Bank of America — Weak 3Q: Expenses High, Fees Down, NII On Track; Reputation, Confidence Are Key Concerns

J.P. Morgan maintains its Overweight rating on Bank of America (BAC) with a December 2027 price target of $62.00. BofA posted core 3Q EPS of $1.08 excluding a regulatory settlement charge, with reported EPS of $0.91. Two key items clouded results. The main concern was a large $1.2 billion settlement announced with regulators for BSA/AML issues; BofA indicated the costs of remediating this are fully in the run rate, but this was similar to the company's prior announcement and comments, and peers have historically taken several years to get consent orders removed. This issue hurts BofA's reputation and investor confidence. Secondly, BofA had the weakest results among peers in investment banking and trading, both down yoy, driving weak non-interest income trends. Positives included net interest income remaining on track with management expectations of faster growth in 2027, and share buybacks staying unchanged. Trading revenues were weakest among peers, down 5% yoy to $5.1 billion, and in