Bank of America reported third-quarter 2026 results overshadowed by a $1.21 billion regulatory penalty tied to anti-money laundering failures. Net income came in at $6.9 billion, or $0.91 per diluted share, compared with $8.3 billion, or $1.04 per share, a year earlier. Analysts had expected earnings of about $1.10 per share. Revenue was $30.0 billion, up 3% from a year ago but below the roughly $30.6 billion consensus estimate.
The charge stems from settlements announced on October 13 by the Office of the Comptroller of the Currency and the Treasury Department's Financial Crimes Enforcement Network. FinCEN assessed a $1.2 billion penalty, while the OCC added a $750 million civil penalty that was credited against the FinCEN total. As a result, Bank of America must pay $750 million under the OCC action and $450 million under the FinCEN order. The Treasury Department separately announced an $11.6 million settlement with the Office of Foreign Assets Control concerning apparent sanctions violations involving Iran, Russia, narcotics and terrorism.
The regulatory expense is non-tax-deductible and reduced diluted earnings by $0.17 per share. Excluding the charge, adjusted net income would have been $8.1 billion, or $1.08 per share, still below analyst expectations. Regulators found that Bank of America failed to report more than $5 billion in suspicious transactions, with more than $1 billion involving potential national security or priority illicit-finance risks, including suspected Chinese money-laundering networks and possible trade-based money laundering.
The bank admitted willful violations of the Bank Secrecy Act, and regulators said significant deficiencies persisted after a December 2024 OCC cease-and-desist order. Treasury Secretary Scott Bessent said the actions send a message that the biggest banks are not above the law. FinCEN is requiring independent reviews of historical suspicious activity reporting, transaction monitoring, customer due diligence and data governance.
Bank of America shares fell more than 8% during Wednesday's regular trading session before recovering part of the decline. At approximately 12:55 p.m. ET, the stock traded at $51.12, down 5.3% from the previous close. Despite the regulatory hit, the bank's core lending business showed strength: net interest income rose 8% to $16.4 billion, average loans and leases increased 6% to $1.23 trillion, and average deposits rose 2% to $2.02 trillion. Sales and trading revenue declined 5% to $5.1 billion, while investment banking fees fell 11% to $1.8 billion. The bank's Common Equity Tier 1 capital ratio stood at 10.9%, above regulatory requirements, and it repurchased $6.0 billion of common stock while paying $2.2 billion in common dividends during the quarter.
