01—Abstract
Summary
Summary of the 10-K filed February 23, 2017. Cited figures are marked; the original filing is the authoritative source.
Bank of America Corporation (BAC) reported total assets of $2.2 trilliona and net income of $17.9 billion for the fiscal year ended December 30, 2016.
The company experienced a 4% increase in net interest income to $41.1 billionb, primarily driven by growth in commercial loans and the impact of higher short-term interest rates. Noninterest income saw a decrease of $1.4 billion, largely due to lower investment and brokerage services income and a decline in investment banking fees, partially offset by stronger trading account profits. Noninterest expense decreased by $2.8 billion, reflecting ongoing cost management efforts, including reduced personnel and professional fees.
The provision for credit losses increased by $436 millionc, attributed to a slower pace of credit quality improvement in the consumer portfolio and an increase in energy sector reserves. The company continued its capital return program, repurchasing approximately $5.1 billion of common stock and increasing its quarterly dividend. The financial institution is navigating a complex regulatory environment with ongoing implementation of Basel III and Dodd-Frank Act requirements.
02—Key points
Key Highlights
- Net income increased to $17.9 billion ($1.50 per diluted share) from $15.8 billion ($1.31 per diluted share) in 2015, driven by higher net interest income and lower noninterest expense.
- Net interest income rose by $2.1 billion to $41.1 billion, aided by commercial loan growth, higher interest rates, and increased debt securities balances.
- Noninterest income decreased by $1.4 billion to $42.6 billion, impacted by lower investment and brokerage services, and investment banking fees, though trading account profits increased.
- Noninterest expense decreased by $2.8 billion to $55.0 billion, due to continued cost management, lower personnel expenses, and reduced legal fees.
- Provision for credit losses increased by $436 million to $3.6 billion, reflecting a slower pace of credit quality improvement in the consumer portfolio and increased energy sector reserves.
- The company repurchased approximately $5.1 billion of common stock during 2016 and announced plans to repurchase an additional $1.8 billion in the first half of 2017.
- Bank of America is subject to extensive and evolving regulatory frameworks, including Basel III capital and liquidity rules, and the Dodd-Frank Act, which impact capital planning, stress testing, and resolution planning.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 23, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $83.70B$82.97B | +0.9% |
| Interest Expense | $9.96B$10.55B | −5.6% |
| Net Income | $17.82B$15.91B | +12.0% |
| EPS (Basic) | $1.57$1.38 | +13.8% |
| EPS (Diluted) | $1.49$1.31 | +13.7% |
| Shares Outstanding (Basic) | 10.28B10.46B | −1.7% |
| Shares Outstanding (Diluted) | 11.05B11.24B | −1.7% |
05—Questions
Frequently Asked Questions
What was Bank of America's profitability in 2016?
Bank of America reported a net income of $17.9 billion for the fiscal year ended December 30, 2016, which represents an increase from $15.8 billion in 2015. Diluted earnings per common share were $1.50 in 2016, up from $1.31 in 2015.
How did Bank of America's net interest income and noninterest income perform in 2016?
Net interest income increased by $2.1 billion to $41.1 billion in 2016, driven by loan growth and higher interest rates. Noninterest income decreased by $1.4 billion to $42.6 billion, primarily due to lower investment and brokerage services income and investment banking fees, although trading account profits saw an increase.
What were the key drivers of the change in noninterest expense?
Noninterest expense decreased by $2.8 billion to $55.0 billion in 2016. This reduction was primarily due to ongoing cost management initiatives, including lower personnel expenses, reduced professional fees (especially legal fees), and lower general operating expenses.
How is Bank of America managing its capital?
Bank of America repurchased approximately $5.1 billion of common stock during 2016 as part of its capital return program and announced plans to repurchase an additional $1.8 billion in the first half of 2017. The company also increased its quarterly common stock dividend and stated it is focused on meeting regulatory capital requirements.
06—Continue