10-KPeriod: FY2015

BANK OF AMERICA CORP /DE/ Annual Report, Year Ended Dec 31, 2015

Filed February 24, 2016For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) reported a significant recovery in net income for 2015, reaching $15.9 billion, a substantial increase from $4.8 billion in 2014. This improvement was largely driven by a considerable decrease in litigation expenses, which significantly impacted the prior year's results. The bank maintained a strong capital position, with a Common Equity Tier 1 (CET1) capital ratio of 10.2% under the Basel 3 Advanced – Transition rules as of December 31, 2015, and a Supplementary Leverage Ratio (SLR) of 6.6%. Total assets grew to $2.1 trillion, supported by an increase in deposits, reflecting a strong customer base. Despite a slight decline in total revenue, BAC demonstrated a more efficient operational structure, evidenced by an improved efficiency ratio and a significant reduction in noninterest expense, primarily due to lower litigation costs. The company also managed its balance sheet effectively, increasing liquidity sources and maintaining capital ratios well above regulatory minimums. Key business segments like Consumer Banking and Global Banking showed improved net income, while Global Markets and LAS navigated challenging economic environments. The company returned approximately $5.9 billion in capital to shareholders through dividends and share repurchases, signaling a commitment to shareholder returns while navigating a complex regulatory landscape.

Financial Highlights

35 data points
Beta

Revenue

$82.97B

Net Income

$15.91B

19.2% Net Margin

EPS (Diluted)

$1.31

Total Assets

$2.14T

Cash & Equivalents

$159.35B

Free Cash Flow

$28.40B

Financial Statements
Beta
Revenue$82.97B
Interest Expense$10.55B
Net Income$15.91B
EPS (Basic)$1.38
EPS (Diluted)$1.31
Shares Outstanding (Basic)10.46B
Shares Outstanding (Diluted)11.24B

Key Highlights

  • 1Net income surged to $15.9 billion in 2015, up from $4.8 billion in 2014, primarily due to a $15.2 billion reduction in litigation expenses.
  • 2Total assets increased by $39.8 billion to $2.1 trillion, driven by deposit inflows and deployment into debt securities and loans.
  • 3Common Equity Tier 1 (CET1) capital ratio stood at 10.2% under Basel 3 Advanced – Transition rules as of December 31, 2015.
  • 4Noninterest expense decreased significantly by $17.9 billion to $57.2 billion, largely due to a reduction in litigation expenses.
  • 5The company returned $5.9 billion in capital to shareholders through dividends and share repurchases.
  • 6Consumer Banking segment net income increased 5% to $6.7 billion, driven by lower expenses and provisions, partially offset by lower net interest income.
  • 7The Federal Reserve did not object to the resubmitted CCAR capital plan on December 10, 2015, indicating improved capital planning processes.

Frequently Asked Questions

Bank of America reported a net income of $15.9 billion in 2015, a significant increase from $4.8 billion in 2014. This improvement was primarily driven by a substantial decrease in litigation expenses, which reduced noninterest expense by $15.2 billion.

Bank of America maintained a strong capital position in 2015. The Common Equity Tier 1 (CET1) capital ratio was 10.2% under the Basel 3 Advanced – Transition rules as of December 31, 2015. The Supplementary Leverage Ratio (SLR) was 6.6%, comfortably above the required minimum.

The company expects reserve releases to decrease from 2015 levels in 2016. This would likely result in increased provision expense, assuming asset quality remains stable.

Bank of America significantly reduced its noninterest expense by $17.9 billion to $57.2 billion in 2015. This reduction was primarily due to a decrease of $16.0 billion in 'Other general operating expense,' largely driven by lower litigation expenses. Personnel expenses also decreased by $919 million due to streamlining efforts.