US Banking Giants Now Grapple with $172.28bn in Unrealized Losses

July 12, 2025 – The four largest banks in the United States—JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup—are facing a combined $172.28 billion in unrealized losses on their held-to-maturity (HTM) securities, according to a recent report by S&P Global.

These losses, driven by a persistent decline in bond portfolio values, highlight the ongoing challenges for major financial institutions navigating a high-interest-rate environment.

Bank of America leads the group with the highest unrealized losses on its HTM securities, totaling $96.35 billion. Wells Fargo follows with $37.82 billion, while JPMorgan Chase reports $22.91 billion, and Citigroup holds $15.2 billion in unrealized losses.

These figures reflect the impact of rising interest rates, which have devalued bonds purchased when rates were lower, creating a significant gap between their current market value and book value.

The report notes that Bank of America experienced the smallest year-over-year decline in the value of its HTM assets, down 6.2% to $550.76 billion.

In contrast, JPMorgan Chase saw the largest annual drop at 20.8%, reducing its HTM securities to $265.17 billion.

Citigroup recorded the steepest quarterly decline, with its HTM portfolio falling 9.1% to $220.51 billion as of March 31, 2025.

Wells Fargo’s HTM securities decreased by 12.2% year-over-year.

These unrealized losses are not isolated to the “Big Four” but are indicative of broader trends across the banking sector.

According to S&P Global, banks continue to hold bonds purchased during a period of low interest rates and excess liquidity, which have lost value as the Federal Reserve maintains elevated rates to combat inflation.

The unrealized losses remain “on paper” as long as the banks hold these securities to maturity, avoiding the need to realize losses through sales.

However, this strategy limits liquidity and the ability to reinvest at higher yields.

The issue of unrealized losses gained prominence following the collapse of Silicon Valley Bank in March 2023, which was triggered by a $1.8 billion realized loss from selling a portion of its underwater bond portfolio.

This event sparked widespread concern about the stability of banks with significant HTM losses.

Moody’s estimated in 2023 that the U.S. banking industry faced approximately $650 billion in unrealized losses, a figure that has likely grown with continued high interest rates.

Strategic Responses and Outlook

Despite these challenges, the largest banks remain resilient due to their diversified revenue streams and strong capital positions.

Bank of America, for instance, has emphasized that its HTM portfolio consists primarily of government-guaranteed securities, which are expected to yield zero losses if held to maturity.

This approach mitigates immediate financial risk but constrains the bank’s ability to capitalize on higher-yielding opportunities.

JPMorgan Chase, the largest U.S. bank by assets ($4.358 trillion as of March 31, 2025), has also faced scrutiny but continues to report robust earnings.

In 2024, the bank posted a net income of $58.5 billion, driven by strongසtrong investment banking and consumer banking activity.

Citigroup and Wells Fargo have similarly leaned on non-interest income, with Citigroup reporting a $12.7 billion profit in 2024, fueled by record performance in its Services, Wealth, and U.S. Personal Banking divisions.

However, the banking sector is not without broader pressures.

Rising deposit costs, weak loan demand, and shrinking net interest income have squeezed margins, with analysts projecting profit declines for some institutions.

For example, Bank of America is expected to report a 14% drop in earnings per share for Q3 2025, while Citigroup anticipates a 20% decline.

Additionally, the banks have collectively set aside $34.87 billion for potential credit losses in 2025, reflecting caution amid macroeconomic uncertainty.

In a bid to modernize and compete with digital asset platforms, JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo are exploring a joint stablecoin initiative through entities like Early Warning Services (operator of Zelle) and The Clearing House.

These discussions, still in early stages, aim to counter the growing adoption of stablecoins like Tether (USDT) and USDC, which have market capitalizations of $152 billion and $61 billion, respectively.

This move reflects concerns that widespread stablecoin use could erode traditional banks’ control over customer deposits and payment flows, particularly if tech giants or retailers enter the space aggressively.

The $172.28 billion in unrealized losses held by JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup underscores the lingering impact of high interest rates on bank balance sheets.

While these losses remain unrealized and the banks maintain strong liquidity, the situation highlights the delicate balance between holding securities to maturity and adapting to a rapidly evolving financial landscape.

As these institutions explore innovations like stablecoins and manage provisions for credit losses, their ability to navigate economic uncertainty will be critical to sustaining their dominance in the U.S. banking sector.

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Also Read: A Massive US Bank Is Now Freezing Money and Closing Accounts Per Reports

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