Bank of America is the second-largest bank in the U.S. — after JPMorgan Chase — handling roughly $3.24 trillion in total assets as of the second quarter of 2022. Here is a breakdown of how Bank of America stock is performing, how the company is faring and whether or not now is the right time to invest in the company.
Bank of America: A Healthy-Looking Financial Stock
Over the past year, Bank of America stock, NYSE: BAC, has fallen 16%, on par with the KBW Nasdaq Bank Index. However, the company’s performance has been strong enough that analysts’ consensus rating, as reported by The Wall Street Journal, has been a steady “overweight” over the last several months, meaning analysts expect the stock’s performance to improve. The consensus is based on ratings ranging from “buy” to “sell,” with 14 of 28 analysts rating the stock a “buy.”
Bank of America’s earnings per share fell to 73 cents, a 32% decline compared to the second quarter of 2021 due in part to a roughly $500 million provision for credit losses vs. a $1.6 billion benefit for the year before. Despite the decline, the EPS beat analysts’ forecast of 75 cents per share, according to CNBC. Revenue, which increased 6% to $22.79 billion year over year, beat analysts’ forecast of $22.67 billion.
“Solid client activity across our businesses, coupled with higher interest rates, drove strong net interest income growth and allowed us to perform well in a weakened capital markets environment,” CEO and Chair Brian Moynihan said in a statement.
Bank of America’s Historic Bond Offering
Last year, Bank of America announced a plan to sell $15 billion in bonds. It was a record-breaking deal, announced just one day after JPMorgan Chase & Co. announced a similar but smaller offering worth $13 billion and Goldman Sachs Group sold $6 billion in new bond notes.
Investors responded favorably to Bank of America’s new bond offering, with one source claiming that investors bought to the tune of approximately $25 billion. That positioned Bank of America to borrow at lower rates than planned. The company planned to use its proceeds from the bond sale for overall corporate needs, according to a spokesperson.
An Expanded Commitment To Housing Affordability
Last year, Bank of America announced plans to triple its investment in affordable homeownership — from $5 billion in 2019 to $15 billion through 2025. The company plans to help more than 60,000 consumers purchase homes. As of October 2021, Bank of America had already placed more than 29,000 people in homes, CNBC reported. The program provides affordable loans, plus down payments and closing cost grants.
A Focus on Retaining Talent Through a Pandemic
Bank of America also made headlines for announcing that it would be providing pay raises for analysts, associates, vice presidents and international staff. In light of the COVID-19 pandemic, the bank aimed to recognize the increased workloads its workers continue to face.
Also last year, Bank of America announced it had exceeded its five-year goal to hire 10,000 individuals from low- and moderate-income communities through its Pathways program. Currently two years ahead of schedule, the bank expanded the program and has committed to an additional 10,000 hires by 2025 through expanded partnerships with community colleges and local chapters of organizations such as the National Urban League.
Last month, Bank of America raised its minimum wage to $22 per hour, increasing minimum annual salaries for full-time employees to over $45,000. The next step, according to a May 23rd press release, is a $25-per-hour minimum by 2025.
Bank of America at a Glance
Here’s the 10,000-foot view based on the company’s second-quarter 2022 earnings report unless otherwise indicated:
|Headquarters||Charlotte, North Carolina|
|Total Assets||$3.24 trillion|
|Total Liabilities||$2.97 trillion|
|Full-Year Revenue 2021||$93.85 billion|
Here is an overview of the company’s business, according to estimates on its website:
|Clients||67 million consumer and small business clients|
Bank of America’s Market Cap: $268.14B
Market capitalization is determined by the total dollar value of a company’s outstanding shares, which helps investors determine the relative size of a company. Bank of America’s market cap, which sits at $268.14 billion as of Aug. 2nd, reflects how the overall market values the company.
Bank of America’s Net Worth: $449.1B
Market caps offer just one view of what the market values a company at. That value is also susceptible to change on an almost hourly basis due to external market forces and investors fighting over the value of shares. The GOBankingRates Evaluation, however, calculates a company’s net worth based on full-year reports of income and profit while also taking into consideration its assets and liabilities.
Based on the company’s revenue and profits from the last three years, Bank of America is worth just over $449.1 billion.
A Company Performing Well in Challenging Times
Bank of America appears to be weathering the volatile post-pandemic economy with resolve and focus.
The company has weathered hard times before. Bank of America CEO Brian Moynihan has been credited with steering the company out of the 2008 financial crisis by “methodically overhauling and streamlining” its business model, reported The Post and Courier in November 2017. His strategy included closing branches, terminating employees and cutting operating costs. He also made a significant investment choice by purchasing Merrill Lynch in 2008 — completed in 2009 — and integrating it into BofA’s wealth management firm.
Customer deposits increased under Moynihan’s watch, and in the third quarter of 2021 exceeded $1 trillion for the first time. In the second quarter of 2022, deposits rose 10%, setting a record average above $1 trillion. In addition, client balances rose 4% and combined credit and debit spending rose 10%, according to a press release that accompanied the earnings report.
It appears that Moynihan is again navigating a difficult period with relative success — this time, investing in products and people that will help steer the bank through the economic stress and uncertainty of the next phase of COVID-19. Investors may want to keep a close eye on Bank of America, its next moves and its better-than-expected stock performance in the financial sector.
Data is accurate as of Aug. 2, 2022, unless otherwise noted, and subject to change.
Methodology: The GOBankingRates Evaluation assesses a company’s net worth based on the company’s total assets, total liabilities, and revenue and net income from the last three years. Base value is established by subtracting total liabilities from total assets from the company’s last full fiscal year. Income value is established by taking the average of the revenue from the last three full fiscal years, plus 10 times the average of the net profits from the last three full fiscal years, and then calculating the average of those two figures. The final GOBankingRates Evaluation number is the sum of the base value and the income value.
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