In a twist that would make even the most cynical of dwarves raise an eyebrow, the four largest banks in the US are now sitting on a mountain of unrealized losses that could make a dragon weep. These held-to-maturity (HTM) securities, once the pride and joy of their portfolios, are now more of a financial albatross around their necks.
JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup, according to the ever-watchful eye of S&P Global, are collectively holding a staggering $172.28 billion in unrealized losses on their HTM securities as of March 31st. Thatās more than the GDP of some small countries, and itās not exactly the kind of wealth you can flaunt at a cocktail party.
The high interest rate environment, it seems, has turned these securities into a financial equivalent of a lead balloon. S&P Global, with the wisdom of a seasoned wizard, predicts that the downward trend in the value of these assets is unlikely to change anytime soon. So, itās a case of “hold tight and hope for the best” for these financial titans.
Bank of America, always the overachiever, leads the pack with the highest level of unrealized losses on HTM securities at $96.35 billion. Wells Fargo, not to be outdone, follows with $37.82 billion in losses. JPMorgan Chaseās unrealized losses stand at $22.91 billion, while Citigroupās are a mere $15.2 billion. š¤
Among the Big Four lenders, Bank of America managed to record the lowest decline year-over-year in the value of its HTM assets ā a mere 6.2% decrease to $550.76 billion. Itās like losing a small fortune but still managing to smile about it.
āJPMorgan Chase & Co. reported the biggest year-over-year decline in HTM securities of 20.8% to $265.17 billion while Citigroup Inc. led with the biggest quarterly decline of 9.1% to $220.51 billion as of March 31. Wells Fargo saw a 12.2% decline year-over-year in its HTM securities balances.ā
The unrealized losses on HTM assets by the Big Four are, according to S&P Global, a microcosm of the broader industry. Itās a tale of bonds bought in times of excess liquidity and low interest rates, now punished by the cruel hand of rising rates and higher funding costs. The net interest margins, once as wide as the Disc itself, are now feeling the pinch. š
āBanks continue to sit on unrealized losses tied to bonds they purchased when institutions were flush with excess liquidity and interest rates were far lower. Increases in interest rates punished the values of many bonds that banks held while their funding costs moved higher, putting pressure on their net interest margins.ā
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2025-07-12 21:13