BA BAC Bank of America Corporation Loading... : Investor Sentiment and Bull/Bear Views

Bank of America is a low-margin mass-market bank with a large bond portfolio, so its margin is squeezed by current rates, unlike premium banks; he is negative on it.

Moynihan says the $1.21 billion fine relates to an old cease-and-desist order, the remediation expense is already embedded in the quarterly run rate and baseline, and there is a clear path to finish the work, limiting further cost surprises. He expects BofA's core loan and deposit growth, deposit repricing and balance-sheet efficiency to drive 8% net interest income growth this year and 8%+ next year, with net interest yield rising 15 basis points while peers' yields fall. He adds that trading and investment banking results were solid, pipelines are full, and higher rates are net positive for BofA because of its large non-interest-bearing deposit base.

Meredith Whitney views Bank of America's regulatory-fine disclosure as a serious negative because it undercuts investor confidence in the bank's expense discipline and near-term operating leverage, a key part of the prior investment case. She says the share reaction is ugly and the issue may not be fully behind the bank.