BAC
BANK OF AMERICA CORP /DE/NYSEValuation snapshot
Above base casePrice is between the base and bull cases.
Price captured with valuation · Valuation Sep 5, 2026
What drives BAC's base case?
base-case thesisRecent growth came from several businesses rather than one temporary source, and lending and deposits also expanded. The model assumes that activity cools from the latest quarter but remains healthy as fixed-rate assets continue repricing and wealth fees grow. Costs and credit losses normalize, so profitability stays below the latest peak but above earlier quarters.
What shapes the assumptions
Net interest income continues growing after its recent quarterly increases
Quarterly net interest income
Raises revenue growth
The efficiency ratio has fallen from its year-earlier level
Efficiency ratio
Raises operating margin
Average loans are growing faster than deposits
Average loan and deposit growth
Raises reinvestment
First-half taxes align with management's annual expectation
Effective tax rate
Informs tax rate
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 8.1% a year. Over the last 5 years it grew 7.4% a year, so the price assumes about what it has delivered.
What else could explain it?›
- Or, holding growth steady
- the price is also consistent with a 38.8% operating margin, against the 34.0% assumed here.
- How confident is this estimate?
- Robustness 48.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Company value drivers
Ranked operating metrics and the valuation assumptions they influence.
1. Quarterly net interest income
Interest earned after funding costs is BAC's largest recurring revenue source and reveals the combined effect of rates, asset repricing, loans, and deposits.
$16B
reported2. Quarterly pretax margin
Pretax income divided by revenue is a bank-appropriate profitability measure incorporating operating expenses and credit provisions.
36.6%
derived3. Quarterly annualized net charge-off rate
This measures realized loan losses relative to average loans and directly indicates how much lending revenue is being consumed by credit deterioration.
0.5%
reported4. Standardized CET1 capital ratio
This measures BAC's highest-quality regulatory capital against risk-weighted assets and governs how quickly the balance sheet can grow or cash can be distributed.
11.2%
reportedBase inputs from financials
source period →Base revenue (TTM)
$121.1B
Diluted shares
7,294,200,000
Net cash
—
Bear
low confidence$33.87
IV / share
-46.3% vs $63.04
- Explicit cash flows
- $10.89
- Terminal value
- $22.98
- Net cash
- $0.00
- Intrinsic value / share
- $33.87
67.9% of the value rests on the terminal value — elevated dependency.
Revenue growth4.0% → 3.0% → 2.0% → 2.0% → 1.5%medium
How derived: Starting from 0.15 year-over-year growth in 2Q26 and management's 0.05 to 0.07 full-year net-interest-income outlook, this path assumes weaker markets, slower lending, and lower rates rapidly normalize growth.
Why this confidence: Management's near-term outlook ↑, Cyclical fee and interest income ↓, Five-year forecast horizon ↓
Measured by
- Quarterly net interest income$16Breported
- Standardized CET1 capital ratio11.2%reported
Evidence for
- Management's original 2026 outlook called for net interest income to grow only 0.05 to 0.07 and depended on the forward interest-rate curve, asset repricing, and continued loan and deposit growth.[BAC 2026 outlook]· primary
Evidence against
- Second-quarter revenue increased 0.15, with growth across net interest income, trading, investment banking, and asset-management fees.[BAC 2Q26 results]· primary
Operating margin29.0%medium
How derived: The latest quarter's bank-appropriate pretax margin was about 0.366, and this case reduces it to 0.29 for higher credit provisions and expenses as revenue growth weakens.
Why this confidence: Reported revenue, expense, and provision data ↑, Credit-cycle uncertainty ↓
Measured by
- Quarterly net interest income$16Breported
- Quarterly pretax margin36.6%derived
- Quarterly annualized net charge-off rate0.5%reported
Evidence for
- BAC identifies macroeconomic weakness, interest-rate changes, market volatility, and unexpectedly high credit losses as material risks to future results.[BAC 2Q26 Form 10-Q]· primary
Evidence against
- The 2Q26 efficiency ratio improved to 0.59 and revenue growth exceeded expense growth by 0.066.[BAC 2Q26 presentation]· primary
Tax rate22.0%medium
How derived: Starting from management's approximately 0.20 full-year expectation, this case assumes fewer tax-credit benefits and a rate closer to the 2Q26 effective rate.
Why this confidence: Management tax guidance ↑, Variable tax-credit benefits ↓, Possible tax-law changes ↓
No tracked driver measures this assumption yet.
Evidence for
- Income-tax expense of 2.476 billion divided by 2Q26 pretax income of 11.565 billion produces an effective rate of approximately 0.214.[BAC 2Q26 Form 10-Q]· primary
Evidence against
- Management expected the full-year 2026 effective tax rate to be approximately 0.20.[BAC 2026 outlook]· primary
Reinvestment rate30.0%low
How derived: This assumes 0.30 of after-tax operating earnings must be retained because average loans grew 0.08 while the standardized CET1 ratio declined to 0.112.
Why this confidence: Reported regulatory capital and loan growth ↑, Bank reinvestment is not directly observable as capital expenditure ↓, Future capital rules ↓
Measured by
- Quarterly annualized net charge-off rate0.5%reported
- Standardized CET1 capital ratio11.2%reported
Evidence for
- Average loans increased 0.08 year over year, and higher risk-weighted assets contributed to a standardized CET1 ratio of 0.112.[BAC 2Q26 Form 10-Q]· primary
Evidence against
- BAC returned 8.0 billion to shareholders in 2Q26, including 6.0 billion of repurchases, indicating substantial capital was available after regulatory needs.[BAC 2Q26 results]· primary
Terminal growth1.5%low
How derived: This rate is set below long-run real economic growth of 0.02 and long-run inflation of 0.02 because a mature regulated bank could lose share or face sustained pricing and capital pressure.
Why this confidence: Official long-run economic projections ↑, Indefinite forecast horizon ↓, Regulatory and competitive uncertainty ↓
No tracked driver measures this assumption yet.
Evidence for
- BAC's filing describes enduring regulatory-capital, credit, interest-rate, competitive, and macroeconomic risks that can constrain long-run growth.[BAC 2Q26 Form 10-Q]· primary
Evidence against
- Federal Reserve participants projected median longer-run real GDP growth of 0.02 and inflation of 0.02, implying a materially higher nominal economic-growth ceiling.[Federal Reserve June 2026 projections]· primary
Base
low confidence$55.23
IV / share
-12.4% vs $63.04
- Explicit cash flows
- $15.70
- Terminal value
- $39.53
- Net cash
- $0.00
- Intrinsic value / share
- $55.23
71.6% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth7.5% → 5.5% → 4.5% → 3.5% → 3.0%medium
How derived: Starting from 0.15 second-quarter growth and management's 0.05 to 0.07 net-interest-income outlook, this path assumes diversified fee and balance-sheet growth normalize gradually rather than stop abruptly.
Why this confidence: Broad-based recent growth ↑, Management's quantified NII outlook ↑, Volatile trading and investment-banking revenue ↓
Measured by
- Quarterly net interest income$16Breported
- Standardized CET1 capital ratio11.2%reported
Price implies: 8.1% vs our 4.8% — one of several sets that fit this price
Evidence for
- In 2Q26, net interest income grew 0.09, average loans grew 0.08, asset-management fees grew 0.20, and every business segment contributed to year-over-year growth.[BAC 2Q26 presentation]· primary
Evidence against
- Management's initial 2026 net-interest-income outlook was only 0.05 to 0.07 and explicitly depended on rates, asset repricing, and balance-sheet growth.[BAC 2026 outlook]· primary
Operating margin34.0%medium
How derived: The latest bank-appropriate pretax margin was about 0.366, and this case normalizes it to 0.34 as recent fee strength and efficiency gains moderate.
Why this confidence: Five comparable quarterly income statements ↑, Provision sensitivity to the credit cycle ↓, Fee-revenue volatility ↓
Measured by
- Quarterly net interest income$16Breported
- Quarterly pretax margin36.6%derived
- Quarterly annualized net charge-off rate0.5%reported
Price implies: 38.8% vs our 34.0% — one of several sets that fit this price
Evidence for
- Quarterly pretax income rose from 8.668 billion in 2Q25 to 11.565 billion in 2Q26 while the efficiency ratio improved to 0.59.[BAC 2Q26 Form 10-Q]· primary
Evidence against
- Noninterest expense increased 0.08 in 2Q26 as BAC spent more on revenue-related compensation, people, brand, and technology.[BAC 2Q26 results]· primary
Tax rate20.0%high
How derived: The assumption adopts management's approximately 0.20 full-year expectation, which is also close to the 0.195 rate derived from first-half reported figures.
Why this confidence: Explicit management guidance ↑, First-half result aligns with guidance ↑, Quarterly timing of tax credits ↓
No tracked driver measures this assumption yet.
Evidence for
- Management explicitly expected a full-year 2026 effective tax rate of approximately 0.20.[BAC 2026 outlook]· primary
Evidence against
- The quarterly rate moved materially between 1Q26 and 2Q26, showing that timing and tax benefits can make the realized rate differ from the annual expectation.[BAC 2Q26 Form 10-Q]· primary
Reinvestment rate22.0%low
How derived: This assumes 0.22 of after-tax operating earnings is retained to fund moderate loan and risk-weighted-asset growth while keeping CET1 capital above regulatory requirements.
Why this confidence: Reported loan, capital, and distribution data ↑, Reinvestment must be inferred from regulatory capital needs ↓, Capital-rule uncertainty ↓
Measured by
- Quarterly annualized net charge-off rate0.5%reported
- Standardized CET1 capital ratio11.2%reported
Evidence for
- Risk-weighted assets increased as Global Banking and Global Markets expanded, while the standardized CET1 ratio was 0.112.[BAC 2Q26 Form 10-Q]· primary
Evidence against
- The bank distributed 8.0 billion to common shareholders in 2Q26 despite ongoing loan growth.[BAC 2Q26 results]· primary
Terminal growth2.5%low
How derived: This rate is below the roughly 0.04 sum of the Federal Reserve's longer-run real-growth and inflation medians, allowing for BAC's maturity and regulation.
Why this confidence: Official long-run growth and inflation framework ↑, Indefinite forecast horizon ↓, Mature industry structure ↓
No tracked driver measures this assumption yet.
Evidence for
- Federal Reserve participants projected median longer-run real GDP growth of 0.02 and PCE inflation of 0.02.[Federal Reserve June 2026 projections]· primary
Evidence against
- BAC is a mature systemically important bank whose growth and distributions remain constrained by capital, liquidity, and stress-test requirements.[BAC 2Q26 Form 10-Q]· primary
Bull
low confidence$81.03
IV / share
+28.5% vs $63.04
- Explicit cash flows
- $20.80
- Terminal value
- $60.22
- Net cash
- $0.00
- Intrinsic value / share
- $81.03
74.3% of the value rests on the terminal value — high dependency. A small change to terminal growth moves the valuation a lot — see terminal growth below.
Revenue growth11.0% → 8.5% → 6.5% → 5.0% → 4.0%low
How derived: Starting from 0.15 second-quarter growth, this path assumes continued loan expansion, asset repricing, and unusually strong wealth, trading, and investment-banking activity before gradual normalization.
Why this confidence: Broad 2Q26 revenue acceleration ↑, Cyclical capital-markets revenue ↓, Growth exceeds management's initial NII range ↓
Measured by
- Quarterly net interest income$16Breported
- Standardized CET1 capital ratio11.2%reported
Evidence for
- In 2Q26, total revenue grew 0.15, noninterest income grew 0.22, trading grew 0.33, investment-banking fees grew 0.50, and asset-management fees grew 0.20.[BAC 2Q26 results]· primary
Evidence against
- Management's original full-year net-interest-income outlook was only 0.05 to 0.07, and the filing notes that lower rates partially offset asset repricing and balance-sheet growth.[BAC 2026 outlook]· primary
Operating margin38.0%low
How derived: The latest bank-appropriate pretax margin was about 0.366, and this case raises it modestly as revenue continues outgrowing costs and credit losses remain controlled.
Why this confidence: Recent positive operating leverage ↑, Margin exceeds the latest reported quarter ↓, Credit and trading cyclicality ↓
Measured by
- Quarterly net interest income$16Breported
- Quarterly pretax margin36.6%derived
- Quarterly annualized net charge-off rate0.5%reported
Evidence for
- BAC delivered 0.066 of positive operating leverage in 2Q26, improved its efficiency ratio to 0.59, and reduced the credit-loss provision year over year.[BAC 2Q26 presentation]· primary
Evidence against
- Noninterest expense still increased 0.08, and the 2Q26 filing cautions that future credit losses and market conditions may be worse than expected.[BAC 2Q26 Form 10-Q]· primary
Tax rate19.0%medium
How derived: The assumption is slightly below management's 0.20 outlook because the first-half rate derived from reported tax expense and pretax income was approximately 0.195 and BAC benefits from recurring tax-preference investments.
Why this confidence: First-half reported rate ↑, Recurring tax-preference investments ↑, Assumption is below management guidance ↓
No tracked driver measures this assumption yet.
Evidence for
- First-half 2026 income-tax expense of 4.280 billion divided by pretax income of 21.969 billion produces an effective rate of approximately 0.195.[BAC 2Q26 Form 10-Q]· primary
Evidence against
- Management's stated full-year expectation was approximately 0.20 rather than 0.19.[BAC 2026 outlook]· primary
Reinvestment rate15.0%low
How derived: This assumes only 0.15 of after-tax operating earnings is retained because strong profitability generates capital internally and regulatory requirements still permit large distributions.
Why this confidence: Current profitability and distributions ↑, Continued balance-sheet growth ↓, Future stress-test requirements ↓
Measured by
- Quarterly annualized net charge-off rate0.5%reported
- Standardized CET1 capital ratio11.2%reported
Evidence for
- BAC generated 9.1 billion of quarterly net income and returned 8.0 billion through dividends and repurchases while maintaining a 0.112 standardized CET1 ratio.[BAC 2Q26 results]· primary
Evidence against
- Average loans increased 0.08 and risk-weighted assets rose, which can require more retained capital if that growth continues.[BAC 2Q26 Form 10-Q]· primary
Terminal growth3.2%low
How derived: This remains below the roughly 0.04 long-run nominal economic-growth benchmark but assumes BAC retains share through its national consumer, wealth, corporate-banking, and markets franchises.
Why this confidence: Rate remains below nominal economic-growth benchmark ↑, Indefinite forecast horizon ↓, Regulatory constraints on bank growth ↓
No tracked driver measures this assumption yet.
Evidence for
- Federal Reserve longer-run medians of 0.02 real growth and 0.02 inflation support a nominal economic-growth ceiling above this assumption.[Federal Reserve June 2026 projections]· primary
Evidence against
- BAC's scale and systemic importance subject it to extensive capital, liquidity, resolution, and stress-test constraints that can limit perpetual growth.[BAC 2Q26 Form 10-Q]· primary
Valuation robustness
reliability of the estimate, not a stock rating48 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- 72% of the intrinsic value rests on the terminal value — a small change to terminal growth moves the valuation a lot.→ terminal growth
- The reinvestment assumption is low-confidence.→ reinvestment
- The terminal growth assumption is low-confidence.→ terminal growth
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q3 2024 | 0.7% | — | — | 7.9B | -2.2% |
| Q1 2025 | 9.4% | — | — | 7.77B | -3.2% |
| Q2 2025 | 8.1% | — | — | 7.65B | -3.9% |
| Q3 2025 | 10.8% | — | — | 7.63B | -3.5% |
| Q1 2026 | 7.2% | — | — | 7.42B | -4.5% |
| Q2 2026 | 15.0% | — | — | 7.29B | -4.7% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
The latest available 10-year nominal Treasury par yield before the valuation date was 0.0478.
The trailing-12-month adjusted-payout implied equity risk premium published for the U.S. market on 2026-09-01 was 0.0414.
The most recently verified BAC closing quotation was 63.04 per common share.
Generated 9/5/2026, 2:48:59 PM · pipeline v1.2.0