10-QPeriod: Q1 FY2018

BANK OF AMERICA CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 30, 2018For 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 strong first quarter of 2018, with net income increasing to $6.9 billion, or $0.62 per diluted share, compared to $5.3 billion, or $0.45 per diluted share, in the same period last year. This performance was driven by higher net interest income and noninterest income, coupled with a reduction in noninterest expense and a lower income tax expense due to the Tax Cuts and Jobs Act. The company's total assets grew to $2.3 trillion, supported by higher cash and cash equivalents and increased trading-related assets. Shareholders' equity saw a slight decrease, primarily due to capital returns to shareholders through stock repurchases and dividends. The bank's capital ratios remain robust, with Common Equity Tier 1 capital ratio at 11.4% under the Standardized Approach and 11.3% under the Advanced Approaches at the end of the quarter, comfortably exceeding regulatory minimums. Key performance indicators show an improving efficiency ratio of 60.09%, down from 63.34% in the prior year. The bank also announced a significant trust preferred securities redemption, expected to result in an $800 million charge in the second quarter. Overall, BAC demonstrated solid operational performance and continued capital management initiatives, benefiting from a more favorable tax environment.

Financial Highlights

34 data points
Beta

Revenue

$23.07B

Net Income

$6.92B

30.0% Net Margin

EPS (Diluted)

$0.62

Total Assets

$2.33T

Cash & Equivalents

$204.24B

Free Cash Flow

$40.35B

Financial Statements
Beta
Revenue$23.07B
Interest Expense$3.83B
Net Income$6.92B
EPS (Basic)$0.63
EPS (Diluted)$0.62
Shares Outstanding (Basic)10.32B
Shares Outstanding (Diluted)10.47B

Key Highlights

  • 1Net income increased by 29.7% year-over-year to $6.9 billion.
  • 2Diluted EPS rose to $0.62 from $0.45 in the prior year.
  • 3Total revenue, net of interest expense, increased by 3.9% to $23.1 billion.
  • 4Net interest income grew by 5.0% to $11.6 billion, driven by higher interest rates and loan/deposit growth.
  • 5Noninterest expense decreased by 1.4% to $13.9 billion, aided by lower litigation and professional fees.
  • 6Effective tax rate significantly decreased to 17.6% from 27.1% due to the Tax Cuts and Jobs Act.
  • 7Common Equity Tier 1 capital ratio remained strong at 11.4% (Standardized) / 11.3% (Advanced).

Frequently Asked Questions

The primary driver for the increase in net income was a combination of higher net interest income and noninterest income, a reduction in noninterest expense, and a significantly lower income tax expense resulting from the Tax Cuts and Jobs Act.

The Tax Cuts and Jobs Act reduced the federal tax rate to 21% from 35%, which significantly lowered the effective tax rate for the quarter to 17.6% from 27.1% in the prior year. This change contributed substantially to the increase in net income.

Bank of America maintained a strong capital position. The Common Equity Tier 1 (CET1) capital ratio was 11.4% under the Standardized Approach and 11.3% under the Advanced Approaches at March 31, 2018. These ratios are well above the current and projected regulatory minimums.

The company announced the redemption of certain trust preferred securities, which is expected to result in a pre-tax charge of approximately $800 million in the second quarter of 2018.