Bank of America Corporation (BAC) | Investment Case

1. Company Snapshot

1.a. Company Description

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.

Its Global Banking segment provides lending products and services, including commercial loans, leases, commitment facilities, trade finance, and commercial real estate and asset-based lending; treasury solutions, such as treasury management, foreign exchange, and short-term investing options and merchant services; working capital management solutions; and debt and equity underwriting and distribution, and merger-related and other advisory services.The company's Global Markets segment offers market-making, financing, securities clearing, settlement, and custody services, as well as risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income, and mortgage-related products.As of December 31, 2021, it served approximately 67 million consumer and small business clients with approximately 4,200 retail financial centers; approximately 16,000 ATMs; and digital banking platforms with approximately 41 million active users.

The company was founded in 1784 and is based in Charlotte, North Carolina.

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1.b. Last Insights on BAC

Bank of America's recent performance has been driven by several positive factors. The company's robust Q2 2025 earnings, driven by strong lending, trading, and a 7% year-over-year increase in net interest income, have been a significant contributor. Additionally, the company's $40 billion share repurchase plan and 8% dividend increase have been viewed positively by investors. The bank's diversified, digitally enabled business model and structural deposit advantage have driven resilient earnings and support aggressive capital returns. Furthermore, regulatory improvements and robust capital strength have underpinned management's confidence and enabled sustained shareholder payouts. (Source: 24/7 Wall St.)

1.c. Company Highlights

Last Price	53.95
Change Percentage	-0.38%
Open	53.93
Previous Close	54.16
Market Cap ( Millions)	393970
Volume	32907743
Year High	54.83
Year Low	33.07
M A 50	52.04
M A 200	46.58

FCF Yield	15.60%
Dividend Yield	2.00%
ROE	9.92%
Debt / Equity	232.70%
Net Debt / EBIDTA	1353.76%
Price To Book	1.32
Price Earnings Ratio	13.59
Price To FCF	6.41
Price To sales	2.09
EV / EBITDA	25.1

2. Bank of America Delivers Strong Q3 Earnings

Bank of America reported a robust Q3 with revenue reaching $28 billion, up 11% year over year, and EPS of $1.06, exceeding estimates of $0.952 and representing a 31% increase. The return on tangible common equity (ROTC) improved to 15.4%, driven by a record net interest income (NII) of $15.4 billion, supported by commercial loan and deposit growth. The efficiency ratio fell below 62%, indicating effective cost management, and the return on assets reached 98 basis points.

Publication Date: Oct -16

                                    📋 Highlights
                                    Revenue & EPS Growth:
                                                Q3 revenue hit $28 billion (+11% YoY), EPS surged to $1.06 (+31% YoY).
ROTC Improvement:
                                                Return on tangible common equity rose to 15.4%.
Record NII:
                                                Net interest income reached $15.4 billion, driven by loan and deposit growth.
Shareholder Returns:
                                                $7.4 billion returned via dividends and buybacks.
Efficiency Ratio:
                                                Fell below 62%, down from 65% YoY.

                                

Segment Performance

The company's consumer banking segment delivered $3.4 billion in after-tax earnings, up 28%, driven by a 7% year-over-year increase in revenue to $11.2 billion. Global wealth and management posted net income of nearly $1.3 billion, up 19%. Global Banking benefited from improved investment banking activity, significant deposit growth, and solid loan performance, delivering net income of $2.1 billion, up 12% year-over-year. Global Markets generated net income of $1.6 billion, up modestly year-over-year, driven by strong sales and trading performance.

Outlook and Guidance

The company expects NII to be in the higher end of the $15.5 to $15.7 billion range for Q4 2025 and anticipates 5-7% growth in 2026. Expenses are expected to remain roughly in line with Q3 in Q4. Bank of America's CEO, Brian Moynihan, expressed optimism about the company's future prospects, driven by its diversified businesses and investments in technology, including AI, to drive efficiency and improve customer experience.

Valuation and Dividend Yield

With a Price-to-Tangible Book Value (P/TBV) ratio of approximately 1.43 (derived from the given P/B Ratio of 1.32 and considering the tangible book value per share of $28.39), and a Dividend Yield of 2.03%, Bank of America's stock appears reasonably valued. The company's ROTC of 15.4% and expectations for continued NII growth support its dividend sustainability.

Management Insights

Brian Moynihan noted that the company aims to grow revenue faster than expenses, creating operating leverage, and expects the ROTC to continue to increase. He also mentioned that AI will help manage expenses, citing examples such as handling 2 million customer interactions and saving 10% of coding costs. The company's focus on technology and digital engagement is expected to drive future growth.

3. NewsRoom

Bank of America expands crypto access for wealth management clients

Dec -04

Source: reuters.com

Is Bank of America (BAC) Stock Outpacing Its Finance Peers This Year?

Dec -04

Source: zacks.com

BAC Opens Door to Crypto in Managed Portfolios: What Does This Mean?

Dec -04

Source: zacks.com

BofA Offers Exclusive FIFA World Cup 2026™ Custom Card Design and First Year Bonus Offer Available to New Cardholders

Dec -04

Source: prnewswire.com

First Look: Insurers, Auto Rules, AI and Fed Jitters

Dec -04

Source: gurufocus.com

Vikram Sahu approved as Bank of America India CEO by central bank, memo shows

Dec -03

Source: reuters.com

Warren Buffett's 52% Portfolio Rests on These Three Dividend Giants

Dec -02

Source: 247wallst.com

Should You Buy the Dip in Crypto ETFs?

Dec -02

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.20%)

6. Segments

Consumer Banking - Deposits

Expected Growth: 4.8%

The growth in this segment is slightly lower than the global average due to the competitive nature of deposit products and potential fluctuations in interest rates, which can affect the revenue generated from deposits. However, the steady demand for banking services supports a relatively stable growth.

Global Banking

Expected Growth: 5.5%

The expected growth is slightly higher than the global average due to the increasing demand for corporate banking services driven by global economic growth and the need for businesses to access capital markets. This segment is poised to benefit from the global economic expansion.

Consumer Banking - Consumer Lending

Expected Growth: 5.0%

The growth in consumer lending is expected to be near the global average, driven by steady consumer demand for credit products. However, it is slightly tempered by potential regulatory changes and economic uncertainty that could affect consumer creditworthiness.

Global Wealth & Investment Management (GWIM)

Expected Growth: 5.8%

GWIM is expected to grow faster than the global average, driven by the increasing demand for wealth management services among high net-worth individuals and the potential for strong market performance, which can boost investment income and fees.

All Other

Expected Growth: 0.0%

The growth in this category is expected to be neutral as it encompasses a wide range of non-core activities and one-off items that are difficult to predict and may not follow the overall growth trend of the bank's core business segments.

Global Markets

Expected Growth: 6.0%

The expected growth is higher than the global average, driven by the potential for increased market activity and the demand for financial products and services from institutional clients. This segment is sensitive to market conditions and can benefit from volatility and increased trading activity.

Unallocated Fully Taxable-Equivalent Adjustment

Expected Growth: 0.0%

The growth in this adjustment is expected to be neutral as it is not related to the operational performance of the bank's business segments but rather to accounting and tax adjustments.

7. Detailed Products

Consumer Banking

Provides checking and savings accounts, credit cards, home loans, and personal loans to individuals.

Global Wealth and Investment Management

Offers investment and wealth management services, including brokerage, investment advisory, and retirement services.

Global Banking

Provides corporate and investment banking services, including lending, treasury services, and investment banking.

Global Markets

Provides sales, trading, and research services for institutional clients across various asset classes.

Merrill Edge

Offers self-directed online brokerage services and investment advice for individuals.

U.S. Trust

Provides wealth management and investment services to high net worth individuals and families.

Business Banking

Offers financial solutions, including credit, cash management, and investment services, to small and medium-sized businesses.

8. Bank of America Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bank of America Corporation operates in a highly competitive industry, and customers have various alternatives to choose from. However, the switching costs are relatively high, which reduces the threat of substitutes.

Bargaining Power Of Customers

Bank of America Corporation has a large customer base, which reduces the bargaining power of individual customers. Additionally, the bank offers a wide range of financial products and services, making it difficult for customers to negotiate better terms.

Bargaining Power Of Suppliers

Bank of America Corporation has a diverse supplier base, which reduces the bargaining power of individual suppliers. The bank's large scale of operations also gives it significant negotiating power over its suppliers.

Threat Of New Entrants

The banking industry has significant barriers to entry, including regulatory hurdles and high capital requirements. This reduces the threat of new entrants and allows established players like Bank of America Corporation to maintain their market share.

Intensity Of Rivalry

The banking industry is highly competitive, with many established players competing for market share. Bank of America Corporation faces intense competition from other major banks, which can lead to pricing pressures and reduced profitability.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	53.41%
Debt Cost	10.82%
Equity Weight	46.59%
Equity Cost	10.82%
WACC	10.82%
Leverage	114.63%

11. Quality Control: Bank of America Corporation passed 2 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

JPMorgan Chase

A-Score: 6.7/10

Value: 5.3

Growth: 5.2

Quality: 6.5

Yield: 5.0

Momentum: 8.5

Volatility: 9.7

1-Year Total Return ->

East West Bank

A-Score: 6.6/10

Value: 5.8

Growth: 7.7

Quality: 8.1

Yield: 4.0

Momentum: 7.0

Volatility: 7.0

1-Year Total Return ->

Citigroup

A-Score: 6.2/10

Value: 6.7

Growth: 4.7

Quality: 4.4

Yield: 5.0

Momentum: 8.5

Volatility: 8.0

1-Year Total Return ->

Bank of America

A-Score: 6.2/10

Value: 5.6

Growth: 5.3

Quality: 5.0

Yield: 5.0

Momentum: 7.5

Volatility: 8.7

1-Year Total Return ->

Wells Fargo

A-Score: 6.1/10

Value: 5.9

Growth: 5.2

Quality: 5.7

Yield: 4.0

Momentum: 8.0

Volatility: 8.0

1-Year Total Return ->

Truist

A-Score: 5.8/10

Value: 4.8

Growth: 2.8

Quality: 5.5

Yield: 8.0

Momentum: 6.0

Volatility: 8.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

10.61%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

10.82%

Bank of America Corporation - US0605051046

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on BAC

1.c. Company Highlights

Stable Momentum

Medium Volatility

Fairly Valued

Earnings Beats

Revenues Beats

Strong Momentum

Average Quality

Revenues Miss

Lower Quality

Average Growth

Expensive

2. Bank of America Delivers Strong Q3 Earnings

Segment Performance

Outlook and Guidance

Valuation and Dividend Yield

Management Insights

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.20%)

6. Segments

Consumer Banking - Deposits

Expected Growth: 4.8%

Global Banking

Expected Growth: 5.5%

Consumer Banking - Consumer Lending

Expected Growth: 5.0%

Global Wealth & Investment Management (GWIM)

Expected Growth: 5.8%

All Other

Expected Growth: 0.0%

Global Markets

Expected Growth: 6.0%

Unallocated Fully Taxable-Equivalent Adjustment

Expected Growth: 0.0%

7. Detailed Products

Consumer Banking

Global Wealth and Investment Management

Global Banking

Global Markets

Merrill Edge

U.S. Trust

Business Banking

8. Bank of America Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Bank of America Corporation passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

53.95$

12.e Scoring ^Insights

12.f DCF ^BETA