America's biggest banks each took a 10-figure hit to their earnings last quarter to cover the cost of bailing out uninsured depositors at Silicon Valley Bank and Signature Bank.

Why it matters: Most of the banks took the FDIC's special assessment in stride — their earnings are strong enough to be able to afford it. Citigroup is the exception.

How it works: The Federal Deposit Insurance Corporation is designed to reassure banks' customers that their deposits are safe.

• Its insurance fund held $119.3 billion at the end of the third quarter, including $3.2 billion that banks paid into the fund as their regular quarterly insurance premiums.
• That means the fund stands at 1.13% of America's insured deposits, below its target of 1.35%.

Where it stands: The fund is currently undercapitalized for three main reasons.

• First is the failure of First Republic, which is expected to cost the fund more than $15 billion.
• Second is an increase in insured deposits, which has taken place even though overall deposits have declined. The bank failures of 2023 encouraged many depositors to embrace brokered deposits and other ways of ensuring their money was insured.
• Third is that the FDIC was asked to pick up the $15.8 billion tab for protecting the uninsured depositors at Silicon Valley Bank and Signature Bank — a bill far larger than the relatively modest $2.4 billion cost of protecting insured depositors at those institutions.

Between the lines: Because the FDIC was never designed to bail out uninsured depositors, by law it has to levy a "special assessment" to get back that $15.8 billion.

• The assessment is based on the amount of uninsured deposits at U.S. banks, over and above $5 billion per bank.
• That money will be paid to the FDIC in eight installments starting this quarter — but because the final rule has been published and the amounts to be paid are pretty certain, the banks accounted for all of it in the fourth quarter.

By the numbers: The four giant national banks owe $8.6 billion in total, ranging from $1.7 billion at Citigroup to $2.9 billion at JPMorgan.

• Even after accounting for two years' worth of special assessments in a single quarter, the three biggest banks — JPMorgan, Bank of America and Wells Fargo — all made multibillion-dollar profits last quarter.
• Citigroup, by contrast, ended the quarter with a loss of $1.8 billion.

The bottom line: That probably helps explain why Citigroup is trading on a price-to-book ratio of 0.5, while JPMorgan's ratio is more than three times higher at 1.6.