Bank of America was on the upswing for much of 2026. It is poised to enter 2027 on a downbeat note.
After the bank's stock surged to levels not seen since before the 2008-2009 financial crisis, it sailed to 19 record highs this year. Chief Executive Officer Brian Moynihan and his team outlined fresh financial targets in late 2025, touting the bank's growth potential and seeking to reinvigorate the share price.
And the bank, like its competitors, has performed well against a solid U.S. economic backdrop. A boom in Wall Street trading and dealmaking has also lifted its fortunes in recent months.
The firm is now operating in a different light than it was just weeks ago.
On Tuesday, the U.S. Treasury Department said it would fine Bank of America $1.2 billion for violating laws meant to prevent financial crimes such as money laundering.
On Wednesday, after the bank's third-quarter earnings report fell short of analysts' expectations and reflected the fine's hit to earnings, the stock fell as much as 8%. Shares ended the day lower by 4.8%, the most negative post-earnings report reaction the stock has had in six years.
Moynihan and the bank's chief financial officer, Alastair Borthwick, said expenses tied to resolving the problems raised by regulators were already accounted for in financial projections, and that earlier performance targets, such as return on tangible common equity, were unchanged. Work to fix the internal compliance systems at the core of money-laundering-prevention efforts is already underway, they said.
But challenges remain, and the consent order issued by financial regulators is likely to be an overhang to the bank's share price and reputation.
"We will be watching if this spreads to other areas -- we have not-so-fond memories of Wells Fargo and the continual issues they had years ago," says Greg Halter, the director of research at Carnegie Investment Counsel, a Bank of America shareholder.
Halter, a former bank examiner at the Federal Reserve Bank of Cleveland, said he would like to see how the bank works to improve transaction-monitoring systems and processes for filing suspicious activity reports, known as SARs. "Management must address this area swiftly," he says.
The bank's "credibility remains the key burden of proof after this quarter and the settlement," Truist Securities analysts led by John McDonald told clients on Wednesday.
Questions from investors "around potential capital constraints and expense pressures from consent order remediation [are] still likely to linger until proven out over a few quarters," said McDonald, who maintained a Buy rating on Bank of America's shares.
Several analysts viewed the market's response as an overreaction, especially as measures of the bank's health, such as clients' credit quality, remained on solid footing.
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