrics. See the Nov. 6 blog post, “Banking Analytics: Unrealized Losses Decrease Again at U.S. Banks.” The data come from the Federal Financial Institutions Examination Council (FFIEC) via their Central Data Repository’s Public Data Distribution. When this measure becomes negative, it corresponds to unrealized losses instead of gains. Readers will notice the sharp drop in unrealized gains in 2022-23 corresponding to the tightening of monetary policy. [...] This generalized decrease in prices due to rising interest rates has given rise to a large increase in “unrealized losses” in the U.S. banking system since 2022. This is a measure of how much banks stand to lose if they were to liquidate their entire security portfolio, taking into account the difference between prevailing market values and the prices at which those securities were acquired (book values). Note that we can think of unrealized gains in the same way: When interest rates fall, security prices rise, but if banks choose not to sell their securities, then those gains are not realized. ## Unrealized Losses in the U.S. Banking System [...] Our admittedly simple analysis shows that, according to these two metrics, banks with greater unrealized losses are also the ones who tend to exhibit worse metrics in terms of solvency and run risk. This constellation of risks can give rise to systemic risk in the banking industry, which is one reason why unrealized losses are an important metric for policymakers and researchers to track. Notes

• Unrealized Losses: The Rate-Rise Risk Facing Banks - S&P Global

  Unless offset by regulatory intervention, including availability of access to central bank funding, unrealized losses can materialize if a bank looks to sell its securities portfolio because it does not have adequate contingent sources of liquidity or has wider asset/liability mismatches. A bank's attempts to strategically reposition its asset-sensitivity by selling a portion of its long-duration securities at a loss and reinvesting those proceeds in shorter-duration assets may compromise market confidence, further accelerating a run on deposits. A confluence of some of these factors led to the sudden failure of SVB. (We have highlighted some metrics we are looking at to gauge which U.S. banks may be more vulnerable to such market concerns: see "The Fed's Plan For U.S. Banks Should Reduce [...] Unless offset by regulatory intervention, including availability of access to central bank funding, unrealized losses can materialize if a bank looks to sell its securities portfolio because it does not have adequate contingent sources of liquidity or has wider asset/liability mismatches. A bank's attempts to strategically reposition its asset-sensitivity by selling a portion of its long-duration securities at a loss and reinvesting those proceeds in shorter-duration assets may compromise market confidence, further accelerating a run on deposits. A confluence of some of these factors led to the sudden failure of SVB. (We have highlighted some metrics we are looking at to gauge which U.S. banks may be more vulnerable to such market concerns: see "The Fed's Plan For U.S. Banks Should Reduce [...] #### Unrealized Losses In Bank Capital The regulatory capital treatment of unrealized losses differs for banks across the world. In the U.S., most banks are allowed to neutralize unrealized losses (or gains) from their regulatory capital. In other words, unrealized losses do not directly affect their Common Equity Tier 1 (CET1) capital ratios. The largest U.S. banks--that is, the eight U.S. global systemically important banks and Northern Trust Corp.--are held to a stricter standard: unrealized losses must be included in their CET1 ratios, and therefore lead to lower ratios when unrealized losses rise.

• How Unrealized Losses Weigh on Bank Balance Sheets - GARP

  “The earnings impact could be fairly immediate, with net interest income likely having peaked for several banks, but the magnitude of earnings declines may take some time to play out, depending on the duration of the bank’s assets and the stickiness of their liabilities,” said Nick Caes, credit analyst at Janus Henderson Investors. The Tide Can Rise Federal Financial Institutions Examination Council data, Bloomberg reported at the end of March, indicated that at year-end 2022, banks with at least $25 billion in assets had a total of $620 billion in unrealized losses. Those with sizable unrealized losses relative to tangible equity included Bank of America, U.S. Bank, Truist Bank and Charles Schwab Bank. > FDIC Chairman Martin Gruenberg [...] > FDIC Chairman Martin Gruenberg FDIC Chairman Martin Gruenberg quoted the same unrealized-loss figure in March 28 Senate Banking Committee testimony, warning that “additional short-term interest rate increases, combined with longer asset maturities, may continue to increase unrealized losses on securities and affect bank balance sheets in coming quarters.” A draft paper posted in March by New York University’s Stern School of Business, adding in loan data, said the unrealized losses on bank credit could have been as high as $1.7 trillion – approaching total bank equity capital of $2.1 trillion.

• [PDF] Unrealised losses in banks' bond portfolios measured at amortised ...

  to assess the liquidity or solvency situation of a given bank.3 Unrealised losses can be gauged by comparing the carrying amounts and fair values of bond portfolios at a given date. The net unrealised loss is the difference between the carrying amounts and fair values at a given date. Net unrealised losses also incorporate the adjustments due to the mark-to-market change of derivatives booked in a hedge accounting relationship.4 By contrast, gross unrealised losses assume that no derivatives are in place for these positions in a hedge accounting relationship. The presence of hedges, typically on interest rate risk, can thus mitigate the gross unrealised losses and the held-to-maturity portfolios can in some cases act as a natural hedge. Although they do not directly affect capital, gross [...] these bonds, the associated hedges2 and indicators used to capture the sensitivity of these positions to changes in interest rates and credit spreads. The quantification of unrealised losses should be considered in the broader context of banks’ business models and funding strategies. Banks are expected to hold bonds in the amortised cost portfolio until maturity, which allows them to reduce the sensitivity of their accounting P&L to changes in interest rates and credit spreads. Therefore, the quantification of unrealised losses should be interpreted in a wider context that considers banks’ balance sheet conditions from a holistic perspective. Specifically, the unrealised losses measure a downside risk for the banks, should they be forced to liquidate their held-to-maturity bond holdings. [...] hedge. Although they do not directly affect capital, gross and net unrealised losses may have an impact on the present value of the bank’s equity from an economic viewpoint (economic value of equity or EVE). Unrealised losses represent only a partial assessment of a bank’s economic value of equity, as changes in interest rates affect the bank’s entire balance sheet. Accordingly, the unrealised losses on the bond portfolio measured at amortised cost provide only an incomplete view of banks’ economic value of equity. This can be complemented with the Pillar 3 disclosures5, for instance, to evaluate the overall exposure to interest rate risk. As of February 2023, system-level net unrealised losses for significant institutions directly supervised by the ECB totalled €73 billion6. As a