Evercore analyst Glenn Schorr reiterated a Buy rating on Bank of America Corp (NYSE:BAC) with an $18 price target last week after meeting with CFO Bruce Thompson and learning that the company plans to become “a little more offensive on growth.”

After a long period of Bank of America dealing with “legacy issues, cutting costs and getting mostly onsides with regulations,” Schorr sees potential in BAC’s growth directive. If rates lift to provide some relief, Schorr notes that management sees potential for “further expense cuts, [and opportunities] to optimize capital.” He continued, “We think the stock continues to grind higher as BAC executes and investors see a reasonably priced, levered play on higher rates and a slowly improving US economy.” Schorr substantiates his growth theory by noting BAC’s recent firing of several “financial advisors, sales specialists, and commercial/small biz bankers.”

Schorr believes that BAC is going to put pressure on its managers to see more loan growth relative to past loan rates. He continued, “Mgmt is spending time on setting the right risk limits and expects managers to utilize them and see loan growth something more in-line with the overall market.” The analyst clarifies, “we do not think this means BAC is looking to lower risk parameters to chase growth, they just feel with their scale and footprint, if the market is growing say 2.5%, BAC should too.” Schorr notes that BAC will likely “expand its loan balances more aggressively with the right customers.”

Coming into the next Comprehensive Capital Analysis and Review cycle, or CCAR cycle, Bank of America pointed out three things that it can guarantee: having four to six quarters of “clean earnings,” or even some growth; “using what it learned from past CCARs;” and third, continuing to limit negatives, which BAC has already successfully decreased by half. Schorr believes that “higher payouts will follow,” assuming thank BAC will grow slowly and continue successful cost control.

Going forward, Schorr believes BAC should show “some signs of improvement” in the second quarter, but he has “[tempered his] enthusiasm for the year-on-year comps.”

Glenn Schorr has a 78% overall success rate recommending stocks with a +25.9% average return per rating.

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