Bank of America’s bond losses rise to $109 billion at end of September
Key Facts
Unrealized losses in Bank of America’s bond portfolio rose to $109 billion at the end of September, from $85 billion at the end of June, according to Reuters. The bank reported total unrealized losses of $109.150 billion on debt securities as of September 30. This came in the third quarter, when the yield on 10-year U.S. Treasury bonds recorded its biggest quarterly increase since 1994, according to Reuters. The yield is a benchmark for global borrowing costs. As yields rise, prices of existing bonds fall, deepening the unrealized losses recorded on the books. The figures leave banks weighing whether to hold the bonds or sell them and lock in the losses.
Securities classified as held to maturity accounted for most of Bank of America’s losses, according to Reuters, which said the bank does not intend to sell them. Total unrealized losses on this category were $103.914 billion as of September 30, compared with $82.095 billion as of June 30, according to the bank’s supplemental data filed with the Securities and Exchange Commission. Losses on available-for-sale securities rose to $5.063 billion from $2.995 billion over the same period. Classifying securities as held to maturity means the bank intends to keep them, though their market value remains affected by yield movements. Reuters said selling would impose an immediate financial loss, while waiting could prolong pressure on the balance sheet. That could weaken some measures of financial strength and constrain shareholder distributions.
Across the sector, the accumulated other comprehensive income balance at U.S. banks remained negative at $156.64 billion in the second quarter, according to S&P Global Market Intelligence data cited by Reuters. Bank of America’s accumulated other comprehensive income losses increased by more than $3 billion in the three months ended September 30 compared with the end of June. The figures show that falling bond prices affect balance-sheet measures tracked by markets even when securities are not sold. Brian Mulberry, chief market strategist at Zacks Investment Management, said continued rate increases or a further steepening of the long end of the yield curve “will prolong pressure on tangible equity and on regulatory capital at some banks.” The assessment links continued pressure to the path of interest rates and long-term yields. Unrealized losses remain separate from realized losses as long as the securities are not sold.
Bank of America’s third-quarter results showed another way interest rates affected its business. Net interest income rose 8% year over year, driven mainly by growth in loan and deposit balances, global markets activity and the repricing of fixed-rate assets, the bank said. By contrast, the bank’s fixed-income, currency and commodities trading revenue fell 17% year over year in the quarter, according to Reuters. The same revenue declined 7% at Morgan Stanley and 4% at JPMorgan. Alastair Borthwick, Bank of America’s chief financial officer, said lower client activity and changing market conditions, including the significant shift in interest rates, clearly affected the bank’s credit, mortgage and municipal bond businesses. The contrast between growth in interest income and a decline in trading revenue highlights different ways interest rate shifts affect the bank’s business.
Bank of America returned $8.3 billion to shareholders in the third quarter, including $2.2 billion in common stock dividends and $6.0 billion in share repurchases, according to the bank’s filing. The payments came as unrealized securities losses rose, putting balance-sheet pressure and distributions in the same context for investors. The bank’s stock closed at $50.68 on October 27, according to EL7 data. The data provided do not include closing prices for comparison with other banks’ shares. The financial impact of the losses remains tied to the securities’ classification and the decision to hold or sell them. The quarterly figures show the bank continued dividends and buybacks alongside rising unrealized bond losses.
Investors are watching the Federal Open Market Committee meeting scheduled for October 27 and 28, according to the Federal Reserve calendar. The calendar also lists the next meeting for December 8 and 9. The calendar page cited does not specify the time of the decision announcement. The meeting follows the sharp quarterly rise in the 10-year Treasury yield and the accompanying pressure on bond valuations. Bank of America also announced that it will participate in the Bank Analysts Association Conference in Boston on November 5, 2026. The meeting and conference dates are upcoming points for monitoring statements from policymakers and the bank on market conditions and its business.