10-QPeriod: Q1 FY2023

BANK OF AMERICA CORP /DE/ Quarterly Report for Q1 Ended Mar 31, 2023

Filed May 1, 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 solid financial results for the first quarter of 2023, demonstrating resilience amidst a volatile market environment. Net income increased by 15.5% to $8.2 billion, or $0.94 per diluted share, primarily driven by a significant increase in net interest income resulting from higher interest rates. Despite a one percent decrease in total deposits, largely due to customers seeking higher-yielding alternatives, the company's liquidity and capital positions remained strong, with CET1 capital ratio at 11.4% under the Standardized approach. The bank highlighted its direct exposure to the failed financial institutions in March 2023 was not significant and participated in providing liquidity to First Republic Bank. Key performance indicators showed a notable improvement in efficiency ratio and returns on equity, reflecting effective cost management and operational performance.

Financial Highlights

35 data points
Beta

Revenue

$26.26B

Net Income

$8.16B

31.1% Net Margin

EPS (Diluted)

$0.94

Total Assets

$3.19T

Cash & Equivalents

$376.22B

Free Cash Flow

-$11.30B

Financial Statements
Beta
Revenue$26.26B
Interest Expense$14.21B
Net Income$8.16B
EPS (Basic)$0.95
EPS (Diluted)$0.94
Shares Outstanding (Basic)8.07B
Shares Outstanding (Diluted)8.18B

Key Highlights

  • 1Net income increased by 15.5% year-over-year to $8.2 billion ($0.94 per diluted share) for Q1 2023.
  • 2Net interest income rose significantly by 24.8% to $14.4 billion, driven by higher interest rates.
  • 3Provision for credit losses increased substantially to $931 million from $30 million in the prior year's quarter, primarily due to higher credit card balances.
  • 4Total revenue, net of interest expense, grew 12.6% to $26.3 billion.
  • 5Efficiency ratio improved to 61.84% from 65.95% in the prior year's quarter.
  • 6Common equity tier 1 (CET1) capital ratio remained robust at 11.4% (Standardized approach) as of March 31, 2023.
  • 7Deposits decreased slightly by 1% to $1.91 trillion, with a noted shift of customer balances to higher-yielding investment alternatives.

Frequently Asked Questions

Bank of America reported a net income of $8.2 billion for the first quarter of 2023, an increase from $7.1 billion in the same period of the previous year. Diluted earnings per share were $0.94, up from $0.80 in Q1 2022.

The significant increase in net interest income to $14.4 billion was primarily driven by benefits from higher interest rates, including lower premium amortization expense and loan growth. This was partially offset by higher rates paid on deposits and lower net interest income related to Global Markets activity.

Bank of America stated that its direct exposure to the financial institutions that failed in March 2023 was not significant. The company also made a $5 billion uninsured deposit into First Republic Bank as part of a broader industry effort to deploy financial strength and liquidity.

The provision for credit losses increased significantly to $931 million, driven primarily by higher-than-expected credit card balances in the consumer portfolio. While overall asset quality remained relatively healthy, net charge-offs increased, particularly in credit card loans, as delinquency trends slowly increased off historic lows.