Bank of America Profit Falls 17% on $1.2 Billion Compliance Charge as Loans Grow

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Bank of America reported a sharp decline in third-quarter profit Wednesday after recording a $1.2 billion charge tied to U.S. anti-money-laundering enforcement, even as its loan balances and net interest income increased.

The Charlotte-based bank earned $6.93 billion in the quarter ended September 30, down from $8.33 billion a year earlier, according to its October 14 earnings release filed with the Securities and Exchange Commission. Diluted earnings per share fell to 91 cents from $1.04. Revenue, net of interest expense, rose to approximately $30 billion from $29 billion.

The company separately presented adjusted net income of $8.1 billion, or $1.08 per diluted share, excluding the regulatory charge. That adjusted figure is a non-GAAP measure; the reported $6.93 billion is the accounting result. The distinction matters because removing a penalty from a comparison can help explain operating trends but does not eliminate the financial cost.

The charge follows consent orders announced October 13 by the Office of the Comptroller of the Currency and the Financial Crimes Enforcement Network concerning aspects of the bank’s U.S. Bank Secrecy Act, anti-money-laundering and economic-sanctions compliance programs. The bank’s filing describes the charge as non-tax-deductible. Regulators’ allegations and findings should be read in the original orders rather than treated as evidence that every suspicious transaction involved proven criminal activity.

Lending expands even as profit declines

Bank of America’s total loans and leases reached $1.251 trillion at quarter-end, compared with $1.166 trillion one year earlier. Average loans and leases were approximately $1.226 trillion, versus $1.153 trillion in the year-earlier quarter. These figures cover the bank’s full lending business; they are not a measure of residential mortgage originations.

Net interest income on a generally accepted accounting principles basis rose to $16.45 billion from $15.23 billion in the third quarter of 2025. The bank attributed growth in interest income to higher balances and an improved yield environment. Rising rates can increase returns on some assets, but they also raise funding costs and can reduce demand for new mortgages.

Consumer Banking produced $11.57 billion in quarterly revenue and $3.52 billion in net income, compared with $11.17 billion and $3.44 billion, respectively, a year earlier. Its average loans and leases were broadly flat at about $321 billion. These segment figures encompass credit cards, deposits and other consumer products; they should not be presented as a residential-mortgage breakdown.

Credit quality remained mixed. The bank recorded $1.269 billion in provisions for credit losses in the quarter, slightly below $1.295 billion a year earlier. Net charge-offs totaled $1.349 billion, compared with $1.367 billion. Total nonperforming loans, leases and foreclosed properties were $5.649 billion at September 30, versus $5.470 billion one year earlier.

Those aggregate figures offer a broad indication of credit performance but do not establish the direction of mortgage delinquencies on their own. The earnings materials also exclude certain fully insured home loans from the nonperforming-loan measure, making definitions important when comparing figures across institutions.

Why mortgage and real estate executives should watch

Large banks influence housing finance through their lending operations, warehouse facilities, deposits, capital markets desks and holdings of mortgage-related securities. The financial strength of those businesses affects the availability and pricing of credit even when the bank’s earnings headline is driven by non-mortgage events.

The bank’s fixed-income, currencies and commodities trading revenue declined to $2.565 billion from $3.092 billion a year earlier. That segment includes activity beyond mortgage securities, so the decline cannot be attributed entirely to the housing market. Still, weaker fixed-income results come as higher Treasury yields and volatile mortgage-backed-security spreads challenge the broader industry.

The regulatory action also underscores the cost of inadequate financial-crime controls. Mortgage lenders, title firms and settlement providers operate under their own compliance obligations and exposure to fraud, but Bank of America’s enforcement matter is not evidence of deficiencies at those other businesses. The relevant lesson is the financial and reputational importance of demonstrable transaction monitoring and effective escalation procedures.

The bank’s results arrive one day after several other major lenders reported third-quarter earnings, adding to the picture of a financial sector facing strong interest income alongside pressure from higher rates and uncertain borrower demand. WRE News reported Tuesday on the mortgage-related results from Wells Fargo and JPMorgan Chase.

Bank of America did not provide a standalone residential mortgage origination total in the earnings release reviewed for this article. A housing-specific assessment of its quarterly mortgage production would require additional segment disclosures or filings. The confirmed development is a 17% year-over-year decline in reported net income, driven substantially by the $1.2 billion regulatory charge, while aggregate lending and net interest income increased.