5 Quotes Every Bank of America Corp. Investor Needs Hear

Bank of America has filed its annual report, and in light of the resounding win it had compared to Citigroup, there are five quotes everyone needs to hear about its possibility to become an industry leader like Wells Fargo.

Mar 31, 2014 at 12:12PM

With 2013 officially closed, companies everywhere have passed on their annual reports to shareholders. And the 2013 report from Bank of America (NYSE:BAC) has five quotes every investor must know.

[L]et me assure you the company is committed to returning excess capital over time through both repurchases and dividends.

In light of the Federal Reserve's recent objection to of the capital request of Citigroup (NYSE:C) and the subsequent approval for Bank of America, Brian Moynihan, the CEO began his letter to shareholders with a rather fitting quote.

In short, each bank requested a boost of its dividend from $0.01 to $0.05 and Citigroup asked to repurchase $6.4 billion in common stock, and Bank of America asked for a buyback of $4 billion. And while Citigroup had seemingly better quantitative results, the Federal Reserve rejected its plan as a result questions surrounding the qualitative aspect of the bank which resulted in "sufficient concerns."

With that in mind, knowing Bank of America is committed to generating returns for its shareholders, and the Federal Reserve agrees with its ability to do so, investors should be happy.

While our earnings nearly tripled from 2012 to 2013, we know we have more work to do to reach our full earnings potential.

Part of the reason Bank of America was able to receive approval from the Federal Reserve was its remarkable rebound in 2013, where its earnings jumped to $11.4 billion. It earned almost as much in 2013 compared to the $13.6 billion it earned in the five years from 2008 to 2012:

Images
Source: Company Investor Relations

And while things have improved at Bank of America, as shown against its peers like Citigroup as well as Wells Fargo (NYSE:WFC) and JPMorgan Chase, certainly more work is still to be done:

Images
Source: Company Investor Relations

It is encouraging to see Moynihan recognize Bank of America still has ample room for growth ahead of it.

We continue to invest in many areas of the company — averaging about $3.5 billion in initiative spending each year for the past three years. We're investing in our industry-leading online and mobile banking platforms... growth areas, including small business and wealth management...and in the systems that serve our large corporate clients and institutional investors.

One of the common refrains seen regarding Bank of America is its need to cut expenses and become a more efficient and streamlined bank following its rash of acquisitions. And while its Project New BAC initiative is a good thing as it tries to become more efficient, it's also encouraging to see the bank isn't hesitant to make investments in businesses which will ultimately propel it into success in the future.

Everywhere we operate, our teams are exchanging information and opportunities about the customers and clients they serve, and we are tracking closely to ensure that we are giving those customers the opportunity to do with us all the things they must do to live their financial lives.

While at first glance the above quote sounds a touch off-putting, it underscores the reality Bank of America can meet essentially every financial need of every individual and company out there. And having a single financial institution is likely the preference of almost everyone.

As a result, internal marketing efforts to ensure its clients understand the connectivity the bank can offer across a variety of needs will not only result in more satisfied and loyal customers, but those which are more profitable as well.

As we look ahead, we will continue to pursue the same strategy that has served us well these past several years — a strategy to make our company more straightforward; a strategy to serve the core financial needs of our customers; a strategy to manage risk, maintain strong capital and liquidity, and to operate efficiently and reduce costs. This is what will drive results and progress.

Moynihan concludes by noting the core strategy of Bank of America is wildly simple and easy to understand. Serve customers, manage risk, maintain safety, and operate efficiently. The bank deviated far from this path in the years before the financial crisis, which is why it has taken it so long to recover. Yet with the turnaround in full motion, there is certainly a reason for optimism.

Bank of America has begun its slow recovery from the woes of 2008 and 2009, and the reality remains that its best years are almost undoubtedly ahead of it.

Big banking's little $20.8 trillion secret
While 2013 was great for Bank of America, there is a looming revolution which is poised to occur in the banking industry. While that's not great news for consumers, it certainly creates opportunity for savvy investors. That's because there's a brand-new company that's revolutionizing banking, and is 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. To learn about about 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. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers