IRA Bank Book Industry Survey Released

Asset Returns, Funding Costs Fall for Second Consecutive Quarter

BRIARCLIFF MANOR, NY / ACCESS Newswire / June 2, 2025 / Whalen Global Advisors LLC (WGA) has published the latest edition of The IRA Bank Book for Q2 2025, the quarterly outlook for the US banking industry published by The Institutional Risk Analyst. The highlights of the new report include:

The 100 largest US banks tracked by the WGA Top Bank Index have regained some of the value lost following the start of the US trade war in April 2025. Most bank stocks remain down for the year so far.

Funding costs for US banks fell for the second quarter in a row, part of a larger rally in market interest rates that occurred as equity markets have sold off. Banks are also more aggressive in funding markets.

Unrealized losses on securities held by banks totaled $413 billion in the first quarter, according to the FDIC. This figure was down $67.5 billion (14%) from the prior quarter and down $103.3 billion (20%) from first quarter 2024, but interest rate risk remains a problem for some large banks.

“The breakdown in the basis trade for the Treasury market at the end of Q1 was a stark warning to the banking industry,” notes WGA Chairman Christopher Whalen. “Rising LT interest rates and yield spreads in the Treasury market could pose a risk to some large banks such as Bank of America. In its earning release at the end of Q1 2025, BAC reported $90 billion or about 20% of the total unrealized losses on securities for the entire US banking industry.”

The report notes that WGA does not expect any interest rate cuts by the Federal Open Market Committee during 2025. “Our operative assumption is that the strong economy and continued high inflation expectations will mitigate against any interest rate cuts in 2025,” Whalen notes. “We expect to see the FOMC end the shrinkage of the central bank’s balance sheet, which should help to increase the very low growth rates for bank deposits.”

The report notes that Fed Chairman Jerome Powell may remain on the FOMC as governor after his term as chairman ends next year. WGA Chairman Whalen, who just published a new book via Wiley Global, “Inflated: Money, Debt and the American Dream,” noted in a recent event with subscribers that the Trump trade policies are introducing structural changes in the Treasury market that may cause LT interest rates to rise.

“Intense competition for assets caused average yields for bank loans and leases to fall again in Q1 2025, but fortunately banks were able to push funding costs down twice as much, boosting earnings,” notes Whalen. “The very timely increase in non-interest revenue for the industry may not be repeated in Q2. But so long as consumer credit expenses remain benign, industry earnings will remain stable. There still is no recession in sight.”

Copies of the IRA Bank Book report are available to subscribers to the Premium Service of The Institutional Risk Analyst. Stand alone copies of the report are also available for purchase in the WGA store. Media wishing to receive a courtesy copy of the report please email us: info@rcwhalen.com.

About Whalen Global Advisors LLC

Whalen Global Advisors LLC (WGA) is a New York consulting, risk advisory and publishing company that focuses on financial institutions and global markets. WGA publishes The Institutional Risk Analyst (ISSN 2692-1812), the WGA Bank Top 100 Index, and commentary on the capital markets, industry reports and company profiles. For additional information, please contact us at: info@rcwhalen.com

SOURCE: Whalen Global Advisors LLC

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