FDIC: US Banks Post $80 Billion in Profit as Unrealized Losses Swell to $325 Billion

U.S. banks held $325.1 billion in unrealized losses on their investment securities at the end of the first quarter of 2026, according to the Federal Deposit Insurance Corporation. The figure rose for a second straight quarter even as the industry posted strong profits.

Unrealized losses are paper losses on bonds and other securities whose market value has fallen below the price a bank paid. They split into two buckets, i.e. available-for-sale (AFS) securities, which carried $110.6 billion in losses, and held-to-maturity (HTM) securities, which accounted for $214.5 billion. The losses only become real if a bank is forced to sell the underlying bonds before they mature.

On the surface, the industry looks healthy as banks earned $80.5 billion in net income in the quarter, up 3.6% from the prior period, with return on assets reaching 1.26%. Domestic deposits also grew $389.7 billion, a seventh consecutive quarter of growth, suggesting depositors are not fleeing en masse.

Yet the unrealized-loss figure is the same kind of stress that helped topple several regional lenders in 2023, when institutions including Silicon Valley Bank were forced to sell underwater bonds to meet withdrawals and crystallized losses they had hoped to ride out. As long as rates stay elevated, the gap between what banks paid for their securities and what those holdings are worth today remains a latent risk on balance sheets.

The next reading, due in the FDIC’s second-quarter profile, will be one to watch out for as it will reveal whether the trend is easing or deepening, and whether the gap between record profits and growing securities losses can keep widening without tangible consequences.