• Bank of America (BAC) reported Q3 adjusted EPS of $1.08, missing estimates, while revenue of $29.96B also fell short.
  • Trading revenue ex-DVA and net interest income exceeded expectations, providing some support.
  • A $1.2B settlement for anti-money-laundering failures reduced GAAP EPS by $0.17.

Bank of America’s third-quarter results delivered a mixed picture, with earnings and revenue missing analyst estimates but trading and net interest income surpassing forecasts. The bank also disclosed a $1.2 billion settlement with regulators over anti-money-laundering and sanctions compliance failures, which weighed heavily on reported earnings.

The bank reported adjusted earnings per share of $1.08, falling short of the $1.16 consensus estimate, a 6.9% miss. GAAP EPS came in at $0.91, reflecting a $1.2 billion non-tax-deductible charge related to the settlement, which reduced earnings by approximately $0.17 per share. Revenue totaled $29.96 billion, below the $30.76 billion expected, a 2.6% shortfall. Net income was $6.90 billion.

Trading and NII Provide Support

Despite the headline miss, several key business lines outperformed. Net interest income (NII) rose to $16.45 billion, beating the $16.24 billion estimate. Trading revenue excluding DVA jumped to $6.06 billion, well above the $5.41 billion forecast, a 12% beat. Investment banking revenue also edged past expectations at $1.80 billion.

The bank’s credit-loss provision came in at $1.27 billion, lower than the $1.49 billion estimate, though this alone does not signal improved credit quality. Loans totaled $1.25 trillion, above expectations, while deposits were in line at $2.04 trillion. The CET1 ratio, a key measure of financial strength, was 10.9%, below the 11.2% expected.

Regulatory Settlement Looms Large

The $1.2 billion settlement, announced on October 13, stems from willful violations of the Bank Secrecy Act, including inadequate anti-money-laundering controls and failures to file suspicious-activity reports. The Financial Crimes Enforcement Network (FinCEN) assessed $1.2 billion, while the Office of the Comptroller of the Currency (OCC) imposed a $750 million penalty, credited against the FinCEN amount. A separate $11.6 million settlement with the Office of Foreign Assets Control (OFAC) brings total penalties above $1.21 billion.

The Treasury Department said the bank failed to report more than $5 billion in suspicious activity, including over $1 billion involving national-security-related risks. The settlement also covers suspected Chinese money-laundering networks and payments linked to sanctions programs targeting Russia and Iran. Treasury Secretary Scott Bessent framed the failures as risks to the broader U.S. financial system.

“The bank has already invested billions in technology and dedicated thousands of employees to combating financial crime,” a Bank of America spokesperson said, adding that remediation efforts are ongoing. The bank must hire an independent third party to review historical transactions and report suspicious activity previously missed.

Capital Return in Focus

The settlement’s impact on capital distribution is a key concern. UBS (UBS) analyst Erika Najarian noted that the penalty could pressure investor sentiment and raise questions about whether Bank of America can maintain its roughly $6 billion quarterly share-buyback pace. The bank’s CET1 ratio, already below expectations, could face further strain.

Shares fell 2.7% in after-hours trading on October 13 following news of the settlement, according to Reuters (TRI). The stock’s reaction to the earnings release itself was not yet clear at the time of publication.

What’s Next

Investors will look to the 8:30 a.m. investor call for clarity on the revenue miss, expense outlook, and capital-return plans. The bank’s ability to complete remediation without materially increasing costs or attracting further restrictions will be critical.

Strong trading and net interest income provide operational support, but they do not offset the compliance, capital, and adjusted-earnings concerns. As one analyst put it, the penalty “could worsen investor sentiment and call into question” the bank’s buyback capacity.

Correction: An earlier version of this article misstated the OCC penalty as additional to the FinCEN assessment. It is credited against it.