Did Bank of America's earnings decline year over year?

Yes, modestly. Net income fell to $6.9 billion from $7.8 billion in 3Q23, and diluted EPS fell to $0.81 from $0.90. The decline was driven by a 5% increase in noninterest expense, a 3% drop in net interest income and a higher tax expense of $0.4 billion, partially offset by stronger fee income. Revenue was roughly flat at $25.3 billion.

How strong is the bank's capital position after the new regulatory requirements?

Capital remains well above requirements. The Standardized CET1 ratio of 11.8% is 112 basis points above the new minimum that took effect October 1, 2024, and CET1 capital reached $200 billion. The company's binding constraint is the Standardized total capital ratio, which was 14.9%. Management still returned $5.6 billion to shareholders in the quarter.

Is credit quality deteriorating?

Not materially on a linked-quarter basis. Net charge-offs were flat at $1.5 billion, and the net charge-off ratio improved 1 basis point to 0.58%. Credit card losses fell and the reserve build was only $8 million. However, year over year net charge-offs rose about $600 million from $931 million, driven by commercial real estate office and commercial and industrial losses, and nonperforming loans rose to $5.6 billion.

What drove the pressure on net interest income?

Higher deposit costs outweighed higher asset yields and loan growth. Net interest income fell 3% year over year to $14.0 billion, though it rose 2% sequentially, helped by fixed-rate asset repricing and one additional day of interest accrual. The net interest yield was 1.92%, down 19 basis points from a year earlier, and management noted a -100 basis point parallel rate shift would reduce net interest income by about $2.7 billion over the next 12 months.

Are the Q3 results a sign of broader growth in fee businesses?

Fee businesses were a key bright spot. Asset management fees rose 14%, global markets sales and trading revenue increased 12%, and investment banking fees grew 18%, with the company maintaining its No. 3 investment banking ranking. Consumer investment assets grew 28% to $497 billion, and client balances in wealth management reached a record $4.2 trillion. These gains helped offset the lower net interest income.

BAC 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed October 15, 2024. Cited figures are marked; the original filing is the authoritative source.

Bank of America reported third-quarter 2024 net income of $6.9 billion^a, or $0.81 per diluted share, versus $7.8 billion, or $0.90, in 3Q23.

Revenue net of interest expense was $25.3 billion^b, roughly flat year over year (up about 1%), as higher asset management fees, investment banking fees and sales and trading revenue offset a 3% decline in net interest income to $14.0 billion. Noninterest expense rose 4% to $16.5 billion, and the provision for credit losses was $1.5 billion, flat sequentially and up from $1.2 billion a year earlier. Return on average common equity was 9.4% and return on average tangible common equity was 12.8%.

The balance sheet and capital position remained solid. Average deposits were $1.92 trillion^c, up 2% sequentially and the fifth consecutive quarter of sequential average deposit growth, though consumer deposits fell 4% year over year. The CET1 ratio was 11.8% on the Standardized approach, 112 basis points above the new regulatory minimum effective October 1, 2024.

The company returned $5.6 billion^d to shareholders through $2.0 billion in dividends and $3.5 billion in buybacks. Book value per share rose 8% to $35.37 and tangible book value per share rose 10% to $26.25. Credit quality was stable on a linked-quarter basis.

Net charge-offs were $1.5 billion, flat versus 2Q24, with a net charge-off ratio of 0.58%, and nonperforming loans rose modestly to $5.6 billion. The reserve build was minimal at $8 million, and management highlighted fee growth, a 10th consecutive quarter of year-over-year sales and trading growth, and a strong investment banking pipeline. The filing itself is a routine Item 2.02 and 7.01 furnishing of earnings materials with no new material events beyond the results.

02—Key points

Key Highlights

Net income of $6.9 billion, EPS of $0.81 (vs. $0.90 in 3Q23), with ROTCE of 12.8%
Revenue net of interest expense of $25.3 billion, up about 1% year over year, driven by asset management fees (+14%), investment banking fees (+18% ex. self-led) and sales and trading revenue (+12%)
Net interest income of $14.0 billion, down 3% year over year but up 2% sequentially, as higher deposit costs outweighed asset yield gains
CET1 ratio of 11.8% (Standardized), 112 bps above the new regulatory minimum effective October 1, 2024; CET1 capital of $200 billion
Returned $5.6 billion to shareholders, including $2.0 billion in dividends and $3.5 billion in share repurchases
Book value per share up 8% to $35.37; tangible book value per share up 10% to $26.25
Net charge-offs flat sequentially at $1.5 billion (0.58% ratio); net reserve build of only $8 million, with consumer credit card loss rate improving to 3.70% from 3.88%

03—Questions

Frequently Asked Questions

Did Bank of America's earnings decline year over year?
Yes, modestly. Net income fell to $6.9 billion from $7.8 billion in 3Q23, and diluted EPS fell to $0.81 from $0.90. The decline was driven by a 5% increase in noninterest expense, a 3% drop in net interest income and a higher tax expense of $0.4 billion, partially offset by stronger fee income. Revenue was roughly flat at $25.3 billion.
How strong is the bank's capital position after the new regulatory requirements?
Capital remains well above requirements. The Standardized CET1 ratio of 11.8% is 112 basis points above the new minimum that took effect October 1, 2024, and CET1 capital reached $200 billion. The company's binding constraint is the Standardized total capital ratio, which was 14.9%. Management still returned $5.6 billion to shareholders in the quarter.
Is credit quality deteriorating?
Not materially on a linked-quarter basis. Net charge-offs were flat at $1.5 billion, and the net charge-off ratio improved 1 basis point to 0.58%. Credit card losses fell and the reserve build was only $8 million. However, year over year net charge-offs rose about $600 million from $931 million, driven by commercial real estate office and commercial and industrial losses, and nonperforming loans rose to $5.6 billion.
What drove the pressure on net interest income?
Higher deposit costs outweighed higher asset yields and loan growth. Net interest income fell 3% year over year to $14.0 billion, though it rose 2% sequentially, helped by fixed-rate asset repricing and one additional day of interest accrual. The net interest yield was 1.92%, down 19 basis points from a year earlier, and management noted a -100 basis point parallel rate shift would reduce net interest income by about $2.7 billion over the next 12 months.
Are the Q3 results a sign of broader growth in fee businesses?
Fee businesses were a key bright spot. Asset management fees rose 14%, global markets sales and trading revenue increased 12%, and investment banking fees grew 18%, with the company maintaining its No. 3 investment banking ranking. Consumer investment assets grew 28% to $497 billion, and client balances in wealth management reached a record $4.2 trillion. These gains helped offset the lower net interest income.

04—Continue

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