Analyzing Bank of America (BAC)

By Douglas A. McIntyre Published Dec 5, 4:09AM EST

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By Yaser Anwar, CSC of Equity Investment Ideas

BAC is doing quite well lately evident by the fact that BAC has had the greatest improvement on a sequential basis of around eight points. The 3rd Q demonstrated the progress that it has made in executing cost saves from the MBNA acquisition. As of September 30, cost savings were $795 million, well above the full year goal of $675 million, and imply a full-year savings of well over $1 billion (the acquisition is accretive in 07).
Investors should anticipate the non-mortgage consumer, commercial lending and market sensitive fee-based businesses to drive revenue growth in 2007 as they did in 06.
I believe that continued solid credit quality and efficiency improvements are likely to make a positive contribution to the company’s earnings growth. The acquisition of MBNA was an opportunity for BAC to add higher returning loans to its portfolio and help mitigate the effects of a challenging interest rate environment.
BAC management needs to show that they can improve the value in having a national franchise and can sustain some meaningful organic revenue growth. The downside to BAC is limited by the ongoing share buybacks and the attractive 4+% dividend yield alongside the low multiple it is trading at.
Also- recently BAC mentioned they will be having a new CFO. Joe Price’s circle of competence lies in in finance, auditing and, in particular, risk management make him a solid choice for the position.

Update 1:35 AM– My investment club owns BAC (forgot to include earlier!)

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.