BofA's Bond Losses Hit $104B, Capital Ratio Would Halve If Marked
BAC is trading near its 52-week low of $46.115 (11% above the low) on elevated volume (3.3× avg).
Summary
Bank of America's unrealized bond losses widened to $103.9 billion in Q3, up almost $22 billion from the prior quarter, as 10-year Treasury yields rose past 5%. The losses sit in a $496 billion held-to-maturity portfolio of mostly agency mortgage securities with a 2% average yield. Barclays calculates that marking these losses would cut the bank's tangible common equity ratio from 6% to 3.6%, far worse than JPMorgan's impact. The stock fell 4.8% to $51.39, the worst among peers, after Q3 earnings missed forecasts even excluding the $1.2 billion AML penalty. This follows the AML settlement disclosed Tuesday and the earnings miss reported earlier today. The bank continues to buy back stock and pay dividends, but the low-yield portfolio has depressed margins and contributed to BAC's 6% YTD decline versus JPMorgan's 3% gain.
At the time of this announcement, BAC was trading at $51.35 on NYSE in the Finance sector, with a market capitalization of approximately $359.4B. The 52-week trading range was $46.12 to $65.23. This news item was assessed with negative market sentiment and an importance score of 8 out of 10. Source: Dow Jones Newswires.