Asset Structure Analysis
Bank of America had total assets of $3.18 trillion as of December 12, 2023, up from $3.05 trillion as of December 12, 2022.
Cash and cash equivalents were approximately $333.1 billion as of December 31, 2023, accounting for 10.5% of total assets.
Total debt securities were $871.4 billion as of December 31, 2023, making up 27.4% of total assets.
Loans and lease, net were $1.04 trillion as of December 31, 2023, constituting 32.7% of total assets.
Federal funds sold and securities borrowed or purchased under agreements to resell were $280.6 billion as of December 31, 2023, composing 8.82% of total assets.
Trading account assets were $277.35 billion as of December 31, 2023, accounting for 8.72% of total assets.
Profitability Analysis
Total revenue, net includes two reportable segment: net interest income and total noninterest income.
Bank of America’s total revenue, net was $98.58 billion, $94.95 billion and $89.11 billion in 2023, 2022 and 2021, respectively.
Net interest income was $56.93 billion, $52.46 billion and $42.9 billion in 2023, 2022 and 2021, respectively.
Total noninterest income was $41.65 billion, $42.49 billion and $46.18 billion in 2023, 2022 and 2021, respectively.
We feel that interest rates dose not affect total noninterest income, but net interest income.
Interest expense was $73.33 billion, $20.1 billion and $4.74 billion in 2023, 2022 and 2021, respectively.
Total deposits were $1.92 trillion and $1.93 trillion in 2023 and 2022, respectively.
The rate of interest expense to total deposits was 3.8% and 1% in 2023 and 2021, respectively.
The combined amount of total debt securities, loans and lease, net and federal funds sold and securities borrowed or purchased under agreements to resell was $2.19 trillion and $2.16 trillion in 2023 and 2022, respectively.
Interest income was $130.26 billion and $72.56 billion in 2023 and 2022, respectively.
The rate of interest income to the combined amount was 5.95% and 3.36% in 2023 and 2022, respectively.
Net income was $26.5 billion,$27.5 and $32 billion in 2023, 2022 and 2021, respectively.
Cash Flow Analysis
Common stock repurchased was $4.58 billion, $5.07 billion and $25.1 billion in 2023, 2022 and 2021, respectively.
Cash dividends paid were $9.09 billion, $8.58 billion and $8.06 billion in 2023, 2022 and 2021, respectively.
As you can see, Bank of America returned to shareholders in repurchasing stock and paying cash dividends.
Bank of America’s operating performance for the six months ended to June 30, 2024
Total revenues, net were $51.2 billion and $51.5 billion in the six months ended to June 30, 2024 and the six months ended to June 30, 2023, respectively.
Conclusion
High interest rates reduce Bank of America’s net income, but low interest rates would boost profitability.
We hope that we get a at least 10% return per year by holding BAC stock.
We reckon that Bank of America’s reasonable valuation is $250 billion, while the corporation’s market capitalization is $324.83 billion, which is equivalent to $41.68 per share.
Disclaimer: The content is for reference only and does not constitute investment advice.
