Federal Reserve Stress Tests Show Strong Bank Performance
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 25 2026
0mins
Source: Fool
- Stress Test Results: The Federal Reserve's stress tests on 32 major banks revealed that all institutions maintained sufficient capital to withstand hypothetical extreme economic scenarios, capable of absorbing losses up to $708 billion, indicating their strong resilience during economic downturns.
- Leading Bank Performance: Charles Schwab achieved a stressed ratio exceeding 32%, significantly above the safe range of 9% to 12%, showcasing its exceptional risk management capabilities and further solidifying its market leadership.
- Shareholder Return Expectations: With the Fed freezing the 'stress capital buffer' requirements, banks will have more capital available for dividend increases and expanded share buyback programs, likely resulting in substantial returns for investors and driving stock prices higher.
- Economic Health Indicator: Despite macroeconomic challenges, the robust performance of banks signals that the economy is still functioning well, with ongoing credit supply and capital flow supporting households and businesses, thereby enhancing market confidence.
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Analyst Views on BAC
Wall Street analysts forecast BAC stock price to rise
19 Analyst Rating
15 Buy
4 Hold
0 Sell
Strong Buy
Current: 59.900
Low
55.00
Averages
61.64
High
71.00
Current: 59.900
Low
55.00
Averages
61.64
High
71.00
About BAC
Bank of America Corporation is a bank holding company and a financial holding company. Its segments include Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking and Global Markets. Consumer Banking segment offers a range of credit, banking and investment products and services to consumers and small businesses. The GWIM includes two businesses: Merrill Wealth Management, which provides tailored solutions to meet clients' needs through a full set of investment management, brokerage, banking and retirement products and Bank of America Private Bank, which provides comprehensive wealth management solutions. Global Banking segment provides a range of lending-related products and services, integrated working capital management and treasury solutions, and underwriting and advisory services. Global Markets segment offers sales and trading services and research services to institutional clients across fixed-income, credit, currency, commodity, and equity businesses.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Bank of America Faces Performance Pressure Ahead of Earnings
- Underperformance: Bank of America (NYSE:BAC) has only risen about 7.5% this year, significantly trailing the S&P 500 and Nasdaq Bank Index, indicating relative weakness in the banking sector that may affect investor confidence.
- Bond Yield Drag: The bank holds nearly $915 billion in bonds yielding only 2.77%, with $515 billion locked in held-to-maturity accounts, resulting in an unrealized loss of $81 billion, which will continue to pressure earnings.
- Cautious Market Expectations: Analysts expect Bank of America to report $30.58 billion in revenue and $1.14 earnings per share in its upcoming Q2 earnings on July 14, indicating slight growth but with the market remaining cautious about its ability to exceed expectations, especially given its current high valuation.
- Investment Banking Outlook: Despite challenges, Bank of America achieved a 16% return on tangible common equity (ROTCE) in Q1 and served as a lead underwriter for major IPOs, showcasing the potential of its investment banking segment to drive future growth.
See More
Bank of America Passes Stress Test, Stock Rises
- Strong Stress Test Results: Bank of America excelled in the Fed's 2026 stress tests, being one of 32 financial institutions to pass, which led to a stock price increase of over 10% in June, instilling confidence in investors and indicating future dividend growth.
- Launch of New Payment Product: The bank introduced a new cross-border real-time payments product designed for high-volume, low-value transfers, with expectations that P2P payment demand will rise by 58% and B2C by 132% by 2032, potentially increasing the bank's market share.
- Dividend Growth Expectations: While Bank of America is cautious about announcing dividend increases, the market anticipates it will follow other major banks in raising dividends by at least 10%, which will enhance investor confidence and attract more capital inflows.
- Analyst Price Target Increases: Analysts from Morgan Stanley and Truist Securities raised their price targets for Bank of America to $67 and $64 respectively, both maintaining buy ratings, reflecting optimistic market expectations for the bank's future performance.
See More
Federal Reserve Stress Test Results Favor Bank of America
- Strong Stress Test Performance: Bank of America excelled in the Federal Reserve's 2026 stress tests, being one of the 32 financial institutions to pass, which is expected to lead to a dividend increase, further attracting investor interest.
- Significant Stock Price Increase: Following the positive stress test results, Bank of America's stock rose over 10% in June, reflecting market confidence in its financial health and enhancing its position in a competitive financial landscape.
- Launch of New Payment Product: Bank of America introduced a new cross-border real-time payments product designed for high-volume, low-value transfers, with P2P and B2C payment demand projected to grow by 58% and 132% by 2032, respectively, which will further enhance its market share.
- Analyst Price Target Increases: Analysts from Morgan Stanley and Truist Securities raised their price targets for Bank of America to $67 and $64, respectively, indicating a positive outlook on its future performance and reinforcing investor confidence.
See More
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- Potential Sale Impact: Analysts noted that a sale of Fiserv's STAR or Accel debit network to major banks like JPMorgan, Bank of America, Wells Fargo, or PNC Financial could significantly enhance these banks' debit economics and be highly accretive to Fiserv's earnings.
- Regulatory Scrutiny Risks: While the potential transaction could yield benefits, Raymond James cautioned that selling the debit card network may attract significant regulatory scrutiny, particularly as it could be viewed as an attempt to circumvent the Durbin Amendment, leading to higher fees for merchants.
- Leadership Transition: Fiserv President Dhivya Suryadevara resigned effective July 7, yet she will remain in a non-executive role until July 31 to facilitate a transition, which may impact the company's strategic direction moving forward.
- Retail Market Reaction: Fiserv's stock garnered a 102% increase in retail attention over the past 24 hours, despite a nearly 20% decline in share price this year, indicating a cautious yet interested sentiment among investors regarding the potential sale.
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- Acquisition Scale: Vertex Pharmaceuticals has agreed to acquire Crinetics Pharmaceuticals for $85 per share in cash, totaling approximately $10 billion, with the deal expected to close in Q3 2026, marking a significant step for Vertex into a new disease area.
- Asset Value of Crinetics: Crinetics brings the drug PALSONIFY, the first approved once-daily oral therapy for adults with acromegaly, which is expected to fill a market gap; combined with other drugs, Crinetics' assets have a peak sales potential exceeding $5 billion annually.
- Financing Structure Analysis: The acquisition will be financed through a mix of cash and debt, with Vertex planning to utilize $4.5 billion in bridge financing alongside its $13 billion in cash and marketable securities, ensuring the feasibility of the acquisition without over-leveraging.
- Strategic Significance and Future Outlook: Although Vertex expects the deal to contribute to non-GAAP operating income only by 2029, this acquisition aligns with its strategy targeting serious diseases, addressing the company's diversification needs and signaling growth potential in new areas.
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Vertex Acquires Crinetics for $85 Per Share in Cash
- Acquisition Overview: Vertex has agreed to acquire Crinetics for $85 per share in cash, totaling approximately $10 billion in equity value, with the deal expected to close in Q3 2026, marking a significant expansion into a new disease area for Vertex.
- New Drug Assets: Crinetics brings PALSONIFY, the first and only once-daily oral therapy approved for acromegaly, which is expected to fill a market gap; combined with other candidates, these assets boast over $5 billion in peak sales potential.
- Financing Structure: The acquisition will be funded through a mix of cash on hand and debt, with Vertex securing $4.5 billion in bridge financing, while holding approximately $13 billion in cash and marketable securities, indicating strong financial health.
- Strategic Implications: This acquisition not only provides Vertex with a new growth engine to meet diversification needs but also aligns with its strategy of targeting serious diseases, with positive impacts on adjusted operating income anticipated by 2029.
See More
Bank of America Faces Performance Pressure Ahead of Earnings
- Underperformance: Bank of America (NYSE:BAC) has only risen about 7.5% this year, significantly trailing the S&P 500 and Nasdaq Bank Index, indicating relative weakness in the banking sector that may affect investor confidence.
- Bond Yield Drag: The bank holds nearly $915 billion in bonds yielding only 2.77%, with $515 billion locked in held-to-maturity accounts, resulting in an unrealized loss of $81 billion, which will continue to pressure earnings.
- Cautious Market Expectations: Analysts expect Bank of America to report $30.58 billion in revenue and $1.14 earnings per share in its upcoming Q2 earnings on July 14, indicating slight growth but with the market remaining cautious about its ability to exceed expectations, especially given its current high valuation.
- Investment Banking Outlook: Despite challenges, Bank of America achieved a 16% return on tangible common equity (ROTCE) in Q1 and served as a lead underwriter for major IPOs, showcasing the potential of its investment banking segment to drive future growth.
See More
Bank of America Passes Stress Test, Stock Rises
- Strong Stress Test Results: Bank of America excelled in the Fed's 2026 stress tests, being one of 32 financial institutions to pass, which led to a stock price increase of over 10% in June, instilling confidence in investors and indicating future dividend growth.
- Launch of New Payment Product: The bank introduced a new cross-border real-time payments product designed for high-volume, low-value transfers, with expectations that P2P payment demand will rise by 58% and B2C by 132% by 2032, potentially increasing the bank's market share.
- Dividend Growth Expectations: While Bank of America is cautious about announcing dividend increases, the market anticipates it will follow other major banks in raising dividends by at least 10%, which will enhance investor confidence and attract more capital inflows.
- Analyst Price Target Increases: Analysts from Morgan Stanley and Truist Securities raised their price targets for Bank of America to $67 and $64 respectively, both maintaining buy ratings, reflecting optimistic market expectations for the bank's future performance.
See More
Federal Reserve Stress Test Results Favor Bank of America
- Strong Stress Test Performance: Bank of America excelled in the Federal Reserve's 2026 stress tests, being one of the 32 financial institutions to pass, which is expected to lead to a dividend increase, further attracting investor interest.
- Significant Stock Price Increase: Following the positive stress test results, Bank of America's stock rose over 10% in June, reflecting market confidence in its financial health and enhancing its position in a competitive financial landscape.
- Launch of New Payment Product: Bank of America introduced a new cross-border real-time payments product designed for high-volume, low-value transfers, with P2P and B2C payment demand projected to grow by 58% and 132% by 2032, respectively, which will further enhance its market share.
- Analyst Price Target Increases: Analysts from Morgan Stanley and Truist Securities raised their price targets for Bank of America to $67 and $64, respectively, indicating a positive outlook on its future performance and reinforcing investor confidence.
See More
Fiserv's Potential Network Sale Attracts Attention
- Potential Sale Impact: Analysts noted that a sale of Fiserv's STAR or Accel debit network to major banks like JPMorgan, Bank of America, Wells Fargo, or PNC Financial could significantly enhance these banks' debit economics and be highly accretive to Fiserv's earnings.
- Regulatory Scrutiny Risks: While the potential transaction could yield benefits, Raymond James cautioned that selling the debit card network may attract significant regulatory scrutiny, particularly as it could be viewed as an attempt to circumvent the Durbin Amendment, leading to higher fees for merchants.
- Leadership Transition: Fiserv President Dhivya Suryadevara resigned effective July 7, yet she will remain in a non-executive role until July 31 to facilitate a transition, which may impact the company's strategic direction moving forward.
- Retail Market Reaction: Fiserv's stock garnered a 102% increase in retail attention over the past 24 hours, despite a nearly 20% decline in share price this year, indicating a cautious yet interested sentiment among investors regarding the potential sale.
See More
Vertex Acquires Crinetics for $10 Billion
- Acquisition Scale: Vertex Pharmaceuticals has agreed to acquire Crinetics Pharmaceuticals for $85 per share in cash, totaling approximately $10 billion, with the deal expected to close in Q3 2026, marking a significant step for Vertex into a new disease area.
- Asset Value of Crinetics: Crinetics brings the drug PALSONIFY, the first approved once-daily oral therapy for adults with acromegaly, which is expected to fill a market gap; combined with other drugs, Crinetics' assets have a peak sales potential exceeding $5 billion annually.
- Financing Structure Analysis: The acquisition will be financed through a mix of cash and debt, with Vertex planning to utilize $4.5 billion in bridge financing alongside its $13 billion in cash and marketable securities, ensuring the feasibility of the acquisition without over-leveraging.
- Strategic Significance and Future Outlook: Although Vertex expects the deal to contribute to non-GAAP operating income only by 2029, this acquisition aligns with its strategy targeting serious diseases, addressing the company's diversification needs and signaling growth potential in new areas.
See More
Vertex Acquires Crinetics for $85 Per Share in Cash
- Acquisition Overview: Vertex has agreed to acquire Crinetics for $85 per share in cash, totaling approximately $10 billion in equity value, with the deal expected to close in Q3 2026, marking a significant expansion into a new disease area for Vertex.
- New Drug Assets: Crinetics brings PALSONIFY, the first and only once-daily oral therapy approved for acromegaly, which is expected to fill a market gap; combined with other candidates, these assets boast over $5 billion in peak sales potential.
- Financing Structure: The acquisition will be funded through a mix of cash on hand and debt, with Vertex securing $4.5 billion in bridge financing, while holding approximately $13 billion in cash and marketable securities, indicating strong financial health.
- Strategic Implications: This acquisition not only provides Vertex with a new growth engine to meet diversification needs but also aligns with its strategy of targeting serious diseases, with positive impacts on adjusted operating income anticipated by 2029.
See More
