U.S. banks' unrealized losses climbed to $326.7 billion in the second quarter of 2026, extending a rise that began in the prior quarter, according to FDIC data released August 25.
The figure represents a $1.6 billion increase from Q1 2026's $325.1 billion. More broadly, unrealized losses have grown $20.6 billion since the end of 2025, when FDIC-insured institutions reported $306.1 billion in such losses across their securities portfolios. The rise occurs as longer-duration fixed-income holdings decline in market value under persistent higher interest rates.
Unrealized losses measure the difference between what a bank paid for a security and its current market value. They do not become accounting losses unless the asset is sold or impaired. The FDIC tracks the figure quarterly across all insured institutions in its Quarterly Banking Profile.
The two-quarter consecutive increase marks the first time unrealized losses have risen for two straight quarters since late 2023, when the collapse of Silicon Valley Bank and turmoil in regional banking forced a broad repricing of deposit costs and loan portfolios. The prior multi-quarter decline ran from Q4 2023 through Q4 2025.
Larger banks hold the majority of unrealized losses. According to the FDIC data, the largest institutions carry more long-duration securities and have slower deposit bases that lock in lower funding costs, making their portfolios more vulnerable to mark-to-market swings when rates remain high.
Interest rates have remained above 5 percent for the federal funds rate throughout 2026, keeping pressure on the present value of legacy bond portfolios across the sector. The Federal Reserve has held rates at this level with no near-term cuts announced, meaning unrealized losses are unlikely to compress unless market rates fall sharply.
The increase occurs as U.S. banks reported strong Q2 earnings overall. Net interest income and lending volumes have cushioned the sector even as balance-sheet losses widened. The gap between reported earnings and underlying portfolio stress is the field where regulators and bank investors now focus, particularly as deposit competition and lending spreads narrow.
