The Blubber

Per FDIC

The Federal Deposit Insurance Corporation has shared how there were almost half a trillion dollars worth of deposits removed in the first quarter of the year. This was reportedly the largest decline ever seen by the FDIC since 1984, when it started to collect industry data quarterly.

This also marks the "fourth consecutive quarter of industry outflows."  This reportedly resulted in a 2.5% drop in deposits, mostly due to uninsured depositors pulling out $663 billion.

While this was happening, it was noted that insured depositors increased deposits by $225 billion. Some notable things mentioned by the FDIC included how net income saw a quarterly increase, which also led to higher noninterest income.

It was also noted that the net interest margin also saw a quarter-over-quarter decline but still experienced a year-over-year increase. To add, unrealized securities losses saw a second consecutive quarterly decline.

FDIC chair Martin Gruenberg gave a statement regarding the effects of the industry's response and its importance.

Gruenberg: "The more lasting effects of the industry's response to that stress may not become fully apparent until we've received the second-quarter results,"

Around mid-March, it was reported that US banks had unrealized losses that were worth $620 billion by the end of 2022. This referred to the assets that lost their value and decreased in price without having been sold.

Once these assets are sold, they are then considered actualized losses. During that time, Gruenberg said that interest rates have affected profitability and risk. It was noted that with the increase of interest rates, new bonds were starting to pay higher interest compared to older bonds with lower rates.

Around that time, the FDIC and Federal Reserve were contemplating creating a fund that would allow the regulators to backstop more bank deposits.

See flow at unusualwhales.com/flow.

Other News:

• US banks had unrealized losses worth $620 billion by the end of 2022, per FDIC
• The FDIC and Federal Reserve are weighing creating a fund that would allow the regulators to backstop more deposits at banks

Resources:

Yahoo Finance

FDIC