BAC

Bank of America delivered a mixed quarter that underscores the tension between its diversified consumer and commercial franchises and a softer capital-markets environment. Net income of $6.9 billion, or $0.91 per share, fell short of expectations, though adjusted earnings of $1.08 per share (excluding a $1.2 billion non-tax-deductible regulatory settlement charge) showed underlying resilience. The headline miss masks a company firing on multiple cylinders in its core banking businesses: consumer deposits grew for a sixth consecutive quarter, commercial loans expanded across every segment, wealth management client balances topped $5 trillion for the first time, and net interest income rose 8% year-over-year to $16.6 billion. The regulatory settlement, resolving a compliance matter with the OCC and FinCEN, was a shock to investors despite management's prior assurances that remediation costs were embedded in the run rate, and it has clearly dented confidence in the stock, which opened down 7-8%. However, the settlement also provides clarity: management has committed the resources, thousands of employees are dedicated to the work, and the company expects to complete remediation on schedule. The real story for investors is the trajectory of net interest income and operating leverage. Management raised full-year 2026 NII guidance to 8% growth and now projects 8% or higher for 2027, a material upgrade from the original 5%-7% medium-term target. This improvement is being driven not by rate hikes alone but by disciplined deposit growth (non-interest-bearing deposits up nearly