Bank of America Corp (NYSE: BAC) and Wells Fargo & Co ( WFC) continued a mixed earnings season for big bank stocks on Friday morning. Neither company wowed Wall Street, despite both banks reporting third quarter earnings beats.
Bank of America picked up where JPMorgan Chase & Co. ( JPM) and Citigroup Inc ( C) left off on Thursday when it reported strong core banking numbers and lackluster trading revenue.
Bank of America reported earnings per share of 48 cents on revenue of $22.07 billion. Both numbers topped consensus analyst estimates of 45 cents and $21.97 billion, respectively.
[Read: Buffett Snags Bank of America (BAC) Stock at 70 Percent Discount.]
BAC also reported a 22 percent decline in fixed-income trading revenue, which dropped to $2.152 billion. Bank trading revenues have suffered in 2017 thanks to historically low volatility in global financial markets.
However, Bank of America’s consumer banking business delivered strong numbers across the board. Net interest income of $11.4 billion, loans of $927.1 million and deposits of $1.284 trillion all topped analyst expectations.
Wells Fargo, on the other hand, had a more unique quarter due to its ongoing legal issues stemming from its fraudulent accounts scandal last year.
WFC reported EPS of $1.04, barely topping analyst expectations of $1.03. Revenue of $21.93 fell short of consensus estimates of $22.4 billion.
Wells Fargo’s quarter was weighed down by a staggering $1 billion in litigation costs, which made up a majority of the bank’s $1.3 billion in total operating costs in the quarter. Wells Fargo reported nearly a $500 million increase in net interest income to $12.48 billion but still missed analysts’ target of $13.14 billion.
WFC’s most famous and wealthy investor, Warren Buffett, is sticking with the company despite its recent struggles.
“Tim Sloan has my faith,” Buffett said of Wells Fargo’s new CEO earlier this month. “When you have a problem, you have to jump on it.”
The Buckingham Research Group analyst James Mitchell prefers Bank of America as his top big bank stock headed into 2018.
“With the stock trading at just 11.1x 2018E EPS, we don’t believe the market is fully appreciating its above average asset sensitivity via a material mix shift in deposits and potentially lower deposit betas this cycle, as well as its significant expense flexibility beyond its $53 billion expense target for next year,” Mitchell says.
[See: The 7 Best Bank Stocks to Buy for 2017.]
Buckingham has a “buy” rating and $30 price target for Bank of America.
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Bank of America (BAC), Wells Fargo (WFC) Report Mixed Earnings originally appeared on usnews.com
