01—Abstract
Summary
Summary of the 10-K filed February 26, 2019. Cited figures are marked; the original filing is the authoritative source.
Bank of America Corporation (BAC) reported robust performance for the fiscal year ending December 30, 2018.
Driven by an increase in net interest income and noninterest income, coupled with a reduction in noninterest expense, the company saw a significant rise in net income to $28.1 billiona from $18.2 billion in the prior year. This improvement was also bolstered by a lower effective tax rate resulting from the Tax Cuts and Jobs Act of 2017. The company's balance sheet expanded, with total assets reaching $2.4 trillion, supported by strong deposit growth.
Capital management remained a focus, with substantial common stock repurchases and dividend payments returning capital to shareholders. Looking ahead, Bank of America highlighted ongoing efforts to adapt to evolving regulatory landscapes, including the UK's exit from the EU and the transition away from LIBOR.
The company's diversified business segments—Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets—all contributed to the overall positive financial results, demonstrating resilience and strategic execution across its operations. Investors can note the company's commitment to shareholder returns through its capital return program and its solid capital and liquidity positions.
02—Key points
Key Highlights
- Net income increased to $28.1 billion, or $2.61 per diluted share, significantly up from $18.2 billion, or $1.56 per diluted share, in 2017, driven by higher revenues and lower expenses, notably the positive impact of the Tax Cuts and Jobs Act.
- Total revenue increased to $91.2 billion, up from $87.4 billion in 2017, reflecting growth in both net interest income and noninterest income.
- Noninterest expense decreased to $53.4 billion from $54.7 billion in 2017, largely due to lower litigation and FDIC expenses.
- Total assets grew to $2.4 trillion as of December 31, 2018, up from $2.3 trillion in the prior year, primarily driven by increased securities purchased under resale agreements and higher cash and cash equivalents due to deposit growth.
- Common shareholders' equity decreased slightly to $265.3 billion from $267.1 billion, primarily due to returns of capital to shareholders through dividends and share repurchases.
- The company repurchased $20.1 billion of common stock during 2018 and announced plans for an additional $2.5 billion in repurchases.
- Key capital ratios, such as Common Equity Tier 1 capital ratio, remained strong and well above regulatory minimums.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 26, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $91.02B$87.13B | +4.5% |
| Interest Expense | $18.61B$12.34B | +50.8% |
| Net Income | $28.15B$18.23B | +54.4% |
| EPS (Basic) | $2.64$1.63 | +62.0% |
| EPS (Diluted) | $2.61$1.56 | +67.3% |
| Shares Outstanding (Basic) | 10.10B10.20B | −1.0% |
| Shares Outstanding (Diluted) | 10.24B10.78B | −5.0% |
05—Questions
Frequently Asked Questions
What was Bank of America's net income for 2018?
Bank of America's net income for 2018 was $28.1 billion, or $2.61 per diluted share, a significant increase from $18.2 billion, or $1.56 per diluted share, in 2017.
How did the Tax Cuts and Jobs Act of 2017 impact Bank of America's financial results?
The Tax Cuts and Jobs Act of 2017 reduced the federal corporate income tax rate to 21% from 35%. This resulted in a decrease in income tax expense for 2018 and also led to a significant reduction in net income in 2017 due to a lower valuation of certain U.S. deferred tax assets and liabilities.
What were the main drivers of the increase in total revenue for 2018?
Total revenue increased to $91.2 billion in 2018, driven by higher net interest income (up $2.8 billion to $47.4 billion) and increased noninterest income (up $1.1 billion to $43.8 billion). This growth was supported by higher interest rates, loan and deposit growth, and improved trading account profits.
How did Bank of America manage its capital in 2018?
In 2018, Bank of America repurchased $20.1 billion of common stock as part of its capital return program, in addition to paying common stock dividends. The company maintained strong capital ratios, well above regulatory minimums, and announced further repurchase plans for 2019.
06—Continue