10-QPeriod: Q3 FY2021

BANK OF AMERICA CORP /DE/ Quarterly Report for Q3 Ended Sep 30, 2021

Filed October 29, 2021For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) reported strong financial results for the third quarter of 2021, with net income applicable to common shareholders of $7.26 billion, an increase from $4.44 billion in the same period last year. Diluted earnings per share were $0.85, up from $0.51 year-over-year. Total revenue grew to $22.77 billion, driven by solid performance across all business segments, particularly in Global Wealth & Investment Management and Global Banking, supported by higher investment and brokerage services and investment banking fees, respectively. The company's capital position remains robust, with a Common Equity Tier 1 (CET1) capital ratio of 11.1% under the Standardized approach, exceeding regulatory requirements. Bank of America also announced the renewal of its $25 billion common stock repurchase program and declared a quarterly dividend of $0.21 per share, demonstrating a commitment to returning capital to shareholders. The provision for credit losses benefited the company, reflecting improved credit quality and a more favorable macroeconomic outlook, with a significant decrease in the provision compared to the prior year.

Financial Highlights

35 data points
Beta

Revenue

$22.77B

Net Income

$7.69B

33.8% Net Margin

EPS (Diluted)

$0.85

Total Assets

$3.09T

Cash & Equivalents

$279.85B

Free Cash Flow

$9.79B

Financial Statements
Beta
Revenue$22.77B
Interest Expense$1.24B
Net Income$7.69B
EPS (Basic)$0.86
EPS (Diluted)$0.85
Shares Outstanding (Basic)8.43B
Shares Outstanding (Diluted)8.49B

Key Highlights

  • 1Net income applicable to common shareholders increased significantly year-over-year to $7.26 billion ($0.85 per diluted share) from $4.44 billion ($0.51 per diluted share).
  • 2Total revenue increased by 12% year-over-year to $22.77 billion, driven by growth in noninterest income across key segments.
  • 3Provision for credit losses improved substantially, turning into a benefit of $624 million from a provision of $1.39 billion in the prior year period, reflecting better credit quality and economic outlook.
  • 4Total assets grew to $3.09 trillion, primarily due to increased deposits and deployment of cash into debt securities.
  • 5The CET1 capital ratio remained strong at 11.1% (Standardized approach), well above regulatory minimums.
  • 6Bank of America renewed its $25 billion common stock repurchase program and declared a quarterly dividend of $0.21 per share.
  • 7Global Wealth & Investment Management and Global Banking segments showed strong revenue growth, with noninterest income from investment and brokerage services and investment banking fees increasing notably.

Frequently Asked Questions

The increase in net income was primarily driven by a significant improvement in the provision for credit losses, which swung from a provision to a benefit, reflecting better credit quality and a more favorable macroeconomic outlook. Additionally, total revenue saw a notable increase, particularly from noninterest income across various segments like Global Wealth & Investment Management and Global Banking.

Bank of America maintains a strong capital position. As of September 30, 2021, its Common Equity Tier 1 (CET1) capital ratio under the Standardized approach was 11.1%, which is well above the required regulatory minimums. The company also reported a Tier 1 capital ratio of 12.6% and a Total capital ratio of 14.7%.

Total revenue growth was primarily fueled by increases in noninterest income. Specifically, investment and brokerage services revenue grew by 19% year-over-year, and investment banking fees increased by 34%, reflecting strong client activity and market conditions in these areas. Card income and service charges also contributed to the overall revenue increase.

Bank of America is committed to returning capital to shareholders through dividends and share repurchases. The company declared a quarterly cash dividend of $0.21 per share, payable in December 2021. Furthermore, the Board renewed the $25 billion common stock repurchase program, indicating continued efforts to reduce outstanding shares.