BAC excoriated by Jim Sloan

*Bank of America managed to beat lowered estimates for Q3 results, but the important measures of net income, per share earnings, and return on assets all declined.

  • Everything positive at BAC (NII and NIM) came from rising rates over which, it has no control; negatives stem from a flubbed stress test, which it should have controlled.
  • BAC spiffs up its buildings and spends on technology and employees but shows little interest in shareholders, while executives got shares requiring $450M in buybacks to avoid dilution.
  • What did shareholders get? I think a wake-up call is in order for Bank of America management.

The trouble is that nothing has worked quite right for banks over the past decade and a half since the great financial crisis in which banks were featured. The rising rate climate was their chance to step on the gas and reward shareholders. It hasn’t happened. Instead I think Bank of America continues to struggle with a basic principle of capitalism which involves investors being rewarded fairly for the use of their capital.

I wonder if Buffett is pleased with BAC’s recent results.

Is it even worth investing in banks? Maybe just invest in financial services, asset managers or insurers. They reward shareholders more and don’t seem to be forever in the regulators’ penalty box.