Bank of America Misses Q3 Estimates as $1.2 Billion Treasury Penalty Cuts EPS to $0.91; Shares Slide

BAC reported third-quarter 2026 net income of $6.9 billion, or $0.91 per diluted share, on October 14, down from $8.3 billion, or $1.04, a year earlier. The quarter absorbed a $1.2 billion regulatory settlement charge, or $0.17 per share, booked as a non-tax-deductible expense. Excluding the charge, adjusted EPS was $1.08, still short of the $1.10 LSEG consensus. Revenue on a fully taxable-equivalent basis was $30.12 billion against a $30.69 billion LSEG estimate, up 3% from a year earlier.

The charge stems from enforcement actions announced on October 13. Treasury said the penalties total more than $1.21 billion, the third-largest in its history: a $1.2 billion FinCEN penalty that credits a $750 million civil money penalty from the OCC, the largest in that agency's history, plus an $11.6 million OFAC settlement covering 475 apparent sanctions violations. Treasury found the bank failed to timely report over $5 billion in suspicious transactions, more than $1 billion of which involved priority risks including Chinese money laundering networks and trade-based laundering tied to the southwest border. The bank said "financial crime compliance is serious, and we are responsible for getting it right."

The operating picture was mixed. Net interest income rose 8% to $16.4 billion, but sales and trading revenue fell 5% to $5.1 billion, with fixed income, currencies and commodities down 17% while equities rose 11%, and investment banking fees fell 11% to $1.8 billion. CEO Brian Moynihan said that "while investment banking and sales and trading revenues were lower, commercial lending grew in every client segment." The bank returned $8.3 billion to shareholders in the quarter.

Shares fell 4.2% in premarket trading, per Reuters, and about 7% after the open, with some reports putting the intraday drop as deep as 8%. What to watch: whether the trading and advisory shortfall carries into the fourth quarter, and how much remediation under the OCC and FinCEN consent orders adds to noninterest expense, which rose $2.4 billion from a year earlier to $19.7 billion including the charge.