$512,900,000,000 in Unrealized Losses Hit US Banks As Number of ‘Problem Banks’ Rises To 66: FDIC
The FDIC reports a rise in US banks facing significant issues, with the number on its "Problem Bank List" increasing from 63 to 66 in Q2 2024. This marks the fifth consecutive quarterly rise. The report highlights $900 million in unrealized losses on securities, a slight decrease from the previous quarter. FDIC chairman Martin Gruenberg acknowledges the resilience of the banking industry but warns that risks persist, recalling the impact of last year's Silicon Valley Bank collapse.
The number of US banks with major issues is on the rise, according to the Federal Deposit Insurance Corporation (FDIC).
The agency’s Second Quarter 2024 Quarterly Banking Profile shows the number of lenders on its “Problem Bank List” rose quarter-on-quarter from 63 to 66.
It’s the fifth consecutive quarterly increase of banks rated 4 or 5 on the CAMELS ratings system since the second quarter of 2023.
A rating of 4 on the CAMELS system indicates a bank is suffering from financial, operational or managerial issues that could reasonably threaten viability if unresolved, while a rating of 5 indicates a bank is critically deficient and requires immediate remedial attention.
Meanwhile, US banks continue to saddle billions of dollars in unrealized losses on securities. The FDIC reports $512.9 billion in total unrealized losses in the second quarter, a 0.7% quarter-on-quarter decrease.
Says FDIC chairman Martin Gruenberg,
The dangers of unrealized losses came into focus last year amid the collapse of Silicon Valley Bank, when concerns about the lender’s balance sheet triggered a bank run.
Today, Gruenberg says the US banking industry continues to demonstrate resilience, but risks remain.
