Which Bank Stock to Buy as Fed Lowers Rate: Bank of America or Truist?

By Swayta Shah | September 26, 2025, 10:31 AM

Bank of America BAC is one of the "Big Four" global banks, while Truist Financial TFC is a prominent regional bank. BAC leverages its massive scale, branch expansion strategy and diversified financial services, while TFC is blending its targeted regional branch expansion with cutting-edge digital banking.

As the Federal Reserve has started an interest rate cut cycle, it is important to understand how these two large banks navigate the evolving operating environment. Let’s analyze Bank of America and Truist Financial’s business models to determine which one presents a solid investment opportunity.

The Case for Bank of America

Bank of America, one of the most asset-sensitive banks in America, is likely to witness a modest decline in net interest income (NII) over the medium term as the Fed continues to lower interest rates. Earlier this month, the central bank cut rates by 25 basis points (bps) and signaled two more this year amid easing inflation and a weakening labor market.

The impact of the current rate cut cycle on BAC’s NII is likely to be minimal this year. The company projects NII to rise 6-7% in 2025, reaching $15.5-$15.7 billion in the fourth quarter, even if the central bank initiates rate cuts. This is based on the resilient consumer behavior and steady demand for loans.

Moreover, Bank of America’s aggressive financial center expansion strategy across the United States will solidify customer relationships and tap into new markets, driving NII growth over time. The company continues to align its banking centers according to customer needs. These efforts, along with the success of the person-to-person money transfer system Zelle and the digital financial assistant Erica, will enable BAC to offer enhanced digital services and cross-sell several products, including mortgages, auto loans and credit cards.

The shift toward easier monetary policy is expected to support client activity, deal flow and asset values. Thus, Bank of America’s non-interest income streams will likely see meaningful upside. Lower rates are expected to aid the company’s asset quality, as declining rates will ease debt-service burdens and improve borrower solvency.

As the bank embarks on an ambitious expansion plan to open financial centers in new and existing markets, operating expenses are likely to remain elevated in the near term. BAC expects non-interest expenses to rise moderately in 2025.

The Case for Truist Financial

Unlike BAC, Truist Financial is less sensitive to interest rate cycles. Since the divestiture of its insurance subsidiary in 2024, the company has been trying to strengthen its balance sheet through repositioning and making efforts to enhance its non-interest revenue sources.

In August, TFC announced a growth plan – opening 100 new branches and renovating more than 300 existing locations in high-growth opportunity cities in the next five years and investing in its business banking ecosystem -- to capitalize on growth opportunities in dynamic U.S. markets while strengthening its digital capabilities.

Additionally, the company is focusing on wealth management and expects a broad-based recovery in trading and investment banking businesses to drive non-interest income higher. This will also help alleviate Truist’s dependence on spread income to sustain top-line growth as rates come down.

For 2025, TFC expects NII to grow almost 3% driven by loan growth and two 25-bp rate cuts alongside the benefits of fixed-rate asset repricing. Management expects to reprice nearly $27 billion of fixed-rate loans and securities in the third and fourth quarters of 2025.

Like BAC, the company’s asset quality is expected to benefit from relatively lower rates. As Truist gets on with its branch expansion plan, upgrade technology and hire personnel to drive commercial banking business, operating expenses will likely remain high. The company expects adjusted non-interest expenses to rise approximately 1% this year.

TFC & BAC: Price Performance, Valuation & Other Comparisons

This year, TFC and BAC shares have risen 5.4% and 17.9%, respectively. Hence, in terms of price performance, Bank of America has a clear edge over TFC.