Bank of America (BAC, Financial) is set to report its third-quarter earnings, with expected revenue of $28.3 billion, remaining flat year-over-year, and earnings per share projected at $0.77, a 14% decline from the previous year.
Berkshire Hathaway (BRK.A), led by Warren Buffett (Trades, Portfolio), has reduced its stake in Bank of America to below 10%, which releases it from the obligation to promptly report related transactions. This is notable as Buffett has been selling bank stocks like JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC), and U.S. Bancorp (USB) over recent years. He cited increased deposit liquidity and past financial crises as factors undermining confidence in the banking sector.
Despite the reduction in Berkshire’s stake, Brian Gilmartin, an investment manager at Trinity Asset Management, notes that Bank of America shares have shown resilience, climbing nearly 27% this year. Gilmartin highlights two main challenges for Bank of America: a liability-sensitive balance sheet, which can be concerning amid rising federal fund rates and yields, and the need for better expense management.
Since January 2020, major banks like Bank of America, JPMorgan Chase, and Citigroup (C) have underperformed the S&P 500. Gilmartin anticipates stronger earnings per share growth for Bank of America in 2025 and 2026 compared to 2024. However, investors will have to wait until January 2025 for further guidance.
