Q: My shares of Bank of America Corp. haven't done much. Does the future look brighter? C.R., via the Internet
A: The No. 2 U.S. bank in assets, behind Citigroup, has more than 5,700 branches in 29 states and the nation's largest credit card business.
But its growing influence extends beyond size alone.
It recently acquired a $2 billion equity stake in Countrywide Financial Corp., the nation's largest mortgage company, to shore up that beleaguered lender.
The investment in Countrywide preferred stock can be converted into common stock, which would give it a 16 to 17 percent stake in Countrywide.
It can draw upon Countrywide mortgage knowledge while profiting if its stock rebounds.
Shares of Bank of America (BAC) are down 8 percent this year following a gain of 16 percent last year. The quarterly dividend was increased by 14 percent, to 64 cents per share, payable Sept. 28 to shareholders of record Sept. 7.
Here's a fan: Warren Buffett's Berkshire Hathaway Inc. has added Bank of America to its holdings. It now holds 8.7 million shares, less than 1 percent of the total outstanding, according to regulatory filings.
Bank of America earnings rose 5 percent in the second quarter on increased consumer fees and capital markets activity.
It is increasing its automated teller machine fees for non-customers at bank and in-store locations to $3 in most U.S. markets, a $1 increase.
Consensus rating on the shares is between a "buy" and "hold," according to Thomson Financial, consisting of five "strong buys," six "buys" and 11 "holds."
Most criticism of Bank of America focuses on its aggressiveness in offering zero-fee products that attract customers but not necessarily profits and on its expensive acquisition sprees.
It is paying $21 billion to buy Chicago-based LaSalle Bank Corp. and has completed the $3.3 billion purchase of the U.S. Trust business from Charles Schwab Corp. Previous acquisitions included FleetBoston and credit card company MBNA Corp.
Bank of America is precluded from any more large domestic acquisitions because it has nearly reached the 10 percent maximum legal share permitted in U.S. deposits. So it is expanding into new financial businesses.
Earnings are expected to increase 5 percent this year, versus 6 percent projected for the money-center banking industry.
Next year's forecast of a 7 percent increase compares to 9 percent predicted industrywide. The expected five-year annualized return of 7 percent compares to 9 percent for its peers.
Q: Olstein All Cap Value Fund interests me. Is it worth my money? F.C., via the Internet
A: It makes sure there's no monkey business in the accounting methods of the companies whose stock it buys.
Seasoned contrarian manager Robert Olstein uses cash flow analysis to find discounted companies with conservative accounting methods.
This fund has looked bad in recent years because it added a number of out-of-favor and larger stocks. It can also be volatile and has high expenses.
The $1.7 billion Olstein All Cap Value Fund "C" (OFALX), formerly called Olstein Financial Alert Fund, is up 16 percent in the past 12 months to rank in the lower half of mid-cap growth and value funds.
Its three-year annualized return of 10 percent is in the lowest 10 percent of its category, but its 10-year annualized return of 13 percent ranks in the top 10 percent of its peers.
"We recommend it because it works well on the value side of an individual's portfolio," said Greg Carlson, analyst with Morningstar Inc. in Chicago, who notes that its large-cap holdings may pay off when small-cap investing cools.
"Olstein's strategy has worked quite well over the long term."
Olstein has been in charge since the fund's launch in 1995. Sean Reidy was added as co-manager in 2004 and there are three research analysts.
In the 1970s Olstein co-founded the "Quality of Earnings Report" service for institutional investors to inform them if accounting was used by firms to mask problems.
Olstein All Cap Value Fund usually owns 70 to 80 stock names. Frequent trading has sometimes led to significant capital-gains distributions for its shareholders.
One-fourth of assets are in consumer services, with other large concentrations in financial services and industrial materials.
Top stock holdings recently were Tyco International Ltd., Apple Inc., American International Group Inc., Williams Cos., Quanta Services Inc., Helix Energy Solutions Group Inc., RadioShack Corp., McDonald's Corp., Marsh & McLennan Cos. and Boyd Gaming Corp.
The fund has no front-end "load" (sales charge) but a 1 percent deferred load. It requires a $1,000 minimum initial investment and has a hefty annual expense ratio of 2.19 percent.
Q: I have a traditional individual retirement account that I won't need to tap in retirement because I have other income. My adviser suggested that I convert to a Roth IRA. What would be the benefit? J.L., via the Internet
A: Although you'll have to pay some tax in the year of conversion, Roth IRA money will grow tax-free and you never have to take required minimum distributions.
"I agree with the adviser that it is a good idea to convert to a Roth IRA," said Marilyn Capelli Dimitroff, a certified financial planner in Bloomfield Hills, Mich.
"Since you don't need the money it makes sense to go with an option where you aren't required to take the money."
Only individuals with $100,000 or less in modified adjusted gross income are eligible to do this conversion.
When you convert after-tax money from a traditional IRA to a Roth, that amount is tax-free because you already paid taxes on it.
But the account's earnings must be treated as ordinary taxable income.
The way after-tax money can end up in a traditional IRA is if you contributed non-deductible amounts, such as by exceeding the deductible limits, by choosing not to deduct or by rolling money over from an employer plan.
"Tax rates right now are historically low and it is more likely they'll rise than fall in the future, so this may be a good time to make the conversion," she said.
Andrew Leckey is a Tribune Media Services columnist. E-mail him at firstname.lastname@example.org.