Bank Of America Corp.

The banking sector plays a pivotal role in our daily lives. This series explores the sector, its driving factors, and its key indicators and latest trends.

In August, JPMorgan Chase (JPM) and Bank of America Merrill Lynch (BAC) suggested that investors not buy just yet. Their opinions are now changing.

You’ve likely heard about it in the financial press recently: this ominous, notorious thing called the “yield curve inversion.”

White House economic advisor Larry Kudlow doesn’t see a looming recession. However, recession fears grew as the yield curve inverted last week.

There weren’t any real surprises in Berkshire Hathaway’s 13F for the second quarter. In some ways, the 13F replicated the first quarter.

On Wednesday, Bank of America (BAC) reported mixed second-quarter results. The bank’s profitability beat analysts’ expectation.

Bank of America’s (BAC) credit quality across its consumer and commercial portfolios remained stable at the end of the first quarter.

Berkshire Hathaway (BRK-B) chair Warren Buffett has never been a fan of cryptocurrencies like bitcoin.

Bank of America (BAC) has impressed investors with its financial performance. We expect Bank of America to sustain the momentum in 2019.

On August 23, Wells Fargo (WFC) announced that it planned to terminate the jobs of 638 employees in its home mortgage division.

On a TTM basis, JPMorgan Chase trades at a price-to-book ratio of 1.7x, while the industry average stands at 1.6x.

Berkshire Hathaway (BRK.B) was sitting on liquidity of $118 billion at the end of the first quarter.

JPMorgan Chase (JPM) stock has generated a return of 21.0% in the last six months and 31.3% over the past year.

Evercore generated 25% of its fees from its technology, media, and telecom sector, 20% from its energy sector, and 17% from its financials sector in 4Q17.

Bank of America’s dividend yield of 1.5% and PE of 20.6x compares to a sector average dividend yield of 2% and PE of 20.7x.

Goldman Sachs’s (GS) Investment Banking segment generated revenues of $1.8 billion in 3Q17, which was a 4% rise compared to 2Q17.

Wells Fargo (WFC) stock has risen 13.0% over the past six months and 10.1% over the past year.

In May, 13 of the 31 analysts covering Wells Fargo rated the stock as a “buy,” 12 analysts rated it as a “hold,” and six analysts rated it as a “sell.”

The US GDP growth outlook is near its potential at ~3%, with increased investment in infrastructure.

Bank of America’s CEO has repeatedly discussed the importance of cost controls and how such measures could significantly boost BAC’s earnings over the next few years.

Bank of America (BAC) is extremely sensitive to interest rate changes. Its latest 10-Q filing shows that its asset sensitivity has risen in 2Q15.

Wells Fargo has the largest loan portfolio among US banks (XLF). As of 2Q16, the bank has a loan portfolio of $952 billion.

Wells Fargo (WFC) is less exposed to the risky investment banking and trading business than its peers JPMorgan Chase (JPM), Citigroup (C), and Bank of America (BAC).

For Wells Fargo, net interest income makes up 53% of its total income while for JPMorgan Chase (JPM), net interest income makes up 46% of its total income.

JPMorgan Chase (JPM) and Wells Fargo (WFC) reported profits of $6.2 billion and $5.6 billion, respectively, in the most recent quarter.

Bank of America (BAC) is better positioned to gain from an interest rate hike than JPMorgan Chase (JPM). It’s more sensitive to interest rate changes.

The Federal Reserve’s stress test results indicate that Wells Fargo (WFC) has sufficient capital to absorb the estimated $25 billion in losses it is projected to incur under the test’s worst-case scenario.

Wells Fargo (WFC) is the largest mortgage lender in the US, operating primarily as a retail and commercial bank. It is been the most profitable bank in its peer group, posting a return of 10% on shareholder’s equity and ~1.3% on assets in 2015.

Wells Fargo (WFC) has been considered the strongest and most steady among the “too big to fail” banks in the United States for years.

In 1Q16, Wells Fargo’s revenue grew 4% to $22.2 billion. Bank of America’s (BAC) revenue fell 7% YoY (year-over-year) to $19.5 billion.

Bank of America’s (BAC) earnings are extremely sensitive to interest rate changes. Low interest rates have weighed on the bank’s top line.

The Consumer Financial Protection Bureau was established to protect consumers’ interests by implementing federal consumer financial laws.

Investment-grade bond yields rose 8 basis points month-over-month and ended at 3.5% on November 30 due to high expectations of an interest rate hike in the December policy meeting.

PLVVX holds fixed income securities in both long and short positions. The fund also holds derivative forward, future, and swap agreements on government securities, indexes, and currencies.

Analysts who favor the Dodd-Frank Act believe it will protect the investing community and consumers. Critics believe it will hamper economic growth and hurt competitiveness.

During the period between September 2008 and March 2009, US stock markets plunged, and the financial sector fell 60% in value.

The Dodd-Frank Act is a financial reform legislation passed in an attempt to prevent events similar to the 2009 financial crisis from occurring again.

Since the financial crisis, the Fed has enforced regulations for the capital strength and liquidity of 16 systematically important financial institutions.

Goldman Sachs engages in asset management, investment banking, wealth management, institutional sales, and trading activities across asset classes as well as regions.

Morgan Stanley divides its non-interest expenses into compensation and non-compensation. It’s compensation expenses (and benefits) are ~80% of this class.

Discover Financial Services (DFS) has two operating segments: Direct Banking and Payment Services. Payment Services is comparatively small.

Certain industries typically outperform at various phases of business cycles. This provides important clues to investors and helps them manage their portfolios.

In the US, J.P. Morgan competes with Bank of America (BAC), Goldman Sachs (GS), and Morgan Stanley (MS), the leading players in investment banking.

J.P. Morgan Commercial Banking clients can access the Consumer and Community Banking segment’s commercial credit cards, payments services, and branch network.

Banks like US Bancorp (USB) and Wells Fargo (WFC) have an advantage over J.P. Morgan in terms of debt rating. Both banks secure higher ratings.

The number of J.P. Morgan active mobile customers has more than tripled since 2010. As a result, the bank is adapting its digital capabilities.

Consumer and Community Banking is the biggest of J.P. Morgan’s four segments. Corporate and Investment Banking follows, with 34% of revenues.

In this series, you’ll learn what value J.P. Morgan holds for its shareholders, about its various businesses, and how it compares with other big banks.

The quantitative easing policy adopted by the Federal Reserve at the end of 2008 to boost economic growth included a drastic reduction in interest rates.

Lower funding costs determine a bank’s net interest margin. A bank has funding cost advantage when it pays less interest on borrowed funds and deposits.