Skip to Content
Stock Analyst Update

Solid 2nd-Quarter Results for Bank of America

We are maintaining our fair value estimate for the narrow-moat firm.

Mentioned:

Narrow-moat  Bank of America (BAC) continued its solid results in the second quarter. Expense declines continued while revenue stayed fairly stable, leading to the efficiency ratio improving to 58.4% this quarter on a fully taxable-equivalent basis from 60.6% in the second quarter of 2017. Credit quality was superb with provisioning remaining range-bound, and net interest income still managed moderate growth, at 6% year over year. The bank reported a 1.17% return on average assets and a 15.2% return on tangible common equity as a result, fairly close with last quarter’s results. We are maintaining our fair value estimate of $29 per share.

Consumer Banking performance was a major contributor to the strong performance in the quarter. The segment continued its steady, upward climb as net interest income was up 11% year over year, and noninterest income was up roughly 1.7%, with card income up over 7%. The most impressive number has been the expense control, with noninterest expense down year over year, supporting a consistently improving efficiency ratio. Brokerage assets also continued to climb for the segment, and deposits and loans were up as well, although loan growth was fairly limited at only 1.6% annualized for the quarter. With the bank continuing to invest in efficiency and technology gains, we would expect this segment to continue its improved performance over the medium term.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Eric Compton does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.