BofA Q3 profit falls 17% to $6.93B on $1.2B regulatory charge; buybacks hit $19.3B

The current filing discloses a new $1.2 billion non-tax-deductible charge in Q3 2026 for civil money penalties from OCC, FinCEN, and OFAC regulatory resolutions. This charge was not present in the prior-year filing and directly reduced net income for the quarter.

Quarterly net income declined 17% year-over-year to $6.9 billion, driven by the $1.2 billion regulatory settlement charge and lower noninterest income, partially offset by higher net interest income. Nine-month net income increased 8% to $24.6 billion.

Noninterest expense rose sharply in Q3 2026, primarily due to the $1.2 billion regulatory settlement charge, higher revenue-related expenses, and continued investments in technology and marketing. The prior-year increase was driven by investments in people, technology, and brand.

The effective tax rate rose to 22.7% in Q3 2026 from 19.9% a year earlier, driven by the non-tax-deductible regulatory settlement charge. The prior-year ETR was lower due to recurring tax preference benefits from renewable energy and affordable housing credits.

Net interest income grew 8% year-over-year in Q3 2026, driven by loan and deposit growth, higher Global Markets activity, and fixed-asset repricing, partially offset by lower interest rates. The prior-year increase was driven by Global Markets activity, fixed-asset repricing, and deposit and loan growth.

Quarterly noninterest income declined 2% year-over-year, driven by lower market making and investment banking fees, partially offset by higher investment and brokerage services. Nine-month noninterest income rose 16% on higher investment and brokerage services and investment banking fees.

Common equity tier 1 capital ratio declined to 10.9% at September 30, 2026 from 11.6% a year earlier, reflecting higher risk-weighted assets and capital returns to shareholders.

Common stock repurchases increased to $19.3 billion in the first nine months of 2026 from $15.1 billion in the prior-year period, reflecting higher capital returns to shareholders.

The quarterly common stock dividend increased 14% to $0.32 per share from $0.28 per share a year earlier.

The current filing provides new detail on remedial actions required by the FinCEN consent order and the previously disclosed December 2024 OCC consent order, including independent consultant reviews of historical transactions and BSA/AML data governance.

Net interest income increased for both the three and nine months ended September 30, 2026 compared to the same periods in 2025. The three-month figure rose from $15,233 million to $16,449 million, and the nine-month figure rose from $44,346 million to $48,191 million. This reflects higher interest income on loans and leases and lower interest expense on deposits and borrowings.

Noninterest income increased for both periods, driven by higher asset management fees, brokerage fees, and investment banking fees. The three-month total rose from $12,855 million to $13,509 million, and the nine-month total rose from $37,571 million to $43,597 million. Market making and similar activities declined in the three-month period but increased over nine months.

Gains and losses related to assets and liabilities accounted for under the fair value option swung significantly. For the three months ended September 30, 2026, total gains were $3,079 million compared to a loss of $857 million in the prior year. For the nine months, total gains were $495 million compared to $323 million. The swing was driven by changes in long-term debt and trading account assets.

Interest rate swap notional amounts increased significantly from $26,751.3 billion to $0.0M. Gross derivative assets and liabilities also increased, reflecting higher trading and hedging activity.

The carrying value of long-term debt designated in fair value hedging relationships increased, and the cumulative fair value adjustment changed from a positive $12 million to a negative $9,573 million. This reflects significant changes in interest rates and hedging activity.

The after-tax net loss on derivatives in accumulated OCI increased from $2.4 billion to $4.9 billion, indicating larger unrealized losses on cash flow hedges. This could affect future earnings when reclassified.

Nonrecurring fair value adjustments on loans held-for-sale increased, with losses of $30 million and $56 million for the three and nine months ended September 30, 2026, compared to a loss of $1 million and a gain of $49 million in the prior year. This suggests higher impairment or lower valuations on loans held for sale.

The carrying value of loans increased from $1,129,340 million to $1,215,776 million, and the fair value increased correspondingly. This reflects loan growth during the period.

Total Corporation net income for the three months ended September 30, 2026 was $6,933 million, down from $8,469 million in the prior year. Consumer Banking and Global Wealth & Investment Management net income increased, while Global Banking and Global Markets declined. All Other loss widened.

For the nine months ended September 30, 2026, total Corporation net income increased to $24,591 million from $22,981 million. All segments showed improvement except All Other, which had a larger loss.