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Bank of America Eliminates Its Five Dollar Debit Card Fee

Mark — Wed, 02 Nov 2011 03:33:30 +0000

It appears as if the voice of the customer has won out. Bank of America (BAC) has scrapped the plans to institute its $5 monthly fee on all debit card purchases. The banking giant caught a lot of flak over the past few weeks from customers, the media, and most online sites about the proposed debit card fees. The $5 charge seemed like the final straw as customers threatened to close their accounts and move their business to credit unions and local banks.

Debit Card Fee Programs Dropped

Bank of America had to scrap the plan when several of the big banks decided not to implement debit card charges that they had been planning. JPMorgan Chase (JPM) and Wells Fargo (WFC) tested debit card fees in some cities and decided against making them permanent. Citigroup (C) is planning to eliminate some of its own card fees. Bank of America could not maintain its debit card fees when the other big banks decided not to follow suit. Customers would have simply left and gone to one of the other big banking institutions.

The big banks learned that customers do have a limit and that you cannot just keep whopping them with fees. Customers stood up against the big banks and they won. I am glad to see that customers drew a line in the sand and were willing to move their money for a better deal elsewhere. (Find the best savings accounts online).

Does this mean the end of new fees for banking customers?

No, it does not. Banks are still raising the fees on checking accounts and will start to look for new ways to increase fees. I think that credit card fees could see more fees attached and savings accounts may even see new charges. Banks should consider offering new products to raise revenue and not just try to exploit their already existing customer base. It is good news however that customers were able to fight off this terrible business idea.

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Bank of America Keeps On Dropping

Mark — Wed, 01 Dec 2010 03:15:11 +0000

This has not been a good week for Bank of America. Shares of Bank of America (NYSE: BAC) dropped over 3% today to $10.95 per share today. The stock has been in a free fall over the past year losing nearly half of its value.Why is the stock dropping?

The banking giant dropped today due to fears over a potential damaging report from WikiLeaks. The Internet site is rumored to have damaging information about lending practices at the nation’s largest bank. The firm has already been penalized for security violations.

Lehman Brothers is currently suing Bank of America for $150 million dollars over derivatives transactions. It appears that Bank of America does rightfully owe Lehman the money but is trying to use unenforceable clauses to keep Lehman from collecting this money. It’s not a large amount of money for Bank of America but the lawsuit comes at a bad time for BofA.

Although the WikiLeaks report may be another black eye to Bank of America’s reputation, I doubt that it will do much to materially change the earnings capability of BofA. I think that the price drop is unjustified and remain a buyer of Bank of America’s shares.

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Bank of America Drops Another 3%

Mark — Thu, 21 Oct 2010 17:54:52 +0000

The past month has not been kind to Bank of America (BAC). Shares of BofA have dropped 16.8% over the last month. The stock was priced at $13.65 just a month ago. The banking giant saw its shares drop another 3.3% to $11.36. Bank of America’s shares have been very weak over the past few weeks and the stock has been in a freefall.

I have been adding more shares of Bank of America (BAC). That was just too low for me to pass up. Anytime the bank has dropped to these levels I have systematically added shares. The stock may drop more over the short term but I continue to be comfortable buying shares at these prices. I will use any weakness to add to my position in the nation’s largest bank.

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Portfolio Update

Mark — Tue, 14 Sep 2010 02:56:12 +0000

I added shares of Bank of America (BAC) and Wells Fargo (WFC) to my portfolio. Analysts are still down on the financial sector. I think that these stocks are still a great contrarian play. An economic rebound is coming and these companies will benefit the most in the coming years.

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Today’s Buys

Mark — Fri, 27 Aug 2010 18:02:44 +0000

Today, I picked up shares of Bank of America (BAC) at $12.50 and added shares of Wells Fargo at $23.50. I am still a big believer in the long term viability of the financial sector.

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Bank of America Drops 3%

Mark — Thu, 12 Aug 2010 05:12:17 +0000

Frequent readers of this blog will know that I have been long Bank of America (BAC) since the stock plummeted in 2009. I used the market weakness of yesterday to buy more shares of Bank of America. The stock dropped to $13.04 in the after hours market. I always use weakness to add to my position. Bank earnings may take a hit but I still believe that the stock is trading at a huge discount based on the earnings power of BofA.

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My Best Picks Over The Past Month

Mark — Tue, 20 Jul 2010 19:27:51 +0000

US Steel (X) has had a nice bounce since I recommended that investors pick up shares in the mid $30’s at the beginning of the month. Shares are up $7 giving investors an 18% gain.

Back on June 25th I recommended that investors get long Research In Motion (RIMM) when shares hit the $40’s. Shares appear to have bottomed out right at $47. The stock is up to $55 now. Investors should take profits now. I think that Research In Motion is headed lower.

On July 5th I suggested that investors get long Intel (INTC) at $19.48 and General Electric (GE) at $13.97. Shares of Intel have rallied 10.5% to over $21.50. GE has rallied 7.1%. I think that shares of GE have much more upside so I will continue to hold shares of General Electric.

My Current Picks

Bank of America (BAC) is a steal at $13 per share.

Exxon Mobil (XOM) is being given away at under $60.

Apple (AAPL) is worth buying at $245 a share. I would get long Apple shares.

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I Am Still On The BofA Bandwagon

Mark — Mon, 19 Jul 2010 17:56:56 +0000

I added more shares of Bank of America (BAC) through my DRIP plan today. Shares of Bank of America trade at just $13.46. The stock has been punished due to its lackluster earnings report and the expected negative impact that financial reform may have on BofA’s earnings. Let’s take a look at the pros and cons of investing in Bank of America.

The negatives for Bank of America are as follows:

1) Credit losses continue to rise as delinquency rates are increasing. Bank of America has tremendous exposure to the real estate market and credit card market.

2) Financial reform is expected to put a cap on interchange rates. This would severely impact debit card fee income.

3) Trading revenues dropped substantially after bolstering the bank in Q1.

4) Much of last quarter’s profitability was due to one time gains such as the sales of bank assets.

So, why should you buy the shares?

Bank of America trades at a discount to book value. The bank’s earnings power is still incredibly strong. Fee income could easily offset any future losses. I expect Bank of America to find new ways of generating fee income by charging for services that used to be free. Increased checking account service charges and increased account activity fees.

The large deposit base gives Bank of America the cheapest form of capital. Bank of America has enough cash reserves to weather any economic downturn.

The downside is already baked into the stock’s price. Analysts have been rushing to downgrade shares of BofA. This is a bank that could easily earn $3 a share in in 5 years. Even if Bank of America only earns $2 per share 3 years from now, the stock still only trades at just 6.5 times earnings.

This is definitely not an overnight play. It may take years for things to shake out at Bank of America. However, I think that patient long term investors will be rewarded when the economy rebounds.

Disclosure: I do own shares of Bank of America.

Photo by: taberandrew

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4 Large Cap Stocks To Buy Now

Mark — Mon, 05 Jul 2010 09:48:26 +0000

The current market decline has created a great opportunity for value investors. Long term investors do not have to chase speculative growth names because the market has put a lot of large cap U.S. companies on sale. There are a number of household names trading at less than 10 times earnings. Listed below are 4 companies that are selling at a discount to their intrinsic value.

Intel Corporation (INTC)

The recent Dow drop has turned Intel into an accidental high yielder. Intel trades just under 10 times next year’s earnings and has a dividend yield of 3.3%. Intel has a tremendous balance sheet as many tech bellwethers do. Intel has over $16 billion dollars in cash and just $2.5 billion dollars in debt. Intel is a great buy with tremendous free cash flow and an 11.5% earnings growth rate.

Corning (GLW)

Corning is probably the cheapest stock on the list. Shares trade at just 8 times next year’s earnings and the company has a projected growth rate of 11.6% over the next 5 years. Corning has a fortified balance sheet with almost $4 billion in cash and approximately $2 billion dollars in debt. Corning is a cash cow that generates significant operating cash flow. Shares trade just above 1.5 times book value.

Bank of America (BAC)

The nation’s most recognizable bank is trading at just 7 times next year’s earnings estimate. Bank of America has the earnings power to overcome any significant losses in its loan portfolio. The lax financial reform bill shows that the government is still backing the big banks. At just $13.70 a share, Bank of America is a buy.

General Electric (GE)

General Electric has fallen to buy territory again at under $14 a share. Long term investors are getting a great chance to buy a global franchise that trades at just 10 times forward earnings. Even with the dividend cut last year, GE is still yielding almost 3%.

Disclosure: I do own shares of Bank of America and General Electric.

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The One Big Bank That You Never Hear About

Mark — Mon, 28 Jun 2010 07:25:32 +0000

While Bank of America (BAC), JPMorgan Chase (JPM), and Wells Fargo (WFC) dominate the headlines, there is one large bank that just slowly continues to grow away from the limelight. That bank is US Bancorp (USB). US Bank took TARP funds just like the other big banks but unlike the other big banks has been able to escape the public backlash.

US Bank has been a longtime Buffet holding because of the company’s great management team and conservative approach to lending. The company’s management is a big reason why the banking giant’s loan portfolio has been outperforming that of its banking peers. It’s non performing loans percentage is much lower than Citigroup and Bank of America. US Bank is the 5th largest bank in the US based on asset size and US Bank has been quietly increasing its size by buying up failed banks over the past year. There have been continuous rumors that US Bancorp may acquire a larger regional bank to expand its operations.

US Bancorp has reported nearly two consecutive years of profitability. Last quarter’s earnings were very solid. USB had earnings of $648 million dollars and an EPS of 34 cents per share. Profitability increased 55% and total deposits increased almost 14%. The encouraging news was that consumer loan delinquency was decelerating even as the bank was increasing its reserves for loan losses. Investors should pay attention to the July 21st earnings release to see how US Bancorp’s sizeable commercial loan portfolio is holding up.

US Bank pays out a much higher dividend than its banking competitors. Shares of US Bancorp are not expensive but are not particularly cheap either at $23. Shares trade at 11 times forward earnings and 1.8 times book value.

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