Key Stats for Bank of America Stock
- Price change for Bank of America stock in last 6 months: 10%
- $BAC Stock Price as of Sep. 30: $54
- 52-Week High: $65
- $BAC Stock Price Target: $69
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What Happened?
Bank of America’s (BAC) Merrill Lynch unit will pay $39 million to settle a class action over cash sweep accounts. The settlement papers were filed late Wednesday in Manhattan federal court.
The case centered on idle cash in retirement accounts. Customers said Merrill Lynch swept their cash into deposit accounts that paid very little interest.
Here is what the complaint claimed:
- It covered Merrill Edge online account holders between December 15, 2016 and March 15, 2020.
- Customers said Merrill broke its client agreements by paying less than a “reasonable rate.”
- The sweep accounts yielded 0.05% to 0.14% a year.
- Other brokerages were paying about 2%.
The deal still needs approval from US District Judge Valerie Caproni. It avoids a trial set for mid-October.
Merrill is not alone. Many big banks and brokerages have been sued over low-yield sweep accounts. The suits have had mixed results.
In February, a judge said JPMorgan Chase must face part of one such case. On September 18, another judge gave final approval to a $70 million settlement with Oppenheimer.
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What the Market Is Telling Us About Bank of America Stock
For Bank of America stock, this looks like a small item. The settlement removes trial risk and caps the cost of this case. Other factors are driving Bank of America stock right now.
Take Q2. Revenue rose 15% to $31.6 billion. Net income rose 27% to $9.1 billion. EPS climbed 34% to $1.21. Return on tangible common equity hit 17%.
Wealth management, the business closest to this case, was strong. Revenue in that unit grew 16% to a record $6.9 billion. Client balances reached $4.9 trillion.
The bank also returned $8 billion to shareholders in the quarter. Its common equity Tier 1 ratio was 11.2%.
Credit quality stayed steady. Management said it expects net interest income growth at the top of its 6% to 8% range this year.
So Bank of America stock still rests on earnings strength. A $39 million payment is tiny next to $9.1 billion in quarterly profit. The bigger watch item is whether more sweep account suits follow across the industry.
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So what is Bank of America stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
