Bank of America Stock Posts Worst Drop Since April 2025 as CEO Warns of Weaker Q3 Fees

Nauman Khan Thu, September 17, 2026 at 1:00 PM PDT | 4 min read

Tickers: BAC | ^GSPC

Bank of America (BAC) shares recently experienced their steepest one-day decline since April 2025, following CEO Brian Moynihan's warning that third-quarter investment banking fees could fall by at least 10%, while sales and trading revenue may remain flat compared to the prior year. BAC stock fell 5.1% to $59.47 on September 14, while the S&P 500 banking index dropped 2.7%.

Large banks are inherently cyclical, and this guidance reflects a slower period for markets. Morgan Stanley noted that the market reaction was likely "overdone." The stock currently trades near fair value on its usual metrics, and the selloff appears to be a short-term blip. For long-term investors, Bank of America's core loan and deposit growth, higher rates supporting net interest income, and strong capital levels remain reassuring.

Bank of America Stock Has Still Delivered in 2026

Bank of America stock is up approximately 6% year-to-date (YTD) and roughly 13% over the past 52 weeks. The company has demonstrated stronger net interest income (NII), loan growth, and a recovery in trading and investment banking activity. The recent pullback followed management's cautious Q3 outlook.

BAC stock trades at about 13.6 times earnings, compared to approximately 12 times for the sector median. Its price-to-book (P/B) ratio stands at about 1.5 times, versus 1.3 times for the sector median. The stock therefore carries a premium on both valuation measures.

The Guidance Shock Could Be Temporary

Moynihan expects Q3 investment banking fees of $1.6 billion to $1.8 billion, down from approximately $2 billion a year earlier. Sales and trading revenue is projected at roughly $5.4 billion, flat year-over-year (YOY).

However, management noted that the deal pipeline remains strong and consumer spending is healthy. Bank of America also expects full-year net interest income growth at the upper end of its 6% to 8% range, which could help offset weaker fee income.

JPMorgan anticipates mid- to high-teen growth in Q3 investment banking and markets revenue, suggesting that some of Bank of America's weakness may be company-specific rather than indicative of a broad downturn in deal activity.

Q2 Showed Strong Underlying Growth

Bank of America's July quarter was robust:

• Revenue rose 15% year-over-year (YOY) to $31.6 billion.
• Net income increased 27% to $9.1 billion.
• Adjusted EPS climbed 34% to $1.21.

Segment Performance:

• Global Banking: Reported $2 billion in net income, supported by investment banking fees that rose 50%.
• Global Markets: Posted $2.6 billion in net income, with sales and trading revenue up 33% to $7.1 billion.

Key Metrics:

• Net interest income increased 9% to $16 billion.
• Average deposits rose more than 2% to $2.02 trillion.
• Average loans climbed 8% to $1.22 trillion.
• Cash and cash equivalents stood at approximately $229.7 billion in Q2 2026.

CFO Alastair Borthwick stated that the quarter delivered "strong revenue growth across every business segment." Management raised its full-year NII expectations to the upper end of the 6% to 8% range and anticipates 300 to 400 basis points of operating leverage.

Bank of America is also investing beyond traditional banking. In August, the firm launched a $250 billion critical infrastructure finance initiative covering digital, energy, and power projects.

Looking ahead, analysts expect EPS of approximately $4.67 in fiscal 2026, representing 23% YOY growth, followed by EPS of $5.27 in fiscal 2027, representing 13% YOY growth.

So, do shares of Bank of America represent a buying opportunity now? I believe so — or at least that the dip is worth monitoring, given BAC stock's underlying strengths.