Bank of America Earnings: Solid Quarter in Line with Our Expectations

Key Morningstar Metrics for Bank of America

• Fair Value Estimate
  : $65.00
• 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 strong first-quarter 2026 results, sending shares upward by a low-single-digit percentage on the back of 7% year-over-year revenue growth and 290 basis points of positive operating leverage.

Why it matters: We believe the two most important takeaways from these results are the trajectory of net interest income, up 9% year over year, and the continued improvement in operational efficiency.

• Continued rolloff of legacy fixed-rate assets and deposit growth underpin our view that the market will increasingly recognize the bank’s operational strength, regardless of rate direction, as evidenced by an 8-basis-point expansion in the net interest margin despite falling interest rates.
• The firm is adept at growing its revenues without a commensurate increase in expenses, which came into focus after it posted a 170 basis point improvement in its efficiency ratio from the prior year, supporting our call for another 400 basis points of improvement over the next decade.

The bottom line: We will maintain our $65 fair value estimate for wide-moat Bank of America, as the results were largely in line with our forecast. We believe the positive share price reaction today shows the market is increasingly coming around to our view that the shares remain undervalued.

• The 16% return on tangible common equity this quarter, up 200 basis points from a year ago, was a bright spot, as the net effect of new capital proposals surrounding Basel III and global systemically important bank, or GSIB, surcharges would allow the firm to hold less capital, enabling further upside.