Bank of America (NYSE:BAC) released third-quarter earnings that not only beat analysts' expectations on the top and bottom lines but showed signs of continued improvement and consistency across most areas of its business. Here are seven things in particular from the earnings report that Bank of America investors, and those who are considering investing, should know.

1. Solid growth in most key areas

Bank of America beat analyst expectations on both the top and bottom lines for the third quarter and posted impressive growth in most of its businesses.

Just to name a few key data points:

  • Net income rose 13% year over year
  • Earnings per share grew by 17%
  • Noninterest expense fell 3%
  • Average deposits grew 4%
  • Average loans grew 6%
  • Consumer banking net income grew by 14%
  • The bank's efficiency ratio improved from 62% to 60%
A customer being greeted by a female bank teller.

Image source: Getty Images. (Note: Image doesn't necessarily depict a Bank of America facility.)

2. Net interest income is growing and could get much bigger

The Federal Reserve has increased interest rates several times over the past couple of years, so it shouldn't come as much of a surprise that the bank's interest income has grown.

Bank of America's $11.4 billion in interest income during the third quarter was $1 billion more than a year ago, and its net interest yield of 2.36% is up by 13 basis points. What's more, the bank says that a 100-basis-point parallel shift in the yield curve would result in an additional $3.2 billion in net interest income over a 12-month period.

3. Bank of America's book value decreased -- or did it?

In the third quarter, Bank of America's book value per share declined from $24.88 to $23.92, a drop of roughly 4%. At first glance, this might look like a cause for concern. However, this was not actually a drop -- in fact, Bank of America's book value increased substantially.

The reason for the per-share drop was that Bank of America's outstanding share count increased significantly during the quarter, thanks to Berkshire Hathaway's exercise of 700 million shares' worth of warrants. So, while this dilutes the per-share book value, it was completely expected and the bank's overall book value actually increased by $4.3 billion during the quarter.

4. Profitability continues to improve

One reason for Bank of America's depressed valuation relative to some of the other big banks is that it has been unable to produce profitability metrics that met or surpassed key industry benchmarks. Specifically, the bank aims to generate a return on assets (ROA) of 1% and a return on equity (ROE) of 10%, and it hasn't been able to do so since before the financial crisis.

However, there has been significant improvement recently. The bank's ROA was 0.98% for the third quarter, just shy of the 1% benchmark and up from 0.90% a year ago. ROE of 8.1% is still not quite where it should be, but is a solid improvement over last year's 7.3%.

5. Massive repurchases help offset the "Buffett dilution"

I mentioned that Bank of America issued 700 million new shares during the quarter when Berkshire Hathaway's warrants were exercised. However, if the bank's recent capital activity is any indicator, the (expected) dilution this caused could be short-lived.

Through the first three quarters of 2017, Bank of America repurchased $7.9 billion worth of its common stock. And since its outstanding share count grew by just 580 million despite the issuance of 700 million new shares, it looks like about $3 billion of that amount took place during the third quarter alone. CEO Brian Moynihan recently indicated that the bank intends to keep emphasizing buybacks, and at the current rate, it should take just over a year before the effects of the "Buffett dilution" are negated.

6. Bank of America's efficiency is improving

Bank of America's efficiency has significantly improved in recent years, particularly in the consumer banking business. A primary reason for this is a reduction in physical presence and increased investment in technology.

Branch count has dropped by more than 400 over the past three years to 4,511. Meanwhile, the number of digital and mobile banking users have increased by 14% and 47%, respectively. Twenty-one percent of Bank of America's deposits now take place through the cost-effective mobile platform, more than double the rate of three years ago, and the online and mobile platforms have received industry acclaim for their functionality.

7. Fixed-income trading was an ugly spot on the earnings report

To be fair, Bank of America's earnings report wasn't all positive news. One major disappointment was a 22% drop in fixed-income trading revenue. This has been occurring across the industry, and wasn't a big surprise. For comparison, Citigroup and JPMorgan Chase's fixed-income revenue dropped by 16% and 27%, respectively, on a year-over-year basis, so Bank of America's performance is right in between these two competitors.

To sum it up...

Not only does Bank of America continue to improve, but lately it's starting to look like a predictable, solid bank for the first time since before the financial crisis. While there are areas of industrywide weakness, such as fixed-income trading, the bank's focus on responsible growth and running a leaner operation is certainly paying off.

Matthew Frankel owns shares of Bank of America and Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.