Bank of America (BAC) reported total first quarter 2017 revenue of $22.25 billion, up from $20.8 billion in the first quarter of 2016. The company said net interest income rose to $11.06 billion in the quarter from $10.49 billion a year earlier. Additionally, non-interest income increased to $11.2 billion from $10.3 billion. Net Income increased to $4.354 billion from $3.015 billion. The company had diluted EPS of $0.41 in the quarter, up from diluted EPS of $0.28 a year prior. Book value per share increased to $24.36 from $23.14, while tangible book value increased to $17.23 from $16.19. Analysts had been looking for total revenue of $21.77 billion and EPS of $0.35, according to data compiled by YCharts.

The company said total loans were up by $18 billion, and deposits increased by $64 billion, while brokerage assets rose by 21%. Total assets rose to $2.25 trillion in the quarter from $2.19 trillion a year ago. Sales trading revenue was $3.9 billion. Average deposit balances declined by 3.1 billion, or 1% y/y; while average loans and leases grew $9.3 billion, or 7% y/y.

Bank of America's net interest income rose nearly 8.5% y/y. This improvement was likely driven by increases in the yield curve, especially short-end spreads. Remember, banks typically borrow short-term funds and lend long-term funds. This means they borrow money through deposits (paying a lower rate), and lend long in the forms of loans and mortgages (capturing a higher rate). As the yield spreads expand, the bank generates more revenue.

Year over Year increases in the Treasury Yield Curve

When looking at BAC's price to tangible book value versus peers like JPMorgan Chase (JPM) and Wells Fargo (WFC), we find that BAC is still relatively undervalued.

BAC Price to Tangible Book Value Chart shows it is valued lower than both JP Morgan and Wells Fargo

BAC Price to Tangible Book Value data by YCharts

When taking into consideration Bank of America's performance over the past year and the steady increases in the bank's net interest income, if the yield curve keeps moving higher, it's likely we will see continuing improvement from the firm. BAC seems to be on the right path and early trading in the shares suggests the market agrees.

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