Bank of America: Why So Serious? The Meltdown Is Undeserved

Summary:

  • Bank of America has been oversold indeed, with it suffering a similar ailment to C, where both stocks are notably trading below their book values.
  • This is despite the sustained expansion in its NIY and RoTCE, implying the bank has been able to generate alpha despite the Fed’s sustained rate hike thus far.
  • For now, it appears that Mr. Market is increasingly concerned about BAC’s unrealized losses, which we believe to be unwarranted since most of them belong to HTM debt securities.
  • Then again, based on Powell’s pessimistic commentaries, it appears that many have adopted a sell first and think later attitude, especially since the US Treasuries Yields continue to climb.
  • As a result of the potential volatility, investors may want to monitor market sentiments for a little longer and only add if the critical support levels of $25s hold through in the near term.

Gold dollar inflation currency 3d symbol isolated white melt down financial background of crisis economy money finance investment business recession exchange loss market decrease economic low price.

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We previously covered Bank of America (NYSE:BAC) in July 2023, discussing its excellent performance in the FQ2’23 quarter, with stable deposits, robust liquidity sources, and growing profitability.

We continued to rate the stock as a


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.

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