Bank of America Corporation (NYSE:BAC) reported first-quarter financial results before the market open on Wednesday. The transcript from the company’s first-quarter earnings call has been provided below.
- Bank of America stock is building positive momentum. What’s driving BAC shares up?
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
Operator
Hello and welcome everyone joining today’s Bank of America of America earnings announcement. At this time, all participants are in a listen only mode. Later you will have the opportunity to ask questions during the question and answer session. To register to ask a question at any time, please press star1 on your telephone keypad. Please note this call is being recorded. We are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to Leigh McIntyre of Bank of America.
Lee McEntire (Senior Vice President)
Good morning. Thank you. Thanks for joining us to talk through our first quarter results. As always, the earnings release and presentation are posted on the Investor relations section of bankofamerica.com and we’ll reference those materials during the call. Brian will start us off with a few opening thoughts and then Alistair will walk through the quarter and provide more detail on the results. Before we begin, quick reminder that during the call we may make forward looking statements and refer to non GAAP financial measures. Those reflect management’s current views and are subject to risks and uncertainties which are outlined along with the relevant GAAP reconciliations in our earnings material and the SEC filings on our website. With that, Brian over to you.
Brian Moynihan (Chief Executive Officer)
Good morning and thank you for joining us, all. It’s our earnings report for the first quarter of 2026. I’m going to begin on slide two. Bank of America delivered strong first quarter 2026 results. Revenue grew 7% year over year to 30.3 billion. Earnings per share were up 25% year over year to $1.11 per share. This performance was driven by balanced results across our businesses. Continued operating leverage, solid client activity and stable to modestly improved asset quality. We also saw solid year over year growth in both loans and deposits. Our capital liquidity positions remain strong and well above current regulatory requirements. Along the bottom of slide 2 you can see the progress against some of our most important operating metrics. We delivered operating leverage of 290 basis points this quarter. The efficiency ratio for our company improved 170 basis points year over year at 61%. And importantly, we generated return on tangible common equity or ROTCE of 16%. The biggest highlight I can provide you as you flip to slide three. There you can see that every segment of the company contributed to our year over year growth. Every segment grew revenue, every segment grew earnings, every segment grew average deposits and every segment grew loans. And every segment drove strong returns. Now moving to slide four. Let me talk about some of the primary drivers of results before Alistair takes you through additional details. First, net interest income performed better than expected on an FTE basis net interest income was 15.9 billion, up 9% year over year. Second, our fee based markets facing businesses performed well. Markets, wealth and investment banking all show good momentum. Client activity remained healthy and revenues in each of these areas grew at double digit rates compared to the first quarter 2025. Third, our team continued to manage expenses well. We reported non expense of 18.5 billion in the first quarter, which was in line with the roughly 4% year over year increase we discussed on our last earnings quarterly earnings call Let me just spend a few moments on expense and how we think about them in the context of delivering growth and returns for our shareholders. As we said consistently, our focus is on delivering durable earnings and returns. Expense discipline is embedded in how we run our company. It’s also one of the reasons we’re able to convert scale productivity and macro tailwinds and operating leverage over time. In the quarter. The first quarter our expenses reflected deliberate choices we made. First, we continue to invest in our revenue producing capabilities. Whether it’s relationship managers in all the businesses, new branches, technology of all types delivered throughout the platform and product enhancements of all types. All those support the client activity, market share gains and long term earnings power of this company. These investments are return on investment driven. They’re tied to businesses where you see clear demand and attractive returns. The second thing we do is we continue to offset those investments through productivity and simplification. The continued digitization of activities by our clients and inside our company. The application of artificial intelligence, the detailed process re engineering, all help reduce manual work, lowered unit costs, limited increase in our base cost structure. That’s why even as we’ve invested, we continue to deliver positive operating. It’s simply put that our revenue growth rate is faster than our expense growth rate. Third, we remained highly disciplined in non strategic spend. We are conscious not to add complexity layers or fixed costs that don’t support the clients and what they need from us. That discipline is part of our responsible growth culture has been going on for many years. If you think about that in terms of headcount, we are down about 1070 people from year end 2025 through attrition and we’ll continue to drive that. We continue to heavily extend the franchise, deepen the client relations and deliver attractive terms. And we’re doing it While reducing those full-time employees (FTEs) and absorbing costs and inflationary cost out in the market. Turning briefly to asset quality, we saw improvement from last year. Net charge offs, car delinquencies, reservable criticized assets and non performing loans or all declined versus the first quarter 25 provision expense was 1.3 billion compared to 1.5 billion last year reflecting continued benign credit results. Finally, capital generation remains strong. We continue to deploy excess capital to support RWA grow across all the businesses while returning capital to shareholders through dividends and share repurchases. We ended the quarter with a strong capital position and including $200 billion plus of CET1 capital. We also continue to benefit from the many quarters of organic growth across our businesses. We include our standard organic growth view beginning on slide 19 and following in the appendix I commend you to look at those across all the different business lines. All the activity and all the digital activity are there. All that activity remains a key differentiator for us, driving continued growth in deposits, improve investment assets, lending balances and trading counterparty. This combines with that strong engagement across our digital platforms and we believe driving ongoing share gains in targeted markets and products. Overall results again demonstrate the value of our diversified earnings stream, the growth and durability of all our businesses across different environments and in the end is a strong performance by our team here at bank of America and I thank them for another great quarter. Before I turn to Alistair to go through a few observations go through the quarter, I’m going to give you a few observations we see about the economy beginning on slide 5. We have two things at bank of America to help us view the economy. First is our very strong research team and they provide great data to us based on their view of the world. And you can see that on the left hand side of the slide 5. But we also couple that with our internal data, what our customers really do both on the consumer side, corporate side, small business side, et cetera. And you can see that on the consumer expressed on the right-hand side of the slide. Our research team continues to see the economy that is resilient, that the core activities economy continue to push along even with all the uncertainty that you’ve all written about out there. We see the forward look of GDP growth rates in the US around 2% and we see a faster growth rate around the world. When you look at the inflation you can see in the lower left you can see that the projection is for it to be remain elevated in 26 and into 27 and we both at the US basis and a global basis. But when you look on the right you can see where the resilience comes from in the US the US consumer continues to spend 3 through all its different platforms here at bank of America. To put that in context, the total Spending by consumers across all the ways they move money into the US economy of bank of America is 4.5 trillion a year for 2025. You can see that was up 5% from 2024 and that 5% growth has been consistent in 1Q26 compared to 1Q25. And during that quarter customers moved a trillion dollars plus into the economy. As you look on the lower right, you can see the debit and credit card spending was up 6% year over year. This totals about 25% of the ways consumers spend money at bank of America. If you look within the categories, you can see it’s up in entertainment and services and travel and retail and yes, it’s up in gas prices. And we know that in March it was up 16% year over year. At the same time we look at this data and see what it tells us. We also are mindful of all the risk out there, the ongoing conflicts in the Middle east, including implications for the energy market, inflation and growth. We look at global trade flows and broader financial conditions. To date these impacts have been measured and absorbed by the economies here and around the world and we continue to watch them carefully. Looking ahead, our research team expects moderate US and global growth over the next several years and our data supports that view. In this environment, I’m asked if the capital markets activity has really inflected or is this just the volatility producing the results that our markets team produced or our investment banking team? What we’re seeing is improved breadth in our global businesses, not just episodic activity. Trading has benefited from volatility. In fact, this is the 15th quarter we have year over year revenue growth, but more importantly, investment banking pipelines are building and engagement is up across all products. Tone of our corporate clients is strong. While they wonder about all the things I spoke about earlier, they continue to conduct strong activity. That activity is healthier than a year ago and supports a continued constructive fee environment in our view. While those risks are out there, the macro backdrop remains constructive and a diversified business model position is well due to continue to deliver for you across a range of economic scenarios. With that context, I’ll turn it over to Alistair for you more details.
Alastair Borthwick (Chief Financial Officer)
Thanks Brian. I’m going to begin with the balance sheet starting on slide 6. You can see total assets ended the quarter at approximately $3.5 trillion up 2% linked quarter reflecting loan growth, deposit growth and balance sheet to support our clients. Increased activity in global markets deposits increased to more than 2 trillion driven by continued strength in both commercial and consumer client engagement. Common shareholders equity was approximately $276 billion and relatively stable quarter over quarter as earnings generation was more than offset by the capital we returned to shareholders through dividends and share repurchases. This quarter we paid 2 billion in common dividends and we bought back 7.2 billion of common shares. From a regulatory perspective, the CET1 capital ratio declined 14 basis points to 11.2% and that decline primarily reflects the capital returned to shareholders above earnings generation as well as balance sheet growth and mix change in support of our clients, and our ratio remains well above regulatory requirements. Looking ahead, we don’t have any meaningful updates to report on the recently proposed Basel III endgame or G SIB capital changes as proposed, Basel III would result in modestly higher capital requirements. However, the proposed changes to the G SIB surcharge are expected to more than offset the Basel III endgame impact for US G SIBs. Taken together, if Basel III endgame and G SIB frameworks are adopted as proposed, we believe bank of America is likely to see some reduction in overall capital requirements relative to the current regime in future periods and the public comment period concludes in mid June and we look forward to the finalization of the rules Liquidity remains strong with global liquidity sources of more than 960 billion well above regulatory requirements and now as we go a little deeper on the balance sheet, we’ll focus on loans and deposits. So start with deposits on slide 7 where our franchise continues to demonstrate strength, stability and discipline. Average deposits remained solid during the quarter, increasing approximately 59 billion year over year or 3%, reflecting the depth of our client relationships and the value customers place on safety, liquidity and convenience, particularly in an environment where rates and market conditions remain dynamic. It’s notable that both interest bearing and non interest bearing deposits grew 3%. Growth was led by commercial clients, while consumer banking grew more modestly, marking its fourth consecutive quarter now of year over year growth, composition of our deposits remains a key differentiator. We benefit from a high quality mix with a meaningful portion in low cost operational balances and strong engagement across consumer wealth and commercial clients. That mix has continued to benefit our funding costs even as pricing competition persists across the industry. The total rate paid on our deposits declined 16 basis points to 1.47% and this allows us to maintain one of the lowest cost funding profiles among the large US banks. Turning to loans on slide 8, average balances grew nearly 9% year over year, driven primarily by client demand in our commercial portfolios. That growth was broad based and it reflects good core operating client activity. And as always, we remain disciplined in how we deploy our capital, prioritizing returns, credit quality and relationship depth over volume. Consumer loan balances were up about 4% year over year including 3% credit card growth. Wealth management contributed nicely to consumer loan growth through strong securities based lending and across both consumer and commercial portfolios. The credit performance remained consistent with our expectations and we’ve not changed our risk posture. We remain highly liquid. We’re focused on protecting our margin and preserving flexibility while continuing to support our clients. Let’s turn to net interest income on Slide 9 in the first quarter net interest income on a fully taxable equivalent basis was $15.9 billion on a year. Over year NII increased by 1.3 billion or 9% driven by growth in average loans and deposits, the ongoing benefit of fixed rate asset repricing and higher global markets, client related activity and those tailwinds were partially offset by the impact of lower average rates in the quarter compared to Q4. NII was materially flat and reflected similar underlying benefits that were nearly enough to offset the negative impact of 2 fewer days of interest accrual in Q1. Net interest yield for the quarter was 2.07%, up 8 basis points year over year reflecting disciplined balance sheet management, funding optimization and the continued benefit of repricing dynamics even as rates declined across the curve. Regarding interest rate sensitivity, we continue to provide a 12 month dynamic deposit based sensitivity relative to the forward curve and on that basis an additional 100 basis point decline in rates beyond the forward curve would reduce NII over the next 12 months by $2 billion while a 100 basis point increase would benefit NII by a little less than $500 million. Looking ahead, while the rate environment remains dynamic, we continue to see multiple levers supporting NII including balance growth, funding optimization and the ongoing roll off of lower yielding assets. Given our outperformance against expectations of NII in Q1 and based on the most recent interest rate curve which has now shifted from two rate cuts expected to having none, Currently we’re raising our full year NII growth guidance range for 2026 versus 2025 to be up 6 to 8% and that outlook continues to assume moderate deposit and loan growth. Turning to expenses on Slide 10 in the first quarter non interest expense was 18.5 billion. That was up 4% and consistent with the guidance we provided on our Q4 earnings call, we generated 290 basis points of operating leverage and that translated into measurable improvement in both our efficiency ratio from 63% to 61 and an increase in the ROTCE to 16%. We continue to manage our cost base with discipline while investing selectively to support client activity and long term growth. The year over year increase in expense largely reflects double digit revenue growth in investment banking, asset management, fees and sales and trading and the associated higher revenue related incentives and transaction expenses. Stepping back Our approach here remains unchanged. We’re investing where returns are clear, we tightly manage the discretionary spend and we maintain our sharp focus on operating leverage, including expanding our use of technology and AI to improve operational efficiency and sales effectiveness. Looking ahead, we continue to expect more than 200 basis points of positive operating leverage for the year consistent with our prior guidance, and we also have levers that preserve our flexibility to help navigate changing market conditions as required. Let’s turn to slide 11 for a discussion of asset quality. Credit performance remained stable and consistent with our expectations. Net charge offs were approximately $1.4 billion with a net loss rate of 48 basis points. Both of those were down ong momentum was led by MA with equity capital markets also up very nicely in the quarter. The year over year investment banking performance is particularly notable given our prior year first quarter included gains related to leveraged finance positions that didn’t repeat this year. Balance sheet growth remained a strength and you can see average loans increased 5% year over year with all lines of business contributing. Deposits increased 13% year over year reflecting continued client engagement across the franchise and rates paid was down linked quarter and year over year. Returns remained strong with return on capital of 16% which was higher year over year. Turning to Global Markets on slide 16, I’ll focus my remarks as usual. Ex DVA and Global Market’s strong first quarter was driven by robust client activity and disciplined risk management in a volatile trading environment heightened by geopolitical uncertainty. Revenues ex DVA were $7 billion, up 7% year over year where sales and trading had its strongest performance in a decade, increasing 12% to $6.3 billion, led primarily by equities performance and despite the noted volatility, we had no trading loss days during the quarter. Equities had their best quarter ever with revenues up 30% year over year reflecting increased client activity and capital extended to the business for growth. The increase was driven by client financing activity, particularly in Asia, as well as strong trading performance in derivatives FICC results remained strong and were modestly higher with strength in commodities partially offset by lower revenue and FX and interest rate products. Net income was $2 billion, which was up modestly from strong results in Q1.25. That also included roughly $230 million in gains related to leverage finance positions. Higher revenues were offset by increased expenses on higher …