Bank of America (BAC)

5.125% bond maturing December 29, 2049. It is very, very likely to be called in five years. They are an improving credit story; capital levels and profit are up. Headline risk has diminished.

Own 10% of all deposits in the US. Great retail branch brand. Has great investment banking in Merrill Lynch, and a great asset management business along with a great brokerage business. US growth, global growth, and a better housing market will help. Not expensive. This could easily trade at 2X Book. Great time to buy at these levels.

His preferences are J.P. Morgan (JPM-N) and Goldman Sachs (GS-N). J.P. Morgan has a better dividend, so this is what he would rather stick with. However, this bank has performed admirably, and he is a big believer that the US banks are dramatically undervalued. As interest rates rise, they’re going to get free money out of nowhere.

It is still early. There is not a lot of catalyst at this point to banks growing. Margins are anemic because interest rate curves are flat. Capital markets are starting to do well. You have to look at credibility of management. A black eye resulted when an error on their tier one capital was found. He would pass on this for these reasons, but also on most of the US banking industry.

She prefers C-N over this. But they are both trading at significant discount to their book value. There will be some pretty good catalysts for stocks in this space.

Likes the company and what is going on. Thinks the worst is a couple of years behind them now. Hasn’t performed all that well this year so far. Yield curve has flattened out, which doesn’t speak well for a retail banks earnings. This is well priced here and he would be a Buyer.

(Top Pick Jun 12/13, Up 19.49%) It has had some setbacks, not returning capital to shareholders. Still a play on housing recovery and rising interest rates over time. Slower than he would have liked. Buy on weakness in the low $16’s.

Very well run bank, and he thinks they will get it turned around, however they have taken a punch to the chin on their branding. If he were making an investment today, he would wait to see the sentiment get a little bit better. Would like to see them executing a little bit better. Would prefer something like Wells Fargo (WFC-N) instead. Also he would be more interested in focusing on an asset manager as opposed to a bank or insurance company that has strong business and wealth management.

$4 Billion mistake on the balance sheet created an opportunity. Likes it. There is a lot of low hanging fruit in the company. Trading at a big discount to book. Good exposure to loan growth, capital markets, housing market and the structure of the yield curve. Short term interest rates should start to move up. Stock is cheap.

Doesn’t own any of the money centered banks because there are not a lot of catalysts for growth. This bank has a little bit more work to do coming off the problems of 2008. There is still a lot of turmoil going on.

Royal Bank (RY-T), J.P. Morgan (JPM-N) or Bank of America (BAC-N)? A lot of part of 2013 for US banks looked fantastic, especially in January. However, something is going on there. There have been more fines with these organizations. US banks have been struggling. J.P. Morgan is better than most in terms of fundamentals. His target price for this bank is right where it is trading at, but it could go to the $83.40 level. He is partial to the US financials.

This bank was hurt badly during 2008-2009. Trading at 7X Book. Feels they did a great job of selling off non-core assets. Has also done a great job of trying to build up its capital although they have had some setbacks.

(A Top Pick July 30/13. Down 44.69%.) (Bought Jan 15 Calls at US$1.79.) These expire in 2015. They were up over $3.90 at their high. This bank fell precipitously when they announced the mispricing of some of the derivatives that they had.

The difficulty is that this bank is too big to fail and the attempt to raise their dividend failed, which will keep them in the doghouse for quite a while. US money centered banks are so big, they can be sitting in litigation for a long, long period of time which can erode their ability to grow their interest income. At the same time, if you are getting sluggish environment right across the board, or in parts of the businesses, wealth management is doing well, but trading is not. If the homebuilders market slows down this bank will be impacted.

He has tended to look at a movement away from the money centered banks because of the regulatory glare of the Dodd-Frank act, the Basel etc. which is a product of the global financial melt. Prefers banks which have a large exposure to credit risks or increasing interest rates. A safe way to do it is to invest through regional banks so he prefers BB&T (BBT-N) and Bank United (BKU-N).