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Unrealized Losses

All articles tagged with #unrealized losses

finance2 years ago

"US Banking Sector Faces Soaring Unrealized Losses in Q3, Posing Challenges for FDIC-Insured Banks"

The "unrealized losses" on securities held by FDIC-insured commercial banks increased by 22% to $684 billion in Q3, with the losses spread between held-to-maturity (HTM) and available-for-sale (AFS) securities. These losses occur when interest rates rise and bond prices fall. While these losses don't matter in the short term, they can become significant if banks are forced to sell the securities. Banks are not required to mark these securities to market value, but can carry them at purchase price. The accumulated unrealized losses represent about 13% of the total securities held by banks.

via WOLF STREET|
#banks#fdic#finance
finance2 years ago

"Banks Grapple with $650 Billion Unrealized Losses Amid Bond-Market Crash"

Big banks, including Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo, are facing approximately $650 billion in unrealized losses due to the crashing bond prices caused by the Treasury-market rout. This situation has raised concerns about another financial crisis similar to the collapse of Silicon Valley Bank earlier this year. While these losses are not the same as debt, they have negatively impacted the share prices of major financial institutions. However, some analysts believe that the worst of the Treasury-market rout may be over, as the Federal Reserve signals the end of its tightening campaign. Nonetheless, the unrealized losses continue to be a concern for Wall Street's biggest names.

via Markets Insider|
#big-banks#bond-market-crash#finance
finance2 years ago

Bank of America's Unrealized Losses on Securities Soar to $131.6 Billion

Bank of America reported unrealized losses of $131.6 billion on securities in the third quarter, but does not expect actual losses in the long-term. The bank's strong liquidity and ability to hold securities until maturity provide downside protection and flexibility to avoid mark-to-market losses. The holdings of low-yielding assets have constrained the bank's ability to generate higher profits, but the mounting unrealized losses are considered a "non-issue" from an accounting perspective. U.S. banks could be facing at least $650 billion of unrealized losses in their securities portfolios, with JPMorgan Chase reporting $40 billion in unrealized losses and Citigroup not disclosing losses for the third quarter.

via Reuters|
#bank-of-america#finance#held-to-maturity
finance2 years ago

US Banking Giants Face Mounting Losses as Banking Crisis Persists

The four largest banks in the US - Bank of America, Wells Fargo, JPMorgan Chase, and Citigroup - have a combined total of $205 billion in unrealized losses on their balance sheets, primarily due to bad bets in the bond market. Bank of America holds the largest amount of unrealized losses at $100 billion, followed by Wells Fargo and JPMorgan Chase with $40 billion each, and Citigroup with $25 billion. Despite these losses, the Federal Reserve's stress test indicates that these banks would still meet their minimum capital requirements in a hypothetical recession.

via The Daily Hodl|
#balance-sheets#bond-market#federal-deposit-insurance-corporation-fdic
finance2 years ago

US Bank Failures Looming, Warns Fund Manager.

Soros Fund Management CEO Dawn Fitzpatrick warns that the banking sector crisis is not over yet and more bank failures are in sight, particularly in small banks. She believes that there are more problems under the surface and banks have to prepare for incoming regulatory measures that will require them to report their unrealized losses on assets such as government bond holdings. Fitzpatrick also predicts that there will be a lot more scrutiny on liquidity management and liability management, which was not given much focus during the 2008 financial crisis.

via The Daily Hodl|
#bank-failures#banking-crisis#finance
finance2 years ago

US Banks Continue to Struggle with Deposits and Securities Losses

Banks' unrealized losses on securities, mostly Treasury securities and government-guaranteed mortgage-backed securities, held by all FDIC-insured commercial banks in Q1 fell by $102 billion from the prior quarter, to $516 billion. This is a cumulative loss over time on all securities from the purchase, and not an additional loss incurred in the quarter. It was the second quarter in a row of declines: They have now dropped by $174 billion, or by 25%, from the peak in Q3 2022, when unrealized losses had hit $690 billion, according to FDIC data on bank balance sheets released on Wednesday.

via WOLF STREET|
#banks#fdic#finance
finance2 years ago

US Banking Industry Faces Significant Risk of Collapse Due to Unrealized Losses and Deposit Shifts.

More than 700 American banks are facing "significant safety and soundness risk" due to massive unrealized losses on their balance sheets, according to newly released data from the Federal Reserve. The Fed points to its own interest rate rises as the catalyst for the losses, and says banks have been taking steps to try and avoid further losses for months, including changing the accounting treatment of their securities, hedging interest rate risk and retaining more tangible capital.

via The Daily Hodl|
#federal-reserve#finance#interest-rate-risk
business2 years ago

Bank of America Addresses Bond Portfolio Concerns for Investors.

Bank of America's CFO, Alastair Borthwick, reassured investors about $99 billion of unrealized losses on its bond portfolio during the company's earnings conference call. The bank's bond portfolio is classified as held-to-maturity for accounting purposes. Borthwick emphasized that the bank's net interest income would rise in a higher-rate environment.

via Barron's|
#bank-of-america#bond-portfolio#business
finance2 years ago

Top Investor Sells Entire Stake in Charles Schwab Amid Banking Turmoil

GQG Partners, a top investor in Charles Schwab, sold its entire $1.4 billion stake in the bank due to fears of unrealized losses on its bond portfolio and a run on deposits. Schwab's stock has dropped over 30% since the start of March, making it one of the worst-hit banks. Despite the turbulence, Schwab reported the second-highest inflows in March in bank history, bringing in more than $54 billion of core net new client assets.

via Markets Insider|
#banking-sector#charles-schwab#deposit-withdrawals
finance2 years ago

The Ongoing Risks and Lessons from Bank Failures.

The US banking sector is still facing risks despite regulators and bank executives saying they don't foresee a repeat of the 2008 financial crisis. Banks face huge unrealized losses on long-term investments, the threat of more bank runs, and looming defaults in the commercial real estate market. Midsize and regional banks are particularly exposed to a downturn in the commercial real estate market. Existing rules also make it harder for investors to identify bank risks, and banks have often found ways to reclassify losses. President Biden is pushing lawmakers to toughen bank regulations to reduce the chance of future bank failures.

via The Hill|
#bank-regulations#banking-sector#commercial-real-estate
finance2 years ago

Analyst predicts tough decision for First Republic

First Republic, a troubled regional bank, may have to continue as a standalone company as no buyer will be willing to take on its unrealized losses, according to Wedbush Securities. The bank has been exploring various options, including a sale, but Wedbush said it essentially has no other choice than to move forward as a standalone company due to the amount of unrealized losses on its balance sheet. Even a sale at $0 a share is unlikely because any buyer would still essentially have to pay billions to absorb those losses.

via Yahoo Finance|
#finance#first-republic#regional-banks
finance2 years ago

The Risks and Realities of Investing in Banks Today.

US banks are sitting on $1.7tn in unrealized losses caused by rising interest rates that have slashed the value of the US Treasuries and mortgage-backed securities that make up a large portion of many banks’ assets. Nearly $7tn of the $17tn in total US bank deposits are currently not insured by the FDIC, according to a new paper by researchers at New York University. If half of these uninsured depositors decide to withdraw their funds after the recent bank instability, it could put hundreds of billions of dollars of deposits in jeopardy. Multiple politicians have argued the Fed should backstop every type of depositor at all banks to prevent further bank runs from the public.

via Yahoo Finance|
#bank-runs#fdic#finance
finance2 years ago

The Risky Reality of U.S. Banks' Unrealized Losses and Potential Collapse.

U.S. banks had unrealized losses of $1.7 trillion at the end of 2022, nearly equal to banks’ total equity of $2.1 trillion, due to rising interest rates that have slashed the value of their assets. Nearly $7 trillion of the $17 trillion in total U.S. bank deposits are currently not insured by the FDIC, and if half of these uninsured depositors decide to withdraw their funds after the recent bank instability, it could put hundreds of billions of dollars of deposits in jeopardy. Multiple politicians have argued the Fed should backstop every type of depositor at all banks to prevent further bank runs from the public.

via Fortune|
#bank-runs#fdic#finance