Bank of America Stock Slides 12.9% YTD: Time to Buy the Dip or Wait?

This year is turning out to be a bad one for Bank of America BAC. The stock is down 12.9% after posting two consecutive years of double-digit gains. 

Also, BAC stock is trailing the S&P 500 Index, which is down 1%. Its close peers, JPMorgan JPM and Citigroup C, have fared better. 

YTD Price Performance
 

So, why is investor sentiment toward BAC bearish? While nothing seems to be fundamentally wrong with the company, external factors, including the U.S.-Iran war and AI-related apprehensions, are leading to a pessimistic stance.

Let’s assess whether this pullback presents a potential buying opportunity. Let’s analyze Bank of America’s fundamentals to understand whether this is the right time to buy the stock.

Key Factors to Keep an Eye on for Bank of America

Interest Rate Cuts: The Federal Reserve slashed rates three times last year, to a range of 3.5% to 3.75%, following a 100-basis-point (bp) cut in 2024. Being one of the most interest rate-sensitive U.S. banks, lower interest rates are expected to weigh on BAC’s net interest income (NII). Yet, fixed-rate asset repricing, higher loan and deposit balances and a gradual fall in funding costs are expected to offset the adverse impact of lower rates. 

As rates decline, lending activity is set to improve. Also, easing regulatory capital requirements will help channel excess capital into loan growth, particularly within resilient commercial and consumer segments. Hence, Bank of America is likely to witness a decent demand for loans, which will support NII expansion. Over the medium term, the company expects loans and deposits to witness a CAGR of 5% and 4%, respectively. 
 
Bank of America projects a 5-7% year-over-year increase in NII for 2026, with the first-quarter number likely to grow 7%. JPMorgan and Citigroup are expected to demonstrate resilience and steady growth in NII. For 2026, JPM expects NII to be almost $104.5 billion, up 9% from $95.9 billion in 2025. Further, C projects 2026 NII to rise 5-6% year-over-year.

Network Expansion & Digital Reach: Bank of America is highly focused on its financial centers as a core part of its growth strategy, combining digital and physical convenience for clients. The company operates 3,628 financial centers nationwide and is actively expanding its footprint, particularly in high-growth markets. Since 2019, it has opened 300 new financial centers and renovated more than 100.

BAC has entered 18 new markets since 2014 and plans to open financial centers in six additional markets through 2028. This expansion has already added 170 new financial centers and $18 billion in incremental deposits in those markets. The bank views the physical network as critical to driving core deposit and account growth, even in a heavily digital era, thanks to client preference for local, trusted in-person advice and expanded relationship opportunities.

The bank's strategic investment in new financial centers and expansion into new markets reflects a broader industry shift toward optimizing branch networks to deepen customer relationships and tap into new business opportunities. In this competitive environment, the ability to blend digital convenience with in-person expertise is expected to give Bank of America long-term leverage in the evolving banking landscape.

The company plans to continue strengthening its technology initiatives and spend heavily on these. These efforts help it attract and retain customers and boost cross-selling opportunities.

Fortress Balance Sheet & Solid Liquidity: Bank of America’s liquidity profile remains solid. As of Dec. 31, 2025, average global liquidity sources totaled $975 billion. The company’s investment-grade long-term credit ratings of A1, A- and AA- from Moody’s, S&P Global Ratings and Fitch Ratings, respectively, and a stable outlook facilitate easy access to the debt market.

BAC continues to reward shareholders handsomely. The company cleared the 2025 stress test conducted by the Fed and raised the dividend by 8% to 28 cents per share. In the past five years, it has raised dividends five times, with an annualized growth rate of 8.64%. 

BAC’s Historical Dividend Trend
 

JPMorgan and Citigroup cleared their stress tests and announced higher quarterly dividends. JPMorgan declared a quarterly dividend of $1.50 per share, representing a rise of 7% from the prior payout. Citigroup announced an increase in its quarterly dividend by 7% to 60 cents per share.

Additionally, Bank of America has announced a new share repurchase plan under which it is authorized to buy back $40 billion worth of shares. The company intends to buy back shares worth $4.5 billion every quarter in the near term. 

Investment Banking (IB) Business: As global deal-making came to a grinding halt at the beginning of 2022, it weighed heavily on Bank of America’s IB business. Though the company’s total IB fees plunged in 2022 and 2023, the trend reversed thereafter. In 2024, the company’s IB fees soared 31.4% year over year. In 2025, IB fees increased 8.4% on a year-over-year basis. Despite the near-term geopolitical headwinds, the market for global mergers and acquisitions (M&As) has been improving, and the company will continue to witness solid growth in IB fees, driven by a healthy IB pipeline.
 
Additionally, Bank of America targets mid-single-digit CAGR in IB fees and a 50 to 100-bp market share gain over the medium term, building on its 136-bp gain as of the third quarter of 2025. Management plans to deepen integration between corporate and IB, expand middle-market coverage and pursue more large deals. Growth will be driven by AI-enabled insights, senior talent and holistic capital solutions, including private credit and alternative investments, while leveraging its global client reach across 87 jurisdictions.

Asset Quality: Bank of America’s asset quality has been deteriorating. While the company recorded negative provisions in 2021, a substantial jump in provisions occurred in the following years due to a worsening macroeconomic outlook. The metric surged 115.4% in 2022, 72.8% in 2023 and 32.5% in 2024. Net charge-offs (NCOs) grew 74.9% in 2023 and 58.8% in 2024. 

Though both provisions and NCOs declined last year, asset quality is less likely to improve much in the near term. BAC remains vigilant about the effects of continuous high rates on its loan portfolio. The impact of trade policy and the ongoing U.S.-Iran conflict are likely to put pressure on prices, thus keeping inflation high in the near term.

Bank of America’s Earnings & Valuation Analysis

Over the past month, the Zacks Consensus Estimate for 2026 and 2027 earnings has been revised upward to $4.32 and $4.95, respectively, indicating growth of 13.4% and 14.5%. 

Bank of America Earnings Estimates
 

Bank of America stock is currently trading at a 12-month trailing price-to-tangible book (P/TB) of 1.74X, which is below the industry’s 2.92X. This shows the stock is trading at a discount.

P/TB Ratio (TTM)
 

BAC stock is inexpensive compared with JPMorgan, which has a P/TB of 2.86X. On the other hand, it is trading at a premium compared with Citigroup’s P/TB of 1.17X.

How to Play Bank of America Stock Now

While Fed cuts can hurt BAC’s NII in the near term, repricing of fixed-rate assets, improving deposit costs and rising loan/deposit balances should help offset headwinds, with management targeting 5-7% NII growth in 2026. With a potential pickup in lending as rates ease and capital rules relax, the fundamental backdrop remains constructive.

BAC also has multiple levers that can compound returns. Its expanding physical network, paired with deep digital engagement, supports core deposit growth and cross-sell, while the IB cycle is recovering and management is targeting share gains. With a fortress liquidity profile, an 8% dividend hike and a $40B buyback plan, shareholders are paid to hold, especially with the stock still trading at a discount to the industry.

However, investors should avoid buying BAC stock right now as more clarity is necessary on the macro and geopolitical fronts to understand the direction of interest rates and economic growth in 2026. However, those who have already invested can retain it for robust long-term returns.

At present, Bank of America carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research