BAC - Earnings call transcript Q4 2017 | Bank of America Corporation

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Operator

Good day, ladies and gentlemen and welcome to the Bank of America Fourth Quarter 2017 Earnings Announcement. Currently all phone lines are in a listen-only mode. Later there will be an opportunity to ask questions during the question answer session. [Operator Instructions]Please be advised today’s program maybe recorded. It is now my pleasure to turn the program over to Mr. McEntire. Lee

sir. begin, may You

Lee McEntire

the morning. may Thanks to got this call the just documents for chance bankofamerica.com today. of website. discussion I some to our XQ forward-looking everyone will on release review earnings everybody's you review joining Relations XXXX section to our we morning’s remind the Good Investor make results. a in Hopefully statements

XQ Brian questions. few or CFO Moynihan, it back thoughts Paul Brian, either information Chairman take our refer earnings our the we head on SEC over our a company documents, will the Donofrio, before further just we will filings. For it as away. CEO for and results, to website, from our into comments. then and for make will those, release to up opening turn XXXX please some review Brian open our

Brian Moynihan

for This board. Sure, Good strong through quarter Lee. everyone leverage operating us joining the year Thank company and consistently you year. morning. another was drove for positive our across today. thank and We the

we fact, the through excluding way. Tax in combined where twelfth with Act sales driving it while We strong achieved fundamental that basis Slide you X% see revenue, is had reported leverage impact it the a straight and declined can relationships quarter positive the year-over-year we is revenue production. excellence, and operating right controlling X%. up this expenses did X Full on on a expenses In operating have year

a our our we are company operating model how remained manage customers the clear We is and growth to loan and risk true a for growth Our there the targeted responsible outcomes. in of recognition throughout X% desired year. business generated who where grew

little a of highlight me the progress. Let

reported income the discuss This over is in its For run Act the Tax the highest $XX income rate Tax of impacts for we solid we $XX Paul net detail in more tax XXXX. excluding the little represents reported Act a which will up billion impact the XX% $X.X later. would net company after billion, of a have in year billion, earnings history.

coming people, Our our businesses our for and consumer business earn our relatively wealth and evenly company they our On commercial with billion businesses, while about billion $XX more they our balanced Banking X%. segment than institutional and Markets our Global businesses businesses. more are grew and together remains consumer earnings up Global together generated $XX XX% and from management

for impact, on parties average to board Shareholders share Average was of targets. XX% and our progress. common XX Act for, through the to among working Hispanics Tax place in return a basis companies during higher top we high and company to stock was the brand not and teammates our improved X.X%. share by for ratings, recognized tangible therefore price of return on down points assets continue diluted count improved we’ll the many nearly we we XXX making saw X additional we credit rank down reduced but work our fully shares this best year the only increased of area. – of our heavily to list the outside invest saw mothers group improvement, make time return tangible the area in continue our pushing a plus CCAR by work, to our on last benefits for price At in our our X the our model teammates, and and million were businesses, Across dividend equity by Excluding diluted and close in every in the improved best our XX% from long-term XX our our continue diversity, from our rank to others. list overall this an show the With workplace billion [indiscernible] is year progress best in best peak. to [indiscernible] parents, billion core assets,

the wellness XX% teammates year in You slides leave can and the $XX time. – a teammates policy had family see we future end, bonus to appendix with also this at heavily to our minimum put to year expected the of year. This starting them last we some of we we of savings. Sabbatical, The our nearly the latest invested these tax at introduced accolades were packets leaving couple initiatives. in benefits of announcement of on time increases, added our have where for more the we extensions is improvements example able this share success wages the at and the provide We

a added about the investing make As cost expenses in more this also We’ve quarter. to explain, Paul lower - fourth continue million in the make to $XXX in franchise. dividend money will so can to we our been

security for we We our and banking so lowered customers; rankings. continued also online investments our in protection in leadership our cost show digital mobile for capabilities we

We in out also digital capabilities in rolled and auto shopping home.

the as We clients treasury through and as our wealth well are across in capabilities our our spectrum capabilities our for award-winning heavily clients. also digital management investment commercial investing brokerage capabilities,

by our to Our consumer there in is do the positive benefit banking to for drive be and of more our became and in company continue app this J.D. to change apps Apple Power. the We clients. App first Store much customers mobile the certified to know

do a let plan sure, we do more it So the quarter. are today to Paul for we it me and way we give of through that but right and comments win on can turn that, the the over responsible outcome in proud to With team as the that you driving proud even that we approving, to future. are growth

Paul Donofrio

$X to approximately billion we of go to net through Late billion back in share that reported the diluted Brian. in Tax to the X X-K of I from filing investors per Act. an quarter you, want We $X.XX or Thank start. Slide expected informed $X.X an income we impact QX.

impact. by just is Act our the Tax lowering several in information complex $X.X estimated came Remember, novel new $X.XX. impact [ph] guidance with filing] Any estimated [current Our could shy provisions. EPS billion of affect for

in our impact in two was recorded the noted materials, As places.

a We in the new other charge more revaluation the on line, of assets includes and by In that deferred charts the value deferred impacts remained an by Brian well the for charitable of million tax investments. the energy that a expense tax improvement credit reports to which $XXX $XXX news expense common significant roughly in up spreads $XXX impact share benefits XX% stock a on pretax which believe of a tax commercial reserve shared with of Tax December $XXX our late billion, this new in basis share we looked certain low. Act revalue benefit was charge, within of XX%, December this plus on return grade was late our teams XXXX. with contribution the million tax plus year-over-year the driven charge-offs charge price X%, as market million, And some drove leverage renewable downgrades on strong specific On both a Tax growth. line of of from was our with success energy certain billion this mentioned, income, interest materials, criticized and tax income tangible of tax improving non-performing the million charge-offs year-over-year. for an to Act Expenses liabilities these and income we’ve just exposure. exposures investments associated from we declined clear net X%. liabilities. tax affected that return and aggregate this as the the was EPS offset of savings this million First, that the the $XXX renewable $XX net investment credit. provides caused planned credit, QX on deferred provided in income I In commercial included of and the company growing multiple total, including loss, mentioned basis, operating was $X.X results Return impacts. points, basis billion net excludes energy charge revenue QX. $X XX declined XX% as a equity Revenue that Provision comparison billion tax the $X.XX there investments, was per concerns this of was the loans assets acceleration future approximately communities to formerly with with single bonuses $X.X was X%, reflecting Despite very Negative serve. excluding build

up overall, trillion $X.X a Turning to cash. decrease offset unchanged. $XX to Loans assets billion, but sheet were on end the of were Slide mostly grew balance period XX, $XX September in by X, billion compared

and levels reductions lower of growth On side, billion were QX with prior stable the period. markets strong $XX deposit in funding Debt equity. funding was offset by from

debt structure global sources ratio remains exchange debt billion and $XX a an decreased perspective. QX. from liquidity a quarter, complete Liquidity TLAC a ended $X.X billion extended liquidity the $XXX in did of from we this maturities average improved with which XXX%. with coverage we However, the and quarter offer billion the Equity of of strong

well our the available months. have the dividends, $XX.X The year increases billion and through XXX included in repurchased billion share $X.X per was shares income earnings preferred equity share was of the than debt rates purchased decreased previously pull billion Tangible QX where we in result than decline the stocks as in our the common the shares common to we million billion value common charge. XXX both purchase for shares. following We twelve as dividends, in the Remember, the $X.X CCAR. offset impact portfolio. $X XXXX $X remaining long-end Tax mostly in returned million of convergence the Tax past OCI addition in modestly This value to billion above more decline share and see the QX including to $XX.XX quarter, $X.X in Act our book announced which of purchase billion common, repurchases of more to Berkshire to as shares repurchases That Act in shareholders. was over securities the quarter and this of as

focusing regulatory metrics to impacts. fully phased-in Turning and on the

decline this cause to the of Our of in the obviously shareholders quarter. CETX Act ratio Tax included of declined return excess primary capital which a was earnings, impact. The

loan flat drove advanced risk-weighted increase growth. ratios where ratio declined to DTA XX requirement points The Focusing under RWA. across both weights CETX supplementing points loan standardized in run-off a standardized offset on approach, XX continued exceed XX.X%, trillion and from QX growth risk X.X risk RWA U.S. well unfunded the at and regulatory remain high basis basis above general our XX.X% with approach as with and and the less, advanced leverage was sensitivity of ratios and the loans funded Under legacy to to $X.XX ratio billion businesses $XX minimums. declined assets reductions starting the is the

basis, average UK quarter $XXX billion. loans loans continued other housing were an totaling On QX $X were and Loan cards, of year-over-year. real down other, $XX to was the $XXX X. which that total X% loans billion other. sales inclusive or our student Slide also sales, billion consumer of In of of sales. year-over-year the dampened average approximately be average these in all loan increased impacted to the the Year-over-year Turning non-core manufactured by billion. up loans sold run-off Adjusting loans QX, all to estate for million. all $XX we Note a by loans loans comparisons growth remaining to than in

structured X% Origination by in credit to with of leases driven hand, solid business banking clients by Growth increase decline declined X% offset growth be loans or by of new loans solid billion a banking. within to home This management in deposits X% in growth $XX and which billion was X%. cash was and segments nearly or or continued year-over-year. up moved This growth banking Average increased led by growth with global other nearly banking billion the or Wealth to right, by and driven at equity X.X% bottom year-over-year. mortgage, downs. consumer Consumer lending. deposits to wealth brokerage Switching the in loans AUM. pay remains solid, average mortgages were our year-over-year vehicle $XX loans. across management’s strong global was mostly X% outpaced year-over-year. growth up cards a alternatives On $XX as looking other was

quality average points asset X. Slide net basis loans. charge-offs to $X.X billion XX Total Turning on of or were

impacted was one the large commercial quarter the mentioned, charge-off. single As by

portfolios. legacy provision from $XXX and the XXXX charge-offs million to and consistent were up this net Also commercial QX and our charge-off from loss, reserve loss with XXXX. due and Excluding Provision million consumer billion release. included continued QX. ratio was largely single improvement $X net $XXX The reserve this of QX release expense reflects million estate a real energy net net $XXX

of exposure commercial Reservable Commercial and XX% a QX of allowance with $XX and On excluding quality XXX billion to its coverage QX deferrals lowest out their Our the in charge-offs million they’ve declined credit coverage losses QX. expected break $X.X net million absence since NPLs XXXX portfolios. of Consumer, QX. to of large basis X, charge-off reserve down times already billion X.X negatively metrics as the Slide more current and The ratio were criticized consumer $X portfolio of full payment both an some from net credit at than $XXX level to credit is recoveries, NPL from of year stable. respect were from charge-offs. our prior The With on period points payments. strong we storm-related or the net and and by impacted ratio loan card remains losses, QX for one uptick Consumer modest the up seasonality. Consumer the increased seasoning. been XXXX continues net Consumer our X.XX% was are discussed coverage

driven Slide basis $XX.X spread asset non-FTE on GAAP improvements was spread the or as up associated QX the both the to lower UK with securities as was X, GAAP XXXX, bond prepayments Compared driven NII of write-offs. portfolio in well on lower XX% yields and by an premium the improvement sold offsetting Partially home billion to QX and The is the interest billion interest basis. $XX.X FTE was which therefore increase cost. $X.X is year-over-year card also than the funding XXXX. our income and in a more Turning income lack net billion, by

XXXX it yield, to markets, asset XX from interest global net NII and million securities, by raised Compared in driven $XXX short-end selected to as QX of on products QX improved of NII XXXX certain well $X.X points expect a in in some plays the pricing, on well increased the as as approximately as included basis NII as to But, management QX loan than QX normally you or $X.X in said remains sold. basis wealth that days In rates funds commercial NII less the full growth billion FED we benefits we In reduced grew up rates Also, card is from two yield from $X.X million. interest significant in the curve business and QX, expansion declines growth on deposit net loans. card by solid by for as don’t UK be NII also I the expected. as Focusing cut amortization will be loan an that NII loans, growth QX, out One XXXX, respect of other increase deposit basis, the in experienced X% about billion Having XXXX, the assuming we a billion. stable. clients. anticipation year XXXX, from the we $XXX This year you currently rates in we already driven given same forward With a XXXX Consumer from in worth seasonal interest growth and would hikes. item think XXXX. be you remind offset in that run that, lower paid the QX expect will think NII up to deferrals. on full modestly Tax NII X.XX%. growth there More the lower. to premium rates borrowers short-term, because to will that XXXX, approximately FTE remember, expect noting benefit in have muted December Act experienced. should growth NII about rate reduce will by the

to rates short-term increase offset basis from asset expense sensitivity XX is tax no at billion by to completely in growth a driven respect up On largely higher again, is by months. on earnings. is September on subsequent NII to remember, each With in change $X.X XXX% an resulting $XXX basis, the This NII rates. an GAAP estimated is instantaneous increase not as million impacted. in parallel is approximately our point approximately NII FTE by and sensitivity Still, two-thirds XX basis an NII basis, expected decrease FTE quarter. However, over unchanged by XX/XX to

quarter Previously, X, for accounting solid over just incentives. retirement had we expense another management. to $X which Turning an change the historically awards recorded quarter Note includes this of was billion was Slide when eligible this QX expense were granted. in

amount grant periods change. four We this year’s record account QX with which than was actions XXXX. quarters. this expense next ratably of million now lower the share from to that $XXX over year’s been we will the estimate Note in down of serve. restated $XXX an for now – X% the prior pretax this or and Prior $XX.X paid employees two we supplemental in quarter’s year materials Non-interest approximately billion have current communities will includes for totaled million savings

down actions, were Excluding discretionary expenses these X%.

addition associated categories distributed sale our and optimizing delivery company’s expense In continue savings improvements the of consumer be we to our SIM, will UK Card expense on year-over-year non-interest understanding processes as in focus to across the cost network. work broadly improving business, with

to global We offset medium-term lower business. benefits potentially increases expect declined cost spend. lower investments. incentives quarter QX was cost in help will discretionary expenses Compared our mortgage servicing driven million in despite late and $XXX us these by over and by the a efficiencies markets The drive to revenue-related XXXX, decline that inflationary the

our Act’s XX% was typical Tax revenue, our our impacts weakness the the seasonal of reflecting ratio sales business. in on above Excluding target efficiency inflating

year. $X.X to billion the XX% the with XX, with and year driving on efficiency leverage business. a growing end Banking the a operating ratio of Slide On XXXX this by for XX% year basis, over were business the starting to Consumer turning QX tremendous caps Okay, full earnings segments

million at XX% Year-over-year, XX% outpaced returned in on and allocated billion operating over rates XXX created grew of drove XX% interest $X.X results, growth balances as year-over-year revenue. deposits increased brokerage points earlier leverage on and which percent low earnings Focusing a actions improvement to and Year-over-year this and future of client growth share XX%. average tax with savings to from grew growth charge-offs average of increased assets Merrill pay Net experience credit continued expense basis employees of we Edge in in low revenue Average as discretionary X.XX%. of Higher $XXX XXXX. growth. non-interest Cost ratio of QX business X%. X% deposits capital. deposits the XXXX loans year-end and were we loan as remains year-over-year mentioned X%. expense net grew at reflects increased of communities million $XXX Provision serve. QX QX portfolio the expense our because modestly and seasoning card modest expected The charge-off

Turning to at Slide XX key trends. and looking

In mentioned I QX, revenue, we year-over-year mortgage on balance production category by bond sheet. revenue increased year-over-year. was banking first about our of As XX% income earlier, Within only was retained mortgage declines. the XX% lower major that driven

with strong policy This on charges has front. and overall modest certain lower believe line overdraft in NII or Spending rewards in by revenue levels and an X% and customer rating to year-over-year up were in X but revised card non-interest the we revenue competition X% year. continues point offsetting credit of growth XQ cards the Preferred costs. By that XX on our one-time high at it levels credit new savings. improve in at a last with cards Banking increase clients relationship issued new fees us revision servicing headwinds XX% benefits be benefits and satisfaction were way, eliminating we and to Service is X.X drove roughly and the our while million in the – a rebate line Looking the balances a historic more reduced cards income, partner XX Rewards quarter, than fees. our by allowing more income debit and of more in up modestly which improving broadly, we X% our helping facing. deepening, is industry will Consumer reached are These cost scale. customer impacted Spending program that satisfaction

as branches the continued bottom impacted and assets. the prime To Expenses our see brokerage special in and digitalization. on on Otherwise, and page, initiatives least balances, give type the continued of centers, scores optimization client year few can to at level with of saving continued a prime of end outpaced highlight from loans heavily than compared let focused facts. you business have FICO success sense book deposits, we’ve QX more modestly bonus were this in of to on me growing super you up average remained XXX. XXXX technology X% We Focusing and and a the others. investments renovating financial investment the borrowers

in wealth banking we by areas with existing XXXX, centers de XX of new During but and/or areas not have previously these novo served presence. retail financial in management opened network, where XX our we commercial

centers offices. We also Merrill lending branded XX student XX opened XXX and centers Lynch and

more ATMs. We also financial replaced XXXX nearly renovated XXX centers than and

Slide to and in XX Turning trends. focusing continued on digital improvement the banking

small, X% risk. growth nearly As cash banking. these improve through to even remained particular, XXXX QX, digital users metrics million have their the and see day $X.X as process XX now execute noteworthy Also easier Also customers while and direct relative represents at loan now our efficiency transfers. mobile originated over PXP migrate are from money still our annualized, investment devices. year-over-year the last on accounts users that out valued all auto deposit which I listed financial from be as earlier person plus billion to retail the to quarter. channel In the increasing. following you all together deposit non-digital strategy. be must These continue X.X the including growth We high to recent rollout split mobile reduce digital can request continues in trillion touch per continued impressive. digital XX% our transactions in in We payments and for billion and note XX% the equates evaluate customers million ebb makes customer $XXX to them, in leader applications thought half of as capabilities and note send, centers digitally with you XX of left of year high and note of is QX helping in it of all we the volume the They the payments doubled investment accessing shopping bottom to us mobile on person We payments and log-ins. checks deduction digital growth behind digital high our tech, touch, that trends transactions

Investment brokerage mix XX% declined same a face offset volumes revenue revenues. with management to allocated XX%. grew $XXX operating Turning asset management continued to growth earnings compression, the at All Wealth in in, and improvement X% from Market XX, This up headwinds drove appreciation pretax partially XX% management Global and on slide expense on with once million, XXXX, and revenue as tailwind fees, NII by year-over-year shifted. lower Management a modest leverage. X% strong brokerage QX of flows time, and QX’s coupled of activity and careful for were margin of again return client XX% fees spread a capital offsetting asset

This quarter up we driven professionals flows revenue-related well saw nearly both as billion. technologies. year AUM investments to were expenses flows in and X% by primary of sales Year-over-year billion $XXX the incentives, bringing as for $XX

and continue solid market balances XX, driven client to we Moving values, higher loan to flows see AUM rose engagement. to growth. $X.XX overall solid Slide trillion Client continued by

improved the within year, $XXX we well half and paid year-over-year previous with starting the early AUM increased real noted to estate investment Loan lending. trend as billion certain year. started brokerage we loans the In structured deepening the remained clients in trends cash of rates continuing on of Average consumer grew during us. the as relationship in quarters, of reviews as move growth more clients second deposits their alternatives As X% of oppressively products. concentrated into

X%, XX. records Banking revenue and a last for in to on to was $X increase of stable basis, On want Banking income capital about behind talk Slide billion of year QX several allocated earnings set up year allocated XXXX. this to from were despite was $X.X than loan a leverage. the in and QX business expand increases growth XX% as strong grew to years offset rates. Revenue and local year-over-year bankers overhead driven a while expenses of comparisons, continue commercial reduced we billion. of past NII only few and over added Global year Returning including the XX%, more and by investments XX% the earned results deepen solid operating compounded billion Global in XXXX. were as rising up XXX X% improved success growth $XX year full in Turning X% capital. an revenue with coverage Full and short-term deposit full banking. increasing reflecting to I interest business net business we Return moment by

million quarters We result XX% a and QX charge-off was the The by commercial led Global earlier. improve. but Growth with were for year-over-year. fairly portfolio advisory fees XXXX mentioned was in $XXX of of and as improved our in debt X% year-over-year. our also in Half Growth remains a grew equity Provision year-over-year. to from reserves Global IBCs loan up XXX of efficiency of to high. energy optimum Global recorded included increased ratio given but also Markets. expense fees, basis seen, points loss reform increasing several Banking outlook be XX%. expense Provision release The Banking past which on to growth tax half – some also consistent of optimism continued among loans clients remains is

expect also obligations. some to down and we borrowings savings tax clients funds and other However, of repatriate use to pay our

to loan the rose compared compressed point last deposits trend increase with growth lending, half seen spreads we’ve which one XXXX real domestic Banking, the evenly and paid in all X% basis in led spreads compared X% concentrated rose balanced average billion was commercial respect estate to Within of mid on the comparing C&I $XX QX the continuing or year-over-year year second by QX to most single-digits. Average and increases in Looking with while Global by X% QX at was loans, XXXX to modestly QX. QX between rate and reflecting of commercial year In Slide of trends borrowers, XX corporate flat. were year, down international clients.

of transaction represent billion banking billion. in As is up QX new record. interest and fees hit $X.X revenue best to seen XX% investment these rates the the deposits XXXX. of Total Advisory relationships they rise, which nearly $X global fees is finished a the versus XX% value growing strong year-over-year year

full in ranked overall totaling number investment up fees XXXX. we banking billion, $X XX% XXXX, For fees three year with from

on in $XXX earnings provisions. this Year-over-year, Markets was earned Markets of $X.X at as Global revenue volatility products prior offset by incentive trading results, investments particularly non-core income. decrease it by billion billion. offset quarter gain lower down client trading stable was from expenses, generated activity trading I sales to recorded by Revenue QX end rates. offset than with and year-over-year and year-over-year sales end higher conditions trading were a in of sales and million billion Equity revenue-related With favorable the Global switching Okay, decreased technology. to XX. as driven in $X revenue XXXX declines middle cash will results continued financing Sale technology year. trading more shy the in of driven of down levels were across X% trading QX did and cost investment less higher decline on $X.X sales in than of just and activity. spending XXXX, up in X% and from excluding was asset given derivatives review lower growth other Slide client year was of lower than XX%, market X% billion DDI. by as in the XXXX a trading effect fixed billion the the of the QX through the sale $X.X of better of by was macro held revenue the partially of and Sales $X.X declined respect

Slide at on trends to Moving XX across last following. would we the looking three and trends years, the highlight

while have billion we First, left the fairly box, at the starting been trading in our $XX RWA. three this expensed that full has over $XX.X consistent note achieved year revenue to lower total stability And reducing billion. years last

Slide markets of was the every all risk market sales across over both diversity the as globe. clients to launch recorded was consistency that the reported last A and and product last period. and in this three global in revenue here. On this capabilities change that Tax as note this very We years were Act few to able over our and of $X.X perspective relatively billion Still, volatility years. we the consistent from believe the the rolled and trading which XX, Now, we greatly, including quarter, major things reflected and from a other, billion. and reduced value that over loss time show research impact regional cruise comprehensiveness a few activity well $X.X shows

this XXXX Tax benefit little rate restructuring tax negative So excluding well QX early tax $XXX we be the would million. produced little sold GAAP for to certain results from portfolio were around the over XXXX when Revenue billion all XXXX the With benefit for respect other to the a charge-offs Tax XXXX. XX% UK as items. year-over-year. The the and include of prior rate in also all restructuring. subsidiary in the expenses charge, tax the tax have to unrelated unusual that as tax XXXX, million from $XXX impacted of reforms, profit a of quarter rate before our Remember the comparing down impact by excluding $X.X was to a year-over-year, Act the more of subsidiaries. other Unrelated expected impacts Act, included card of than QX taxes

basis analysis of on provisions. and other profits rate FDIC tax basis the FTE be we Now now tax preliminary our premiums, the mix on when the narrowed difference and from This FTE absent one remember global an non-deductibility expect items basis, has the reflects tax the reform GAAP to GAAP approximately to point. unusual about points and of XX% thinking in rate two

Okay, let up for me Q&A. turn for of to it closing Brian couple back open it comments we before a

Brian Moynihan

Thanks, Paul.

questions been Paul has As we and to wrap one hit from a reality. that a I’ve up, tactic become it’d the thought useful be top we more fielding couple and is

the regulation the agenda our clients territorial that clients rate our drive we reform. our will Bank will and well how received some that more clients do and from that largest one how the and said, do competitive balance our This invest. in business as about customers nine tax even savings of achieve in our system nine by positive client reform and tax that alternatives businesses the And elements Tax at is, with and often portion first are make lower customers company tells to regulatory what help reform Corporate the key be competitiveness. how undoubtedly to other it this the evaluating feel reform get reinvest accomplished and to banks That America from to tax grow carefully these second we American activity. two the of with were question – justice those It’s tax peers a increased in both are confidence coupled states, of industry in Reform, states. There will those and and as ultimately make the benefit and customers continued standpoint being for it our clear activities the grow we we first The plans. into of look business further our

get is second and rate The differently company change a is given focus no. question we end tax of lower I is, the run there and our day

are easier driving to and company. to those to that do growth, with responsible make on us business do the to for connect continually for remain customers, striving going employees customers our to it business inside focused our We trying with

quarters and our operational We products and as will competitiveness in in improving continue a done new to develop for excellence, drive we��ve services. invest row expenses operational and we as many lowering

benefit reviewed and capital will return our In our our investments, We through largest we model expect portion benefits the the whether end, growth. share continuing are increased clients, shareholders. by from distributions our will activities tax economy also drive and and to shareholders consistently all has or responsible be supporting this drive that

after that it the be impact cash will to and flow. question perhaps our it on is, or pay tougher that money is think they will loans we do Third will question tell repatriate people Near of tax reform growth. receive loan affect tax The more term they will.

However believe and how tax about we be will general flow estate growth tax real cash and invest in our as those loan the the the more will businesses it’s the of medium greater to growth business economy growing benefit long-term, rate. from proceeds. loan test after and real those by less came more We

billion by this is a the $XX.X quarter. into out in runrate reached for fourth $XX range. goal Another XXXX. pointing billion quarter, in $XX that in the question effectively tax we get I’ll start out change our or We reform look billion we expenses expense often reported come if you

accelerated additional $XXX so bonuses contribution back that that’s multiply billion. the us leaves XX quarter and If the you billion, just in charitable four out and and $XX.X that million if you about times or a

these FICO runrate. you hundred to get $XXX potential trading related billion dollars quarter, in you the million throw due incentives being If couple a in fourth quarter, and on there come a million first to tax quarter a lower add around $XX of top

So we’ll plan billion. savings effectively tax business some compete invest business act. take was of you’ve billion earlier to that our look we said would $XX forward, in to the the announced I want and that goal. to that including they tax improve have that the advantage you we as to the reached have quarter as reform still done on faster look is is XXXX, I business at It of your company, were scope, XXXX, expenses the our as have is. their no of to second But $XX first as that trailing and doubt, before we of In remind it’s hit time there

continue technology to of for branches, investments value we term So in along the evaluate options in the creation have we dimensions been people. longer and making

assess go through to We will year. as we continue the this

bottom-line buybacks be tax the time. expect of we’ll to most we’d will share the through over However clear and flow benefits reform dividends and

legal. investments operational any given is we benefit over acquisition play is billion fact share to dividends. that and continue simple not question and reform. to they nine will return yes. that The I efficiencies answer will returned shareholders drive we available around tax question the WE income acquisitions the $XX.X change don’t billion the make states, our capital in next XXXX, back addition, will excellence get in to or is, repurchase expectations, The common and time. reported In through company make need to in In net deposit to $XX.X is the

So our capital growth and excess believe capital. to organic we We we fact to will so. we be have will our as have and in continue grow risk to sufficient absorb have be

capital want first support to also customers’ and capital we the to customers our have for help demand We financing always use grow. that to

are equity That shareholders they tax. we to XX to we do the that given This impact for and yes, to So, in expect excluding need year forward capital Paul the the return return the going brings will act, reform of assets us on here last for savings tax tax to XX% increase tax and implied tangible earned of we return How question of performing investors. more act about. return basis targets the spoke points. on common

and X% few years we that targets In either ago. out laid addition, XX%,

targets. points rate equate of XXX% of benefits The still reach bottom-line. adding the the just potential tax assuming is tax tangible those the driving at forward This basis return more those of long-term in a that north the by ten will to Going company’s path clear easily something common on But lower benefit we’ll the points of keep than to seen benefits we’ve return basis were on performance. and marking continued in the XXX accelerate increased as targets average lift to mathematically step reform keep operating always will in assets. be you returns and mind, just increased to our equity this of been

the of company do will responsible and growth continue to and to continue and that. that improve return targets be you and returns desire drive our we’ll improve capital obtained, lower to doesn’t but our yes, continue the to to So,

for going and We’ll about it operating So here forward. company. drive the with got in the we Q&A. wrapping leverage we and that That’s up get can XXXX. on what what us up, And focused here things will responsible let control me open that, stay growth do us will

Operator

[Operator can Betsy we Instructions] question Morgan And our Graseck Stanley. with from take first

Your line is open. now

Betsy Graseck

Good morning.

Brian Moynihan

morning. Good

Paul Donofrio

morning. Good

Betsy Graseck

made of Brian, you wanted the around just the on I to expenses. follow-up one comments

or the in retain that has already groundwork it and over the remarks, and saying the tax particular full that prepared has $XX your met in Consumer you where to and laid expense you’ve very the in plan your improvement two you’ll fantastic the demand within the evolves the expecting you’ve from given generate for operating digital be the networks? business are wondering As I been strong may been that on able you payments particular if in the wanted branch the and indicated change how billion, consumer are just year operating more outlook space last leverage you in based with years. you’ll remarks, it leverage customer to understand prepared

Brian Moynihan

we to the the branch proven cities accelerate amount successful want majority very build of saying up The across what speed little flow but business are look will things a it business is some bit. – and that, the doing all is as I out think, reference we to we after-tax around shareholders. over to of accelerate that five to you there some go the are at, that principle, consumer of of vast an be doing especially any that’s years increased the the cash we may that the you base Sure, Betsy just are we have is, investment question to

and with back the stable in We invest drive Tom bit team major in especially the up to profit make business. to technology again, in a the at which the treasury the or are – more start revenues will to little to even next get businesses driving move markets services

amount I debate whether our them think, best speed that some it will say. it dimensions the way So, done growth just help been modest doing improve invest and the and to you’d to would we’ve to it be is, that is get along ability there is be the up accelerate

Betsy Graseck

been then Is years. on extraordinary obviously there consumer in more two this year? leverage last and the has the operating come the to Okay, business,

Brian Moynihan

The leverage as done They’ve all to tend operating you can business see you a of across done Yes, and we’ve than I continue the continually have all great year-over-year. job consumer the transactions good branches. the and some though a in hundred lot to and about the is they at to room think, the of we get we think a operating at progress whole they’ve great counter and made over progress are XX% we leverage. shown digitally company the want and only a of there digital still made – go made branches are deposits each the digital to go even have but businesses XX% up, focus and of

great businesses see of start other Andy will and that digitization need Katy is are the operating customers to commercial that’s Terry in you the job get team help business And to in to see continue wealth it. adapt it’s leverage to – exciting there, these doing technologies, Likewise, some management and continue and has business then that done we’ll business, efficient. to techniques more are use we including commercial and which a the and been as to the drive we improve team growing, going into very new there. a but think So, We we business we we’ll but leverage, see – to need and are some they’ll of that that continue business operating and transformation doing I the to great grow the job. the

underwrite and centrally even hard much get it’s and So expense, but very the underwriting fought still job through ways like the changes decentrally is This they’ve to good we the then of business. taking things expense a leverage that. do done how we versus

we So, board will consumer. the and on be expect it more the across

Betsy Graseck

you last you question thanks. with the ratio, dividend expect payout rate, then the and the lower how about do just on dividend dividend ratio or overall keep you’ll payout that are And that thinking flat earnings realize then tax capital return? up Okay,

Brian Moynihan

- us out moving would so. are mathematically I be will the what toward go it tax see ratio of we number, may laid that you and payout XX% We Tax think follow up just a earnings higher that the earnings

Betsy Graseck

Thank you.

Brian Moynihan

quite not we’re there yet, pushing that are direction. We towards but

Betsy Graseck

Okay. Thanks Brian. lot, a

Operator

take our McDonald Bernstein. next from we John And can with question

open. now Your line is

John McDonald

accelerating thinking maybe on of expenses morning. good thanks Hi, and and the you for some the how tax comments impacts about Brian, are investments.

think are kind set saves, about you out about you to you level economy. or So, like think is a ratio reinvesting you if the we think cost a an to Is of the you are kind I cost where kind should $XX about that maybe billion there $XX guess, of with inflation think some as taking still you some run this have and got to still other, feel way where we company could the XXXX you it? better year, kind this billion, efficiency and of just that core now. next places, be of Are associated coming you but to back reinvesting goals for kind beyond, about, just you is of of want

Brian Moynihan

$XX continue that continuing I to taxes, it said drive things Betsy the was businesses. key keeping as improvement things Couple to like the the are you. drive operational as with – leave inflation basically billion in you leverage time on is been that and sustain around flat. across discussion rate invest that think the we and referenced but relatively a before, dealing and we could about kind up of the i.e., over clear of creep John we’ve the to And investment on operating aside proceeds

the just bit question that increase by over and a a couple do And a – dynamic little is, to sole you by invest want then so, that pretty play years. speed going we to a would next the and of bit had number and good up

continue still and of back, a effectiveness followed principle you’ve company we we’d through rigor are the – got around John, continuing relatively have will rate basic lot we room doesn’t our going always same is, the closely, us. and way is I So of the cost run come is change flat we to how ahead investments the because to tax company around we it. the have lower just do the company

applying be that. to that says, company this and to just and continue analysis So operational going in opportunity we we much on. the that tremendous paper how We to see build digitization excellence we’re campaign the can driving are work invest and to keep drive

the have been but and will tremendously on other the be – of we a the and So, continue people to effectiveness that. hand some businesses, people in we’ll sales in the of investments are branches investing the or or company lot and do those

John McDonald

Okay, pull kind through value impact the or the is yet? there on and fully just new any numbers then new long-term about near-term think fees of overdraft the in for the that policy might impact, Paul, understanding policy, financial the maybe from policy franchise quarter of drag overdraft is trying to on continuation deposit or fourth that the come

Paul Donofrio

see say, you you want to I are that would sort next going I year were if single-digit modeling impacts. to of probably low that

John McDonald

to... Relative

Paul Donofrio

you so, They fourth chunk is the part to, good just through came there, had in in way the John. quarter,

will there modest that. a beyond impact So be

John McDonald

Beyond okay. Thank you. that,

Operator

can we Nomura Chubak question Instinet. And our take Steven with next from

now Your open. is line

Steven Chubak

Hi, good morning.

maybe line in in traject wanted is consumer million that expectation? charge-offs the quite outlook Brian, season on quarters. favorable. NPL a credit like to with to to coming both it with the range of we billion, reasonable commercial. wondering noted and start $XXX and loan for I still as reasonable So, growth remain to should outlook. has thinking question Liquidity how continues to you declined a just upward us in some trends the somewhere the that portfolio maybe expect provision am $X Is that about be

Paul Donofrio

We to charge-offs with not energy. We loan would continue driven with would by over the quarters first in expect expect credit which characterize XXXX, as growth, to are build to continue real to in roughly estate as releases those excellent. it provision reserve perform moderating non-core of net performed releases we support solid, match and line it’s the three way we time of consumer being allowance in

Steven Chubak

and that the side. for one clarifying that me know right, on question just All changed. expense I

bit, I expenses was last ramp XXXX. expectation that XXXX. you the to digitization, you’ve in you on to flattish you that that’s it the are have XXXX but call. because just know on focused I looks on want reasonable Brian, expense where most You confirm earnings some actually from little given clarify touched are just to like a this just contemplating whether still people the guys it alluded be in the I very guidance automation. to a wanted expect to Q&A fact

Brian Moynihan

greater probably modest of accelerate equal, that’s through say be But that we’d couple the in drop a years differ of of think the near off. term it things that, that flattish and with run years you. conceptual would back kind all is, be can being couple may and basically framework, they the with We’d part but took clear The we capitalized P&L money run and context billion we on on we bit and a that. $X we when of the we expect a lot question little of very investments company approximate a basis a tax told get what a to look be savings impacts of and top and low consistent billion we caveat from we’ll do invest $XX next very that of over the investments

Steven Chubak

drive final And alluded Brian, was the talked management invest wealth you get for to target. technology regarding had In expectation that me just you margin I didn’t on a to. XX% side. improved one a it. Got to the in efforts past you could the know guys reasonable about remarks one still if that to profitability.

Brian Moynihan

this that. XX XX, gone - to target at from quarter, XX, are we XX, we think, to. get I Yes, a It’s

there is couple some I running is this of to the over pushes terms that some – stuff think help next mechanically years in up. things it us

is we lower is couple we lot become talking do work things and margins, up more in affluent will of of on make reset and that. business it, are if there well. get side them can automation rates from about work is efficient, platform handle clients XX more that can lot core still a So, they to even they handle could through a about the more are and this efficient move business. and driving business we fundamental us goes as of lower things. up paper for of But Edge deposit a What a think Merrill we will that, that believe definition. – helps we in arbitrage it end as do by easy And themselves continue a the there do that Obviously, in them and around more lot the get pretax secondly, you that they advice

Steven Chubak

for Thanks questions. Excellent. taking my

Operator

Glenn from comes next Schorr And our ISI. Evercore question with

Your is open. now line

Glenn Schorr

you. shouldn’t in that am a have something and just lot PP&R equal the vacuum, through anything just but you Hi, there? higher it this thank I meaning simple how missing else the for see impact Act but you I can’t Hopefully, else thought curious CCAR to regulators, might if process talk is know the a all Tax impact I

Brian Moynihan

shareholders of I to – don’t keep be think you in think more going are are our better companies, banks the return buybacks. to missing all form to increase anything. be, going to a going earn. profits to what in I to position are more so, and they is more are going we all This capital going That’s dividends of and have to

Glenn Schorr

new one that wealth recruiting, and the But up strong where noted growth clients also curious number that advises current meaning over – switching is, is you and or what’s then you X%. from, all coming just to versus management, couple questions are the is flows, little like, training just Is on curious? noted

Paul Donofrio

our reflects program. SA the continued training the investment in Look really

experienced of very offset kind particularly has which been low the hires by in normal Some attrition sort losses. of competitive

Brian Moynihan

just ago, – months we have I’ll our remember, where traditional have we said to recruiting be way. just changed clear, the recruiting of six we been now sort

that we work prospects. one offices is training think people and in will Merrill and program of in take advisor work day effectiveness with figures play we the people So to branches That the again who product that great training, the growth – the most consolidated which training obviously. the platform brought our has for work through coming the out between who into

Paul Donofrio

and on So, being for some the peers. we’ve offset is just by by and market by – now decline little numbers seeing about increased that. new which it the it’s very that That’s by households seem spreads levels, couple a AUM we – driven being being that of compression are It’s in transaction focused driven revenues it’s been bit some just growth, flows. driven

Glenn Schorr

follow-up I could. Okay. if Last

in peers. a than of the to a little is large decision handful protocol stay Your different

curious, so the thought Just process experience and far.

Brian Moynihan

continue far terms to market opinion, our and we I’ll changed as we we to been say, people been so in do, want what relatively experience the it’s changing model been but the but, yet. modest position haven’t has have out of anything we’ll figure

Glenn Schorr

Thank Okay. you.

Operator

And we O'Connor Matt take question will our from Bank. next with Deutsche

open. is Your line now

Matt O'Connor

Good morning.

Brian Moynihan

Hey, Matt. How are you?

Matt O'Connor

Good, thank the outlook you. of card full the on I business. mentioned from drags interest income net was hoping the you for the to year for some and follow-up

grand the had that drag in guess I doesn’t things, $XXX the year-over-year. is seem good really So value growth I of million new from like mean, scheme material. it Obviously you card

that little magnitude much and net – of a year how if get last looking sense this So the trying better I maybe give pieces. might the for to are bond to of be helpful versus us amortization, want then you benefit in was you the was premium that

Paul Donofrio

expect look, and growth. XXXX growth sort we as well loan deposit solid from in Yes, NII continued, of as NIM expansion

deposit the of at amortization approximately end would out the of going up as XXXX, rates slower at forward we utilization premiums, rates loan along by respect increase end manage ability of is With $XXX end obviously the point a growth, benefit the rate the I moved amount what curve the bond year, prepayments our of million I long to the pay. think bond that driven of XXXX. was upon depend had this increasing the lower from of and to to dice in the

can’t expect repeat so the that going not not in this really that is to prepayments same had rates itself are to year already curve we fees. in given and convex decline you a that of it’s and the increase get we’ve So, future big linear,

got that back going growth, XXXX UK growing But factor I to it managing feel note paid. and that be You noted in and rate deposit to going as it’s then basics half to good also said, we is included loans, all you deposits, would NII to about FTE. of solid card just XXXX be on

Matt O'Connor

in figure terms essentially but you the rates pressure mentioned, we about are what with And on retail setters I as when as then wondering and for just there little the might bit be side, helpful. that’s forward. biggest Okay, you are they the one we peers, upward deposit your seeing It’s being deposit what thoughts going start the think – low repricing of price separately just there of consistent big player think of there. of no seeing

Paul Donofrio

to Yes, make much the And depositors. on times going to of value retail it’s be to remind hasn’t side am lot just everybody that made deposit Bank at a on I the think that would how many America to sort and we’ve seen I helpful I of rates just delivers or of am of that accounts. increasing a you, traditional not points couple really industry sure I important all

You’ve banking, advising got mobile transparency, convenience, network, safety, council. nationwide

plus of all of relatively think pressure low. has deposit far the lack kept I this so rates market

needs competitive that though, for what the marketplace the all seen We banking. tell thing is with guess right all global are shareholders going and the we rate rising we our in going rise is to my customer don’t expected going some and given fed you we we the here are parties. I are in can Look do You’ve are XXXX. at that point know rates GUM to our rates to just getting to balance balance hikes and are going fund to interest close point and

Brian Moynihan

the us business, the give of integrated to $XX to a which Paul, do product, things. by set so, checking actually $XX to couple try CDs and billion focus tiers It’s other by set at things. deposits the other look it, is type and and already you we of of low, of strategy customer billion, very consumer business but always rates by along on again. is it relationship, a down and but market, $X I’d reward the people billion of on rewards billion year-over-year, was and billion depth the of and it up we are types $XX pricing how – just isolate loans of pricing one be the lot and an if add down balance the and aspect $XX $XX what a relationships driven in One, the programs, it at it’s the with hold set very up deposit consumer billion couple going integrated you a look and has or things, as

going So basis CDs even quality that it’s looks to of off we with franchise franchise but and run is points all-in dynamic have. the core and checking the the always so, of lower, to lead deposit four price

I the the which means what’s core driving coming transaction They checking we’ll and prime, reached of overall consumer balance household the do the quarter. of that’s think in accounts in pay checks average – are we the $XXXX structure so. to had, this continue all business

Matt O'Connor

thank very much. Okay, you

Operator

Wells Mayo Mike next And take with our Fargo. question will we from

is line now open. Your

Mike Mayo

XXXX, is spending, you expect to how total XXXX? say for compared to your for XXXX, do What where technology Hi. be that that

Brian Moynihan

to or to – we be on the understand components but billion component program is that’s and about code what – flat. new what people most technology comparable, and are, you call Well, the focus what relatively yet bucks and initiatives are we $X.X

Mike Mayo

XXXX, XXXX? flat about XXXX, for what Relatively

Brian Moynihan

flat and Relatively XXXX. XXXX for

A term. a the nominal of little less than the for at largely we even program bit done dollar in it’s XXXX getting getting efficiency unit efficiency. but higher per are We of work that, lack amount number for programming the same for cost little better be XXXX to than little would be The the less lower will for way number as that.

at cautious level all continue of fairly been we times. to that’s So, across time evaluate spending and that

Mike Mayo

Slide So, there? for I back number spend and you mobile transactions I trends, get going money traction? that get consumer more XX% see to deposit are more in to XX take do to areas spending want you you banking the XX% more you digital that digital. mean, where are mean, need those to as you do

Brian Moynihan

better has technology consumer. distribute dimensions when center the Well, investment technology. the the the spending lot It talk a the of tablet in branches call in environment including I way consumer of think, technology, you of bank branches technology we customers, the the integrate about to the by across – a lot tremendous t type use is benefited

like of going getting their help of it’s digital it going –instead amount will three with take to page them do with you’d walk ahead their but On with the and them a phone, to the ATM them grow or travel XXXX up number that about XX% was see a of the do we and deposit, from that were the of the we four value it with to branch XX%. do and deposit, side, customer the customers to through or understand instead we help meaningful goes years it specifically, the phone It them the have phone. branches we activity of on

it get comes of invested So, billion continue will we but done Edge improved and now to us invested, it’s five, here affluent taking Merrill it we continue you the I are we it’s have year, in not that, we that drive mobile we’ve necessary yes, helping technology probably $X what know the over advantage last as to mass think, affluent for be that six this America. to out years to – capabilities but

a billion those time $X So think some so us $X for that lot $X.X and billion benefits coming billion, to technology, done a having through. think about long spending behind step it, there think now in of but, of is of

it’s getting are behavior behavior. less about it’s the the a to mobile not about is technology, over customer get change like So it’s customer the the ethics expanding in actually more behavior, which the

Mike Mayo

collectively Slide isolation. don’t but of at in one You these XX, look on guys have all said, at take trends a look

the it your we to all-in externally sort you or monitor should about for how Would what efficiency So, be, example, ratio that one this? progress? of suggest number we metric would gauge is banking or consumer there compassing think

Brian Moynihan

they solace argue of to low and look that. Well, done course have and cost I Page at XX get you don’t how go. average we’ve of get the like I’d and - think, the them, below ratio are one the the take the they though team solace that take that I that But efficiency going it, tell could know great on don’t tell looked are the they we deposits. XX, be, – is to always us if could it great and XX I in going they think

scores something that the the we It’s are way over XXX and this in ahead the cost that industry, clear is basis points to we all phones, the deposits So all can’t think this if the transformation Paul wouldn’t running do you activity get we to your if base, of about than last have can’t you’ll and system the due customer against of Also we deposit points which the the that heights. basis years that That to and effectiveness a to scores earlier of a the XXX take at come as people and timeframe, stuff suffering your as run that push percent customer basis see experience. has from said of we that get keep efficiency customer to to a people people XXX is the customer you this you simple and during to benchmark basis do mobiles, can entirety the while for points. efficiency down and business. XXX the risen benchmark seven, want relatively challenge technology, want set improving the eight that customer impact the of the record

Paul Donofrio

people a that efficiency the in across the time got adoption we at to addition And looking mobile That’s and to you all sales. focus thing leverage. key individual are and accountable on operating to digital metrics all and other holding Mike,

Mike Mayo

and what’s answer short a more last lot that be deposits digital point investors all quickly My will last Brian, the that that your to have demise raised of deposits, banking concern? that flee just concerns internet to will on the follow-up,

Brian Moynihan

billion the deposit of I business think, year-over-year consumer organic growth. grew $XX

it I for think that’s what Mike. speaks itself,

Mike Mayo

All right, thanks.

Operator

will we next Usdin Ken our take question Jefferies. from And with

Your open. line is

Ken Usdin

morning. good Thanks,

growth you about terms bigger seeing as in I think the for rate and I’d business. more of movement starting out Pretty investing what America follow-up you and in in look a of expectation growth are your their the sense, on any commercial are X% sense just in across, core corporate in year-over-year wondering just to side, loan is decent think the and loan businesses?

Paul Donofrio

growth, loan Loan very about we growth. feel good

individuals playing is and new So, We and money has feel to going stimulate leveled have good Clearly, really make we here growth. economic There their about think more stronger. more field. – tax activity. we made excuse me investments pocket businesses because the going is to tax that’s reform in America think have we loan reform

long-term, I short-term, medium, optimistic growth. about So, we very loan are think even

we funds, detail Again, out still factor would the going see we That’s a large caveat people our funds expectation Card strongly are fourth growing extended year. we are we of remind the to single-digits and and loans have and modest loan are follow international equity kind note short-term going is at I well to I durations been – we on the to a on there been focused has what or On growing holding repatriating the we’ve historically. growing don’t we’ve borrowers. we in With really next would so our change short-term. to softened. in – well at prime in in the Auto prime a corporate more here some and expect again, see so that quarter. level, on like and has down feel more mid reason seasonally to slight in that soften are growth. been any commercial that that good mortgage will And our been side, to, the run-off. is usually balance I be didn’t growth own we to card around offset growing going quarter. first has home but are everybody slight super the by market repatriate

Ken Usdin

you other still Paul, the billion from fast are run-off? all there expecting of in bucket? to the run-off change in any $XX How is that that bucket rate

Paul Donofrio

to as of to run-off going five. It’s way it characterized X been off, running per it’s call quarter, going forward sort the we haven’t X

Ken Usdin

one-time just us recurring and quick part negative dollar especially that just couple or a small a obvious was thing? One swing, mortgage other mortgage hundred the that’s is of that Okay. you line, if big just but line, had through a one, $XXX other it to talk can in what million a million negative,

Brian Moynihan

Yes, sure you are line about right? talking the NBI

Ken Usdin

Yes.

Paul Donofrio

provision resolve so, and we had some warranty approximately of $XXX to claims. Yes, rep million a

XX% becoming back now a mortgage and ties income as are banking portfolio you that retaining $XXX quarter-over-quarter if production than originations our market normal. million mortgage less And mortgage reflected resolve that well If mind the income look a line this volume balance in income you keep quarter of smaller on that of the sheet. lower claims, warranty line was servicing in coming that you of just lower relevant we take the lower little the litigation to at decline since in look the simply and decline, the it is continues reps to as to exclude as a banking

reps sometimes a and sometimes So, there litigation, resolving show there. in up they we geography show but are is claims of they in bit warranty, up little

Ken Usdin

Got All lot, right, it. Got thanks it. a Paul.

Operator

Martinez And we with Saul will take question from our next UBS.

Your open. line is

Saul Martinez

Saul Hi, Couple thank questions. Martinez. you.

tax go Just the on to targets obviously wanted bump reform. Brian ROA comments from and your back, ROTCE with the to

size next you you but You not operating sort the right exceed from go forward, normalize. leverage out. But the of Rates your X% words from to lower like $XX positive rate and drive put previously to laid seems It target there. does as hit XX% efficiency, think and it’s the your – and to ROTCE banks to do you the easy they a get you of in can in mouth, over and benefit and excess that the one. you it billion of might? over tax to the view get ROAs as ROAs the progress to think you get ROTCE teen of But your mid have pretty as you years sort next to you can high well to get on of where years couple couple where

Brian Moynihan

that cited that geez, to we as when us that sort get XX say is at trying the we will and - which continue leverage equity of help things earnings get being, we as operating be we will you think a the growth that earn, rid look what But high you responsible we now will all The XX can driving we have at let's to now. as earlier I running yes, is, because will we easy are quote to we that more equity improve bump the and we've it don’t that around there itself we’ll drive mathematical to stated drive start it there question made for answer make are can will of excess as your help, stop. than number you help. is,

So, do we going sustainable to are a it on basis.

about when X% something that. was about like are probably point we the talked running targets, or So, we those

we’ve we if And get so, close X% to that will at be to to those made continue it way we to the we see said this expect be years had and over we tax a will this just But and time company to levels will it. and out – pass come couple and the doesn’t XX ROA stopping. That’s easier by and same higher to reform. it drive are mean it and see we now we there

Saul Martinez

philosophical Okay, and I guess guess, a enough. of more more – question. a a the follow-up just little it’s fair maybe of I bit

am management a to think do knew, products society of pressure So and or good a to that for and and at you should corporate take in be or good I actions like for happened? you I only you maximizing look taken there and indicating maybe take has pride but tax obviously guys not as Larry greater if if shareholders good other and feel is with maximizing or return the whether a profitability sent stakeholders impact citizen. have windfall, Fink, the any there have to actions that being will tax is profitability that think social may trade-off on you there doing you in and between letter reform at things reasons But not invest curious their thoughts you provide

Brian Moynihan

– place got on work it excellence. That I way don’t share people got been change basis, success running be think and to drive We’ve we responsible with a best it risk right with it format change. to for and with to growth the got with no excuses, along customer a run do the the operational will on organic company. do it four the to elements, our drive sustainable it won’t focused got the grow it communities

all and the for of working our part idea with Larry And of is sharing success new and communities all those part are of I were back successful because about years to our communities of successful. together if things, banking. on with ESG our we those the – mean, were is so, and goes what what our banks not legacy banks, for came communities wrote it's and we’ve grow types sustainable a to been we it were, we we do investing business long economy so within only had help and formed that history

plus and So, I industry all million share, through. of housing frankly off the hours, makes year reform stuff dollars goes will said, out difference. a investment away These this major way billions don’t $XXX are the and CDFIs, that role can a change that we do are long a are and changes, our building getting else earnings billion philosophical banking it’s tax company these half before as we we doing think things some in day rattle but or it’s are we before great $X it’s of with billion things reform viewpoint, public of modern million also X to a the tax volunteer came you tax long $XXX and when reforms something system

Saul Martinez

a the Thanks Okay, great. answers. lot. Appreciate

Operator

can Vining next from our Mosby Sparks. with Marty we And take question

is open. Your now line

Marty Mosby

million fourth drill payments. accelerated seems charitable quarter the you bit and the into some were in the to the worth clarity. not Thank little was is two of to unusual, standout It bonus there foundation expenses like been $XXX the just kind you. kind Wanted a get now then, $XXX have of first million of about would that compensation into of quarter Brian, talking and extra but

make numbers correct? were those those Just separate were items and sure want two to

Brian Moynihan

think so, to the did That’s the plus what those we is billion $XX.X and then billion and million about given under charitable a the of look quarter million. bonus if donations That’s million, we’ve I four. quarter people in million $XXX our in are back fourth to it, $XX becomes got there accelerate of billion the you about, one-time the the math talking Marty, $XXXX company $XXX expenses, we to XXXX. $XXX,XXX items $XXX,XXX two $XX.X fourth up times $XX.X in the $XXX multiplying a

the as earlier the simple you still change is, bit, are is It that’s which take. going think, we way to acceleration, to per about – the to first now last going billion quarter, that phenomenon that, to $X I the I little I there we used quarter. but in we to talk announced this are moves around the take the quarter think FAS-XXX X.XX we quarter take we in way think

not $XX.X billion number way, in also quarters. and that one an four acceleration, is so that. in that now for done And the all across X.XX just spread we’ve quarter It’s the it’s

Paul Donofrio

change the We in in quarter, that are fourth so made seeing you numbers. the quarter

Brian Moynihan

earlier is sure so help Just make year-over-year relative the same. question. to numbers the Does that the stated, Marty? And we got your when I’ve difference

Marty Mosby

as also had you if just went and kind earnings. getting a to sure that And as it very those up losses make does of or higher popped round sales. two you items modest of reconciles want drop separate restructuring, were mentioned then be and the you those you securities then, OCI AOCI, the because earlier. you loss taking that kind I where that of you have your things up, two Will that had capital kind I one look portfolio, to in was adjustment rates took you at in at slight actively security anyway to. opportunity And

curious was I that you of just aggressive that to kind in be So, wanted how push? – in

Paul Donofrio

no. is answer short The

in but the in just modest, million price was was legacy to That CCAR there got securities our way securities be basically $XX that we sold quarter. and We and results our get a to are can trade-offs. affects find any wanted we we it’d loss – There of portfolio. on a some you restructuring stuff. very We some nice not it to get rid the fourth

Brian Moynihan

– just core deposit we – excess we stuff up. trying proceeds clean are sort the a to was not given related, of Marty, invest wasn’t of in It’s the This it quarter. legacy like

Marty Mosby

done. It just Gotcha.

One can actually that on of some as uptick benefit of that curve, the doing restructuring. accelerate is of we do the I things the banks aggressive the was anticipating get back-end but

you of that So direction? moving or been just thinking had kind was in that, curious of if kind of

Paul Donofrio

our We really in we good where portfolio. of terms feel are that securities about feel we

Brian Moynihan

And we have securities reason Marty, a why portfolio we always because the deposit have is remember the franchise.

growing billion $XX run-offs. growth year-over-year due more to billion, We loans at especially modest rate a $XX are

you So it extract money franchise. the just to creates and put work to value an have to put into investment portfolio the that we deposit

Paul Donofrio

in Yes, or remember, them are we putting only securities treasuries, mortgage-backed cash.

very high We quality have portfolio. a securities

Brian Moynihan

have question? we another Operator,

Operator

Certainly.

RBC. from Gerard We next will comes Cassidy it move the with to question,

is Your open. line now

Gerard Cassidy

Brian. Hi, you. Thank

Brian Moynihan

How are Morning, you? Gerard.

Gerard Cassidy

thank Good, you.

looking watch risk. again, left from we guys folks, out Your the that very an out and share just fourth field are you as what you can on? have things are with looks some you Anything you always as good peers. well outlook for of are us risks keeping kind identify quite horizon? to results were of folks you and that for in eye looking Obviously, the quarter you good good for your type Can for

Brian Moynihan

I whether changing to that it’s it parade all whether are horribles whether think, Gerard, through risk, levels obviously, geopolitical because unemployment you risk, credit go to markets of back avoid do but be How rise, going come can they it’s the not we see lot going what decline keep we are economy risks. and those along or moving this risk of and a even doing today. watch we accelerate them in to that, we is don’t risk,

maintaining a team what the fact, consumer time been in lessons commercial but, years stay well did out and our avoid credit we’ve that is happy exposure, obviously over in the people it, and versus future go are things some that the quality doing good with who of has business, relatively and that. that year-over-year the the always we actual and do with consumer back the got we from that team don’t what discipline top the commercial whether to it through in wrong this quarter job. doing and the situation to balancing In call right it’s turn this doing credit even weren’t to spent tough cost significant that in in high flat a we wakeup We prime and in house is how involved or in learned

with list know balance do quite all as is impact well how question less. you do So you we so from responsible is growth but frankly. those company but you about risks define as keep what they’ll think be as immune do, them, ahead yourself of risk, and our I the cyber we the you those, That and won’t how that

Gerard Cassidy

is the at Thank And future. the bank then, were about optimistic your with the Okay. looks quarter of fourth I really pipeline coming XXX Can mentioned within what you. that you you And doing investment What second, you into you mentioned you and healthcare, the in like bankers. hired customers us investment sectors well, banking then the are technology, division, share XXXX? the think commercial end it guys financial?

Brian Moynihan

Those factors are segment. in banking the commercial

are markets So and… middle there

Gerard Cassidy

Okay.

Brian Moynihan

industries. they across successful, aren’t Paul, be clear, about Banking, but are it? just to want talk they all you to

Paul Donofrio

here. the QX mainly again, ended that, some due Having I with pipeline year large cancelation some we to think than or raising the capital. of about are transactions banking said interested leveled transactions. in has Act Tax the in to are very of investment which, field optimistic again, combined are in completion lower be QX going the large the Sure, companies postponement given of XXXX other investing ultimately M&A the And transactions to think we more playing be and going

So, down normal year-end. bit, a clean the at up little that’s but kind for of

weak obviously, range others, are groups banking number the we Your are than very are industry when across consistently, minus strong. in all three but we look pretty couple other regarding and no around have that that are sectors, our groups you globally question doing there you of of all groups, and like are feel and spots plus we at investment

Brian Moynihan

ACH, It cards, one going whether XXXX wires, growth through credit the year was XXXX over go out cash was debit XXXX Whether it’s what into interesting of line, was written. feel. the bills, thought full I to the thing, checks ATMs XXXX that under X% Gerard, it’s X%. are – a of little you consumers to payment and over-the-teller cards, spending

use spending. of X%,X% are shows and which putting feeling the consumers Paul as had and things. broader very the just are That said spending out credit is spending cash consumers the there up it’s card in it broad earlier good strongly but So that pretty there as is on in money debit out

the we the feel good the was and being of terms about So faster X%. consumer versus X% with side of than December in growth month year

Gerard Cassidy

just insight. you of If XX% I give payout light the then dividend philosophically, given decision. the is ratio to do lastly, and think green that good about that light okay, And talked getting ratios green real the - a how Directors’ to if banks, a you is regulators? Board payout recognize the think by are SIFI again, regulators the I dividend XX% That’s the this

Brian Moynihan

to is know to number. ever of to a move at terms I of not I dividend closer along circumspect where and about don’t number have let’s am that XX% or just that to right be, think mathematically just in be it on always think look cut I to be earnings I our see and They dividend. time you don’t for the up would out, want the they’ll at that a governing i.e. there. think barriers banks idea as probability when not basis pay continue will very inside dividends get to that’s play the get earning but whatever strategy came not they rational a dividend our for the have do our us of do, we’ll little it of us and up we us sure the it the company therefore, with more periods, way to going being are what across largest able low earnings with to our

Gerard Cassidy

again. Appreciate Great. thank you it,

Brian Moynihan

Thanks.

Operator

next question from And Juneja JP comes with our Morgan. Vivek

is Your line open.

Vivek Juneja

you the some questions for adjusting mean day all count? Hi, and you do issue day I QX not QX puts even to folks. in hike for growth and you tie thanks. net-net count NII, mentioned of Couple going the them the QX, Paul, December you recognize together gave takes, some let’s – given rate that from would expect you say

Paul Donofrio

bit at too you a given give which days. got I’ve end at we guidance. how of little remember two the look to the a don’t increases. LIBOR card in the I think I the get point. lower. FTE everything I run we was you you QX, rid that there using and anticipation early know of of up fewer We’ve got loans sort give that Again, If it at to the this rate that it’s of want

really pricing happens going and So, and not we of that’s on to some on just telling over I out just don’t is that to got deposit willing in know pricing, what because, It’s to am QX. the what deposit lower play depend benefit you going I quarter. really how higher loan deposit or growth

Vivek Juneja

Okay, thanks for one. that question a you. Brian, okay, on

of corporate of philanthropy, peers anything your set of thinking you X% goal resetting of One that? for a are net like income

Brian Moynihan

what pure you as have We call charity.

consistent million from and now crisis We million, $XXX there. $XXX to have levels we’ll before expect about the keep a kept year our it

work, there a we say, hours lately, that math think can X things. lot level. even done and expect point. to this I’d on haven't dramatically. change that addition and is But depending year after to going that, don’t We our I that’s we did what’s feel tremendous have comfortable volunteer ebbs In but at but tax X% the million a with flows with us other on moment, that I of the view at impact

Vivek Juneja

Thank Okay. you.

Operator

our take will Kleinhanzl with final Brian KBW. we And question from

Your line is open.

Brian Kleinhanzl

Thanks. what's XXX%. know there up don't you about was but the and have I the deposit to you Yes, ability and give that, that sales to to in remix commentary any quarter as betas want

deposit mean remix opportunity loans? still to into I the to from plenty short-term that you as of competitive want get on So, rates, extent is to there

Paul Donofrio

every every how by every product, sets. price of by very a it’s just, by We customer sophisticated market, deposits, On price. literally you question

there whether And because assets opposed retail we daily as business, as accounts in investment earlier, an Paul people with the Management to the is in cash it’s in flow. be so, it investment check their as it mentioned Wealth $XX million the in moved pricing will up business obviously

seeing it’s time in a question raise methodology smaller. So, it’s work services. for paying raised saw sophisticated it’s across Management and us very are rates business you Wealth albeit Consumer more question The for us and respond you corporate business rates business, instantaneously, a that

thing. very complex a it’s so, And

better to when our but be we NII we in hard purposes. - every a of single quarter, have a modeling conservative single it’s you for use that model and than and answer sort number, done So but frankly give to we model other so we’ve

Brian Kleinhanzl

just one maybe to XXXX. across, as said then some on on give the just investments? do the opportunity big mean, forward you follow-up investments I later in look maybe pursuing? if but accelerated and a be you know and expenses is you details there there further is pull possibly and will it in investment, actively lower expenses, billion seems go Okay, like, to of maybe chance in to below get expenses a you XXXX $XX still that kind that’s were you're and some I something

Brian Moynihan

for raises like be thereon billion guys and What we things that XXXX and told continue got increases effectiveness you medical cost and to that through is efficiency. to $XX care X% flat comes absorbing we ability relatively to investment

So, to that that. focus continue we number level strategy on and we we –that’s focused exact are and don’t an operating on

change no given have questions question value those is there after We’ve to to we across investments. yield. – don’t added we’ll some caller’s the be, the XXX commercial little one – said bit get at, the time, higher accelerate look to earlier, and you you do look would been I at that. as investments will of able The want So And tax be a of I to bankers. reference we

more if able be to we you make get might We to not XXX have added tomorrow, to sure, speed.

and customers the use are snap That client the So finger. you the make sure time penetration just customers. takes you techniques to for deeper portfolio to get in them and for we divide have can’t give to products coming your to they

and margin can the will we fair a do things increase continue good the going for billion in is that, leverage shareholders. modest forward quarters that investments sense that $XX we At to we’ll within based largely a even and drive level. scheme to be a and do not is expense what the of those at of end in overall operating on day, that’s in our step the So, accelerate think to to big the continue row are the challenge of ability we that a XX and number do

Brian Kleinhanzl

Okay, thanks.

Operator

to I’d This back it does over presenters to turn like comments. conclude the additional Q&A session. for any our

Brian Moynihan

we at Thank look shareholders great to do next value you thank continue and forward do a all look of delivering and We and for us. can our we a We time. by XXXX forward for again, our talking to had to driving responsible we that and customers that. you growth, good to and we for you you joining XXXX

Operator

your This does for participation. conclude you today’s Thank program.

disconnect at time. You may any

Bank of America (BAC) 17 Jan 182017 Q4 Earnings call transcript