10-KPeriod: FY2022

BANK OF AMERICA CORP /DE/ Annual Report, Year Ended Dec 31, 2022

Filed February 22, 2023For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) reported its 2022 fiscal year results, highlighting a resilient performance despite a challenging macroeconomic environment characterized by rising interest rates and inflation. The company's net income for the year was $27.5 billion, with diluted earnings per share of $3.19. This reflects a decrease from the prior year, primarily due to a higher provision for credit losses and increased noninterest expenses, partially offset by a significant increase in net interest income driven by higher interest rates. The bank's balance sheet remained robust, with total assets of $3.1 trillion and total deposits of $1.9 trillion. BAC continued to return capital to shareholders through dividends and share repurchases, demonstrating a commitment to shareholder value. Key areas of focus for investors include the company's strong capital position, with Common Equity Tier 1 capital ratios well above regulatory minimums, and the effective management of credit and market risks. While the company experienced a decrease in noninterest income, particularly in investment banking fees, this was partially offset by strength in market-making activities. The outlook suggests continued focus on expense management and leveraging higher interest rates for net interest income growth.

Financial Highlights

35 data points
Beta

Revenue

$94.95B

Net Income

$27.53B

29.0% Net Margin

EPS (Diluted)

$3.19

Total Assets

$3.05T

Cash & Equivalents

$230.20B

Free Cash Flow

-$6.33B

Financial Statements
Beta
Revenue$94.95B
Interest Expense$20.10B
Net Income$27.53B
EPS (Basic)$3.21
EPS (Diluted)$3.19
Shares Outstanding (Basic)8.11B
Shares Outstanding (Diluted)8.17B

Key Highlights

  • 1Net income for 2022 was $27.5 billion, or $3.19 per diluted share, down from $32.0 billion in 2021.
  • 2Net interest income increased by $9.5 billion to $52.5 billion, driven by higher interest rates and loan growth.
  • 3Noninterest income decreased by $3.7 billion to $42.5 billion, primarily due to lower investment banking fees and service charges.
  • 4Provision for credit losses increased significantly to $2.5 billion in 2022, compared to a benefit of $(4.6) billion in 2021, reflecting a dampened macroeconomic outlook.
  • 5Noninterest expense increased by $1.7 billion to $61.4 billion, driven by investments in people, technology, and settlement expenses.
  • 6Total assets decreased by 4% to $3.1 trillion, primarily due to lower debt securities and cash and cash equivalents.
  • 7Total deposits decreased by 6% to $1.9 trillion, attributed to increased customer spending and a shift to higher-yielding accounts.

Frequently Asked Questions

Bank of America's net income decreased to $27.5 billion in 2022 from $32.0 billion in 2021. Diluted earnings per share also decreased to $3.19 from $3.57. This decline was primarily driven by a higher provision for credit losses ($2.5 billion in 2022 vs. a benefit of $(4.6) billion in 2021) and increased noninterest expenses ($61.4 billion in 2022 vs. $59.7 billion in 2021). However, net interest income saw a substantial increase of $9.5 billion to $52.5 billion, benefiting from higher interest rates and loan growth.

Noninterest income decreased by $3.7 billion to $42.5 billion. Key factors contributing to this decline included lower investment banking fees ($4.8 billion in 2022 vs. $8.9 billion in 2021), primarily due to reduced equity and debt issuance and advisory fees, and a decrease in service charges ($6.4 billion vs. $7.5 billion), mainly from overdraft policy changes and lower treasury service charges. These decreases were partially offset by an increase in market-making and similar activities, which rose by $3.4 billion due to improved performance in fixed income, currencies, and commodities (FICC) and client financing activities in equities.

Bank of America maintained a strong capital position, with its Common Equity Tier 1 (CET1) capital ratio under the Standardized approach at 11.2% as of December 31, 2022, exceeding regulatory minimums. The bank also reported a Tier 1 capital ratio of 13.0% and a total capital ratio of 14.9%. Liquidity remained strong, with an average consolidated Liquidity Coverage Ratio (LCR) of 120% for the fourth quarter of 2022. Total assets stood at $3.1 trillion, with deposits totaling $1.9 trillion.

The company increased its provision for credit losses to $2.5 billion in 2022, primarily driven by loan growth and a 'dampened macroeconomic outlook'. This reflects management's expectation of potentially higher credit losses in the future due to economic uncertainties, including inflationary pressures and rising interest rates. The allowance for loan and lease losses increased to $12.7 billion.