Bank of America’s unrealized losses on its bond portfolio climbed above $109 billion in the third quarter, highlighting the continued pressure that rising interest rates are placing on the nation’s banking industry. The losses on the bank’s debt securities increased 28% from the end of June, according to regulatory filings cited in a Wednesday report by The Edge Malaysia.

Higher yields on seven-year and 10-year U.S. Treasury bonds, now above 5%, have reduced the market value of existing bonds issued when interest rates were lower. When interest rates rise, older bonds with lower yields generally become less attractive compared with newly issued securities offering higher returns.

The losses are largely unrealized, meaning Bank of America has not necessarily incurred the full losses through selling the securities. However, the figures have renewed concerns about a vulnerability that contributed to the 2023 regional banking crisis, when rising interest rates weakened the value of banks’ bond portfolios and helped lead to the collapses of Silicon Valley Bank and First Republic Bank.

Industry experts told The Edge that the current situation differs from the earlier crisis because banks are not facing the same liquidity pressures that contributed to the turmoil. Bank of America also maintains average deposit balances of approximately $2 trillion, providing a substantial funding base as it manages its portfolio.

Nevertheless, the growing losses could weigh on investor confidence and raise questions about whether major banks will reduce stock buybacks to preserve capital. Changes in the value of securities can affect earnings and capital measures, including accumulated other comprehensive income, or AOCI, which captures certain gains and losses that have not flowed through net income.

AOCI losses more than doubled during the third quarter at JPMorgan Chase and Wells Fargo, according to the report.

Truist Securities analysts led by Brian Foran said in a note to clients Tuesday that the sharp increase in AOCI losses came as a surprise, even though analysts had expected rising interest rates to put pressure on bond valuations.

The concern is that banks may decide to retain more capital rather than return it to shareholders through stock repurchases. Analysts had projected in August that large banks would buy back $207 billion in shares by the end of 2027, Foran noted.

JPMorgan reported Tuesday that its share repurchases fell nearly 90% in the third quarter compared with the same period a year earlier. Chief Executive Officer Jamie Dimon said the decline reflected the bank’s decision to redirect capital toward opportunities offering better returns, rather than concerns about bond losses or the broader economic environment.

Bank of America has faced scrutiny over its securities portfolio since the Federal Reserve began raising interest rates in early 2022. Its portfolio remains the largest among its major banking peers and carries comparatively low yields, according to The Edge.

Bank executives have said the institution can gradually replace lower-yielding bonds as they mature with securities offering better returns. Other banks have taken more immediate steps to restructure their portfolios, sometimes selling securities at a loss to reinvest in higher-yielding assets.

JPMorgan recorded $658 million in investment securities losses during the third quarter as it replaced lower-yielding holdings. Bank of California also sold $2.3 billion in low-yielding securities in July and reinvested some of the proceeds in assets offering higher returns.

Scott Hildenbrand, chief balance-sheet strategist at Piper Sandler, said he has been discussing potential portfolio restructurings with banks more frequently, reflecting continued investor concern over the issue.

The scale of Bank of America’s unrealized losses does not necessarily indicate an immediate financial crisis, but it underscores the challenge banks face when interest rates rise after years of holding lower-yielding securities. Investors will continue watching how banks manage those portfolios and whether the pressure affects capital decisions, lending, and shareholder returns.