Bank of America (NYSE:BAC) closed Friday at $57.88, down 0.53%, after touching a 52-week high of $59.20 the previous day. The slight pullback comes as the Federal Reserve's 2026 stress test details shift investor attention to the bank's corporate credit portfolio, with a dividend announcement still pending from the board next month.
The Fed's stress test results revealed that commercial and industrial loans represent the largest share of projected losses for Bank of America, accounting for $23.2 billion, or roughly 36% of the total $64.9 billion in estimated loan losses. Credit card losses followed at $17.2 billion (27%), while domestic commercial real estate losses were $7.1 billion. This composition marks a notable shift from previous tests where consumer credit often dominated.
Under the Fed's severely adverse scenario, Bank of America's stressed minimum common equity tier 1 (CET1) ratio would fall to 9.9%, down from its actual 11.4% at the end of 2025. The 1.5 percentage point decline was slightly below the average 1.6-point drop across all 32 banks tested. The scenario also projected a pre-tax loss of $12.5 billion, with $66.2 billion in pre-provision net revenue largely offset by $69.5 billion in provisions and other losses.
Despite the stress test outcomes, Bank of America maintained its existing $40 billion share buyback program but chose not to immediately raise its dividend, unlike several peers. JPMorgan Chase (NYSE:JPM) increased its quarterly dividend and announced a new $50 billion buyback, while Citigroup (NYSE:C), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), and Wells Fargo (NYSE:WFC) all declared dividend hikes following the Fed's results. Bank of America's board will decide on the next quarterly dividend in July.
The stock's relative performance on Friday was stronger than many competitors. Bank of America slipped 0.53%, outperforming JPMorgan's 1.91% decline, Citigroup's 2.25% drop, Wells Fargo's 1.04% fall, and Goldman Sachs' 4.33% loss. Trading volume reached approximately 48.76 million shares, about 35% above the 65-day average.
Looking ahead, Bank of America CEO Brian Moynihan has guided for a 15% increase in second-quarter trading revenue compared to the prior year, cautioning that year-over-year comparisons may appear elevated due to the "liberation quarter" last year. He also indicated that net interest income could reach the upper end of the bank's 6% to 8% growth target for 2026, supported by a 4.8% rise in household credit and debit card spending in April.
The upcoming trading week will be shortened due to the July 3 Independence Day holiday, with the New York Stock Exchange closed that day. Bank of America's second-quarter earnings are scheduled for release on July 14, which will provide further clarity on loan growth, reserve levels, and corporate credit trends. The unresolved dividend decision adds an element of uncertainty for income-focused investors ahead of the report.
