Waiting for the Bank of America report

Before the market opens, Bank of America will report on what it was able to accomplish during the third quarter.

On Friday, giants like JPMorgan Chase, Citigroup and others have already released their results for the past quarter, so Bank of America investors should start this work week with a sense of full confidence.

As with the banks that have already reported, Bank of America is expected to report lower earnings than last year due to a downturn in investment banking activity and a modest increase in reserves ahead of the economic recession. The decline, however, is expected to be partially offset by an increase in net interest income as the bank benefits from the Federal Reserve's interest rate hike.

Analysts polled by FactSet projected Bank of America's earnings to reach $6.4 billion, or $0.78 per share, down from $7.3 billion last year. Projected income will be $23.5 billion, up from $22.8 billion a year ago, largely reflecting the expected increase in net interest income.

Among the big banks, it is Bank of America that is projected to have the best performance in the current environment. Rising interest rates widen the difference between the interest the bank earns on loans and the interest it pays on deposits.

And even though storm clouds are already gathering over the economy as many Wall Street and Main Street players fear a recession, Bank of America appears to be able to handle any downturn. The bank learned important lessons during the 2007-09 financial crisis and has since become much more prudent in its growth strategy.