Bank Stocks/Bank of America

[MichealKnight]

I was hoping to hear opinions on bank stocks - and amongst them, Bank of America.

Disclosure: I've held onto 70% of my original positions in regional banks like RF, andTFC(Trust -the old BBT). Certainly off their highs quite a bit - but with divs from 3.5-4.9, banks positions in growth areas, my (naive?) belief that regional banks know their clients a bit, and therefore make prudent loans I've held on. As someone whose goal is an annualized 5-6% nominal return - I felt this is a place to be.(Divs help my picture a lot due to tax advantages)

Bank of America.... I've pasted a few Barron's snippets in case paywall comes up:

https://www.barrons.com/articles/st...-hathaway-delta-51671234366?mod=Searchresults

"The bank’s conservatism extends to its dividend, with an earnings payout ratio below some of its major rivals. The bank lends mainly to an affluent customer base that should hold up better in an economic slowdown. It’s getting a boost to margins from rising short-term rates. "


“Over my three decades following the industry, I’ve seldom seen the fundamentals improve the way they have at Bank of America and the stock perform so poorly,” says Wells Fargo Securities analyst Mike Mayo, who named BofA a top pick with a price target of $52. “Bank of America has de-risked its balance sheet more than any other big bank and is more recession ready than at any time in the past half-century.”

Around 9 times 2023 earnings. 2.7% dividend.

I am 100% sure about BOA's not taking on bad paper. In my previous life I saw (and benefitted from and was good at) having banks approve the most idiotic loans you could think of. Not my rules - their rules. Some nights I'd drive home shaking my head even though it was to my benefit. But BOA? Nope, if the people weren't near perfect, I didn't even try.

The article talks about this as a strength. Makes sense - - providing a potential recession is not a White Collar Recession....when there's reason to believe it might well be?

Would love any thoughts. Thanks.

 

[DrRoy]

On principle, I own no individual stocks. They are too subject to unforeseen events. What if you had been following someone's great write-up about Southwest Airlines?

 

[Dash man]

I was hoping to hear opinions on bank stocks - and amongst them, Bank of America.



Disclosure: I've held onto 70% of my original positions in regional banks like RF, andTFC(Trust -the old BBT). Certainly off their highs quite a bit - but with divs from 3.5-4.9, banks positions in growth areas, my (naive?) belief that regional banks know their clients a bit, and therefore make prudent loans I've held on. As someone whose goal is an annualized 5-6% nominal return - I felt this is a place to be.(Divs help my picture a lot due to tax advantages)



Bank of America.... I've pasted a few Barron's snippets in case paywall comes up:



https://www.barrons.com/articles/st...-hathaway-delta-51671234366?mod=Searchresults



"The bank’s conservatism extends to its dividend, with an earnings payout ratio below some of its major rivals. The bank lends mainly to an affluent customer base that should hold up better in an economic slowdown. It’s getting a boost to margins from rising short-term rates. "





“Over my three decades following the industry, I’ve seldom seen the fundamentals improve the way they have at Bank of America and the stock perform so poorly,” says Wells Fargo Securities analyst Mike Mayo, who named BofA a top pick with a price target of $52. “Bank of America has de-risked its balance sheet more than any other big bank and is more recession ready than at any time in the past half-century.”



Around 9 times 2023 earnings. 2.7% dividend.



I am 100% sure about BOA's not taking on bad paper. In my previous life I saw (and benefitted from and was good at) having banks approve the most idiotic loans you could think of. Not my rules - their rules. Some nights I'd drive home shaking my head even though it was to my benefit. But BOA? Nope, if the people weren't near perfect, I didn't even try.



The article talks about this as a strength. Makes sense - - providing a potential recession is not a White Collar Recession....when there's reason to believe it might well be?



Would love any thoughts. Thanks.

I have a mix of dividend growing stocks and ETFs. BAC is on my list to purchase next month when we have some cash freeing up. It’s a solid bank that grows its dividend at a double digit rate most years. It’s current quarterly dividend is $0.22/share for a 2.69% yield. It’s stock price is reasonable too. It would be my first choice of a dividend stock, but I do want to add it to my current mix.

 

[Montecfo]

I do like the banks. If we have a recession they will fall further. But the divs pay you to wait and they will move higher quickly when the economy turns up. Downside limited to this point.

I own or have recently owned BofA, JPM, MS, GS, MTB, TFC a regional bank index and a money center bank index. I sold FNH at a very nice gain after it agreed to be acquired.

I plan to sell the indexes soon and move that back into individual names.

 

[Winemaker]

While I am not adding to my position, I have owned BoA for at least 18 years. Originally purchased 200 at $45, I road it down to $3 during the Great Recession, and backed up the truck, and bought 3000 more. Sold some awhile back at $38, still own about 2000.

 

[aja8888]

The big banks and the FED are connected at the hip. No big bank will fail in the U.S. unless we are taken over by the Chinese (which could happen someday).

Actually, the Canadian big banks are great investments also.

 

[Freedom56]

Money normally flows into bank stocks 3-6 months before the last rate hike. Nothing wrong with Bank of America. I own their bonds. I even owned their bonds though from 2009 and 2019 when the headlines were predicting a collapse of Band of America in 2011. Obviously that never happened.

As stock investors, look at the long term stock charts of Canadian banks as such as the Royal Bank of Canada, TD Bank, Bank of Montreal, Scotia Bank, and CIBC. The long term trend is up. They have never cut their dividends like U.S. banks. None required bailouts in 2008/2009. The issue you will have with Canadian bank stocks is that 15% of the dividend is held back by the Canadian Revenue Agency and you have to claim a foreign tax credit or file a form with Canada to seek a refund.

 

[matjung]

No opinion about Bank of America.
This year I made nice money with European Banks, especially with Irish Bank stocks.
For 2023 I expect another 10 to 20% upside potential with European Bank Stocks.
But, if interest rates are hiking up too fast, provisions for bad credit will go up too.
The momentum for banks might change during the year.
Because of the war, the banks are not too expensive.

If we get a soft landing. Perfect. Dividends in 2023/2024 are expected to go up.
The banks are still undervalued compared with the before credit crunch times.

p.s.
don't gamble with Credit Suisse

 

[aja8888]

p.s.
don't gamble with Credit Suisse

That's old news around here!

 

[MarieIG]

Don't even remember how and when BOA got into my portfolio, but it's been there a looooooog time. Treated me better than Washington Mutual and Citibank, which made me leery of bank stocks. I bought a tiny bit of NYCB in the last year or so, which has been relatively flat. I hope it doesn't go under. I expect the banks will go down the first half of next year - but what do I know?

 

[MichealKnight]

nycb

Don't even remember how and when BOA got into my portfolio, but it's been there a looooooog time. Treated me better than Washington Mutual and Citibank, which made me leery of bank stocks. I bought a tiny bit of NYCB in the last year or so, which has been relatively flat. I hope it doesn't go under. I expect the banks will go down the first half of next year - but what do I know?

Didn't NYCB just complete some acquisition? What is the impetus for worry they will go under? Thanks

Disclosure: Small position of NYCB. Love the dividend. Worried by the dividend

 

[target2019]

Didn't NYCB just complete some acquisition? What is the impetus for worry they will go under? Thanks

Disclosure: Small position of NYCB. Love the dividend. Worried by the dividend

NYCB is giving to you part of your initial investment.
https://www.portfoliovisualizer.com...ocation1_1=100&symbol2=NYCB&allocation2_2=100

Look at recent performance comparison with JPM, for example. The link above is for the most recent ten-year period.

 

[thepalmersinking]

I was hoping to hear opinions on bank stocks - and amongst them, Bank of America.



Disclosure: I've held onto 70% of my original positions in regional banks like RF, andTFC(Trust -the old BBT). Certainly off their highs quite a bit - but with divs from 3.5-4.9, banks positions in growth areas, my (naive?) belief that regional banks know their clients a bit, and therefore make prudent loans I've held on. As someone whose goal is an annualized 5-6% nominal return - I felt this is a place to be.(Divs help my picture a lot due to tax advantages)



Bank of America.... I've pasted a few Barron's snippets in case paywall comes up:



https://www.barrons.com/articles/st...-hathaway-delta-51671234366?mod=Searchresults



"The bank’s conservatism extends to its dividend, with an earnings payout ratio below some of its major rivals. The bank lends mainly to an affluent customer base that should hold up better in an economic slowdown. It’s getting a boost to margins from rising short-term rates. "





“Over my three decades following the industry, I’ve seldom seen the fundamentals improve the way they have at Bank of America and the stock perform so poorly,” says Wells Fargo Securities analyst Mike Mayo, who named BofA a top pick with a price target of $52. “Bank of America has de-risked its balance sheet more than any other big bank and is more recession ready than at any time in the past half-century.”



Around 9 times 2023 earnings. 2.7% dividend.



I am 100% sure about BOA's not taking on bad paper. In my previous life I saw (and benefitted from and was good at) having banks approve the most idiotic loans you could think of. Not my rules - their rules. Some nights I'd drive home shaking my head even though it was to my benefit. But BOA? Nope, if the people weren't near perfect, I didn't even try.



The article talks about this as a strength. Makes sense - - providing a potential recession is not a White Collar Recession....when there's reason to believe it might well be?



Would love any thoughts. Thanks.

As someone who retired from Truist. It would be foolish to confuse it with BBT.

 

[jazz4cash]

As someone who retired from Truist. It would be foolish to confuse it with BBT.

Could you explain a bit?
Some mergers are acquisitions in disguise.
BIL worked at Wells Fargo entire career. He claims their merger with Wachovia was really a takeover. The WF culture dissolved.
Truist = Suntrust + BBT, right? I take it you worked primarily for BBT pre merger? I have a + image of the culture at BBT. No clue on their merger partner.

 

[Bamaman]

One of my friend's father bought into some small banks in Atlanta area, merged them and sold out to Bank of America. It's been said he's B of A's largest individual shareholder. He flies in a JetRanger helicopter to work to avoid Atlanta traffic.

I've never really cared for those big mega banks or the way they operate. Some stocks have performed better than others. And heaven knows that Bank of America has its share of operational, profitability and governmental problems the last 20 years.

Another guy I did business with and a partner purchased a small bank in North Georgia. They found a young aggressive banker in Atlanta and installed him running the bank. Their whole intention was to go around buying small underperforming banks county by county and merging them. They also expanded inexpensively by placing bank branches in grocery stores and Walmarts. As North Georgia's economy has been so strong, their ROE on the combined banks' stock has been out of sight. I wouldn't be surprised if my ole buddy's stock is now worth $100 million.

I would be looking for bank stocks of very well managed regional community banks if I was going to purchase bank stock. There always seems to be a leader of the pack in banking--with all the other bank locations looking like ghost busineses.

 

[Texas Proud]

I like JPM as it seems to be the best run bank and is making good profits..


I think BAC and Wells have a potential to have bigger returns since they have not been run as well so can increase their profits more... just not sure if they will be...

 

[matjung]

The banks in Europe/Greece are starting to become interesting.
Reason: They are behind in recovering from Corona/Covid
Parliament Elections in 2023 - it is expected to boost Athens Stock Market
I have no idea, if those stocks are tradable in the US.



The recovery of Europe/Irish banks may slowly come to an end.
One may have to wait until March to find out how business was doing last year.

 

[SunGuy]

Oh cool more bank people lol.

I have been obsessed lately with researching and investing into regional banks, they have a lot of great value, good dividends, a few are prime investments, great cash flow, low price to book value etc.

Go to finviz.com and run through a few screeners for them. You will find some good ones.

 

[matjung]

Again I cannot help with BoA, but maybe you can help me with valuation concepts for Banks.


Given 4 European Banks.
For simplicity, dividends in 2021 and 2022 was zero, expectations for 2023 are not much better.



What criteria would you choose to rank or value banks.
In my humble opinion, the first two banks are under valued, compared with the last two banks.

In 2021 Net Income was negative at all four of them.

All four banks are rather regional/national banks, with not much international business.
I am looking for inspiration about how to value them.
Would you compare a regional bank from Los Angeles with New York.
Or would that feel like comparing Apples with Oranges



Sales 620
Capitalization 1055
Net income 168

Sales 2000
Capitalization 2800
Net income 540

Sales 3300
Capitalization 10523
Net income 1000

Sales 3700
Capitalization 10556
Net income 1130

 

[Montecfo]

Again I cannot help with BoA, but maybe you can help me with valuation concepts for Banks.


Given 4 European Banks.
For simplicity, dividends in 2021 and 2022 was zero, expectations for 2023 are not much better.



What criteria would you choose to rank or value banks.
In my humble opinion, the first two banks are under valued, compared with the last two banks.

In 2021 Net Income was negative at all four of them.

All four banks are rather regional/national banks, with not much international business.
I am looking for inspiration about how to value them.
Would you compare a regional bank from Los Angeles with New York.
Or would that feel like comparing Apples with Oranges



Sales 620
Capitalization 1055
Net income 168

Sales 2000
Capitalization 2800
Net income 540

Sales 3300
Capitalization 10523
Net income 1000

Sales 3700
Capitalization 10556
Net income 1130

Banks are usually valued by multiples of book value and PE ratio.

 

[matjung]

So given two banks
one with a discount of 60% and the other one with 50% from book value,
you would consider the discount 60% as more valuable.
PE ratio is at the moment a bit too volatile to draw any conclusions.
Since the crisis from 2007, the banks I am looking at are all quoted below its book value.

 

[Montecfo]

Trading that far below book suggests impaired earning ability or a lot of bad assets on balance sheet.

Compare to Citibank ( C ), the US bank with the greatest emerging market presence. it is cheap but continues to trade below book. It has been interesting to trade but would be a frustrating hold.