Q2 2024 Bank of America Corp Earnings Call

Good day, everyone, and welcome to the Bank of America earnings announcement. At this time, all participants are in a listen-only mode.

Lee McIntyre: It is now my pleasure to turn the conference over to Lee McIntyre of Bank of America. Good morning.

Unknown Executive: This time, all participants are in listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star in one on your telephone keypad. You may withdraw yourself from the queue by pressing the pound key. Please note, this call may be recorded.

Later, you will have the opportunity to ask questions during the question and answer session.

Speaker Change: You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing the pound key. Please note, this call may be recorded. I'll be standing by if you should need any assistance.

Unknown Executive: I'll be standing by if you should need any assistance.

Lee McIntyre: It is not my pleasure to turn the conference over to Lee McIntyre of Bank of America.

Speaker Change: It is now my pleasure to turn the conference over to Lee McIntyre of Bank of America.

Brian Moynihan: Good morning. Welcome. Thank you for joining the call to review our second quarter results. Our earnings release documents are available in the Best Relation section of the Bank of America.com website. And they include the earnings presentation that we will make reference to during a call. I hope everyone is at a chance to review those documents.

Unknown Executive: Welcome. Thank you for joining the call to review our second quarter results. Our earnings release documents are available in the investor relations section of the bankofamerica.com website. They include the earnings presentation that we will make reference to during the call. I hope everyone has had a chance to review those documents.

Lee McIntyre: Good morning. Welcome. Thank you for joining the call to review our second quarter results. Our earnings release documents are available in the investor relations section of the bankofamerica.com website. And they include the earnings presentation that we will make reference to during the call.

Unknown Executive: Our CEO, Brian Moynihan, will make some opening comments before Alastair Borthwick, our CFO, discusses the details of the quarter. Let me just remind you that we may make forward-looking statements and refer to non-GAAP financial measures during the call. Forward-looking statements are based on management's current expectations and assumptions that are subject to risk and uncertainty. Factors that may cause our actual results to materially differ from expectations are detailed in our earnings materials and SEC filings, available on our website.

Brian Moynihan: Our CEO, Brian Moynihan, will make some opening comments before Alastair Borthwick. Our CEO discusses the details of the corner.

Speaker Change: I hope everyone has had a chance to review those documents. Our CEO , Brian Moynihan, will make some opening comments before Alastair Borthwick, our CFO , discusses the details of the quarter.

Brian Moynihan: Let me just remind you that we may make forward-looking statements and refer to non-GAAP financial measures during the call. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties. Factors that may cause are actual results to materially differ from expectations. Our detailed and our earnings materials and SEC findings are available on our website. Information about non-GAAP financial measures, including reconciliation to US GAAP, can also be found in our earnings materials that are available on their website.

Speaker Change: Let me just remind you that we may make forward-looking statements and refer to non-GAAP financial measures during the call. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties.

Speaker Change: Factors that may cause our actual results to materially differ from expectations are detailed in our earnings materials and SEC filings available on our website.

Speaker Change: Information about non-GAAP financial measures, including reconciliations to U.S. GAAP, can also be found in our earnings materials that are available on our website.

Unknown Executive: Information about non-GAAP financial measures, including reconciliations to U.S. GAAP, can also be found in our earnings materials that are available on our website. So with that, let me turn the call over to Brian. Thank you.

Brian Moynihan: So, with that, let me turn the call over to Brian.

Brian Moynihan: Thank you. Thank you, Lee.

Speaker Change: So, with that, let me turn the call over to Brian . Thank you. Thank you, Lee, and good morning, and thank all of you for joining us today. Before I begin today, I just want to reflect a second on the horrible events this weekend.

Brian Moynihan: Good morning, and thank all of you for joining us today.

Brian Moynihan: Before I begin today, I just want to reflect the second on the horrible benefits this weekend. We thank America. Our clear that there's no place for political violence in our great country. And we continue to wish the foreign President Trump and speed of recovery. And our thoughts, of course, go out to the victims and our families and others impacted by the charitable event.

Brian Thomas Moynihan: Before I begin today, I just want to reflect a second on the horrible events this weekend. We at Bank of America are clear that there's no place for political violence in our great country, and we continue to wish the former President Trump a speedy recovery, and our thoughts, of course, go out to victims and their families and others impacted by this terrible, Let's turn our attention to the results for the second quarter of 2024 from Bank of America Corporation.

Brian: We at Bank of America are clear that there's no place for political violence in our great country and we continue to wish the former President Trump a speedy recovery. And our thoughts, of course, go out to the victims and their families and others impacted by this terrible event.

Brian Thomas Moynihan: With that, let's turn results. Let's turn attention to the results for the second quarter of 2024, thank America Corporation. This quarter routine success in the number of areas underscoring the benefits of our diversity and the dedication our team to the liver response will grow. Our organic growth as you continue to add customers and activity to all our businesses. Even as we see the drop, and that is just income this quarter.

Speaker Change: With that, let's turn our results.

Brian: Let's turn attention to the results for the second quarter of 2024 Bank of America Corporation.

Brian Thomas Moynihan: This quarter, we achieved success in a number of areas underscoring the benefits of our diversity and the dedication of our team to deliver responsible growth. Our organic growth engine continues to add customers and activity to all our businesses, even as we see a drop in editor income this quarter. I'm starting on slide two.

Speaker Change: This quarter, we achieved success in a number of areas, underscoring the benefits of our diversity and the dedication of our team to deliver responsible growth. Our organic growth engine continues to add customers and activity to all our businesses, even as we see the drop in net interest income this quarter.

Brian Thomas Moynihan: Our net income for the quarter was $6.9 billion after tax, or 83 cents diluted EPS. Attesting to the balance in our franchise, the earnings were split evenly, half in our consumer and G-Win businesses, which serve people, and the other half in our institutional-focused business, global banking and markets. We grew revenue from the second quarter of 2023 as improvement in non-interest income overcame the decline in net interest income. Fees grew 6% year-over-year and represented 46% of total revenue in the quarter.

Brian Moynihan: I'm starting on slide two. Our net income to the quarter was $6.9 billion after tax rate, $3, sets and deluded EPS. Attesting to the balance in our franchise, the earnings are were split evenly. Half in our consumer due in the businesses which serve people. Any other half in our institutional focus business, global banking and markets. We grew revenue from the second quarter of 2023 as improvement in non-ish income overcame with the decline in that interest income. These grew as 6% every year or represent a 46% of total revenue in the quarter. Our strong feed performances led by a 14% improvement in asset management fees in our wealth management businesses.

Brian: I'm starting on slide two. Our net income for the quarter was $6.9 billion after tax or 83 cents in diluted EPS.

Brian: Attesting to the balance in our franchise, the earnings were split evenly, half in our consumer G-WIN businesses, which serve people, and the other half in our institutional-focused business, global banking and markets.

Brian: We grew revenue from the second quarter of 2023 as improvement in non-interest income overcame the decline in net interest income. Fees grew 6% year-over-year and represented 46% of total revenue in the quarter.

Brian Thomas Moynihan: Our strong fee performance was led by a 14% improvement in asset management fees in our wealth management business. We grew investment banking fees 29% year-over-year and saw sales and trading revenue increase 7%. Global Markets had its ninth consecutive quarter of year-over-year growth in sales and trading revenue. A good job by Jimmy DeMar and the team.

Brian: Our strong fee performance was led by a 14% improvement in asset management fees in our wealth management businesses.

Brian Thomas Moynihan: We grew investment banking fees 29% year every year and saw sales and trading revenue increase 7%. Global markets had its 9th consecutive quarter of year, year growth and sales and trading revenue. A good job by giving them our on a team. Car and service charge revenue also grew by 6% year by year, not considered this.

Brian: We grew investment banking fees 29% year-over-year and saw sales and trading revenue increase 7%.

Brian: Global Markets had its ninth consecutive quarter of year-over-year growth in sales and trading revenue, a good job by Jimmy DeMar and the team. Car and service charge revenue also grew by 6% year-over-year in our consumer business.

Brian Thomas Moynihan: Card and service charge revenue also grew by 6% year over year in our consumer business. Much of this feed growth is a result of our intensity around organic growth, a testament to the diversity of our offering. Now on to slide three. Organic growth has been driven by several key factors.

Brian: Much of this feed growth is a result of our intensity around organic growth and is a testament to the diversity of our operating model.

Brian: Now on to slide three. Organic growth has been driven by several key factors.

Brian Thomas Moynihan: First, we focus on our customers. We continue to place them at the center of everything we do; they led the way in delivering solid organic growth with high quality accounts and engaged clients. For the 22nd consecutive quarter.

Brian: First, we focus on our customers. We continue to place them at the center of everything we do.

Brian: Consumer led the way in delivering solid organic growth with high quality accounts and engaged clients. For the 22nd consecutive quarter we had significant net new consumer check-in counts.

Brian Thomas Moynihan: We had a significant net new consumer check; we expanded our customer base and our market. Specifically, we added 278,000 net new checking accounts this quarter, which brings our first six months of 2024 to more than 500,000. In Wealth Management, we added another 6,100 new relationships this quarter.

Brian: We expand our customer base and our market share.

Brian: Specifically, we added 278,000 net new check-in accounts this quarter, which brings our first six months of 2024 to more than 500,000.

Brian: In Wealth Managers, we added another 6,100 new relationships this quarter. In our Commercial Businesses, we added thousands of small businesses and hundreds of commercial banking relationships.

Brian Thomas Moynihan: In our Commercial Businesses, we added thousands of small businesses and hundreds of commercial banking relationships. This has led to now managing $5.7 trillion in client balances with loans, deposits, and investments across the consumer and wealth management client sectors. In those areas, we saw flows of $58 billion in the past four quarters.

Brian: This has led to now managing $5.7 trillion in client balances of loans, deposits, and investments across the consumer and wealth management client segments.

Brian: In those areas, we saw flows of $58 billion in the past four quarters.

Brian Thomas Moynihan: Our emphasis on personalized financial solutions and superior customer service has strengthened customer loyalty and attracted new clients across all our business. Our focus on providing liquidity and risk management solutions to our institutional clients positions us to continue to gain more share of the walls as well.

Brian: Our emphasis on personalized financial solutions and superior customer service has strengthened customer loyalty, attracted new clients across all our businesses. Our focus on providing liquidity and risk management solutions to our institutional clients' positions to continue to gain more share of the walls as well.

Brian Thomas Moynihan: One of the primary contributors to both attracting and attaining customers to our platforms is our digital banking capabilities for our clients across all business. Our fully integrated consumer banking investment app drives the utility for our customers across their investment and consumer accounts. Our use of stats is strong proof.

Brian: Second, we continue to deliver innovative digital solutions.

Brian: One of the primary contributors of both attracting and attaining customers to our platforms is our digital banking capabilities for our clients across all the businesses.

Brian: Our fully integrated consumer banking investment app drives the utility for our customers across their investment and consumer accounts. Our use of stats are strong proof points. Our second language capabilities in our consumer businesses further enhance our customers' capabilities.

Brian Thomas Moynihan: Our second language capabilities in our consumer businesses further enhance our customers' capabilities. You can see the continued digital growth in the slides on pages 26, 28, and 30 in the appendix. A couple highlights: our consumer mobile banking app now serves more than 47 million active users. They logged in 3.5 billion times this quarter.

Brian: You can see the continued digital growth in the slides on pages 26, 28, and 30 in the appendix.

Brian: A couple highlights. Our consumer mobile banking app now serves more than 47 million active users. They logged in 3.5 billion times this quarter.

Brian Thomas Moynihan: We also committed to continue to see more sales through the use of our digital properties. Digital sales represented 53% of our total sales in the past quarter in our consumer business. 23 million consumers are now using Zelle.

Brian: We also continue to see more sales through use of our digital properties. Digital sales represent 53% of our total sales in the past quarter of consumer businesses.

Brian Thomas Moynihan: They spend money on Zelle at nearly two and a half times the rate they write checks. And in fact, more Zelle transactions, SEND transactions, take place than a combination of customer ATM transactions, cash withdrawals, and teller. Simply put, Zelle has become a dominant way to move money.

Brian: 23 million consumers are now using Zelle. They spend money on Zelle at nearly two and a half times the rate they write checks.

Brian: And in fact, more Zelle transactions, SEND transactions, take place than a combination of customer ATM transactions, cash withdrawals, and teller. Simply put, Zelle has become a dominant way to move money.

Brian Thomas Moynihan: In our wealth management business, we are seeing more banking accounts being opened to complement the investment business those clients do with us. Importantly, these clients are also recognizing the ease of our digital banking capability. 75% of our new accounts and our male teammates were open digital.

Speaker Change: In our wealth management business, we are seeing more banking accounts being opened to complement the investment business those clients do with us. Importantly, these clients also recognize the ease of our digital banking capabilities.

Brian Thomas Moynihan: 87% of our global banking clients also are digitally active. We have innovated and significantly streamlined service requests by enabling clients to directly initiate and track transaction inquiries within our reward cash flow platform using AI to accomplish this. Third, we continue to make core strategic investments in our business. We're not complacent with the success you see on this page. We continue to invest in our core business. Here are a few examples.

Speaker Change: 75% of our new accounts and our mail teammates were open digitally. 87% of our global banking clients also are digitally active. We have innovated significantly streamlined service requests by enabling clients directly initiate and track transaction inquiries within our reward cash flow platform using AI to accomplish that.

Brian Moynihan: We're not complacable to success you see on this page; we continue to strategically invest our core businesses, a few examples. While we have the leading retail deposit share in America, we continue to invest in both 11 new financial centers this quarter and its first half a year, and renovated another 243. This is investment in both our expansion markets and our growth markets. And whilst managerately continuing investment advice or development program, it's growing at 2,300 teammates, allowing us to continuously add more than teammates to our 18,000 strong vested class financial advisory force across all of our management businesses.

Speaker Change: Third, we continue to make core strategic investments in our businesses.

Speaker Change: We're not complacent with the success you see on this page. We continue to strategically invest in our core businesses.

Brian Thomas Moynihan: While we have the leading retail deposit share in America, we continue to invest in 11 new financial centers this quarter and in this first half of the year and renovated another 243. This is an investment in both our expansion markets and our growth, and in Wealth Management, we continue to invest in our advisor development program. It's going to have 2300 teammates, allowing us to continuously add more than 2300 teammates to our 18,000-strong best-in-class financial advisory force across all of our wealth-managed businesses.

Speaker Change: A few examples. While we have the leading retail deposit share in America, we continue to invest in over 11 new financial centers this quarter, in this first half of the year, and renovated another 243. This is an investment in both our expansion markets and our growth markets.

Speaker Change: and Wealth Management, we continue to invest in our advisor development program. It's grown to 2,300 teammates, allowing us to continuously add more than...

Speaker Change: teammates to our 18,000 strong best-in-class financial advisory force across all our wealth-managed businesses.

Brian Thomas Moynihan: We're also adding teams of experienced advisors strategically in areas across the country, and our banking teams we continue to add our regional investment to our regional investment banking team. We now have more than 200 regional bankers across the country to better serve our commercial clients, and they complement our industry coverage to our corporate clients. And our global markets businesses, we continue to send balance into our clients and adding expertise and talent to continue to lead our market share and proven scene of the last several years.

Brian Thomas Moynihan: We're also adding teams of experienced advisors strategically in areas across the country. And our banking teams, we continue to add to our regional investment banking team. We now have more than 200 regional bankers across the country to better serve our commercial clients, and they complement our industry coverage for our corporate clients and our global markets business. We continue to extend balance sheets to our clients and add expertise and talent to continue to lead our market share improvements over the last several years. We have also increased our technology initiatives and expect to spend nearly $4 billion on technology initiatives this year.

Speaker Change: We're also adding teams of experienced advisors strategically in areas across the country.

Speaker Change: And our banking teams, we continue to add to our regional investment banking team. We now have more than 200 regional bankers across the country to better serve our commercial clients, and they complement our industry coverage to our corporate clients.

Speaker Change: And our Global Markets business, we continue to extend balance sheets to our clients in adding expertise and talent to continue to lead our market share improvement scene over the last several years.

Brian Moynihan: We also have increased our technology initiatives, and expect to spend nearly $4 billion on technology initiatives this year. We have focused projects on our artificial intelligence and enhancements of both clients and our teammates. Our recent example of our use of AI is our advisor to client insights tool. We've delivered more than 6 million insights here today to our financial advisors, providing the proactive review of the age of clients. AI has moved from cost savings ideas to enhance the quality of our customer interactions. Forced organic growth is driving integrated flows across our business. We invest heavily in each line of business that competes in the markets based on their particular customer segment.

Speaker Change: We also have increased our technology initiatives and expect to spend nearly $4 billion on technology initiatives this year. We have focused projects on artificial intelligence enhancements with both clients and our teammates.

Brian Thomas Moynihan: We have focused projects on our artificial intelligence enhancements with both clients and our own, a recent example of our use of AI as our advisor for client insights. We've delivered more than 6 million insights here today to our financial advisors, providing them proactive reasons to engage their clients. AI has moved from cost savings ideas to enhancing the quality of our customer interaction. Ford's Organic Growth is driving integrated flows across our business.

Speaker Change: A recent example of our use of AI is our Advisor to Client Insights tool.

Speaker Change: We've delivered more than 6 million insights here today to our financial advisors, providing them proactive resources to engage their clients.

Speaker Change: AI has moved from cost-savings ideas to enhancing the quality of our customer interactions.

Brian Thomas Moynihan: We invest heavily in each line of business that competes in the markets based on its particular customer segment. But importantly, we also invest across our lines of business to knit them together and gain market share in the local market. It's a differentiated advantage for us, our banking leadership position across our businesses and our nationwide franchise. For example, we leverage our franchise by connecting business customers while our teams across all our businesses have made four million referrals to other businesses in the first six months of this year. Next, we drive efficiency and effectiveness, and that's through our operational access platform.

Speaker Change: 4th Organic Growth is driving integrated flows across our business.

Speaker Change: We invest heavily in each line of business that competes in the markets based on their particular customer segment. But importantly, we also invest across our lines of business to knit them together and gain market share in the local markets.

Brian Moynihan: But, of course, we also invest across our line of business to knit them together and gain market share and welcome markets. It's a different differentiated advantage for our banking leadership position across our business and our nationwide franchise.

Speaker Change: It's a differentiated advantage for us, our banking leadership position across our businesses and our nationwide franchise. For example, we leverage our franchise by connecting business customers while management teams.

Brian Moynihan: For example, we leverage our franchise by connecting business customers while management teams. Our teams across all our businesses have made 4 million referrals to other businesses in the first six months of this year.

Speaker Change: Our teams across all our businesses have made 4 million referrals to other businesses in the first six months of this year.

Brian Moynihan: Next, we drive efficiency and effectiveness, and that's our operational excellence platform. We continue to invest heavily in the future of our franchise and growth. Well, we also have to manage expensive day-to-day. Our focus on operational excellence has enabled us to hold our expense growth up to 2% year over year, while below in the inflation rates. We continue to work to achieve operating beverages as then our AI stabilizes and begins to grow again. As you look at it now, so we'll explain later, a fair portion of your career increase of expense is due to the formula like a sense of wealth management due to the feed growth and efforts.

Speaker Change: Next, we drive efficiency and effectiveness, and that's through our Operational Access Platform.

Brian Thomas Moynihan: We continue to invest heavily in the future of our franchise and growth. But, we also have to manage expenses day to day. Our focus on operational excellence has enabled us to hold our expense growth up to 2% year over year while below inflation rates. We continue to work to achieve operating leverage as NII stabilizes and begins to grow. As you look at it, and Alastair will explain later, a fair portion of your increase in expenses due to the formulaic incentives of wealth management due to the fee growth in that business.

Speaker Change: We continue to invest heavily in the future of our franchise and growth, but we also have to manage expenses day to day.

Speaker Change: Our focus on operational excellence has enabled us to hold our expense growth up to 2% year over year, well below the inflation rates, and we continue to work to achieve operating leverages as NII stabilizes and begins to grow again.

Speaker Change: As you look at it, and Alastair will explain later, a fair portion of your increase in expenses due to the formulaic incentives of wealth management due to the peak growth of that business.

Brian Moynihan: And last, our capital strength allows us to live across stakeholders. Our capital rate strong is we held our CT1 ratio at 11.9% this quarter. We grew loans and increased our shared purchases at $3.5 billion paid and paid $1.9 billion in dividends. Average saluted share is dropped below 8 billion shares outstanding.

Brian Thomas Moynihan: And last, our capital strength allows us to deliver for all our stakeholders. Our capital remains strong, as we held our CET1 ratio at 11.9% this quarter. We grew loans, increased our share repurchases to $3.5 billion and paid $1.9 billion in dividends. Average saluted shares dropped below eight billion shares outstanding. In addition, we also announced our intent to increase our quarterly dividend by 8% upon board approval. Note that 11.9% CT1 ratio; we have a solid excess capital position, both above the current regulatory requirements and the increased requirement to 10.7% beginning October as a result of the lease of C-Card. Let's turn to slide four; there are a couple things to note.

Alastair: And last, our capital strength allows us to deliver for all stakeholders. Our capital remains strong as we held our CET1 ratio at 11.9% this quarter. We grew loans, increased our share repurchases to $3.5 billion and paid $1.9 billion in dividends.

Brian Moynihan: In addition, we also now spend 10 to increase our quarterly dividend and 8% upon board proof. and consumer growth was driven by credit card borrowing. And while home-lending balances were flat-ish, the originations picked up a bit this quarter. Lastly, and on a positive note, loan spreads continued to widen.

Speaker Change: Average diluted shares dropped below $8 billion, shares outstanding. In addition, we also announced our intent to increase our quarterly dividend 8% upon board approval.

Speaker Change: Note that the 11.9% CTU-1 ratio remained a solid excess capital position, both above the current regulatory requirements and the increased requirement to 10.7% beginning in October as a result of the Visa C-Card bill.

Brian Thomas Moynihan: First, we've noted for several quarters that the second quarter NII would be the trough for this rate cycle. We expect NIA to grow in the third quarter and fourth quarter this year. Alastair is going to provide you with some points in detail about the path forward.

Speaker Change: Let's turn to slide four. A couple things to note here.

Speaker Change: First, we've noted for several quarters that the second quarter NII would be the trough for this rate cycle.

Speaker Change: We expect NI to grow in the third quarter and fourth quarter of this year. Alastair is going to provide you some points in detail about the path forward. One of the important contributors to that change is the positive behaviors of our customers.

Brian Thomas Moynihan: One important contributor to that change is the positive behaviors of our customers. On slide four, you'll note that average deposits grew 2% year-over-year and increased modestly by a quarter. The second quarter, in reality, is typically a heavy outflow quarter. We have a lot of customers who pay a lot of taxes.

Alastair: On slide four, you'll note that average deposits grew 2% year-over-year and increased modestly by a quarter.

Alastair: The second quarter, in reality, is typically a heavy outflow quarter. We have a lot of customers who pay a lot of taxes in that quarter. Quarter-over-quarter increases in rates paid continue to slow again this quarter across all businesses except for wealth management.

Brian Thomas Moynihan: Quarter of a quarter increases in rates paid continue to slow again this quarter across all businesses except for WealthManager, and we show you that on this page, slide four by line of business. While wealth business deposit rates have moved higher with continued rotation, we expect those rates to begin to stabilize and the rate of quarterly change to decrease going forward. Turning to slide five, in previous calls, many of you asked questions or commented on the question about consumer net charge-offs and whether they would stabilize in the second half of 2024. That expectation we have remains unchanged as well.

Alastair: And we show you that on this page, slide four, by line of business. While wealth business deposit rates have moved higher with continued rotation, we expect those rates to begin to stabilize and the rate of quarterly change to decrease going forward.

Alastair: Turning to slide 5, in previous calls, many of you asked questions or commented on the question about consumer net charge-offs and whether they would stabilize in the second half of 2024. That expectation we have remains unchanged as well. This quarter's net charge-offs were 59 basis points.

Brian Thomas Moynihan: This quarter's net charge-offs were 59 basis points, for context. I you, This is a stabilization of the rate. I've just reminded you that prior to this quarter, I have to go all the way back to 2014 to see a charge-off rate that high, and that's near when we were still emerging from the financial crisis. On slide four, we highlight the 30 and 90 day plus credit card delinquency trends, which show delinquencies have plateaued for the second consecutive quarter. This should lead to stabilized net credit losses in credit cards in the second half of the year. At the bottom of the page, note a couple of facts.

Speaker Change: This is stabilization of the rate. I've just reminded prior to this quarter. I have to go all the way back to 2014 to see a charge-off rate of that high and that's near when we're still emerging from the financial crisis.

Alastair: On slide four, we highlight the 30 and 90 day plus credit card delinquency trends, which show delinquencies have plateaued for the second consecutive quarter. This should lead to stabilized net credit losses in credit card in the second half of the year. At the bottom of the page, note a couple facts.

Brian Thomas Moynihan: First on payment rates, this is the rate of pay down of balances a given month remains 20% above the index to the pre-pandemic levels, even while our card customers have plenty of capacity to borrow, importantly, because of our relationship-based businesses. Look at the right-hand slide at the bottom of page five. There you can see our deposit investment balances of our customers who also have a card with us remain 25% above their pre-pandemic levels, continuing to help these customers.

Alastair: First on the payment rates, this is the rate of pay down on balances at a given month remain 20% above

Alastair: Index to the pre-pandemic levels, even while our card customers have plenty of capacity to borrow. Importantly, because we're a relationship-based business,

Alastair: Look at the right-hand slide at the bottom of page 5. There you can see our deposit investment balances of our customers who also have a CARB list remain 25% above their pre-pandemic levels, illustrating continued healthiest customers.

Brian Thomas Moynihan: So you think about consumer credit. The car charge-offs drive it, and they flattened out in terms of delinquencies, and we expect an improvement. With regard to commercial real estate, our usual CRA credit exposure slide is included in our appendix.

Alastair: So if you think about consumer credit.

Speaker Change: The car charge us drive it in a flattened out in terms of delinquencies and we expect to improve in the second half

Speaker Change: With regard to commercial real estate, our usual CRA credit exposure slide is included in our appendix.

Alastair M. Borthwick: We continue to aggressively work through our loans and our modest office portfolio. We saw a decrease in all the categories, a decrease in reservable criticized loans, a decrease in MPLs, and a decrease in net charges. This supports our previous expectation that net charge-offs in the second half of 2024 will be lower than in the first half. Our second quarter performance highlights Bank of America's ability to generate strong. Alastair Borthwick, Alastair Maynard, Alastair Borthwick, Alastair Maynard, Thank you, Brian.

Speaker Change: We continue to aggressively work through our loans and our modest office portfolio. We saw a decrease in all the categories, a decrease in reservable criticized loans, a decrease in MPLs, and a decrease in net charge-offs.

Speaker Change: This supports our previous expectation that net charge offs in the second half of 2024 will be lower than the first half of 2024.

Speaker Change: Our second quarter performance highlights Bank of America's ability to generate strong.

Speaker Change: Sustainable growth through a combination of customer-centric strategies, innovation, strategic investments, and a commitment to a strong balance of risk and reward. We call that responsible growth. We're confident that focused approach will continue to drive long-term success and create value for you, our shareholders.

Alastair M. Borthwick: And I'm going to start on slide six of the earnings presentation. I'll touch on more highlights noted on slide six. As we work through the material, I just want to say up front that we delivered strong returns, with a return on average assets of 85 basis points and a return on tangible common equity of nearly 14%. So let's move to the balance sheet on slide seven, where you can see we ended the quarter at 3.26 trillion in total assets, relatively unchanged from the first quarter, and not much to note here apart from a mixed shift of lower securities balances, mostly offset by an increase in reverse repo and modest loan growth, as well as client activity in global markets.

Speaker Change: Now I will turn to Alastair for additional calls.

Alastair: Thank you, Brian , and I'm going to start on slide 6 of the earnings presentation. I'll touch on more highlights noted on slide 6 as we work through the material. I just want to say up front that we delivered strong returns with return on average assets of 85 basis points and a return on tangible common equity of nearly 14%.

Alastair: So let's move to the balance sheet on slide 7, where you can see we ended the quarter at $3.26 trillion of total assets, relatively unchanged from the first quarter, and not much to note here apart from a mixed shift of lower securities balances.

Alastair: mostly offset by an increase in reverse repo and modest loan growth as well as global markets client activity.

Alastair M. Borthwick: On the funding side, deposits declined $36 billion on an ending basis, reflecting typical seasonal customer payments of income tax. And as Brian noted, average deposits were still modestly higher, liquidity remains strong with 909 billion of global liquidity sources, which was flat compared to the first quarter. Shareholders' equity was also flat compared to Q1, as earnings were hurt by $5.4 billion in capital distributed to shareholders and a $1.9 billion redemption of preferred stock and quarter.

Alastair: On the funding side, deposits declined $36 billion on an ending basis, reflecting typical seasonal customer payments of income taxes. And as Brian noted, average deposits were still modestly higher.

Brian: Liquidity remains strong with 909 billion of global liquidity sources that was flat compared to the first quarter.

Alastair M. Borthwick: The $5.4 billion of capital contributions included $1.9 billion in common dividends and the repurchase of $3.5 billion in shares. AOCI improved modestly in the quarter, and its tangible book value per share of $25.37 rose 9% from the second quarter of last year. In terms of regulatory capital, our CET1 level improved to $198 billion, and the CET1 ratio was stable at 11.9%. This 11.9% ratio remained well above our current 10% requirement, as well as our new 10.7% requirement as of October 1st, 2024. Risk-weighted assets increased modestly, and that was driven by the Supplemental leverage ratio is 6% versus our minimum requirement of 5%, and that leaves plenty of capacity for balance Brian has already covered deposit trends, so let's turn the balance sheet focus to loans. And we'll look at average balances on slide eight. And you can see an average volume in Q2 of 1.051 trillion.

Brian: Shareholders' equity was also flat compared to Q1, as earnings were upset by $5.4 billion in capital distributed to shareholders.

Brian: and a $1.9 billion redemption of preferred stock and quarter. The $5.4 billion of capital contributions included $1.9 billion in common dividends and the repurchase of $3.5 billion in shares.

Brian: AOCI improved modestly in the quarter and tangible book value per share of $25.37 rose 9% from the second quarter of last year.

Brian: In terms of regulatory capital, our CET1 level improved to $198 billion and the CET1 ratio was stable at 11.9%.

Brian: This 11.9% ratio remained well above our current 10% requirement, as well as our new 10.7% requirement as of October 1st, 2024. Risk-weighted assets increased modestly, and that was driven by lending activity.

Brian: Our Supplemental Leverage Ratio is 6% versus our Minimum Requirement of 5% and that leaves plenty of capacity for balance sheet growth.

Brian: and our 468 billion of TLAC means our total loss absorbing capital ratio remains comfortably above our requirements.

Brian: Brian already covered deposit trends, so let's turn the balance sheet focus to loans, and we'll look at average balances on slide 8.

Brian: You can see average loans in Q2 of $1.051 trillion. They improved 1% year-over-year, driven by 5% credit card growth and modest commercial growth.

Alastair M. Borthwick: They improved 1% year over year, driven by 5% credit card growth and modest commercial growth. A modest improvement in overall commercial loans included a 2% increase in our domestic commercial loans and leases, partially offset by a 4% decline in commercial real middle market lending saw an uptick in the quarter. And we saw good demand in our wealth businesses from custom lending. These areas of growth were largely offset by continued paydowns from our larger corporate clients on interest rates, and Consumer Growth was driven by credit card borrowers. And while home lending balances were flattish, originations picked up a bit this quarter. Lastly, and on a positive note, bone spreads continue to wake.

Brian: A modest improvement in overall commercial loans included a 2% increase in our domestic commercial loans and leases.

Brian: Partially offset by a 4% decline in commercial real estate.

Brian: Middle market lending saw an uptick in the quarter and we saw good demand in our wealth businesses from custom lending.

Brian: These areas of growth were largely offset by continued paydowns from our larger corporate clients on interest rate sentiment.

Brian: Consumer Growth was driven by credit card borrowing.

Brian: And while home lending balances were flattish, originations picked up a bit this quarter.

Brian: Lastly, and on a positive note, loan spreads continue to widen.

Alastair M. Borthwick: As we turn our focus then to NII performance and slide 9, note that we moved the slide we typically use to talk about excess deposits to the appendix on slide 22, so you can see that there. Our excess deposit levels above loans remained high at $850 billion and continue to be a good source of value for shareholders. 52% of our excess liquidity is now in short-dated cash and available for sale as security.

Brian Moynihan: As we turn our focus back to NII performance, handslide 9, note that we move this light we typically use to talk about excess deposits to the appendix on light 22C can see that there. Our excess deposit levels of up loans were mined high at 850 billion and continued to be a good source of value for shareholders. 52% of our excess liquidity is now in short-dated cash and available-for-sale securities. The longer-dated lower yielding, called to maturity book continues to roll off, and we reinvest it again this quarter in higher yielding assets. The blended yield of cash and securities continued to improve in the quarter, and is now 160 basis points above our deposit rate paid.

Brian: As we turn our focus then to NII performance and slide 9, note that we moved the slide we typically use to talk about excess deposits to the appendix on slide 22, so you can see that there.

Brian: Our excess deposit levels above loans remained high at $850 billion and continue to be a good source of value for shareholders. 52% of our excess liquidity is now in short-dated cash and available for sale securities.

Alastair M. Borthwick: The longer dated, lower yielding Holt's maturity book continues to roll off, and we reinvested again this quarter in higher yielding assets. The Blended Yield of Cash and Security continued to improve in the quarter and is now 160 basis points above our deposit rate, regarding NII on a gap. To all locations on hold, please remain online. We're experiencing a technical difficulty. Please remain online.

Brian: The longer-dated, lower-yielding Hultman Cherokee book continues to roll off, and we reinvested again this quarter in higher-yielding assets.

Brian: The Blended Yield of Cash and Securities.

Brian: continue to improve in the quarter and is now a hundred and sixty basis points above our deposit rate paid.

Unknown Executive: Regarding NII, on a guess, we're experiencing a technical difficulty. Please remain online. You'll hear music for just a moment.

Speaker Change: Regarding NII on a gap

Speaker Change: To all locations on hold, please remain online, we're experiencing a technical difficulty. Please remain online. You'll hear music for just a moment.

Alastair M. Borthwick: You'll hear music, and for just a moment, it will materialize. And this now includes three interest rate cuts, starting in September, another in November, and one more in December. And the waterfall shows an estimated impact of those very cuts on our quarterly MII. The next couple of categories are a result of the natural management of interest rate risk in a balance sheet mixed with fixed rate assets and variable rate assets. And our balance sheet... is roughly half and half.

Speaker Change: Just a moment.

Speaker Change: will materialize. And this now includes three interest rate cuts starting in September , another in November , and one more in December . And the waterfall shows an estimated impact of those rate cuts to our quarterly NII.

Unknown Executive: The next couple categories are a result of natural management interest rate risk in a balance sheet, next with fixed rate assets, and variable rate assets. And our balance sheet is what, roughly? It's very challenging, then, to provide guidance for 25 at this stage. Overlaying up here is these are the component parts. We're going to get some benefit from first-rate asset pricing over time. We're going to get some benefit and the immediate term from this basis, that leaving back into the P&L. As that goes off, we'll get benefit from cash flow hedges repricing. And then, you know, what we do is to forward-curps things you do for the red cuts.

Speaker Change: The next couple of categories are a result of natural management of interest rate risk in a balance sheet mixed with fixed rate assets and variable rate assets, and our balance sheet is split roughly half and half.

Alastair M. Borthwick: So we take in liquidity from customers that we use to fund our assets, and then we store excess liquidity in cash and securities. We have fixed assets that mature and pay down, and those supply cash that then gets put back to work on the balance sheet and reprices over time. We have two basic categories of fixed assets that mature and pay off, and those are securities and loans.

Speaker Change: So we take in liquidity from customers that we use to fund our assets, and then we store excess liquidity in cash and securities.

Speaker Change: We have fixed assets that mature and pay down, and those supply cash that then gets put back to work on the balance sheet and reprices over time. And we have two basic categories of fixed assets.

Alastair M. Borthwick: On securities, you can see we've got about $10 billion and a quarter of cash coming off of our securities portfolio. And we gained roughly 300 basis points of improvement on those assets when we put that money back on the balance sheet. On loans, between Rati Mortgage and Otto, we've got another roughly $10 billion, which reprices with a bit of last year's improvement on the securities. And between the securities and loans, we expect the fixed rate asset repricing to add about 300 million to our quarterly rate of NII as we get to the fourth quarter. On the variable rate asset side, and to protect from down moves in rates.

Speaker Change: The mature and payoff, and those are securities and loans.

Speaker Change: On securities, you can see we've got about $10 billion and a quarter of cash coming off of our securities portfolio, and we gained roughly 300 basis points of improvement on those assets when we put that money back on the balance sheet.

Speaker Change: On loans, between Rati Mortgage and Otto, we've got another roughly $10 billion which reprices with a little less yield improvement than securities.

Speaker Change: And between the securities and loans, we expect the fixed-rate asset repricing adds about $300 million to our quarterly rate of NII as we get to the fourth quarter.

Speaker Change: On the variable rate asset side, and to protect from down moves in rates, we hedge some of that with cash flow swaps.

Alastair M. Borthwick: We had some of that with cash flow swaps, and those typically roll off in any given quarter and get replaced over time. So included in the cash flow hedges is an impact of the cessation of BISB as an alternative rate. If you recall, we took a charge in the fourth quarter of 23. It was $1.6 billion, and we said that would come back to us three times.

Speaker Change: and those typically roll off in any given quarter and get replaced over time.

Speaker Change: So included in the cash flow hedges is an impact of cessation of BISB as an alternative rate. If you recall, we took a charge in the fourth quarter of 23. It was $1.6 billion. And we said that would come back to us through time.

Alastair M. Borthwick: And beginning in November, we start to see the benefit coming back into NII, and in Q4, that's about 200 million. That Q4 partial quarter benefit will grow by a slightly smaller sequential NII benefit in Q1, 25, and then it begins to taper off heading into 2026. In addition, we've got about $150 billion of received fixed cash flow hedges protecting us from short rate moves moving over. Most are hedging floating rate commercial loans, and the cost of those hedges is reported as contra revenue in commercial loan interest income.

Speaker Change: And beginning in November , we start to see the benefit coming back into NII, and in Q4, that's about $200 million.

Speaker Change: That Q4 partial quarter benefit will grow by a slightly smaller sequential NII benefit in Q1-25.

Speaker Change: And then it begins to taper off heading into 2026.

Speaker Change: In addition, we've got about 150 billion of received fixed cash flow hedges protecting us from short rate moves moving over.

Speaker Change: Most are hedging floating rate commercial loans and the cost of those hedges is reported as contra revenue in commercial loan interest income. These hedges have a weighted average life of just over two years and they've got an average fixed rate of approximately 250 basis points.

Alastair M. Borthwick: These scientists have a weighted average life of just over two years, and they've got an average fixed rate of approximately 250 basis points. So starting in the second half of 2025, we begin to get some additional NII tailwind because the cash flow hedges with lower fixed rates, when we receive them, those will begin to roll off and will likely replace those at higher current market rates at the time. The actual size of the tailwind we'll get from exploring those swaps will obviously be highly dependent on the level and the shape of the yield curve at the time of those maturities, and that stretches out over the course of the next four years. Okay, I have a couple other points to make.

Speaker Change: So starting in the second half of 2025, we begin to get some additional NII tailwind because the cash flow hedges with lower fixed rate likes when we receive.

Speaker Change: Those will begin to roll off and will likely replace those at higher current market rates at the time.

Speaker Change: The actual size of the tailwind we'll get from the expiration of those swaps will obviously be highly dependent on the level and the shape of the yield curve at the time of those maturities, and that stretches out over the course of the next four years.

Alastair M. Borthwick: You'll note we don't expect much movement around our modestly liability sensitive global markets NII activity. And lastly, our forward view has an expectation of low single-digit growth in loans and low single-digit growth in deposits, with continued slowing of rate-paid movement through the back half of 2024. And you can see our expectation of the combined impact here as well. This last element is the one that has the most potential variability and obviously will depend upon actual deposit and loan growth and pricing and rotation.

Speaker Change: Okay, a couple other points to make.

Speaker Change: You'll note we don't expect much movement around our modestly liability-sensitive global markets NII activity.

Speaker Change: And lastly, our forward view has an expectation of low single-digit growth in loans.

Speaker Change: Low single-digit growth on deposits, with continued slowing of rate-paid movement through the back half of 2024. And you can see our expectation of the combined impact here as well.

Speaker Change: This last element is the one that has the most potential variability and obviously will depend upon actual deposit and loan growth and pricing and rotation.

Alastair M. Borthwick: Okay, let's turn to expenses, and we'll use slide 11 for the discussion. We reported $16.3 billion of expenses this quarter, and that's more than $900 million lower than Q1, which included $700 million for the FDIC Special Assessment. Not including the FDIC assessment, expenses were lower than Q1 by $229 million, driven by seasonally lower payroll tax expenses.

Speaker Change: Okay, let's turn to expense and we'll use slide 11 for the discussion.

Speaker Change: We reported $16.3 billion of expense this quarter, and that's more than $900 million lower than Q1, which included $700 million for the FDIC Special Assessment.

Speaker Change: Not including the FDIC assessment, expenses were lower than Q1 by $229 million, driven by seasonally lower payroll tax expense.

Alastair M. Borthwick: Q2-23 were up less than 2%, and that increase is equal to the incentives paid for improved fee revenue; incentives for a G1 business alone are up 200 million euros. That's obviously an expense we're happy to pay when we have a 14% improvement in fees for assets under management. Our second quarter headcount number included welcoming a diverse class of nearly 2000 summer interns. We hope they will join us over the course of the next year or two upon their graduation.

Speaker Change: Compared to Q2'23 we're up less than 2% and that increase is equal to the incentives paid for improved fee revenue.

Speaker Change: Incentives for a G1 business alone are up 200 million euro per year.

Speaker Change: And that's obviously an expense we're happy to pay when we have a 14% improvement in fees for assets under management.

Alastair M. Borthwick: And absent those interns, our headcount fell by nearly 2000. In the third quarter, we expect to add approximately 2,500 college graduates full-time, and that's from more than 120,000 applications received, showing that we remain an employer of choice for talented young people. Expense levels for the rest of 2024 are expected to bounce around the second quarter level, given the higher fee revenue and investments made for growth. So let's now move to credit, and we'll turn to slide 12. There was little change in our asset quality metrics this quarter. Provision expense was $1.5 billion.

Speaker Change: Our second quarter headcount number included welcoming a diverse class of nearly 2,000 summer interns We hope will join us over the course of the next year or two upon their graduation And absent those interns our headcount fell by nearly 2,000

Speaker Change: In the third quarter, we expect to add approximately 2,500 college graduates for full-time, and that's from more than 120,000 applications received, showing that we remain an employer of choice.

Speaker Change: for talented young people.

Speaker Change: Expense levels for the rest of 2024 are expected to bounce around this second quarter level, given the higher fee revenue and investments made for growth.

Speaker Change: So let's now move to credit and we'll turn to slide 12.

Speaker Change: There was little change in our asset quality metrics this quarter. Provision expense was $1.5 billion. That was $189 million higher than Q1, driven by a smaller reserve release in Q2.

Alastair M. Borthwick: That was $189 million higher than Q1, driven by a smaller reserve release in Q2. Net charge-offs of $1.5 billion were little changed, with a small increase in credit card charge-offs, mostly offset by lower commercial real estate office charge-offs. On a weighted basis, we remain reserved for an employment rate of nearly 5% by the end of 2025, compared to the most recent 4.1% rate reported. The net charge-off ratio was 59 basis points, largely unchanged for 2 months.

Speaker Change: Net charge-offs of $1.5 billion were little changed, with a small increase in credit card, mostly offset by lower commercial real estate office charge-offs.

Speaker Change: On a weighted basis, we remain reserved for an employment rate of nearly 5% by the end of 2025 compared to the most recent 4.1% rate reported. The net charge-off ratio was 59 basis points, largely unchanged from 2.1.

Alastair M. Borthwick: On slide 13, we highlight more credit quality metrics for both our consumer and commercial portfolios. Consumer net charge-offs increased by a modest $31 million versus the first quarter, from the flow-through of higher late-stage credit to our delinquencies from Q1. Highlighting the change in direction of delinquencies, consumer 90-day plus delinquencies declined in 2Q by 57 million. Commercial net charge-offs were relatively flat, as lower commercial real estate losses were mostly offset by a small increase in other commercial loans. Our office losses went from $304 million in Q1 to $226 million in Q2. Other commercial real estate loan losses were simply due to debt.

Speaker Change: On slide 13 we highlight more credit quality metrics for both our consumer and commercial portfolios. Consumer net charge-offs increased by a modest $31 million versus the first quarter from the flow-through of higher late-stage credit card delinquencies from Q1.

Speaker Change: Highlighting the change in direction of delinquencies, consumer 90-day plus delinquencies declined in 2Q by 57 million.

Speaker Change: Commercial net charge-offs were relatively flat, as lower commercial real estate losses were mostly offset by a small increase in other commercial loans. Our office losses went from $304 million in Q1

Speaker Change: to $226 million in Q2, other commercial real estate loan losses were simply one with debt.

Alastair M. Borthwick: Okay, let's move to the various lines of business and some brief comments on their results. And I'll start on slide 14 with consumer banking. For the quarter, Consumer earned $2.6 billion on continued strong organic growth, but reported earnings declined 9% year-over-year as revenue declined from lower deposit balances compared to the second quarter of last year.

Speaker Change: Okay let's move the various lines of business and some brief comments on their results and I'll start on slide 14 with consumer banking.

Speaker Change: For the quarter, consumer earned $2.6 billion on continued strong organic growth, and reported earnings declined 9% year-over-year, as revenue declined from lower deposit balances compared to the second quarter of last year.

Alastair M. Borthwick: Customer activity showed another strong quarter, net new check-in growth, another strong period of cargo leaves, and investment balances for consumer clients, which climbed 23% year over year to a new record $476 billion. That included 12 months of strong flows at $38 billion in addition to market appreciation over the time. As noted earlier, loans grew nicely year over year from credit cards, as well as small business, where we remain the industry leader.

Speaker Change: Customer activity showed another strong quarter, net new check-in growth, another strong period of card openings, and investment balances for consumer clients which climbed 23% year-over-year.

Speaker Change: through a new record $476 billion. That included 12 months of strong flows at $38 billion in addition to market appreciation over the time. As noted earlier, loans grew nicely year-over-year from credit cards as well as small business where we remain the industry leader.

Alastair M. Borthwick: The team held expenses flat year over year, reflecting good work with continued business investments for growth, offset by operational excellence work to improve processes and move more of our transactions to digital. And, as you can see in the appendix, page 26, digital adoption and engagement continue to improve, and customer satisfaction scores remain near record levels, demonstrating customer appreciation of our enhanced capabilities due to our continuous investment. Moving to wealth management, on slide 15, we produced good results, including good organic climate activity, market favorability, and strong AUM flows, and this quarter also saw good lending results.

Speaker Change: The team held expense-flat year-over-year, reflecting good work, with continued business investments for growth, offset by the operational excellence work to improve processes and move more of our transactions to digital.

Speaker Change: And as you can see in the appendix, page 26, digital adoption and engagement continue to improve. The customer satisfaction scores remain near record levels, illustrating customer appreciation of our enhanced capabilities due to our continuous investment.

Speaker Change: Moving to wealth management on slide 15, we produced good results and those included good organic climate activity, market favorability and strong AUM flows and this quarter also saw good lending results.

Alastair M. Borthwick: Our comprehensive suite of investment and advisory services, coupled with our commitment to personalized wealth management planning solutions, has enabled us to meet the diverse needs and aspirations of our clients. That income rose 5% from the second quarter of last year to a little more than a billion dollars.

Speaker Change: Our comprehensive suite of investment and advisory services, coupled with our commitment to personalized wealth management planning solutions, has enabled us to meet the diverse needs and aspirations of our clients.

Speaker Change: Net income rose 5% from the second quarter of last year to a little more than a billion.

Alastair M. Borthwick: In Q2, we reported revenue of $5.6 billion, growing 6% over the prior year. As Brian noted, strong 14% growth and fee revenue from investment or brokerage services overcame the NII headwind. Expense growth reflects the fee growth and other investments for the future. The business had a 25% margin, and it generated a strong return on capital of more than 22%. Average loans were up 2% year over year, driven by the strong growth we're seeing in custom lending and a pickup in mortgage lending.

Speaker Change: In Q2, we reported revenue of $5.6 billion, growing 6% over the prior year. As Brian noted, strong 14% growth and fee revenue from investment and brokerage services overcame the NII headwind.

Brian: Expense growth reflects the fee growth and other investments for future.

Speaker Change: The business had a 25% margin, and it generated a strong return on capital of more than 22%. Average loans were up 2% year over year, driven by strong growth we're seeing in custom lending and a pickup in mortgage lending.

Speaker Change: Both Merrill and the private bank continue to see good organic growth, and they produce strong assets under management flows of $58 billion since last year's second quarter, which reflects a mix of new client money as well as existing clients putting more of their money to work.

Alastair M. Borthwick: I also want to highlight the continued digital momentum in this business, and you can find that on slide 28. On slide 16, we return to global banking results. Here, the business produced earnings of $2.1 billion, down 20% year-over-year, as improved investment banking fees and Treasury services revenue were overcome by lower net interest income and higher provision expense. Revenue declined 6% driven by the impact of interest rates and deposit flotation.

Speaker Change: I also want to highlight the continued digital momentum in this business, and you can find that on slide 28.

Speaker Change: On slide 16, we turn to global banking results.

Speaker Change: And here the business produced earnings of $2.1 billion, down 20% year-over-year, as improved investment banking fees and treasury services revenue were overcome by lower net interest income and higher provision expense.

Speaker Change: Revenue declined 6%, driven by the impact of interest rates and deposit flotation.

Alastair M. Borthwick: The diversified revenue across products and regions reflects the strength of our global banking franchise. In our GTS business, fees for managing the cash appliance offset a lot of the NII pressure from high rates. Clients are accessing capital markets for their capital needs instead of borrowing. Investment banking had a strong quarter, growing fees 29% year over year to nearly $1.6 billion, led by debt capital markets fees, mostly in leverage finance and investment grade.

Speaker Change: A diversified revenue across products and regions reflects the strength of our global banking franchise.

Speaker Change: In our GTS business, fees for managing the cash appliance offsets a lot of the NII pressure from high rates.

Speaker Change: And clients are accessing capital markets for their capital needs instead of borrowing. Investment banking had a strong quarter, growing fees 29% year-over-year to nearly $1.6 billion, led by debt capital markets fees, mostly in leveraged finance and investment grade.

Alastair M. Borthwick: And we finished the quarter strong, maintaining our number three investment banking fee position globally. A solid start to 2024 has left us in a good position with top three rankings now in North America, Latin America, and EMEA, and number six in APAC. And we're seeing strong performance in important industry groups as well. An increase in provision expense from last year was driven by the commercial real estate net charge-offs I discussed earlier. And expenses increased 3% year-over-year, including continued investment in the business.

Speaker Change: And we finished the quarter strong, maintaining our number three investment banking fee position globally.

Speaker Change: A solid start to 2024 has left us in a good position with top three rankings now in North America, Latin America, and EMEA, and number six on APAC, and we're seeing strong performance in important industry groups as well.

Speaker Change: An increase in provision expense from last year was driven by the commercial real estate net charge-offs I discussed earlier. And expense increased 3% year-over-year, including continued investment in the business.

Alastair M. Borthwick: Switching to global markets on slide 17, I'll focus my comments on results, excluding DVA as I normally do. The team had another terrific quarter as we generated good revenue growth and achieved operating leverage and continued to deliver a solid return on capital. Earnings of $1.4 billion grew 19% year over year, and return on average allocated capital was 13%.

Speaker Change: Switching to global markets on slide 17, I'll focus my comments on results excluding DVA as I normally do.

Speaker Change: The team had another terrific quarter as we generated good revenue growth and achieved operating leverage and continued to deliver a solid return on capital.

Speaker Change: Earnings of $1.4 billion grew 19% year-over-year, and return on average allocated capital was 13%. Revenue, and again, this is ex-DBA, improved 10% through the second quarter of 2023.

Alastair M. Borthwick: Revenue, and again, this is XDVA, improved 10% from the second quarter of 23. Focusing on sales and trading, XVVA revenue improved 7% year over year to $4.7 billion, and that's the highest second quarter in over a decade. Revenue was down 1% while equities increased 20% compared to Q2'23. Fig. Revenues remain strong, and versus Q223, they're modestly lower, driven by a weaker macro trading quarter and FX rates, but that was largely offset by better commodities and mortgage trading. Equities was driven by strong trading results in derivatives and cash equities. Year-over-year expenses were up 4% on revenue improvement and continued investment in the business.

Speaker Change: Focusing on sales and trading, XDVA, revenue improved 7% year-over-year to $4.7 billion and that's the highest second quarter in over a decade.

Speaker Change: It was down 1%, while equities increased 20% compared to Q2'23.

Alastair M. Borthwick: Big Revenues remain strong and versus Q223 they're modestly lower driven by a weaker macro trading quarter and FX rates.

Speaker Change: And that was largely offset by better commodities and mortgage trading.

Speaker Change: Equities was driven by strong trading results in deliveratives and cash equities. Year-over-year expenses were up 4% on revenue improvement and continued investment in the business.

Alastair M. Borthwick: Finally, on slide 18, all other shows a loss of $0.3 billion, and that was little changed year over year, as lower expense was offset by lower provision costs as a result of reserve changes. Our effective tax rate for the quarter was 9%, and excluding the street items and the tax credits related to investments in renewable energy and affordable housing, our effective tax rate would have been 25%.

Speaker Change: Finally, on slide 18, all others shows a loss of $0.3 billion, and that was little changed year over year, as lower expense was offset by lower provision costs as a result of reserve changes.

Speaker Change: Our effective tax rate for the quarter was 9%.

Speaker Change: and excluding the street items and the tax credits related to investments in renewable energy and affordable housing, the effective tax rate would have been 25%.

Unknown Executive: And with that, I think we'll stop there and jump into questions. Alastair, Brian, I just wanted to say, I did hear some feedback that maybe the audio from the call got interrupted for a moment. So, at the point at which it got interrupted, I just want to reiterate a couple of points that Alastair was making. If you go back to slide nine, where I think we lost the audio, that was where we started beginning a discussion about the performance, you know, from Q1 to Q2 of net interest income.

Speaker Change: And with that, I think we'll stop there and we'll jump into questions.

Speaker Change: Hi Alastair, Brian , I just wanted to, I did hear some feedback that maybe the audio

Unknown Executive: That was driven by higher funding costs and the rotation of deposits seeking higher yield alternatives, and while higher again in Q2, both the rotation and the rate of pay increases did continue to slow down. On slide 10, I think the only points that I would make that Alastair began to discuss there were that we are just reiterating our expectation that quarter two would be the bottom for the NII in the rate cycle that we have been in.

Speaker Change: from the call got interrupted for a moment. So at the point at which it got interrupted, I just want to reiterate a couple of points that Alastair was making.

Speaker Change: If you go back to slide 9, where I think we lost the audio, was where we started beginning a discussion about the

Speaker Change: Performance, you know, from Q1 to Q2 of net interest income. That was driven by higher funding costs and the rotation of deposits seeking higher yield alternatives.

Speaker Change: And while higher again in Q2, both the rotation and the rate pay increases did continue to slow down.

Speaker Change: on the slide 10.

Speaker Change: I think the only points that I would make that Alastair began to discuss there was

Speaker Change: We are just reiterating our expectation that Quarter 2 would be the bottom for the NII in the rate cycle that we have been in.

Unknown Executive: And our trajectory remains the same, the belief that our NII will begin to rise in Q3 compared to Q2 and then rise again in Q4. We provided the range of expectations that Alastair covered, and we expect Q4 NII to be around the $14.5 billion level, plus or minus. That would be approximately four to five percent higher than this quarter's NII. And he began that discussion by making sure that you know that we pick up an extra day of net interest income in Q3, providing about 125 million of additional NII that also carries through into Q4.

Speaker Change: And our trajectory remains the same, the belief that our NII will begin to rise in Q3 compared to Q2, and then rise again in Q4.

Speaker Change: We provided the range of expectations that Alastair covered.

Alastair: We expect Q4 NII to be around the $14.5 billion level, plus or minus.

Alastair: That would be approximately 4-5% higher than this quarter's NII.

Speaker Change: And he began that discussion by making sure that you know that we pick up an extra day of net interest income in the Q3, providing about $125 million of additional NII that also carries through into Q4. You see that on the slide.

Unknown Executive: You see that on the slide. It also assumes that the current forward curve will materialize. Those that said that interest rate cuts would start in September. We will expect another one in November and December on the curve, and the waterfall includes an estimated impact of those rates on quarterly net interest income. And so then we started the discussion.

Speaker Change: It also assumes that the current forward curve will materialize. That says that interest rate cuts will start in September . We will expect another one in November and December in the curve.

Speaker Change: And the waterfall includes an estimated impact of those rates to quarterly net interest income.

Unknown Executive: He began the discussion on fixed asset repricing, which then I think is where the audio picked back up again. And so we're happy to answer some questions on that. I know you'll have questions, but I just wanted to recap that point, those points for you. At this time, if you would like to ask a question, please press star 1 on your telephone keypad. Again, that is star 1 to ask a question.

Speaker Change: And so then we started the discussion. He began the discussion on the fixed asset repricing.

Speaker Change: At this time, if you would like to ask a question, please press star 1 now on your telephone keypad. Again, that is star 1 to ask a question.

Glenn Paul Schorr: We'll take our first question from Glenn Schorr of Evercore. All right, thanks very much. Hello there, and I definitely appreciate slide 10 a lot.

Speaker Change: We'll take our first question from Glenn Schorr of Evercore.

Glenn Paul Schorr: I know you would have given us a 2025 NII guide if you wanted to give us one. So feel free to give that if you want, but that's not my question. My question is, given all the pieces of the puzzle that you gave us expectations for modest loan and deposit growth and slowing deposit seeking behavior, if you get that 4% pickup from 2Q to 4Q this year that you're expecting. Right now, or at least recently, the consensus had, and I was looking flattish with that fourth quarter number. And that doesn't make a lot of sense given all the pieces.

Glenn Paul Schorr: Thanks very much.

Glenn Paul Schorr: Hello there, and definitely appreciate slide 10 a lot. I know you would have given us a 2025 NII guide if you wanted to give us one. So feel free to give that if you want, but that's not my question. My question is,

Speaker Change: it given all the pieces of the puzzle that you gave us expectations for modest loan and deposit growth and slowing

Speaker Change: Deposit Seeking Behavior. If you get that 4% pickup from 2Q to 4Q this year that you're expecting,

Speaker Change: Right now, or at least recently, consensus had NII looking flattish with that fourth quarter number.

Unknown Executive: So maybe if you can just comment directionally, if you don't want to give the number, does it make sense to you that we collectively should be expecting flat NII with your higher fourth-quarter number? So Glenn, you're right, we're probably not going to get guidance around 2025 for all the reasons that you would expect. What we're trying to do here is reinforce what we've been saying from the beginning of the year

Speaker Change: And that doesn't make a lot of sense given all the pieces, so maybe if you can just comment directionally, if you don't want to give the number, of does it make sense to you that we'd collectively be expecting flat NII with your higher fourth quarter number?

Speaker Change: So Glenn, you're right, we're probably not going to get guidance around 2025 for all the reasons that you would expect.

Speaker Change: What we're trying to do here is reinforce what we've been saying from the beginning of the year. That is, we think Q2 is the trough.

Unknown Executive: That is, we think Q2 is the drawback, and we believe from this point, we're in a good position to grow. Now, when you look at some of the elements of this bridge, you'll draw your own conclusions with respect to fixed rate asset prices going to persist for some period of time. I knew you'd be able to draw your own conclusions, but I just want to point out, you know, we've been pretty clear on our guidance for Q1 and Q2, we've always felt like this would be the trough, and we feel like Q3 and Q4 are likely to be better.

Speaker Change: And we believe from this point we're in a good position to grow.

Speaker Change: Now, when you look at some of the elements of this bridge, you'll draw your own conclusions with respect to fixed rate asset prices going to persist for some period of time.

Speaker Change: I knew you'd be able to draw your own conclusions, but I just want to point out, you know, we've been pretty clear on our guidance for Q1 and Q2. We've always felt like this would be the trough. We feel like Q3 and Q4 are likely to be better. You can see our work here. We've laid it all out.

Unknown Executive: You can see our work here, we've laid it all out, nothing's really changed in terms of that, and the most important thing I think for everybody here is we feel like 2024 is a really foundational year. It's this twist period where we just got to get through the last of the deposit rotation, and we're establishing a foundation for growth from here, so that's what we're trying to convey. Maybe I could just ask I'm curious if you break out the split between the brokerage and the advisory account. Can you hear me?

Speaker Change: Nothing's really changed in terms of that, and the most important thing I think for everybody here is we feel like 2024 is a really foundational year.

Speaker Change: It's this twist period where we just got to get through the last of the deposit rotation and we're establishing a foundation for growth from here. So that's what we're trying to convey.

Speaker Change: Maybe I could just ask a follow-up on...

Speaker Change: On deposits within one Business.

Speaker Change: You have four trillion prime assets. I'm curious if you break out the split between brokerage and advisory accounts.

Unknown Attendee: Okay, I'm hearing tons of feedback. Sorry. Okay, sorry. Okay, so the fourth, [inaudible] Great, $4 trillion in client assets in Wells. I'm curious if you could give us the split between brokerage and advisory. And the reason I'm asking is, I'm curious how you've been handling the rate paid on cash and advisory accounts and whether we should expect any behavioral changes following the recent Wells news. Thanks

Speaker Change: Do you hear me okay? I'm hearing tons of feedback, sorry.

Alastair M. Borthwick: Alastair Borthwick

Speaker Change: 4 trillion and contact that some...

Speaker Change: Great. $4 trillion in client assets and wealth. I'm curious if you could give us the split between brokerage and advisory. And the reason I'm asking is I'm curious how you've been handling rate paid on cash and advisory accounts.

Speaker Change: And whether we should expect any behavioral changes following the recent Wells news. Thanks a lot. Sorry for the feedback.

Unknown Executive: Sorry for the feedback. Look, I'm not sure that distinction would be the distinction I'd look at. We price RTP. We've gone through a massive change in cash, you know, infusing the economy and withdrawing now under monetary policy. And so as we stabilize, our instructions to our team are to grow our deposit base a little bit faster. But the economy, that means you have to price across the board to achieve that. And if you look at slide four of Iowa, where I showed you sort of the change, what you see is the wealth management business takes a little bit longer because those clients have more investment cash with us. Not what you're thinking, investment cash, but in their money, how they think about cash because they don't need your daily cash flow, and they move that around.

Speaker Change: Look, I'm not sure that distinction would be the distinction I'd look to. We price...

Speaker Change: Thank you.

Speaker Change: We've gone through a massive change in cash, you know.

Speaker Change: Infusing the economy and withdrawing now under monetary policy, and so as we stabilize our instructions to our team are to grow

Speaker Change: Our deposit base is a little bit faster economy. That means you have to price across the board to achieve that and what if you look at the slide Four or five where I showed you sort of the change

Speaker Change: What you see is the wealth management business takes a little bit longer because those clients have more investment cash with it.

Speaker Change: [inaudible]

Brian Thomas Moynihan: That largely is over, and if you look at the last, you know, four or six weeks, we're seeing those deposits in that business bounce around the $280 billion level, you know, not a lot of movement. And, you know, it'll keep moving in and out depending on customers paying down their debts, and your income taxes, you know, taking more risk in the market and all those things, but the deposit pricing changes that we made sure that they were on a platform they could grow having been as high as $350 billion to $280 billion were made in the quarter and all through the P&L. Okay, so, Advisory. Thank you. Unknown Speaker.

Speaker Change: Not a lot of movement and it'll keep moving in and out depending on customers paying down.

Speaker Change: Income taxes, you know, taking more risk in the market and all those things, but the deposit pricing changes that we made to ensure that they were at a platform they could grow, having been as high as $350 billion, $280 billion, were made in the quarter and all through the P&L.

Speaker Change: Okay, so.

Speaker Change: Advisory. Thanks.

James Francis Mitchell: We'll take our next question from Jim Mitchell of Seaport Global. Hey, good morning. Maybe just a quick follow-up, and I don't need to beat a dead horse on NNI. But can we just can you just help us think through the puts and takes on, you know, you have rate cuts at the end of the year, and the forward curve implies more next year as that cumulative impact starts to hit next year, which I guess what gives you confidence that this is sort of a trough?

Speaker Change: That's Daniel Hinkel.

Speaker Change: We'll take our next question from Jim Mitchell of Seaport Global.

James Francis Mitchell: What are all the puts and takes that we should think about? And how do we model the NNI for next year when we think about the forward curve and that impact? Jim, I think this bridge probably gives all the right inputs for any given year.

James Francis Mitchell: Hey, good morning. Maybe just a quick follow-up, and I don't...

Speaker Change: Can you just help us think through the puts and takes on, you know, you have rate cuts at the end of the year. Can you just help us think through the puts and takes on, you know, you have rate cuts

Speaker Change: Fuller curve implies more next year as that cumulative impact starts to hit.

Speaker Change: Next year what I guess what gives you confidence that this is

Speaker Change: sort of the trough.

Speaker Change: What are all the puts and takes that we should think about in how we model the NNI for next year when we think about the forward curve and that impact?

Unknown Executive: I mean, we've chosen to do it for 2024. We've already, we've always resisted going out too far for the very simple reason that there are so many variables, and they start to multiply with one another.

Speaker Change: Jim, I think this bridge...

Jim: probably is all the right inputs for any given year. I mean we've chosen to do it for 2024. We've already, we've always resisted going out too far.

James Francis Mitchell: The very simple reason that there's so many variables and they start to multiply with one another.

Unknown Executive: If you think about even the rate cut one here, we're using the three cuts, September, November, December. If I did this as of Wednesday of last week, there would have been two. I don't even know if there were six.

Speaker Change: If you think about even the rate cut one here, you know, we're using the three cuts, September , November , December . If I do this as a Wednesday of last week, you're doing two.

Unknown Executive: So since we don't know what that path looks like, it's very challenging then to provide guidance for 25 at this stage. What we're laying out here is these are the component parts; we're going to get some benefit from FISC's rate asset pricing over time. We're going to get some benefit in the immediate term from the Bisbee cessation leading back into the P&L. As that rolls off, we'll get benefit from cash flow hedges repricing.

Speaker Change: earlier in the head there were six

Speaker Change: So, since we don't know what that path looks like,

Speaker Change: It's very challenging then to provide guidance for 25 at this stage.

Speaker Change: What we're laying out here is, these are the component parts. We're going to get some benefit from FISC's rate, asset pricing over time.

Speaker Change: We're going to get some benefit in the immediate term from the Bisbee cessation and that's leading back into the P&L.

Speaker Change: As that rolls off, we'll get benefit from cash flow hedges repricing.

Unknown Executive: And then, you know, we use the forward curbs as you do for the rate cuts; we benefit a little bit from global markets, liability sensitivity. And then that final piece is the piece that we're trying to drive in terms of organic growth.

Speaker Change: And then, you know, we use the forward curve, as soon as you do, for the rate cuts, we benefit a little bit from global markets, liability sensitivity, and then that final piece is the piece that we're trying to drive in terms of organic growth.

Ebrahim Poonawala: We benefit a little bit from global markets, live in the peace of sensitivity. And then that final piece of the piece that we're trying to drive in terms of organic growth. We're trying to drive this loan growth. We're trying to drive the deposit group from this Brian Poonawala.

Unknown Executive: We're trying to drive this loan growth, trying to drive the deposit growth. And as Brian pointed out, it's been a pretty unusual period in history where we've had an enormous change in the rate structure and in the fiscal stimulus, with the effects now fading away to something more normal. But that last box will come down to your assumptions versus our assumptions.

Speaker Change: We're trying to drive this loan growth, we're trying to drive the deposit growth, and as Brian pointed out, it's been a pretty unusual period in history where we've had an enormous change in the rate structure.

Ebrahim Poonawala: It's been a pretty unusual period in history where we've had an enormous change in the rate structure. And in the fiscal stimulus and effects, no fading away to something more normal. But that last box will come down to your assumptions versus our assumptions.

Brian: and in the fiscal stimulus and the effects now fading away to something more normal. But that last box will come down to your assumptions versus our assumptions. And we will update you as we go through the next couple quarters and we'll give you a better sense towards the end of the year.

Unknown Executive: And we will update you as we go through the next couple of quarters, and we'll give you a better sense towards the end of the year. Okay, that's all fair.

Ebrahim Poonawala: And we will update you as we go through the next couple of quarters, and we'll give you a better sense towards the end of the year.

Unknown Executive: And maybe just on the growth piece, maybe deposits seem to have bottomed for you guys in the second quarter of last year. You've had the growth, I think Brian pointed out, even with the tax headwind this quarter, you grew sequentially. So, good performance, but still pretty modest.

Ebrahim Poonawala: Okay, that's all fair and maybe just on the growth piece, maybe deposits. I've seen to the bottom for you guys in the second quarter of last year you've had the growth. I think Brian pointed out even with the tax head, when this quarter you grew sequentially. So good performance, but still pretty modest.

Speaker Change: Okay, that's all fair. And maybe just on the growth piece, maybe deposits.

Speaker Change: seem to have bottomed for you guys in the second quarter of last year you've had

Speaker Change: Good girl. It's the thing Brian pointed out, even with the tax headwind this quarter, you grew sequentially.

Unknown Executive: How are you thinking about the growth trajectory from here, I guess, as we think about, does it accelerate with rate cuts in your view? What are the dynamics you are thinking about as we're returning to that historical kind of mid single-digit deposit growth within BMI and the industry? Well, I think, you know, Brian covered slide four, that top left chart gives a sense of what's going on with the growth. Average growth over time there. We've had four quarters in a row, so we feel good about that.

Ebrahim Poonawala: How are you thinking about the growth trajectory from here, I guess, as we think about. Is it what does it accelerate with rate cuts in your view? What are the dynamics you're thinking about? It's really turning to that historical kind of mid-single digit deposit growth. And it wouldn't be an eye in the industry. Well, I think Brian covered the slide for that top left chart. It gives a sense for what's going on in the field. The growth that's average growth over time there. It has four quarters in a row, so we feel good about that part.

Speaker Change: So good performance, but still pretty modest. How are you thinking about the growth trajectory?

Speaker Change: From here, I guess, as we think about, does it accelerate with rate cuts, in your view, what are the dynamics are you thinking about as we're returning to that historical kind of mid-single-digit deposit growth within BVI in the industry?

Speaker Change: Well, I think, you know, Brian covered slide 4, that top left chart gives a sense for what's going on with the growth that's...

Speaker Change: average growth over over time there within four quarters in a row so feel good about that part

Unknown Executive: Q2 does tend to be a slow report just with all the tax payments. So, you know, we think deposits will do better over time, in particular as we get past peak Fed funds. We feel like the pricing and rotation are, you can sort of see it in our numbers, slowing. So we're getting towards the end of QT.

Ebrahim Poonawala: Q2 does tend to be as over quarters, just with all the tax payments. So we think deposits will do better over time. Particularly as we get past peak fund funds. We feel like the price of a rotation is it can sort of see it in our numbers. There's slowing. So we're getting towards the end there. We're getting towards the end of QT. So we're not quite finished on all of those things yet.

Speaker Change: Q2 does tend to be a slower quarter just with all the tax payments.

Speaker Change: So, you know, we think deposits will do better over time, particularly as we get past peak Fed funds. We feel like the pricing and rotation, you can sort of see it in our numbers, they're slowing. So we're getting towards the end there.

Unknown Executive: So we're not quite finished with all of those things yet. I'd be careful about getting too excited about deposit growth, but we feel like we're doing okay so far. We just have to keep driving that.

Speaker Change: We're getting towards the end of QT, so we're not quite finished on all of those things yet. I'd be careful about getting too excited about deposit growth, but we feel like we're doing okay so far. We've just got to keep driving now.

Ebrahim Poonawala: I'd be careful about getting too excited about deposit growth, but we feel like we're doing okay so far. We're just going to keep driving that.

Michael Lawrence Mayo: Okay, thanks for taking my question. We'll take our next question from Mike Mayo of Wells Fargo Security. Hi, I'll start with a simple question. You mentioned loan spreads have improved. Why is that? Where is that?

Michael Mayo: Okay, thanks for taking my questions. Let's take our next question from Mike Mayo of Wells Fargo Securities. Hi, I'll start with a simple question. You mentioned loan spreads have improved. Why is that? Where is that? We expect that to continue. Wells Fargo has been approved for us Mike over the course of the past. I think it's no eight or nine quarters. It's primarily in the commercial businesses. And it's largely because we have to price the balance sheet for the returns that our shareholders expect. And that's true, I think, for the industry. We've been quite purposeful in that regard, so we've tried to balance price, spread, and growth over the course of time, but it's primarily a commercial phenomenon of this part.

Speaker Change: Okay, thanks for taking my questions.

Speaker Change: We'll take our next question from Mike Mayo of Wells Fargo Securities.

Michael Lawrence Mayo: Hi, I'll start with a simple question. You mentioned loan spreads have improved.

Michael Lawrence Mayo: I expect that to continue. It won't spread to the crew for us, Mike, over the course of the past. I think it's now eight or nine quarters. It's primarily in commercial businesses. And it's largely because we have to price the balance sheet for the returns that our shareholders expect. And that's true, I think, for the industry. We've been quite purposeful in that regard.

Michael Lawrence Mayo: Why is that? Where is that?

Speaker Change: We expect that to continue.

Speaker Change: One spread has improved for us, Mike, over the course of the past, I think it's now eight or nine quarters.

Speaker Change: It's primarily in commercial businesses.

Michael Lawrence Mayo: And it's largely because we have to price the balance sheet for the returns that our shareholders expect.

Michael Lawrence Mayo: And that's true, I think, for the industry, and we've been quite purposeful in that regard. So we've tried to balance price spread and growth over the course of time, but it's primarily a commercial phenomenon at this point.

Alastair M. Borthwick: So we've tried to balance price spread and growth over the course of time, but it's primarily a commercial phenomenon at this point, and I would expect that to continue for the foreseeable future, but it's a competitive environment we've got to see. Okay, you gave us slide 10, a lot of details there. You talked about September rate cuts, the fixed asset repricing, securities repricing, loans repricing, mortgage and auto, flops maturing, November received fixed cash flops, and the whole litany of stuff.

Michael Mayo: And I would expect that to continue for the foreseeable future, but it's a competitive environment; we gotta see.

Michael Lawrence Mayo: And I would expect that to continue for the foreseeable future, but it's a competitive environment we've got to see.

Michael Lawrence Mayo: Okay, you gave us slide 10, a lot of detail there, you talked about, it's a temporary cut to fix asset repricing, security, repricing, loans repricing, mortgage and auto, lots of maturing, November, receive fixed cash flocks and the whole litany of stuff. So I think, when you put it all together, what it's led to is a net interest margin of only 1.93%. In fact, I think your yield on your assets is below Fed funds right now, so would you agree that you're under-earning with that NIM of 1.93%? And I know I've asked this question before, but you always have to mark the market. What is a normal nim?

Speaker Change: Okay, you gave us slide 10, a lot of details there, you talked about

Speaker Change: September rate cuts, the fixed asset repricing, securities repricing, loans repricing, mortgage and auto, flops maturing, November received fixed cash flops, and the whole litany of stuff. But I think when you put it all together,

Alastair M. Borthwick: But I think when you put it all together, what it's led to is a net interest margin of only 1.93%. In fact, I think your yield on your assets is below Fed funds right now. So would you agree that you're under-earning with that NIM of 1.93%? And I know I've asked this question before, but you always have to mark to market. What is a normal NIM?

Speaker Change: What it's led to is a net interest margin of only 1.93 percent.

Speaker Change: In fact, I think your yield on your assets is below Fed funds right now, so...

Speaker Change: Would you agree that you're under-earning with that NIM of 1.93%?

Speaker Change: And I know I've asked this question before, but you always have to mark to mark it. What is a normal NIM? I mean, you were 2.5% in 2017, you were 3% in 2004. Now, I know the composition has changed and everything, but what's a normal NIM? And what do you think is a normal...

Michael Lawrence Mayo: I mean, you were 2.5% in 2017, you were 3% in 2004, and I know the composition's changed and everything. But what's a normal NIM, and what do you think is a normal return on tandem common equity through the cycle? Thanks.

Brian Moynihan: I mean, you were 2.5% in 2017, you were 3% in 2004, and I know the composition is changing everything, but what's a normal NIM, and what do you think is a normal return on tandem common equity through the cycle? Thanks. So I'd say right now, in terms of the 1.93, we feel like we are under earning. We feel like that number is going to go up over time. It'll go up as net interest income goes up, but additionally, I think the balance sheet's likely to stay kind of flat as here, so the numerator is going to grow; the denominator is going to stay pretty tight here.

Speaker Change: Return on Candor of Common Equity through the cycle. Thanks.

Alastair M. Borthwick: So I'd say right now in terms of the 193, we feel like we are under earning. We feel like that number is going to go up over time. It'll go up as net interest income goes up. But, additionally, I think the balance sheet is likely to stay kind of flattish here. So the numerator is going to grow, and the denominator is going to stay pretty tight here. So we think we're under-earning there. We think through a cycle; we've got to get back to a more normal number like 230-ish over time. That takes a while. It's a grind, Mike, quarter after quarter.

Speaker Change: So I'd say right now, in terms of the 193, we feel like we are under-earning. We feel like that number is going to go up over time.

Speaker Change: It'll go up as net interest income goes up, but additionally I think the balance sheet's likely to stay kind of flattish here, so the numerator is going to grow, the denominator is going to stay pretty tight here, so

Brian Moynihan: So we think we're under earning there. We think through a cycle, we've got to get back to a more normal number, like 2.30-ish over time. That takes a while, it's a grind, Mic, or to after quarter, so that's where we're headed. And in terms of return on allocated capital, you know, right now we're right around that 14%; you want to be 15% or higher for our shareholder. A lot of it is because we've approved an awful lot of capital over the time, over the course of time. In advance of any potential capital changes.

Speaker Change: We think we're under-earning there. We think through a cycle, you know, we've got to get back to a more normal number like $2.30-ish over time. That takes a while. It's a grind, Mike, quarter after quarter. So that's where we're headed.

Alastair M. Borthwick: So that's where we're headed. And in terms of return on allocated capital, right now, we're right around that 14%. We want to be 15% or higher for our shareholders.

Speaker Change: And in terms of return on allocated capital, you know, right now we're right around that 14%. We want to be 15% or higher for our shareholder. A lot of it is because we've accrued an awful lot of capital over the time.

Michael Lawrence Mayo: A lot of it is because we've accrued an awful lot of capital over time, over the course of time, in advance of any potential capital changes. And the other final thing I'll just remind you is we're a little different than some of the regional banks in that we've got an enormous global markets business. And that obviously makes an impact on the headline NIM number. Okay, and then I wasn't clear, you said net charge off for the second half should be less than the first half, and I wasn't sure if that related to cards, or I wasn't sure what net charge off was. Mike, that was me.

Speaker Change: Over the course of time, in advance of any potential capital changes. And the other final thing I'll just remind you is, we're a little different than some of the regional banks in that we've got an enormous global markets business, and that obviously makes an impact on the headline NIM number.

Brian Moynihan: I know all the final thing I just remind you is we're a little different than some of the regional banks and that we've got an enormous global market business, and that obviously makes an impact on the headline number.

Brian Moynihan: Okay, and then just I wasn't clear you said net charge off the second half to be less than the first half, and I wasn't sure if that made it a car or two, I wasn't sure what. Yeah, my car. My house made and basically what I'm saying is you black code in terms of the delinquency, it's which means the second half is pretty well determined, as you know, this is just the March, you know, from 369180 and it'll be. That charge up rate will be flat as we kind of back to normal 380 or so.

Speaker Change: Okay and then just I wasn't clear you said net charge off the second half should be less than the first half and I wasn't sure if that related to cards or I wasn't sure what

Brian Thomas Moynihan: And basically, what I'm saying is he plateaued in terms of the delinquencies, which means the second half is pretty well determined, as you know, because it's just a March, you know, from 3690 to 180. And the charge-off rate will be flattish. We kind of are back to normal 380 or so that's, we underwrite to actually have a higher charge-off rate, quite frankly, that intolerance, but that 380 is kind of where we've seen since 3.80%. Okay.

Speaker Change: Like that was me, and basically what I'm saying is you plateaued in terms of the...

Speaker Change: Delinquencies, which means the second half is pretty well-determined, as you know, because it's just a march, you know, from 3690 to 180, and then a beat.

Speaker Change: The charge-off rate will be flattish. We kind of back to normal at 3.80 or so. We underwrite to actually have a higher charge-off rate quite frankly than that in tolerance, but that 3.80 is kind of where we've seen since, 3.80 percent. Okay.

Brian Moynihan: Then we underwent to actually have a higher charge up rate quite finely in that intolerance, but that's 380 is kind of where we see since 3.80%. Okay. So credit card chargers should flatten or decline in the second half relative to the first half. Exactly, you've never. If you think about all the chargers, that's not the, you know, that's the dominant part of it on the consumer side by lot. And then, you know, the commercial we spoke to the question of CRU office, which, you know, has been a go and dropped quarter to quarter, and we expect the second half to be better also.

Michael Lawrence Mayo: So credit card charge-offs should flatten or decline in the second half relative to the first half. Remember, if you think about all the charge-offs, that's not that you know, that's the dominant part of it on the consumer side by a lot. And then, you know, the commercial we spoke about the question of CRE office, which is going to go drop quarter to quarter. We expect the second half to be better also. All right, thank you. We'll take our next question from Steven Chubak of Wolf Research. Hi, good morning, for you guys.

Speaker Change: So credit card charge-offs should flatten or decline in the second half relative to the first half.

Speaker Change: Exactly. Remember, if you think about all the charge-offs, that's the dominant part of it on the consumer side by a lot, and then the commercial, we spoke to the question of CRE office, which has been dropped quarter to quarter, and we expect the second half to be better also.

Unknown Executive: All right, thank you.

Steven Chubak: We'll take our next question from Steven Chubak of Wolf Research.

Speaker Change: All right, thank you.

Speaker Change: We'll take our next question from Steven Chubak of Wolf Research.

Steven Chubak: Hey, good morning. Sorry, guys. So I wanted to ask just on just, you know, building on some of the name questions from earlier. You know, a lot that's been focused on asset repricing, both loans and securities. And so what we could speak to the opportunity to potentially optimize some of your higher cost funding and just given multiple sources of an improvement.

Steven Joseph Chubak: Hi, good morning.

Steven Joseph Chubak: So I wanted to ask just building on some of the NIM questions from earlier, you know, a lot that's been focused on asset repricing, both loans and securities. I was hoping you could speak to the opportunity to potentially optimize some of your higher cost funding. And just given multiple sources of NIM improvement, looking beyond 24. Now, how should we think about the pace of NIM build? As I know, it's a longer timeline to get to 230 to 240.

Alastair M. Borthwick: I'm Alastair Borthwick

Steven Joseph Chubak: I wanted to ask, building on some of the NIN questions from earlier, a lot that's been focused on asset repricing, both loans and securities. I was hoping you could speak to the opportunity to potentially optimize some of your higher cost funding.

Steven Joseph Chubak: Now, looking beyond 24, how should we think about the pace of an in build as we, I know it's a longer timeline to get to the 230 to 240. But just how to think about the expectations around the ninja trajectory beyond 24. Well, your first point is a question of, you know, can we pay down some of the higher cost securities? The answer to that is yes. And that would be an expectation of ours as part of this. We've got some short related CDs that can roll off. We can replace those or not. We have short related debt.

Alastair M. Borthwick: and just giving multiple sources of NIMH improvement.

Alastair M. Borthwick: and looking beyond 24.

Speaker Change: Now, how should we think about the pace of NIM build as we, I know it's a longer timeline to get to the 230 to 240, but just how to think about the expectations around the NIM trajectory beyond 24.

Steven Joseph Chubak: But just how to think about the expectations around the NIM trajectory beyond 24. Well, your first point is a question of, you know, can we pay down some of the higher-cost securities? The answer to that is yes. [inaudible] We've got a lot of different ways that we can use the reinvestment, if you like, around the fixed rate, and then. What was the second point?

Speaker Change: Well, your first point is a question of, you know, can we pay down some of the higher cost securities? The answer to that is yes.

Speaker Change: And that would be an expectation of ours as part of this, we've got some...

Speaker Change: Shorter dated CDs that can roll off, we can replace those or not. We have shorter dated debt. We've taken our long term debt footprint down as we've continued to build the

Brian Moynihan: We've taken our long-term debt footprint down as we continue to build the, you know, strength of the company. So there's a lot of different ways. It doesn't have to be securities reinvestment. It can be paying down higher cost. Light abilities as well. So we've got a lot of different ways that we can use or the reinvestment, if you like, around the fixed rate. And then.

Brian Thomas Moynihan: Alastair Moynihan, Alastair Borthwick

Alastair M. Borthwick: The second question was over one time period. It's really about getting the name trajectory beyond 24. Yeah, so look, we're obviously on it right now. We feel like this is the trough. We're going to build it from here. And we'll make meaningful strides on that through 2025. That's where we're going. That's great.

Brian Moynihan: What was the second? The second question was over one type. You're usually going to have the name of the directory beyond 24. Yeah, so what we're obviously on it right now, if you like, this is the trial. We're going to build it from here. And we'll make meaningful strikes on that through 2025. That's where we're going. It's great.

Speaker Change: and then

Speaker Change: What was the second? The second question was over what type of period should we be on 24? Yeah, so look, we're obviously on it right now. We feel like this is the trough. We're trying to build it from here. We'll make meaningful strides on that through 2025. That's where we're going.

Steven Chubak: Thanks for taking my questions.

Steven Joseph Chubak: Thanks for taking my question. We'll take our next question from Betsy Graseck of Morgan Stanley. Hi, good morning.

Speaker Change #103: Great, thanks for taking my questions.

Betty Grafick: We'll take our next question from Betty Grafick of Morgan Stanley. Hi, good morning.

Speaker Change: We'll take our next question from Betsy Graseck of Morgan Stanley .

Betty Grafick: What is that? So yes, another question on NII. Out directed. I think here you correctly when you said that as you go into the second half of 25. There's going to be incremental benefits coming from swap or loss. Did I hear that right? Yeah, that's correct. Second half 25. So, as we get closer, we'll, you know, we'll be able to give you some kind of bridge like this that allows you to see what that looks like. But it's just, you know, it's. It's your own right now. Yeah, for sure, but I'm just wondering if there is anything that.

Betsy Lynn Graseck: So, yes, another question on NAI, Alastair. I did, I think, hear you correctly when you said that as you go into the second half of 25, there's going to be incremental benefits coming from swap roll-offs. Did I hear that right? Yeah, that's correct. Second half of 25.

Betsy Lynn Graseck: Hi, good morning.

Betsy Lynn Graseck: Yes, another question on NAI. Alastair, I did, I think, hear you correctly when you said that as you go into the second half of 25, there's going to be incremental benefits coming from swap roll-offs. Did I hear that right?

Betsy Lynn Graseck: So as we get closer, we'll, you know, we'll be able to give you some kind of bridge like this that allows you to see what that looks like. But it's just, you know, it's a year out right now. Yeah, for sure.

Alastair M. Borthwick: Yeah, that's correct. Second half, 25. So, as we get closer, we'll, you know, we'll be able to give you some kind of bridge like this that allows you to see what that looks like, but it's just, you know, it's...

Betsy Lynn Graseck: But I'm just wondering, is there anything that has, like, I guess what I just would like to understand a little better is how the SWOT book is impacting slide 10. And then is it gradual into the second half of 25? Or is it a switch on in 3Q?

Speaker Change #106: It's a year out right now.

Betty Grafick: I guess what I just would like to understand a little better is how the swap book is impacting slide 10. And then. Is it gradual into the second half 25, or is it a switch on in three cue?

Speaker Change #107: Yeah, for sure. But I'm just wondering, is there anything that's happened? I guess what I just would like to understand a little better is how the SWOT book is impacting slide 10.

Speaker Change #102: and then is it gradual into the second half of 25 or is it a switch on in 3Q?

Betty Grafick: Just. Under so how the swap is playing another thing. Yeah, so the part that's important. First slide 10 around the second half of this year is just the this piece. And just what's the emotional of the pastoral hedges that you're referring to? Over time? I'd say about a hundred and a hundred and a hundred and a hundred. And how much of that starts rolling off in the second half of 2025? Well, I think about it like this: you can almost think about it like it's like 10 billion or so every quarter. It's just that the ones that roll off for the first, you know, next 12 months, they're all kind of current coupons, so they won't really have any impact.

Alastair M. Borthwick: Just understand how the SWOT book is playing into this thing. Yeah, so the part that's important for slide 10 around the second half of this year is just the Bisbee piece. It's not from cash flow swaps. Any cash flow swaps we have that roll off in the course of the next, 12 months really, they're all kind of current coupon ish because I don't know what we did there with LIBOR cessation or whatever, so they all got recoupons, so I wouldn't worry about that. In the second half and onwards, some of the older, longer-dated things, they've got the lower coupon.

Speaker Change #104: The part that's important for slide 10 around the second half of this year is just the Bisbee piece.

Speaker Change #105: It's not from cash flow swaps. Any cash flow swaps we have that roll off in the course of the next 12 months, really, they're all kind of current coupon-ish, because anything that we did there was to do with LIBOR cessation or whatever, so they all got recoupons, so I wouldn't worry about that.

Speaker Change #105: In the second half and onwards, some of the older, longer dated things, they've got the lower components.

Betsy Lynn Graseck: So that's when, you know, the Bisbee number will disappear over time, but in the second half of 25, the cash flow number will begin to appear. So we'll give you a sense for what that looks like over time. Okay, got it. And then on the far right-hand side of slide 10, you've got the yellow box from 50 million to 200 million. Could you just give us a sense as to what we're essentially using four variables? Unknown Attendee, Erika Najarian, Tal Liani, Vivek Juneja, Lavi Lazarovitz, Bernard Mensah Yeah, we're essentially using four variables.

Speaker Change #105: So, that's when, you know, the BISB number over time will disappear, but in the second half of 25, the cash flow number will begin to appear. So, and we'll give you a sense for what that looks like over time, Betsy.

Betsy Lynn Graseck: Okay, got it. And then on the far right-hand side of slide 10, you've got the yellow box, $50 million to $200 million. Could you just give us a sense as to what's the input to the $50 million versus the $200 million, just so we can be able to track it as we go through the rest of the next two quarters?

Betsy Lynn Graseck: We're thinking, what will the loan growth be? What will the deposit growth look like? What will be the rotation between non-intersparing and intersparing?

Speaker Change #108: Yeah, we're essentially using four variables. We're thinking what will the loan growth be? What will the deposit growth look like?

Speaker Change #108: What will be the rotation between non-interest-bearing and interest-bearing? And what will be any pricing changes we need to make? Rotation and pricing are pretty closely interlinked. You could even call them the same thing.

Alastair M. Borthwick: And what will be any pricing changes we need to make, right? Rotation and pricing are pretty closely interlinked. I think you could even call them the same thing.

Alastair M. Borthwick: If you use more conservative numbers, you get towards the lower end. If you use slightly more constructive numbers, you get towards the higher end. I think the point we're trying to convey is that this last part, this yellow box, is always the unknowable at the beginning of the quarter where we're projecting. The pieces in the green, we kind of feel like we know what those look like.

Speaker Change #108: If you use more conservative numbers, you get towards the lower end. If you use slightly more constructive numbers, you get towards the higher. I think the point that we're trying to convey is that this last part, this yellow box, is always the unknowable at the beginning of the quarter where we're projecting.

Alastair M. Borthwick: That's pretty predictable at this point, but we've got a little more certainty around that. So the teams, we've got 213,000 people who are working really hard to try and make that dotted yellow box the higher end, but obviously it depends on our assumptions and it depends on our actions. Super. Thank you so much for the call. We'll take our next question from Erika Najarian of UBS.

Speaker Change #108: The pieces in the green, we kind of feel like we know what those look like. That's pretty predictable at this point, but we've got a little more certainty around that.

Speaker Change #108: The teams, we got 213,000 people who are working really hard to try and make that dotted yellow box the higher end, but obviously it depends on our assumptions and it depends on our actuals. Super. Thank you so much for the call.

Speaker Change #108: We'll take our next question from Erika Najarian of UBS.

Erika Najarian: My first question is trying to square, you know, what you're telling us on the net interest income trajectory and the setup versus your disclosure. So, you know, Alastair, you told us about, as a response to Glenn's question, the benefit from fixed asset repricing, you know, cash flow hedges repricing in the second half of 2017. And when I look at Table 40 from your queue, in both a parallel shift and a steepener scenario, down 100 is negative for net interest income. Is it because this is a 12-month view?

Erika Najarian: Hi, good morning. My first question is trying to square

Erika Najarian: You know, what you're telling us on the net increased income trajectory and the setup versus your disclosure.

Erika Najarian: So, you know, Alastair, you told us about, as a response to Glenn's question, the benefit from fixed asset repricing, you know, cash flow hedges repricing in the second half of 25.

Speaker Change #110: And when I look at Table 40 from your queue,

Speaker Change #111: In both a parallel shift and a steepener scenario, down 100 is negative to net interest income.

Erika Najarian: And like you pointed out, in the second half of 25, you have underwater cash flow hedges that are rolling off. In other words, as we go through 2025, do you become less asset sensitive? And additionally, what is the notional on those cash flow hedges that you're talking about? Yeah, so the asset sensitivity that we disclose is meant to give a sense of what happens if nothing changes; it's totally static. So that's, that's one difference.

Speaker Change #112: Is it because this is a 12-month look?

Speaker Change #113: And like you pointed out, in the second half of 25, you have underwater cash flow hedges that are rolling off.

Speaker Change #114: In other words, as we go through 2025, do you get less asset sensitive? And additionally, what is the notional on those cash flow hedges that you're talking about?

Speaker Change #115: Yeah, so the asset sensitivity that we disclose is meant to give a sense for what happens if nothing changes, it's totally static. So that's, that's one difference.

Alastair M. Borthwick: Number two, it's off of the future curve. So it's 100 above or below whatever the future curve is. So I think it's a really helpful thing for sort of short-term moves and rates like, take for example, that orange box on page 10. It's helpful for something like that.

Speaker Change #116: Number two, it's off of the future curve.

Speaker Change #117: So, it's a hundred above.

Speaker Change #117: whatever or below whatever the future curve is so I think it's a really helpful thing for sort of short-term moves and rates like take for example that orange box on page 10 it's helpful for something like that

Alastair M. Borthwick: But it's less helpful in terms of a predictor of where 2025 NII would be because there are so many other inputs Erika over time. And just what's the notional of the cash flow hedges that you're referring to?

Erika Najarian: But it's less helpful in terms of a predictor of where 2025 NIA would be because there's so many other inputs Erika over time

Erika Najarian: And just what's the notional of the cash flow hedges that you're referring to?

Erika Najarian: Chairman of the Undersecretary's Office, Unknown Speaker, Unknown Speaker, And how much of that starts rolling off in the second half of 2025? Well, I think about it like this, you can almost think about it like it's like 10 billion or so every quarter. It's just that the ones that roll off for the first, you know, next 12 months, they're all kind of term coupons, so they won't really have any impact

Erika Najarian: Overtime?

Erika Najarian: It's about $150 billion. About $150 billion.

Erika Najarian: And how much of that starts rolling off in the second half of 2025?

Erika Najarian: Once you get into the second half of 2025, they're a little bit lower rated, so that's when you begin to get some benefit there. And then I think Lee can give you more of the details following.

Speaker Change #118: Well, I think about it like this. You can almost think about it like it's like 10 billion or so every quarter. It's just that the ones that roll off for the first, you know, next 12 months, they're all kind of term coupons, so they won't really have any impact.

Betty Grafick: Once you get into the second half of 2025, they're a little bit lower rated, so that's when you begin to get some benefit there.

Speaker Change #118: Once you get into the second half of 2025, they're a little bit lower rated, so that's when you begin to get some benefit there. And then, yeah, I think probably Lee can give you more of the details following.

Betty Grafick: And then, you know, I think probably we can give you more of the details following.

Erika Najarian: If I could just slide in one more question on the normalized MIM, you know, 2.3 and 2.4 are clearly much higher than where you are now. Alastair, you mentioned we should assume a flattish balance sheet. But I think I had conversations with the company before in that half of that path between 1.9-ish to 2.3 to 2.4 has to do with balance sheet efficiency. And I'm wondering if you could carry out the balance sheet efficiency program with and keep your balance sheet flattish.

Betsy Lynn Graseck: If I could just slide in one more question on the normalized name, you know, two, three, and two, four clearly is much higher than where you are now. I'll throw you mentioned, which is the theme of flat-ish balance sheet, but I think I conversation to the company before and that. How far is that path between one nine-ish, two, three, two, four? How to do a balanced sheet efficiency? And I'm wondering if you could carry out the balance sheet efficiency with and keep your balance sheet flat-ish. In other words, you know, obviously what the market is going to do is take your earnings assets today and, you know, apply two, three, five and say, okay, over time, whether it's 26 or 27, this is what beer they can earn under a normalized curve.

Speaker Change #119: If I could just slide in one more question on the normalized MIM, you know, 2.3 and 2.4 clearly is much higher than where you are now. Alastair, you mentioned we should assume a flattish balance sheet.

Speaker Change #120: But I think I had conversations with the company before, and that...

Lee McIntyre: Half of that path between 1-9-ish.

Speaker Change #121: 2.0 to 2.3 to 2.4 has to do with balance sheet efficiency.

Erika Najarian: In other words, obviously, what the market is going to do is take your earning assets today and, you know, apply 2, 3, 5, and say, okay, over time, whether it's 26 or 27, this is what B of A can earn under a normalized curve.

Speaker Change #122: I'm wondering if you could carry out the balance sheet efficiency with

Speaker Change #123: and keep your balance sheet flattish. In other words, you know, obviously what the market is going to do is take your earning assets today and, you know, apply 2, 3, 5 and say, okay, over time whether it's 26 or 27, this is what B of A can earn under a normalized curve. I'm wondering if that's the right math to do or should we expect some shrinkage of the balance sheet if you can, that's part of the.

Brian Moynihan: I'm wondering if that's the right math to do, or which should be expected some shrinkage of the balance sheet. If you can, that's part of the path of two, three, two, four. Yeah, I think what will happen is the underlying proof of the company will still be there. But we have some things that we know, you know, just like Steve asked that question. Is there any higher rate, shorter dated stuff you'd like to pay off? Yes, they will be over time. So I think we've got some ability to, you know, almost like self-fund the first 150 billion accruals in terms of earning assets.

Erika Najarian: I'm wondering if that's the right math to do, or should we expect some shrinkage of the balance sheet? If you can, that's part of the path of 2, 3, 2, 4. Yeah, I think what will happen is that the underlying growth of the company will still be there. But we have some things that we know, you know, just like Steve asked that question, is there any higher rate, shorter-dated stuff you'd like to pay off? Yes, there will be in time.

Speaker Change #124: 2, 3, 2, 4.

Speaker Change #125: Yeah, I think what will happen is

Kenneth Michael Usdin: So I think we've got some ability to, you know, almost self-fund the first 100-150 billion of growth in terms of earning assets. So that's why we're saying that'll keep the denominator down while we're growing the number right. Okay, thank you. We'll take our next question from Ken Ustin of Jeffries. Hey, thanks. Good morning.

Speaker Change #126: The underlying growth of the company will still be there.

Speaker Change #126: But we have some things that we know, you know, just like Steve asked that question, is there any...

Speaker Change #129: Higher rate shorter dated stuff you'd like to pay off. Yes, there will be overtime. So

Speaker Change #129: I think we've got some ability to, you know, almost like self-fund the first 100, 150 billion of growth in terms of earning assets. So that's why we're saying that'll keep the denominator down while we're growing the numerator.

Brian Moynihan: So that's what we're saying: that will keep the denominator done while we're growing the numerator.

Unknown Executive: Okay, thank you.

Penn Houston: We'll take our next question from Penn, Houston of Jeffries. Hey, thanks. Good morning. Hey, Alistair. It's wanted to ask you a little bit more on the securities portfolio side, because you also have a 180 billion or so of pay fixed swaps on the AFS book. And so we know about the HFS, the HTM maturity schedule.

Speaker Change #127: Okay, thank you.

Speaker Change #128: We'll take our next question from Ken Usdin of Jeffries.

Kenneth Michael Usdin: Hey, Alastair, I just wanted to ask you a little bit more on the securities portfolio side, because you also have 180 billion or so of pay fix swaps on the AFS book, and so we know about the HFS, and HTM maturity schedule. But how do you look at that AFS book? And you know, how much are those pay-fix swaps currently in the money, and kind of like how you're just thinking about that side of the portfolio as well? Thanks.

Kenneth Michael Usdin: Hey, thanks. Good morning. Hey, Alastair, I just wanted to ask you a little bit more on the

Kenneth Michael Usdin: On the securities portfolio side, because you also have, what, $180 billion or so of pay-fix swaps on the AFS book.

Speaker Change #131: And so, we know about the HFS, the HTM maturity schedule, but how do you look at that AFS book and, you know, how much are those pay-fix swaps currently in the money and kind of like how you're just thinking about that side of the portfolio as well? Thanks.

Penn Houston: But how do you look at that AFS back AFS book and, you know, how much are those pay fixed swaps currently in the money and kind of like how you're just thinking about that side of the portfolio as well. Thanks. You know, just remember those are received fixed. So remember start that right there. Remember that is when we put the AFS in our portfolio; it's so that we've got a group of securities. They're sitting there. They're, they're typically treasury swap them to flow things so that they look like they're cash as far as we're concerned.

Alastair M. Borthwick: Yeah, just remember, those are received fixed. So remember that there, do you remember that is? When we put the AFS in our portfolio, it's so that we've got a group of securities that are sitting there in Canada. And then how do you manage that going forward with regard to the rate forecast? Do those come off as the Securities Book matures, or not? Well, it's less of an interest rate call for us.

Speaker Change #132: Yeah, just remember those are receipt-fixed.

Speaker Change #134: So, remember, that there, remember that is...

Speaker Change #133: When we put the AFS in our portfolio, it's so that we've got a group of securities that are sitting there.

Speaker Change #133: They're typically treasuries. We swap them to floating so that they look like they're cash as far as we're concerned. We don't have to worry about impact into regulatory capital flowing through. And to us, they just look like cash equivalents. So that's how we think about it, Ken.

Penn Houston: We don't have to worry about impact them to a regulatory capital flowing through. And they just, to us, they just look like cash equivalents. So that's how we think about it again.

Penn Houston: And then chatty manage that going forward with regards to like the rate forecast, so those come off as the security smokers or... Well, it's less of an interest rate call for us; it's more of going back to this concept: we've got 1.9 trillion of deposits, and we've got 1.05 trillion loans, so we've got 850 billion of access. So when the access comes in, we can do a variety of different things. We'd love to put it in loans. So that's always our first; that's our first loan. But in the absence of that, we're going to put it in cash, or we've been put it in available-for-sale.

Kenneth Michael Usdin: And then how do you manage that going forward with regards to like the rate forecast? Do those come off as the...

Alastair M. Borthwick: Alastair Borthwick, thank you.

Alastair M. Borthwick: It's more of, you know, going back to this concept of we've got 1.9 trillion in deposits, and we've got 1.05 trillion in loans. So we've got $850 billion of excess. So when the excess comes in, we can do a variety of different things. We'd love to put it in loans, but that's always our first. That's our first love. But in the absence of that, we're going to put it in cash, or we're going to put it available for sale, probably switch to floating pay for the most part. And we can choose to put things in ultimate purity if we choose to.

Speaker Change #138: and we've got 1.05 trillion of loans so we've got 850 billion of excess.

Speaker Change #135: So when the excess comes in, we can do a variety of different things. We'd love to put it in loans, but that's always our first, that's our first love.

Speaker Change #135: But in the absence of that, we're going to put it in cash or we're going to put it in available for sale, probably swap to floating for the most part.

Penn Houston: We're all hopefully swapped to float in pretty most part. And we can choose to put things in ultimately, if we choose to, but obviously right now, we feel like we want ultimately to just continue to pay down. That's what's happening over the course of the past 11 quarters. We're just going to keep going with that.

Speaker Change #135: And we can choose to put things in ultimate maturity if we choose to, but obviously right now we feel like we want ultimate maturity, just continuing to pay down, that's what's been happening over the course of the past 11 quarters, we're just going to keep going with that. So no particular changes to our philosophy around available for sale.

Alastair M. Borthwick: But obviously, right now, we feel like we want the whole future to just continue to pay down. That's what's been happening over the course of the past 11 quarters. We're just going to keep going with that. So no particular changes to our philosophy around what's available for sale. Okay, and a quick one on expenses. I believe you said that costs should kind of hang in here at around the 16.3 that was reported.

Penn Houston: So no particular changes to our philosophy around the Available for Sale.

Brian Thomas Moynihan: And so just kind of any call on puts and takes here, just you know, is that a better kind of revenue-related comp against your ongoing efficiencies? And just how do you think about longer-term expense growth again? Thank you. Sure, Ken.

Penn Houston: Okay, and the quick one on expenses that we've said that costs are kind of hanging here, and around the 163 that was reported. And so just kind of any clock collar on puts and takes here, just, you know, is that better kind of revenue-related comp against your ongoing efficiencies, and just how do you think about long return expense growth again? Thank you. Sure. Yeah. I think, obviously, the second quarter is sort of emblematic. You think about five years, second quarter, and this year, second quarter. You know, we went up by 300 million, 300 million, excuse me.

Speaker Change #137: Okay. And a quick one on expenses. I believe you said that costs should kind of hang in here in around the 16-3 that was reported. And so just kind of any call on puts and takes here, just, you know, is that better kind of revenue related?

Speaker Change #136: comp against your ongoing efficiencies and just how you think about longer term expense growth again. Thank you.

Brian Thomas Moynihan: I think, honestly, the second quarter is sort of emblematic. If you think about last year's second quarter and this year's second quarter, we went up by $300 million. As Alastair said, $200 million was just wealth management and incentive comp, and the other growth was really under incentive comp. As you follow the revenue side equation that Alastair's been talking about with your colleagues on NII and stuff, is that list, the expenses stay relatively flat.

Speaker Change #136: Sure, Ken, you know, I think...

Speaker Change #139: Honestly, the second quarter is sort of emblematic if you think about last year's second quarter and this year's second quarter.

Brian Moynihan: And I also said 200 was this month, man. That's a company. Other growth was really other incentive comp. So the idea, the pressures we face now are really more due to the fee growth in the business, which typically have a tighter correlation between fees and expenses, and it's kind of copper-related in those fees. So that, you know, that's not a good expense growth. It's what you want to do to grow with growth is a good rate. And count is basically been bounced around relatively flat or get too 12 this quarter. Even that adding up a bunch of summer teammates, we're at 250 in last year.

Speaker Change #139: We went up by $300 million, as Alastair said, $200 million was just wealth management, incentive comp, and the other growth was really other incentive comps.

Speaker Change #140: The pressures we face now are really more due to

Speaker Change #140: See growth in the businesses which typically have a tighter correlation between fees and expenses.

Speaker Change #140: Headcount has basically been bouncing around relatively flat. We're at 212 this quarter, even adding a bunch of summer teammates. We were 215 last year this quarter, the same summer teammates included. So managing headcount, redeploying people. We have the usual cleanup stuff going on. We have the new initiatives going on, bringing up work and moving it over. So we feel good about managing the company and that's against inflation rate wages that

Brian Moynihan: This quarter is the same summer teammates included. So we had count, we deploying people. We have the clean up stuff going on. We have the new initiatives going on; we're bringing up work and moving it on. So if you'll go to about man's in the company, and that's against inflation rate wages at 35%. You know, going on inflation and all the services we buy in the third-party market, obviously, the world experiences. So we feel good about how our man's expenses; the key is that it's pretty simple. As you follow the revenue side equation that, you know, founders have been talking about their colleagues on an ice, that is that list.

Speaker Change #140: [inaudible]

Brian Thomas Moynihan: You start moving towards positive operating leverage. We were minus a percent or something like that this quarter, kind of hanging in there, and we'll expect that to go back to the five-year track we had all the way up until the pandemic hit and things got thrown in a bunch. Thanks, Brian. We'll take our next question from Gerard Cassidy of RBC. I'm Brian. How are you?

Speaker Change #140: Yeah

Brian Moynihan: And the expenses, same amount that we flat, we start moving towards a positive operating leverage. We were, my, the percentage of my debt was quarter kind of hanging in there. And we'll expect that to go back to the five-year track we had all the way up until the pandemic hit. And things got thrown aside. Thanks, Brian.

Speaker Change #140: Alastair's been talking about their colleagues on NIH and stuff, as that lifts, the expenses stay relatively flat, you start moving towards positive operating leverage. We were minus a percent or something like that this quarter, kind of hanging in there, and we'll expect that to go back to the five-year track we had all the way up until the pandemic hit and things got thrown aside.

Gerard Cassidy: We'll take our next question from Gerard Cassidy of RPC. Hi, Brian. Hi.

Brian: Thanks, Brian .

Speaker Change #141: We'll take our next question from Gerard Cassidy of RBC.

Gerard Sean Cassidy: [inaudible] Brian, you talked, and Alastair, both of you talked about the excess deposits. I think it was slide 22 you pointed to. Can you share with us, as you go forward, and assuming the Federal Reserve does cut interest rates, I know you put, I think, three Fed Fund rate cuts on slide 10, but as we go out onto the end of 25, the forward curve is calling for, obviously, more rate cuts. Could you tell us how you expect to price your deposits as rates continue to fall? With this excess deposit level, can you be more aggressive in lowering your deposit costs?

Gerard Sean Cassidy: I'm Brian . Hi, Alastair.

Gerard Sean Cassidy: Oh, there.

Speaker Change #143: Brian , you talked, and Alastair, both of you talked about the excess deposits. I think it was slide 22 you pointed to.

Gerard Sean Cassidy: Can you share with us as you go forward and assuming the Federal Reserve does cut interest rates I know you put I think free Fed Fund rate cuts in your slide 10 But as we go out onto the end of 25 the forward curve is calling for obviously more rate cuts Could you tell us how you expect to price your deposits as rates continue to fall with this excess deposit level? Can you be more aggressive in lowering your deposit costs?

Brian Thomas Moynihan: I think that's very business and, more importantly, customer-specific use. Gerard, so, you know, we think about our deposit strategies in the context of how our customers utilize our services. And so, you know, if you think about the parts that priced up in global banking or the investment-related cash in the consumer business and wealth management, that'll come back down as rates come because it's short term, and equivalents come down. Some of it's absolutely mechanical because it's actually priced to meet the money market fund equivalent. That'll happen.

Speaker Change #144: I think that's very business and more importantly customer-specific use there are so you know we think

Speaker Change #144: Bye-bye.

Speaker Change #145: Our deposit strategies in the context of how our customers utilize.

Speaker Change #146: Our services and so.

Speaker Change #146: [inaudible]

Speaker Change #147: Alastair Moynihan, Alastair Borthwick

Gerard Sean Cassidy: And so, yes, I think if you think about us being, you know, all in, if you look at that slide at 203 basis points, there'll be some pickup as rates come down in those higher things, balance accounts or low interest checking, yep, they don't really move because there's zero interest or low interest. So they'll, they'll be kind of static, but they're still extremely valuable in the current So when you think of all in consumer, I think 60 odd basis points or something that's driven by the fact that we have 40 odd million transactional primary checking accounts that are growing at a million a year, multiple years in a row, $900,000 a million a year that are maturing from $3,000 up to $7,000 or $8,000 in balances as people mature their relationship with us.

Speaker Change #147: Alastair Borthwick, CEO Alastair Borthwick, CEO Alastair Borthwick, CEO

Speaker Change #147: Transactional primary checking accounts that is growing at a million a year.

Speaker Change #147: Multiple years in a row, 900,000 million a year that are maturing, you know from $3,000 up to $7,000 or $8,000 in balances as people you know.

Gerard Sean Cassidy: That's where the tremendous value of the deposit base of this company comes from. And so if you think about $1.91 trillion having grown $100 billion almost from the trough, you think about it growing in one quarter, multiple quarters in a row, you think about even as we look now to apply deposit balances above that amount, those are good dynamics. So we think about it, but it'll move. But remember, part of our deposit pricing is never going to move because it's zero. Right, right. No, no, no doubt.

Speaker Change #147: mature the relationship with this. That that's where the tremendous value of the deposit basis company goes. And so if you think about $1.9, 1 trillion, having grown $100 billion, almost

Alastair M. Borthwick: Alastair Moynihan, Alastair Borthwick

Gerard Sean Cassidy: Those are the golden deposits. There is one other question on slide 10. And also, I think if I recall your first quarter Q, you guys indicated you are asset sensitive. I would assume that this slide 10 also shows that with the free rate cuts. Alastair, what would it take to move to a more neutral position on the balance sheet or even a liability-sensitive position? Should the Fed really get into a rate-cutting environment? Yeah, so this shows that we're asset sensitive. That's why the red box obviously is bigger than the green box.

Speaker Change #148: Right, right. No doubt, those are the golden deposits. One other question on slide 10, and also I think if I recall your first quarter Q, you guys indicated you were asset sensitive. I would assume that this slide 10 also shows that with the free rate cuts. Alastair, what would it take to move to a more neutral position on the balance sheet or even a liability sensitive position should the Fed really get into a rate cutting environment?

Alastair M. Borthwick: Yeah, so this shows that we're asset sensitive. That's why the red box obviously is bigger than the green box. It's the market space that's liability sensitive. So we're still asset sensitive, Gerard.

Alastair M. Borthwick: It's the market space that's liability sensitive. So we're still asset sensitive, Gerard. What it would take for us is either we can have a lot more rotation and launch into intersparing, or we could buy some short-dated duration fixed rate. So those are the two alternatives.

Alastair M. Borthwick: What it would take for us is either we can have a lot more rotation into interest-bearing

Speaker Change #149: or we could buy some short-dated duration fixed rate. So those are the two alternatives. And if you look at the course of time, if you were to go back to our queues over time, you'd see that we've become.

Alastair M. Borthwick: And if you look at the course of time, if you were to go back to our queues over time, you'd see that we've become less and less rate sensitive over time. We've really narrowed the corridor of whether rates go up by 100 or down by 100. What would that outcome look like?

Speaker Change #149: Less and less rate-sensitive over time.

Speaker Change #149: We've really narrowed the corridor of whether rates go up by a hundred or down by a hundred. What could that outcome look like? Narrowed that pretty substantially over time because we're trying to lock in rates here recognizing the NII's up four or five billion over the course of the past several years.

Brian Thomas Moynihan: I've narrated that pretty substantially over time because we're trying to lock in rates here, recognizing the NII is up, you know, four or five billion over the course of the past several years. The last thing I'd say, Gerard, for a person who's been around this business for as many years as you have, this has been a very abnormal rate environment for the last 15 years or so. And if you get to where you have a Fed funds rate of three and a half, which is what our experts predict it sort of stops out at, the ability to bring that sensitivity tighter and tighter is there because you actually have room to move down without hitting zero floors and stuff.

Speaker Change #150: Yes, the last thing I'd say to a person who's been around this business as many years as you have, you know, this has been a very abnormal rate provider for the last 15 years.

Speaker Change #151: or so. And if you get to where you have a more fed funds rate, three and a half, which is what our experts predict it sort of stops out at,

Speaker Change #151: The

Speaker Change #151: Ability to bring the sensitivity tighter and tighter is there because you actually have room to move down without hitting zero floors and stuff, so there's

Brian Thomas Moynihan: So there's instability during time periods during which the rate environment doesn't flip around. And then secondly, a higher nominal rate environment allows you to manage that outcome because part of the other outcome for us is that just as the rate structure is nominally very low, the zero floors kick in, and that creates an amount of sensitivity that, over time, will go away if the rate structure is higher. Yeah, no, it does. Thank you. And just Brian or Alastair, one last quick question.

Speaker Change #152: It's a stability.

Speaker Change #153: during time periods of which the rate environment doesn't.

Brian Thomas Moynihan: Alastair Moynihan, Alastair Borthwick

Gerard Sean Cassidy: I noticed on slide 25, your home equity loan balance has actually increased. I think that's the first time in maybe over two or three years. Was there a new program, or what are you seeing that drives that? And should that, or can that, continue as we go forward into 25? Thank you. Yeah, I think it just reflects that people have locked in low-rate loans, and now that they want to borrow, it's an expensive view because they've got a fixed-rate mortgage loan and they've got home equity sitting on top of it. Why wouldn't they use it?

Speaker Change #154: Yeah, no, it does. Thank you. Just, Brian or Alastair, one last quick question. I noticed on slide 25, your home equity loan balance has actually increased. I think that's the first time in maybe over two or three years. Was there a new program or what are you seeing that drives that? And should that or can that continue as we go forward into 25?

Speaker Change #155: Thank you.

Speaker Change #158: Yeah, I think.

Speaker Change #157: It just reflects that the people have locked in low-rate loans, and now that they want to borrow, it's an expensive view because they've got to...

Speaker Change #156: Take Straight mortgage loan and I've got a home equity sitting on top of it.

Brian Thomas Moynihan: I'd like it if it was only two years. It's been four or five years since that balance of 130 billion started declining, so it's good to see. I'll note at the bottom of that page, if you look at your mortgage production, you have 5.7 billion and 5.9, and you look at home equity line production, which is new originations in the boxes, solid, but it is nice to finally see that the actual balances have stabilized, and we'll see. They're kind of flattish.

Speaker Change #159: Why wouldn't they use it? I'd like it if it was only two years. It's been four or five years since that balance of $130 billion started declining.

Speaker Change #160: It's good to see, I'll note at the bottom of that page, you know, if you look at year-over-year mortgage production.

Speaker Change #162: You have $5.7 billion and $5.9 billion, you look at home equity line production, which is new originations in the boxes.

Speaker Change #160: [inaudible]

Brian Thomas Moynihan: They're not really growing, but it's nice to see them not just keep coming down, and hopefully, they'll start to be utilized. Our expectation would be that they will be as consumers, over time, want to take out part of the equity in their home at a rate that is reasonable but doesn't require them to refinance the whole first. Great. Thank you again, Brian.

Speaker Change #161: Consumers, you know, over time want to take out part of the equity in their home at a rate that, you know, is reasonable but doesn't require to refinance the whole first.

Vivek Juneja: We'll take our next question from Vivek Juneja of J.P. Morgan. Hi, thanks for the question. Just a little color on non-interest bearing deposits. When you look at it on an average basis, the decline has clearly slowed sharply.

Brian: Great. Thank you again, Brian .

Vivek Juneja: We'll take our next question from Vivek Juneja of J.P. Morgan.

Vivek Juneja: Period end was down at a faster rate. Is that just the noise around the end of one queue? Or what are you seeing as you look sort of month by month? Is that truly slowing? And talk to it a little bit by customer segment, if you can, please. Yeah, I think the fact that you're catching two things.

Speaker Change #166: Hi, thanks for the question. Just a little color on non-interest bearing deposits. When you look at on average basis, the decline has

Speaker Change #163: Slowly choppily

Speaker Change #164: Period end was down at a faster rate. Is that just the noise around end of one queue or what are you seeing as you look sort of month by month? Is that truly slowing? And talk to it a little bit by customer segment, if you can, please.

Alastair M. Borthwick: The first one is that the rotation is slowing down, and we would expect that because, at the end of the day, this is mostly cash in motion, it's transactional accounts, and that's why it's not interest-bearing. And the answer why it's a little different this quarter is because of the seasonality of tax payments. If anyone has a big tax payment due, they frequently just allow it to, you know, they may pull it out of their brokerage account, put it into their, they may put it into their non-interest bearing account, and then they're, you know, wiring it out from there.

Speaker Change #167: Yeah, I think the fact that you're catching two things. First one is it is slowing, that rotation is slowing, and we would expect that because at the end of the day, this is mostly the average.

Speaker Change #168: Cash in Motion, it's transactional accounts, that's why it's not interest-bearing.

Speaker Change #169: An answer why it's a little different this quarter is because of the seasonality of tax payments.

Speaker Change #169: If anyone has a big tax payment due, they frequently just allow it to, you know, they may pull it out of their brokerage account, put it into their, they may put it into their

Vivek Juneja: So that's again an example of money in motion, but that's what's going on in this quarter. A quick one, Visa B derivative gains. Did you have anything in your equity derivatives trading revenues this quarter? Nothing to highlight, nothing to note.

Speaker Change #169: non-interest bearing, and then they're, you know, wiring it out from there. So that's, again, an example of money in motion, but that's what's going on in this quarter.

Speaker Change #170: A quick one. Vis-a-vis derivative gains, did you have anything in your equity derivatives trading revenue this quarter?

Speaker Change #171: Nothing to highlight, nothing to note. That's a position, you know, we sold years ago.

Speaker Change #171: And the thing that's happened with Visa, we've just unwound on the balance sheet, we've recycled it, so it shouldn't have any impact to revenue.

Vivek Juneja: That's a position you know we sold years ago. And the thing that's happened with Visa, we've just unwound it on the balance sheet. We've recycled it, so it shouldn't have any impact on revenue. Thank you. We'll take a question from Matt O'Connor of Deutsche Bank. Good morning, Matt. Good morning.

Speaker Change #172: Thank you.

Speaker Change #173: We'll take a question from Matt O'Connor of Deutsche Bank.

Matt O'connor: I heard you guys thinking about kind of targeted capital levels going forward. You know, obviously, we're still waiting for final rules. Maybe there's a little more volatility in your SUV than you would have thought, but you still have a nice buffer. And then I guess one last piece I was thinking of, The remixing of the balance sheet that's been commented kind of throughout this call over time probably causes a little creep in RWAs, right, like loans higher than, say, securities.

Speaker Change #174: Morning, Matt. Good morning.

Matt O'connor: I heard you guys thinking about kind of targeted capital levels going forward, you know, obviously we're still waiting for final rules. Maybe there's a little more volatility in your SGB than you would have thought, but you still got a nice buffer. And then I guess one last piece I was thinking of.

Matt O'connor: So lots of excess capital, but some puts and takes, and you know, how are you thinking about it between now and when we get the final guidelines? So first off, I think we always want to use the capital to grow the business. So if we need to use it to support RWA growth for loans or something, that's a good outcome. And that's what we want to do for our second. We maintain that 11.9% quarter to quarter with a little bit of an RWA increase. I think that would be sort of emblematic.

Speaker Change #176: The remixing of the balance sheet that's been commented throughout this call over time probably causes a little creep in RWAs, like loans higher than say securities. So lots of excess capital, but some puts and takes, and how are you thinking about it between now and when we get the final guidelines?

Speaker Change #177: So, first off, I think...

Speaker Change #177: We

Speaker Change #178: We always want to use the capital to grow the business, so if we need to use it to support RWA growth for loans or something, that's a good outcome, and that's what we want to do first.

Speaker Change #179: We maintained at 11.9% quarter-to-quarter with a little bit RWA increase, I think that would be sort of emblematic, and we bought $3.5 billion, paid out $1.9 billion in dividends, so you'd expect that kind of to continue on in terms of that basic idea of

Alastair M. Borthwick: And yeah, we bought three and a half billion, and paid out billion nine in dividends. So you expect that kind of to continue in terms of that basic idea of, we don't need a lot of capital to grow because the RWA demands are met with a fairly straightforward amount. We're earning a nice amount of dollars, and we'll deploy it back in the dividend and the buybacks. Our job is to maintain, our view is we'll maintain a 50 basis point type of management buffer to whatever the requirements are.

Speaker Change #179: We don't need a lot of capital to grow because the RWA demands are met with a fairly straightforward amount. We're earning a nice amount of dollars and we'll deploy it back in the dividend and the buybacks.

Speaker Change #179: Our job is to maintain a 50 basis point type of management buffer to whatever the requirements are. The volatility...

Alastair M. Borthwick: The volatility, well, there's a whole different discussion about that in terms of the wisdom of that. But the reality is the volatility is absorbable because you have time to plan for it and get it done within a race we've seen. So whether we agree with the volatility or not, we've easily absorbed it.

Speaker Change #179: Well, there's a whole different discussion on that in terms of the wisdom of that. But the reality is the volatility is absorbable, you know, because you have time to plan into it and get done within the race we've seen. So whether we agree with the volatility or not, we've easily absorbed it. And the new rule is coming out. We'll see what happens and we'll adjust. But just think of it as a system.

Brian Thomas Moynihan: And the new rule is coming out. We'll see what happens, and we'll adjust. But just think of this as basically a requirement of 10.7 under the new SEB plus 50 is 11.2.

Speaker Change #180: Basically, a requirement of 10.7 under the new SCB, plus 50 is 11.2.

Matt O'connor: Maybe you get a little tighter if you feel you have great insight into what happens next year. But then I think the finalization of 1003 will come through, and we'll see what that is and see how that all correlates to the various aspects. But, you know, we feel good about where we are and expect that all current earnings are basically available to support the growth we're talking about in the current economic environment. That's a relatively modest need, but really, the rest of it just goes plowing back to you.

Speaker Change #181: Maybe you get a little tighter if you feel you got great insight to what happens next year, but...

Speaker Change #181: And then I think the finalization of House Bill 3 will come through and we'll see what that is and see how that all correlates to the various aspects. But, you know, we feel good about where we are and expect that all current earnings are, you know, basically available to support.

Speaker Change #181: The growth we're talking about in the current economic environment, that's relatively modest need, but really the rest of it just goes plowing back to you.

Brian Thomas Moynihan: Okay, and just to summarize that, I mean, do you think about bringing down the 11.9 to 11.2 in the near term, or to make it obvious, like, wait, that's a little bit more theoretical and wait for the capital wills to play out? I think we just need to see how the next 60, 90, 120 days play out there. There was a lot of discussion about the timing of a resubmission or not, etc.

Speaker Change #182: Okay, and then just to summarize that, I mean, do you think about bringing down the 11.9 to 11.2 kind of in the near term, or just to make it obvious, like, wait, that's a little bit more theoretical and wait for the capital rules to play out?

Matt O'connor: So we have a lot of flexibility, and we continue to focus on shareholder value creation with that. But, you know, I think we're in a critical spot for the industry in terms of learning the outcome of a lot of these things over the next short period of time. Okay, thank you.

Speaker Change #182: I think.

Speaker Change #183: We just, we need to see how the next 60, 90, 120 days play out. There's a lot of discussion about the timing of a re-proposal or not, etc. So we have a lot of flexibility, but we continue to focus on shareholder value creation and all of that. But, you know, I think we're in a critical spot for the industry in terms of learning the outcome of a lot of these things over the next short period of time here.

Brian Moynihan: Okay, thank you.

Unknown Executive: That concludes our question and answer session for today.

Operator: That concludes our question and answer session for the day. I'd be happy to return the call to Brian Moynihan for closing comments. Thank you, operator. Thank all of you for joining us today. Obviously, a lot of focus is on AI, and we gave you slide 10 to give you the bridge. Alastair answered a lot of the questions.

Speaker Change #184: Okay, thank you.

Brian Moynihan: I'd be happy to return the call to Brian Moynihan for closing comments. Thank you, operator.

Speaker Change #184: That concludes our question and answer session for the day. I'd be happy to return the call to Brian Moynihan for closing comments.

Brian Moynihan: Thank all of you for joining us today. Obviously, a lot of focus on eye, and we gave you the slide 10 to give you the bridge. Alastair answered a lot of questions; leads here to answer. The key is to understand what's driving that, which is the positive positive performance was to stabilize and starting to grow for all like six quarters are grown out, long growth, very low and it looked very little bit to stay positive. Those are going to drive the value of this franchise, and that's Gorda Grant at Growth by our customers. That's coupled with, you know, strong fee performance is corner in terms of love and fees, best from banking fees, consumer fees even growing global payment services fees and of course the great work done by our market teams. So that level was flashed expenses give us a chance to start driving operating leverage again in the company and that generates a lot of earnings, a lot of access capital and we put that back in your hand.

Brian Thomas Moynihan: Thank you, Operator. Thank all of you for joining us today. Obviously, a lot of focus in on AI, and we gave you the slide 10 to give you the bridge.

Brian Thomas Moynihan: Lee's here to answer it. The key is to understand what's driving that, which is deposit performance, which has stabilized and started to grow for like six quarters in a row now. Loan growth, very low, and it looked very low, but just staying positive. Those are going to drive the value in this franchise, and that's going to grow with our customers. That's coupled with strong fee performance this quarter in terms of wealth management fees, investment banking fees, consumer fees, and even growing global payment services fees. And, of course, the great work done by our markets team.

Speaker Change #185: Alastair answered a lot of the questions. Lee is here to answer it. The key is to understand what's driving that, which is...

Alastair M. Borthwick: Alastair Borthwick, thank you.

Speaker Change #186: That's coupled with strong fee performance this quarter in terms of wealth management fees, investment banking fees, consumer fees even growing.

Brian Thomas Moynihan: So that, together with flattish expenses, gives us a chance to start driving operating leverage again in the company, and that generates a lot of earnings, a lot of excess capital, and we put that back in your hands. So thank you for your time and attention. We look forward to talking to you next quarter.

Speaker Change #186: Global Payment Services fees, and of course, the great work done by our markets team, so that level of

Speaker Change #187: Flash expenses give us a chance to start driving and operating and leverage again in the company.

Unknown Executive: So thank you for your time and attention. We look forward to talking next for.

Speaker Change #187: And that generates a lot of earnings, a lot of excess capital, and we put that back in your hands. So thank you for your time and attention. We look forward to talking next quarter.

Unknown Executive: This does conclude today's Bank of America earnings announcement. You may now disconnect your lines, and everyone have a great day. Thank you. . Thank you very much. . Once again, today's Bank of America earnings announcement has concluded. You may end down to disconnect.

Operator: This does conclude today's Bank of America earnings announcement. You may now disconnect your lines, and everyone have a great day. [inaudible] © The Bulletproof Executive 2013 ?? ?? ?? ?? [inaudible] © BF-WATCH TV 2021, [inaudible] ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? [inaudible] ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? [inaudible] ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?.

Speaker Change #188: This does conclude today's Bank of America earnings announcement. You may now disconnect your lines and everyone have a great day.

Speaker Change #188: www.larryweaver.com

Speaker Change #188: ?? ??

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Speaker Change #189: Once again today's bank of America earnings announcement has concluded you may now disconnect.