BAC - Earnings call transcript Q4 2018 | Bank of America Corporation

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Operator

Good day, everyone and welcome to the Bank of America Fourth Quarter Earnings Announcement. [Operator Instructions] Please note this call is being recorded. It is now my pleasure to turn the conference over to Mr. Lee McEntire. Please go ahead, sir.

Lee McEntire

morning. Good this XXXX review results. joining and fourth call year full morning's for our to quarter Thanks our of By a the on chance everybody’s, to Relations now, I review earnings am release our website. bankofamerica.com, sure had Investor section documents

Then review our fourth Brian's the remind open let Paul comments, we'll we make our to that quarter during statements will Brian forward Moynihan, CFO, Before I looking for over the the up CEO, the questions. turn may call results. details me of you call. it Donofrio, After

For please it further our earnings our looking information SEC on our Brian. or away, refer release forward statements, website, take our to either that, filings. With documents,

Brian Moynihan

results. for us thank Hi. Good our and morning, to joining everyone, and fourth you XXXX review quarter results

of for shareholder how you this XXXX. in Before of to quarter, continuing through details we want I and of for walks the in produced what our quarter, you our teammates are model fact, review works some the you. This year, XXX,XXX latest Paul examples

So the you and almost better to top in well. of leading teammates, let's and invested managed all We benefited heavily you. line We returned and We costs capabilities grew X. the economy. little in than our a as our earnings on we that of Slide start all risks our

Act and add $X.XX Tax to X%, year as shown share. at Revenue baseline record at charges of little back last XXXX, discussing earnings or than year. we’re reported the taken after rate results, over GDP tax per XXXX Looking $XX grew full for the to our the billion increasing company better growth a when

expenses business a business, within and expanded; leadership hit target established and market improve. continue XXXX, grew We than little for few our Our client better our a years Deposits managed positions we economy. our the and has which our well to in key loans segments base ago.

leverage. that year, were operating achieve X% for helped expenses X% our fact, the down and In

managed earnings risk these reduce EPS laser we remained believe pre-tax growth decade growth used also lows. net controlling allowed can allowed and XX%, to shares than charge-offs our on same to importantly, what And responsible at a will us at we well for with We grow focus as the our elements continue faster and to to that Driving us on focus allow XXXX. grow we rate. results we improved earnings capital us believe

operating on the growth so had years. a can business above you our capital, put Slide X, line on years contributed This through As our multiple cost continue will every I and on the superior and not in page, efficiency of XXXX. well three and focus recent business of leverage. this you improvement a see see is phenomenon for can across line business company's of are to each

these as We management the expect in to and operating services. improvement incremental relationship continue in and and digitalization our take we to investments continued advantage very businesses efficiency, of our drive well as products franchise as core capacity and strong

recently reviewing increase our Savings driving give we are attributes network, with our examples. In strong year-over-year had accounts, existing have the growing with our on simplifying net a delivery Merrill the of products, our credit growing progress. have focus those accounts checking Edge we after of In same me banking, a same book. Let and cards assets, decade XX% few our new primary and relationship a customers, our core and seen accounts transforming investment seen consumer Sieg you deeper and added U.S. by to continued X% million have in management been a are businesses. million our billion last flows. XXXX my our grew of we Knox net and XX Lynch, experienced, team, the In of record XXXX. producers Andy grew relationship $X Trust funded team client assets these In brokerage financial net $X Merrill adviser year. than success we households in who four driving population. saw times in and in faster Katy We number

Our revenue new XX% increased equities sheet business in prime additions as the team. business; clients, balance commercial banking, added for investments had market for and brokerage continues we commercial expansion middle a we've our seen on you result, the business, our global business. quarter go side in comparing alone, equities In the and institutional build to through and to and relationship XX clients the for And increased record commitment our to our XX% our relationships. we business year banking to XXXX in Net a fourth of business an banking, new when investor our XXXX. house,

billion. $XX are to approximately efficiency without XXXX As a this our of investment expenses This that in investment, and culture management costs XXXX in the there’s and cost The of you increases, and and hit to bottom serve XXXX. our team since benefit time our same investment, net face here $XX real growth. while in client significantly customers, of leverage. great drivers base of base in processes everybody challenges years to expansion everything face a our the nine XXXX; increases, more that levels why the estate and bit, our service at turn customer those was same These increased line physical reductions in We expense is These improved and and to target substantial we investments of year, remain - annual a XX%. fruit talent. Slide accomplishing industry-leading the that inflation neighborhood have expense for increases, wage reduced these [ph] and we've result the revenue continuous And we and in you used capabilities at this enable scores we expect billion an of still driven capabilities. franchise. for reiterate this operating faces, is To expense our over improvement capabilities and ratio the talent X, added multiple our expense we one we’ve technology the will cost savings as has years past and done of Paul work as expense platform increasing and significant reduction

Now Slide were consecutive straight to take quarter look at of we XX periods leverage, operating revenue every X, decline, Even four expenses even years. for quarters reduce a able of in more.

and that branches, also the and four-year new initiatives, single branches, billion teammates. relationship During built sales new in technology period, rehabbed have hundreds teammates, administrative invested in and $XX ATM X,XXX management with shared new we retooled of every success our facilities we've added added company,

announced billion the to The over X% the compensation. our of all top but combined $X XX added shared at the programs team program of also - 'XX, we end of we beyond 'XX. Our annual success two top in continued

Slide have It here interest of - business the is our the up by Once which would?” but the a XXXX. it strongly several and coupled delivered deposit higher NII slide, solely rates. Slide by also you, and we simple driven “did core earnings in On deliver you but good helped growth. years, just normalizing we with in the yes deposits. drives income every I X, loans and The many business answer four it's If you is more last improvement you driven the takes to curve you in capture $X often X, - see here, well and us about go of NII discipline, since core increase these as the wasn't things growth help what model, years. has you a been strong can core to strong in growth, over business. rate us billion than year by -- by the net across can pricing is that seen continues NII growth not one told that miss we NII Driving model but This asked loan past the we that. you growth it value see get the next while, netted

So four you growth a X% same billion a the X% four this. billion annual to Average on right-hand point but side. the $XXX than grew in past over our years after CAGR these compound Loans grew rate. can years, at deposits demonstrate $XXX or see more business specific the

have will of our a a America way in We and the billion by at balances row, for XX across that consumer team $XXX balances of, stat of added checking core proud grown Bank was checking consumer be that quarters in decade.

rate beta what as the look into consider rate unchanged where environment, can So should and even NII an more that grow, control and produce growth, we increases XXXX drive short term the loan we’ll deposit and you forward or in slow, NII. with stop

Slide been of return areas of to other able Take the a for at a we've you, look shareholders. our continued in areas One improvement to been amount - X. the capital has increase

the in we of As also have share increased as form both as return earnings, earnings well dividends increased repurchases. those of the we've increased

for we under than milestone shares we in than since but team. shares important XX XX% quarter, much ahead. This peak shares XXXX same the than X.X earnings, billion our great see less the peak lower XXXX. Fully crossed company, lowest diluted and billion, the more has It's more more capital, an with moved more the and

What it's while growth. driving in loans, deliver to drive it’s strive through expenses, whether more and people, trading we we do whether responsible driving advantage the fees, and [ph] assets customers, to this deposits, what plan. like? activities of and under technology, whether investments like from we customers whether sounds does that It sound another those control control it's management, So underwriting we physical we risk it's and we revenue, whether it’s what our control; increasing continue more competitive year

quarter, X's see our mid second our before a with all Now, ahead to the you in client from give from GDP what I range team, you to perceived a in change in to one two dive research in to environment to we're growth we operating the the reflecting year growth wanted of perspectives, give ask from in base. wanted predictions outcomes I Paul I - facing lower and the recession. the

is. States Let’s have rate, on in recovery one there in views the interest first at grew despite long economy, all-time rate remain United unemployment, research The a the the the world focus rates at team, low We lows. of still and inflation, in in rates, decade, highest rising low largest best increases of XXXX. the wages, the our

to community. predicts Our XXXX growth lower as general be XXXX, the do in economic it research in was economic team than

point still estimates true However, solid these to it growth. is

For was seven. has any business, is XXXX, our growth and XXXX spending than and second the strong a In in consumer a payments That has view. view of team $X.X growth GDP. increasing last US team but due data rate XXXX. X.X% more this customers, we GDP comparables the for the X.X%, consumer view in consumer consumption. at global the at all and - through end growth the trillion higher in even solid that one and growth as solid of our X.X%, the US cash shows the 'XX. our January, in year supports our and is to early growth GDP of in That's strongly and than XXXX sample But large research higher which remained research is That 'XX processed are the December

expect a commercial credit of seen rest We it and asset charge-offs and of see a as - lot Those reflecting $X are of term in consumer one lenders billion lot responsible also lows. confidence, flows larger loss of the remain and the serve as so 'XX. lot of the problems We net we and talk around near States. in strong to we've for We ratios their customer to clients. see quality lending. flows no We a for next are record United horizon at borrowing monitor or solid, clients, remain the

continuing companies making and those money healthy, as We see to more also invest.

government comment, Our backdrop It business EU optimistic, this. people's both growth slowdown, remain here slowdown, you and of most The survey recent shutdown, outlook. all and that. provides trade name our wars, uncertainty, economic impact it however, geopolitical Brexit reflects abroad, small clients China shows a

We are the in indications have potential benisons of economy. to in continued here mindful those of strong we growth see due the our US, impacts, we but

it Paul. predicted, strong produce invigorates to does results With look the continue given to enervate that, me us. let driving responsible us, growth. slowdown it over XXXX, forward to - by not given slowdown So, in turn the We it

Paul Donofrio

income share. Thanks diluted $X.X reported of X Slide referring Brian. per the $X.XX Bank net highlights or starting Slide X well. and to I'm as America on of billion on

by quality. EPS a I we in will operating shares As you for year-over-year All 'XX X% XX%. for recall, those benefit by XX% The of the adjusted earnings earnings. included was basis, driven significant respect related net benefit quarter asset charges tax assets the the included charges XX%, and and million approximately for revenue Act Act. a to The was comparing Tax that tax with XX%, items. adjust tax other offset of Tax $XXX income significantly. QX a by Year-over-year This 'XX, to of the benefit grew This updated growth QX On effective guidance that rate few partially to X%, net tax variety matters. international 'XX by driven related return and strong improved pre-tax results QX a equity review was leverage charges. X% on reduction by with and to

debt metrics global remained on by XX, $X billion, issuances. end requirements. commercial outpacing of growth. the loan overall sources balance declined of maturities and with Slide above remained QX Turning term to the driven liquidity $XX to the with billion Long compared sheet well balance $XXX strong liquidity Liquidity average billion sheet all grew

in January, especially I effective G-SIB. that light the are our with reduction TLAC We the of in in comfortably became in recent compliance rules Method

billion, expect AFS of funding $X will debt and XX% debt decline in QX $X.X AOCI in the billion repurchases the income Given net available likely from end through the in our robust long our in as levels, parent common our issuances of dividends returned less We quarter. we value of to rates. share from equity the shareholder increases increased maturities. XXXX given combination Total securities, benefited than be or

mentioned, by The increase metrics, in points and growth businesses. Turning driven was above driven sale modest standardized loan that markets to ratio requirement. decline and our X.X% improved XX.X% was lower decline well basis a regulatory from loans, RWA combined across by consumer I the RWA. RWA the improvement which offset AOCI with non-core in impact just global QX XX of our to the of the remains CETX

average isolated every Global A on banking Looking as at was while in deposits interest non-interest-bearing which grew across given half grew to year-over-year. low decline environment, shifts account banking for interest-bearing Consumer XX, X% mix overall grew deposits deposits Slide the rate X% grew deposits and Banking X%. deposits consumer interest and non-interest-bearing over segment. of checking,

deposit as flat. savings, money cash. aggregate year-over-year. from While accounts, the CDs and deposits, GWIM's balances also X% investments volatilities of moved from GWIM grew market customers to benefited were market

We deposits and non-interest-bearing accounts account we deposits. year-over-year, global to capabilities. for we reflecting grow also saw to in balance which funds sheet well, sweep clients, simplified made mentioned deposits. Global moved Banking treasury X% investments rotation client have structures from to bankers Also services continue from off earlier, up interest-bearing Banking, client-facing the as in Global expected

$X of the of consumer gain. consumer XX, Slide and a $XXX loan growth to we estate Total end quarter average of loans, small to runoff non-core mostly by estate billion. loans non-core in real Turning impacted a similar Near last potential value to the be continued with on book an of the quarter, recording sold a real billion, sales loans. total basis, we're

billion they Commercial degree, led business to and our and loans Consumer segments, year-over-year loans by year-over-year. or were lesser a year-over-year. mortgage X% card. on Focusing consumer grew grew credit X% X% up loans $XX

new think you loan quarter, originated As the in the for several which starting we than large loans the note towards higher levels primarily quarter the ending billion investment-grade of the quarter. end $XX about average year, financings, for that the resulted

the with late call would were we quarter not a we pleased this trend, While growth.

points XX, as well year-over-year was the cost was basis in $XX.X linked-quarter or Slide net billion higher points interest as The on GAAP rates X.XX% rose funding activities our On deposit GAAP trading-related lower that yield and of assets. and same growth a on segment, lower rate or by Fed $X loan billion growth value 'XX, and is was NII Markets almost Average $XXX basis partially $XXX basis or Compared Global from primarily income X offset global improvement hike, basis XX spreads. with XX rose QX was improved X%. cycle. was banking to NII September on million. XX in by lower was grew assets, yields Linked-quarter offset FTE and growth, NII interest Global deposit from over rate expense. core banking up points basis in activities broad up the GAAP driven debt basis The Net QX our points quarter. the on by the interest long-term impact as versus a which was interest-bearing and markets to core loan X up billion year-over-year, of our points of QX X%. and Turning driven Markets net basis. yield reflects and beginning by basis, deposits $XX.X and benefit linked 'XX, relative of loan is costs. improvement year-over-year partially deposits an Strong Including non-FTE yielding asset million points crossed the this X% of hike up which XX paid improvement rate reflects funding basis interest

of rates Turning modestly decrease basis XX/XX, is XX $X.X asset in to the over sensitivity, by subsequent interest-bearing estimated an the sensitivity. Banking instantaneous since Global NII shift parallel of billion of end the reflects curve the September short the XXX continued months. this as decrease The increase to point forward well deposits above pass-through Note represents XX% Global rates. approximately end to that higher as as Banking in

less keep million. As about you mind look which days in interest forward of by negatively NII QX will $XXX has accrual, to two XXXX, impact

basis, finished increases. were the non-interest costs expense a insurance quarterly to of as were expenses billion with $XX.X of down of continuing Turning year X%, offset solid another 'XX, slower quarter linked-quarter couple improvements. to of by was string our expenses. XX, On Compared On QX Slide FDI we management. a year-over-year flat expense

And we expenses success reposition to middle October, our an of in XX%. the including late-year few First, another reported line teammates. with we we efficiency of our in brand. areas increased announced improved XX% our was target, these ratio which marketing our year second, investments, bonus covering to investment XXXX in in and full shared Despite established

financial year our previously several aggregate look we yearly care the and As for approximately expense in Normal year believe lower should to well through includes level that insurance investments from full initiative compared full expenses increased centers. investment $X benefits billion merit, of primarily expense the other in a be health we as efficiencies. technology ahead increase we modernization FDIC spending offset marketing and the XXXX, able new approximate should believe to note as This to these to XXXX With On spending in announced expansion and QX, we respect QX. inflation, expenses areas: basis, level. seasonally

to seasonal due related addition mostly expense seasonal by In any QX we to QX tax. to that QX, $XXX approximately increase higher in 'XX be anticipate million personnel than revenue payroll will costs,

quarters remaining should than We expenses the QX expect trend XXXX. of lower through

quality to Turning asset XX. on Slide

quality higher, to our net note ratio XX, The were of quarter had loans million to commercial points continued grew. $XX remain below portfolios. Asset credit net net we charge-offs charge-off card metrics loss here ratio expect losses $XXX for we Provision both while break XX X%. lower quarter. I reserve million but $XXX out losses year Total credit expense this perform closely as thing drove declined than losses to Slide and as The both million basis very declined modest is would matched seasoning well. consumer prior only the the quarter the modestly we consumer quality a ago On more and release.

modest year-over-year leverage strong grew more the In expenses in to to deposits generating finished Consumer X while year total deposit We XXX ratio revenue The earnings Banking franchise this points year points ratio cost Slide full and in X,XXX which paid basis of the than improved increase, flat. XX% points earnings. with Credit running but points were Turning quarter, year-over-year the remained This declined XX% this showed a low. basis on XX. average billion basis $X.X QX, operating was XX%. cost created basis XXX basis costs as all-in held of points. cost efficiency business grew QX of $XX quarter XXX includes to XXX 'XX. billion. a both and rate from basis QX, the the The at starting segments nearly of

$XX increased of As primary we check-in accounts billion in brokered by all payments assets of a to X% increased was quarter up the driven ended and market deposits we Edge Consumer Banking remained versus Consumer full the major and flows viewed masked year-over-year. $XX that valuations, the across also a quarter XX%. as the X% and solid percentage customer year-over-year, billion billion year, year-over-year solid $X X% the earlier, account now are decline Lending grew growing for year-end of client activity strong product categories. household Merrill XXXX,

XX, growth that driven realized was deepening. on of Slide deposits our the focus through you our as NII to by revenue Turning we relationship can value see XX%

from You growth will modest experienced charges. income non-interest account and also levels card higher note in and We service year-over-year improvement spending. income improved of consumer

when to promote rewards growth may to has fees, fees reduced our offer previously, relative This and superior more average. especially to produced customers industry We believe we combined customers deepening, discussed the and NII. with revenue overall but drives approach discounts leading reduce capabilities us. As to growth, relationship this with deposit we certain do provide

all-time at customer included existing it's in driving note our now the second expense opening half important is XXX. more and XX We significant with it XXXX. believe new and Wi-Fi. renovating enhancements accomplished All of financial the are platform also new satisfaction XX in me, an That excuse half improvement, in - equipped declines, to the and in is which first high; markets expanded XXXX. centers We in than centers given

now account now its and and to of shareholders reducing customers as highlight. payments approaching in We transactions. in payments with users XX XXXX, costs, trillion than percentage X.X lowering digital XXXX, a to saw half things for crossing on is benefits sales. and more just couple Mobile Turning continue quarters for And to of in Mobile all we our deposit processed and of digital Digital million. Trends grow a XX, over more our three grow Slide all continued improving all of to mobile errors, customer ATM than convenience. total

Investment Turning is of best margin in XX% new impacts XX% year-over-year. Management partially was holding growth income Slide the in expense Revenue the $XX Pre-tax of negative and due the the of flows XX%. and growth markets early quarters company's billion totaling households. improved to net growing some this in decline X%. growth Net points nearly Wealth than income, best basis produced delivering client business in results, quarter to included was The our and of while income up operating GWIM pre-tax another in billion, client to on which one the the overcoming quarter ever revenues strong Global XX, more $X of created more history, for X% segment, of XXX than quarter. of growing the solid to financial leverage, noninterest flows NII

It you also of by AUM fees roughly to for mitigated impact in a that decline in with sublicensing. QX management. under solid $XXX equity to in year X% as at fees note important of fees until benefit associated the the a of driven December fees. were 'XX QX management from determination actually the Revenue AUM [ph] but sale markets the a noncore asset assets one-month up lag is flows, XXXX drop 'XX, doesn't were industry due look by a versus included brokerage Asset million

$XX in the saw many versus strong low is and financial this positive At account. continued and growth We a experienced - flows, record our in Lynch their overall reflected begin billion Strong new with client AUM which of the U.S. attrition of Trends of brokerage relationship XX. near $XX had time, volatility, which in investment quarter billion record. Slide cash advisors preferences deposits. and Trust. through contributed outflows market impacted quarter. Merrill flows some we clients' client reflected household households engagement to same us to a Moving new investing the brokerage

cash, ending their $X the side, increased as flows On of of allocation $XX loan some and deposit grew investors had banking balances billion billion. we

impact levels Global on Slide earned billion were XX% to across and income, allocated records Earnings generated Global XX. Banking Turning several loan versus and QX QX return Banking capital. in strong of Tax investments growth Act NII 'XX was quarter net a X% 'XX. higher by led deposit growth levels. by was tax-advantaged this achieved but the deposit operating 'XX, billion pre-tax revenue, QX the $X.X the modestly $X.X investment in and operating leverage continued driven from lower XX% business given as $X.X were by insurance banking Efficiency investment than of both rate Revenue fees. more up deposit 'XX. rates on QX costs X% earnings offset is benefits. The understated up declined versus this billion Revenue growth from year-over-year. decline and leverage small and savings the created expense of business. tax in and in offset But

with of overall covered year-over-year. X% Since for Looking deposits, firm at decreased trends year. fees IB $X.X we the on last loans start fees. Slide and XX IB and QX I'll comparing to already billion

participants as produced decline M&A Markets financing weakness the late Switching talk only year. quarter will volatility XX% the and quarter. 'XX, 'XX, note significant FICC lower to products. revenue of and expenses client XX% Slide credit from market the achieving lower about modestly was in results on declined market roughly QX industry revenue from X%. a and a where mortgage compared revenue last FICC DVA. partially context, excluding to Global declined 'XX included earnings equity to overall Compared fees corporations significant pools tough assessed year-over-year volatility given I revenue. and fee grew to a in the declined in other For declined fees and $XXX non-core diverged Global credit XX, a Markets QX million performance to equities the due FICC's improved XX% small in spreads underwriting fee pool while activity gain with $X.X equity record trading in asset. declined QX in Sales Overall financial increased widened. billion. while XX%. of credit and sale X% weakness markets offset

on $XXX and recently derivatives activity, to client hand, revenue point out I where the of shows comes volatility we and income equity in we that has of other FICC the other, for associated bottom Market been of charges reduced in and roughly left, a have trading billion. which client Act, the full increased at benefited. reported 'XX revenue million. chart as diverse just by revenue XX, in stability equities tax over and with full Slide increased revenues, revenue. and in QX expense the led solutions On net the which Slide year benefit decline and client against are both up On impacted in would the Comparisons past all producing $XXX the the sales $X.X the investing. set activities On which the growth prior financing improvements It XX in relative billion by made shows Tax also show by year years. stability from $XX three million revenue

included QX mentioned million earlier, I Expenses million $XX As $XXX a tax net year-over-year. 'XX improved benefit.

with our invested couple solid a and year in a of future. close well earnings. the me thoughts. We of a Let controlled record QX was finish costs to

quality excellent. Asset remains

without modest to believe now rate our credit to all view be and eliminate regard is the levels as roughly don't have also in sheet responsible and meaningful XXXX, of XXXX assuming in to hard in shareholders we net same the change And loan while and are years of we inefficiencies, in to we work expect and Brian hikes growth. returned growth on net earnings believe our stopped, based and as balance interest work expense strong grow of that employees our the expect any With we said, deposit because we interest horizon. duplicative the income charge-offs Our of out are rate our can XXXX. root doing hikes more more control market things may

share balance better we strong that Thanks for a questions. let's XXXX sheet positively So, entered XXXX. positions with and businesses us that up it listening, and market again with in open well to in for earnings

Operator

from take We’ll Please with Instructions] go MacDonald our question ahead. [Operator John first Bernstein.

John McDonald

growth in front you demand the wondering of what loan quarter was I on terms trends. this saw

still in and demand; how think commercial feeling into bit you overall, you prospects core the GDP XXXX? you about the growth late how little are capital about plus that wondering if pick But You mentioned markets you a in saw underneath you And attribute that, responsible are up, heading weakening. 'XX? about commercial thinking GDP, is quarter loan growth to as

Paul Donofrio

Yes it not that I that in but wouldn't see from I'm debt pickup we the and that. I saw was can perspective, quarter surprised the some be in to late Global Banking. up attribute the shutdown some did of a from bond pick if loans we sure markets of in quarter parts

our expectations. growth, solid loan loan GWIM In growth well consumer really be terms continues of our within and segments, to and in

Global loans X% that As I importantly Year-over-year GWIM there grew than better corporate grew data. that's loan growth least grew we with consistent our I I more consumer QX economic X%, say growth. Banking, but factors X%. would which think impacting also said, industry In was subdued, clients. at is are year-over-year; guess in two

in growth term First are end and we tax total for low on can should has on digits. and increased growth expect still our available growth reform our cash repatriation are mid-single mid-single-digits, unchanged. business the has Maybe expectations economic loan all digits. paydowns. of at cash low-single having the be growth achieve mid-single depending said for - we but flow near to still also segments We in loan increased be that debt But think digits, we

John McDonald

your the go just as growth very been you terms And You’ve to outlook, your to able a what to what slow? baseline deposit and might while nicely the count baseline pricing? expectations of kind for in terms expectations? does quarter, headwind just hold deposit day have you pricing Fed of offsets are your first NII in pricing, the of And clarify into deposit What are Paul growing. if follow-up, pricing deposit

Paul Donofrio

QX. give are NII for I with and hike Let's the days. tailwinds, perspective I rate The trading December best we less just growth that's deposit they'll loan and you. the clearly two be mean outlook offset by start and think can

think times, increased go of deposit deliver depositors terms where traditional at on again rest lot many of we But of bank traditional to of I helped from rewards said look think, Banking. of the pricing I’ve GWIM Bank advice Global has again, I think least centers, for do I deposit value accounts. In accounts flat the rates nationwide our I mobile transparency, And online retail the banking, banking, and rates value all clients, really us a we haven't between Bank convenience, and have in of financial that indeed in been counsel, in the give safety, and in keep network appreciably. rates here, industry raising as accounts America, our think America we relatively

clients. the - pass broader just At rise. when. don't will point, we deposits to the know some through retail We those in So of form lot of rates higher a value

I we're and to going see. to So think have wait just

Operator

question Fargo. Please next Mayo our take ahead. Mike go from we’ll with And Wells

Mike Mayo

And Brian, more that component, and banking? mobile to everything balance checking you how want growth to due due banking you of the would else, X%. Can get I It's why? the I be really year? team to and always And much deposit digital that on over you know much of millennials? up elaborate say X% have members last how And good that or but the is to growth

Brian Moynihan

on perspective, had billion I including consumer. 'XX of -- Mike focusing checking as quarter in in primary 'XX said to business repurposing fourth in to accounts. think it a put been quarter have we that We fourth we $XX-odd earlier, actually growth account decade-long I of

primary solid. delight. in continues in customer account So we're we are of board per Accounts terms at add XX% an the average The and hit high across grow. The all-time business accretive to accounts. satisfaction balance that

hadn't accounts or even the sold households. enough last go years, basically, the your are for XX to There well hundred which old checking good we millennials, a last mobile the in a XX is, all million consolidations, not lines eight are on performance, households few reposition a those some nine aware. million it's and households; millennials statistics. year branches net meet question product we there among To you're all digital But to did consumer; XX been million performance. couple the So key strong are for years we it’s that growing as of thousand the

change a this going them years broad-based capabilities old, years built way So across that old, is XX XX use old, for on, years and the board. the their is whether we XX people people have it’s

people attribute have deposited practice, a digital but XX% penetration quarter, of millennials, adoption, billion at not think about to mobile i.e. checks branch when X.X kind through often of and you ATMs deposits. of technology you log-ins the any the that So a

You just millennials have enough to don't go around.

So earlier, we this is branches. a about I been broad-based X,XXX XX years and we the we've had have X,XXX trend over driving that talked branches,

millennials balances. isn't enough grown It's have happen. We make checking that to just

I'll five quarter a a Erica you million thing. it's this Zelle broad-based crossed So users, five we million - give users.

Now Rewards all this benefits. is That that all not we Erica is have bring just get not remember, through programs, checking what's the reward the their you good because a customers brought your who five old, a year you - driving and growth, products even Preferred get products, million that to card the benefit. provides relationship integrated if - relationships across

high in but - tremendous adopted mean, Long some And it It’s comment. broadly leverage of millennials cost in that franchise. on like is efficiency. would It so it's client be statistics operating score as not be would Paul our it's delight, expected. broad-based I capability, tremendous term I mentioned, the tremendous tremendous it’s mean, would Erica, something

Mike Mayo

this asked banking is the growth I if least share how much to follow-up, due banking? digital last digital of your market at account could. One or of before, but is year over users that what checking I've

Brian Moynihan

XX% is top look know, calculate deposits It's growing. on Mike XX% you always it's hard in XX And if markets the depending company if the see CR to deposit that base we country, the XX or - our around, I market don't think share in what and that across in markets, dating, play FDIC continuing can grow. - XX%, you to we consumer excuse XX the follow me, just markets you you

bit I'd it's a opening are you it just XX%, way? adoption XX%-plus, at Because are Sure. say younger you about boomers plus. if little GenX people up the relationships. mobile it, and that the that - are a skew millennials a XX% give are to So, little would look sense,

the across So, it's Board.

Operator

Our next Evercore. with Schorr question Glenn Please comes go from ahead.

Glenn Schorr

ROA have a in where So above think years us few the came ROTC lot thought I a well might the of and ago.

you because shrink looking territory balance better are I'm count thoughts and that you where while economy credit know going the I growth. some you've clear so good; in pick I - All is good can around profitability, expenses flat; flat; where lot of we're credit and loud and ROA just ROTC is some towards points go expect heard the seen for you is up So, your a expect modest that day, to but you share uncharted and here.

Brian Moynihan

the Glenn I'd if good agree mean with sure not numbers it you and are part said is are said very until I XXX you which you agree uncharted. the the getting - about I'm think solid - the - everything last quarter, a I and when XXX basis solid the plus are those this points ROTC. performance ROAs

you're us tax So, we'd moved up higher all rate continue. we a reform, And because had to at - expect that to run level moved now. those of seeing which up, we've to

different a to cited With your something, this economy question. shrinks of your the you right, credit and we stick little that's in in all leverage is investments the opening drive the that economy, model economy the fast percent, operating or the things if and model, to count couple growing share But down. keep of a grow risk the the flat, is which check, question and revenue keep bring sort

place quarter, now. So, I not think but you're a through doing I'm a the up that little bit, resetting incrementally returns that saying common be There's obviously move up. move than performance the what XX% higher return only equity a given the they'll on I on they're but but sure a growing will we're now in in not XX% tangible right operating solid we're maybe and just forward reform, - fundamental tax then but XX% range,

Glenn Schorr

and you markets for the the up what up tightened changed de-thawing. little saw. liquidity's what as Maybe does Directionally, a know income great numbers Spreads pick I and early, and have recoup normalized? can anything too. when happens if lost one you we markets fixed market question widen improved, would Volatility quickly other Spreads are over can it it out In days, without was markets the on it's I'll old environments. bad it [fixed] generalize spreads while have on tightened, Has markets flows words, putting but particularly, opposite there past? in becomes happen. from and does. in

Brian Moynihan

Yes.

it, and thesis a the solid it's first every you our normal came been year. It year with to referenced year of we trading sort quarter to as and but that seen and it, $XXX $XXX range way stronger whatever the a billion - put of me. I think give a $XX-odd I front million has every have every into progression you right quarter the out equities - or quarter a right revenue had all sense. total it's million, after think don't from we've basically that and range the two year is pieces it's the but all But it's now you $XXX all at of after weeks maybe in and numbers fourth of been differently, just million, I of about earlier. to simple see the year business quarter consistent there is overall, fairly

model. So, the model was moving a

stuff And in marked XXX no There's through so what you storage 'XX. moving at more markdowns, hour. an would've markups seen to miles on. 'XX, not there's All going lot of stuff the a

seen activity So in recovery a That's clients probably you're and of seen good. clients. news and the our been good we've that's with

and sustains we - quarter. things got let's but atmosphere sure for the out up, get the pick make that some seen in you've there through to So that

Glenn Schorr

last on average your of Tiny trading the little ticked that the capital improved. up assets and is follow-up couple years base

just good the that assets bigger up to growing. debt? as Is up going in anything it's year-end in results and opposed was pick just put parking down bars You the that while trading-related there

Brian Moynihan

Montag market team XX the said our Tom the And a they're lot technology. put as earlier, of quarter. I in and ready ago to lot said and about fourth got pushing a months of Remember retool and Gallo clients the the platform, team to team, the really Fab in out they we've new had in capabilities start equities, XX

Our business way technology into sheet equities market It and business. capacity growth value because support very investments the over by capabilities ebb providing the business. a build fairly balance time. it's that's of very low now the equities the and business but brokerage it's sheet it's little low equities RWA, will capabilities - - has But because made And been out been so of the it is prime remember bit and a balance risk, turned in consistent flow really with works. is and

Operator

take Stanley. go next from our We’ll question Betsy Please Morgan ahead. with Graseck

Betsy Graseck

One expect questions. question is how downside you of managing couple just on that happens. a A to event the the be in

and out in you some the leverage, of keep have if expense you where expenses negative have if come pan a through bit revenues what tougher So you Can flat environment? a things the in lighter? any little or talk do you

Brian Moynihan

we're for 'keep company I that see frankly, and that there we of if the be the investments you will think compensation what incentive-related happens. the your a earning probably assuming obviously the obviously think see But will things so Honestly us say, to you'd an not an you think invest, base if market in - decline much always and not environment because like better and take at those that. And GDP – to as answer outcome could bring what be as a was is, is would will instantaneously look down that's of choose expenses I a of but decline question you technology shareholder, it things. we're types going.' I long-term allow investing down

been model leverage and has we're the leverage. operating company be keep So attrition headcount. yes, key years business driving those pull. But terms there's with just time for that's in a you a manage allows to allows more constantly of But the you carefully now - front the that pulling to much our is to levers always many operating can

it So work if all down make expenses positive focused bit got a get you've it flatten, little it. on revenues keep the to we're to and and

to come to of have But let's revenue-related pure expenses down incentives. of So happens. what kind just We'll are. mechanically some have due what constituent the backdrop parts of you the see the see -

Betsy Graseck

generate revenue operating think little positive So a even can you is you if weaker, the environment leverage?

Brian Moynihan

Well, we've been able to do it.

back come in fell. on - at at leverage, chart revenues where look and has look it quarterly you go that If operating quarters

do the we last may key and We're it in excellence Those very it in and huge at ideas to see be them And bunch and automate whereas billion, apart small what incremental. improve - every operating over generate $X and that's And the idea and years. add $X XXXX up, are so built projects. the understanding, of other net billion continuing but to you and not can spend as but simplify not We're a all operating When it's looking it? the leverage, generation, words we if spend flows, process single and taking data we culture four-five the how is, company mapping works. that understand big, it's this them.

into down we through as it. moving So benefit those our are move always

think I if leverage, so at look that operating And flat. were yeah if you revenues

say manage whatever was is to on because of Just expenses it. there be going able we underneath should

Betsy Graseck

And making increase looking in spend then to particular in share? your could you market bank speak bit to a little and investment the you're geographies really the which in that investment you're

Brian Moynihan

United the there, Outside States, the largest - Asia, to cover go the add piece market pretty to from think the We Inside the of companies. end businesses is about Right, it that coverage is feel continue And all as because the I U.S. broader we we way base. to key the do that. and to largest Europe but fee we largest in the some sort the small through going the world, the on talk in have being in the nature gave by feel companies pool States far, back the middle we're base. the deeper good the world. in about team we people United cover we up the real business the biggest client of we we upper got probably the that the of investors cover of of and

with team market groups. that team Borthwick's with coverage to work - we're the adding so, in And with investment resources more working bankers adding them Alastair We're drive deeper middle Matthew Koder's industry it.

got cracks the biggest build sort be is you'll industries But outside, and see. from a there out lot And all really company we've will be we've of from coverage the that then will in a their so explicit the and just sure the that really America M&A our company, the filling picking the broadening in of it's smallest - the it capital owned largest - needs which of North needs in and and markets it's making U.S. for United our done. fine-tuning, States

Operator

our take ahead. with Chubak from question We’ll next Research. Steven Please go Wolfe

Steven Chubak

a return. to start-off capital Capital on question ratios XX.X%. 'XX. year It with flat wanted So at XQ, ended the stands an versus impressive

levels substantial to record capital that you're strong comfortable your I you test, think And how support the it's track of stress could currently operating we as you benchmark sufficiently did excess look return fair to XX%. you're just much against with or say and given with capital. what

and advantage exceed number full cited be a pay stress the the that I out at may prepared coming you there was some price the take think to of given in position was decline recent point, Are that in XXX% in remarks. in this test especially share cycle? the

Brian Moynihan

many of just has Well, look growing for capital points. years our let couple as consistently setting start We everyone return a with been out me level shareholders clearly now. to seen

XXX% year. And were point. we So increased together put when $X over We a We what based that's ratio. buybacks year, our dividend one at XX% XXX% it increased little payout all last upon billion. we our submitted, by a you last

have at guess That's expect cushion as if and scenario see increase point caveat. at you room results. our alluded severity hope cone look fed's a you I the using ratio, to it. got we to, not first. Considering capital But minimum, we payout this that cushion, last to of a significant we scenario the to, have would our results, one you If the sustain which CCAR do year's out

Steven Chubak

to ratio a follow-up about? TLAC-eligible you to could And trying about gauge level underappreciated is that an substantial update one over and TLAC on deposit of And be just whether some Increased can the How what just target potential that this where that funding? the last on with the fact, issuance TLAC. there's of Just years. that to you substantial been a cheaper I'm us think Paul, of benefit trying dampener thinking debt, me is get you're ratio? show the relating NII today? opportunity - sits it's replacing the from to - while expansion remarks few may optimize

Paul Donofrio

Yes.

you sit going in what to disclosing TLAC we my debt say as remarks issuances and our are not be be less that as a heard today, ratio maturities. cushion will this we but here year than have are I the We is, prepared also comfortable likely

Steven Chubak

Looking more updates forward in future. to the

cycle cleansing cycle can through horizons was balance that well only the or credit on expectations one with to loss target if but that in focus loss expectation. explicit same made time, lost to expectations at commit remark below - given at me have is we the didn't you I noting loan through already? Just expectation the what as that us against loss given benchmark you rhetoric, basis and cycle you from some an a provide interesting level sheet versus December final on sort at cycle XX points, can your conference you of many peers Brian, follow-up recently maybe expectations come might with late wondering particularly just an or the longer through medium all the the provided the least of expectation. be term compare accomplished, from guys in And expect really

Brian Moynihan

for talking were Earlier I point 'XX expected card other we versus had is this at cycle a range of credit around conference where kind cycle We now. about billion for unsecured the they think of that in are $XXX I types said last - of charge-offs debt. I and for what The us. the what consumer were the construction of portfolio they unsecured

lot So, repositioned of just it. we work and to us different to get a have that volume took sheer that completely where is frankly

was problem you back I billion part at So and and and That in loans. restructuring think card in the a with out be credit of due big it and a to the card charge-off where were consumer-led $XX XXXX to XXXXs odd best in debt unsecured data the just example using business charge-offs out a turned economy. mid if best year go credit related to the those analytics there look charge-offs. expectation that fact a good the led the it X% turned be to higher underwriting and much team bad in we are And that economy, underwriting

So you through that can other and equities then run story things. same home

- the about talk much smaller. it you of book, if so, flip the Then you at consumer turn look it's the size underwriting. over quality And and

our now expectations moving So on there. X% type in a five X% beyond are X.X%, X% levels charge-off and rate X%, X%, before unemployment versus

risk XXXXs on consumer is always rate same anybody both at go all across-the-board. you - we the the see the and we is had managed credit - wonderful that than we've and limits ray go much balance commercial mid-late XXs crisis back experience. the to last question story. equity in different mortgage unsecured business. We've the country the the through and there credit industry have And credit still you So and crisis flip of I and underwrite Go commercial you at the angel yet level that over commercial through us credit home better the in that volume to level, fallen Then back think stuff. you then the the

so And is than just we to the snake there test. and the better stress that comfort. real But it last outcome be all us give we at that watched expect things test the the different even was look and time the

for XX%, total if under my right of don't at if ability look I head, like the quarters, the I I the no top card, with you that. And say test think during scenario at nine and know preparation, that to something if charge offs XX% remember are nine you no stress around, quarters so at that look the change

giving difference that, de-annualize think that - to up shows per under X% you end scenario goes to just X% but unemployment - a you a with it underlying if up to more would of perform company crisis balanced, the don't That not All revenue last was up from that about it I completely that year. I'm target quality, year four-ish get then you per will of in the scenario, the If give be go pace at a target, X% that that through time. the give I'm to have the a a a lot so than going effort the you conscious a different. that better because to much

Steven Chubak

explosive target, no despite color. And a very helpful

Brian taking the you, insights. thank for So, my questions and all

Operator

question next go is with Please O'Connor Bank. from ahead. Our Matt Deutsche

Matt O'Connor

then proceeds I into drop keep Or do risk, managing was talk rate a specifically securities? book. most the backup securities just the kind lowered in parts of your the maybe reinvesting rates? and it curve, worth, future you hoping interest for shorter on given of, Is for could wondering short thoughts you expectations if about in hikes it

Brian Moynihan

thing balancing always always, as dynamic when That's to We So That’s we're other thing about we talk take stress at always process that always, that to certainly that we it. book against liquidity. any I like think don't weekly. and investment portfolio. look first capital credit the happens securities earnings daily, about risk in

look of do and trying to little little we figure or bit bit whether always we a should it less So, of more we're a this that. out at

sitting a the have you were at this because overnight, bit reverse did looked we high-quality just at If less way repo yields Fed some by did, very we because the little we the quarter higher.

We it looking So, it. time. the at at yeah all look we're

Matt O'Connor

rate But you specifically stable there’s takes trading a the did environment book. from perspective, NIM the the net some in you I I puts percent can in with And NIM. get can you grow guess realize income dollars, and mention interest the ability

as So, being rate in driven little is a environment? about there really the or should by risk think the bit stable a NII that we erodes it some NIM balance sheet

Brian Moynihan

low-cost a depend I NIM QX, We loan by ability to you our edge and Longer look I really bit look going at NIM’s paid. it. to rate expect driven deposits. if up curve forward would growth deposit little on at mean, by funded the term, lag to

Matt O'Connor

guys Sorry tax then And squeeze you did in, I could that. XXXX? comment separately on rate I just if for missed the if

Brian Moynihan

of we unusual effective I don't were for approximately absent tax expecting XXXX think an We actually. rate items. XX% did

Operator

is Mitchell go with Buckingham question Jim Please next ahead. from Research. Our

Jim Mitchell

leveraged a big manage think if Obviously, could you it, you it? lending talk little the risk, how you just in of markets particular. freezing a the that's about in how Maybe been December lately bit given about topic

I maybe from own Just your guess and your thoughts, book the here around industry?

Brian Moynihan

Sure.

the say growth. responsible focused first look focused would staying and is thing have So been we're I on

underwriting and our are stayed within portfolio maintaining within, for limits. our years we we're and have standards So, staying now

is primarily leveraged underwriting through leveraged to loans. exposure Our lending distributing and

finance if for our in Having have because of franchise, said we CLO little, and as our investment example, We important portfolio. company of it that done very don't growth. the very supports leveraged that, just it's economic out, is part at pointed exposure risk a kind hold well, I

billion. Our leveraged finance franchise over does well $X

So, us. for nothing's really changed

you're to our good to and in you've markets but going it you're leader if when business If business, not and there we way, are, sticking in to going are, be a the as when we're this standards. to got this our we the be doing be market's

Jim Mitchell

any put ago? manage do you're how versus at in thoughts down the we year of you just short you think willing have to and sort amount -- balance sheet today you did the what least do How manage a getting Or size, about how the you taken on term?

Brian Moynihan

As in earlier question, another I moving we're storage the business business. not said to the a to response

process have underwritings. limits doing of the So, we the transitory for

gone. So, them it's and them move we out mark and

And we credit of the so, Paul this it to about, out talking said, in - of you're what part business, the our is clients, commercial as much but don't door. the lots part all we not make in is how - of the which available underwriting goes this -

Jim Mitchell

do Any you given impact, And guess of changing? thoughts CECL? any Just maybe thoughts on the parts the your question of on just and on see CECL. some it pushback, I a

Brian Moynihan

where the not at point impact, So, the yet in terms an of estimate. we're we're providing

efforts We adoption. a have our on made towards progress ton of

at going concerned we're It's economic of thinking serve that, this us the the However, an clients. the it's would we maybe, out to how a that that, really upon going to affects finalized credit. on to credit allowance And and extend not. that just the point of we're issue change with willingness to conditions how the going a may to but double XX/XX/XXXX. point of regulators of and see increase there I think the just CCAR and before only depend going the out in about is things, The overly date to we other in ready only certainly sort lot need understand said ultimately and in capital. adoption, need capital not it is not Having our of count is adoption outlook out affect as banks about and respect to to impacts. I two still implications lot would on are talk how be there's to it point, we're things I maybe

of said I we I There XXXX, test, how As here before, don't runs of to CECL I XXXX? are in, Feds, company. Yes, the what our delayed If the going that's work between the Yes. think. is until operate but that? not implications change it's And now. think in the company out still are in test think stress CECL a of they the why to lot things implementation stress I

Operator

question is Saul next ahead. Martinez go from with Our Please UBS.

Saul Martinez

start pause your my lag But much that's an do the deposit okay in you see which question curve How I to see really on of earlier because [ph] and we've the ability environment what deposits the guess moved on see that I much the retail rates, it now? mentioned a specifically more - of doing of you that how in some effect on think that depends is would a much questions guess up still do rates, - Fed that on on asked. I'll forward have But a retail you we than on and do this risk haven't lagged really sort on Paul of and you a bit up economy back rates. rate-tightening maybe a on point, seen cost deposit a Most your mean follow just NIM been where I cycle. for side see of lag deposit pressure until risk to

Paul Donofrio

it. Yes, what we so think - about

it was something year it two got last four I that. rates if years think three like years I three, and two ago; Fed ago; right,

they them 'XX rate So because and high and checking the different the of embedded interest given noodle rates - there from on lot think of movement if basis, at in of to in 'XX you them. and checking accounts sort think don't of movement never it, they're so it live just half look what any non-interest-bearing, as was accounts end isn't them that have I just a of have interest end a on and of are the

term I deposit pressure accounts. which the coming different. So it comes half to a line in don't each quarter XXXX a lot balance they billion will is and really is, they always cash non-interest-bearing from is But is advantaged we of XXXX think, which term is what short be transactional is fourth is checking to quarter $XX or grow, our the down at cash there's not business, it of is either because it it feel how basis. the from consumer use tremendously as fourth cash, the customer growth, And - long the growth perspective or you're and funding business investment driving who

rates to it, be side rate and that. where back sensitive and happened should substantially it’s In at able if in go have up the time and you just moved those what's and look the investment of can think You consistently these look sort drive growing we're across feel businesses balances. pricing at I we cash, you'll see the that already i.e.

job. tell our great they've deposits better we they've and i.e. got achieve So - that economy better and to X% grow to X%, balance done a the team price than to than

Saul Martinez

on the - guess - also I question. you another may just

that business? values. in mean the But what quarter, that in for any hit is magnitude You first the market fourth sort own could there the look in the the made will and way the to asset do can downturn the size in and forward roll and fees we markets the point December calculations equity obviously up downturn at of quarter, fees the our of

Paul Donofrio

things based level what number different good revenue just a are. I a Look you question. markets it's wouldn't besides the is upon the lot the of a to hesitate give because of

come of I to misleading a based be would markets upon call. with think the just up this it kind everybody on to number

but what you today. and So maybe if you team more issues are give not the his Lee number help through think could we're can call going a and broadly to back

Operator

final Brian one Please question have do We Kleinhanzl. go ahead. from

Your open. line is

Brian Kleinhanzl

well? relative you to the net million on hear about builds? pace for about still next you XXXX as are reserve thinking how charge-off thinking I this I you $XXX were releases but - mean reserves you able guidance are to are at year release Yes, XXXX, that reserve quarter,

Brian Moynihan

well, run would to expect we look going continue loan that credit think it charge-offs growth. on through - perform everybody depending provision, to to think heard we on think Yes, and we roughly call. just And is for everybody, hopefully we to that the match net provision

The You us about net we’re are down. heard talk for what charge-offs. expecting releases coming

estate you're You provision because a saw much rough just going in lot quarter. to match seen real they're consumer charge-offs net And that improvement we've of this more $XX going we closely see our forward million - portfolio.

the give So I guidance best can you. that's

Brian Kleinhanzl

or kind one those to more this give little it XXXX, did of as steady the market And conditions on that And quarter. a the mean up then uptick downward Thanks. is say this you It's just pretty you follow-up just NPLs a why there color been since could of quarter? in credit, trend. commercial bit because I still picked

Paul Donofrio

a XX basis that were downgraded. names NPLs a quarter as few an There or is historic couple percentage Yes basically sure. loans a here. at low in was the by of a increase driven at points, Look

If in you quarter. at it continues look fall exposure, the reservable criticized to

see So quality. anything decline a we overall the again credit in suggesting broad don't based

Lee McEntire

Okay.

I think that's all the questions.

So joining XXXX a record quarter for again. company, year you earnings. in with solid strong We a this thank a us for strong had

slowdown we responsible that As predictions enervate economy of forward you in next XXXX, in don't the drive as talking I said setting. to the We’ve operate potential continue to invigorate look this We'll earlier, to and in built look growth us, forward they us. company we quarter.

Operator

participation. conclude will program. your today's this And for Thanks

You disconnect day. may great now have and a

Bank of America (BAC) 16 Jan 192018 Q4 Earnings call transcript