BANK OF AMERICA CORP /DE/ Quarterly Report for Q2 Ended Jun 30, 2019

Summary

Bank of America Corporation (BAC) reported solid financial results for the second quarter of 2019, showcasing growth in net income and key performance metrics. The company's net income applicable to common shareholders increased to $7.11 billion from $6.47 billion in the prior year's second quarter, translating to diluted earnings per share of $0.74, up from $0.63. Key drivers for this improvement included a notable rise in net interest income, benefiting from higher short-term interest rates and loan/deposit growth across its segments. Total revenue also saw an increase. The company also demonstrated strong capital management, with the Federal Reserve not objecting to its capital plan, allowing for a substantial return of capital to shareholders through dividends and share repurchases. However, investors should note a significant non-cash impairment charge expected in Q3 2019 related to the termination of its merchant services joint venture, which will impact CET1 ratios. The company continues to navigate the evolving interest rate environment and regulatory landscape, including ongoing preparations for the UK's exit from the EU and the transition away from LIBOR.

Key Highlights

• 1Net income applicable to common shareholders increased to $7.11 billion ($0.74 per diluted share) in Q2 2019, up from $6.47 billion ($0.63 per diluted share) in Q2 2018.
• 2Net interest income rose by $361 million to $12.2 billion in Q2 2019 compared to Q2 2018, driven by higher short-term rates and loan/deposit growth.
• 3Total revenue, net of interest expense, increased to $23.1 billion in Q2 2019 from $22.5 billion in Q2 2018.
• 4The company's capital plan received no objection from the Federal Reserve, allowing for an estimated $37 billion return to common shareholders over the next four quarters via dividends and share repurchases, including a 20% increase in the quarterly dividend to $0.18 per share.
• 5Total assets grew to $2.4 trillion, primarily due to higher trading account assets, loans and leases, offset by lower federal funds sold and securities borrowed/purchased under agreements to resell.
• 6Noninterest expense remained largely stable, with a slight increase of $44 million to $13.3 billion in Q2 2019 compared to Q2 2018.
• 7The company announced its intent to terminate its merchant services joint venture, expecting a non-cash, pre-tax impairment charge of approximately $1.7 billion to $2.1 billion in Q3 2019.

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