BofA commits $25 billion to private credit deals, memo shows | ReutersSkip to main content[Exclusive news, data and analytics for financial market professionalsLearn more aboutRefinitiv]Bank of America logo appears in this illustration taken December 1, 2025. REUTERS/Dado Ruvic/Illustration/File Photo [Purchase Licensing Rights, opens new tab]Feb 19 (Reuters) - Bank of America [(BAC.N), opens new tab] is committing $25 billion to private credit deals, according to an internal memo seen by Reuters.Traditiona ...

Core Insights - Bank of America (BAC) is launching a no-fee loyalty program, BofA Rewards, on May 27, which will expand eligibility to over 30 million existing customers with personal checking accounts, turning basic checking into a gateway for deeper engagement [1][9] Group 1: Loyalty Program and Customer Engagement - The BofA Rewards program ties membership to checking accounts, encouraging customers to centralize bill payments, debit spending, and direct deposits, which can lead to more stable and lower-cost deposits [2] - The program aims to drive fee-based revenue by offering credit card rewards bonuses ranging from 10% to 75%, which can increase card adoption and everyday spending, thereby enhancing interchange income and net interest income (NII) for revolvers [3] - BAC Rewards includes discounts on home and auto loans and access to cash-back deals from over 15,000 brands, designed to increase borrowing and purchasing activity through the bank [4] Group 2: Competitive Landscape - JPMorgan is expanding cross-sell opportunities by adding 160 Chase branches and using data-driven offers to guide customers into various financial products [6] - Citigroup is combining its U.S. retail bank with wealth management to streamline services for clients, enhancing cross-sell capabilities [7] Group 3: Financial Performance and Valuation - Bank of America's shares have increased by 10.3% over the past six months [8] - The bank trades at a 12-month trailing price-to-tangible book (P/TB) ratio of 1.93X, which is below the industry average [10] - The Zacks Consensus Estimate indicates year-over-year earnings growth of 12.9% for 2026 and 14.5% for 2027, although recent estimates have been revised lower [11]

Core Insights - Goldman Sachs Conviction List features top stock picks for institutional and high-net-worth clients, highlighting companies with strong growth and income potential [1][2] - Five dividend-paying companies have been on the Conviction List for extended periods, all rated as Buy by Goldman Sachs [1] Company Summaries - **Bank of America (NYSE: BAC)**: - Dividend yield of 2.06% - Target price set at $67 - On the Conviction List for 362 days - Operates in Global Markets, Global Banking, Global Wealth & Investment Management, and Consumer Banking segments [1][2] - **Johnson & Johnson (NYSE: JNJ)**: - Dividend yield of 2.10% - Target price set at $250 - On the Conviction List for 275 days - Focuses on pharmaceuticals, biotechnology, and medical devices across Innovative Medicine and MedTech segments [1][2] - **Huntington Ingalls Industries (NYSE: HII)**: - Dividend yield of 1.33% - Target price set at $425 - On the Conviction List for 214 days - Engages in designing and constructing military ships and offers various naval nuclear support services [1][2] - **Duke Energy (NYSE: DUK)**: - Dividend yield of 3.37% - Target price set at $141 - On the Conviction List for 214 days - Operates in Electric Utilities and Infrastructure and Gas Utilities and Infrastructure segments [1][2] - **Kontoor Brands (NYSE: KTB)**: - Dividend yield of 3.09% - Target price set at $84 - On the Conviction List for 214 days - A global lifestyle apparel company with brands like Wrangler and Lee [1][2]

Group 1: Berkshire Hathaway and Warren Buffett's Legacy - Warren Buffett has stepped down as CEO of Berkshire Hathaway but remains chairman of the board, with his investment legacy continuing through the company's equities portfolio [1] - Berkshire Hathaway is known for its long-term investment strategy, suggesting that stocks chosen by Buffett will likely remain in the portfolio for many years [2] - In his final years as CEO, Buffett sold 29% of Berkshire's stake in Bank of America while increasing investments in Domino's Pizza for four consecutive quarters [2][4] Group 2: Bank of America and Market Performance - Despite selling a portion of its Bank of America holdings, the bank remains one of Berkshire's top positions, being the third-largest in the portfolio by the end of Q3 2025 [4] - Large bank stocks have recently performed well, but there are growing concerns about valuations, leading to a sell-off in this subsector as 2026 begins [5] Group 3: Domino's Pizza Investment - Berkshire Hathaway purchased approximately $1.3 billion worth of Domino's Pizza stock by the end of Q3 2025, despite the company's stock being down over 21% in the past year due to competition and inflation [6][8] - Domino's Pizza is recognized for its resilience, benefiting from the recession-proof nature of pizza and its ability to capture market share [9] - The company is tech-forward with a well-designed app and delivery system, and management plans to improve performance through value offerings, new menu items, and a focus on profitable growth [9]

Market Overview - Major indices closed higher, with technology stocks leading the gains. The Dow Jones increased by 129.47 points (0.26%) to 49,662.66, the Nasdaq rose by 175.25 points (0.78%) to 22,753.63, and the S&P 500 gained 38.09 points (0.56%) to 6,881.31 [1] - European markets also saw gains, with the DAX30 up by 264.43 points (1.06%) to 25,269.77, the FTSE 100 rising by 131.73 points (1.25%) to 10,687.90, and the CAC40 increasing by 67.57 points (0.81%) to 8,429.03 [1] Cryptocurrency - Bitcoin fell over 1.8% to $66,298, while Ethereum dropped more than 2% to $1,947.26 [2] Commodities - Spot gold briefly surpassed $5,000 before closing at $4,976.39 [3] - WTI crude oil rose by 4.6%, closing around $65 per barrel, while Brent crude surpassed $70 per barrel for the first time in over two weeks [4] Economic Data - U.S. industrial production growth reached its highest level in nearly a year, with a 0.7% increase driven by broad manufacturing growth and healthy utility output. Manufacturing output alone grew by 0.6%, marking the largest increase since February 2025 [5] - New housing starts in the U.S. rose to their highest level in five months, with a year-over-year increase of 6.2%, reaching an annualized rate of 1.4 million units [5] Federal Reserve Insights - The latest Federal Reserve meeting minutes revealed a shift in focus from labor market risks to inflation concerns, with officials warning that progress in reducing inflation may be slower and more uneven than expected [7] - There is little willingness among Federal Reserve officials to lower interest rates, with most preferring to see more progress on inflation before considering any cuts [8] Company News - Figma reported Q4 revenue of $300 million, a 40% year-over-year increase, exceeding guidance. The company anticipates Q1 revenue between $315 million and $317 million [10] - Bank of America is expanding its rewards program to attract more customers, allowing all checking account holders to enjoy rewards regardless of their balance, aiming to double profits in its consumer business to $20 billion by the end of the decade [11]

Core Insights - Bank of America is launching the BofA Rewards program, a no-fee loyalty initiative aimed at rewarding clients for their banking and investing relationships, starting May 27, 2026 [1][2] - The program will allow over 30 million clients with an active personal checking account to enroll, offering benefits ranging from $150 to $4,000 annually based on membership tier and engagement [1][2] Group 1: Program Structure - BofA Rewards features four tiers based on a client's three-month average account balance: - Premier tier: $1 million and above - Preferred Honors tier: $100,000 to less than $1 million - Preferred Plus tier: $30,000 to less than $100,000 - Member tier: less than $30,000 [1][2] - The program replaces the existing Preferred Rewards program, which has over 11 million members, and will automatically enroll current members into the new structure [1][2] Group 2: Benefits Offered - Members will receive personalized benefits including enhanced fraud and identity monitoring, exclusive discounts on home and auto loans, and cash back deals from over 15,000 brands [1][2] - Credit card rewards bonuses will range from 10% to 75% on everyday purchases with eligible credit cards [1][2] - Preferred Honors and Premier tier members can receive reimbursement for popular subscriptions, with credits of up to $96 per year for Preferred Honors and up to $180 per year for Premier members [1][2] Group 3: Lifestyle and Digital Experience - The program will provide lifestyle benefits for Preferred Honors and Premier tier members, including curated offers in travel, automotive, food, and entertainment [1][2] - A redesigned digital experience will be available through the Bank of America Mobile App and Online Banking, featuring personalized offers and tier-specific features [1][2]

Core Insights - Berkshire Hathaway Inc. significantly reduced its stake in Amazon.com Inc. by over 75% in Q4, while acquiring a new stake in the New York Times Co. valued at $351.7 million [1][2] Investment Actions - Berkshire acquired 5.1 million shares of the New York Times Co. during the last quarter of the year [1] - The company now holds approximately 2.3 million shares of Amazon after the reduction [2] - Berkshire continued to decrease its stakes in Bank of America Corp. and Apple Inc., bringing them to 7.1% and 1.5% respectively [3] - The stakes in oil producer Chevron Corp. and insurance firm Chubb Ltd. were increased to 6.5% and 8.7% respectively [3] Market Reactions - The New York Times shares rose by 1.8% to $75.39 in early trading following the news [2] - Amazon shares increased by 1.3% in the same trading session [2] - Chubb's shares experienced an approximate 11% rise over Q4 after speculation about a potential acquisition of American International Group Inc. [4] Strategic Moves - Buffett, who stepped down as CEO on December 31, has been actively pursuing new investments, including a $9.7 billion deal for Occidental Petroleum Corp.'s petrochemical business and a $5.6 billion stake in Alphabet Inc. [5]

Core Viewpoint - Wall Street is increasingly adopting cryptocurrencies, with major financial institutions like Bank of America advising clients to allocate a portion of their portfolios to digital assets [1] Group 1: Bank of America's Involvement - Bank of America has increased its stake in Bitmine Immersion Technologies, owning 3,162,085 shares valued at $85.8 million as of Q4 2025, representing a 1,668% increase from its previous holding of 178,808 shares [2] - The bank is recommending a 1%-4% allocation of client portfolios to digital assets, indicating a strategic shift towards embracing cryptocurrencies [1] Group 2: Bitmine Immersion Technologies - Bitmine Immersion transitioned from Bitcoin mining to establishing an Ethereum treasury, with Tom Lee from Fundstrat appointed as chairman [3] - The company aims to acquire 5% of the total ETH supply, currently holding 4,371,497 ETH, which is 3.62% of the total supply, making it the largest corporate ETH treasury [4][5] - Despite its ambitions, Bitmine is facing challenges as the market experiences a crypto winter, with ETH losing 35% of its value in the last three months and BMNR stock down 37% in the same period [5]

Core Insights - Bank of America is launching a new loyalty program called BofA Rewards to attract a broader customer base, replacing the existing preferred rewards program on May 27 [1] Group 1: Program Details - The BofA Rewards program will be available to all customers with a personal checking account, with no minimum balance required for enrollment [1] - The program will feature four tiers based on the customer's average balance across Bank of America and Merrill accounts [1] - Benefits include credit card rewards bonuses, cash back deals, discounts on home and auto loans, and enhanced fraud monitoring [1] Group 2: Customer Benefits - Customers in the preferred honors and premier tiers will receive additional benefits across various lifestyle categories such as travel, automotive, and food [1] - The existing business rewards program will remain unchanged for current users [1] Group 3: Membership Growth - Since its launch in 2014, the preferred rewards program has grown to over 11 million members [1]

Group 1 - Berkshire Hathaway reduced its holdings in Apple stock during the fourth quarter [1][2] - The company also decreased its stakes in Amazon and Bank of America [1][2] - In Warren Buffett's final quarter as CEO, Berkshire established a new position in The New York Times valued at approximately $352 million [1][2]