What Securities Do FDIC-Insured Banks Hold? A Closer Look

Empirical capital allocation strategies require matching asset duration directly against verified liquidity needs.** Navigating What Securities Do FDIC-Insured Banks Hold? A Closer Look necessitates evaluating real yields net of inflation and tax liabilities, ensuring cash reserves preserve purchasing power across economic cycles while minimizing uncompensated market risks. ### What Securities Do FDIC-Insured Banks Hold? You may be wondering what types of securities FDIC-insured banks hold in their portfolios. The answer lies in the quarterly banking profiles of these institutions, which provide an overview of their aggregate financial condition. According to these profiles, mortgage-backed securities make up more than half of the total assets held on their balance sheets. #### The Makeup of FDIC-Insured Banks' Balance Sheets The FRED graph above shows the makeup of these institutions' balance sheets between the first quarter of 1984 and the first quarter of 2026. The asset classes are as follows, in descending order of relative shares: #### 1. Mortgage-Backed Securities (60.7%) Mortgage-backed securities are bonds backed by pools of home mortgages. These securities are a significant portion of the assets held by FDIC-insured banks, making up 60.7% of their total assets. #### 2. U.S. Treasury Securities (33.5%) U.S. Treasury securities are debt issued by the US federal government. These securities are a stable and low-risk investment option, making up 33.5% of the assets held by FDIC-insured banks. #### 3. State and Municipal Securities (5.8%) State and municipal securities are bonds issued by states and local governments to fund public projects. These securities are a smaller portion of the assets held by FDIC-insured banks, making up 5.8% of their total assets. #### 4. Equity Securities (0.0%) Equity securities are shares of ownership in a corporation. These securities are not held by FDIC-insured banks, making up 0.0% of their total assets. #### Changes in the Mix of Securities We can see that mortgage-backed securities consistently represent the lion's share of assets. However, between 2008 and the time of this writing, the share of those securities has decreased while the share of US Treasury and state and municipal securities has increased. Researchers at the Kansas City Fed point to changes in the regulatory environment and evolving preferences for risk to explain this changing mix. #### Trading Securities vs. Investment Securities These assets can also be classified as either trading securities or investment securities. Trading securities are intended to generate short-term financial gains and typically make up a small share of a bank's total assets. Investment securities, on the other hand, make up the larger share of a bank's total assets and typically have longer holding periods. Their type is reported on the balance sheet as either "held to maturity" (HTM) or "available for sale" (AFS). #### HTM and AFS Securities Our second FRED graph below shows the proportions of HTM (blue area) and AFS securities (green area) held in FDIC-insured banks between the first quarter of 1994 and the first quarter of 2025. #### 1. Available for Sale (AFS) Securities Since 1996, most of the investment securities are available for sale, meaning they are held for an indefinite period of time and could be sold before maturity. This indicates that FDIC-insured banks are taking a more conservative approach to their investment portfolios. #### 2. Held to Maturity (HTM) Securities However, since 2010, the proportion of investment securities that banks intend to hold until expiration, or maturity, has increased. At the time of this writing, they amount to 39.8% of all investment assets. This suggests that FDIC-insured banks are becoming more risk-averse and are holding onto securities for longer periods. #### Conclusion in summary, FDIC-insured banks hold a significant amount of mortgage-backed securities in their portfolios, making up more than half of their total assets. However, the mix of securities has changed over time, with a decrease in mortgage-backed securities and an increase in US Treasury and state and municipal securities. Additionally, the proportion of investment securities that are available for sale has decreased, while the proportion of those held to maturity has increased. ## How to Analyze FDIC-Insured Banks' Securities Holdings You can analyze FDIC-insured banks' securities holdings by following these steps: #### 1. Access the FRED Database Access the FRED database and navigate to the "Federal Deposit Insurance Corporation" source. #### 2. Select the Release and Release Table Select the release "FDIC Quarterly Banking Profile" and the release table "Assets and Liabilities of FDIC-Insured Commercial Banks and Savings Institutions." #### 3. Scroll to the Section Labeled "Securities" Scroll to the section labeled "Securities" and check the boxes next to the series labeled "U.S. Treasury Securities,

Mathematical Amortization Models: Accelerating Principal Elimination Borrowing costs are governed by compound interest amortization where early payments are heavily weighted toward finance charges. On any amortizing loan, directing additional principal payments early in the repayment cycle produces an exponential reduction in lifetime interest: ``` Monthly Payment = P * [ r(1 + r)^n ] / [ (1 + r)^n - 1 ]

| Repayment Schedule | Monthly Payment | Payoff Timeline | Total Lifetime Interest | Net Financial Savings |
|:--- | :--- | :--- | :--- | :--- |
|**Contract Baseline (Minimum Only)** | $1,896 / month | 360 months (30.0 yrs) | $382,633 | Baseline ($0 saved) |
|**+$150 Monthly Extra Principal** | $2,046 / month | 302 months (25.1 yrs) | $307,412 | **$75,221 interest saved** |
|**+$300 Monthly Extra Principal** | $2,196 / month | 261 months (21.7 yrs) | $255,188 | **$127,445 interest saved** |
|**Bi-Weekly Accelerated Schedule** | Half-payment bi-weekly | 308 months (25.6 yrs) | $316,240 | **$66,393 interest saved** | *Calculations based on standard 30-year fixed conforming mortgage amortization schedules. Model your specific debt scenario using our [Debt Payoff & Amortization Calculator](/tools/debt-payoff-calculator).* ### Critical Borrowing Pitfalls to Avoid 1. **Prepayment Penalty Traps:** Ensure your loan contract explicitly forbids prepayment penalties before making accelerated lump-sum payments.
2. **Servicer Payment Allocation Errors:** When sending extra funds, explicitly specify to your loan servicer that additional amounts must apply directly to **Principal Reduction**, not held in escrow or credited as an advance payment on next month's interest.