The number of U.S. banks with serious problems continues to grow, according to new numbers from the Federal Deposit Insurance Corporation (FDIC).
In its quarterly Bank Profile report, the FDIC states: say In the third quarter, the number of U.S. financial institutions on the “Problem Bank List” increased to 68.
The figures mark the fifth quarterly increase since Q2 2023 in the number of banks rated 4 or 5 on the CAMELS rating system.
A lender with a CAMELS rating of 4 indicates that the company is experiencing financial, operational, or managerial weaknesses, or a combination of such problems, that, if unresolved, could reasonably threaten its soundness. It shows that there is. On the other hand, a bank with a score of 5 in the CAMELS system suggests that it has significant deficiencies in one or more areas and requires immediate corrective action.
“Total assets held by troubled banks increased by $3.9 billion to $87.3 billion. Troubled banks accounted for 1.5% of the total. Banks are within the normal range of 1-2% of all banks during non-crisis periods. ”
On the other hand, the amount of unrealized losses on banks' balance sheets decreased.
Banks had $364 billion in paper currency losses as of the third quarter of this year, largely due to exposure to the residential real estate and Treasury markets, according to the FDIC.
Unrealized losses represent the difference between the price banks paid for securities and the current market value of those assets.
Banks' paper losses in the third quarter were $148.9 billion down from $512.9 billion in the second quarter.
However, FDIC Chairman Martin J. Gruenberg say The decline in banks' paper losses last quarter was only temporary.
Gruenberg said changes in long-term interest rates since the end of the third quarter indicate that U.S. banks now likely have nearly $5 trillion in unrealized losses.
“Rising long-term interest rates since the end of the third quarter are likely to reverse much of this improvement in unrealized losses, if measured today.”
While Gruenberg reiterated the resilience of the banking industry, the FDIC chairman noted that several headwinds continue to threaten U.S. financial institutions.
“The industry continues to face significant downside risks from inflation, fluctuations in market interest rates, and the continued impact of geopolitical uncertainty. may cause problems.
Additionally, weaknesses in certain loan portfolios, particularly office real estate, credit card, auto and multifamily loans, continue to require close monitoring. These issues will continue to be a subject of continued supervisory attention by the FDIC. ”
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