Shares of Bank of America (NYSE:BAC) were up yesterday on news of bottom-line strength in the company's earnings. However, much of the credit for Bank of America's increase to its bottom line year over year can be attributed to weak revenue from the fourth quarter last year, which was fairly easy to beat.
In this video, host Mark Reeth talks with Motley Fool One analyst Jason Moser about what's behind the curtain at Bank of America today. He notes that the company was able to increase both its net interest margin and its deposit base, but for the long-term investor, he sees some big headwinds. While Jason commends Bank of America for starting to embrace some of the major macro shifts that will come to the banking industry over the next decade, such as the shift to entirely online banking and the resulting branch closures and job reductions to cut costs, he sees that shift more broadly as part of the commoditization of banking. This could put a large amount of downward pressure on Bank of America's fee pricing structure and force the company to be much more reliant on other areas of its business.
Looking forward, Jason sees no reason to be a buyer of this stock today. He notes that a company of this size with a pretty anemic yield holds little interest for him, and says that the bank's management team isn't nearly inspiring enough to change that opinion. His final verdict: There are plenty of other opportunities elsewhere.
Jason Moser has no position in any stocks mentioned. Fool contributor Mark Reeth has no position in any stocks mentioned. The Motley Fool recommends Bank of America. The Motley Fool owns shares of Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.