Bank of America Equity Remains Steady While its Mortgage-Bond Values Decline

Equity from shareholders declined because BofA’s bond portfolio took a turn for the worst. This was mainly due to rising interest rates and other problems. The equity declined by $4.2 billion and these impacted bond holdings, currency transactions and adjustments to their consumer’s pensions.

Total shareholder equity fell to $231 billion from $237.3 billion at the end of March. This included a $4.01 billion, a 63% increase from the previous year.

JPMorgan Chase & Co., Wells Fargo & Co., and Citigroup Inc. also saw losses on their securities but didn’t see as much decline as Bank of America did.

Bank of America’s unrealized gains and losses from securities are put under the AOCI, which is included in comprehensive income. This stands for available for sale and is included in a balance sheet. They can reflect a company’s true gains and losses. Their AOCI loss doubled actually at the end of last June. Bank of America will need to gain more capital to overcome their large amount of losses.

Their portfolio revealed this loss and also a gain of $5.3 billion in gains three months earlier. The net paper loss amounted to $2.3 billion.

Bank of America is experiencing an unfortunate change of events.

Wells Fargo’s securities experienced gains of only $5.1 billion in June while in March they experienced $11.2 billion in gains on their securities. They reported a $3.35 billion decline to their AOCI. JP Morgan said they had a $3.1 billion overall decline to their AOI. Citigroup experienced a $2.1 billion decrease.

It seems like most of the major lenders are experiencing major issues. Later on, it seems like the real estate market will improve as well as their fortunes. This is not happening now, however.