BAC · Forward model · Bear case

The Bear case, 20 quarters out

Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.

READ THE FIELD NAMES WITH CARE: this is an equity-level DCF wearing an enterprise-value engine's labels. The page will say 'Enterprise value' and 'Net cash'. What it means is EQUITY value and a deliberate zero. Deposits of $2.03T and long-term debt of $340B are FUNDING at a deposit-taking bank, not financing to be netted, so netCash is 0 and the engine's 'Equity' is the equity value; fair value is a true per-share number. Seven substitutions make that reading correct, all of them checked against the June quarter. (1) The five verticals are the disclosed FTE segment revenue lines - Consumer Banking, GWIM, Global Banking, Global Markets and All Other - which sum EXACTLY to reported Total Corporation FTE revenue of $31,721M in the basis quarter and in all fifteen quarters of history. Nothing is split below a reportable segment: the $2,138M of Total Corporation investment-banking fees stays where BAC puts it, $1,154M in Global Banking, $965M in Global Markets and $88M in GWIM, rather than being reassembled into an invented vertical. (2) 'EBITDA margin' is PRE-TAX INCOME margin, already net of segment noninterest expense AND of each segment's own provision for credit losses. It is NOT pre-provision pre-tax income: PTPI would strip the entire credit cycle out of the model and would inflate Consumer Banking from 38.6% to 48.8%. (3) capexIntensity is 0.2% of revenue as a premises-and-equipment proxy - BAC discloses no capex line and technology spend sits in expense - and it is EXACTLY 0 on All Other, whose revenue is negative and where a positive intensity would produce a negative capex, a phantom cash inflow. (4) corporate.taxRate is 22.6%, the FTE-EQUIVALENT effective rate, NOT management's guided 21.5%. That guide is a GAAP rate on GAAP pre-tax income; the verticals here are FTE, and applying a GAAP rate to FTE pre-tax would overstate net income by about $132M a quarter. The $163M FTE adjustment appears in revenue, pre-tax income and tax expense but nets to zero at net income; it is the basis trap in this model and it is respected everywhere. (5) overheadPctRevenue of 1.33% carries PREFERRED STOCK DIVIDENDS and nothing else: $326M of preferred dividends grossed up at the 22.6% rate is $421M of pre-tax equivalent, 1.33% of FTE revenue. Segment noninterest expense is already inside each vertical's margin, so a second overhead would double-count it. (6) discountRate is a COST OF EQUITY of 10.0%, derived by inverting P/TBV = (ROTCE - g) / (CoE - g) on the tape, not a WACC. (7) exitEvEbitda of 9.3x is a 12x P/E grossed DOWN by tax, because the engine applies it to terminal PRE-TAX earnings. CALIBRATION: under those seven settings the first projected quarter's free cash flow is $8,744M against actual 2026 Q2 net income applicable to common shareholders of $8,748M - a 0.05% error. That is the proof the substitutions land where they are meant to; if a future revision breaks it, the tax or the margin basis has drifted. CREDIT: provisions stay inside the vertical margins, which is where BAC's own disclosure puts them - segment provisions of $1,160M, $11M, $215M, -$11M and -$9M sum exactly to the reported $1,366M with no residual. They are NOT modelled as a corporate programme, because programme spend is subtracted as capex before tax and would corrupt the calibration above. But the smooth margin glide does not represent the credit cycle and is not meant to: it is a mid-cycle average. The cycle is carried as a step in the BEAR case, minus 4.0 points on Consumer Banking, roughly $1.9B a year of extra provision. Consumer carries about 85% of the group provision; Global Markets carries none. BANK ANCHORS, all disclosed for 2026 Q2 and all needed to judge the DCF: tangible book value per share $29.37 and book value per share $39.34; ROTCE 17.03% for the quarter and 16.52% for the half; CET1 ratio 11.2% on $202B of CET1 capital; efficiency ratio 59.02%; net charge-off ratio 0.47%; $13.2B repurchased in the first half against a $40B authorisation with roughly $17B remaining at 30 June 2026, about 2.6 quarters at that pace, so the buyback beyond early 2027 depends on a board authorisation that does not yet exist; the dividend raised 14% to $0.32 a quarter on 24 July 2026; and FY2026 NII growth guided to the upper end of 6-8% with 300-400bps of operating leverage. The base case at $63.29 is an implied 2.15x tangible book against a 2.08x tape and a 2.17x Gordon-justified multiple - three methods within 4%. LIMITATION ONE, the labels: as above, 'Enterprise value' is equity value and 'Net cash' is a chosen zero, not a measured balance. Read them that way or the page will mislead. LIMITATION TWO, the share count: the engine holds shares flat at 7,018.0M while BAC retired 5.63% of its shares over the past year. That is CORRECT arithmetic, not a conservatism - the model discounts total firm earnings and divides by today's count, and buybacks at fair value are NPV-neutral, so shrinking the count would double-count them. What it does misstate is the per-share EARNINGS path: implied terminal EPS of about $5.71 runs 25-30% below Street 2031 figures built on a shrinking count. The buyback shows up here as price appreciation, not as EPS growth. FURTHER LIMITATION: CET1 retention against risk-weighted-asset growth is not represented anywhere, so in a strong loan-growth year the engine overstates cash available to shareholders. It is left in prose rather than plugged into capexIntensity. The mitigation is that BAC returned $17.2B in the first half against $16.9B of net income to common, a 102% payout - the engine's implicit full distribution is close to what the company actually does. Fiscal quarters are calendar; 2026 Q2 ended 30 June 2026, so seasonal index 0 is January-March. Seasonality is applied to Global Markets ONLY, factors [1.1364, 1.0119, 1.0183, 0.8335], signal 0.303 against a worst window spread of 0.035; its growthQoQ is therefore a deseasonalised trend rate. GWIM, Global Banking and Consumer Banking tested aseasonal, and All Other cannot be tested because its revenue is negative. The local data/companies/bac/series.json revenue series is GAAP and is not the FTE basis used here; the reference price is the $61.17 close captured on 27 August 2026.

Where each case comes from

From cash flow to fair value

The projected path

Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.

Model revisions

Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.