- Price
- $51.76
- Fair value
- $62.00
- Discount
- 16.5%
- Uncertainty
- Medium
- LSEG rating
- 1.92
- Moat
- Wide
- Next earnings
- 2027-01-14
- Next earnings is estimate
- Yes
- Company name
- Bank of America
- Sector
- Banks
- About
- Bank of America is the second largest US bank by assets, with $3.4 trillion of assets and $2.04 trillion of deposits at September 30, 2026. It reports four segments. Consumer Banking takes deposits, gives credit cards and loans, and serves about 39 million consumer checking accounts. Global Wealth and Investment Management, with Merrill and the Private Bank, manages $5.1 trillion of client balances. Global Banking lends to companies and earns investment banking fees, and Global Markets trades bonds, currencies, and stocks for clients. The bank earns most of its money from net interest income, the difference between the interest it earns on loans and securities and the interest it pays on deposits, which was $16.4 billion in Q3 2026. It also earns fees from asset management, cards, investment banking, and trading.
- Thesis
- The market prices Bank of America at a discount because a large part of its assets are low-yield bonds that it bought when rates were very low, and its returns are still below its own target. At September 30, 2026, it held $496 billion of held-to-maturity securities with an unrealized loss of $104 billion, up from $82 billion at June 30, as rates rose. These bonds earn less than new loans or bonds, so they limit net interest income until they mature. Return on tangible common equity was 12.6% in Q3 2026, or 14.9% without a $1.2 billion anti-money-laundering penalty, below the 16% to 18% medium-term target that the bank set in November 2025. In Q3, adjusted EPS of $1.08 was below the expected $1.10, and the shares fell more than 3% before the market opened. For the gap to close, three things must be true. Net interest income must keep growing as old bonds mature and the money goes into higher-yield assets; it grew 8% from a year earlier in Q3 2026. ROTCE must move into the 16% to 18% range in 2027. The consent orders of October 13, 2026, must not bring more penalties or limits on growth. The Q4 2026 report, expected in mid-January 2027, with the outlook for 2027, is the next check. If net interest income keeps growing and returns rise, the gap can close over the next four to six quarters. If rates fall quickly or loan losses rise, it can take longer.
- Risks
- Bank of America holds $496 billion of held-to-maturity securities with an unrealized loss of $104 billion at September 30, 2026. Higher long-term rates increase this loss. The loss does not reduce regulatory capital now, but it would become real if the bank had to sell the bonds, for example after a large outflow of deposits.
Net interest income depends on interest rates and deposit costs. If the Federal Reserve cuts rates quickly or deposits move to higher-rate products, net interest income can grow more slowly than the bank expects.
The consent orders of October 13, 2026, require the bank to improve its anti-money-laundering and sanctions programs. A failure to meet them can bring more penalties or limits on growth.
A weaker economy can raise loan losses. Net charge-offs were $1.3 billion in Q3 2026. Credit card loans of $106 billion and loans to companies are the main sources of losses in a downturn.
Investment banking fees fell 11% and sales and trading revenue fell 5% in Q3 2026. These revenues change with markets and can fall further.
- Balance sheet
- Cash: $249.6B
Debt: $380.9B
Net debt: $131.3B
Ratings: Moody's A1 (stable outlook), S&P A- (stable outlook), Fitch AA- (stable outlook)
Bank of America funds itself mostly with $2.04 trillion of customer deposits, which are not part of debt here. The figures are preliminary amounts from the Q3 2026 supplemental information. Debt is $62.2 billion of short-term borrowings and $318.7 billion of long-term debt at September 30, 2026. Cash is cash and due from banks plus $222.7 billion of deposits at the Federal Reserve and other banks. Because the company is a bank, interest expense is a cost of its business, so net debt to EBITDA and interest cover do not apply. Debt securities were $842 billion at amortized cost, and $496 billion of them were held to maturity, with an unrealized loss of $104 billion. The CET1 ratio was 10.9% under the standardized approach, above the bank's 10.5% target, and the supplementary leverage ratio was 5.5%. The ratings are the senior debt ratings of Bank of America Corporation in the Q2 2026 10-Q, which did not change from the 2025 10-K.
As of 2026-09-30.
- Checkpoints
- Jan 14, 2027 (estimate): Q4 2026 results and 2027 outlook. Pending. Watch: Net interest income that grows at least 5% from a year earlier and an outlook for more growth in 2027 pass; flat net interest income or a weaker outlook fails.
Q2 2027 (estimate): 2027 stress test and capital return. Pending. Watch: A stress capital buffer that lets the bank keep its CET1 ratio near 10.5% and continue buybacks passes; a higher buffer that forces lower buybacks fails.
2027 (estimate): Returns reach the 16% to 18% ROTCE target. Pending. Watch: Quarterly ROTCE of 16% or more in 2027 passes; ROTCE that stays near 15% or below fails.
- Recent events
- 2026-10-14: Bank of America reported Q3 2026 results. Revenue was $30.0 billion, up 3%, and net interest income was $16.4 billion, up 8%. Net income was $6.9 billion, or $0.91 per share, after a $1.2 billion regulatory penalty. Without the penalty, EPS was $1.08. The CET1 ratio was 10.9%, and the bank returned $8.3 billion to shareholders, with $6.0 billion of buybacks. Shares fell more than 3% before the market opened.
2026-10-13: The Office of the Comptroller of the Currency and FinCEN announced that Bank of America consented to orders about parts of its Bank Secrecy Act, anti-money-laundering, and sanctions compliance programs. The bank recorded $1.2 billion of expense in Q3 2026 for the civil money penalties, which is not tax deductible.
2026-07-24: Bank of America raised its quarterly dividend by 14% to $0.32 per share, from $0.28.
2026-07-14: Bank of America reported Q2 2026 results. Net income was $9.1 billion, and EPS was $1.21, up 34% from a year earlier. Revenue was $31.6 billion, up 15%, and net interest income was $16.0 billion, up 9%.
2026-05-27: Bank of America launched BofA Rewards, which replaced its Preferred Rewards program. By September 30, 2026, 17.6 million clients were enrolled.