According to Odaily, the latest data from the Federal Deposit Insurance Corporation (FDIC) indicates a rise in the number of problematic banks in the United States. The FDIC's quarterly banking profile report reveals that the number of banks on its 'problem bank list' increased to 68 in the third quarter. This marks the fifth consecutive quarterly rise in banks receiving a CAMELS rating of 4 or 5 since the second quarter of 2023. A CAMELS rating of 4 suggests that a bank is facing financial, operational, or managerial issues that could threaten its stability if not addressed. A rating of 5 indicates severe deficiencies in one or more areas, requiring urgent corrective action.
The report highlights that the total assets held by these problematic banks rose by $3.9 billion, reaching $87.3 billion. Problematic banks account for 1.5% of the total number of banks, which falls within the normal range of 1% to 2% during non-crisis periods.
Meanwhile, the amount of unrealized losses on bank balance sheets has decreased. The FDIC reports that as of the third quarter of this year, banks recorded losses of $364 billion, primarily due to exposure to the residential real estate and treasury markets. Unrealized losses represent the difference between the price banks paid for securities and their current market value.
The third-quarter losses were down by $148.9 billion from the second quarter's $512.9 billion. However, FDIC Chairman Martin J. Gruenberg cautioned that the reduction in bank losses last quarter is only temporary. Changes in long-term interest rates since the end of the third quarter suggest that the current unrealized losses for U.S. banks may be nearing $500 billion.