Bank of America (NYSE:BAC) just posted its first-quarter report, and at first glance, the numbers look solid. Earnings came in better than expected and growth, profitability, and efficiency appear strong.

With that in mind, here's a look at Bank of America's first-quarter earnings, and the most important points for investors to know.

Interior of a Bank of America branch.

Image source: Bank of America.

The headline numbers

Bank of America beat expectations on the bottom line, reporting $0.70 a share in earnings, $0.04 above analyst estimates. On the top line, the bank's $23 billion in revenue matched expectations. So just based on the headline numbers, it appears Bank of America had a pretty solid first quarter.

Having said that, those figures rarely tell the entire story of how a company performed. Let's dig a little deeper to get a better idea of how Bank of America is doing so far in 2019.

Looking beyond the headlines

The short version is that Bank of America's numbers look solid all around. There was a bit of weakness in trading revenue, but since the rest of the big banks have already reported their results, this wasn't a big surprise. With that in mind, here are some of the most important numbers for investors to know.

The good

  • Bank of America's net interest yield, which can be essentially thought of as the bank's "profit margin" on loans, expanded by 9 basis points year over year to 2.51%. This is among the best margin expansions we've seen in the industry so far this earnings season.
  • The bank's efficiency ratio improved to 57% from 60% a year ago on effective expense management. Return on assets (ROA) of 1.26% is a solid improvement from 1.21% a year ago.
  • The loan and deposit portfolios grew by 4% and 5%, respectively.
  • Bank of America continues to be a technology leader, with 9% more mobile users than a year ago. Digital sales now represent more than one-fourth of all of Bank of America's consumer banking sales.
  • Bank of America bought back $6.3 billion in stock during the first quarter. Based on the current price, this represents 2.2% of the bank's outstanding shares, an aggressive stock buyback rate for a single quarter.

The not-so-good

It's rare for a bank to have an excellent quarter all around without any problem areas. Bank of America's first quarter did have its share of disappointing and concerning numbers, and here are the most significant:

  • Bank of America's net charge-off ratio increased by 3 basis points and the bank's provision for credit losses grew by $179 million, indicating that loan quality may be deteriorating slightly, or the bank may be anticipating an economic slowdown.
  • Investment banking fees declined by 7%, thanks to a general lack of IPOs and debt offerings in the first quarter.
  • Trading revenue was a particularly weak spot, as market volatility was rather low in the first quarter, especially compared with the first quarter of 2018. Equity trading revenue plunged 22% from a year ago and fixed-income revenue dropped by 8%.

Investor takeaway

Bank of America's first quarter was solid all around. While some of the increased charge-offs were caused by the credit card portfolio, the bulk was due to a single commercial loan exposure. Trading revenue was down across the industry, so that shouldn't be too concerning. And while a lack of IPOs caused poor investment banking revenue during the first quarter, there's a wave of high-profile IPOs expected in the third quarter and beyond, so this could easily turn around going forward.

Bank of America is growing its business and its profits nicely, is returning tons of capital to its shareholders, and is doing a great job of keeping expenses low and efficiency high. Investors should be pleased with the bank's performance, and at less than 11 times earnings, Bank of America stock could be an excellent value given its impressive growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.