This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

For Bank of America, It's About Cost Cuts, Not Growth

"We think it will be hard for Bank of America to grow revenues faster than the 'average' bank," Orenbuch wrote. He expects "incremental improvement in fee income in 2013 relative to 2012 with growth in service charges, investment banking income and trading."

In the meantime, far more than peers like Citigroup, Wells Fargo and JPMorgan Chase (JPM - Get Report), Bank of America has relied on "releases" of capital it set aside to cover bad loans in order to boost its earnings. Such reserve releases equaled 86% of Bank of America's earnings last quarter and 163% of the bank's profits in the fourth quarter of 2011, according to Morgan Stanley analyst Betsy Graseck. She predicts such releases will equate to 72% of Bank of America's earnings in the fourth quarter. That compares to 17% at JPMorgan, which announced its fourth quarter earnings Wednesday.

Of course Bank of America's success will in many ways be tied to the overall economy, as Wells Fargo analyst Matt Burnell contended in a Jan. 7 report.

"In our view, Bank of America 's business remains the most dependent of its peers on U.S. economic growth. However, we would not expect the stock to trade at or significantly above tangible book value until management demonstrates greater progress in resolving legacy mortgage issues and restoring a more meaningful dividend," he wrote.

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BAC $15.56 0.00%
JPM $62.84 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%
GOOG $524.05 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs