CHART OF THE DAY: US bank stocks hit all-time low relative to the S&P 500 as bond crash weakens balance sheets

• US bank stocks hit an all-time low relative to the S&P 500, according to Bank of America.
• The recent underperformance of bank stocks comes amid a bond crash that has weakened balance sheets.
• Other factors hurting banks include government regulations and a period of low interest rates.

Our Chart of the Day is from Bank of America, which shows that US bank stocks hit an all-time low relative to the S&P 500 going back more than 80 years.

Over the long term, US banks have been weakened by a number of factors, including periodic debt crises in the 1980s, 1990s, and 2000s, the bank said. Increased regulation on banks also isn't helping the sector versus the S&P 500.

"The underperformance of banks in the past 10 years has been driven by historically low interest rates, poor balance sheets and government regulations hampering bank profitability," Bank of America investment strategist Michael Hartnett said in a Tuesday note.

And more recently, bank stocks have slumped amid a bond crash that has weakened balance sheets across the industry.

As interest rates have surged over the past 18 months, bond prices have plunged. Some of the more drastic results have been the unwinding of several regional banks that were forced to sell their bonds at a loss amid a liquidity crunch, like Silicon Valley Bank.

Many of those bonds are still on the books. According to a Moody's estimates, US banks are sitting on $650 billion of unrealized losses stemming from bond securities they purchased during a prolonged period of near-zero interest rates.

Bank of America alone is sitting on $130 billion of unrealized losses related to its bond holdings. While banks can and likely will hold these bonds to maturity to avoid booking losses, the opportunity cost is high.

That's because by holding on to their losing, banks are missing out on the higher yields, with some currently over 5%.