Bank of America Falls 5% as $1.2B Money Laundering Penalty Drives Earnings Miss; JPMorgan Chase and Wells Fargo Hold Steady

A one-time regulatory bill turned a solid lending quarter into an earnings miss for Bank of America (NYSE:BAC | BAC Price Prediction). Bank of America stock is at $51, down 5% in morning trading, after third-quarter 2026 results missed on revenue and earnings and absorbed a $1.2 billion money laundering penalty.

Meanwhile, JPMorgan Chase (NYSE:JPM) stock is at $330.59, down 0.3%, a far softer dip. Wells Fargo (NYSE:WFC) rounds out a trio of diversified U.S. lenders that don’t have to move together on a single bank’s result; WFC stock is down 0.62% and trading at $80.25.

The Financial Select Sector SPDR ETF (NYSEARCA:XLF) is flat, while the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is up 0.2%. The drop in Bank of America stock looks company-specific.

Money Laundering Penalty Triggers a Rare Earnings Miss

Bank of America posted adjusted earnings per share (EPS) of $1.08, missing the $1.10 consensus. Revenue of $29.96 billion fell short of the $30.58 billion estimate.

Regulators at the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network imposed the penalty a day before the results, citing failures in Bank Secrecy Act, anti-money laundering and sanctions safeguards and concluding the lender had effectively outsourced its compliance obligations. The non-tax-deductible charge cut generally accepted accounting principles (GAAP) EPS by $0.17, and it follows an enforcement order from nearly two years ago over the same weaknesses.

Lending Engine Keeps Growing Beneath the Charge

Underneath, Bank of America’s net interest income rose 8% to $16.45 billion on higher loan and deposit balances. Average loans climbed 6% to $1.23 trillion.

Chief Executive Brian Moynihan said in the release, “The team delivered organic growth, deepening client relationships and adding new ones. While investment banking and sales and trading revenues were lower, commercial lending grew in every client segment.”

Bank of America’s Global Wealth & Investment Management revenue grew 13%, Consumer Banking gained 4%, and the net charge-off ratio declined to 0.44%. The miss ended a streak of six consecutive quarterly beats.

Over the quarter, the bank bought back $6 billion of stock and paid $2.2 billion in dividends. It raised its dividend in July, and the quarterly payout now stands at $0.32 per share.

Wall Street Half Loses Momentum

Bank of America’s investment banking fees fell 11% to $1.8 billion. Fixed income, currencies and commodities trading revenue dropped 17% to $2.57 billion on weakness in mortgages, municipals and credit.

Its equities trading provided a partial offset, rising 11% to $2.51 billion. Management called its investment banking pipelines robust.

Moynihan also pointed to AI adoption. More than 200,000 employees use those tools, with over 300 approved use cases.

Remediation Costs Versus a Trading Rebound

Uncertainty remains over whether deal and trading activity recovers before ordered compliance remediation shows up in expenses. A growing loan book, rising net interest income and a one-time charge give the bank a sturdy base.

However, a second enforcement action raises the risk of heavier compliance spending, and Wall Street revenue could stay soft. Granted, Bank of America’s dividend increase and steady buybacks signal confidence in the company’s capital base. Still, investors should keep their BAC share positions modest.

Contact [email protected] for any questions or corrections.