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Assets continue to grow, but so has every shareholder's piece of the pie.

Even after Bank of America gets back on track, earnings per share may disappoint current value projections.

The opportunity cost of investing in Bank of America is very high.

Every Bank of America (NYSE:BAC) investor dreams of the day when litigation fees and legacy issues subside to unlock the bank's true earnings power. And, even after tripling from their recessionary lows, to the current price of $15.59 per share, the typical thesis has the company trading closer to $30, which implies that another double is in-store.

This thesis may eventually play out, however, the major headwinds have spanned such a long amount of time that it's easy to forget one underlying problem that shareholders are going to have to stomach once the bank is in the clear. And, that is the much higher balance of shares outstanding.

Negative Effects

Held back by the low interest rate environment, net interest income accounted for 45% of Bank of America's revenues (net of interest expenses) last quarter. Diversified revenue streams have helped, but this major line item is directly tied to total assets, that are now up to $2.17 trillion dollars. Looking back, way back, this balance is 48.7% higher than the bank's pre-Countrywide total of $1.459 trillion, at the end of 2006.

Asset growth and this giant figure are two of the items that bulls rally behind when projecting a higher future value, but this doesn't consider the massive dilution from an equally fast rising balance of shares outstanding. Up 129% during the same time, additional shares outstanding have driven down assets per share, a key component in all growth calculations, to $206 (down 35% from $317.6 per share in 2006).

Working from this angle, and plugging in a return on asset goal of 1% (compared to last quarter's 0.42%), net income per share would only come in at $2.06. That's 35% lower that what could have been produced with the per share number of assets that shareholders had back in 2006.

There is still a lot of work to complete to move the needle up to a 1% return on assets, but if and when that time comes, it's hard to expect that Bank of America's earnings would be valued higher than Wells Fargo's (NYSE:WFC) P/E ratio of 12.7. This is assuming a lot, but I hope we can agree that Wells Fargo provides a good benchmark to use to value a profitable bank under current market conditions.

However, there is a slight problem with this line of thinking, because applying a P/E ratio of 12.7 means that Bank of America's stock would only be worth $26.16 per share. This would still be good for a 68% increase, but not quite worth the $30 per share that some shareholders appear to believe in. And, more importantly, there is absolutely no telling how long investors will have to wait.

Wells Fargo Continues To Move Along Like Wells Fargo

To help illustrate the opposite side of this coin, you guessed it, I only had to turn to Buffett's favorite bank Wells Fargo.

Since the end of 2006, Wells Fargo's assets have grown 231%, to $1.59 trillion dollars. During the same time, diluted shares outstanding also moved up, but by a much lower 53.9%. Combined, these two moves pushed assets per share up by more than 100%, to $304 per share. And, while Bank of America investors wait, Wells Fargo consistently drives in a return on asset ratio of 1.47%, like it did last quarter .

Trading near its 52-week high of $53.08, there has been a lot of talk about the benefit of share repurchases executed at multiples of book value. But, from this angle, I believe we get a better look at what Wells Fargo's management has been buying. And, considering that 39.4 million shares were bought last quarter, and that we were told that an additional 19.4 million shares are expected to be purchased in the 3rd quarter, it's safe to say that management has and will continue to buy back a material amount of its outstanding balance.

Bottom Line

Projecting future earnings based on higher asset balances will show net income improvements, but a full picture of what investors can expect to earn on a per share basis is the only way to think about value. Bank of America may still have a lot of growth in-store, but the amount of time it will take to materialize is still unknown. And, looking back, the cost of that time has been significant compared to what shareholders could have earned on an investment in Wells Fargo.

Disclosure: The author is long WFC. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I own WFC Warrants.