| Snowflake Score | |
|---|---|
| Valuation | 3/6 |
| Future Growth | 1/6 |
| Past Performance | 1/6 |
| Financial Health | 6/6 |
| Dividends | 5/6 |
BAC Stock Overview
Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide.
Bank of America Corporation Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$35.91 |
| 52 Week High | US$50.11 |
| 52 Week Low | US$29.67 |
| Beta | 1.4 |
| 1 Month Change | 14.51% |
| 3 Month Change | 2.10% |
| 1 Year Change | -14.80% |
| 3 Year Change | 36.80% |
| 5 Year Change | 51.90% |
| Change since IPO | 208.08% |
Recent News & Updates
Bank of America (NYSE:BAC) Is Paying Out A Larger Dividend Than Last Year
Bank of America Corporation ( NYSE:BAC ) has announced that it will be increasing its dividend from last year's...
Bank Of America: Fed Stress Tests Were A Disaster For Shareholders
Banks with large consumer exposure were ambushed by the recent stress tests, none more so than Bank of America. BAC, which seemed about to benefit greatly from increased NII due to rising rates, instead found itself constrained to radically reduce buybacks and look over its shoulder at the Fed. One can argue whether the Fed was "capricious," as Jamie Dimon did, but the banks must also ask why they didn't see it coming and prepare. BAC's shareholders will suffer the most because buybacks were important to the premise for owning it; top leadership avoided questions at the recent earnings call. Operating results were fine looking backward, but BAC leaders should explain how they dropped the ball on the stress tests and what they plan to do about it in the future. Bank of America (BAC) is about to suffer from a major lost opportunity thanks to the recent Federal Reserve stress tests. It shouldn't have come as a surprise. The handwriting should have been on the wall for anybody who noticed the CET1 (Common Equity Tier Number) in its Q4 2021 end-of-the-year report. The fifth line of the first slide reported a standardized CET1 ratio of 10.6. It struck me at the time that this was pretty close to the 10.5 the Fed was going to require on the stress tests. I checked other banks and BAC compared unfavorably with its peers. Everybody loved BAC and saw that it was going to book big time with rising interest rates. Bank of America was well aware of this advantage and its earnings call slides included a line saying how much their income would benefit per 100 basis point lateral increase in interest rates. Under CEO Brian Moynihan, Bank of America had turned itself around after the 2008-2009 disaster and gone from strength to strength. It had taken care of both customers and employees during the pandemic and lockdown and still made good money. Now that they were getting that rise in interest rates they should race ahead of all other diversified banks. The only thing to worry about with BAC was that it had the most exposure to consumer banking among its peers and as a consequence held more of the kind of loans that would be heavily discounted by the Fed in the upcoming stress test. I wrote about the difference between investment banks and diversified banks with large consumer exposure in this article on Goldman Sachs (GS). The short version is that investment banks are structured so as to do better on stress tests. My assumption at the beginning of the year was that CEO Brian Moynihan had this all worked out. Surely he had a strategy in place to take advantage of rising rates while managing loans so as to improve its CET1 ratio enough to get out of the danger zone. That isn't what happened. Here's the way the Fed described the worst case scenario used in the stress tests taken into account for the stress tests: 2022's hypothetical scenario included a severe global recession with substantial stress in commercial real estate and corporate debt markets. The unemployment rate rises by 5-3/4 percentage points to a peak of 10% and GDP declines commensurately. Asset prices decline sharply, with a nearly 40% decline in commercial real estate prices and a 55% decline in stock prices." And here are the stress test results for the four major banks which have already led JPMorgan (JPM) and Citi (C) to halt buybacks: Bank Q4 21 Actual Test Result Minimum Bank of America 10.6 7.8 7.6 JPMorgan 13.1 10.6 9.8 Citi 12.2 9.5 8.6 Wells Fargo (WFC) 11.4 8.7 8.6 JPMorgan CEO Jamie Dimon was apoplectic and didn't hold back when asked a question about the tests at JPM's July 14 earnings call. "We don't agree with the stress test," Dimon said. "It's inconsistent. It's not transparent. It's too volatile. It's basically capricious, arbitrary." It was one of those "you want to know what I really think" remarks. Having earlier said he saw a "hurricane" coming, he went on to say that JPM would still make money in a worst case scenario but would suspend share buybacks. He added that JPMorgan was pulling back on "risk weighted assets," citing mortgages, which require capital set aside. "It's not good for the United States economy and in particular, it's bad for lower-income mortgages," Dimon continued. "You haven't fixed the mortgage business and then we're making it worse. It's not good for the United States economy and in particular, it's bad for lower-income mortgages," Dimon said. He then explained that JPM would continue originating mortgages but immediately offload them although other banks might recede from home loans entirely. "It's a terrible way to run a financial system," Dimon said. "It just causes huge confusion about what you should be doing with your capital." Bank of America, of course, commits a far larger percentage of its capital to mortgages than JPMorgan. At the Bank of America Q2 earnings call Brian Moynihan and his CFO seemed determined to talk around the subject of the stress tests and their consequences for BAC, including buybacks. Here's Moynihan talking about capital after mentioning customers and the 22% increase in dividend: Third, we're going to be building capital given the new higher amounts received during the stress test. It will make our balance sheet even stronger. Along the way, we believe our expected earnings generation over the next 18 months will provide an ample amount of capital, which allows us to support customer growth, pay dividends and use the rest to allocate between buying back shares and growing into our new capital requirement." What struck me about this paragraph was how carefully it was worded. It had many words but little content. The balance sheet would be "even stronger." The quiet center of it was that earnings generation "over the next 18 months" would be allocated after customer growth and dividends to buying back shares and "growing into" the new capital requirement. The timing is vague. The policy seems to be that Bank of America would grow itself into better shape that would enable it to do better in00 future stress tests. Only then would it talk about things like buybacks. Erika Najarian of UBS was unwilling to leave it at that and asked the question again of CFO Alastair Borthwick: Erika Najarian Got it. And my second question is a follow-up on capital. I guess the first is are you working to actively reduce the stress capital buffer? And maybe remind us where you think the pain points were for this year's test that you think you could address for next year? And second, should we -- what is the pacing of buybacks like from here as you potentially -- as you -- or not potentially, as you build towards that January 1, 2024, new hire minimum?" Alastair Borthwick On the second question, that's going to be dictated by our LOBs use of the balance sheet. Our 1 goal is to keep them in the market winning every day and let the capital support that. That's what we do because what they're doing is providing good returns and stuff. So that requires us to -- well, it will be driven by, frankly, loan growth more than anything else in the near term because the markets business will bounce around but won't move much." That's a stumbling evasion of specificity followed by a quick change of subject. The subtext hovers over both conversations. Buybacks have been one of the major attractions for BAC shareholders for the past half dozen years. Organic growth has been hard to come by and in its absence Bank of America has manufactured growth in all per share numbers by aggressive buybacks. Now that buybacks have been pulled away, how should shareholders look at BAC. That's clearly not a question that Bank of America wanted to engage. Let's Look At The Numbers The following table contains the numbers that matter. They are not the usual operating numbers. Those look fine through mid-year 2022. There's a good positive case to make about every part of the Bank of America business, and, trust me, the CEO and CFO went over it in mind-numbing detail line by line. If you don't trust me read it for yourselves. I wrote this recent article comparing BAC to JPM and detailing BAC's operating success. The problem is that the Q2 2022 results amounted to a detailed picture of a frozen moment in time with the assumption that subsequent numbers will be similar. Unfortunately, quite a lot of uncertainty and dread hangs over the future. Let's leave that to unfold on its own and instead take a look at buybacks in some detail: Date 2017 2018 2019 2020 2021 6 MO,22 Shares Outstanding ((M)) 10287 9669 8836 8651 8077 8036 Shares Retired (234M) 618M 833M 185M 574M 40M Net Income $18B $28B $27B $18B $32B $13.3B Book Value Per Share $23.8 $25.1 $27.3 $28.7 $30.4 $29.9 Spent on Buybacks $12.8B $20.1B $28.1B $7.8B $25.1B $3.6B I would love to do a piece of nifty arithmetic to get the average price paid per share, but there is a catch to doing that. The number of shares retired does not equal the number of shares bought because BAC uses a significant portion of shares repurchased to offset shares paid out as compensation. There is thus no very good way of getting the exact average price of shares repurchased accurately. As a result you cannot calculate the price paid per share by simply dividing the amount spent on buybacks by the number of shares retired.
Shareholder Returns
| BAC | US Banks | US Market | |
|---|---|---|---|
| 7D | 7.5% | 5.5% | 1.3% |
| 1Y | -14.8% | -13.2% | -11.7% |
Return vs Industry: BAC matched the US Banks industry which returned -14.5% over the past year.
Return vs Market: BAC underperformed the US Market which returned -11.6% over the past year.
Price Volatility
| BAC volatility | |
|---|---|
| BAC Average Weekly Movement | 4.7% |
| Banks Industry Average Movement | 3.7% |
| Market Average Movement | 7.8% |
| 10% most volatile stocks in US Market | 16.9% |
| 10% least volatile stocks in US Market | 3.2% |
Stable Share Price: BAC is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.
Volatility Over Time: BAC's weekly volatility (5%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1784 | 210,000 | Brian Moynihan | https://www.bankofamerica.com |
Bank of America Corporation, through its subsidiaries, provides banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments worldwide. Its Consumer Banking segment offers traditional and money market savings accounts, certificates of deposit and IRAs, noninterest-and interest-bearing checking accounts, and investment accounts and products; and credit and debit cards, residential mortgages, and home equity loans, as well as direct and indirect loans, such as automotive, recreational vehicle, and consumer personal loans. The company’s Global Wealth & Investment Management segment offers investment management, brokerage, banking, and trust and retirement products and services; and wealth management solutions, as well as customized solutions, including specialty asset management services.
Bank of America Corporation Fundamentals Summary
| BAC fundamental statistics | |
|---|---|
| Market Cap | US$288.55b |
| Earnings (TTM) | US$26.57b |
| Revenue (TTM) | US$91.30b |
10.9x
P/E Ratio1.2x
P/B RatioIs BAC overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| BAC income statement (TTM) | |
|---|---|
| Revenue | US$91.30b |
| Cost of Revenue | US$0 |
| Gross Profit | US$91.30b |
| Other Expenses | US$64.74b |
| Earnings | US$26.57b |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
Oct 17, 2022
| Earnings per share (EPS) | 3.31 |
| Gross Margin | 100.00% |
| Net Profit Margin | 29.10% |
| Debt/Equity Ratio | 205.5% |
How did BAC perform over the long term?
See historical performance and comparisonDividends
2.5%
Current Dividend Yield26%
Payout RatioDoes BAC pay a reliable dividends?
See BAC dividend history and benchmarks| Bank of America dividend dates | |
|---|---|
| Ex Dividend Date | Sep 01 2022 |
| Dividend Pay Date | Sep 30 2022 |
| Days until Ex dividend | 20 days |
| Days until Dividend pay date | 49 days |
Does BAC pay a reliable dividends?
See BAC dividend history and benchmarks