1 More Reason to Be Optimistic About Bank of America

Bank of America has had its share of missteps when compared to peers like Wells Fargo and Citigroup, but a recent study reveals investors should be optimistic about its future.

Mar 13, 2014 at 7:30AM

Bank of America (NYSE:BAC) has seen its stock rise by almost 50% over the past year, but the best may still be ahead of it.

Yet as Winston Churchill famously noted, "A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty." And a research firm recently revealed why Bank of America investors should be more optimistic than those of peers Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C).

The ever important top line
Often -- and rightly so -- the discussion on banks centers on the bottom line net income numbers. In recent years, as a result of fewer losses from mortgage divisions and litigation, banks have seen astounding improvements in the money they can ultimately earn. Bank of America delivered a net income of $11.4 billion last year, which nearly equaled the $13.6 billion in net income it saw in the five years combined from 2008 to 2012.

However, top-line revenue numbers are critical because reductions in losses and expenses have a finite limit. Looking ahead for banks, the growth to their bottom lines will likely be the direct result of growth in the top line.

A quick glance at the revenues of the three largest banks reveals that Citigroup was surprisingly the winner over the past year:




Growth ($)

 Growth (%)

Bank of America










Wells Fargo





Source: Company SEC filings.

However, the growth at Citigroup wasn't the result of business growth and actual additions in revenue, as its net impairment losses -- which are subtracted directly from revenue -- fell 90% from $5.0 billion to $535 million, directly resulting in revenue growth.

Meanwhile, Wells Fargo is heavily reliant on mortgage banking revenue, and as broader refinancing plummeted in the latter half of 2013, so, too, did its revenue, which fell from $11.6 billion in 2012 to $8.8 billion in 2013.

Of these three, Bank of America comes out the true winner. It saw improved results across its various sources of revenue:

Source: Company SEC filings.

The future prospects
So what about the future? Deloitte, a consultancy, provides a distinct reason for investors to be optimistic about Bank of America.

The consultancy, as the following graphic illustrates, notes that five areas providing a differentiated customer experience and compelling mixture of products will be the key to growing revenue at the biggest banks:


Bank of America has been executing on all of these initiatives over the past year, which could mean even greater growth in its top line in the future.

Just last week, Bank of America announced its "SafeBalance" account, in which it is transparent about its $4.95-a-month fee to customers. In addition, it has been aggressively pursuing growth in its Global Wealth and Investment Management business, which saw its net income rise 32% to $3.0 billion in 2013.

Yet not only is it focusing on product mix, but it's also providing the differentiated customer experience. Bank of America has distinctly focused on its mobile app and website services, as Brian Moynihan noted on the most recent conference call that the bank has invested $500 million "in the online mobile platform across the last three or four years, and we will continue to invest at that rate."

While many banks are focusing on driving top-line growth, Bank of America seems to be at the top of the ladder in its ability to execute across business lines and initiatives, which could mean big things for both it and its shareholders.

The bank worth buying
There's a brand-new company that's revolutionizing banking, and it's poised to kill the hated traditional brick-and-mortar banking model. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. For the name and details on this company, click here to access our new special free report.

Patrick Morris owns shares of Bank of America. The Motley Fool recommends Bank of America and Wells Fargo and owns shares of Bank of America, Citigroup, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information