Bank of America Stock Slides Despite Higher Profit Targets at First Investor Day Since 2011
Bank of America (BAC) shares fell on Wednesday even as the bank’s leadership raised profitability and growth targets during its first investor day in 14 years. The event, held in Boston’s Back Bay, was intended to reassure Wall Street that CEO Brian Moynihan can close the performance gap with rivals such as JPMorgan Chase and Wells Fargo.
The second-largest U.S. bank now targets a return on tangible common equity (ROTCE) between 16% and 18% over the next three to five years, up from 15.4% in the third quarter. The new range met analyst expectations but didn’t ignite enthusiasm—shares were down 1.7% in midday trading even as the S&P 500 rose 0.7%.
Performance Goals and Investor Reaction
Moynihan’s message was clear: responsible growth remains the bank’s north star, but profitability and efficiency will improve. Analysts, however, questioned the time horizon for results. UBS’s Erika Najarian said the longer timeline “raised early rumblings from investors.”
By comparison, JPMorgan Chase reported a 20% ROTCE in the third quarter—highlighting Bank of America’s continued lag behind its peers. Wells Fargo analyst Mike Mayo called the event a potential “sell-the-news” moment, noting the stock had rallied ahead of the meeting. Still, he expects higher earnings and returns to drive future gains.
Efficiency, Credit Quality, and Income Growth
Bank of America said it plans to lower its efficiency ratio—a key measure of profitability—to 55–59%, down from 62% in the third quarter. It also expects its net charge-off rate to hold steady between 0.5% and 0.55% “through the cycle,” indicating stable credit quality.
Meanwhile, net interest income—a primary driver of profitability—is projected to grow at a compound annual rate of 5% to 7% over the next five years, driven by asset repricing and organic expansion.
Repricing Legacy Assets
The bank acknowledged that its low-yielding securities portfolio—a byproduct of pandemic-era investments in U.S. agency mortgages—has constrained performance. Bank of America invested around $500 billion in securities yielding about 2% when the Federal Reserve slashed rates in 2020.
Those assets will finally roll off over the next decade. Between 2026 and 2031, the bank expects $450 billion to $490 billion of those holdings to be reinvested at higher yields. Analysts at Deutsche Bank described this repricing as “a built-in earnings lift” that should fuel better per-share growth starting in 2027.
Rebuilding Investor Confidence
Bank of America’s management team emphasized consistency, long-term profitability, and operational discipline—attributes they argue will drive shareholder value. Yet, many investors remain cautious, comparing its slower growth to faster-moving peers. “In the long run, the stock should follow earnings and returns,” Mayo noted. “Both seem to be heading higher, but it’s a question of patience.”