Major Banks · #53 in the Retail 100

Bank of America

BAC

Our rating: hold
12-month target: $57.67 +16.1%
Expected vs. S&P 500: -0.1 ptsSee the math
Next earnings: Jan 15In 71 daysEarnings calls page ↗

Bank of America's earnings now ride on interest income, which is growing 8% as low-rate pandemic bonds roll off.

Summary

Bank of America runs four large businesses: consumer banking, wealth management, lending and deal advice for companies, and trading for investors. Its biggest income source is net interest income, the gap between what it earns on loans and bonds and what it pays depositors, and that gap is widening as low-rate bonds from the pandemic years mature. Fees from deals and trading are weakening, and a compliance penalty cut profit last quarter. The stock depends on interest income growing fast enough to carry earnings.

$49.66

-$2.38 (-4.57%)Past year

What Bank of America does

Bank of America takes in about $2 trillion of deposits from households and companies. The gap between what it earns lending and investing that money and what it pays depositors is over half its revenue.³⁷

What it sells

Consumer banking38% of revenue, FY2025
Checking, savings, credit cards and home loans for households and small businesses. It holds nearly half the bank's deposits.
Wealth management22% of revenue, FY2025
Merrill advisors and the Private Bank, serving clients with over $250,000 to invest. Mostly fees tied to client assets.
Corporate banking21% of revenue, FY2025
Loans, cash management, bond and stock underwriting, and merger advice for companies of every size.
Trading21% of revenue, FY2025
Buying and selling stocks, bonds, currencies and commodities for big investors, plus lending to them.

Who buys it

Mostly American: the U.S. brought in 86% of 2025 revenue. Households and small businesses use the consumer bank, people with over $250,000 to invest use Merrill, and companies and institutional investors use the rest. The bank's fortunes track the U.S. economy.

Where you've seen it

Besides its 3,628 branches, Bank of America owns Merrill, the brokerage and financial advisor firm.

The backstory

In 2020 and 2021, Bank of America's deposits exceeded its loans by up to $1.1 trillion, and it parked much of that money in low-rate bonds. When rates rose in 2022 and 2023, deposit costs climbed while those bonds still paid little. Quarterly net interest income fell from $14.7B in late 2022 to $13.7B in mid-2024. Those bonds are now maturing, which is why interest income is rising again.

How the business makes money

Why Bank of America earns more as old bonds mature^{1,2,3,4,5,6,7,9,13,26,30,31,33}

Step 1
Households and companies keep about $2 trillion of deposits at the bank, and much of it is cheap: about $1T of consumer deposits costs roughly 0.5% a year.
Step 2
The bank lends and invests that money and keeps the difference, which is over half its revenue. Loans grew 8% to $1.22T.
Step 3
Low-rate bonds bought in 2020 and 2021 are maturing, and the money is reinvested at today's higher rates. Interest income reached $16.4B in Q3.
Step 4
Fees from Merrill wealth advisors, deal advice and trading fill out the rest of $30.0B of quarterly revenue.
What shareholders get
Most profit goes back to shareholders: $8.3B in Q3, $6B of it buying back stock, so each remaining share owns more of the profit.

Advantages

Cheap deposits

Major advantage

The bank's biggest advantage. Low-cost consumer deposits let it earn more on each loan than rivals that pay more, and deposits have grown 12 straight quarters.^3,4,9

Merrill, its wealth business

Strong advantage

A strong second engine that grows with markets. Assets managed by Merrill, its wealth business, rose 17% to $2.3T.⁴

Capital to return to shareholders

Supporting

Helpful for shareholders, not a competitive edge. Strong capital pays for big buybacks, though the core capital ratio slipped to 10.9% from 11.2%.^1,2,3

What's changing

A $1.2B penalty and weaker deal fees overshadowed a higher interest income outlook

A penalty and weak deal fees overshadowed a better interest income outlook. Q3 included a $1.2B charge for civil penalties under consent orders with the OCC and FinCEN over anti-money-laundering and sanctions compliance, which cut earnings by $0.17 a share. Management said the order includes no asset cap. The stock closed down 4.8% on October 14.^30,32,33

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Bank of America
Bank of Americathis stock	$342.66B	Bank of America takes in about $2 trillion of deposits from households and companies. The gap between what it earns lending and investing that money and what it pays depositors is over half its revenue.
JPMorgan ChaseJPM	$888.19B	Largest U.S. bank, strongest in Wall Street trading and dealmaking.	JPMorgan earns notably higher returns, driven by its larger trading and deal business.^17,1
Wells FargoWFC	$248.10B	Main Street consumer and business bank, growing again after its regulatory cap lifted.	Wells Fargo is mostly a Main Street lender; returns now match Bank of America's.¹⁸
CitigroupC	$203.10B	A global bank serving multinationals, now cutting businesses to raise returns.	Citi reaches further abroad; Bank of America has more U.S. consumer deposits.
Charles SchwabSCHW	$155.20B	Low-cost brokerage and wealth platform for individual investors and independent advisers.	Schwab sells cheap self-service investing; Merrill sells advice. Both chase wealthy clients.¹⁰

Leadership

Who runs the company, and how the stock has done under the CEO.

BAC +313.5%S&P 500 +794.2%Total return with dividends since Jan 2010 · log scale

20112013201520172019202120232025

Brian MoynihanChair of the Board and CEO16 yrs, since 2010

Alastair BorthwickEVP and CFO5 yrs

Dean AthanasiaCo-President1 yrs

Jim DeMareCo-President1 yrs

When Moynihan was named (Dec 2009), the stock moved -2.7% that day; the S&P 500 moved -1.2%.

Wall Street on Moynihan: PositiveJPMorgan rates it a Buy, citing lending income growth near the top of its 6% to 8% forecast. Jefferies rates it a Buy but cut its price target to $70 after Moynihan said deal fees would fall at least 10%.^L5,L6,L7

Leadership sources (7) · researched Oct 2026

L1Moynihan Named Bank of America CEO · American Banker, 2009-12-16
L2Executive Biographies · Bank of America Newsroom, 2026-10-11
L3Bank of America announces new CFO, technology and legal heads in sweeping management overhaul · CNBC, 2021-09-10
L4Bank of America Announces Senior Leadership Changes · Bank of America Newsroom, 2025-09-12
L5JPMorgan reiterates Bank of America stock rating on NII outlook · Investing.com, 2026-10-06
L6Bank of America CEO sees at least 10% drop in Q3 investment banking fees · Reuters / Investing.com, 2026-09-14
L7Bank of America Stocks Rise although Jefferies Cuts Its Target · GuruFocus / Yahoo Finance, 2026-10-05

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Will net interest yield, what the bank earns on its assets after paying depositors, keep climbing from 2.16% toward management's 2.30% target, keeping earnings growing as deal fees and trading slow?^{1,2,3,4,5,6,8,9,10,12,22,26,30,31,32,33}

Bull case: why buyers buy

Maturing bonds get reinvested at higher rates, so interest income grows 8% or more in 2027 as management now forecasts, and wealth fees offset weaker deals.

Old low-rate bonds are rolling off. Bonds held to maturity shrank to $506B in June from a $683B peak in 2021.
The bank is earning more on its assets. Net interest yield rose to 2.16% in Q3 from 2.08% in Q2.
The outlook doesn't rest on rates alone. The CFO points to loan and deposit growth, slower deposit-pricing shifts and repricing of fixed-rate loans.
Wealth fees reduce the reliance on deals. Wealth management profit rose to $1.5B from $1.3B a year earlier.

Bear case: why sellers sell

If deposit costs rise with Fed increases while deal fees and trading slow, earnings growth falls short of management's target of 12% or more a year.

The yield target is still some way off. Net interest yield sits 0.14 percentage points below the 2.30% target.
Last year's gain came from cheaper deposits, not higher asset yields. Fed increases could push deposit costs back up, and the 2027 forecast assumes three of them.
Trading is slipping along with deal fees. Sales and trading revenue fell 5% to $5.1B, with bond trading down 17%.
Costs are outrunning revenue. Adjusted expenses rose just under 7%, against 3% revenue growth.

Where Delphi landsholdWe think today's price already weighs both sides fairly.See why

What to watch

The numbers that will settle the debate.

Net interest yield▲ improving

2.16% in Q3, up from 2.01% a year ago; net interest income up 8% to $16.4B^30,31,1

What the bank earns on assets after paying depositors, and the main driver of banking income. Management targets 2.30%.

Investment banking fees and trading revenue▼ worsening

Deal fees down 11% to $1.8B and sales and trading down 5% to $5.1B in Q3^30,32,33

Its deal-making and trading units earn most of their fees here.

Wealth management client balances▲ improving

Record $5.1T in Q3; division profit $1.5B, up from $1.3B^30,31

Shows whether Merrill, its wealth arm, keeps growing fee income as markets and AI rivals shift.

Next earnings report

Jan 15

In 71 days

Earnings calls page ↗

Expected earnings per share: $1.14
Expected revenue: $30.47B

What to listen for: Whether net interest yield keeps rising above 2.16% and deal fees recover, and how deposit costs react to further Fed increases.³⁴

What would prove this wrong

✕Net interest yield stays near 2.08% through 2027.
✕Deposit costs rise faster than loan and bond yields after Fed increases.
✕Credit card losses climb well above Q2's 3.55% as rates rise.
✕Deal fees and trading fall for several quarters, not one.

Our ratingHoldas of Nov 3 close, $49.66 · what ratings mean

Interest income is accelerating and the stock trades near 10 times expected earnings, but deal fees and trading are slipping, so expected returns only match the S&P 500.

12-month target: $57.67 (+16.1%)
Plus dividend: +2.3%
S&P 500, same method, with dividends: +18.5%
Expected vs the market: -0.1 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $49.66

Target $57.67

bull case25% likely

$66.87 +35%

Old bonds roll into higher rates and Fed increases lift loan yields, pushing the yield toward 2.30%, while deal fees recover and earnings reach the top of forecasts.

$5.86 earnings per share × 11.4 = $66.87

base case50% likely

$58.66 +18%

Interest income grows about 8% in 2027, as management guides, while softer deal fees and trading offset it, so earnings match forecasts.

$5.63 earnings per share × 10.4 = $58.66

bear case25% likely

$46.47 -6%

Deposit costs rise with Fed increases and cap the yield, while deal fees and trading slip further and earnings land in the lower half of forecasts.

$5.51 earnings per share × 8.4 = $46.47

Why these odds: Balanced. The 2027 interest income outlook rose to 8% or more and yield is climbing, but Q3 missed forecasts, deal fees and trading fell, and Yahoo shows 15 of 15 recent estimate changes for 2026 and 2027 were cuts.

How the prices are built: Wall Street expects earnings per share of $5.63 for the year starting a year from now (analysts range from $5.38 to $6.08). Today the stock trades at 9.9 times next year's earnings per share; its five-year middle is 11.88.^{3,11,14,20,22,23,24,25,27,34,35,36}

What tests the call: Q4 2026 earnings and the net interest yield update (~2027-01)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 15; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $49.66, investors pay less for each dollar of Bank of America's earnings than for the average stock's

Bank of America trades at 9.9 times the earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's earnings. That is below its five-year middle of 12.

Analysts expect earnings to grow about 13% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. At the market's multiple, today's price would only make sense if Bank of America earned about 47% less than forecast over the next year.

Bank of America multiple: 9.9×
S&P 500 multiple: 19×
Base case: +18%
Bear case: −6%

The skewOur bear case loses about 35¢ for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

No reported quarters available.