U.S. banks reported $325.1 billion in unrealized losses on investment securities at the end of the first quarter of 2026, according to the FDIC's Quarterly Banking Profile, reversing four consecutive quarters of improvement in a metric that had fallen as low as $306.1 billion at the end of 2025.
The reversal traces back to interest rates: the 30-year mortgage rate stayed roughly flat through the first two months of the quarter before rising in March, which pushed down the market value of the mortgage-backed securities banks hold on their books and widened the gap between what those securities are worth today and what banks paid for them.
Where the Losses Sit
Of the total, $214.5 billion sat in held-to-maturity portfolios and $110.6 billion in available-for-sale securities, according to the FDIC breakdown. That split matters for how the losses actually affect a bank's financial position: held-to-maturity losses don't have to be marked against reported equity the way available-for-sale losses do, since banks intend — and are generally required — to hold those securities until they mature and repay at face value rather than sell them at a loss.
Despite the elevated unrealized losses, the FDIC reported that the banking industry as a whole posted $80.5 billion in aggregate net income for the quarter, an increase of $2.8 billion, or 3.6%, from the prior quarter, with a return-on-assets ratio of 1.26%. The agency characterized the industry's overall capital and liquidity levels as remaining strong enough to support continued lending despite the securities losses.
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An Echo of 2023, With Different Stakes
Unrealized losses of this kind became a subject of intense market focus in early 2023, when a cluster of regional bank failures highlighted how quickly paper losses on long-duration securities portfolios can turn into real liquidity problems if a bank is forced to sell those securities to meet deposit withdrawals rather than holding them to maturity. The FDIC has been careful to note that these losses remain unrealized as long as banks aren't compelled to sell — banks that hold their Treasuries and mortgage-backed securities to maturity will recover their full principal regardless of interim price swings. Still, the return to a higher loss figure after four quarters of improvement is a reminder that the sector's exposure to interest-rate-driven securities losses hasn't been resolved, only managed, and remains sensitive to further moves in long-term rates.
