JPMorgan Chase & Co (JPM  ) and Bank of America Corp (BAC  ), two among the "big four" banks in the U.S., reported their fourth quarter 2023 earnings today.

While JPMorgan stock has done well in 2023, Bank of America stock has lagged. With the anticipated rate cuts likely to benefit financial sector stocks in 2024, investors may want to know where the value is.

2023 was a year of monetary tightening, with high-interest rates prevailing in the U.S. economy as the Fed balanced its employment and inflation targets. High-interest rates are generally a dampener for banking stocks. The financial sector tracking the Financial Select Sector SPDR Fund (XLF  ) gained just over 5%.

Nonetheless, JPMorgan's stock gained over 25%, fueled by nearly $40 billion in new deposits, the acquisition of wealth management franchise First Republic (FRC) at a low cost and record profits.

On the other hand, Bank of America's stock being the most interest rate-sensitive among its peers, faced challenges.

The issue stemmed from its substantial holdings of long-dated Treasuries and mortgage bonds the bank acquired at low rates during the COVID-19 pandemic. With rising rates, the bank made increased interest payments on deposits, while returns from long-term securities remained comparatively lower. This resulted in significant unrealized losses on the bank's balance sheet, despite marginal improvements in net interest income (NII) and margins.

With interest rates expected to decline in 2024, investors want to know which stock offers more value.

In 2024, the banking industry is expected to benefit from rate cuts which should support both credit volume and stimulate investment banking activities.

JPMorgan, with its global leadership position, appeared well-positioned to capture the 2024 bull market in bank stocks with its strong balance sheet. However, with the stock gaining through 2023, Wall Street analysts saw less upside left in JPMorgan stock (9.66%), relative to Bank of America stock (11.58%).

Price/Book ratios for the two banks also indicated the same. JPMorgan stock currently traded at a P/BV of 1.70 while Bank of America stock traded at 1.02.

While Bank of America stock appeared to trade at more favorable valuations, investors must not ignore the key risks including pressured net interest income and lack of deal activity, that come with it.