Bank of America Corp (NYSE:BAC) has been one of the stars of the so-called “Trump rally.” Since the election, BAC stock has lifted more than 50%. This has made windfalls for the bank’s big investors, including none other than Warren Buffett himself. It’s been a great comeback story — a down and out bank that barely survived the financial crisis roaring back to life.

But with shares up so much lately, including a fresh rally in recent weeks, can the party continue? Today’s earnings are fairly unremarkable.

They came in weak on revenues, missing expectations, but per-share earnings beat. So far, BAC stock has swung from an initial negative reaction to a positive one, and is now trending flat as of this writing.

BAC Stock Cons

Interest Rates Not Cooperating: Banks rely on the yield curve to make the bulk of their profits. The banking business is built on borrowing short and lending long. In short, banks pay low interest rates on short-term deposits such as savings and checking accounts, money market accounts and CDs.

In turn, the banks lend this money out in longer-duration loans, such as mortgages. Since interest rates are higher over a 10- or 30-year period than in the short run, banks can collect a sizable difference.

Alas, things are heading in the wrong direction for banks now, though. Since the election, short-term interest rates have spiked up, powered by several Fed rate hikes. On the other hand, long-term interest rates haven’t rallied much. This has resulted in the spread between short and long rates — a bank’s effective profit margin — plunging back to post-financial crisis lows.

The two-year/10-year spread is in fact down to 0.8% now, way off the 1.4% level reached early in Trump’s time. This is horrendous for banking profits, and will serve as an anchor on BAC stock going forward.

Low Volatility: Bank of America already guided down expectations for this quarter due to extremely low volatility in the equity and credit markets. And today’s results confirmed the weakness in this area. Banks with investment operations, such as BofA, rely on market-making and other such commercial activities to generate revenues.

However, in dull markets, this sort of activity dries up. Fewer people hedge, and trading volumes drop off. And there’s no sign that this is about to improve in coming quarters. The stock market isn’t showing any sign of turbulence, with the volatility index “VIX” remaining near record lows. On the credit side, the Federal Reserve’s gradual and well-telegraphed rate hikes have done little to spark volatility. Expect trading profits to continue to be a drag on BofA’s earnings going forward.

No Longer Top Dog: This week, reports surfaced showing that JPMorgan Chase & Co (NYSE:JPM) has now overtaken Bank of America as the country’s leading bank based on deposits.

That’s not surprising, in a way. Bank of America has been aggressively shedding branches since the financial crisis. JPMorgan, by contrast, has maintained more of its branch network. On top of that, Bank of America has been slow to increase interest rates in the wake of the Fed’s interest rate hikes. This protects their spread.

As I discussed above, when short-term interest rates rise, but the long end stays sticky, banks lose margin. BofA has reacted by leaving deposit rates lower, however, that’s resulted in depositors taking their money to banks with more generous rates.

On the plus side, today’s earnings report shows their discipline on interest rates leading to higher net interest margins.

BAC Stock Pros

Tax Cut: Trump’s proposed tax cuts would be a big boon for the banking sector. The economics of the industry tend to result in financial firms paying relatively high effective tax rates, as opposed to other sectors of the economy.

Bank of America paid a 29% tax rate last year after its deductions. That’s far higher than much of the S&P 500 universe, which benefit from more tax loopholes.

So Trump’s proposed slash to the corporate tax rate would be particularly good news for financial firms such as Bank of America. Presumably, the whole market would rally on the passage of said tax reform, and BAC and its peer banks would lead the way.

Stronger Economy: The economy has notably picked up steam over the past few quarters. Unemployment has plunged, wages are finally picking up, consumer spending is robust and confidence is high.

That’s all great news for banks. Sure, profit margins are getting hammered, but if banks can make more loans it can still work out alright. The American housing market, in particular, is surging. Prices are rising close to 10% annually across much of the country, and sales volume is up as well. This creates plenty of demand for mortgages. Since the financial crisis, it’s been hard for banks to deploy all their money, and excess reserves have piled up at the Federal Reserve.

That may be changing. We’re starting to hear more talk of inflation (finally!) after years of a persistently stuck economy that always appeared ready to tip back into deflation. A more inflationary economy generally correlates to more credit demand, rising spreads and, in general, better environments for banking profits.

On top of that, the improvement in the economy is improving loan performance. A healthy consumer is less likely to default on her loans.

Still Reasonably Priced: BAC stock used to be dirt cheap. It sold way under book value. Investors punished it for sins dating back to the financial crisis. However, given its prior deep undervaluation, even after doubling, BAC stock still seems reasonably priced.

It sells at 15x trailing and 12x forward earnings. That’s a bit on the cheaper end, compared to other too-big-to-fail banks. Critics will say that BofA’s business is less profitable than its peers, but recent results show improvement on that front. And on a book value basis, a key metric for banks, it sells at just 1.05x, making it one of the most discounted big players in the country.

Bottom Line on BAC Stock

There is a lot to like about Bank of America stock. But today’s earnings report is unlikely to cause the stock to rally to new highs.

After such a big run, the banking sector will need help from interest rates to advance much further. Management is doing the best they can considering the market conditions, but BAC stock already reflects a lot of potential earnings upside over the next 12 months.

At the time of this writing, the author held no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek.