Q1 2020 Earnings Call

April 15, 2020

Good day, everyone and welcome to today's Bank of America earnings announcement. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. Please note that this call may be recorded. I will be standing by should you need any assistance. It is now my pleasure to turn today's conference over to Lee Mcintyre, Investor Relations. Please go ahead.

Time, all participants are any listen only mode. Later, you will have the opportunity to ask questions. During the question and answer session. Please note. This call may be recorded I will be standing by should you need any assistance. It is now my pleasure to turn todays conference over to leave Mcintyre Investor Relations. Please go ahead.

Good morning. Thank you and thanks for joining the call to review our first-quarter results. I hope everybody has had a chance to review the earnings release documents that are available on the Investor Relations section of the bankofamerica.com website. For the many years, I've been in IR, I've always joined the other speakers in the same room as we presented earnings. But this quarter, we like all of you are practicing safe physical distancing protocols, and we're joining this morning from different locations. So first I'll turn the call over to our CEO, Brian Moynihan for some opening remarks, and then I'll ask Paul Donofrio, our CFO to cover the quarter briefly before turning back to Brian to moderate the question session.

Brian Moynihan: Good morning. Thank you, Kathryn. Thanks for joining the call to review our first quarter results. By now, I hope everybody's had a chance to review the earnings release documents that are available on the Investor Relations section of the Bank of America.com website. For the many years I've been in IR, I've always joined the other speakers in the same room as we presented earnings. But this quarter we, like all of you, are practicing following safe physical distancing protocols, and we're joining this morning from different locations. So first I'll turn the call over to our CEO Brian Moynihan for some opening remarks, and then I'll ask Paul Donofrio, our CFO, to cover the quarter briefly before turning back to Brian to moderate a question session. So hopefully this will make the session go a little bit smoother.

Lee McEntire: Good morning. Thank you, Kathryn. Thanks for joining the call to review our first quarter results. By now, I hope everybody's had a chance to review the earnings release documents that are available on the Investor Relations section of the Bank of America.com website. For the many years I've been in IR, I've always joined the other speakers in the same room as we presented earnings. But this quarter we, like all of you, are practicing following safe physical distancing protocols, and we're joining this morning from different locations.

I hope everybody has had a chance to review the earnings release documents that are available on the Investor Relations section of the Bank of America Dot Com website.

For the many years I've been in iron ore as always doing the other speakers in the same room as we presented earnings but this quarter. We like all of you are practicing. The way you saved physical distancing protocols, and where do you winning this morning from different locations. So first I'll turn the call over to our CEO, Brian Moynihan for some opening remarks, and then I'll ask Paul did not for young our CFO to cover the quarter briefly before turning back to Brian to moderate as question session.

The way you saved physical distancing protocols, and where do you winning this morning from different locations. So first I'll turn the call over to our CEO, Brian Moynihan for some opening remarks, and then I'll ask Paul did not for young our CFO to cover the quarter briefly before turning back to Brian to moderate as question session.

So first I'll turn the call over to our CEO Brian Moynihan for some opening remarks, and then I'll ask Paul Donofrio, our CFO, to cover the quarter briefly before turning back to Brian to moderate a question session. So hopefully this will make the session go a little bit smoother. Before I turn the call over to Brian, let me remind you we may make forward-looking statements during this call. For further information on forward-looking comments, please refer to either our earnings release documents, our website, or our SEC filings. Over to you, Brian.

So hopefully, this will make the session go a little bit smoother. Before I turn the call over to Brian, let me remind you we may make forward-looking statements during this call. For further information on all forward-looking comments, please refer to either our earnings release documents, our website or SEC fillings. Over to you, Brian.

Brian Moynihan: Before I turn the call over to Brian, let me remind you we may make forward-looking statements during this call. For further information on forward-looking comments, please refer to either our earnings release documents, our website, or our SEC filings. Over to you, Brian. Thank you, Lee, and good morning to all of you, and thank you for joining us to review our results. It has been an eventful quarter, but I hope all of you are safe and your families are well during this war on the COVID virus. As you think about our quarter, our decade plus long discipline of responsible growth has resulted in us strengthening our balance sheet and making investments in technology and people and talent over the decade has helped us prepare for this environment. Today we're going to do three things with you.

Brian Kleinhanzl: Thank you, Lee, and good morning to all of you, and thank you for joining us to review our results. It has been an eventful quarter, but I hope all of you are safe and your families are well during this war on the COVID virus. As you think about our quarter, our decade plus long discipline of responsible growth has resulted in us strengthening our balance sheet and making investments in technology and people and talent over the decade has helped us prepare for this environment. Today we're going to do three things with you.

What do you Brian.

Thank you, Lee, and good morning to all of you and thank you for joining us to review our results. It has been an eventful quarter, but I hope all of you are safe and your families are well during this war on the COVID virus. As you think about our quarter, our decade-plus long discipline of responsible growth resulted in us strengthening our balance sheet and making investments in technology, in people and talent over the decade, which has helped us prepare for this environment.

Has been an eventful quarter, but I hope all of you are safe and and your families are well during this war on the cobot virus.

Do you think about a quarter or decade, plus long discipline up responsible growth.

We will result in a strengthening our balance sheet and making investments in technology in people and talent over the decade, just help us prepared for this environment.

Today, we're going to do three things with you. First, I could provide a couple high-level thoughts in the quarter. Second, I'm going to make sure you know how we're supporting our teammates, our customers our communities and deliberate for your shareholders during this crisis. And third, Paul will cover the results in more detail. I'll start this discussion by covering the chart on slide two along with the comments on slide three which go with the chart. Given the volatility in the last couple of months in the global slowdown. I'm proud of Bank of America, and our teams' results. I want to thank my 209,000 teammates across our company for all of their efforts this quarter, both in frontline roles and support. It's been a company-wide effort continues to serve our customers well during those times.

Brian Moynihan: First, I'm going to provide a couple high-level thoughts on the quarter. Second, I'm going to make sure you know how we're supporting our teammates, our customers, our communities, and delivering for you, our shareholders during this crisis. And third, Paul will cover the results in more detail. I'll start this discussion by covering the chart on slide 2 along with the comments on slide 3 which go with the chart. Given the volatility in the last couple months and the global slowdown, I'm proud of Bank of America and our team's results. I want to thank my 209,000 teammates across our company for all of their efforts this quarter both in the frontline roles and support functions. It's been a company-wide effort to continue to serve our customers well during these times.

First, I'm going to provide a couple high-level thoughts on the quarter. Second, I'm going to make sure you know how we're supporting our teammates, our customers, our communities, and delivering for you, our shareholders during this crisis. And third, Paul will cover the results in more detail. I'll start this discussion by covering the chart on slide 2 along with the comments on slide 3 which go with the chart. Given the volatility in the last couple months and the global slowdown, I'm proud of Bank of America and our team's results. I want to thank my 209,000 teammates across our company for all of their efforts this quarter both in the frontline roles and support functions. It's been a company-wide effort to continue to serve our customers well during these times.

Second I'm going to make sure you know how we're supporting our teammates are customers our communities and deliberate for your shareholders. During this crisis there Paul will cover the results in more detail.

I'll start this discussion by covering the chart on slide two along with the comments on slide three which go with the chart.

Given the volatility in the last couple of months the global slowdown.

I'm proud of Bank of America, and our teams results I want to thank my 2000 209000 teammates across our company for all of their efforts this quarter, both in frontline roles and support.

It's been a company wide effort continues to serve our customers well during those times.

Brian Moynihan: As I said many times, we're in a war against the COVID-19 and at Bank of America we're doing our part to help fight the effects of that war. We do that by living our purpose. We're helping people manage their financial lives through this crisis. My teammates know they're playing a critical role for their clients, whether the people, whether companies of all different sizes, and institutional investors. Their role is to help keep the economy moving as best we can during this healthcare crisis. Their role is, we have seen major disruption of financial markets that affected every line of business as customers move to stay-at-home status through voluntary, involuntary measures. In the United States and around the world, governments have responded with historic measures in a very short period of time.

As I said many times, we're in a war against the COVID-19 and at Bank of America we're doing our part to help fight the effects of that war. We do that by living our purpose. We're helping people manage their financial lives through this crisis. My teammates know they're playing a critical role for their clients, whether the people, whether companies of all different sizes, and institutional investors. Their role is to help keep the economy moving as best we can during this healthcare crisis. Their role is, we have seen major disruption of financial markets that affected every line of business as customers move to stay-at-home status through voluntary, involuntary measures. In the United States and around the world, governments have responded with historic measures in a very short period of time.

As I've said many times we're in a war against the COVID-19, and at Bank of America, we're doing our part to help fight the effects of that work. We do that by living our purpose, we're helping people manage their financial lives through this crisis. My teammates know they're playing a critical role for their clients, whether the people whether companies of all different sizes and institutional investors. Their role is to help keep the economy moving as best we can during this healthcare crisis.

My teammates no they're playing a critical role for their clients, whether the people whether companies of all different sizes and institutional investors their role to help keep the economy moving as best we can during this healthcare crisis.

We have seen major disruption the financial markets that affect every line of business as customers move to stay at home status through voluntary or involuntary measures. In the United States around the world, governments have responded to historic measures in a very short period of time. Central banks, governments and others have responded to provide tremendous liquidity to keep the market's functioning and to protect individuals and businesses on a historic scale. The bank industry continues to play a vital role. We well capitalize with strong liquidity and we have helped transmit the benefits these programs as well as their own measures in the economy and markets.

[noise] measures in the United States around the World governments have responded historic measures in a very short period of time.

Brian Moynihan: Central banks, governments, and others have responded to provide tremendous liquidity to keep the markets functioning and to protect individuals and businesses at an historic scale. The banking industry continues to play a vital role. We're well capitalized with strong liquidity, and we have helped transmit the benefits of these programs as well as our own measures in the economy and markets. Let's cover our Q1 performance. In Q1 2020, Bank of America produced $4 billion of after-tax earnings. This included building our loan loss reserve by $3.6 billion over charge-offs, and that's due to the economic deterioration of the global economy as a result of the virus. Earnings per share were $0.40. Earnings were down $3.3 billion from last year. This was led by the reserve build.

Central banks, governments, and others have responded to provide tremendous liquidity to keep the markets functioning and to protect individuals and businesses at an historic scale. The banking industry continues to play a vital role. We're well capitalized with strong liquidity, and we have helped transmit the benefits of these programs as well as our own measures in the economy and markets. Let's cover our Q1 performance. In Q1 2020, Bank of America produced $4 billion of after-tax earnings. This included building our loan loss reserve by $3.6 billion over charge-offs, and that's due to the economic deterioration of the global economy as a result of the virus. Earnings per share were $0.40. Earnings were down $3.3 billion from last year. This was led by the reserve build.

For banks governments and others have responded to provide tremendous liquidity in the mark to keep the market's functioning and to protect individuals and businesses and historic scale.

The bank industry continues to play a vital role.

Well capitalize a strong liquidity and we have helped transmit the benefits these programs as well as they're all measures in the economy <unk> end markets.

So let's cover our first-quarter performance. In the first quarter of 2020, Bank of America produced $4 billion of after-tax earnings. This includes building our loan loss reserve by $3.6 billion overcharging us. And that's due to the economic deterioration of the global economy as a result of the virus. Earnings per share were 40 cents. Earnings were down $3.3 billion from last year. This was led by the reserve bill. I think it's useful to draw your attention to the pretax pre-provision income line as we believe it helps illustrate the underlying earnings power of the company to support the credit costs that are inevitable in a downturn.

This include building our loan loss reserve by $3.6 billion Overcharge us and that's due to the economic deterioration of the global economy. As result of the buyers earnings per share a 40 cents.

Earnings were down $3.3 billion from last year.

This was led by the reserve though.

Brian Moynihan: I think it's useful to draw your attention to the pre-tax pre-provision income line as we believe it helps illustrate the underlying earnings power of the company to support the credit costs that are inevitable in a downturn. We produced $9.3 billion of pre-tax pre-provision income in Q1 2020. That was down 5% from Q1 2019. That is relatively strong given the changes in interest rates that have occurred, the widening of credit spreads, and other changes across the past 12 months, particularly in the last quarter or so. During this period we maintained our strong balance sheets. Global Markets clients' needs for liquidity temporarily increased our balance sheet during the quarter by as much as $130 billion from year-end. But through the efforts of Tom Montag and team, we ended the quarter marginally up.

I think it's useful to draw your attention to the pre-tax pre-provision income line as we believe it helps illustrate the underlying earnings power of the company to support the credit costs that are inevitable in a downturn. We produced $9.3 billion of pre-tax pre-provision income in Q1 2020. That was down 5% from Q1 2019. That is relatively strong given the changes in interest rates that have occurred, the widening of credit spreads, and other changes across the past 12 months, particularly in the last quarter or so. During this period we maintained our strong balance sheets. Global Markets clients' needs for liquidity temporarily increased our balance sheet during the quarter by as much as $130 billion from year-end. But through the efforts of Tom Montag and team, we ended the quarter marginally up.

I think it's useful to draw your attention to the pretax pre provision income line as we believe it helps illustrate the underlying earnings power of the company.

Just to support the credit costs that are inevitable in a downturn.

We produced $9.3 billion, a pretax pre-provision income in the first quarter of 2020. That was down 5% in the first quarter of 2019. That is relatively strong given the changes in interest rates that have occurred, the widening credit spreads and other changes across the past 12 months, particularly in the last quarter or so. During this period, we maintained our strong balance sheet. Global markets clients' needs for liquidity temporarily increased our balance sheet during the quarter by as much as $130 billion. But the efforts Tom on taking team we ended the quarter marginally up. Small business originations not for many of the special programs were $2.4 billion during this quarter show support for that segment of the economy.

That is relatively strong given the changes in interest rates that have occurred.

Widening credit spreads and other changes across the past 12 months, particularly in the last quarter. So.

During this period, we maintained our strong balance sheets global markets clients' needs for liquidity temporarily increased our balance sheet during the quarter by as much as $130 billion from Europe.

But the efforts Tom on taking team we ended the quarter marginally up.

Brian Moynihan: Small business originations not from any of the special programs were $2.24 billion during this quarter, showing support for that segment of the economy. We also met our larger commercial borrowing customers' demands with commercial loans increasing $67 billion as clients drew down against their unfunded commitments and new commitments were made. In addition to these fundings, which reduced commitments, we also had requests for new commitments. Remember, some of the commitments that we're making are for clients like grocers, healthcare companies, and others who need liquidity because of the rising demand for their services during this time. At the same time, we returned $7.9 billion in capital to our shareholders, and as you know, during the quarter we voluntarily chose to suspend the buyback portion of those distributions to assure capital for expected customer growth. We did all that in our Common Equity Tier 1 ratio of 10.8%.

Small business originations not from any of the special programs were $2.24 billion during this quarter, showing support for that segment of the economy. We also met our larger commercial borrowing customers' demands with commercial loans increasing $67 billion as clients drew down against their unfunded commitments and new commitments were made. In addition to these fundings, which reduced commitments, we also had requests for new commitments. Remember, some of the commitments that we're making are for clients like grocers, healthcare companies, and others who need liquidity because of the rising demand for their services during this time.

Small business originations not for many of the special programs were $2.4 billion. During this quarter show support for that segment of the economy.

We also met our larger commercial borrowing customers demands with commercial loans increasing $67 billion as clients drew down again sort of unfunded commitments new commitments were made. In addition to these findings, which reduced commissions, we also had requests for new commitments. Remember some of the commitment that we're making corporate clients like grocers healthcare companies and others, who need to quality because of the rising demand for their services during this time. At the same time, we returned $7.9 billion in capital to our shareholders and as you know during the quarter, we voluntarily chose to suspend the buyback portion of those distributions to share capital for expected customer growth.

In addition to these findings, which reduced commissions. We also had requests for new commitments.

Remember some of the commitment so we're making corporate clients like grocers healthcare companies and others, who need to quality because of the rising demand for their services. During this time.

At the same time, we returned $7.9 billion in capital to our shareholders, and as you know, during the quarter we voluntarily chose to suspend the buyback portion of those distributions to assure capital for expected customer growth. We did all that in our Common Equity Tier 1 ratio of 10.8%. Still finished 130 basis points above 9% or 9.5% minimum from our liquidity standpoint. We ended the period with $700 billion in liquidity, increasing $120 billion from year end. Driving that increase was deposits increasing $149 billion, far exceeding our $67 billion expansion in our loan portfolio. Moving away from the balance sheet and onto earnings. A couple highlights I'd point out. NII finished a bit better than expected at $12.3 billion on an FTE basis, flat with fourth quarter.

At the same time returned $7.9 billion in capital to our shareholders and as you know during the quarter, we voluntarily chose to suspend the buyback portion of those distributions to share capital for expected customer growth.

We did all that in our common equity tier one ratio. Up 10.8% still finished 130 basis points about 9.4% or 9.5% minimum. From our liquidity standpoint, we ended the period with $700 billion and liquidity, increasing $120 billion from year-end. Driving that increase was deposits increasing $149 billion far exceeding our $67 billion dollar expansion in our loan portfolio. Moving away from the balance sheet and earnings, a couple of highlights I'd point out. And I finished a bit better than expected at $12.3 billion on an FTE basis flat with fourth quarter. Capital markets revenue was strong.

10.8% still finished 130 basis points about 9.9, 0.5% metal.

Brian Moynihan: Still finished 130 basis points above 9% or 9.5% minimum from our liquidity standpoint. We ended the period with $700 billion in liquidity, increasing $120 billion from year end. Driving that increase was deposits increasing $149 billion, far exceeding our $67 billion expansion in our loan portfolio. Moving away from the balance sheet and onto earnings. A couple highlights I'd point out. NII finished a bit better than expected at $12.3 billion on an FTE basis, flat with fourth quarter. Capital markets revenue was strong. Sales and trading revenues excluding DVA were up 22% year over year, and investment banking fees were up 10% year over year. We had a record quarter in Favgalla's equities trading business. Our non-interest expense was a touch better than expected, as well, at $13.5 billion.

From our liquidity standpoint, we ended the period was seven point $700 billion and liquidity.

Creasing $120 billion from yearend driving that increase was deposits increasing $149 billion far exceeding our 67 billion dollar expansion in our loan portfolio.

Moving away from the balance sheet and earnings a couple of highlights I'd point out.

And I finished a bit better than expected expected at $12.3 billion out enough de basis flat with fourth quarter.

Capital markets revenue was strong. Sales and trading revenues excluding DVA were up 22% year over year, and investment banking fees were up 10% year over year. We had a record quarter in Favgalla's equities trading business. Our non-interest expense was a touch better than expected, as well, at $13.5 billion. Net charge-offs remain low at a little more than $1 billion, up $163 million from last quarter, driven by an uptick in commercial. Obviously, returns this quarter move lower given the reserve build.

Capital markets revenue was strong.

Sales and trading revenues, excluding DVA, were up 22% year over year. And investment banking fees were up 10% year over year. We had a record quarter in fab goes equities trading business. On a noninterest expense was touched better than expected as well at $13.5 billion. Net charge offs remain low a little more than a billion up $163 million from last quarter, driven by an uptick in commercial. Obviously, returns the quarter move lower given the reserve build return on tangible common equity was 8.3%.

We had a record quarter in fab goes equities trading business.

On an noninterest expense was the touched better than expected as well at $13.5 billion net charge offs remain low a little more than a billion up 163 million from last quarter, driven by an uptick in commercial.

Brian Moynihan: Net charge-offs remain low at a little more than $1 billion, up $163 million from last quarter, driven by an uptick in commercial. Obviously, returns this quarter move lower given the reserve build. Return on tangible common equity was 8.3%. Let's turn to slide 4. Just as important as our financial results this quarter is what we're doing to take care of our teammates and to help clients and communities impacted by the virus. We do this not only because it's the right thing to do, but also, in the end, it will benefit you, the shareholder. Many of our teammates are on the front lines of this effort, including daily engagement with clients.

Obviously, if it turns the corner move lower given the reserve build return on tangible common equity was 8.3%.

Return on tangible common equity was 8.3%. Let's turn to slide 4. Just as important as our financial results this quarter is what we're doing to take care of our teammates and to help clients and communities impacted by the virus. We do this not only because it's the right thing to do, but also, in the end, it will benefit you, the shareholder. Many of our teammates are on the front lines of this effort, including daily engagement with clients.

Let's turn to slide four. Just as important as our financial results this quarter is what we're doing to take care of teammates and to help clients and communities impacted by the virus. We do this not only because it's the right thing to do, but also in the end it will benefit you, the shareholders. Many of our teammates ae on that front lines, a separate including daily engagement with clients, whether it's in our financial centers, which remain open, financial advisors gotten to clients for the turbulent times, where the cap and liquidity are providing the companies across the businesses.

Just as important as our financial results. This quarter is what we're doing to take care about teammates and to help clients and communities impacted by the buyers. We do this for.

Not only because it's right thing to do but also the and it will benefit you the Cheryl.

Many of our teammates ae on that front lines, a separate including daily engagement with clients, whether it's in our financial centers, which remain open, financial advisors gotten to clients for the turbulent times, where the cap and liquidity are providing the companies across the businesses.

Brian Moynihan: Whether it's in our financial centers, which remain open, financial advisors guiding their clients through the turbulent times, or the capital liquidity we're providing to companies across the businesses to be able to do all these great things to support clients. Our first priority since this crisis was to address the health and safety of our teammates. We've taken that teammate centric view of our efforts because it's the right thing to do and we need these teammates to do a great job for the clients. We've taken extensive measures in our business continuity work to prevent teammate exposure to the virus. We've established multiple locations for important work of our trading operations and call center platforms and otherwise enabled social distancing by moving more than 150,000 people to work from home.

Whether it's in our financial centers, which remain open, financial advisors guiding their clients through the turbulent times, or the capital liquidity we're providing to companies across the businesses to be able to do all these great things to support clients. Our first priority since this crisis was to address the health and safety of our teammates. We've taken that teammate centric view of our efforts because it's the right thing to do and we need these teammates to do a great job for the clients. We've taken extensive measures in our business continuity work to prevent teammate exposure to the virus. We've established multiple locations for important work of our trading operations and call center platforms and otherwise enabled social distancing by moving more than 150,000 people to work from home.

To be able to do all these great things to support clients. Our first priority since the crisis was to address the health and safety of our teammates. We've taken that teammate centric view of our efforts. Because it's the right thing to do and we need our teammates to do a great job for the clients. We've taken extensive measures in our business continuity work to prevent teammate exposure to the virus. We've established modifications for important work of our trading operations and call center platforms, and otherwise enabled social distancing by moving more than 150,000 people to work from home. That means ensuring that they have appropriate tools and resources and we have the appropriate control protocols for them to do their day to day work. To give you a sense of scale, we have deployed about 90,000 laptops in the last 60 days across the company.

We've taken that team make centric view of our efforts.

Because it's the right thing to do and we need is teammates do a great job for the clients. We've taken extensive measures in our business continuity work to prevent teammate exposure. The buyers. We've established modifications for important work of our trading operations and call center platforms, and otherwise enabled social distancing by mid moving more than 150000 people.

Work from home.

Brian Moynihan: That means ensuring that they have appropriate tools and resources, and we have the appropriate control protocols for them to do their day-to-day work. To give you a sense of scale, we have deployed about 90,000 laptops in the last 60 days across the company. We move quickly to assure social distancing in our facilities. They're still open. We installed additional protective barriers in all our branches, thinned outstanding operations environments, and posted healthcare professionals or facilities to help anybody. We're also taking measures to help our employees better handle the stresses in their personal lives. You can see some highlight here. One example has been our increased childcare support. We allow teammates to hire relatives and others so they can work given school and daycare outages. Our Life Event Services team provides teammates with personalized support, resources, tools, and access to benefits.

That means ensuring that they have appropriate tools and resources, and we have the appropriate control protocols for them to do their day-to-day work. To give you a sense of scale, we have deployed about 90,000 laptops in the last 60 days across the company. We move quickly to assure social distancing in our facilities. They're still open. We installed additional protective barriers in all our branches, thinned outstanding operations environments, and posted healthcare professionals or facilities to help anybody. We're also taking measures to help our employees better handle the stresses in their personal lives. You can see some highlight here. One example has been our increased childcare support. We allow teammates to hire relatives and others so they can work given school and daycare outages. Our Life Event Services team provides teammates with personalized support, resources, tools, and access to benefits.

That means ensuring that they have appropriate tools and resources and we have the appropriate control protocols for them to do their day to day work. To give you a sense of scale, we have deployed about 90,000 laptops in the last 60 days across the company.

We've moved quickly to ensure social listening and in our facilities that are still open. Installed additional protected berries and all our branches then outstanding operations environments and posted health care professionals, our facilities to help anybody. We're also taking measures to help employees better handle the stresses in their personal lives. You can see some highlights here. One example has been increased childcare support. We allow teammates to hire relatives or others, so they can work given school in daycare outages.

We're also taking measures to help employees better handle the stresses in their personal lives. You can see some highlights here. One example has been increased childcare support. We allow teammates to hire relatives or others, so they can work given school in daycare outages.

Our life events services team provides teammates a personalized support resources tools and access to benefits. And we're providing special compensation teammates in the financial centers, operation centers and call centers. We also higher 2,000 teammates in March to continue to increase the staffing we need, especially in the consumer-related areas to handle our clients' needs. And we announced that there would be no layoffs during 2020 of our teammates.

Brian Moynihan: And we're providing special compensation to teammates in the financial centers, operations centers, and call centers. We also hired 2,000 teammates in March to continue to increase the staffing we need, especially in the consumer related areas to handle our clients' needs. And we announced that there would be no layoffs during 2020 of our teammates. Our previous announced $20 an hour minimum compensation is now in effect and reflected in the numbers you're seeing across the company. And we confirmed our commitment to bring on our 3,000 young kids from summer jobs for summer jobs and starting their first job. Whether graduating college or graduate school. Taking care of the employees is the right thing to do. Enables them each to play the important role they must provide as critical providers or services to help the economy keep rolling through the virus. We're doing that in many ways.

And we're providing special compensation to teammates in the financial centers, operations centers, and call centers. We also hired 2,000 teammates in March to continue to increase the staffing we need, especially in the consumer related areas to handle our clients' needs. And we announced that there would be no layoffs during 2020 of our teammates. Our previous announced $20 an hour minimum compensation is now in effect and reflected in the numbers you're seeing across the company. And we confirmed our commitment to bring on our 3,000 young kids from summer jobs for summer jobs and starting their first job. Whether graduating college or graduate school. Taking care of the employees is the right thing to do. Enables them each to play the important role they must provide as critical providers or services to help the economy keep rolling through the virus. We're doing that in many ways.

And we're providing special compensation teammates in the financial centers operation centers and call centers.

We also higher 2000 teammates in March to continue to increase the staffing we need, especially in the consumer related areas to handle our clients' needs.

And we announced that there would be no layoffs during 2020 of our teammates.

Our previous announced $20 an hour minimum compensation is now in effect and reflect the numbers you're seeing across the company. And we confirmed our commitment to bring on 3,000 young kids from summer jobs and starting the first job whether graduate College graduate school. Taking care of the employees is the right thing to do enables each to play an important role they must provide is critical providers the services to help the economy keep rolling through the virus.

Taking care of the employees is the right thing to do enables each to play an important role they must provide is critical providers the services to help the economy keep rolling through the virus.

We're doing that in many ways. In addition, to keep my financial Center open the many things I mentioned earlier, we're doing more through our clients for these times. Customers are struggling to make their payments are calling the bank the deferral quest on loans and fees. In waiver of fees. And other disruptive events that we've done for hurricanes, earthquakes tornadoes and other things over time, we work with them. Since this humanitarian crisis began, we received more than 1 million requests for assistance through early April. We've seen the volume of the deferrals, however, reduce since the peak a week or two ago, and we'll see where it goes next.

Brian Moynihan: In addition to keeping our financial center open, the many things I mentioned earlier, we're doing more for our clients. Through these times, customers are struggling to make their payments or calling the bank with deferral requests on loans and fees in waiver of fees. As in other disruptive events that we've done for hurricanes, earthquakes, tornadoes, and other things over time, we work with them. Since this humanitarian crisis began, we received more than 1 million requests for assistance through early April. We've seen the volume of the deferrals, however, reduce since the peak a week or two ago, and we'll see where it goes next. We provide a chart in the material beginning on slide five about the deferrals.

In addition to keeping our financial center open, the many things I mentioned earlier, we're doing more for our clients. Through these times, customers are struggling to make their payments or calling the bank with deferral requests on loans and fees in waiver of fees. As in other disruptive events that we've done for hurricanes, earthquakes, tornadoes, and other things over time, we work with them. Since this humanitarian crisis began, we received more than 1 million requests for assistance through early April. We've seen the volume of the deferrals, however, reduce since the peak a week or two ago, and we'll see where it goes next. We provide a chart in the material beginning on slide five about the deferrals.

<unk> customers are struggling to make their payments are calling the bank the deferral quest.

On loans and fees.

<unk> labor fees as it and other disruptive events that we've done for hurricanes or earthquakes tornadoes and other things over time, we work with them.

Since this Americas humanitarian crisis began we received more than 1 million request for assistance through early April.

We've seen the volume of the deferrals, however, reduce since the peak a week or two ago, and we'll see where it goes next.

We provide a chart on the material beginning on slide five about the deferrals. As you've seen in our case, the largest number requested to come from cardholders, but as a percentage of loans, we have the most request from our small business clients. We've got clients at the heart of the governmental programs and also at the heart of businesses that were shut down due to the stay at home orders by governments. One of the things that is different about this business for us is it lets doctors, dentists and others. They have deferred payments until they can reopen their practices.

Slide five about the deferrals as exceed our case the largest number requested to come from cardholders, but as a percentage of loans. We have the most request from our small business clients.

Brian Moynihan: As you can see, in our case the largest number of requests has come from cardholders, but as a percentage of loans, we have the most requests from our small business clients. These clients, at the heart of the governmental programs, are also at the heart of businesses that were shut down due to the stay-at-home orders by governments. One of the things that's different about this business for us is it led to doctors, dentists, and others. They have deferred payments until they can reopen their practices. We're a leading lender to them, and you'll see those recover as they go back to business. Our mortgage requests remain relatively low in volume, and for all our customers, we've also suspended foreclosures or repossessions of autos which may have been pending.

As you can see, in our case the largest number of requests has come from cardholders, but as a percentage of loans, we have the most requests from our small business clients. These clients, at the heart of the governmental programs, are also at the heart of businesses that were shut down due to the stay-at-home orders by governments. One of the things that's different about this business for us is it led to doctors, dentists, and others. They have deferred payments until they can reopen their practices. We're a leading lender to them, and you'll see those recover as they go back to business. Our mortgage requests remain relatively low in volume, and for all our customers, we've also suspended foreclosures or repossessions of autos which may have been pending.

<unk> clients at the heart of the governmental programs and also at the heart of.

Businesses that were shut down due to the stay at home orders by governments.

One of the things that different about this business for us is it lets doctors dentists and others.

They have deferred payments until they can reopen their practices.

We're a leading lender to them and you'll see those recover as they go back to business. Our mortgage requests remain relatively low in volume. For all of our customers who have also suspended foreclosures or repossessions autos, which may have been pending. Our affluent clients are also looking for our company and these turbulent times.

Brian Moynihan: Our affluent clients are also looking for our company in these turbulent times. We've been there for clients with both upgraded systems and capabilities to allow them to trade, a centralized investment office supplementing 20,000 advisors' capabilities to talk to the clients and give advice and counsel. Client engagement during the quarter was up 2/3 from last year even as our advisors work from home. For small business clients, we built the first digital platform for the PPP program, and we launched it 12 days ago. The team is working hard to drive over 300,000 requests for funding through the process so that we can get those loans funded. As stated earlier, our regular way small business support was over $2 billion in the quarter. For larger clients, we provided $67 billion in access to unfunded commitments.

Our affluent clients are also looking for our company in these turbulent times. We've been there for clients with both upgraded systems and capabilities to allow them to trade, a centralized investment office supplementing 20,000 advisors' capabilities to talk to the clients and give advice and counsel. Client engagement during the quarter was up 2/3 from last year even as our advisors work from home. For small business clients, we built the first digital platform for the PPP program, and we launched it 12 days ago. The team is working hard to drive over 300,000 requests for funding through the process so that we can get those loans funded. As stated earlier, our regular way small business support was over $2 billion in the quarter. For larger clients, we provided $67 billion in access to unfunded commitments.

Oh affluent clients are also looking for our company and these turbulent times.

We've been there for clients with both upgraded systems and capabilities to allow them to trade a centralized investment office supplement at 20000 advisors capabilities to talk to their clients and give advice and counsel. Client engagement during the quarter was up two thirds from last year, even if our advisors work from home. For small business clients, we built the first digital platform for the PPP program and we launched it 12 days ago. The team is working hard to drive over 300,000 requests for funding through the process. So that we can get those loans funded.

Hi engagement during the quarter was up two thirds from last year, even as east the our advisors work from home.

For small business clients, we built the first digital platform for the P.P.P. program and we launched it 12 days ago. The team is working hard to drive over 300000 request for funding through the process.

So that we can get those loans funded.

As stated earlier, our regular small business support was over $2 billion in the quarter. For larger clients, we brought a $67 billion and access certain funding commitments matching the speed and capacity that our team did to absorb the request so quickly and get them funded over the course of the quarter. These commitments are a much needed liquidity bridge for many clients, especially in light of the rapid changes that occurred in March and the commercial paper markets and then debt markets.

Brian Moynihan: Imagine the speed and capacity that our team did to absorb the requests so quickly and get them funded over the course of the quarter. These commitments are much near the liquidity bridge for many clients, especially in light of the rapid changes that occurred in March in the commercial paper markets and in debt as those markets opened up. We also saw a strong debt capital markets issuance to support clients. In fact, March ended up being the busiest month ever for US high grade market with approximately $260 billion of total issuances. The previous record was $171 billion, and we led the market. April has continued this busy pace, and it's been good to see that access is expanding to high yield clients. For our institutional trading clients, we have provided an operationally sound system with improving speeds of trading.

Imagine the speed and capacity that our team did to absorb the requests so quickly and get them funded over the course of the quarter. These commitments are much near the liquidity bridge for many clients, especially in light of the rapid changes that occurred in March in the commercial paper markets and in debt as those markets opened up. We also saw a strong debt capital markets issuance to support clients. In fact, March ended up being the busiest month ever for US high grade market with approximately $260 billion of total issuances. The previous record was $171 billion, and we led the market. April has continued this busy pace, and it's been good to see that access is expanding to high yield clients. For our institutional trading clients, we have provided an operationally sound system with improving speeds of trading.

These commitments are much needed liquidity bridge for many clients, especially in light of the rapid changes that occurred in March and the commercial paper markets and then debt markets.

As those markets up opened up, we also saw strong debt capital markets issuances to support clients. In fact, March ended up being the busiest month ever for U.S. high-grade market with approximately $260 billion of total issues. The previous record was 171 billion. And we led the market. April has continued this busy pace. And it has been good to see that access has expanded to high yield clients.

The previous record was 171 billion.

And we let the market April has continued this busy pace. It has been good to see that Texas has expanded to high yield clients.

For our institutional trading clients, we have provided an operationally sound system with improving speeds of trading. In a single day, we had 1.7 trillion dollars in payment value made. Again,the investments made over the past years to our trading platforms delivered more speed and capacity make that possible. In all doing while maintaining good controls. The clients we served in that business had witnessed severe volatility in markets and we have are brought on liquidity when they needed. Since the mid-month spike, Tom and the team managed the balance sheet into the place we need to be at the end of the quarter.

Brian Moynihan: In a single day, we had $1.7 trillion in payment value made. Again, the investments made over the past years to our trading platforms delivered more speed and capacity. That made that possible, all while maintaining good controls. The clients we serve in that business have witnessed severe volatility in markets, and we provided them with liquidity when they need it. Since the month-end spike, as you can see, Tom and the team managed the balance sheet to the place we needed to be at the end of the quarter. Lastly, to ensure communities around the US where we live and work got some assistance before the government money came to help, we announced $100 million donation to help fight the virus outcomes and supply vital support across those communities.

In a single day, we had $1.7 trillion in payment value made. Again, the investments made over the past years to our trading platforms delivered more speed and capacity. That made that possible, all while maintaining good controls. The clients we serve in that business have witnessed severe volatility in markets, and we provided them with liquidity when they need it. Since the month-end spike, as you can see, Tom and the team managed the balance sheet to the place we needed to be at the end of the quarter. Lastly, to ensure communities around the US where we live and work got some assistance before the government money came to help, we announced $100 million donation to help fight the virus outcomes and supply vital support across those communities.

In all doing well remained maintaining good controls.

The clients we served in that business.

witnessed severe volatility in markets and we have are brought on liquidity when they needed. Since the mid-month spike, Tom and the team managed the balance sheet into the place we need to be at the end of the quarter.

Lastly, just to ensure communities around the U.S., where we live and work got some assistant before the government body came to help, we announced a $100 million donation to help fight the virus outcomes and supply bottle support across those communities. Our market presence and other leaders are playing a vital role in this [inaudible]. We've also increased our capital, this community development financial institutions by $250 million on top of already industry-leading 1.5 billion commitment to these institutions. As we've discussed each quarter and frequently over the last decade, we've transformed our company so we could serve clients consistently across all areas. We've added the supply in appendix to remind you how much the company has improved its balance sheet position and risk profile since the last crisis. Stress testing illustrates our preparedness, but we're not now being tested in the new environment. We didn't know what economic challenges might cause us to have to demonstrate this resilience and that challenge is upon us now. I remain very proud of what my teammates have accomplished across every dimension to help us to be ready. And I'm proud that other part to playing to help the world win this war against this virus.

Brian Moynihan: Our market presence and other leaders are playing a vital role in these critical actions. We've also increased our capital to community development financial institutions by $250 million on top of our industry-leading $1.5 billion commitment to these institutions. As we discussed each quarter and frequently over the last decade, we've transformed our company so we could serve clients consistently across all areas. We've added a slide in the appendix to remind you how much the company has improved its balance sheet position and risk profile since the last crisis. We've developed the stress testing to illustrate our preparedness. But we're now being tested in a new environment. We didn't know what economic challenges might cause us to have to demonstrate this resilience. That challenge is upon us now. I remain very proud of what my teammates have accomplished across every dimension to help us be ready.

Our market presence and other leaders are playing a vital role in these critical actions. We've also increased our capital to community development financial institutions by $250 million on top of our industry-leading $1.5 billion commitment to these institutions. As we discussed each quarter and frequently over the last decade, we've transformed our company so we could serve clients consistently across all areas. We've added a slide in the appendix to remind you how much the company has improved its balance sheet position and risk profile since the last crisis. We've developed the stress testing to illustrate our preparedness. But we're now being tested in a new environment. We didn't know what economic challenges might cause us to have to demonstrate this resilience. That challenge is upon us now. I remain very proud of what my teammates have accomplished across every dimension to help us be ready.

We've also increased our capital, this community development financial institutions by $250 million on top of already industry-leading 1.5 billion commitment to these institutions. As we've discussed each quarter and frequently over the last decade, we've transformed our company so we could serve clients consistently across all areas. We've added the supply in appendix to remind you how much the company has improved its balance sheet position and risk profile since the last crisis. Stress testing illustrates our preparedness, but we're not now being tested in the new environment. We didn't know what economic challenges might cause us to have to demonstrate this resilience and that challenge is upon us now. I remain very proud of what my teammates have accomplished across every dimension to help us to be ready. And I'm proud that other part to playing to help the world win this war against this virus.

We've transformed our company so we could serve clients consistently across all areas.

We've added the supply in appendix to remind you how much the company has improved its balance sheet position and risk profile since the last crisis. Stress testing illustrates our preparedness, but we're not now being tested in the new environment. We didn't know what economic challenges might cause us to have to demonstrate this resilience and that challenge is upon us now. I remain very proud of what my teammates have accomplished across every dimension to help us to be ready. And I'm proud that other part to playing to help the world win this war against this virus.

We didn't know what economic challenges like caused us to have to demonstrate these resilience and that challenge is upon us now.

I remain very proud of what my teammates have accomplished across every dimension to help us to be ready. And I'm proud that other part to playing to help the world win this war against this virus.

Brian Moynihan: And I'm proud of the part they're playing to help the world win this war against this virus. An area that we focused on also is consumer spending. We've seen a shift in consumer payments, and this is on slides beginning on slide 6. Overall, a couple months ago in a healthy US economy, payments were running at a high single digit, in fact in some cases a low double digit percentage increase over the same period prior to January and February 2020 versus January and February 2019, and in fact that would have shown that the economy this quarter probably was going to grow faster than people expected. That changed. The virus spread, and you can see that impact here. On slide 6, we saw a severe immediate decline in discretionary payments for travel, leisure, and other things that you've read about in entertainment that you expected.

And I'm proud of the part they're playing to help the world win this war against this virus. An area that we focused on also is consumer spending. We've seen a shift in consumer payments, and this is on slides beginning on slide 6. Overall, a couple months ago in a healthy US economy, payments were running at a high single digit, in fact in some cases a low double digit percentage increase over the same period prior to January and February 2020 versus January and February 2019, and in fact that would have shown that the economy this quarter probably was going to grow faster than people expected. That changed. The virus spread, and you can see that impact here. On slide 6, we saw a severe immediate decline in discretionary payments for travel, leisure, and other things that you've read about in entertainment that you expected.

An area that we focused on also is consumer spending. We've seen a shift in consumer payments and this is on slides beginning on slide six. Overall, a couple of months ago and healthy U.S. economy payments are running at high single digits. In fact in some cases, a low double-digit percentage increase over the same period prior of 2020 January-February versus 2019 January-February. And in fact, that would have shown that economy this quarter, it probably is going to grow faster than people expect it. That changed as the virus spread and you can see that impact here on slide six. We saw a severe immediate decline in discretion payments for travel leisure and other things that you've read about next in entertainment that you expected. This is followed immediately by large increases in payments for necessities around groceries, and staples like health supplies et cetera.

19 January February and in fact.

That would have shown that economy. This quarter, it probably is going to grow faster than people expect.

That changed as the virus spread and you can see that impact here on slide six. We saw a severe immediate decline in discretion payments for travel leisure and other things that you've read about next in entertainment that you expected. This is followed immediately by large increases in payments for necessities around groceries, and staples like health supplies et cetera.

Brian Moynihan: This was followed immediately by large increases in payments for necessities around groceries and staples like health supplies, et cetera. Then as large cities and states began to move to voluntary and mandated stay home status orders, we saw large declines in debit and credit card spending into other categories. At the same time, we've also noted a stabilizing going on and the level of payments in other areas like ACH cash, wires, and P2B payments. The broader measure is the black line in the chart. As you can see, overall payments declined but remained at a high single digit pace year over year, moving down from double digit pace to around 8%. The total movement in the US has been pulled down by significant decline in card spending, which is more than up, which has been affected by the travel, entertainment, and other related areas in retail areas.

This was followed immediately by large increases in payments for necessities around groceries and staples like health supplies, et cetera. Then as large cities and states began to move to voluntary and mandated stay home status orders, we saw large declines in debit and credit card spending into other categories. At the same time, we've also noted a stabilizing going on and the level of payments in other areas like ACH cash, wires, and P2B payments. The broader measure is the black line in the chart. As you can see, overall payments declined but remained at a high single digit pace year over year, moving down from double digit pace to around 8%. The total movement in the US has been pulled down by significant decline in card spending, which is more than up, which has been affected by the travel, entertainment, and other related areas in retail areas.

Then, as large cities in states began to move to voluntary mandate to stay at home status orders, we saw large declines in debit and credit card spending into other categories. At the same time, we've also noted a stabilizing going on and the level of payments in other areas like [ACH] cash wires and B2B payments.

Into other categories at the same time, we've also noted as a stabilizing going on and the level of payments in other areas like asias cash wires appear to be payments.

The broader measure is the black line in the chart. As you can see, overall pipe payments have declined but remain at high single-digit pace year over year, moving down from a double-digit pace throughout 8%. The total movement in the U.S. has been pulled down by a significant decline in card spending which has more than a [pot] but has been affected by the travel entertainment and other related areas and retailers. And that's gone from 7% to 8% to only 2% increases in the month of March and has fallen into negative territory in April.

The total movement.

in the U.S. has been pulled down by a significant decline in card spending which has more than a [pot.]

but has been affected by the travel entertainment and other related areas and retailers. And that's gone from 7% to 8% to only 2% increases in the month of March and has fallen into negative territory in April.

Brian Moynihan: That's gone from 78% to only 2% increases in the month of March and has fallen into negative territory in April. The overall spending, however, of all types of spending in our customers seems to have stabilized in the last few weeks. During mid-April, we're seeing spending run at about a low $50 billion average level compared to a $60 billion average level before the crisis. That's per week spending. We'll see how that plays out through this quarter, and that stability may provide insight to the level of economic activity in the shutdown status. Our digital bank capabilities have helped with both customer service and sales. Our financial center visits are down, and sales down. Because of that, we've seen consumer digital logins remain steady as people manage their financial lives on a digital basis.

That's gone from 78% to only 2% increases in the month of March and has fallen into negative territory in April. The overall spending, however, of all types of spending in our customers seems to have stabilized in the last few weeks. During mid-April, we're seeing spending run at about a low $50 billion average level compared to a $60 billion average level before the crisis. That's per week spending. We'll see how that plays out through this quarter, and that stability may provide insight to the level of economic activity in the shutdown status. Our digital bank capabilities have helped with both customer service and sales. Our financial center visits are down, and sales down. Because of that, we've seen consumer digital logins remain steady as people manage their financial lives on a digital basis.

Increases in month in March and has fallen into negative territory in April.

The overall spending however of all types of spending at our customers seems to stabilize in the last few weeks. During mid-April, we're seeing spending run at about a low $50 billion average level compared to a $60 billion average level before the crisis that's per week spending. We'll see how that plays out through this quarter and that stability may provide insight to the level of economic activity in the shutdown status.

During mid April were seeing spending run at about a low $50 billion average level compared to $60 billion average level before the crisis that's per week spending well see how that plays out through this quarter and that stability may provide insight to the level of economy activity in the shutdown status.

Our digital bank capabilities have helped with both customer service and sales or financial center visits are down and sales are down because of that. We've seen consumer digital loggins remained steady as people manage their financial lives digital basis. Digital sales are down, but they're now running about 50% of the total sales. Our loan production per cars mortgage another products has fallen week by week. Through the first two weeks of Air April comparing that to the February habits levels were seeing them down 55% the cart origination, 40% for mortgage and 60% for autos. Again, we're watching to see these stabilize at some level of activity, even given the shutdown economy. And we'll keep watching that as states, cities and the federal government focuses on reopening the economy.

Brian Moynihan: Digital sales are down, but they're now running about 50% of the total sales. Our loan production for cars, mortgage, and other products has fallen week by week through the first two weeks of April. Comparing that to the February average levels, we're seeing them down 55% for card origination, 40% for mortgage, and 60% for auto. Again, we're watching to see these stabilize at some level of activity even given the shutdown economy. We'll keep watching that as states, cities, and the federal government focus on reopening the economy. On slide 7 you can see a couple of charts showing commercial line draw velocity in deposits in March.

Digital sales are down, but they're now running about 50% of the total sales. Our loan production for cars, mortgage, and other products has fallen week by week through the first two weeks of April. Comparing that to the February average levels, we're seeing them down 55% for card origination, 40% for mortgage, and 60% for auto. Again, we're watching to see these stabilize at some level of activity even given the shutdown economy. We'll keep watching that as states, cities, and the federal government focus on reopening the economy. On slide 7 you can see a couple of charts showing commercial line draw velocity in deposits in March.

Digital sales are down, but they're now running about 50% of the total sales.

Our loan production, but cars mortgage another products has fallen.

Week by week through the first two weeks of Air April comparing that to the February habits levels were seeing them down 55% the cart origination, 40% for mortgage and 60% for Odyssey again, we're watching to see these stabilize at some level of activity, even given the shutdown economy.

And we'll keep watching that as.

States cities in the federal government focuses on reopening the economy.

On slide seven you can see a couple of charts, showing a commercial line draw velocity in deposits in March. In total, we saw a 67 billion dollar increase in commercial loans due to drives from commercial clients in the month of March. 45% of these funnies came from large commercial clients. 40% from where from large corporate bank customers and made was spread across all the businesses. As for the asset quality of what we funded, 92% of these were collateralized were made to investment grade clients. And less than 100 million what made the clients as loans became nonperforming. The drives were well-diversified by industry were largely driven by U.S. borrowers.

Brian Moynihan: In total, we saw a $67 billion increase in commercial loans due to draws from commercial clients in the month of March. 45% of these fundings came from large commercial clients, 40% were from large corporate bank customers, and remainders spread across all the businesses. As for the asset quality of what we funded, 92% of these were collateralized or were made to investment grade clients, and less than $100 million were made to clients whose loans became non-performing. The draws were well diversified by industry and were largely driven by US borrowers. From a capital standpoint, we're already at risk weighting these commitments at 50% under standardized capital. So the additional impact to CET1 from these draws was roughly 25 basis points for the quarter.

In total, we saw a $67 billion increase in commercial loans due to draws from commercial clients in the month of March. 45% of these fundings came from large commercial clients, 40% were from large corporate bank customers, and remainders spread across all the businesses. As for the asset quality of what we funded, 92% of these were collateralized or were made to investment grade clients, and less than $100 million were made to clients whose loans became non-performing. The draws were well diversified by industry and were largely driven by US borrowers. From a capital standpoint, we're already at risk weighting these commitments at 50% under standardized capital. So the additional impact to CET1 from these draws was roughly 25 basis points for the quarter.

40% from where from large corporate bank customers and made it was spread across all the businesses.

As for the asset quality of what we funded, 92% of these were collateralized were made to investment grade clients. And less than 100 million what made the clients as loans became nonperforming. The drives were well-diversified by industry were largely driven by U.S. borrowers.

Were made to investment grade clients and less than 100 million what made the clients as loans became nonperforming.

The drugs are well diversified by industry.

Were largely driven by U.S. borrowers.

From a capital standpoint, we're already at risk weighting these commitments at 50% understand it ice capital. So the additional impact of these draws was roughly 25 basis points for the quarter. The draw activity was pretty normal through the first week of March but ramped up in the second week before peaking in the third week of the month. The requests have come down in every one of the last three weeks. And as we've seen we turned into April. Draw requested new credit quests have mitigated at these levels. We're seeing clients attentions turn from security liquidity to a more structured view of their capital position and there needs to better understand how they will prosper and fair in the COVID-19 impact of business model.

In addition impact to see T. Once these draws was roughly 25 basis points for the quarter.

Brian Moynihan: The draw activity was pretty normal through the first week of March, but ramped up in the second week before peaking in the third week of the month. The requests have come down in every one of the last three weeks, and as we've seen, we turn into April. Draw requests and new credit requests have mitigated. At these levels we're seeing clients' attention turn from securing liquidity to more structured view of their capital position and their needs to better understand how they will prosper and fare. In the COVID-19 impacted business model, we observed earlier that the commercial paper market froze in the middle of the quarter as new rounds of virus worsened. Clients were unable to access the CP markets. As the Fed announced their programs, we saw that market stabilize, and over time here we've seen it lengthen out.

The draw activity was pretty normal through the first week of March, but ramped up in the second week before peaking in the third week of the month. The requests have come down in every one of the last three weeks, and as we've seen, we turn into April. Draw requests and new credit requests have mitigated. At these levels we're seeing clients' attention turn from securing liquidity to more structured view of their capital position and their needs to better understand how they will prosper and fare. In the COVID-19 impacted business model, we observed earlier that the commercial paper market froze in the middle of the quarter as new rounds of virus worsened. Clients were unable to access the CP markets. As the Fed announced their programs, we saw that market stabilize, and over time here we've seen it lengthen out.

The draw activity was pretty normal through the first week of March but ramped up in the second week before Pete, peaking in the third week of the month.

The requests have come down and every.

One of the last three weeks.

And as we've seen we turned into April. Draw requested new credit quests have mitigated at these levels. We're seeing clients attentions turn from security liquidity to a more structured view of their capital position and there needs to better understand how they will prosper and fair in the COVID-19 impact of business model.

We observed earlier, that's commercial paper market froze in the middle of the quarter as new rounds the virus worsened clients were unable to access the CP markets. As the fed announced the programs, we saw that market stabilize and over time here we've seen lighten out so draws can be for long periods of time. It's worth noting since we have one of the premiered global Treasury services the platforms [inaudible] we saw many of those draws come back in our balance sheet as deposits. While the 75% alone draws will not use rather pay downs ended up as deposits with our company.

As as the fed announced a programs we saw that market stabilize and over time here, we've seen a drug like than out so draws can be for long periods of time.

Brian Moynihan: Draws can be for long periods of time. It's worth noting, since we have one of the premier global treasury services platforms in the world, we saw many of those draws come back in our balance sheets as deposits. Well, 75% of the loan draws were not used for other pay downs ended up as deposits with our company. In addition to that, at the bottom of the slide, you can see the growth in deposits by every line of business. Global banking deposits rose $94 billion, which is unusual for sure. We also saw a $32 billion increase in consumer deposits, with 65% of that being checking. That has been our normal. In fact, it's the 28th quarter of the last 29 that we've had year-over-year growth of $20 billion or more in consumer banking deposits.

Draws can be for long periods of time. It's worth noting, since we have one of the premier global treasury services platforms in the world, we saw many of those draws come back in our balance sheets as deposits. Well, 75% of the loan draws were not used for other pay downs ended up as deposits with our company. In addition to that, at the bottom of the slide, you can see the growth in deposits by every line of business.

It's worth noting since we have one of the premiered global Treasury services the platforms [inaudible] we saw many of those draws come back in our balance sheet as deposits. While the 75% alone draws will not use rather pay downs ended up as deposits with our company.

Well, there's 75% alone draws will not use rather pay downs ended up as deposits with our company.

In addition to that, at the bottom of the slide, you can see the growth in deposits by every line of business. The bank deposits rose $94 billion, which is unusual for sure. We also saw a $32 billion increase in consumer deposits with 65% of that being checking. That has been our normal. In fact, is the 28th quarter the last 29 that we've had year over year growth at $20 billion or more in consumer banking deposits. Wealth managers deposits reflect a flight to cash in the first quarter, but have been stabilizing last year as you can see in the charts Paul will show you later. So with that, let me turn over to Paul.

Global banking deposits rose $94 billion, which is unusual for sure. We also saw a $32 billion increase in consumer deposits, with 65% of that being checking. That has been our normal. In fact, it's the 28th quarter of the last 29 that we've had year-over-year growth of $20 billion or more in consumer banking deposits.Wealth management deposits reflect a flight to cash in Q1, but have been stabilizing last year as you can see in the charts. Paul will show you later. So with that, let me turn it over to Paul.

Go global banking deposits rose $94 billion, which is unusual for sure.

We also saw $32 billion increase in consumer deposits with 65% that being checking. That has been our normal in fact is the 28th quarter. The last 29 that we've had year over year growth at $20 billion or more in consumer banking deposits. Wealth managers deposits reflect a flight to cash in the first quarter, but have been stabilizing last year as you can see in the charts Paul will show you later. So with that let me turn over to fall.

Brian Moynihan: Wealth management deposits reflect a flight to cash in Q1, but have been stabilizing last year as you can see in the charts. Paul will show you later. So with that, let me turn it over to Paul.

but have been stabilizing last year as you can see in the charts Paul will show you later.

So with that let me turn over to fall.

Paul Donofrio: Thanks Brian. Good morning everyone. I am beginning on slide 8 with the balance sheet. Overall, compared to the end of Q4, the balance sheet expanded $186 billion driven by an increase in deposits of $149 billion. Deposit growth in excess of our loan growth was invested primarily in cash or cash equivalents. As Brian mentioned, the team did an incredible job of not only providing our global markets clients needed liquidity from a mid-March spike, but also reducing those levels by the end of the quarter. Shareholders equity of $265 billion was stable with year end but included some offsetting factors. AOCI of $6.5 billion reflecting several factors but was driven by a $4.8 billion improvement in the valuation of AFS debt securities.

Thanks, Brian. Good morning, everyone. I'm beginning on slide eight with the balance sheet. Overall, compared to the end of Q4, the balance sheet expanded 186 billion. Driven by an increase in deposits of 149 billion. Deposit growth in excess of our loan growth was invested primarily in cash cash equivalents. As Brian mentioned, the team did an incredible job of not only providing our goal markets clients needed liquidity from a mid-March spike but also reducing those levels by the end of the quarter. Shareholders' equity up 265 billion was stable with year-end but included some offsetting factors. AOCI increased 6.5 billion, reflecting several factors, but was driven by a 4.8 billion improvement in the valuation of AFS debt securities, offsetting this increase to equity were two items. Share repurchases and common dividends up 7.9 billion exceeded our 4 billion earnings. Given the reserve build this quarter.

Good morning, everyone I'm, beginning on slide eight what the balance sheet.

Overall compared to the end of Q4 of the balance sheet expanded 186 billion.

Driven by an increase in deposits of 149 billion.

Deposit growth.

In excess of our loan growth was invested primarily in cash cash equivalents.

As Brian mentioned the team did an incredible job of not only providing our goal markets clients need liquidity from a mid March spike, but also reducing those levels by the end of the quarter.

Shareholders' equity up 265 billion was stable with year end, but included some offsetting factors.

Hey, let's see I increased 6.5 billion, reflecting several factors, but whats driven by a 4.8 billion improvement in devaluation of and fast.

Debt Securities.

Paul Donofrio: Offsetting this increase to equity were two items, share repurchases and common dividends, of $7.9 billion, which exceeded our $4 billion of earnings given the reserve build this quarter. And as a reminder, we booked a reduction in equity on 1 January by adopting CECL. Now with respect to CECL, we elected the five-year transition option made available under the Fed rule to delay any capital effects of CECL until 2022. The 1 January reserve build plus Q1's $3.6 billion build equate to a total increase in the reserve of $6.9 billion since year end. Assuming no regulatory relief, including the original relief planned for day one adoption, our CET1 ratio would be 22 basis points lower than we reported. The relief received in late March accounted for 12 of the 22 basis points.

Offsetting this increase to equity were two items, share repurchases and common dividends, of $7.9 billion, which exceeded our $4 billion of earnings given the reserve build this quarter. And as a reminder, we booked a reduction in equity on 1 January by adopting CECL. Now with respect to CECL, we elected the five-year transition option made available under the Fed rule to delay any capital effects of CECL until 2022. The 1 January reserve build plus Q1's $3.6 billion build equate to a total increase in the reserve of $6.9 billion since year end. Assuming no regulatory relief, including the original relief planned for day one adoption, our CET1 ratio would be 22 basis points lower than we reported. The relief received in late March accounted for 12 of the 22 basis points.

Offsetting this increase to equity were two items.

Share repurchases and common dividends up 7.9 billion exceeded our 4 billion earnings. Given the reserve build this quarter.

Given the reserve build this quarter.

And as a reminder, we booked a reduction in equity on January 1st by adopting Cecil. Now, with respect to Cecil, we elected to five-year transition option made available under the fed rule to delay any capital effects of Cecil until 2022. The January 1st reserve build, plus Q1 3.6 billion build equate to a total increase and the reserve a 6.9 billion since year end. Assuming no regulatory relief, including the original relief plan for day one adoption, our C21 ratio would be 22 basis points lower than we reported. The relief received in late March accounted for 12 of the 22 basis points. As you know a portion of the CET1 impact of future reserve increases or decreases during the emergency period will also be delayed until 2022. Beginning in Q1 or 2022, we will begin phasing and the 22 basis point reduction for these impacts in equal quarterly amounts through 2025.

Now with respect to see so we elected to five year transition option made available under the fed rule to delay any capital effects oxy so until 2022.

The January one reserve build.

Plus Q1 3.6 billion build.

Wait to a total increase and the reserve a 6.9 billion since year end.

Assuming no regulatory relief.

Including the original relief plan for day, one adoption.

I see tier one ratio would be 22 basis points lower than we reported.

The relief received in late March accounted for 12 of the 22 basis points. As you know a portion of the CET1 impact of future reserve increases or decreases during the emergency period will also be delayed until 2022.

Paul Donofrio: As you know, a portion of the CET1 impact of future reserve increases or decreases during the emergency period will also be delayed until 2022. Beginning in Q1 of 2022, we will begin phasing in the 22 basis point reduction for these impacts in equal quarterly amounts through 2025. With respect to our CET1, our CET1 standardized ratio declined 40 basis points to 10.8%, driven by a $70 billion increase in RWA. Increases in counterparty risk in global markets and increased loan revolver draws in global banking drove the RWA increase. Lastly, our TLAC ratios remain comfortably above our requirement. Given the time constraints and Brian's points earlier on ending deposits, I will skip the discussion on average deposits on slide 8 and move to slide 9. Earlier Brian also discussed our loan growth near the end of the quarter, which was driven by revolver draws.

As you know, a portion of the CET1 impact of future reserve increases or decreases during the emergency period will also be delayed until 2022. Beginning in Q1 of 2022, we will begin phasing in the 22 basis point reduction for these impacts in equal quarterly amounts through 2025. With respect to our CET1, our CET1 standardized ratio declined 40 basis points to 10.8%, driven by a $70 billion increase in RWA. Increases in counterparty risk in global markets and increased loan revolver draws in global banking drove the RWA increase. Lastly, our TLAC ratios remain comfortably above our requirement. Given the time constraints and Brian's points earlier on ending deposits, I will skip the discussion on average deposits on slide 8 and move to slide 9. Earlier Brian also discussed our loan growth near the end of the quarter, which was driven by revolver draws.

As you know a portion of the see Q1 impact.

Our future reserve increases or decreases during the emergency period, well also be delayed until 2022.

Beginning in Q1 or 2022, we will begin phasing and the 22 basis point reduction for these impacts in equal quarterly amounts through 2025.

With respect to our CET1, the CET1 standardized ratio declined 40 basis points to 10.8% driven by a 70 billion increase in RWA. Increases and counterparty risk and global market and increased loan revolver draws and global banking drove the Arterberry increase.

Increases and counterparty risk and global market and increased loan revolver draws and global banking drove the Arterberry increase.

Lastly, RT lack ratios remain comfortably above our requirement. Given the time constraints and Brian's points earlier on ending deposits, I will skip the discussion on average deposits on slide eight and move to slide nine. Earlier, Brian also discussed our loan growth near the end of the quarter, which was driven by revolver draws. Some of that growth affected the growth of average loans presented on slide 10. Q2 should further reflect this late quarter growth.

Given the time constraints and Bryan's point earlier on ending deposit I will skip the discussion on average deposits on slide eight and move to slide nine.

Earlier, Brian also discussed our loan growth.

Near the end of the quarter, which was driven by revolver draws some of that growth affected the growth of average loans presented on slide 10.

Paul Donofrio: Some of that growth affected the growth of average loans presented on slide 10. Q2 should further reflect this late quarter growth. Year over year average growth has been consistently in the mid single digit range, and early Q1 trends were similar to that. Note the significant increases across consumer and GWIM, which was driven by residential mortgage. Given continued low interest rates this quarter, we originated $19 billion in first mortgage loans, retaining 94% on our books. We continue to see good follow through on a large pipeline, but apps are down in the past couple of weeks. I would also note credit card balances. Average credit card loans were down a bit more than the typical seasonality given the drop off in consumer spending late in the quarter, while customer payment rates continued at a fairly steady pace.

Some of that growth affected the growth of average loans presented on slide 10. Q2 should further reflect this late quarter growth. Year over year average growth has been consistently in the mid single digit range, and early Q1 trends were similar to that. Note the significant increases across consumer and GWIM, which was driven by residential mortgage. Given continued low interest rates this quarter, we originated $19 billion in first mortgage loans, retaining 94% on our books. We continue to see good follow through on a large pipeline, but apps are down in the past couple of weeks. I would also note credit card balances. Average credit card loans were down a bit more than the typical seasonality given the drop off in consumer spending late in the quarter, while customer payment rates continued at a fairly steady pace.

Q2 should further reflect this late quarter grow.

Year over year average growth has been consistently in the mid single-digit range and early Q1 trends were similar to that. Note the significant increases across consumer and GM, which was driven by residential mortgage given continued low-interest rates. This quarter, we originated 19 billion in first mortgage loans retaining 94% on our books. We continue to see good follow through on a large pipeline, but apps are down in the past couple of weeks.

Q1 trends were similar to that.

No the significant increases across consumer and GE, well, which was driven by residential mortgage given continued low interest rates.

This quarter, we originated 19 billion and first mortgage loans retaining 94% on our books.

We continue to see good follow through on <unk> on a large pipeline, but apps are down in the past couple of weeks.

I would also note credit card balances. Average credit card loans were down a bit more than the typical seasonality given the drop-off and consumer spending late in the quarter while customer payment rate continued at a fairly steady pace. Given the significant drop and card spending, we expect card balances to decline further in Q2.

Average credit card loans were down a bit more than the typical seasonality given the drop off and consumer spending late in the core while customer payment rate continued at a fairly steady pace.

Paul Donofrio: Given the significant drop in card spending, we expect card balances to decline further in Q2. Okay, turning to slide 11 and net interest income on a GAAP, non-FTE basis. NII in Q1 was $12.1 billion, $12.3 billion on an FTE basis and was relatively flat compared to Q4. One less day of interest and lower asset yields driven by lower rates negatively impacted NII this quarter. Two primary things offset these negative impacts. First, we saw good loan and deposit growth. Second, lower rates reduced the cost of our long-term debt and improved our funding costs in global markets. The lower rates also allowed us to price our deposits more efficiently in wealth management and global banking.

Given the significant drop in card spending, we expect card balances to decline further in Q2. Okay, turning to slide 11 and net interest income on a GAAP, non-FTE basis. NII in Q1 was $12.1 billion, $12.3 billion on an FTE basis and was relatively flat compared to Q4. One less day of interest and lower asset yields driven by lower rates negatively impacted NII this quarter. Two primary things offset these negative impacts. First, we saw good loan and deposit growth. Second, lower rates reduced the cost of our long-term debt and improved our funding costs in global markets. The lower rates also allowed us to price our deposits more efficiently in wealth management and global banking.

Given the significant drop and card spending we expect card balances to decline further in Q2.

Okay, turning to slide 11, and net interest income. On a GAAP non FTE basis, NII was 12.1 billion, 12.3 billion on an FTE basis, and was relatively flat compared to Q4 '19. One less day of interest and lower asset yield driven by lower rates negatively impacted kind of high this quarter. Two primary things offset the negative impacts. First, we saw good loan and deposit growth. Second, lower rates reduced the cost of our long term debt and improved our funding costs in global markets. The lower rates also allowed us to price our deposits for efficiently and wealth management and global banking.

On a GAAP non ft basis, and I in Q1 was 12.1 billion.

12.3 billion on an F T basis, and was relatively flat compared to Q4 19.

One less day of interest and lower asset yield driven by lower rates negatively impacted kind of high this quarter.

Two primary things offset the negative impacts first we saw good loan and deposit growth second lower rates reduced the cost of our long term debt and improved our funding costs in global markets.

The lower rates also allowed us to price our deposits for efficiently and wealth management and global banking.

Paul Donofrio: Before I discuss our forward view of NII, I want to emphasize that future NII results will be influenced by interest rates as well as loan and deposit balances, which will likely be highly influenced by the virus's impact on the economy. Both of these drivers have been volatile and may continue to be. In terms of the forward guidance, as you know, interest rates dropped significantly over the past 90 days on the short end, one-month LIBOR, which impacts variable rate loan pricing, as well as longer-term rates, which impact mortgage- and mortgage-related assets, have both dropped nearly 80 basis points on a spot basis. As you think about our NII for the rest of the year, I would point you to the asset sensitivity disclosure for our banking book at 31 December before we experienced these rate declines.

Before I discuss our forward view of NII, I want to emphasize that future NII results will be influenced by interest rates as well as loan and deposit balances, which will likely be highly influenced by the virus's impact on the economy. Both of these drivers have been volatile and may continue to be. In terms of the forward guidance, as you know, interest rates dropped significantly over the past 90 days on the short end, one-month LIBOR, which impacts variable rate loan pricing, as well as longer-term rates, which impact mortgage- and mortgage-related assets, have both dropped nearly 80 basis points on a spot basis. As you think about our NII for the rest of the year, I would point you to the asset sensitivity disclosure for our banking book at 31 December before we experienced these rate declines.

Before I discuss our forward view of NII, I want to emphasize that future NII results will be influenced by interest rates, as well as loan and deposit balances, which will likely be highly influenced by the virus's impact on the economy. Both of these drivers have been volatile and may continue to be. In terms of the forward guidance, as you know, interest rates dropped significantly over the past 90 days.

I want to emphasize that future <unk> and <unk> results will be influenced by interest rates.

As well as loan and deposit balances, which will likely be highly influenced by the virus impact on the economy.

Both of these drivers have been volatile and may continue to be.

In terms of the forward guidance as you know interest rates dropped significantly over the past 90 days.

On the short end, one month LIBOR, which impacted variable rate loan pricing. As well as longer-term rates, which impact mortgage and mortgage-related assets. Have both dropped nearly 80 basis points on a spot basis.

Well as longer term rates, which impac mortgage and mortgage related assets.

Having both dropped.

Nearly 80 basis points on a spot basis.

As you think about our NII for the rest of the year, I would point you to the asset sensitivity disclosure for our banking book at 12 31 before we experienced these rate declines. Banking book sensitivity from an instantaneous parallel drop of 100 basis points and rate at that time was estimated to reduce NNI by 6.5 billion over the following 12 months. Since these rates moved less than 100 basis points, the change in NII over the next 12 months is likely to be less than 6.5 billion.

At 12 31.

For we experienced these rate declines.

Paul Donofrio: Banking book sensitivity from an instantaneous parallel drop of 100 basis points in rate at that time was estimated to reduce NII by $6.5 billion over the following 12 months. Since these rates moved less than 100 basis points, the change in NII over the next 12 months is likely to be less than $6.5 billion. I would also note some additional items to consider that are expected to mitigate some of that decline. First, we have grown both loans and deposits significantly more than what would have been assumed in that asset sensitivity at year end. Second, our deposit pricing actions have been pretty swift. And last, the asset sensitivity of the banking book does not include the benefits to NII of the trading book, which is a little liability sensitive.

Banking book sensitivity from an instantaneous parallel drop of 100 basis points in rate at that time was estimated to reduce NII by $6.5 billion over the following 12 months. Since these rates moved less than 100 basis points, the change in NII over the next 12 months is likely to be less than $6.5 billion. I would also note some additional items to consider that are expected to mitigate some of that decline. First, we have grown both loans and deposits significantly more than what would have been assumed in that asset sensitivity at year end. Second, our deposit pricing actions have been pretty swift. And last, the asset sensitivity of the banking book does not include the benefits to NII of the trading book, which is a little liability sensitive.

Banking book sensitivity from an instantaneous parallel drop of 100 basis points and rate at that time.

Was estimated to reduce Eni by 6.5 billion over the following 12 month.

Since these rates moved less than 100 basis points the change in <unk> over the next 12 months is likely to be less than 6.5 billion.

I would also note some additional items to consider that are expected to mitigate some of that decline. First, we have grown both loan to deposit significantly more than what would have been assumed in that asset sensitivity at year-end. Second, our deposit pricing actions have been pretty swift. And lastly, the asset sensitivity of the banking book does not include the benefits to NII of the trading book, which is a little liability sensitive.

Some additional items to consider that are expected to mitigate some of that decline.

First we have grown both loan to deposit significantly more than what would have been assumed in that asset sensitivity around.

Second our deposit pricing actions have been pretty swift.

And lastly, the asset sensitivity of the banking book does not include the benefits to and <unk> of the trading book, which is a little liability sensitive.

Paul Donofrio: With that said, we would expect the largest decline in NII over the balance of 2020 to impact Q2 as the bulk of the repricing of our variable rate loans should happen fairly quickly. Considering all these factors, particularly the virus impact on the economy and interest rates, we believe NII could approach $11 billion in Q2 and then begin to stabilize with loan and deposit growth, mitigating the negative impacts of longer term asset repricing. Turning to Slide 12 and expenses at $13.5 billion this quarter, expenses were up 2%. They were 2% higher than Q1 2019 as increased investments throughout 2019 in people, real estate, and technology initiatives were partially offset by savings from operational excellence initiatives. Compared to Q4 2019, expenses increased roughly $250 million, reflecting nearly $400 million in seasonally elevated payroll tax expense.

With that said, we would expect the largest decline in NII over the balance of 2020 to impact Q2 as the bulk of the repricing of our variable rate loans should happen fairly quickly. Considering all these factors, particularly the virus impact on the economy and interest rates, we believe NII could approach $11 billion in Q2 and then begin to stabilize with loan and deposit growth, mitigating the negative impacts of longer term asset repricing. Turning to Slide 12 and expenses at $13.5 billion this quarter, expenses were up 2%. They were 2% higher than Q1 2019 as increased investments throughout 2019 in people, real estate, and technology initiatives were partially offset by savings from operational excellence initiatives. Compared to Q4 2019, expenses increased roughly $250 million, reflecting nearly $400 million in seasonally elevated payroll tax expense.

With that said, we would expect the largest decline in NII over the balance of 2020 to impact Q2. As the bulk of the repricing of our variable rate loans should happen fairly quickly. Considering all these factors, particularly the virus' impact on the economy and interest rates, we believe NII could approach 11 billion in Q2. And then begin to stabilize with loan and deposit growth mitigating the negative impacts of longer-term asset repricing.

That's the bulk of the repricing of our variable rate loans should happen fairly quickly.

Considering all these factors.

Particularly the virus impact on the economy and interest rates.

We believe and I could approach 11 billion in Q2.

And then begin to stabilize with loan and deposit growth mitigating the negative impact of longer term asset repricing.

Turning to slide 12 and expenses. At 13.5 billion this quarter expenses were up 2%. They were 2% higher than Q1 19 as increased investments throughout 2019 in people, real estate and technology initiatives were partially offset by savings from operational excellence initiatives. Compared to Q4, 19 expenses increased roughly 250 million, reflecting nearly 400 million in seasonally elevated payroll tax expense.

Were 2% higher than Q1 19 as increased investments throughout 2019 and people real estate and technology initiatives were partially offset by savings from operational.

Excellent initiatives.

Compared to Q4, 19 expense increased roughly 250 million, reflecting nearly 400 million and seasonally elevated payroll tax expense.

Paul Donofrio: With respect to our outlook, we are still assessing the impacts, both positive and negative, that the virus has had on the company's expenses and as such are not in a position to provide any updates to our previous expectation that expense would be in the mid-$53 billion range this year. As a reminder, that mid-$53 billion number was before considering the dissolution of our BAMs, JEV, and surrounding actions. With respect to impacts of the pandemic, on the one hand, there are many costs that decline, such as travel, meeting costs, lodging, conferences, and lower power costs for unused facilities. Incentives will align with financial performance and market levels. But on the other hand, as you heard Brian mention earlier, there are costs associated with protecting, supporting, and rewarding our employees during this health crisis, including suspending headcount reductions related to COVID for the rest of 2020.

With respect to our outlook, we are still assessing the impacts, both positive and negative, that the virus has had on the company's expenses and as such are not in a position to provide any updates to our previous expectation that expense would be in the mid-$53 billion range this year. As a reminder, that mid-$53 billion number was before considering the dissolution of our BAMs, JEV, and surrounding actions. With respect to impacts of the pandemic, on the one hand, there are many costs that decline, such as travel, meeting costs, lodging, conferences, and lower power costs for unused facilities. Incentives will align with financial performance and market levels. But on the other hand, as you heard Brian mention earlier, there are costs associated with protecting, supporting, and rewarding our employees during this health crisis, including suspending headcount reductions related to COVID for the rest of 2020.

With respect to our outlook. We are still assessing the impacts both positive and negative that the virus has had on the company's expenses. And as such, I'm not in a position to provide any updates to our previous expectation that expense would be in the mid 53 billion dollar range this year. As a reminder, that mid 53 billion number was before considering the dissolution of our BAMS JV and surrounding actions.

We are still assessing the impact both positive and negative that the virus has had on the company's expenses.

And as such our not in a position to provide any updates to our previous expectation that expense would be in the mid 53 billion dollar range. This year as a reminder, that mid 53 billion number what before considering the dissolution of our BAMS JV and surrounding.

Actions.

With respect to the impacts of the pandemic. On the one hand, there are many costs that the clients such as travel, meeting cost lodging conferences and lower power costs for unused facilities. Incentives well aligned with financial performance and market level. But on the other hand, as you heard Brian mentioned earlier, there are costs associated with protecting, supporting and rewarding our employees during this health crisis, including suspending headcount reductions related to COVID for the rest of 2020. We also have costs from the setup operation and cleaning of backup facilities for trading and other activities. This would include the cost of computers and other supplies and expenses to reposition 150,000 associates to work from home.

On the one hand, there are many cost that the clients such as travel meeting cost lodging conferences.

Lower power costs for unused facility.

And Santa's, well aligned with financial performance and market level.

But on the other hand as you heard Brian mentioned earlier, there are costs associated with protecting supporting and rewarding our employees during this health crisis, including spending.

Spending head count reductions.

Related to co bid for the rest of Twentytwenty.

Paul Donofrio: We also have costs from the setup, operation, and cleaning of backup facilities for trading and other activities. This would include the cost of computers and other supplies and expenses to reposition 150,000 associates to work from home. Okay, turning to asset quality on slide 13, our underwriting standards have been responsible for and strong for years now, and we expect this strength to differentiate us as we advance through this health crisis. For years now we have been focused on client selection and getting paid appropriately for the risk we take. As you all know, what really impacts banks in a recession is not the loans put on your books during stress, but rather the quality of your portfolio booked during the years leading up to stress.

We also have costs from the setup, operation, and cleaning of backup facilities for trading and other activities. This would include the cost of computers and other supplies and expenses to reposition 150,000 associates to work from home. Okay, turning to asset quality on slide 13, our underwriting standards have been responsible for and strong for years now, and we expect this strength to differentiate us as we advance through this health crisis. For years now we have been focused on client selection and getting paid appropriately for the risk we take. As you all know, what really impacts banks in a recession is not the loans put on your books during stress, but rather the quality of your portfolio booked during the years leading up to stress.

We also have cost from the set up operation and cleaning backup facilities for trading and other activities.

This would include the cost of computers and other supplies and expenses to reposition 150000 associates to work from home.

Okay, turning to asset quality on slide 13. Our underwriting standards have been responsible and strong for years now. And we expect the strength to differentiate us as we advance through this health crisis. For years now, we had been focused on client selection and getting paid appropriately for the risk we take. As you all know, what really impacts banks in a recession is not the loans put on your books during stress. But rather the quality of your portfolio booked during the years leading up to stress. One independent indicator of the relative quality of our balance sheet is the federal reserves annual CCAR stress test. Our net charge off ratio under those stress tests has been lower than peers in six of the last seven years. And our consistent focus on asset quality has been reflected in our results for many years now. Adjusted for the recoveries of loan sales in some periods described before we have reported net charge off between $901 billion for many quarters.

Our underwriting standards have been responsible and strong for years now.

And we expect the strength.

To differentiate us.

As we advance through this health crisis.

For years now we had been focused on client selection and getting paid appropriately for the risk we take.

As you all know what really impacts banks in a recession is not the loans put on your books during stress.

But rather the quality of your portfolio booked during the years, leading up to stress.

Paul Donofrio: One independent indicator of the relative quality of our balance sheet is the Federal Reserve's annual CCAR stress test. Our net charge-off ratio under those stress tests has been lower than peers in six of the last seven years, and our consistent focus on asset quality has been reflected in our results for many years now, adjusted for the recoveries of loan sales in some periods. As described before, we have reported net charge-offs between $901 billion for many quarters. Total net charge-offs this quarter were $1.1 billion or 46 basis points of average loans. Net charge-offs rose $163 million from Q4, driven by commercial losses, with the largest contribution coming from energy exposure. We saw a small seasonal increase in card losses. Provision expense was $4.8 billion.

One independent indicator of the relative quality of our balance sheet is the Federal Reserve's annual CCAR stress test. Our net charge-off ratio under those stress tests has been lower than peers in six of the last seven years, and our consistent focus on asset quality has been reflected in our results for many years now, adjusted for the recoveries of loan sales in some periods. As described before, we have reported net charge-offs between $901 billion for many quarters. Total net charge-offs this quarter were $1.1 billion or 46 basis points of average loans. Net charge-offs rose $163 million from Q4, driven by commercial losses, with the largest contribution coming from energy exposure. We saw a small seasonal increase in card losses. Provision expense was $4.8 billion.

One independent indicator.

The relative quality of our balance sheet, the federal reserves annual see CCAR stress test.

Our net charge off ratio under those stress test has been lower than peers and six of the last seven years.

And our consistent focus on asset quality has been reflected in our results for many years now.

Adjusted for the recoveries of loan sales in some parents that described before we have reported net charge off between $901 billion for many quarters.

Total net charge off this quarter for 1.1 billion or 46 basis points of average loans. Net charge off rose 163 million from Q4, driven by commercial larger losses with the largest contribution coming from energy exposure. We saw a small seasonal increase in card losses. The provision expense was 4.8 billion. Our reserve build up 3.6 billion reflects the expected increase in life of loan losses, given the weaker current and expected economic conditions as a result of the virus.

Net charge off rose 163 million from Q4, driven by commercial larger losses with the largest contribution coming from energy exposure.

We saw small seasonal increase and card losses.

Provision expense was 4.8 billion.

Paul Donofrio: Our reserve build of $3.6 billion reflects the expected increase in life-of-loan losses given the weaker current and expected economic conditions as a result of the virus. On slide 14 we break out the credit quality metrics for both consumer and commercial portfolios. Q1 is too early to see any significant effects of COVID on net charge-offs. However, there were a couple of leading indicators of deteriorating asset quality in our commercial portfolio due to the virus. As both NPLs and reservable criticized exposures increased. On the consumer front, COVID's effect on asset quality were less observable. This is likely due to deferral offers extended to consumer borrowers. Moving forward, we believe deferrals coupled with government stimulus for individuals and small businesses should aid in minimizing future losses.

Our reserve build of $3.6 billion reflects the expected increase in life-of-loan losses given the weaker current and expected economic conditions as a result of the virus. On slide 14 we break out the credit quality metrics for both consumer and commercial portfolios. Q1 is too early to see any significant effects of COVID on net charge-offs. However, there were a couple of leading indicators of deteriorating asset quality in our commercial portfolio due to the virus. As both NPLs and reservable criticized exposures increased. On the consumer front, COVID's effect on asset quality were less observable. This is likely due to deferral offers extended to consumer borrowers. Moving forward, we believe deferrals coupled with government stimulus for individuals and small businesses should aid in minimizing future losses.

Our reserve build up 3.6 billion reflects the expected increase and life of loan losses, given the weaker current and expected economic conditions as a result of the virus.

On slide 14, we break up the credit quality metrics for both consumer and commercial portfolio. Q1 is too early to see any significant effects of COVID on net charge offs. However, there were a couple of leading indicators of deteriorated asset quality in our commercial portfolio due to the virus as both NPLs and reservable criticized exposures increased. On the consumer front, the COVID effect on assets quality was less observable. This is likely due to deferral offers extended to consumer borrower.

However, there were a couple of leading indicator of the Terry and asset quality and our commercial portfolio due to the virus has both npls and Reservable criticized exposure increased.

On the consumer front.

This is likely due to deferral offers extended to consumer borrower.

Moving forward, we believe deferrals, coupled with the government stimulus for individuals and small businesses should aid in minimizing future losses. Having said that, gven the rising unemployment claims we do expect consumer losses to increase later this year and potentially into 2021.

Paul Donofrio: Having said that, given the rise in unemployment claims, we do expect consumer losses to increase later this year and potentially into 2021. Turning to Slide 15, this table provides a full picture of our allowance increase since 31 December 2019, including the 1 January 2020 implementation of CECL as well as this quarter's build given the worsening economic conditions. As you can see, our allowance, including reserves for unfunded commitments, was $10.2 billion at year-end and now stands at $17.1 billion. That is nearly a $7 billion increase or 67% since year-end. Note that we ended Q1 with an allowance to loans and leases of 1.51%. I would also note the increase in the coverage ratio for credit card increased to 8.25% and the coverage ratios for US commercial and commercial real estate increased to 1.1% and 2.16% respectively.

Having said that, given the rise in unemployment claims, we do expect consumer losses to increase later this year and potentially into 2021. Turning to Slide 15, this table provides a full picture of our allowance increase since 31 December 2019, including the 1 January 2020 implementation of CECL as well as this quarter's build given the worsening economic conditions. As you can see, our allowance, including reserves for unfunded commitments, was $10.2 billion at year-end and now stands at $17.1 billion. That is nearly a $7 billion increase or 67% since year-end. Note that we ended Q1 with an allowance to loans and leases of 1.51%. I would also note the increase in the coverage ratio for credit card increased to 8.25% and the coverage ratios for US commercial and commercial real estate increased to 1.1% and 2.16% respectively.

Given the rising unemployment claims we do expect consumer losses to increase later this year and potentially into 2021.

Turning to slide 15. This table provides a full picture of our allowance increased since 12, 31 '19. Including the 1120 implementation of Cecil. As well as this quarter's build given the worsening economic conditions. As you can see our allowance, including reserve for unfunded commitments was 10.2 billion at year-end and now stands at 17.1 billion. That is nearly a 7 billion increase or 67% since year-end. Note that we ended Q1 with an allowance to loan and leases of 1.51%. I would also note the increase in the coverage ratio for credit card increased to 8.25%. And the coverage ratios for U.S. commercial and commercial real estate increased to 1.11% and 2.16% respectively. These ratios reflect our underwriting standards over the past 10 years as well as our loan mix with a large concentration of secured consumer loans.

This table provides a full picture of our allowance increased since.

12, 31 19.

Including the one 120 implementation of Cecil.

As well as this quarter's build given the worsening economic conditions.

You can see our allowance, including reserve for unfunded commitments was 10.2 billion at year end and now stands at 17.1 billion.

That is nearly 7 billion increase.

Or 67% since yearend.

Note that we ended Q1 with an allowance to loan and leases of 1.51% I would also note the increase in the coverage ratio for credit card increased to 8.25%.

And the coverage ratios for U.S. commercial and commercial real estate increased to 1.11% and 2.16% respectively.

Paul Donofrio: These ratios reflect our underwriting standards over the past 10 years as well as our loan mix with a large concentration of secured consumer loans. We sized the increase to our allowance in the quarter by weighting a number of different scenarios, all of which assumed a recession of various depth and longevity, including an assumption of some tail risk similar to what is in the severely adverse scenarios. A weighting of these scenarios produced a recessionary outlook, which includes a marked drop in GDP in Q2. Growth recovered slowly from there, with negative growth rates in GDP extending well into 2021. Obviously there are many unknowns, including how government fiscal and monetary actions will impact the outcome, and how our own deferral programs will impact losses. But perhaps the biggest unknown is how long how long economic activity and conditions will be significantly impacted by the virus.

These ratios reflect our underwriting standards over the past 10 years as well as our loan mix with a large concentration of secured consumer loans. We sized the increase to our allowance in the quarter by weighting a number of different scenarios, all of which assumed a recession of various depth and longevity, including an assumption of some tail risk similar to what is in the severely adverse scenarios. A weighting of these scenarios produced a recessionary outlook, which includes a marked drop in GDP in Q2. Growth recovered slowly from there, with negative growth rates in GDP extending well into 2021. Obviously there are many unknowns, including how government fiscal and monetary actions will impact the outcome, and how our own deferral programs will impact losses. But perhaps the biggest unknown is how long how long economic activity and conditions will be significantly impacted by the virus.

These ratios reflect our underwriting standards over the past 10 years as well as our loan mix.

With a large concentration of secured consumer loans.

We sized the increase to our allowance in the quarter by waiting a number of different scenarios. All of which assumed a recession of various depth and longevity, including an assumption of some tail risk similar to what is in the severely adverse scenarios. A weighting of these scenarios produced a recessionary outlook. Which include a marked drop in GDP in Q2. Growth recoveries slowly from there with a negative growth right in GDP extending well into 2021. Obviously, there are many unknowns, including how government fiscal and monetary actions will impact the outcome and how our own deferral problems will impact losses. Or perhaps the biggest unknown is how long economic activity and conditions will be significantly impacted by the virus.

All of which assumed a recession of various depth and longevity, including an assumption some tail risk similar to what is in the severely adverse scenarios.

Awaiting of these scenarios produced a recessionary outlook.

Which include a marked drop in GDP in Q2.

Gross recoveries slowly from there with a negative growth right in GDP, extending well into 2021.

Obviously, there are many unknowns, including how government fiscal and monetary actions will impact the outcome and how our own deferral problems will impact losses. Or perhaps the biggest unknown is how long economic activity and conditions will be significantly impacted by the virus.

Or perhaps the biggest unknown is how long how long economic activity and conditions will be significantly impacted by the virus.

Paul Donofrio: Okay, turning to the business segments and starting with consumer banking on slide 16, consumer banking earned $1.8 billion. Results were impacted by COVID-19 through lower rates, higher provision expense, and modest fee reductions. As you know, banking is considered an essential service, and across the country we have kept more than 75% of our financial centers opened. In addition, we've added personnel to service calls and manage digital interactions not only with respect to existing products and services, but also on small business applications to the Paycheck Protection Program. Many of these additional personnel are working from home. While net income declined 45% from Q1 2019, it's worth noting that pre-tax pre-provision income declined 12%. Revenue declined, driven by lower interest rates as well as the impact of COVID-19.

Okay, turning to the business segments and starting with consumer banking on slide 16, consumer banking earned $1.8 billion. Results were impacted by COVID-19 through lower rates, higher provision expense, and modest fee reductions. As you know, banking is considered an essential service, and across the country we have kept more than 75% of our financial centers opened. In addition, we've added personnel to service calls and manage digital interactions not only with respect to existing products and services, but also on small business applications to the Paycheck Protection Program. Many of these additional personnel are working from home. While net income declined 45% from Q1 2019, it's worth noting that pre-tax pre-provision income declined 12%. Revenue declined, driven by lower interest rates as well as the impact of COVID-19.

Okay, turning to the business segments, starting with consumer banking on slide 16. Consumer banking on 1.8 billion. Results were impacted by COVID-19 for lower rates, higher provision expense and modest fee reductions. As you know, banking is considered in the central service and across the country we have kept more than 75% of our financial centers opened. In addition, we've added personnel to surface call demand digital interaction not only with respect to existing products and services but also on small business applications to a paycheck protection program. Many of this additional personnel are working from home.

Results were impacted by corporate 19th lower rates higher provision expense and modest fee reductions as you know banking is considered in the central service and across the country. We have kept more than 75% of our financial centers opened. In addition, we've added personnel to surface call demand digital interaction not only with respect to existing products and services.

But also on small business applications to a paycheck to paycheck protection program.

Many of these additional personnel are working from home.

Well, net income declined 45% from Q1 '19, it's worth noting that pretax pre-provision income declined 12%. Revenue decline was driven by lower interest rates as well as the impact of COVID-19. Aside from the higher provision cost, consumer fees also reflected modestly lower consumer spending and fee waivers beginning late in the quarter. We continued to invest in the franchise driving expenses up 3% year over year. We added new and renovate financial centers, salespeople and increased minimum wages. Plus the additional associates added to service calls I just mentioned.

Paul Donofrio: Aside from the higher provision costs, consumer fees also reflected modestly lower consumer spending and fee waivers. Beginning late in the quarter, we continued to invest in the franchise, driving expenses up 3% year over year. We added new and renovated financial centers, salespeople, and increased minimum wages, plus the additional associates added to service calls I just mentioned. The expense from these investments continued to be mitigated by process improvements, digitalization, and technology improvements. Investments supported continued growth in loans as well as deposits. As a result, our cost of deposits declined to 150 basis points. Client momentum continued as we saw average deposits increase $40 billion from Q1 2019. Average loans increased 8% and we continued to add consumer investment accounts, and saw solid flows into our Merrill Edge platform. Let's skip slide 18 as I think I covered much of the Trends on slide 17 already.

Aside from the higher provision costs, consumer fees also reflected modestly lower consumer spending and fee waivers. Beginning late in the quarter, we continued to invest in the franchise, driving expenses up 3% year over year. We added new and renovated financial centers, salespeople, and increased minimum wages, plus the additional associates added to service calls I just mentioned. The expense from these investments continued to be mitigated by process improvements, digitalization, and technology improvements.

Aside from the higher provision cost consumer fees also reflected modestly lower consumer spending and fee waivers beginning late in the quarter.

We continue to invest in the franchise driving expenses up 3% year over year, we added new and renovate a financial center salespeople and increased minimum wages.

Plus the additional Celsius added to service calls I just mentioned.

The expense from these investments continued to be mitigated by process improvements, digitalization and technology improvements. That's meant a supported continued growth in London as well as deposits. As a result, our cost of deposits declined to 150 basis points. Climb momentum continued asked me sought average deposits increased 40 billion from Q1, '19. Average loans increased 8% and we continued to add consumer investment accounts and saw solid flows into our Merrill Edge platform.

Investments supported continued growth in loans as well as deposits. As a result, our cost of deposits declined to 150 basis points. Client momentum continued as we saw average deposits increase $40 billion from Q1 2019. Average loans increased 8% and we continued to add consumer investment accounts, and saw solid flows into our Merrill Edge platform. Let's skip slide 18 as I think I covered much of the Trends on slide 17 already.

That's meant a supported continued growth in London as well as positive.

As a result, our cost of deposits declined to 150 basis points.

Climb momentum continued asked me sought average deposits increased 40 billion from Q1, 19 average loans increased 8% and we continued to add consumer investment account.

And saw solid flows into our Merrill edge platform.

Let's skip slide 18, as I think I covered much of the trend on slide 17 already. The ability of our customers to connect to digital banking has never been more important. As you can see on slide 18, all aspects of digital engagements continued to increase with one-third of sales now process with digital channels and as you heard that and as you heard. That moved higher in the last few weeks of the quarter. We learned a lot from our digital auto and mortgage experiences and what we learned enabled us to quickly launch a digital pathway for our small businesses to apply for loans and the Paycheck protection program.

Paul Donofrio: The ability of our customers to connect through digital banking has never been more important. As you can see on slide 18, all aspects of digital engagements continued to increase with 1/3 of sales now processed through digital channels, and as you heard that moved higher in the last few weeks of the quarter. We learned a lot from our digital auto and mortgage experiences, and what we learned enabled us to quickly launch a digital pathway for our small businesses to apply for loans in the Paycheck Protection Program. Turning to global wealth and investment management on slide 19, here again we saw lower rates, and COVID-19-related credit costs impact an otherwise solid quarter. Note the impact of lower market levels in March.

The ability of our customers to connect through digital banking has never been more important. As you can see on slide 18, all aspects of digital engagements continued to increase with 1/3 of sales now processed through digital channels, and as you heard that moved higher in the last few weeks of the quarter. We learned a lot from our digital auto and mortgage experiences, and what we learned enabled us to quickly launch a digital pathway for our small businesses to apply for loans in the Paycheck Protection Program. Turning to global wealth and investment management on slide 19, here again we saw lower rates, and COVID-19-related credit costs impact an otherwise solid quarter. Note the impact of lower market levels in March.

[noise] the ability of our customers to connect to digital banking has never been more important as you can see on slide 18, all aspects of digital engagements continued to increase with one third of sales now process with digital channels and as you heard that and as you heard.

That moved higher in the last few weeks of the quarter.

We learned a lot from our digital auto and mortgage experiences and what we learned enabled us to quickly launch a digital pathway for our small businesses to apply for loans and the Paycheck protection program.

To apply for loans and the Paycheck protection program.

Turning to global wealth and investment management on slide 19. Here again, we saw lower rates and COVID-19 related credit cost impact and an otherwise solid quarter. Note the impact of lower market levels in March. Those impacts did not impact Q1 AUM fees. As of March, fees were calculated based upon market levels at the end of February. Merrill Lynch and the private bank both continues to grow clients as well as remain a provider of choice for affluent clients. Net income of 866 million was down 17% from Q1 '19, but here again, pretax pre-provision income was down a more modest 4%.

Turning to <unk> to global wealth and investment management on slide 19.

[noise] here again, we saw lower rates and Coburn 19 related credit cost impact and otherwise solid quarter.

No the impact of lower market levels in March.

Paul Donofrio: Those impacts did not impact Q1 AUM fees as March fees were calculated based upon market levels at the end of February. Merrill Lynch and the private bank both continue to grow clients as well as remain a provider of choice for affluent clients. Net income of $866 million was down 17% from Q1 2019, but here again pre-tax pre-provision income was down a more modest 4%. Revenue grew 2% year over year as a strong increase in AUM fees and brokerage fees were partially offset by a decline in NII as a result of lower interest rates. Expenses increased from revenue-related incentives as well as investments we made in the past 12 months in sales, professionals, technology, and our brand. Okay, let's skip slide 20 and move to global banking on slide 21. The early impacts of COVID-19 were more evident in this segment.

Those impacts did not impact Q1 AUM fees as March fees were calculated based upon market levels at the end of February. Merrill Lynch and the private bank both continue to grow clients as well as remain a provider of choice for affluent clients. Net income of $866 million was down 17% from Q1 2019, but here again pre-tax pre-provision income was down a more modest 4%. Revenue grew 2% year over year as a strong increase in AUM fees and brokerage fees were partially offset by a decline in NII as a result of lower interest rates. Expenses increased from revenue-related incentives as well as investments we made in the past 12 months in sales, professionals, technology, and our brand. Okay, let's skip slide 20 and move to global banking on slide 21. The early impacts of COVID-19 were more evident in this segment.

Those impacts did not impact Q1, a when fees.

As of March fees were calculated based upon market levels at the end of February.

Merrill Lynch and the private bank both continues to grow clients as well as remain a provider of choice for affluent clients net income of 866 million was down 17% from Q1 19, but here again.

Pretax pre provision income was down a more modest 4%.

Revenue grew 2% year over year as a strong increase in AUM fes and broker fees were partially offset by a decline in NII as a result of lower interest rates. Expenses increased from revenue-related incentives as well as investments we made in the past 12 months in sales professionals, technology and our brand.

Expenses increased from revenue related incentives as well as investments we made in the past 12 month and sales professionals technology and our brand.

Okay, let's skip slide 20, and move to global banking on slide 21. The early impacts of COVID-19 were more evident than this segment. First, LIBOR fell rapidly in March impacting loan yield at the same time revolver draws didn't happen until late in the quarter. And will likely be more fully reflected in Q2 averages of all loans and NII. Lastly, COVID-related credit costs are higher in the segment as the reserve build with more heavily weighted to commercial loans. The business earned 136 million. Which included adding 1.9 billion to the allowance for credit losses. On a pretax pre-provision income basis, results declined 21% driven by lower interest rates and by roughly 450 million of net marked downs and the value of loans and underwritten commitments recorded at fair value in our capital markets books and FPL book.

The early impacts of the covert 19 work or more evident and this segment.

Paul Donofrio: First, LIBOR fell rapidly in March, impacting loan yields. At the same time, revolver draws didn't happen until late in the quarter and will likely be more fully reflected in Q2 averages of loans and NII. Lastly, COVID-19-related credit costs are higher in this segment as the reserve build was more heavily weighted to commercial loans. The business earned $136 million, which included adding $1.9 billion to the allowance for credit losses on a pre-tax, pre-provision income basis. Results declined 21% driven by lower interest rates and by roughly $450 million of net markdowns in the value of loans and underwritten commitments recorded at fair value in our capital markets books and FVO book. On the positive side, in Q1 we were able to improve our investment banking revenue and market share.

First, LIBOR fell rapidly in March, impacting loan yields. At the same time, revolver draws didn't happen until late in the quarter and will likely be more fully reflected in Q2 averages of loans and NII. Lastly, COVID-19-related credit costs are higher in this segment as the reserve build was more heavily weighted to commercial loans. The business earned $136 million, which included adding $1.9 billion to the allowance for credit losses on a pre-tax, pre-provision income basis. Results declined 21% driven by lower interest rates and by roughly $450 million of net markdowns in the value of loans and underwritten commitments recorded at fair value in our capital markets books and FVO book. On the positive side, in Q1 we were able to improve our investment banking revenue and market share.

First [laughter] lieberthal rapidly in March impacting loan yield at the same time revolver draws didn't happen until late in the quarter.

Will likely be more fully reflected in Q2 averages of all loans and and I.

Lastly, covert related credit costs are higher in the segment as the reserve build with more heavily weighted to commercial loans.

The business earned 136 million. Which included adding 1.9 billion to the allowance for credit losses. On a pretax pre-provision income basis, results declined 21% driven by lower interest rates and by roughly 450 million of net marked downs and the value of loans and underwritten commitments recorded at fair value in our capital markets books and FPL book.

Which included adding 1.9 billion to the allowance for credit losses.

On a pretax pre provision income basis results declined 21% driven by lower interest rates.

And by roughly.

450 million of net marked down and the value of loans and underwritten commitments recorded at fair value and our capital markets books and FPL book.

On a positive side in Q1, we were able to improve our investment banking revenue and market share we generated 1.4 billion in investment banking fees this quarter. A 10% increase year over year. Back despite a 20% year over year decline and the volume investment banking transactions across all banks. We processed 9% more transactions in Q1 than the previous year. Growth in investment banking fees, loans and deposits reflected not only what we believed to be a flight to quality and uncertain times, but also the addition of hundreds of bankers over the past few years, increasing and improving client coverage.

Paul Donofrio: We generated $1.4 billion in investment banking fees this quarter, a 10% increase year over year. In fact, despite a 20% year over year decline in the volume of investment banking transactions across all banks, we processed 9% more transactions in Q1 than the previous year. Growth in investment banking fees, loans, and deposits reflected not only what we believe to be a flight to quality in uncertain times, but also the addition of hundreds of bankers over the past few years increasing and improving client coverage. Turning to slide 22, Brian covered the most important points around loan and deposit growth. I just want to reiterate one point. We believe companies viewed us as a safe haven in this period of stress. Quarter over quarter on an end-of-period basis, deposits increased $94 billion while loans increased $58 billion.

We generated $1.4 billion in investment banking fees this quarter, a 10% increase year over year. In fact, despite a 20% year over year decline in the volume of investment banking transactions across all banks, we processed 9% more transactions in Q1 than the previous year. Growth in investment banking fees, loans, and deposits reflected not only what we believe to be a flight to quality in uncertain times, but also the addition of hundreds of bankers over the past few years increasing and improving client coverage. Turning to slide 22, Brian covered the most important points around loan and deposit growth. I just want to reiterate one point. We believe companies viewed us as a safe haven in this period of stress. Quarter over quarter on an end-of-period basis, deposits increased $94 billion while loans increased $58 billion.

10% increase year over year.

Back despite a 20% year over year decline and the volume investment banking transactions across all banks.

We processed 9% more transactions in Q1 than the previous year.

Growth in investment banking fees loans and deposits reflected not only what we believed to be a flight to quality and uncertain times, but also.

The addition of hundreds of bankers over the past few years, increasing and improving client coverage.

Turning to slide 22, Brian covered the most important points around loan and deposit growth. I just want to reiterate one point. We believe companies viewed us as a safe haven and this period of stress. Quarter over quarter on an ending basis deposits increased 94 billion, while loans increased 58 billion. Not only where are we able to capture as deposits, the bulk of the cash the customers drew on their revolvers, that wasn't used to pay down debt or for other purposes. We were also able to attract billions more an additional deposits even as we were pricing deposits lower with falling rates.

We believe companies viewed us as a safe Haven and this period of stress.

Quarter over quarter on an ending basis deposits increased 94 billion, while loans increased 58 billion or.

Paul Donofrio: Not only were we able to capture as deposits the bulk of the cash that customers drew on their revolvers that wasn't used to pay down debt or for other purposes. We were also able to attract billions more in additional deposits even as we were pricing deposits lower with falling rates. Turning to slide 23, as in consumer and GWM, our digital capabilities are more important and useful than ever, enabling clients to work from home and seamlessly manage their treasury needs. And it's no surprise that in this environment we continue to see increased use of these capabilities. Switching to Global Markets on slide 24, as I usually do, I will talk about results excluding dda. Despite the volatility experienced in the quarter, Global Markets produced $1.5 billion of earnings in Q1, a 34% increase year over year.

Not only were we able to capture as deposits the bulk of the cash that customers drew on their revolvers that wasn't used to pay down debt or for other purposes. We were also able to attract billions more in additional deposits even as we were pricing deposits lower with falling rates. Turning to slide 23, as in consumer and GWM, our digital capabilities are more important and useful than ever, enabling clients to work from home and seamlessly manage their treasury needs. And it's no surprise that in this environment we continue to see increased use of these capabilities. Switching to Global Markets on slide 24, as I usually do, I will talk about results excluding dda. Despite the volatility experienced in the quarter, Global Markets produced $1.5 billion of earnings in Q1, a 34% increase year over year.

Not only where are we able to capture as deposits the bulk of the cash the customers drew on their revolvers that wasn't used to pay down debt or for other purposes.

We were also able to attract.

Billions more an additional deposit even as we were pricing deposits lower with falling rates.

Turning to slide 23. As a consumer in view of our digital capabilities are more important and useful than ever, enabling clients to work from home and seamlessly manage their treasury needs. And it's no surprise that in this environment we continue to see increased use of these capabilities. Switching to global markets on slide 24, as I usually do. I will talk about results excluding DVA. Despite the volatility experienced in the quarter, global markets produced 1.5 billion of earnings in Q1, a 34% increase year over year.

I think consumer in view of our digital capabilities are more important and useful than ever enabling clients to work from home and seamlessly manage their treasury needs.

And it's no surprise that in this environment, we continue to see increased use of these capabilities.

Switching to global markets on slide 24, as I, usually do I will talk about results excluding Libya.

Despite.

The volatility experienced in the quarter Global markets produced 1.5 billion of earnings in Q1, a 34% increase year over year.

Paul Donofrio: Revenue was up 15% from both higher sales and trading results and improved investment banking fees. Expense was up a more modest 2% year over year on higher revenue-related costs. Within revenue, sales and trading improved 22% year over year, driven by a 39% improvement in equities and a 13% increase in FICC and a significantly higher, more volatile market environment when compared to Q1 last year. FICC revenue reflected better trading performance across macro products, offsetting weaker performance in credit-sensitive products resulting from widening credit spreads which impacted asset prices. Equity revenue of $1.7 billion was a record for the company. All right, skipping slide 25 and moving to all other on slide 26, all other reported a loss of $492 million.

Revenue was up 15% from both higher sales and trading results and improved investment banking fees. Expense was up a more modest 2% year over year on higher revenue-related costs. Within revenue, sales and trading improved 22% year over year, driven by a 39% improvement in equities and a 13% increase in FICC and a significantly higher, more volatile market environment when compared to Q1 last year. FICC revenue reflected better trading performance across macro products, offsetting weaker performance in credit-sensitive products resulting from widening credit spreads which impacted asset prices. Equity revenue of $1.7 billion was a record for the company. All right, skipping slide 25 and moving to all other on slide 26, all other reported a loss of $492 million.

Year over year revenue was up 15% from both higher sales and trading results, and improved investment banking fees. Expense was up a more modest 2% year over year on higher related revenue-related costs. Within revenue, sales and trading improved 22% year over year, driven by a 39% improvement in equities and a 13% increase in FICC. And a significantly more volatile market environment, when compared to Q1 last year. FICC revenue reflected better trading performance across macro products. Offsetting weaker performance in credit-sensitive products, resulting from widening credit spreads which impacted asset prices. Equity revenue of 1.7 billion was a record for the company.

<unk> expense was up a more modest 2% year over year on higher related revenue related costs.

[noise] within revenue sales and trading improved 22% year over year, driven by a 39% improvement in equities and 13% increase in FICC.

And a significantly more volatile market environment, when compared to Q1 last year.

FICC revenue reflected better trading performance across macro products.

Offsetting weaker performance in credit sensitive products, resulting from widening credit spreads which impacted asset prices.

Equity revenue of 1.7 billion was a record for the company.

All right, skipping to slide 25, and moving to all other on slide 26. All other reported a loss of $492 million. The loss reflects approximately $500 million for several valuation reductions, including marks on derivative positions and certain noncore securities which were impacted by wider spreads toward the end of the quarter. Our effective tax rate this quarter was 11.5%. It included the impact of a fairly normal level of tax credits from our commitment to sustainable energy products and other ESG efforts, many of which are taxed advantage. Applying this fairly normal level of tax credits against a lower pretax earnings base resulted in a lower tax rate, it's just math. For the full year, I would expect the ETR to be in a range of 14% to 15%. Okay, with that, I think we'll open it up to questions.

All other reported a loss of 492 million.

Paul Donofrio: The loss reflects approximately $500 million for several valuation reductions, including marks on derivative positions and certain non-core securities which were impacted by wider spreads toward the end of the quarter. Our effective tax rate this quarter was 11.5%. It included the impact of a fairly normal level of tax credits from our commitment to sustainable energy products and other ESG efforts, many of which are tax-advantaged. Applying this fairly normal level of tax credits against a lower pre-tax earnings base resulted in a lower tax rate. It's just math. For the full year I would expect the ETR to be in a range of 14% to 15%. Okay, with that I think we'll open it up to questions.

The loss reflects approximately $500 million for several valuation reductions, including marks on derivative positions and certain non-core securities which were impacted by wider spreads toward the end of the quarter. Our effective tax rate this quarter was 11.5%. It included the impact of a fairly normal level of tax credits from our commitment to sustainable energy products and other ESG efforts, many of which are tax-advantaged. Applying this fairly normal level of tax credits against a lower pre-tax earnings base resulted in a lower tax rate. It's just math. For the full year I would expect the ETR to be in a range of 14% to 15%. Okay, with that I think we'll open it up to questions.

The loss reflects approximately 500 million for several valuation reductions, including marks on derivative positions and certain noncore securities which were impacted by wider spreads.

Toward the end of the quarter.

Our effective tax rate this quarter was 11.5%.

It included the impact of a fairly normal level of tax credits from our commitment to sustainable energy products and other E.S.G. efforts, many of which are taxed advantage.

Applying this fairly normal level of tax credits against a lower pretax earnings base resulted in a lower tax rate, it's just math.

For the full year, I would expect the ETR to be in a range of 14% to 15%. Okay, with that, I think we'll open it up to questions.

Okay with that I think we'll open it up to questions.

If you would like to register to ask a question, please press star and one on your touchtone phone. Again that it's star and one if you would like to register to ask a question you can remember yourself from the queue at any time by pressing the pound key. We'll take our first question today from Betsy Graseck with Morgan Stanley. Please go ahead. Your line is open.

Operator: If you would like to register to ask a question, please press star n1 on your touchtone phone. Again, that is star n1. If you would like to register to ask a question, you can remove yourself from the queue at any time by pressing the pound key. We'll take our first question today from Betsy Graseck with Morgan Stanley. Please go ahead. Your line is open. Hi. Good morning. Thank you very much for all the detail and insight. In particular, your slide that talked about the percentage of folks who have been asking for deferrals is extremely interesting, as well as the detail on the reserving analysis. My question has to do with how you thought about that reserving analysis.

And your line is open [noise].

Betsy Graseck: Hi. Good morning. Thank you very much for all the detail and insight. In particular, your slide that talked about the percentage of folks who have been asking for deferrals is extremely interesting, as well as the detail on the reserving analysis. My question has to do with how you thought about that reserving analysis. You know, I know we've been through stress tests here for 10 years now, and it would just be helpful to understand how you decided to size this very significant increase in the reserve and how you think it trajects from here?

Hi. Good morning. Thank you very much for all the detail and say in particular your slide that talked about you know the percentage of folks who has been asking for deferrals. It is extremely interesting as well as to detail on the preserving analysis. My question has to do with how you thought about that reserving analysis. You know, I know we've been through stress test here for 10 years now and it would just be helpful to understand how you decided to size this very significant increase in the reserve and how you think it trajects from here.

Your slide the talked about you know the percentage of folks who has been asking for deferrals is extremely interesting as well as to.

Each on the preserving analysis.

My question has to do with how you thought about that reserving analysis.

Operator: You know, I know we've been through stress tests here for 10 years now, and it would just be helpful to understand how you decided to size this very significant increase in the reserve and how you think it trajects from here?

You know, I know we've been through stress test here for 10 years now and it would just be helpful to understand how you decided to size this very significant increase in the reserve and how you think it trajects from here.

How you decided to size this very significant increase in the reserve and how you think.

It trajectory from here.

Brian Moynihan: All right, Paul, why don't you hit that, please?

[noise] the Paul once you get that yeah sure.

Paul Donofrio: Yeah, sure. So I mean, let me ask the last part. Answer the last part first. We put a reserve, you know, on our balance sheet that we think reflects the information that we had at the end of Q1. And so in terms of what's going to happen in the future, that reserve is going to go up or down based upon the facts and circumstances in our view of the future when we get to the end of Q2. I think, you know, when you think about reserves, you got to really focus on loan mix and the quality of the portfolio. And then you have the added variable under CECL of everybody coming up with a view of the future.

So.

I mean, let me ask the last part and to last part first. We put a reserve and on our balance sheet that we think reflects the information that we had at the end of Q1. And so in terms of what it's going to happen in the future, that reserve is going to go up or down based upon the facts and circumstances and our view of the future when we get to the end of Q2. I think when you think about reserves you got to really focus on loan mix and the quality of the portfolio. And then you have the added variable under Cecil of everybody coming up with a view of the future. We size our reserve build in Q1 by weighting a number of economic scenarios, all of which assumed a recession of various you know depth and longevity.

[noise], we we put a reserve and on our balance sheet that we think reflects the information.

That we had at the end of Q1.

And.

And so in terms of what it's going to happen in the future that reserves going to go up or down based upon the facts and circumstances and our view of the future when we get to the end of Q2.

I think.

When you think about reserves you got to really focus on.

Loan mix and the quality of the portfolio.

Then you have the added variable under Cecil of.

Everybody coming up with a view of the future.

Paul Donofrio: We sized, you know, our reserve build in Q1 by weighting a number of economic scenarios, all of which assumed a recession of various, you know, depth and longevity, and that included assuming some tail risk similar to what's in the severely adverse scenarios. So when we weighted the scenarios that produced clearly a recessionary outlook, which included a significant drop in GDP in the second quarter with negative GDP growth rates extending well into 2021, we also considered the impact of various groups of credits and stressed industries. And while small relative to the impact of scenario weighting, we incrementally factored that analysis into the sizing of our reserve build. Obviously there are many unknowns, including how government fiscal and monetary actions will impact the outcome. But we tried to consider that as well. We also had to consider how our own deferral programs will impact losses.

We sized, you know, our reserve build in Q1 by weighting a number of economic scenarios, all of which assumed a recession of various, you know, depth and longevity, and that included assuming some tail risk similar to what's in the severely adverse scenarios. So when we weighted the scenarios that produced clearly a recessionary outlook, which included a significant drop in GDP in the second quarter with negative GDP growth rates extending well into 2021, we also considered the impact of various groups of credits and stressed industries.

We size.

Our reserve build in Q1 by waiting a number of economic scenarios, all of which assumed a recession of various you know depth and longevity.

And that included assuming some tail risk similar to what's in the severely adverse scenarios. So when we weighted to scenarios that produced a reset clearly a recessionary outlook, which included a significant drop in GDP in the second quarter with negative GDP growth rates, extending well into 2021. We also considered the impact of various groups of credits and stressed industries. And while small relative to the impact of scenario weighting, we incrementally factored that analysis into the sizing of our reserve built.

So when we waited to scenarios that produced a reset clearly a recessionary outlook, which included a significant drop in GDP in the second quarter.

With negative GDP growth rates, extending well in the 2021.

Also considered the impact of various groups of credits.

And stressed industries.

And while small relative to the impact of scenario weighting, we incrementally factored that analysis into the sizing of our reserve build. Obviously there are many unknowns, including how government fiscal and monetary actions will impact the outcome. But we tried to consider that as well. We also had to consider how our own deferral programs will impact losses. But perhaps the biggest unknown is how long economic activities and conditions will be significantly impacted by the virus.

And.

While small relative to the impact of scenario waiting we incrementally factored that analysis into the sizing of our reserve Bill.

Obviously, there are many unknowns, including how government fiscal and monetary actions will impact the outcome, but we tried to consider that as well. We also had to consider how our own deferral programs will impact losses. But perhaps the biggest unknown is how long economic activities and conditions will be significantly impacted by the virus. I might add a couple of things. If you sort of benchmark. Yeah, that this has nothing to is setting and under GAAP, but just sort of okay. Now you have it, let's look at it I think we're about 65% under the last years, that's a supervisor severely adverse total losses type of numbers.

We also had to consider how our own deferral programs will impact losses.

Paul Donofrio: But perhaps the biggest unknown is how long economic activities and conditions will be significantly impacted by the virus.

But perhaps the biggest unknown is how long economic activities and conditions will be significantly impacted by the virus. I might add a couple of things. If you sort of benchmark.

How long economic activities and Titians will be significantly impacted by the virus.

The Dutch I might add a couple of things if you sort of benchmark.

Brian Moynihan: I might add a couple things. If you sort of benchmark, if this has nothing to do with setting under GAAP, but just sort of, okay, now you have it, let's look at it. I think we're about 65% of last year's Fed supervised severely adverse total losses type of numbers. That's one way to think about it as you. And then another thing to think about is the construct of the portfolios. Those of you like yourself have been around our company a lot. You know, I went back and started saying sort of are we sure how much different we are. And you people forget things that it won't mean a lot to the people on the phone. The gold option program, which was a restructuring of card debt that went on in the mid-2000s, you know, there was. It started going into crisis in 2008.

Yeah, that this has nothing to is setting and under GAAP, but just sort of okay. Now you have it, let's look at it I think we're about 65% under the last years, that's a supervisor severely adverse total losses type of numbers.

That's one way to think about it. And then another thing to think about is that constructed the portfolio's those of you like yourself have been around our company, you know I went back and started saying sort of or we sure how much different we are and people forget things that it won't meet a lot of people on the phone the gold option program. Which was a restructure card that went on in the mid 2000s. There was it started to go into crisis in 2008 time frames that 25 billion, eight quarters later six quarters later or something like that is down to 12. Half of that was charge off, there's none of that around them and so it's not only the FICO scores and all the things that you had it's also this piece of the portfolio it cost us a lot in the last crisis there.

Which was a.

A restructure card that went on in the mid two thousands <unk>. There was it started to go into crisis and.

2008 time frames that 25 billion EUR eight quarters later six quarters later or something like that is down to 12 half of that was charge off there's none of that around them and so it's not only the FICO scores and all the things that you had its also this piece of the portfolio it cost us a lot in the last crisis there.

Brian Moynihan: Time frames at $25 billion, $8.4 billion later, $6.4 billion later, something like that, down to $12 billion. Half of that was charge off. There's none of that around them. So it's not only the FICO scores and all the things that you have; it's also that there's pieces of portfolio cost us a lot and the last crisis aren't there. But let me. That's just how we position the portfolio. So even some of the industries which people we are focused on as a credit grantor and you're focused on as an analyst are relatively 1% in this industry or that industry. So the list of sort of concerning industries, entertainment, travel, things like that, we have low exposures to because of diversity, mix of portfolio. You touched on the deferrals.

Time frames at $25 billion, $8.4 billion later, $6.4 billion later, something like that, down to $12 billion. Half of that was charge off. There's none of that around them. So it's not only the FICO scores and all the things that you have; it's also that there's pieces of portfolio cost us a lot and the last crisis aren't there. But let me. That's just how we position the portfolio. So even some of the industries which people we are focused on as a credit grantor and you're focused on as an analyst are relatively 1% in this industry or that industry. So the list of sort of concerning industries, entertainment, travel, things like that, we have low exposures to because of diversity, mix of portfolio. You touched on the deferrals.

And that's just how we position to portfolios, even some of the engine industries. We are focused on as a credit grant or you're focused on as analyst, our relatively 1% in this industry. And that is free so the list of sort of concerning industries entertainment travel things like that we have low exposures to because of diversity of mix of portfolio.

We are focused on is that a credit grant or you're focused on as analyst.

Our relatively 1% in this industry or that is free so the list of sort of concerning industries entertainment travel things like that we have low exposures to because of diversity of mix of portfolio.

You touched on the deferrals, but let me just give you a couple of perspectives on that. One, on the small business as I've mentioned earlier that the reason why it's high, there's a lot of doctors and dentists in there and you would expect that they would pay. But to give you a sense, before the deferal, 95%, 97%, 98% of these people are current under all these measures. And so they're not people who were struggling, there are people who just needed a hiatus due to change the FICO scores for 90 plus percent of the mortgage deferrals, 95% pause or are they on the cards. Again about 90%, 85% I guess are 600 or better. So that you know the average FICO is almost 700 of the deferral, so you'd expect it or people, who have deferred are doing and as matter convenience.

Brian Moynihan: Let me just give you a couple perspectives on that one on that small business. As I mentioned earlier, the reason why it's high: there's a lot of doctors and dentists in there, and you would expect that they would pay. But to give you a sense, before their deferral, 95%, 97%, 98% of these people were current under all the measures. And so they're not people who were struggling. There were people who were current that just needed a hiatus due their change. The FICO scores for 90-plus percent of the mortgage deferrals, 95% plus, or on the cards again, about 90%, 85% I guess, are 600 or better. So you know, the average FICO is almost 700 of a deferral.

Let me just give you a couple perspectives on that one on that small business. As I mentioned earlier, the reason why it's high: there's a lot of doctors and dentists in there, and you would expect that they would pay. But to give you a sense, before their deferral, 95%, 97%, 98% of these people were current under all the measures. And so they're not people who were struggling. There were people who were current that just needed a hiatus due their change. The FICO scores for 90-plus percent of the mortgage deferrals, 95% plus, or on the cards again, about 90%, 85% I guess, are 600 or better. So you know, the average FICO is almost 700 of a deferral.

Small business as I've mentioned earlier that the reason website. It's done there's a lot of doctors and Dennis in there and you would expect that they would pay but to give you a sense.

Yep before there.

Deferral.

90, 590, 798%. These people are current under Ali.

Nudgers.

And so they're not people who were.

Struggling there were people card that just needed. It I just do that change the FICO scores for 90 plus percent the mortgage deferrals, 95% pause or are they on the cards again about 90%, 85% I guess are 600 or better. So that you know the average FICO is almost 700.

Brian Moynihan: So you'd expect that people who have deferred are doing it as a matter of convenience, and we'll get back into the, you know, back back in the flow once the economy reopens. And so in the LTVs on the mortgages again, 95% or better, 95, you know only 5% or 10% are really the FHA, VA of the deferred program, and they're 95% or better. All the rest of it's low. 75% of it's below 80% LTV and stuff. So these are core people who've had a change that we're going to, you know, we'd expect to start to perform, so we'll see how it plays out. But it's very different, I think, than past deferral status that we've had.

So you'd expect that people who have deferred are doing it as a matter of convenience, and we'll get back into the, you know, back back in the flow once the economy reopens. And so in the LTVs on the mortgages again, 95% or better, 95, you know only 5% or 10% are really the FHA, VA of the deferred program, and they're 95% or better. All the rest of it's low. 75% of it's below 80% LTV and stuff. So these are core people who've had a change that we're going to, you know, we'd expect to start to perform, so we'll see how it plays out. But it's very different, I think, than past deferral status that we've had.

<unk> deferral, so you'd expect it or people, who have deferred are doing and as matter convenience.

And we'll get back in the flow once they got a reopens and so and the LTV is on the mortgages again, 95% or under 90, but you only 5% or 10% or really the FHLB a of the deferred program in there and 95% or better all the rest of it slow. 75% of its below 80% LTV and stuff. So these are core people at a change and we're going to you know we'd expect to start to perform so we'll see how it plays out but it's very different I think than past deferrals status as we had. It's a very impressive reserve ratio and in addition, you know your CET1 stayed relatively high this quarter as well. I just wanted to ask a follow-up, Brian, around how you're thinking about the dividend. It's been a question that many investors have been asking and maybe you can give us a sense as to how you think through that question.

It back at you back in the flow once they got a reopens and so and the LTV is on the mortgages again, 95% or under 90, but you only.

Five or 10% or really the FHLB a of the deferred program in there and 95% or better all the rest of it slow they 75% of its below 80% LTV and stuff. So these are core people at a change it we're going to you know we'd expect to start to perform so we'll see how it plays out but it's it's very different I think than past deferrals status as we head.

Yes.

[noise], it's a very impressive reserve ratio and in addition, you know you. Your C.T. one stayed relatively high this quarter as well I just wanted to ask a follow up Brian around how you're thinking about the dividend. It's been a question that many investors have been asking and maybe you can give us a sense is too.

Operator: It's a very impressive reserve ratio. In addition, you know, your CET1 stayed relatively high this quarter as well. I just wanted to ask a follow up, Brian, around how you're thinking about the dividend. It's been a question that many investors have been asking and maybe you can give us a sense as to how you think through that question.

Betsy Graseck: It's a very impressive reserve ratio. In addition, you know, your CET1 stayed relatively high this quarter as well. I just wanted to ask a follow up, Brian, around how you're thinking about the dividend. It's been a question that many investors have been asking and maybe you can give us a sense as to how you think through that question.

How you think through that question.

Lee is correct, I mean, it's 65% of that adverse not severely adverse, I think there's what Lee is telling me. That we're in two different locations. So usually can weigh that me when I made a mistake.

Brian Moynihan: Let me just. Lee is correcting me. It's 65% of that adverse, not severely adverse, I think, is what Lee is telling me. We're in two different locations, so usually he can wave at me when I've made a mistake. In terms of the dividend, you know, we kept the dividend payout ratio below 30% of the sort of normalized earnings level. We did it for a reason that we, you know, one of our operating principles, we wanted to maintain a dividend. Given what we know, we earned twice the dividend this quarter at $0.40 versus an $0.18 payout ratio. We expect that to continue. That shows you the 100 plus basis points, 130 basis points of excess capital. We've tested it lots of ways, as you might expect.

Lee is correct I mean, it's it's 65% of that.

Adverse not severely adverse I think there's what Lee is telling me that weren't too difficult location. So usually can weigh that me when I made a mistake [laughter].

In terms of dividends. We kept the dividend payout ratio below 30% of this sort of normalized earnings level and we did it for reason that we built one of our operating principles, we want to maintain a dividend. And given what we know, we don't twice the dividend this quarter at 40 cents versus 19 cents payout ratio. And we expect that to continue. And that shows you that the 100 plus basis points 30 basis points of excess capital we've tested it lots of ways as you might expect as we talk to our board about capital management, as we talked to our board about dividends on any given time. We're showing the severely adverse cases and thinking through the pretax PPNR capability of withstanding different reserve builds and outcomes. And so that's what we're doing, we're trying to keep it going.

We kept the dividend payout ratio below 30% of this sort of normalized earnings level and we did it for reason that we built one of our operating principles, we want to maintain a dividend.

And given what we know we don't twice the dividend this quarter at 40 cents versus 19 cents payout ratio and we expect that to continue and that shows you. The 100 plus basis points 30 basis points of excess capital. We've tested it lots of ways as you might expect as we talk to our board about capital management as we talked to our board about dividends.

Brian Moynihan: As we talk to our board about capital management, as we talk to our board about dividends, on any given time, we're showing them severely adverse cases, adverse cases, and thinking through the pre-tax PPNR capability of withstanding different reserve builds and outcomes. So that's what we're doing. We plan to keep it going.

As we talk to our board about capital management, as we talk to our board about dividends, on any given time, we're showing them severely adverse cases, adverse cases, and thinking through the pre-tax PPNR capability of withstanding different reserve builds and outcomes. So that's what we're doing. We plan to keep it going.

On any given time, we're showing the severely adverse cases adverse cases and thinking through [noise].

Pretax PPNR capability of withstanding different the reserve builds and outcomes and so that's what we're doing fine to keep it don't.

Operator: Thank you. We'll go now to John McDonald with Autonomous Research. Please go ahead.

Betsy Graseck: Thank you.

Operator: We'll go now to John McDonald with Autonomous Research. Please go ahead.

Thank you. We'll go now to John Mcdonald with Autonomous Research. Please go ahead.

Well go now to John Mcdonald with Autonomous Research. Please go ahead.

Brian Moynihan: Yes, just a quick follow up on that. Paul, I know you mentioned in terms of the macro assumptions it's a weighted average, but what you described as kind of a Q2 deep dive in GDP and then continuing negative for the rest of the year, is that kind of the central case and is there any more details you could provide on that as just we compare different banks and what macro assumptions are embedded into the reserve? It's helpful to know maybe the central case of assumptions. Thank you.

John McDonald: Yes, just a quick follow up on that. Paul, I know you mentioned in terms of the macro assumptions it's a weighted average, but what you described as kind of a Q2 deep dive in GDP and then continuing negative for the rest of the year, is that kind of the central case and is there any more details you could provide on that as just we compare different banks and what macro assumptions are embedded into the reserve? It's helpful to know maybe the central case of assumptions. Thank you.

Yeah. Hi, just a quick follow up on that. Paul, I know you mentioned in terms of the macro assumptions, it's a weighted average, but what you described is kind of a 2Q deep dive in GDP and then continuing negative for the rest of the year. Is that kinda central case and is there any more details you could provide on that as just we compare different banks and what macro assumptions are better into the reserve? It's helpful to know the kind of maybe the central case of assumptions. Thank you.

Got it into the reserve it's helpful.

To know the kind of maybe the central case of assumptions. Thank you.

Paul Donofrio: Yes, I mean, just to be clear, what I said was it's a significant drop in GDP in Q2 and then negative GDP growths extend well into 2021, I think approaching all the way to the end of the year. So we view it as a recessionary outlook. We wouldn't describe it any other way. None of the scenarios that we're looking at are anything other than a recession. And again, we've captured sort of the tail risk of a severely adverse situation. In terms of providing. Yeah, go ahead.

Yeah, I mean, just to be clear what I said was it say you know significant drop in GDP in the second quarter and then negative GDP growth extend well into 2021. You know, I think approaching all the way to the end of the year. So yeah, we view it as a recessionary outlook. We wouldn't describe it any other way. None of the scenarios we're looking at our anything other than a recession and again, we've kept a sort of the tail risk of severely adverse situation.

You know I think approaching all the way to the end of the here. So yeah, we view it as.

A recessionary outlook, we wouldn't describe it any other way none of the scenario. So we're looking at our anything other than a recession and and again, we've kept a sort of the tail risk of severely adverse situation.

In terms of providing. Yeah, go ahead. No, go ahead, please. I was going to say in terms of providing specifics on one variable or another I mean, you've got a lot of variables that go into these models. And many many many many variables. And so you know, we really believe that providing that level of detail you know could be a little misleading. Unless you have the full context of all the factors that we considered when we set the allowance picking one or the other and starting to compare here or there just to us, I think would be misleading.

Yeah go ahead.

Brian Moynihan: No, no, go ahead, please.

No go ahead please.

Paul Donofrio: I was going to say in terms of providing, you know, specifics on one variable or another. I mean, you've got a lot of variables that go into these models. Many, many, many, many variables. And so, you know, we really believe that to provide that level of detail, you know, could be a little misleading. It's, you know, unless you have the full context of all the factors that we considered when we set the allowance, picking one or the other and starting to compare here or there just to us, I think would be misleading. Plus, very importantly, the impact of all those multiple inputs that go into the process will be different for each bank depending upon the bank's loan mix. And very importantly, the quality of the loan portfolio that they've been putting on the books for years.

I'm going to say in terms of providing you know.

[laughter] fix on one variable or another I mean, you've got.

A lot of variables that go into these models.

And many many many many variables.

And so you know, we we really believe that provide that level of detail you know could be a little misleading.

It's you know.

It unless you have the full context of all the factors that we considered when we set the allowance picking one or the other and starting to compare here or there just to us I think I would be misleading.

Plus very importantly, the impact of all multiple inputs that go into the process will be different for each bank depending upon the bank's loan mix and very importantly, the quality of the long portfolio that they've been putting on the books for years. I think Brian just sort of talked about but I'll say it again, we've been very focused on prime and Super Prime customer [balls] for many years now so the impacts of all those inputs is gonna be different.

The bank's loan mix and very importantly, the quality of the long portfolio that they've been putting on the books for years.

Paul Donofrio: I think Brian just sort of talked about it, but I'll say it again, we've been very focused on prime and super prime customer borrowers for many years now. So the impacts to us of all those inputs is going to be different. And, you know, I guess that's what all the information I would want to give you about, like one input or another. Just hopefully that helps you in terms of how we think about it.

I think Brian just sort of talked about it, but I'll say it again, we've been very focused on prime and super prime customer borrowers for many years now. So the impacts to us of all those inputs is going to be different. And, you know, I guess that's what all the information I would want to give you about, like one input or another. Just hopefully that helps you in terms of how we think about it.

I think Brian just sort of talked about but I'll say it again, we've been very focused on prime and Super Prime customer bothers for many years now so the impacts.

Of all those input is gonna be different.

And. I guess that's all the information I would want to give you about like one input or another. Hopefully, that helps in terms of how we think about it. And the reference point to CCAR is helpful too. It sounds like what you provided for built into the reserve is about 60% of the cumulative losses from the feds adverse in 2019.

You know.

I guess, that's the I guess, that's what all the information I would want to give you about like one input or another just hopefully that helps in terms of how would you have about it.

Brian Moynihan: The reference point to CCAR is helpful too. It sounds like what you provided, built into the reserve, is about 60% of the cumulative losses from the Fed's adverse in 2019.

John McDonald: The reference point to CCAR is helpful too. It sounds like what you provided, built into the reserve, is about 60% of the cumulative losses from the Fed's adverse in 2019.

And the reference point it to see car. It's helpful to it sounds like what you provided for built into the reserve is about 60% of the cumulative losses from the feds adverse in 29 tier.

Paul Donofrio: Yeah, again, as Brian said, that's more of an output, not an input. Right. We are developing scenarios based upon the information we had at the end of the quarter. But it is interesting, and it's maybe helpful for all of you in terms of comparing reserves, you know, to really think about the loan mix, the quality of the portfolio, and then of course, you know, what people assumed about the future. But in terms of the loan mix and the quality of the portfolio, there is an independent view out there. There's an independent view every year.

Again, as Brian said, that's more of output, not an input. We're developing scenarios based upon the information we had at the end of the quarter, but it is interesting and maybe helpful for all of you in terms of comparing reserves to really think about the loan mix, the quality of the portfolio. And then of course, you know what people assumed about the future, but in terms of the loan mix and the quality of the portfolio. There is an independent view out there.

To really think about.

The loan mix.

The quality of the portfolio.

And then of course, you know what people assumed about the future, but in terms of the loan mix and the quality of the portfolio. There is an independent view out there.

There is an independent view out there.

There's an independent view every year. And so if you know you look at our losses and the severely adverse, the feds stress test. Our losses under the severely adverse for our losses under the inverse. And then you look at our reserve and you divide by those losses, you're gonna get percentages that are in the range or better than what you're seeing across the industry.

Paul Donofrio: So if, you know, you look at our losses in the severely adverse, you know, the Fed's stress test, our losses under the severely adverse or our losses under the adverse, and then you look at our reserve and you divide by those losses, you're going to get percentages that are in the range or better than what you're seeing across the industry.

So if, you know, you look at our losses in the severely adverse, you know, the Fed's stress test, our losses under the severely adverse or our losses under the adverse, and then you look at our reserve and you divide by those losses, you're going to get percentages that are in the range or better than what you're seeing across the industry.

And so if you know you look at our losses.

And the severely adverse.

Fads stress test.

Our losses under the severely adverse for our losses under the inverse.

And then you look at our reserving you divide by those losses, you're gonna get percentages that are in the range or better than what you're seeing across the industry.

Okay, got it, thank you. And remember those tests basically are an independent way to evaluate the quality of somebody's portfolio and the mix of somebody's portfolio. So we think, again, we didn't size it that way, but we think that's an interesting way for you to kind of get you know some sort of independent perspective on allowances.

Brian Moynihan: Okay, got it.

John McDonald: Okay, got it. Thank you

Paul Donofrio: Thank you and remember, those tests basically are an independent way to evaluate the quality of somebody's portfolio and the mix of somebody's portfolio. So we think, again, we didn't size it that way, but we think that's an interesting way for you to kind of get, you know, some sort of independent perspective on allowances.

Paul Donofrio: and remember, those tests basically are an independent way to evaluate the quality of somebody's portfolio and the mix of somebody's portfolio. So we think, again, we didn't size it that way, but we think that's an interesting way for you to kind of get, you know, some sort of independent perspective on allowances.

And remember those those tests basically are that are an independent way to evaluate.

The quality of somebody's portfolio and the mix if somebody's portfolio. So we think again, we didn't size it that way, but we think that's an interesting way for you to kind of get you know some sort of independent perspective on allowances.

Brian Moynihan: Yeah, I think, I think it's helpful for us to compare across banks that way. Thank you.

John McDonald: Yeah, I think, I think it's helpful for us to compare across banks that way. Thank you.

Yeah, I think it's helpful for us to compare across banks that way. Thank you. You still have the issue, though by the way that every bank is going to have, this is the first quarter are all doing Cecil and everybody's got to develop their own view of the future. And you know there's no evidence right now that you can point to of asset aggregation. There's a little bit of NPL, a little bit her reserve criticized so we're all doing is based upon just you know our view of the future based upon all those inputs that we use in our models. Got it. We'll go now to Mike Mayo with Wells Fargo. Please go ahead.

Paul Donofrio: You still have the issue though, by the way, that every bank is going to have a, you know, this is the first quarter, we're all doing CECL, and everybody's going to have to develop their own view of the future. You know, there's no evidence right now that you can point to, of, you know, asset. There's a little bit of NPL, there's a little bit of reserve criticized. So we're all doing this based upon just, you know, our view of the future based upon all those inputs that we use in our models.

No asset aggregation this little bit of NPL is it a little bit her reserve criticized so we're all doing is based upon just you know our view of the future based upon all those inputs that we use in our models.

Brian Moynihan: Got it.

John McDonald: Got it.

Got it.

Well go now to Mike Mayo with Wells Fargo. Please go ahead.

Operator: We'll go now to Mike Mayo with Wells Fargo. Please go ahead.

Mike Mayo: Hey, Paul, same question. Maybe more specifically, you know, how much.

Hey, Paul, the same question. Maybe more specifically. Same answer. Well, just how much more could the reserves get built in the second quarter. And when you defined a significant drop in GDP. How you defined significant, I mean the stock pre-market looks like it's going to open down 60 or 70% my numbers are right and you just guided for better NII and you earn your dividend at leasttwo times up to four times, depending how you compute book value growth, good capital ratios. You had the balance sheet strength to take additional charges. So you know why not just take it for like the worst case that you're allowed to do so and communicate that and say all right your capital is still fine. You had one of your peers kind of telegraphed that. You seem to be hesitant to do so given all the different variables I understand. But can you give us a little bit more guidance for reserve builds say in the second quarter or the third quarter?

Maybe more specifically yep.

Paul Donofrio: More could the reserve.

Sure.

[music].

Mike Mayo: Same answer. Well, just how much, I mean, how much more could the reserves get built in Q2? And when you define a significant drop in GDP, you know how you define significant, I mean, look, you, I mean the stock pre-market looks like it's going to open down 6% or 7% if my numbers are right and you just guided for, you know, better NII and you earn your dividend at least two times, up to four times depending how you compute it. Your book value grew, you have good capital ratios, you have the balance sheet strength to take the additional charges. So you know, why not just, you know, take, you know, take it for like the worst case that you're allowed to do so and, and communicate that and say, all right, your capital still fine.

[laughter] same answer.

Well, just how much I mean, how much more could the reserves get built and then second quarter and when you defined a significant drop in GDP. Yeah. He defined significant I mean, lucky I mean, the stock pre market looks like it's going to open down 60, or 70% my numbers are right and you just guided.

For better and I and you earn your dividend.

These two times up to four times, depending how you compute book value growth capital ratios you had the balance sheet strength to take additional charges. So you know why not just you know take yeah taken for like the the worst case that you're allowed to do so and and communicate that and say all right your capital still find so.

So you know, why not just, you know, take, you know, take it for like the worst case that you're allowed to do so and, and communicate that and say, all right, your capital still fine. So you had one of your peers kind of telegraph that you seem to be hesitant to do so given all the different variables. I understand, but can you give us any, a little bit more guidance for reserve builds, say in Q2. Or the third quarter?

Mike Mayo: So you had one of your peers kind of telegraph that you seem to be hesitant to do so given all the different variables. I understand, but can you give us any, a little bit more guidance for reserve builds, say in Q2.

You had one of your peers kind of telegraphed that. You seem to be hesitant to do so given all the different variables I understand. But can you give us a little bit more guidance for reserve builds say in the second quarter or the third quarter?

But can you give us any little bit more guidance for reserve builds say in the second quarter or the third quarter.

Brian Moynihan: Or the third quarter?

Paul Donofrio: Yeah, yes, sure. Again, like you said, we have the liquidity, we have the capital.

Paul Donofrio: Yeah, yes, sure. Again, like you said, we have the liquidity, we have the capital. Our reserve build. If you look at, you know, independent perspectives from the Fed or other sources, our reserve build as a percentage of future losses under multiple scenarios that they publish is higher or in the range of our competitors. So that's a lot of information for you right there in terms of your question about, hey, what's the likely reserve build in the future. If we thought we were going to have to add more reserve build in the future, we would have put it into this quarter. That's how the rules work. You reserve for your expected lifetime losses. So our reserve build reflects what we think, as of the end of this quarter, we're going to have to have in losses for the life of the assets on our books.

Yes, sure and again as you said, we have the liquidity, we have the capital. Our reserve build, if you look at independent perspectives from the Fed or other sources, our reserve build as a percentage of future losses under multiple scenarios that they publish is higher or in the range of our competitors. So that's a lot of information for you right there. In terms of your question about what's the likely reserve build in the future. If we thought we were going to have to add more reserve build in the future, we would have put it into this quarter.

Brian Moynihan: Our reserve build.

Our reserve build if you look at you know independent perspectives from the fat or other sources, our reserve build as a percentage of.

Paul Donofrio: If you look at, you know, independent perspectives from the Fed or other sources, our reserve build as a percentage of future losses under multiple scenarios that they publish is higher or in the range of our competitors. So that's a lot of information for you right there in terms of your question about, hey, what's the likely reserve build in the future. If we thought we were going to have to add more reserve build in the future, we would have put it into this quarter. That's how the rules work. You reserve for your expected lifetime losses. So our reserve build reflects what we think, as of the end of this quarter, we're going to have to have in losses for the life of the assets on our books.

Future losses under multiple scenarios that they publish them.

Higher or in the range of our competitors. So that's a lot of information for you right. There in terms of the your question about Hey, what's the likely reserve build in the future.

If we if we thought we were going have to add more reserve build in the future. We would have put it into this quarter.

That's how the rules work. You reserve for your expected lifetime losses. So our reserve build reflects what we think as of this end of the quarter, we're gonna have to haven't losses for the life of the assets on our books. Now when we get to the ended the second quarter, we may have a different view of the future. And so we may release reserves or we may increase reserves. The quality of our loan book won't change that much because that doesn't change that much in a quarter. The mix doesn't change that much because that doesn't change in the quarter. We've built this loan book based upon years and years of underwriting standards. And so the reserve will go down in the second quarter or go up in the second quarter, but it'll be based upon a change in our outlook on the future.

For the life of the assets on our books.

Paul Donofrio: Now when we get to the end of the second quarter, we may have a different view of the future. So we may release reserves or we may increase reserves. The quality of our loan book won't change that much because that doesn't change that much in a quarter. The mix doesn't change that much because that doesn't change in the quarter. We've built this loan book based upon years, years of underwriting standards. So it'll go down. The reserve will go down in the second quarter or go up in the second quarter, but it will be based upon a change in our outlook on the future.

Now when we get to the end of the second quarter, we may have a different view of the future. So we may release reserves or we may increase reserves. The quality of our loan book won't change that much because that doesn't change that much in a quarter. The mix doesn't change that much because that doesn't change in the quarter. We've built this loan book based upon years, years of underwriting standards. So it'll go down. The reserve will go down in the second quarter or go up in the second quarter, but it will be based upon a change in our outlook on the future.

Now when we get to the ended the second quarter.

We may have a different view of the future and so we may release reserves or we may increase reserves the quality of our loan book won't change that much because that doesn't change that much in a quarter. The mix doesn't change that much because that doesn't change in the quarter. We've built this loan book based upon years.

And years of underwriting standards.

And so the reserve will go down in the second quarter or go up in the second quarter, but it'll be based upon a change in our outlook on the future.

It'll go down the reserve will go down in the second quarter or go up in the second quarter, but it'll be based upon a change and our outlook on the future.

Got it. If I could follow Brian then. I mean, clearly, the biggest input is when does the economy come back online and Brian, you and your from have many touchpoints internationally as anybody. There must be some underlying thought process that goes into the reserve build in the losses about when the economy comes back on line, what kind of what's your best case, bad scenario. What are you seeing? What are your thoughts?

Mike Mayo: Got it. If I could follow with Brian, then I mean clearly the biggest input is when does the economy come back online? And you know, Brian, you and your firm have as many touch points nationally as anybody. There must be some underlying thought process that goes into the reserve build and the losses about when the economy comes back online, kind of what's your base case? Best case, bad scenario. What are you seeing? What are your thoughts?

There must be some underlying thought process.

And that goes into the reserve build in the losses about when the economy comes back on line, what kind of whats. Your your base case best case bad scenario. What are you seeing what are your thoughts.

Well, one thing that is different Mike, and you all know is the one area authority embedded in governors and mayors and the president to tell us what to do is overriding here. So we could have a view of what can happen but given they are healthcare crisis as opposed to demand changes and things that would be out in general economic flow or credit risk because commercial real estate got overvalued, the things that we've dealt with in our lifetimes as you've dealt with the this is just different. So we have to remind ourselves always this is going to come down to solving this healthcare crisis. And number one, just to give you some facts of where we stand at, and we'll see this play out. As I said earlier, if you look at sort of the weekly flow of payments across all of this means meaning cash taken out of the ATMs and spent through checks written through HGH wires and you know credit debit card that was running $65 billion dollars a week. in January February. And now it's running 50 like 51, 52 average for the last couple of weeks. But you're seeing that rate of decline flatten at this point and if you go to look at geography based on the data we see, we've seen it sort of flattened. So you're seeing what might be a relatively, and that's after the unemployment claims have been filled, and we're seeing the unemployment come into thr account. You're seeing the rate of decline sort of flatten and as you look at it sort of compared to the rate of decline year over year by weak and things like that and different types of industry, you know they've gotten to the bottom in some you know traveler entertainment. You've gotten to a more sustainable maybe in drug stores, in grocery stores. And you sort of see the economy running at that level on that so that a lie whatever the 10 over 16%, 15% decline. That will hold on, we will watch, but right now that seems to be holding on. Places have been shut down longer. And we'll see that play out as it goes forward to see if that starts to grow from there. Remember gas prices are down a lot and gas usage is down a lot that added taxes numbers also.

Brian Moynihan: Well, one thing that is different, Mike, and, as you all know, is the federal authority embedded in governors, mayors, and the president to tell us what to do is overriding here. So we could have a view of what can happen. But given the health care crisis as opposed to, you know, demand changes and things that would be out of general economic flow or credit risk because commercial real estate got overvalued, the things that we've dealt with in our lifetimes as you've dealt with this is just different. So we have to remind ourselves always this is going to come down to solving this healthcare crisis. And number one, just to give you some facts of where we stand and we'll see this play out.

To tell us what to do is overriding here. So we could have a view of what can happen but.

Given they are healthcare crisis is as opposed to you know demand changes and things that would be out in general economic flow or credit risk because commercial real estate got overvalued, the things that we've dealt with in our lifetimes as you've dealt with the this is just different so we have to remind ourselves always this is going to come down to solving this health care cry.

Assistant and a number one just to give you some facts of where we stand at it and we'll see this play out as I said earlier, if you look at.

Brian Moynihan: As I said earlier, if you look at sort of the weekly flow of payments across all the means, meaning cash taken out of the ATMs and spent through checks, written through ACH wires, and you know, credit and debit card, that was run $65 billion a week in January, February, and now it's running $50 billion, low like $51, $52 average for the last couple weeks. But you're seeing that rate of decline flatten at this point. If you go to look at geographies based on the data we see, we've seen it sort of flatten. So you're seeing what might be a relatively. That's after the unemployment claims have been filed. We're seeing the unemployment come into the accounts. You're seeing the rate of decline sort of flattened.

As I said earlier, if you look at sort of the weekly flow of payments across all the means, meaning cash taken out of the ATMs and spent through checks, written through ACH wires, and you know, credit and debit card, that was run $65 billion a week in January, February, and now it's running $50 billion, low like $51, $52 average for the last couple weeks. But you're seeing that rate of decline flatten at this point. If you go to look at geographies based on the data we see, we've seen it sort of flatten. So you're seeing what might be a relatively. That's after the unemployment claims have been filed. We're seeing the unemployment come into the accounts. You're seeing the rate of decline sort of flattened.

Sort of the weekly flow of payments across all of this means meaning cash taken out they cabs and spent through checks written through hgh wires and you know credit debit card that was running 60 odd billion dollars a week.

in January February. And now it's running 50 like 51, 52 average for the last couple of weeks. But you're seeing that rate of decline flatten at this point and if you go to look at geography based on the data we see, we've seen it sort of flattened. So you're seeing

what might be a relatively, and that's after the unemployment claims have been filled, and we're seeing the unemployment come into thr account. You're seeing the rate of decline sort of flatten and as you look at it sort of compared

Accounts, you're seeing a rate of Oh, yeah, the rate of decline sort of flatten and as you look at it sort of compared.

Brian Moynihan: As you look at it sort of compared to the rate of decline year over year by week and things like that and different types of industries, you know, they've gotten to the bottom in some, you know, travel or entertainment. You've gotten to more sustainable, maybe in drugstores and grocery stores. You sort of see the economy running at that level. And that for that I apply whatever the, you know, 10 over 16, you know, 15, 16% decline. That will hold on. We'll watch. But right now that seems to be holding on. Places have been shut down longer and we'll see that play out as it goes forward to see if that starts to grow from there. Remember, gas prices are down a lot and gas usage is down a lot. That impacts those numbers also. We're looking for those signs.

As you look at it sort of compared to the rate of decline year over year by week and things like that and different types of industries, you know, they've gotten to the bottom in some, you know, travel or entertainment. You've gotten to more sustainable, maybe in drugstores and grocery stores. You sort of see the economy running at that level. And that for that I apply whatever the, you know, 10 over 16, you know, 15, 16% decline. That will hold on. We'll watch. But right now that seems to be holding on. Places have been shut down longer and we'll see that play out as it goes forward to see if that starts to grow from there. Remember, gas prices are down a lot and gas usage is down a lot. That impacts those numbers also. We're looking for those signs.

to the rate of decline year over year by weak and things like that and different types of industry, you know they've gotten to the bottom in some you know traveler entertainment. You've gotten to a more sustainable maybe in drug stores, in grocery stores. And you sort of see the economy running at that level on that so that a lie whatever the 10 over 16%, 15%

decline. That will hold on, we will watch, but right now that seems to be holding on. Places have been shut down longer. And we'll see that play out as it goes forward to see if that starts to grow from there. Remember gas prices are down a lot and gas usage is down a lot that added taxes numbers also.

So we're looking for those signs. I'm not saying we have anything yet. We're looking for signs. We're also looking for how the unemployment affects our customer base and so we've seen the households that we had as unemployment one of the participants the household or we have a lot of daunting households. 75% of households that we have to recede unemployment also have someone receiving a regular paycheck still and so those types of things will be interesting to see it play out is that a change in behavior in terms of what people spend on versus a real crisis in the household, because of one wager worth we'll figure that out. So we're seeing balances in households, especially among the moderately APO growth and in terms of checking account balances because people are spending lessons storing cash. We see on both management side, people can delay paying their taxes. So all these factors are at play.

Brian Moynihan: I'm not saying we have anything yet. We're looking for those signs. We're also looking for how the unemployment affects our customer base. So we've seen, in households that we have, as unemployment hits one of the participants in the household, we have a lot of dual earning households. 75% of the households that we have who have received unemployment also have someone receiving a regular paycheck still. So those types of things will be interesting to see play out. Is that a change in behavior in terms of what people spend on versus a real crisis in the household because of one wage earner? Work? We'll figure that out. So we're seeing balances in households, especially among the moderately affluent, upgrow in terms of checking account balances because people are spending less than storing cash.

I'm not saying we have anything yet. We're looking for those signs. We're also looking for how the unemployment affects our customer base. So we've seen, in households that we have, as unemployment hits one of the participants in the household, we have a lot of dual earning households. 75% of the households that we have who have received unemployment also have someone receiving a regular paycheck still. So those types of things will be interesting to see play out. Is that a change in behavior in terms of what people spend on versus a real crisis in the household because of one wage earner? Work? We'll figure that out. So we're seeing balances in households, especially among the moderately affluent, upgrow in terms of checking account balances because people are spending less than storing cash.

Our customer base and so we've seen as I did.

That's households that we had as unemployment one of the participants the household or we have a lot of daunting households.

75% of households that we have to recede unemployment also have someone receiving a regular paychex still and so those types of things will be interesting to see it play out is that a change it.

Behavior.

in terms of what people spend on versus a real crisis in the household, because of one wager worth we'll figure that out. So we're seeing balances in households, especially among the moderately APO growth and in terms of checking account balances because people are spending lessons storing cash. We see on both management side, people can delay paying their taxes. So all these factors are at play.

One wager worth we'll figure that out so we're seeing we're seeing bounces in and households, especially among the moderately athlone up grow and in terms of checking account balances because people are spending lessons storing cash yeah. We seen in the both management side people are paying can delay paying their taxes. So all these factors at play in.

Brian Moynihan: You know, we've seen in the wealth management side, people aren't paying, you know, can delay paying their taxes. So all these factors will play in. It's just a little premature to call anything, Mike. And so that's the factors we're looking at as we look at, not only to your point about how you set potential losses based on our customer base and their behavior and what happens to them, but also based on our view of the economy opening up and frankly, our advice to people who want it as to what parts of the economy could have a faster impact with less. They're the healthcare experts, but less risk of people congregating versus others that might help support a reopening of good activity. Go back to the dentist or something like that. You know, you can put dentists back to work.

You know, we've seen in the wealth management side, people aren't paying, you know, can delay paying their taxes. So all these factors will play in. It's just a little premature to call anything, Mike. And so that's the factors we're looking at as we look at, not only to your point about how you set potential losses based on our customer base and their behavior and what happens to them, but also based on our view of the economy opening up and frankly, our advice to people who want it as to what parts of the economy could have a faster impact with less. They're the healthcare experts, but less risk of people congregating versus others that might help support a reopening of good activity. Go back to the dentist or something like that. You know, you can put dentists back to work.

It's just a little premature to call anything, Mike. And so that's the factors we're looking at as we look at not only to your point about how you said potential losses based on our customer base and their behavior and what happens to them, but also based on our view of the economy opening up and frankly, our advice to people who want to as to what parts of the economy could have a faster impact with less. The health care experts, but less risk of people congregating versus others that might help support a reopening of getting activity. Go back to the dentist or something like that. You know you can put dentists back to work that will open up part of the economy that is usually not closed down for these things instead relatively few numbers of people in a given space that given time. So I'll leave it that health care experts to make those judgments, but all that is going to come together. As we move to the quarter, we'll try to give a better insight, but right now that you know that's what we're seeing.

Have a faster impact with less.

The health care experts, but less risk of people congregating versus others that might help support it a reopening of get activity go back to the Dennis or something like that you know you can put Dennis back to work that will open up part of the economy that is usually not close down for these things instead relatively few number of people in a given space that given time, so I'll leave it that health care experts to make those.

Brian Moynihan: That will open up part of the economy that is usually not closed down for these things. And it's a relatively few number of people in a given space, a given time. So I'll leave it to health care experts to make those judgments. But all that's going to come together as we move through the quarter. We'll try to give you better insight, but right now that's, you know, that's what we're seeing.

That will open up part of the economy that is usually not closed down for these things. And it's a relatively few number of people in a given space, a given time. So I'll leave it to health care experts to make those judgments. But all that's going to come together as we move through the quarter. We'll try to give you better insight, but right now that's, you know, that's what we're seeing.

Judgments, but all that is going to come together it as he moves to the quarter, we'll try to give a better insight, but right now that you know that's what we're saying.

Mike Mayo: All right, so that's why you say reserves could go up or they could be released. You just don't know yet.

All right. That's why you say reserves could go up or they could be released, you just don't know yet. Yes, I mean, it's just that people are. Yes, we all want to see where the end is, you included. We did too but the questions we got to wait for some time to past to have a feel for them. Thank you.

Brian Moynihan: Yeah, I mean, it's just that's people. We all want to see where the end is, you included. Mike, we do, too. But the questions, we've got to wait for some time to pass to have a feel for that.

Yes, I mean, I'd say, it's just that people are.

Yes, we all want to see where the end is if you include it like.

We did too but the questions we got to wait for some time to past ever feel for them.

Mike Mayo: Thank you.

Thank you.

Our next question comes from Glenn Schorr with Evercore ISI. Please go ahead. Thanks, very much. Maybe one more quickie on allowance and reserves. When I look at the healthy reserve on card, it makes sense given the macro backdrop right looking at an unemployment and kind of the linear relationship with unemployment card. If you look at the U.S. commercial and non-U.S. commercial in and around 1%. That's obviously a lot more than we had lately, but not necessarily so that's the worst thing you could present given the world we're looking at. So I guess my question is when you talk about the quality and the mix of business and all the things that you gave us.

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

Mike Mayo: Hello. Thanks very much. Maybe one more quickie on allowance and reserves. When I look at the healthy reserve on card, it makes sense given the macro backdrop we're looking at and unemployment and kind of the linear relationship with unemployment on card. If you look at, say, US commercial and non-US commercial in and around 1%, that's obviously a lot more than we've had lately, but not necessarily the worst thing you could predict given the world we're looking at.

Glenn Schorr: Hello. Thanks very much. Maybe one more quickie on allowance and reserves. When I look at the healthy reserve on card, it makes sense given the macro backdrop we're looking at and unemployment and kind of the linear relationship with unemployment on card. If you look at, say, US commercial and non-US commercial in and around 1%, that's obviously a lot more than we've had lately, but not necessarily the worst thing you could predict given the world we're looking at.

Oh, thanks, very much maybe one more quickie on on on allowance and reserves.

When I look at the healthy reserve on card it makes sense given the macro backdrop right looking at an unemployment and kind of the linear.

Relationship with unemployment card.

The.

If you look at the U.S. commercial and non U.S. some ourselves.

Moving around 1%.

That's obviously a lot more than we had lately, but not necessarily so that's the so [noise].

The worst thing you could present given the world. We're looking that so I guess my question is when you talk about the quality and the mix of business and and all the things that you gave us.

Mike Mayo: So I guess my question is, when you talk about the quality, the mix of business, and all the things that you gave us, is what I consider the not as severe reserve on the commercial side a function of not knowing the timing, the mix of business, or is it where you sit in the capital stack, meaning even if some of those companies run into issues, your historical experience in the last bunch of years has been actually really, really good? So I know it's probably all of those, but I'm just trying to see if you could talk towards that on the commercial side.

So I guess my question is, when you talk about the quality, the mix of business, and all the things that you gave us, is what I consider the not as severe reserve on the commercial side a function of not knowing the timing, the mix of business, or is it where you sit in the capital stack, meaning even if some of those companies run into issues, your historical experience in the last bunch of years has been actually really, really good? So I know it's probably all of those, but I'm just trying to see if you could talk towards that on the commercial side.

Is the not as severe reserve on the commercial side a function of not knowing the timing, the mix of business or is that where you sit in the capital stack, meaning even if it's some of those companies funding issues your historical experience in last bunch of years since been actually really really good? So I know, it's probably all of those I'm just trying to see if you could talk towards that on the commercial side.

Indeed.

The what I consider them.

I'm not asking if your reserve on the commercial side a function of not knowing that timing.

The mix of business or is that where you sit in the capital stack, meaning even if it's some of those companies funding issues Youre historical experience in last bunch of years since been actually really really good.

So I know, it's probably all of those I'm just trying to see if you could talk towards that on the on the commercial side.

Paul Donofrio: Look, we've got 2.16 on commercial real estate. You know, given how we have run our commercial real estate business over the last 10 years, especially relative to others, we feel, you know, that that's up from, you know, 1.6, you know, at 1 January, we've got 1.11 on US commercial. You know, those commercial losses, they just don't run as high because of, you know, collateral and other protections we have in the structure. So you know, we feel pretty good. If you look at all of, if you look at total commercial, you know, we're at 1.16. So we feel good about where we are.

We got 2.16 on commercial real estate. Given how we have run our commercial real estate business over the last 10 years, especially relative to others, we feel that that's up from 1.6, at January one. We've got 1.11 on U.S. commercial. Those commercial losses, they just don't run as high because you know collateral and other protections we have in the structure.

You know given how we have run our commercial real estate business.

Over the last 10 years, especially relative to others, we feel.

You know that that's up from 1.6, you know at that at January one.

We've got 1.11 on U.S. commercial.

Commercial losses, they just don't run as high because you know collateral and other.

Other protections we have in the structure.

So you know, we feel pretty good. If you look at all of, if you look at total commercial, you know, we're at 1.16. So we feel good about where we are. And again, it's when you sort of add all that up and you just look at it relative to the losses that people are projecting, including the Fed, whether it's an adverse scenario or it's an adverse scenario, you're going to come out with percentages that are pretty healthy on an absolute basis and relative to our peers.

So you know, we feel pretty good if you look at all of took a total commercial. You know we're at 1.16, so we feel we feel good about where we are. When you sort of narrow all that up and you just look at it relative to the losses that people are projecting including the Fed. Whether it's an adverse scenario or an adverse scenario, you're going to come out what percentages that are pretty healthy on an absolute basis and relative to our peers. In closing, I'd add one thing it does go back to the beginning on the pretax, which we all learned does that the last crisis that you that earnings power to absorb pay as you go losses on the consumer side in terms of cartridges and things like that. Or building reserves isn't going through on the commercial side, which is what happens typically. That earnings powers, I think what we feel it has us in good stead in terms of the ability to absorb whatever circumstances play out here. With more liquidity than the started the year, more capital than we need 130 basis points more capital and the PPNR volume that lets us drive through it. And if you think about that PPNR when you look at this ER stress test and stuff, we're running a lot higher than the stress test assumes because they assume there's market losses and things like that, which we didn't experience even the ones most volatile periods of time in the market's history, and so I think as you play this out that, whether we can all talk about the reserve of X or Y or Z per thing, which is what you should all be focused on it should be focused on. The reality is how much earnings capacity you have to keep generating capital and keep generating earnings that you can offset whatever comes at you and that's what we feel good about.

You know we're at 1.16, so we feel we feel good about where we are and again.

Paul Donofrio: And again, it's when you sort of add all that up and you just look at it relative to the losses that people are projecting, including the Fed, whether it's an adverse scenario or it's an adverse scenario, you're going to come out with percentages that are pretty healthy on an absolute basis and relative to our peers.

Yes, it's when you sort of at all that up and you just look at it relative to the losses.

That people are projecting including the fad.

Whether it's an adverse scenario Orient say adverse scenario, you're kind of come out what percentages that are pretty healthy a route on an absolute basis and relative to our peers.

Brian Moynihan: Excellent. I'd add one thing. Let's go back to the beginning on the pre-tax PPNR, which we all learned after the last crisis. But that earnings power to absorb pay-as-you-go losses on the consumer side in terms of car charge-offs and things like that, or building reserves and then going through on the commercial side, which is what happens typically, that earnings power is, I think, what we feel has us in good stead in terms of the ability to absorb whatever circumstances play out here. And still with more liquidity than the start of the year, more capital than we need, 130 basis points more capital, and a PPNR volume that lets us drive through it.

In closing I'd add one thing it does go back to the beginning on the pretax.

Keep in our which we all learned does that the last crisis that you that earnings power to absorb yeah.

Hey, as you go losses on the consumer side in terms of Cook cartridges and things like that or you building reserves isn't going through on the commercial side, which is.

What happens typically that earnings power as I think what we feel it has us in good stead in terms of the ability to the ability to absorb.

whatever circumstances play out here.

More liquidity than the started the year more capital.

Then we need 130 basis points more capital and the PPNR volume that's.

lets us drive through it. And if you think about that PPNR when you look at this ER stress test and stuff, we're running a lot higher than the stress test assumes because they assume there's market losses and things like that, which we didn't experience even the ones most volatile periods of time in the market's history, and so I think as you play this out that,

Brian Moynihan: If you think about that PPNR, when you look at this stress test and stuff, we are running a lot higher than the stress test assume because they assume there's market losses and things like that which we didn't experience even in most volatile periods of time in the market's history. So I think as you play this out that whether we can all talk about the reserve of X, Y, or Z per thing, which is what you all are focused on and should be focused on, the reality is how much earnings capacity you have to keep generating capital and keep generating earnings that you can offset whatever comes at you. That's what we feel good about.

If you think about that PPNR, when you look at this stress test and stuff, we are running a lot higher than the stress test assume because they assume there's market losses and things like that which we didn't experience even in most volatile periods of time in the market's history. So I think as you play this out that whether we can all talk about the reserve of X, Y, or Z per thing, which is what you all are focused on and should be focused on, the reality is how much earnings capacity you have to keep generating capital and keep generating earnings that you can offset whatever comes at you. That's what we feel good about.

whether we can all talk about the reserve of X or Y or Z per thing, which is what you should all be focused on it should be focused on. The reality is how much earnings capacity you have to keep generating capital and keep generating earnings that you can offset whatever comes at you and that's what we feel good about.

If you study that portfolio remember. It's mostly investment grade. And if you look the other way around, if you look at the amount of loans or revolvers that we have, you know and leveraged finance private equity sponsored leveraged loan for example that that's less than 1% of total exposures. We don't have any CLO exposures, because we don't put any of that in our LM portfolio, we've got a fraction of tiny bit in global markets for training purposes. That commercial portfolio is relatively high grade.

Paul Donofrio: Thank you both. If you study that portfolio, remember it's mostly investment grade. And if you look at it the other way around, if you looked at the amount of loans or revolvers that we have, you know, in leveraged finance, private equity, sponsored leveraged loans, for example, that's less than 1% of total exposures. We don't have any CLO exposures because we, you know, we don't put any of that in our, in our ALM portfolio. We've got a fraction of tiny bit in global markets for, you know, trading purposes. So you know, that we, you know, that commercial portfolio is relatively high grade.

If you study that portfolio remember.

It's mostly investment grade.

And.

Looking at the other way around if you looked at.

The amount of.

Loans, our revolver that we have you know and leveraged finance private equity sponsored leveraged loan for example that that's less than 1%.

Total exposures.

We don't have any cielo exposures, because we you know we don't put any of that in our.

And our Alco portfolio, we've got a fraction of top tiny bit in global markets for.

Training purposes. So.

That we you know that that commercial portfolio its relatively high grade.

That's great detail. I appreciate it, thank you. We'll go now to Vivek [inaudible] with JP Morgan. Please go ahead. Hello. Are you still there? We are not able to hear you at this time, please check the mute function on your phone.

Mike Mayo: Great detail. I appreciate it. Thank you.

Glenn Schorr: Great detail. I appreciate it. Thank you.

[noise] [noise] well go now to Vince you may have with JP Morgan. Please go ahead.

Operator: We'll go now to Vivek Juneja with JPMorgan, please go ahead.

Brian Moynihan: Just. Hello?

And just.

[music].

Hello.

So that was that.

Paul Donofrio: You still there? Vivek? Is it us?

The us.

Exactly are not able to hear you at this time, please check the mute function on your phone.

Operator: Vivek, we are not able to hear you at this time. Please check the mute function on your phone.

Let's move on to next. We'll pick them up later. We'll go now to Matt O'Connor with Deutsche Bank. Please go ahead. Good morning. The NII guidance, obviously, was helpful and coming out much better than expected. Just wondering if you can give a little more detail in terms of, I assume that some of the sharp drop is higher bond premium amortization lower trading. But obviously kind of coordinated pressures, that's how I think about the free pockets. I don't know if that's right are you want to parse that definitely. But any additional color would be helpful. Thanks.

Brian Moynihan: Operator. Let's move on to the next one. We'll pick him up later.

Operator: We'll go now to Matt O'Connor with Deutsche Bank. Please go ahead.

Well go now to Matt O'connor with Deutsche Bank. Please go ahead.

Matt O'Connor: Good morning. The net NII guidance obviously helpful and coming off a much better than expected Q1. Just wondering if you can give a little more detail in terms of. I assume some of the sharp drop is higher bond premium amortization, lower trading, and then obviously kind of core NIM pressure is how I think about the three buckets. I don't know if that's right or you want to parse it differently, but any additional color would be helpful. Thanks.

Good morning.

[noise] eat NII guidance, obviously, how fallen coming off a much better than expected one care. Just wondering if you can give a little more detail in terms of I assume that some of the sharp drop of higher bond premium amortization lower trading.

But obviously kind of coordinated pressures, that's how I think about the free pockets. I don't know if that's right are you want to parse that definitely. But any additional color would be helpful. Thanks.

But any additional color would be helpful. Thanks.

Paul Donofrio: Yeah, I mean we did see, you know, bond premium amortization in Q1 was, is always sort of seasonally low or lower. We do expect an increase in Q2 given a decline in rates in Q1. You got to remember that, you know, prepayments generally lag moves in NII, you know, or they precede moves in the rate moves precede the NII impact by, you know, six to eight weeks. What else did you ask about?

Yeah, we did see you know bond premium amortization in Q1 was, there's always sort of seasonally low or lower. We do expect an increase in Q2. That came in a decline in rates in Q1. You got to remember that prepayment generally lags moves in NII, well they proceed moves and the rate move proceed the NII impact by six to eight weeks. Well since you asked about. I assume trading benefit 1Q had been factored in and then just going to call it core NIM pressure from the rate environment as a third bucket. Yeah, trading definitely you know, we are liability sensitive in global markets, but it's not a huge impact and it can bounce around quarter to quarter.

Low.

Or lower.

We do expect an increase in Q2.

The came in a decline in rates in Q1.

I don't remember that prepayment generally lag.

Moves and and I, you know well they proceed moves and the rate move proceed.

Hi, I impact by you know six eight weeks.

Well since you asked about.

Oh, I see them trading I bet, if had one Kevin if being factored in and that just call. It core NIM pressure from the rate environment as a third bucket.

Matt O'Connor: I assume trading benefit Q1 and is being factored in, and then just kind of call it core NIM pressure from the rate environment is the third bucket.

Paul Donofrio: Yeah, yeah. Trading definitely. You know, we are liability sensitive in global markets, but it's not a huge, it's not a huge impact, and it can bounce around quarter to quarter depending upon the type of assets that they're booking and whether they bought them at par or above or below par. That influences whether profits show up or revenue shows up in NII or shows up in market making or similar activities. So that's why we don't give guidance on it because it can change pretty rapidly depending on what they're buying and selling for clients in global markets. But right now it was a little bit liability sensitive and did help a little bit in Q1, and it'll probably help a little bit in Q2.

Yeah, Yeah trading trading definitely you know I, we are we are.

[music].

Liability sensitive in global markets, but it's not a huge it's not a huge impact and it can bounce around.

You know quarter to quarter.

Depending upon the type of assets that they're booking and whether they bought them at par or above or below par. That influences whether you know profit show up or revenue shows up in NII or shows up and market making or similar activity. So you know we that's why we don't give guidance on it because it can change pretty rapidly depending on what their what they're buying and selling for clients and global markets, but right now it was you know went a little bit liability sensitive and did have help a little bit in Q1 and it will probably help a little bit in Q2.

Guidance on it because it can change pretty rapidly depending on what their what they're buying and selling for clients and global markets, but but right. Now. It was you know went a little bit.

Liability sensitive and did have helped a little bit and Juana it'll probably help.

A little bit Inc. in Q2.

Okay, and then as you think about the balance sheet growth component, obviously 2Q average balances will benefit from the run up on a period end in 1Q, but I would think as you kind of look to the back half this year and beyond some of the line drawdowns in commercial start to get paid off. So that maybe it's tougher to grow the balance sheet or may be tougher to grow alone. That's the right way to think about it.

Matt O'Connor: Okay. And then as we think about the balance sheet growth component, obviously Q2 average balances will benefit from the run up on a period end in Q1. But I would think as you kind of look to the back half this year and beyond, some of those line drawdowns in commercial start to get paid off. So that maybe it's tougher to grow the balance sheet or at least tougher to grow loans. I don't know if that's the right way to think about it.

So that maybe it's tougher to grow the balance it or at least having to go alone.

That's right way to think about it.

Yeah, I mean, there's no question that you know commercial revolver line, which spiked in March will start to pay down once economic condition starts to improve. But obviously the timing of that you know very uncertain. So I think we're just gonna have to wait and see clearly we're going to see some carryover from these draws in Q2, and we May see a very significant amount stay with us for some time, we'll just have to wait and see. Obviously, deposit balances also benefit NII because you don't have to make a loan. You can earn on those deposit balances and there they are way up as well. And they may be with us for a little while. We'll just have to wait and see.

Paul Donofrio: Yeah, I mean, there's no question that commercial revolver lines which spiked in March will start to pay down once economic conditions start to improve. But obviously the timing of that is very uncertain. So I think we're just going to have to wait and see. Clearly we're going to see some carryover from these draws in Q2, and we may see a very significant amount stay with us for some time. We'll just have to wait and see. Obviously, deposit balances also benefit NII because you don't necessarily have to make a loan. You can, you know, you can, you can earn on those deposit balances, and they're way up as well, and they may be with us for a little while. We'll just have to wait and see.

Commercial revolver line, which spiked in March will start to pay down once economic condition start to improve but obviously the timing of that you know very uncertain.

So I think we're just gonna have to wait and see clearly we're going to see some carryover from these draws.

In Q2, and and we May see it.

You know very significant amount stay with us for some time, we'll just have to wait and see.

Obviously, deposit balances also benefit NII because you don't have to make a loan. You can earn on those deposit balances and there they are way up as well. And they may be with us for a little while. We'll just have to wait and see.

And.

And they may be whether it's for little while we'll just wait and see.

Matt O'Connor: Okay. And then just last quickie, just so.

Okay, and then just last quickie. Just you know our NII guidance, and I'm not going to get into the details, but our NII guidance of course assumes some sort of runoff. We're making some sort of guesses at this point about what the run off would be in both loan and deposit. Yes, understood. And then just lastly, our quick one on the spread of the commercial line drawdowns. Any rough numbers on that? I often asked that question. Yeah, sure. The spread on the draw downs were no different than what they were pre-crisis. Because you know they're just drawdowns or existing arrangements.

Paul Donofrio: You know, our NII guidance, you know, I'm not going to get into the details, but our NII guidance of course assumes some sort of runoff. We're making some sort of guesses at this point about what the run up would be in both loans and deposits.

Just you know our anti guide and you know I'm not going to get into the detailed third eye on guidance of course assumes some sort of run off we're making some sort of gases at this point about what the run off would be in both loan and deposit.

Matt O'Connor: Yes, understood. Then just lastly a quick one on the spread of the commercial line drawdowns. Any rough numbers on that? I'm often asked that question.

Yep under threat or and then just lastly, our quick one on the spread of the commercial line drawdown.

Any rough numbers on that I I'm, often asked that question yeah sure. They the spread on the draw downs, we no different than what they were pre crisis.

Paul Donofrio: Yeah, sure. The spread on the drawdowns will be no different than what they were pre-crisis because, you know, they're just drawdowns, they're existing arrangements. We worked with some clients to adjust the liquidity we were giving them. There were a few new loans in there that were at higher spreads, but most of the spreads were the same as were spreads pre-crisis. So you're not going to get a spread benefit on those draws.

Because you know there just draw downs or existing arrangement.

We worked with some clients to adjust the liquidity we were giving them. There are few new loans in there that were at higher spreads, but most of the spreads were the same as war spreads pre-crisis, so you're not going to get to spread benefit on those draws. Maybe like a LIBOR plus 150 or 200. Well, given the quality of our loan book, I wouldn't go as high as LIBOR plus 150.

Matt O'Connor: Maybe like a LIBOR plus 150 or 200.

Maybe like a LIBOR plus 150 or 200.

Paul Donofrio: Well, given the quality of our loan book, I wouldn't go as high as LIBOR plus 150.

Well given the quality of our loan book I wouldn't go as high as LIBOR plus 150.

Matt O'Connor: Got it. Okay, that's helpful. Thank you.

Got it okay. That's helpful. Yes, in terms of who drew, yeah. Yes, but one thing just a backup, there will be a transitory impact we should all hope of these draws and stuff and that means more stability to market more reopening of the economies. What isn't transitory, as you know, the good core work that went on in our consumer business or wealth manager businesses has been the Treasury services that core growth levels that will continue through even if the deposits that people have built in part. Back into other forms or get used up and so I think that that's going to be the trick for a while all of it got coupled with the pace of those loans are dropping off et cetera, but you know the route is over the long term, we're going to be based more on the way that underlying has performed going into this. And frankly, the amount of activity can continue in the underlying business. Given the COVID situation and our officers are making contact, our wealth managers will continue that accounts and various businesses not at the rate that you would before but because just not necessarily face to face meetings taken place, but you're seeing the wealth manager contacts are up. You're seeing even the referrals between the lines of businesses continue. It just at a lower rate because of the necessities of face to face meeting limitations, but those will come back as soon as we can get back in action. We'll go now to Brian Kleinhanzl with KBW. Please go ahead.

Brian Moynihan: In terms of who drew.

Paul Donofrio: Yeah. In terms of who drew. Yeah.

[music].

Yes, the but one thing we just just a backup <unk> there will be a transitory impact we should all hope of.

Brian Moynihan: But one thing we just to back up. There will be a transitory impact. We should all hope of these draws and stuff. That means more stability in the market, more reopening of the economy. But what doesn't isn't transitory is the good core work that went on in our consumer business, our wealth management businesses, then the treasury services, the core growth levels that will continue through even if the deposits that people have built in part go back into other forms or get used up. And so I think that's going to be the trick for a little while. We're all going to be preoccupied with the pace of those loans dropping off, et cetera.

These draws and stuff and that means more stability to market more.

Reopening of the economies so.

What doesn't isn't transitory as you know the good core work that went on in our consumer business or wealth manager businesses. The Treasury services that core growth levels that will continue through even if.

The deposits that people.

A built in part.

Back into other forms or get used up and so I think that that's going to be the trick for a while all of it got coupled with the pace of those.

loans are dropping off et cetera, but you know the route is over the long term, we're going to be based more on the way that underlying has performed going into this. And frankly, the amount of activity can continue in the underlying business. Given the COVID situation and our officers are making contact, our wealth managers will continue that accounts and various businesses not at the rate that you would before but because just not necessarily face to face meetings taken place, but you're seeing

Brian Moynihan: But the reality is over the long term are going to be based more on the way that underlying has performed going into this, and frankly the amount of activity can continue in the underlying business given the COVID virus situation. And we, our officers are making contact, our wealth managers, we're continuing to add accounts and various businesses not at the rate that you would before, but because just necessarily it's not face to face meetings taking place, but you're seeing the wealth management contacts are up, you're seeing even the referrals between our lines of businesses continue. It's just at a lower rate because of the necessities of face to face meeting limitations. But those will come back as soon as we can get back in action.

But the reality is over the long term are going to be based more on the way that underlying has performed going into this, and frankly the amount of activity can continue in the underlying business given the COVID virus situation. And we, our officers are making contact, our wealth managers, we're continuing to add accounts and various businesses not at the rate that you would before, but because just necessarily it's not face to face meetings taking place, but you're seeing the wealth management contacts are up, you're seeing even the referrals between our lines of businesses continue. It's just at a lower rate because of the necessities of face to face meeting limitations. But those will come back as soon as we can get back in action.

The way that underlying.

As performed going into this and frankly the amount of activity can continue and the underlying business.

Given this given this or the cobot cyber situation and we.

Our officers are making contact our wealth managers will continue that accounts and various businesses not at the rate that you would before but because just no. So it's not face to face meetings taken place, but you're seeing.

the wealth manager contacts are up. You're seeing even the referrals between the lines of businesses continue. It just at a lower rate because of the necessities of face to face meeting limitations, but those will come back as soon as we can get back in action. We'll go now to Brian Kleinhanzl with KBW. Please go ahead.

Meeting limitations, but those will come back as soon as we can get back in <unk>.

Well go now to Brian Kleinhanzl with KBW. Please go ahead.

Operator: We'll go now to Brian Kleinhanzl with KBW. Please go ahead.

Brian Kleinhanzl: Yes, good morning. Quick question. I know you commented on the consumer deferrals that you were seeing, but what's kind of been the trends on the corporate side as well, and kind of what's been the inbound with regards to using some of these government programs from your clients out there?

Yeah, good morning. Quick questions, I know you commented on the consumer deferrals that you were seeing, but what's kind of been the trends on the corporate side as well. And kind of what's been the inbound with regards to using some of these government programs from your clients out there?

Quick questions I know you commented on the consumer deferrals that you were seeing but what's kind of been the trends on the corporate side as well I'm kind of what's been the inbound with regards to using some of these government programs from your clients out there.

In terms of the government programs? Correct. Yes, 12 days ago, we started taking applications in the CPP program. We've had hundreds thousands of applications, we're processing them in accordance with the guidance that was given by treasury to get the work done and then submitted thousands of been through the SBA. And had a number and we have thousands and many thousands the hands declines that are signing promissory notes and we're funding them.

Brian Moynihan: In terms of the government programs we've had 12 days ago, we started taking applications in the PPP program. You know, we've had hundreds of thousand applications. We're processing them in accordance with the guidance that was given by Treasury to get the work done and then submit them. Thousands have been through the SBA and have a number, and we have thousands and many thousands of hands of clients that are signing promise or notes, and we're funding them. So that is still, I think, for the whole industry the real impact economic of the money traveling out is coming will come over the next period of time here. Today we received the first major distribution of the direct payments in terms of the $1,200 stimulus payment types.

Correct, Yeah, we.

Yes, 12 days ago, we started taking applications and CPP program.

Yeah, we've had hundreds thousands applications, we're processing them in accordance with the guidance that was given by treasury to get the work done and then submitted thousands of been through the S Bay and had a number and we have thousands and many thousands the hands declines that are signing promissory notes and we're funding them. So.

That is still for the whole industry the real impact economically the money traveling out will come over the next a period of time here. Today, we received the first major distribution of the direct payments in terms the told on a dollar stimulus payment types. We're seeing now the unemployment benefits the extra Rsix hundred dollar-type thing coming through in the benefits structures in the programs we're seeing both. As we service the state as a provider of prepaid card types, a card access to those programs and we see in our accounts. So those programs are just barely hitting the general consumer, general business et cetera, and turn it did for us it for the industry peers are all the same condition. And so they'll provide the stimulus, they'll provide is actually going to be you'll from now on not from now backwards because this is a program it didnt exist literally three weeks ago. Only started 12 days ago, and several hundred thousand people apply putting a processing through as best we can and it's a around 10-12,000 on the more commercial banking side of it.

The.

Direct payments in terms the told on a dollar stimulus payment.

Types, we're seeing now the unemployment benefits the extra Rsix hundred dollar type thing coming through in the benefits structures in the programs were seeing both.

Brian Moynihan: We're seeing now the unemployment benefits, the extra $600 type thing coming through, and the benefit structures we're seeing in the programs. We're seeing both as we service the state as a provider of prepaid card type card access to those programs. We see in our accounts, so those programs are just barely hitting the general consumer, general business, et cetera, in terms for us, for the industry, you know, our industry peers are all the same condition. So they'll provide the stimulus they'll provide is actually going to be, you know, from now on, not from now backwards because of the, you know, this is a program that didn't exist literally three weeks ago, only started two weeks, 12 days ago, and several hundred thousand people have applied for it and we're processing through as fast as we can and it's around 10 to 12,000.

We're seeing now the unemployment benefits, the extra $600 type thing coming through, and the benefit structures we're seeing in the programs. We're seeing both as we service the state as a provider of prepaid card type card access to those programs. We see in our accounts, so those programs are just barely hitting the general consumer, general business, et cetera, in terms for us, for the industry, you know, our industry peers are all the same condition.

As we service the state as a provider of.

I prepared to prepaid card types, a card access to those programs and and we see in our accounts. So those programs are just barely hitting the general consumer general business et cetera, and turn it did for us it for the industry you know.

Your peers are all the same condition and so they'll provide the stimulus they'll provide is actually going to be you'll from now on not from now backwards because of that you know this is a program it didnt exist.

So they'll provide the stimulus they'll provide is actually going to be, you know, from now on, not from now backwards because of the, you know, this is a program that didn't exist literally three weeks ago, only started two weeks, 12 days ago, and several hundred thousand people have applied for it and we're processing through as fast as we can and it's around 10 to 12,000. On the more commercial banking side of apply.

Literally three weeks ago only started two weeks.

12 days ago, and several hundred thousand people apply putting a processing through as best we can and it's a around 10 12000 on the more commercial banking side of it.

Brian Moynihan: On the more commercial banking side of apply.

And just a separate question. I know you build a big qualitative reserve now with Cecil, but kind of what are your expectations with regards to how the charge offs will roll through given all the deferrals that are going on for parents, which could push a potential charge off out to a year or more? Are you really kind of looking that you may not see much of an uptick this year and this really to be 2021 before you start to see meaningful degradation in the charge offs? Thanks.

Brian Kleinhanzl: Just a separate question. I know you built a big qualitative reserve now with CECL, but kind of what are your expectations with regards to how the charge-offs will roll through given all the deferrals that are going on for forbearance, which could push potential charge-offs out to a year or more. Are you really kind of looking that you may not see much of an uptick this year and this really could be a 2020, 2021 before you start to see meaningful degradation in the charge-offs.

Much of an uptick this year and this really to be a 2021 before we start to see meaningful degradation in the charge offs.

Paul Donofrio: Thanks.

The total amounts as you saw on page five of the balance of deferrals, so to go the inverse that 95% and we see if the cars are not deferred and you know they'll pay us and stuff. So I think the question is what really happens to your points. So we deferred somebody who's a 750 FICO who temporarily lost their job or thought they were going to lose a job at thought income and just wanted a month that have come back. And so I think the losses will shake out. Into the fall because just the methodology as you remember it's it's a 180 days you have to roll through all the buckets and stuff. So we'll see it play out, but it's going to be delayed but remember because the Cecil, you're providing for you expected outcome under that delay and Paul gave you the parameters of what we talked about already. So the question is that you know that's we're putting up at the end of the first quarter and we get the second auto put it up in a third-quarter all based on what we think that the credit cost will be or that portfolio over the cycle ahead of us. Down into the trough and back out the other side and the very slow matters, that Paul described.

Brian Moynihan: You know, so the total amounts as you saw on page five of the balance of deferrals. So if you go to the inverse of that 95% and we see of the cards are not deferred, and you know, they'll pay us and stuff. So I think the question is what really happens? Your point? So we deferred somebody who's a 750 FICO who temporarily thought you lost their job or thought they were going to lose a job or thought income and just wanted a month that'll come back. And so I think the losses will shake out from the, into the fall because just the methodology is. Remember it's to the 180 days you have to roll through all the buckets and stuff. So we'll see it play out, but it's going to be delayed.

It did the total mouse as you saw on page five.

The balance of deferrals, so to go the inverse that 95% and we see if the cars are not deferred and you know they'll pay us and stuff. So I think.

The question is what really happens your points. So we deferred somebody who's a 750, FICO who temporarily thought.

Lost their job I thought there can lose a job at thought income and just wanted a month that have come back and so I think the losses will shake out you know from the yeah.

Into the fall because just the methodology as you remember it's it's a 180 days you have to roll through all the buckets and stuff. So we'll see it play out, but it's going to be delayed but remember because the.

Brian Moynihan: But remember, because the CECL, you're providing for your expected outcome under that delay. And Paul gave you the parameters of what we talked about already. So the question is that's what we're putting up at the end of Q1, and we get the second quarter, we'll put it up in Q3 all based on what we think the credit costs will be of that portfolio over the cycle ahead of us, you know, down, down into the trough and then back out the other side in a very, very slow manner as Paul described. And then the real question will be sort of people's behavior given these government programs and the amount of extra cash going in. And then on the employment, the PPP program is employ people and pay people.

But remember, because the CECL, you're providing for your expected outcome under that delay. And Paul gave you the parameters of what we talked about already. So the question is that's what we're putting up at the end of Q1, and we get the second quarter, we'll put it up in Q3 all based on what we think the credit costs will be of that portfolio over the cycle ahead of us, you know, down, down into the trough and then back out the other side in a very, very slow manner as Paul described.

Cecil you, you're you're providing for you expected outcome under that delay and Paul gave you the parameters of what we talked about.

Yes already so the question is that you know that's we're putting up at the end of the first quarter and we get the second auto put it up in a third quarter all based on what we think that the credit cost will be or that portfolio over the cycle ahead of us.

[music].

Yeah, it down that down into the trough and back out the other side and the very.

Very slow matters, Paul just but.

And then the real question will be sort of people's behavior given these government programs and the amount of extra cash going in. And then on the employment, the PPP program is employ people and pay people. You get two, you know, eight weeks of pay to pay them out. And so we'll see how that all pans out to the underlying people. But so I think it's premature, but I think it will delay charge-offs. But our reserve at any given moment reflect what we think will ultimately happen to those customers, not when it will happen.

And then the real question will be sort of people's behavior, given these government programs and the amount of extra cash going in and then on the employment, the PPP program as employ people and pay people. You get to eight weeks of pay to pay a mouth and so we'll see how that all meets out to the underlying people. But so I think it's premature, but I think it will delay charge offs, but our reserve it any give them over reflect what we think will ultimately have to those customers not when it will happen. Okay. Thanks. We'll go now to [inaudible] with Jefferies. Please go ahead.

Brian Moynihan: You get two, you know, eight weeks of pay to pay them out. And so we'll see how that all pans out to the underlying people. But so I think it's premature, but I think it will delay charge-offs. But our reserve at any given moment reflect what we think will ultimately happen to those customers, not when it will happen.

Premature, but I think it will delay charge offs, but our reserve it any give them over reflect.

What we think will ultimately have to those customers not went away but.

Okay. Thanks. We'll go now to [inaudible] with Jefferies. Please go ahead.

Brian Kleinhanzl: Okay, thanks.

Well done out you can understand with Jefferies. Please go ahead.

Operator: We'll go now to Ken Usdin with Jefferies. Please go ahead.

Brian Kleinhanzl: Hey, thanks a lot. Hey Paul, just a couple of follow-ups on the NII front for you. You know, with LIBOR expanding versus Fed funds and the TED spread still wide, which typically happens obviously in times of stress, how are you expecting that to trajectory as you talk about your $11 billion number and just your expectation for rates in the long end of the curve?

Ken Usdin: Hey, thanks a lot. Hey Paul, just a couple of follow-ups on the NII front for you. You know, with LIBOR expanding versus Fed funds and the TED spread still wide, which typically happens obviously in times of stress, how are you expecting that to trajectory as you talk about your $11 billion number and just your expectation for rates in the long end of the curve?

Hi, Thanks, a lot. Hey, Paul just a couple of follow-ups on the on NII front for you. With LIBOR expanding versus fed funds in a tad spreads still wide, which typically happens obviously in times of stress. How are you expecting that trajectory as you talk about your 11 billion number and just your expectation for rates in the long into the curve.

Curve.

Paul Donofrio: Yeah, so we're basically factoring in a tightening between LIBOR and Fed funds over the year, but we're also factoring in some loan and deposit growth offsetting that. And then of course we've got securities and other assets maturing that we're going to replace at a lower yield. All that's factored into our perspective that we think with loan and deposit growth, you'll see NII kind of at that $11 billion level, give or take, roughly through the end of the year with.

Yeah. So we're basically factoring and a tightening between LIBOR and fed funds over the year. But we're also factoring in some loan and deposit growth offsetting that and then of course, we've got securities and other assets maturing that we're going to replace at a lower yield. All of that's factored into our perspective that we think with loan and deposit growth, we'll see NII at that 11 billion dollar level, give or take roughly at the end of the year.

A tightening between LIBOR and you know fed funds over the year [noise].

Oh.

We're also factoring in some loan and deposit growth you know offsetting that and then of course, we we've got you know securities.

And other assets maturing that we're going to replace at a lower yield [noise].

All of that's factored into the our perspective that we know we think with loan and deposit growth.

We can what you'll see anti kind of at that 11 billion dollar level, you know give or take roughly.

At the end of here.

So when you think with all the cash it sitting on the balance sheet and like you said earlier, you're expecting some tapering of that. What is the asset-liability decision about you know what to invest in what you're putting it in and so that's what's the kind of go-to investment rate versus what's coming off?

Brian Kleinhanzl: All the cash that's sitting on the balance sheet. And like you said earlier, you're expecting some tapering of that. What is the asset liability decision about what to invest and what you're putting it in? And so what's the kind of go to investment rate versus what's coming off?

Ken Usdin: All the cash that's sitting on the balance sheet. And like you said earlier, you're expecting some tapering of that. What is the asset liability decision about what to invest and what you're putting it in? And so what's the kind of go to investment rate versus what's coming off?

Paul Donofrio: Well, right now that liquidity, that excess liquidity that all came flooding in is in cash. We'll have to think about what we want to do with that excess liquidity as it becomes clearer kind of how long it's going to stick around. Right now, if you just look at what's in our securities portfolio and compare to the yields available to reinvest, they'd be 50 basis points lower. All that's kind of factored into our guidance.

Well, right now that excess liquidity that all came flooding in is in cash. We'll have to think about what we want to do that with that excess liquidity as it becomes clearer kind of how long it's going to stick around. Right now if you just look at what's in our securities portfolio compared to the deals available to reinvest, they'd be 50 basis points lower.

As in cash.

Well have to think about what we want to do that with that excess liquidity.

As it becomes clearer kind of how long, it's going to stick around.

Yeah right right now if you just look at what's in our securities portfolio compared to the deals available to reinvest they'd be 50 basis points lower.

But all that's kind of factored into our guidance. Right, and one more question on the block on the deposit side. Can you just talk about across the businesses, what you're seeing from customers in terms of money coming out of the markets? And whether it's sitting in money market mutual funds, in wealth management or whether it's moved onto the balance sheet. And just how do you know kind of how that ties into your ability to replace deposits. Thanks.

Brian Kleinhanzl: Right. And one more question on the deposit side, can you just talk about across the businesses, what you're seeing from customers in terms of, you know, money coming out of the markets and whether it's sitting, you know, in money market mutual funds in wealth management or whether it's moved onto the balance sheet and just, you know, kind of how that ties into your ability to reprice deposits? Thanks.

Ken Usdin: Right. And one more question on the deposit side, can you just talk about across the businesses, what you're seeing from customers in terms of, you know, money coming out of the markets and whether it's sitting, you know, in money market mutual funds in wealth management or whether it's moved onto the balance sheet and just, you know, kind of how that ties into your ability to reprice deposits? Thanks.

Right and one more question on the block on the deposit side can you just talk about across the businesses, what you're seeing from customers in terms of money coming out of the markets and whether it's sitting in money market mutual funds in wealth management or whether it's moved onto the balance sheet and just how do you know kind of how that ties into.

Your ability to reprice deposits. Thanks.

Just to start on that, just generally customers put more cash and you saw that in the wealth management deposits being up 19 billion. So that reflects not only the moving money, but also the reallocation in our models and things like that. So you've seen that, we'd seen them stabilize my guess is two thirds of that was more what you're speaking about a third or so what's sort of the core growth building up that we saw coming into the tail end of last year into the quarter, maybe a little less than that. But a lot of it was moving it will move back into markets based on the allocations and methods and in terms of deposit flowing to the markets on the money funds.

Brian Moynihan: Just to start on that, just generally customers put more cash, and you saw that in the wealth management deposits being up $19 billion. So that reflects not only the moving money but also the reallocation in our models and things like that. So you've seen that we've seen them stabilize. My guess is 2/3 of that was more what you're speaking about. A third or so was sort of the core growth building up that we thought coming into the tail end of last year, into the quarter, maybe a little less than that, but a lot of it was moving. It'll move back in the markets based on the allocations and methods in terms of deposit form to the markets. And then on the money funds, the allocations were reflected there because of the prime money funds versus the government money funds.

The moving money, but also the reallocation in <unk> models and things like that so.

You know so you've seen that I'd, we'd seen them stabilize my guess is two thirds of that was more what you're speaking about.

a third or so what's sort of the core growth building up that we saw coming into the tail end of last year into the quarter, maybe a little less than that. But a lot of it was moving it will move back into markets based on the allocations and methods and in terms of deposit flowing to the markets on the money funds.

It'll move back in the markets based on the allocations and methods in terms of deposit form to the markets. And then on the money funds, the allocations were reflected there because of the prime money funds versus the government money funds. There's a lot of instability around that toward the quarter. So I think this will all settle out and you'll see it return to more normal when people are thinking about that. So you'll see less volume growth in the balance sheet deposit driven than wealth management.

The allocations are reflected there because the prime money funds versus the government money funds, there's a lot of instability around that towards the quarter. So I think this will settle out you'll see it returned to more normal when people are thinking about that. So you'll see less volume go thinking in the balance sheet deposit driven a wealth management. Yeah. Not sure what else I would add to that. Obviously, we brought deposit pricing down in Q1, you can see that in the average byproduct.

The government money funds, there's a lot of instability around that towards the quarter. So I think this well settle out you'll see it returned to more normal when people when people are thinking about that so you'll see less volume go thinking in the balance sheet deposit driven a wealth management.

Brian Moynihan: There's a lot of instability around that toward the quarter. So I think this will all settle out and you'll see it return to more normal when people are thinking about that. So you'll see less volume growth in the balance sheet deposit driven than wealth management.

Yeah.

Paul Donofrio: I'm not sure what else I would add to that. Obviously we brought deposit pricing down in Q1. You can see that in the average by product. They're going to come down further just based upon pricing actions that we've already taken that are just now going to start rolling into those average deposit pricing across the different types of products. In terms of growth, we obviously saw very strong growth in Q1. There's a lot of moving pieces there. So it's hard to give guidance on growth from here. I just would emphasize what Brian emphasized earlier, that the underlying spike in the process, you know, if you look beneath that underlying spike, we still saw solid core organic growth, you know, across all our lobs in January and February.

Not sure what else I would add to that it obviously, we brought deposit pricing down.

In Q1, you can see that in the average byproduct.

They're going to come down further you know just based upon pricing actions that we've already taken that are just now going to start rolling into those average deposit pricing across the different types of products. In terms of growth, we saw very strong growth in Q1, there's a lot of moving pieces there. So it's hard to give guidance on growth from here. I would emphasize what Brian emphasized earlier that the underlying spike in process, if you look beneath that underlying spike, we still saw solid core organic growth across all our [LABs] in January and February.

Deposit pricing across the different types of products in terms of you know growth.

we saw very strong growth in Q1, there's a lot of moving pieces there. So it's hard to give guidance on growth from here. I would emphasize

what Brian emphasized earlier that the underlying spike in process, if you look beneath that underlying spike,

we still saw solid core organic growth across all our [LABs] in January and February.

You know across all our Lps in January and February.

Paul Donofrio: In terms of the second quarter, you know, with respect to consumer, you're going to have government stimulus and delayed tax payments. That's going to be a tailwind. GWIM clients, we'll just have to see they shifted out of investments into deposits. We're going to have to see, you know, how that plays out over time. In global banking, we already discussed the large deposit inflows in March. You know, ending deposits grew $94 billion quarter over quarter. As the markets stabilize and economic activity returns, we do expect, you know, some component of those deposit balances to flow out over time as clients pay down, you know, their lines, pay other bills and redeploy liquidity. So we've kind of factored all that in. But at this point there's a lot of uncertainty.

In terms of the second quarter, you know, with respect to consumer, you're going to have government stimulus and delayed tax payments. That's going to be a tailwind. GWIM clients, we'll just have to see they shifted out of investments into deposits. We're going to have to see, you know, how that plays out over time. In global banking, we already discussed the large deposit inflows in March. You know, ending deposits grew $94 billion quarter over quarter. As the markets stabilize and economic activity returns, we do expect, you know, some component of those deposit balances to flow out over time as clients pay down, you know, their lines, pay other bills and redeploy liquidity. So we've kind of factored all that in. But at this point there's a lot of uncertainty.

In terms of the second quarter. With respect to consumers, you're going to have government stimulus and delay tax payments, that's going to be a tailwind. When clients, we'll just have to see they shifted out of investments in deposits, we're gonna have to see how that plays out over time and then global banking, we already discussed the large deposit inflows in March. Any deposits grew 94 billion quarter over quarter.

With respect to consumer you're going to have government stimulus and delay tax payments, that's going to be a tailwind.

When clients, we'll just have to see they shifted out of investments in deposits, we're gonna have to see.

You know how that plays out overtime and then global banking, we already discussed the large deposit inflows in March.

You know any deposits grew 94 billion quarter over quarter.

As the market stabilizes and economic activity returns, we do expect some component of those deposit balances to flow out over time as clients pay down their lines, pay their bills and redeploy liquidity. We've kind of factored all that in but at this point, there's a lot of uncertainty.

To flow out over time as clients pay down you know their lines of <unk> pay their bills and redeploy appointed excel.

Oh, Yeah, we've kind of factored all that in but at this point, there's a lot of uncertainty.

Brian Kleinhanzl: Yep, understood. Thanks a lot.

Ken Usdin: Yep, understood. Thanks a lot.

Understood. Thanks, a lot. And we'll take our final question today from [inaudible] with JPMorgan. Please go ahead. Sorry about that earlier.

And we'll take our final question today friends at that <unk> with JP Morgan. Please go ahead, sorry about that earlier.

Operator: We'll take our final question today from Vivek Juneja with JPMorgan. Please go ahead.

Matt O'Connor: Sorry about that earlier. Let me just jump in. Not hold everybody up that much in.

Vivek Juneja: Sorry about that earlier. Let me just jump in. Not hold everybody up that much in. Your. Loan drawdowns, you said 90% investment grade. What percentage of those were triple B minus? And what are you thinking as you reserve? How many of those are more vulnerable or more at risk of downgrades?

Let me just jump in and not hold everybody up that much. In your long drawdowns, you said 90% investment grade. What percentage of those were triple B minus and what are you thinking as you've reserved more of those are more vulnerable or more at risk of downgrades. Well, over 90% were investment grade or secured. I don't have how many what triple B minus in front of me.

Operator: Your.

And your.

Matt O'Connor: Loan drawdowns, you said 90% investment grade. What percentage of those were triple B minus? And what are you thinking as you reserve? How many of those are more vulnerable or more at risk of downgrades?

Long drawn down said, 90% investment grade what percent what percentage of those what triple B minus and what are you thinking as Youve reserve.

Many of those are more vulnerable or more at risk of downgrades.

Paul Donofrio: Well over 90% were investment grade or secured. I don't have how many were triple-B minus in front of me. Okay.

Oh, well over 90% where investment grade or secured.

I don't have how many what triple B minus in front of me.

Okay.

Matt O'Connor: Okay. Going back to that, I know, you know, just looking at the reserve build, sorry to go back to that, but it is the question of the day on your, you know, you've talked about GDP staying negative well into 2021. Can you give some color on what you're thinking in terms of unemployment? How high do you see in your weighted average in 2021?

Vivek Juneja: Okay. Going back to that, I know, you know, just looking at the reserve build, sorry to go back to that, but it is the question of the day on your, you know, you've talked about GDP staying negative well into 2021. Can you give some color on what you're thinking in terms of unemployment? How high do you see in your weighted average in 2021?

Okay.

And going back to, just looking up the reserve belt, sorry to go back to that. But it is the question on the day. You've talked about GDP staying negative well into 2021. Can you give some color on what's your thinking in terms of unemployment? How high do you see a weighted average in 2021?

Can you give some color what's your thinking in terms of unemployment how high do you see a weighted average and 2021.

No. As I said before, we're not really providing that level of detail because we think comparisons on this input versus that input when there's 30 or 40 inputs into models. It's going to be misleading unless you have a pole context of all factors.

Paul Donofrio: As I said before, we're not really providing that level of detail because we think comparisons on, you know, this, you know, input versus that input, when there's 30 or 40 inputs in the models, you know, is going to be misleading unless you have the full context of all factors.

As I said before we're not really providing level that little detail because.

We think comparisons on this.

You know input versus that import weren't when there's 30 or 40 inputs into models.

It's going to be misleading unless you have a pole context of all factors.

Matt O'Connor: Right, okay, okay. Another one. Small business, you know, the deferrals that you've seen so far probably going to rise. What are you thinking in terms of as you've done your reserving what percentage of those ultimately either may not make.

Vivek Juneja: Right, okay, okay. Another one. Small business, you know, the deferrals that you've seen so far probably going to rise. What are you thinking in terms of as you've done your reserving what percentage of those ultimately either may not make. It at this point, your best what? Is.

Right. Okay, and others and small business. The deferrals that you've seen so far are probably gonna rise. What are you thinking in terms of as you've done your reserving, what percentage of those ultimately may not make it at this point?

You know.

Further video seems so far.

Probably gonna Rice, what are you thinking in terms of as you've done your reserving what percentage of those ultimately into may not make it at this point.

Brian Moynihan: It at this point, your best what?

Yeah, but what is back to your list. If you're listening earlier, I've been trying too many calls this morning, all at the same time. A substantial part of those small businesses or anything cult practice solution, which of doctors and dentists and things like that. And you expect once they open or practice, they'll pay because they don't want to lose their equipment practice. So it's a little different than the general small business. And that's why that number's elevated just because the dominant that portfolio is a percentage of the total. So if we expect a lot of will come back and we'll see that play out as parts of the economy re-open.

Matt O'Connor: Is.

Brian Moynihan: If you were listening earlier.

If you're listening earlier.

Mike Mayo: Been.

Vivek Juneja: Been. Trying, Brian. Too many calls this morning, all at the same time.

Matt O'Connor: Trying, Brian. Too many calls this morning, all at the same time.

I've been trying to many calls this morning, all at the same time, that's like a substantial part of those small business or anything cult practice solution, which of doctors and Dennis and things like that and you you expect once they open or practice they'll pay because they don't want to lose their equipment practice up so it's a little different than the general small business that that have.

Brian Moynihan: That's right. A substantial part of those small business are in a thing called Practice Solutions which are doctors, dentists, and things like that. You expect once they open their practice they'll pay because they don't want to lose their equipment practice. So it's a little different than the general small business that they have, and that's why that number is elevated just because of the dominance of that portfolio as a percentage of the total. So we expect a lot of it will come back, and we'll see that play out as parts of the economy reopen. Thank you, Vivek. We're going to move to close here because we've got an endpoint at 10. So let me just close quickly. Thank you, all of you, for your time this morning.

And that's why that number's elevated just because the dominant that portfolio is a percentage of the total. So if we expect a lot of will come back and we'll see that play out as parts of the economy re-open.

We'll play that we see that play out as as parts of the economy open.

Thank you, Vivek, and we're going to move to close here because we've got an endpoint attended a 10, so let me just close quickly. Thank you all of you for your time this morning. Please keep your families and yourselves safe as we go through the rest of this health crisis. Simply put, we are in $4 billion, we added substantially to our reserves based on our view of the end of the quarter. Our capital ratios under 30. Basis points over our minimums. The liquidity is increased during the quarter, but importantly, we drove responsible growth, supported our teammates, our clients and our communities and delivered I think for the shareholders too given the circumstances that we're going on.

An endpoint attended a 10, so let me just to close quickly.

Thank you all of you for your time. This morning, a number one please keep your families and yourselves safe as we go through the rest of this health crisis.

Brian Moynihan: Number one, please keep your families and yourselves safe as we go through the rest of this health crisis. Simply put, we earned $4 billion. We added substantially to our reserves. Based on our view of the end of the quarter, our capital ratio is 130 basis points over our minimums. The liquidity is increased during the quarter. But importantly we drove responsible growth, supported our teammates, our clients, and our communities and delivered, I think, for the shareholders too, given the circumstances that were going on. As we look forward, we'll continue to keep apprised of what we're seeing in our client base due to our purview. And as we see that, we'll continue to try to keep people informed to help people understand how the company and economy might operate given the stay-at-home orders.

Number one, please keep your families and yourselves safe as we go through the rest of this health crisis. Simply put, we earned $4 billion. We added substantially to our reserves. Based on our view of the end of the quarter, our capital ratio is 130 basis points over our minimums. The liquidity is increased during the quarter. But importantly we drove responsible growth, supported our teammates, our clients, and our communities and delivered, I think, for the shareholders too, given the circumstances that were going on. As we look forward, we'll continue to keep apprised of what we're seeing in our client base due to our purview. And as we see that, we'll continue to try to keep people informed to help people understand how the company and economy might operate given the stay-at-home orders. Thank you for your time, and we will talk to you next quarter.

Simply put, we are in $4 billion, we added substantially to our reserves based on our view of the end of the quarter. Our capital ratios under 30. Basis points over our minimums. The liquidity is increased during the quarter, but importantly, we drove responsible growth, supported our teammates, our clients and our communities and delivered I think for the shareholders too given the circumstances that we're going on.

Basis points over a minimum.

Liquidity is increased during the quarter, but importantly, we drove responsible goes supported our teammates or clients in our communities and delivered I think for the shareholders too given the circumstances that we're going on.

As we look forward, we'll continue to keep you apprised of what we're seeing on a client base due to our per view. And as we see that, we'll continue to try to keep people informed to help people understand how the company in the economy might operate given up given the state orders. Thank you for your time and we'll talk to you next quarter. This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Brian Moynihan: Thank you for your time, and we will talk to you next quarter.

Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.

Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time

This does conclude today's program. Thank you for your participation. You may disconnect at any time.

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Paul Donofrio: Sam. It. Sa. Sam.

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