There's a great buying opportunity for this struggling bank stock, says Bank of America

The key market mispricing is not the headline credit noise; it’s the assumption that a few visible problem credits translate into a durable lower-quality franchise multiple. For a bank with a relatively sticky deposit base and operating leverage still available, that kind of discount usually only persists if investors believe the earnings stream is structurally impaired. The setup looks more like a sentiment-driven de-rating than a fundamentals break, which creates room for a sharp rerating once underwriting losses stop dominating the tape.

The second-order effect is that the market is conflating idiosyncratic asset-level stress with balance-sheet-wide contagion. That matters because banks with cleaner funding profiles and less rate-sensitive deposit books tend to recover first when the market’s “credit scare” trades unwind; the rebound can happen before reported earnings fully inflect, simply because short interest and underownership are forced to cover. In that scenario, the biggest upside comes not from perfect results, but from a sequence of merely acceptable quarters that remove the bear case.

The contrarian view is that the downside is more likely to be time than price: if the path to higher ROTCE is real, the stock can stay cheap for a few quarters while investors demand proof. The risk is that one or two additional large exposure headlines reset confidence again and keep the multiple pinned below historical comp levels. That makes this a catalyst-driven trade rather than a fundamental sleep-at-night compounder in the near term.