Morningstar

Bank of America Earnings: Market Overreaction to Regulatory Fine Provides a Solid Entry Point

We’ve lowered our fair value estimate of Bank of America stock.

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© 2025 Bank of America Corporation.
Securities in This Article
Bank of America Corp
(BAC)

Key Morningstar Metrics for Bank of America

  • Fair Value Estimate
    : $62.00
  • Morningstar Rating
    : ★★★★
  • Morningstar Economic Moat Rating
    : Wide
  • Morningstar Uncertainty Rating
    : Medium

What We Thought of Bank of America’s Earnings

Bank of America BAC reported third-quarter results that fell slightly short of expectations, even after excluding the impact of a one-time regulatory fine, with adjusted earnings per share of $1.08 and net revenue of $29.96 billion, below our respective forecasts of $1.21 and $30.19 billion.

Why it matters: Coming off a record-breaking second quarter, the capital markets slowdown was evident across the major trading desks, though Bank of America’s results were more tepid, coupled with the announcement of a $1.2 billion regulatory fine.

  • Expectations were tempered after management at a recent conference alluded to this quarter’s trading revenue likely to be flat from a year ago, but sales and trading revenue ended up contracting 5%, while JPMorgan Chase grew 15%, Citigroup grew 6%, Goldman Sachs grew 37%, and Morgan Stanley grew 24%.
  • The Treasury’s Financial Crimes Enforcement Network fined Bank of America $1.2 billion over deficiencies in its anti-money-laundering compliance program. Management noted the fine is a one-time expense, and the consent order poses no material business constraints.

The bottom line: After digesting the results, we are lowering our fair value estimate for wide-moat Bank of America to $62 per share from $66, while still viewing shares as undervalued, even after updating our forecasts to account for lower near-term markets revenue and higher deposit costs.

  • Our revised markets revenue forecasts still call for elevated levels to persist near-term, followed by a reset that we currently estimate to occur in 2028. While we lowered near-term trading revenue estimates across the board, we note that Bank of America exhibited both slower equities growth and larger fixed income declines than its peer set this quarter.
  • The additional rise in deposit costs is tied to faster commercial than consumer deposit growth as we enter a higher-rate environment.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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