Smaller Banks Tackle $395 Billion Bond Headache With Share Sales

Regional and community lenders are turning to stock sales to help them shore up their low-yielding bond portfolios, as the US banking sector grapples with $395 billion in unrealized losses.

At least three regional banks have sold stock in the past month ahead of revamping their balance sheets as the lenders look to partly fund buying new bonds to improve lackluster portfolio returns. Investment bankers expect more deals to follow.

The need for these repositioning transactions was exposed in 2023, with the collapse of a clutch of smaller banks including SVB Financial Group. Many of the bonds these lenders are ...