Q3 2025 Bank of America Corp Earnings Call

Sir Please go ahead.

Good morning. Thank you. Thank you for joining us to review our third quarter results. Our earnings release documents are available on the Investor Relations section of the Bank of America Dotcom website.

Those documents include the earnings presentation that we will make reference to during the call.

Brian Moynihan will make some brief comments before turning the call over to Alastair Borthwick, our CFO to discuss more of the details in the quarter.

Let me just remind you that we may make forward looking statements and refer to non-GAAP financial measures during the call.

The forward looking statements are based on management's current expectations and assumptions and those are subject to risks and uncertainties laid out.

Factors that may cause our actual results to materially differ from expectations are detailed in the earnings material and available in the SEC filings on the website.

Information about non-GAAP financial measures, including reconciliations to U S. GAAP can also be found in our earnings materials and are also available on the website with that Brian over to you.

Speaker #1: If you require assistance throughout the event today, please press star zero. Good day, everyone, and welcome to today's Q3 2025 Bank of America earnings call.

Speaker #1: At this time, I would like to turn the program over to Lee McEntire. Please go ahead.

Thank you Lee and good morning, and thank you all for joining us.

Bank of America delivered a strong third quarter with good growth both on the top line revenue and bottom line EPS.

Speaker #3: Good morning. Thank you for joining us to review our third quarter results. Our earnings release documents are available on the Investor Relations section of the Bank of America dot com website.

Lee McEntire: Good morning. Thank you. Thank you for joining us to review our third-quarter results. Our earnings release documents are available on the Investor Relations section of the BankofAmerica.com website. Those documents include the earnings presentation that we'll make reference to during the call. Brian Moynihan will make some brief comments before turning the call over to Alastair Borthwick, our CFO, to discuss more of the details in the quarter. Let me just remind you that we may make forward-looking statements and refer to non-GAAP financial measures during the call. The forward-looking statements are based on management's current expectations and assumptions, and those are subject to risk and uncertainties laid out. Factors that may cause our actual results to materially differ from expectations are detailed in the earnings material and available in the SEC filings on the website.

All driven by strong operating leverage <unk> improved to 15, 4%.

This quarter's results provide good momentum as we finish 2025 and head into 2026, we.

Speaker #3: Those documents include the earnings presentation that we will refer to during the call. Brian Moynihan will make some brief comments before turning the call over to Alastair Borthwick, our CFO.

We have been demonstrating consistent organic growth for many quarters. This quarter's results highlight the continued organic strength of our world class deposit and lending capabilities.

Speaker #3: To discuss more of the details in the quarter, let me just remind you that we may make forward-looking statements and refer to non-GAAP financial measures during the call.

Our results also underscore the benefits of a diversified business model with top tier position not only in lending and deposits.

Speaker #3: The forward-looking statements are based on management's current expectations and assumptions, and those are subject to risks and uncertainties laid out. Factors that may cause our actual results to materially differ from expectations are detailed in the earnings material and are available in the SEC filings on the website.

But also across the markets driven businesses and wealth management global markets and global banking.

Before I turn about house are going to hit a few highlights here reported revenue of $28 billion up 11% year over year EPS was $1 <unk> up 31% year over year, we drove operating leverage of 560 basis points in the quarter efficiency ratio fell below 62.

Speaker #3: Information about non-GAAP financial measures, including reconciliations to U.S. GAAP, can also be found in our earnings materials and are available on the website.

Lee McEntire: Information about non-GAAP financial measures, including reconciliations to US GAAP, can also be found in our earnings materials and are also available on the website. With that, Brian, over to you.

<unk> the return on assets reached 98 basis points and during the quarter, we returned to our shareholders $7 4 billion through dividends and share repurchases.

Speaker #3: With that, Brian, over to you.

Speaker #4: Thank you, Lee. Good morning, and thank you all for joining us. Bank of America delivered a strong third quarter, with good growth in both top-line revenue and bottom-line EPS, all driven by strong operating leverage.

Brian Moynihan: Thank you, Lee, and good morning, and thank you all for joining us. Bank of America delivered a strong third quarter with good growth both in the top-line revenue and bottom-line EPS, all driven by strong operating leverage. Our ROTCE improved to 15.4%. This quarter's results provide good momentum as we finish 2025 and head into 2026. We have been demonstrating consistent organic growth for many quarters. This quarter's results highlight the continued organic strength of our world-class deposit and lending capabilities. Our results also underscore the benefits of a diversified business model with top-tier positions not only in lending and deposits but also across the market-driven businesses in wealth management, global markets, and global banking. Before I turn it over to Alastair, I'm going to hit a few highlights here. We reported revenue of $28 billion, up 11% year-over-year. EPS was $1.06, up 31% year-over-year.

Net interest income on an FTE basis reached a record two.

$15 4 billion that.

That was supported by strong commercial loan and deposit growth along with continued balance sheet positioning invest.

Speaker #4: Our ROTC improved to 15.4%. This quarter's results provide good momentum as we finish 2025 and head into 2026. We have been demonstrating consistent organic growth for many quarters.

Investment banking fees exceeded $2 billion up 43% year over year.

Our team in sales and trading grew revenue, 8%, marking our 14th consecutive quarter of year over year revenue growth.

Speaker #4: This quarter's results highlight the continued organic strength of our world-class deposit and lending capabilities. Our results also underscore the benefits of a diversified business model.

Our asset management fees increased 12% compared to last year.

All our business segments contribute to our earnings improvement in that growth in earnings to stood out this quarter, our consumer banking team delivered $3 4 billion in after tax earnings up 28% year over year with 600 basis points of operating operating leverage.

Speaker #4: With a top-tier position not only in lending and deposits but also across the markets-driven businesses, in wealth management, global markets, and global banking. Before I turn it over to Alastair, I'm going to hit a few highlights here.

This reflects strong revenue growth and disciplined expense management. This business is driven off the core operating accounts of our consumer customers and we gained more than this quarter. These.

Speaker #4: We report a revenue of $28 billion, up 11% year over year. EPS was $1.06, up 31% year over year. We drove operating leverage of 560 basis points.

Brian Moynihan: We drove operating leverage of 560 basis points in the quarter. The efficiency ratio fell below 62%. The return on assets reached 98 basis points. During the quarter, we returned to our shareholders $7.4 billion through dividends and share repurchases. Net interest income on a fully taxable equivalent basis reached a record of $15.4 billion. That was supported by strong commercial loan and deposit growth along with continued balance sheet positioning. Investment banking fees exceeded $2 billion, up 43% year-over-year. Our team in sales and trading grew revenue 8%, marking our 14th consecutive quarter of year-over-year revenue growth. Our asset management fees increased 12% compared to last year. All the business segments contributed to our earnings improvement and had growth in earnings. Two stood out this quarter. Our consumer banking team delivered $3.4 billion in after-tax earnings, up 28% year-over-year, with 600 basis points of operating leverage.

These accounts have strong balances per account.

The customers give us great customer scores and we operate them at lower cost with more primacy in the account and lower attrition compared to anyone in the industry.

Speaker #4: In the quarter, the efficiency ratio fell below 62%. The return on assets reached 98 basis points. During the quarter, we returned $7.4 billion to our shareholders through dividends and share repurchases.

That is a winning combination.

Our global wealth and investment management teams posted net income of nearly $1 3 billion up 19%.

Speaker #4: Net interest income on an FTE basis reached a record $15.4 billion. That was supported by strong commercial loan and deposit growth, along with continued balance sheet positioning.

That was driven by the strong, Maryland private bank adviser productivity.

Concomitant continued growth in fee based assets.

Lending in this business was particularly strong with $12 billion in loan growth in this quarter.

Speaker #4: Investment banking fees exceeded $2 billion, up 43% year-over-year. Our team in sales and trading grew revenue 8%, marking our 14th consecutive quarter of year-over-year revenue growth.

<unk> also opened another 32000 and banking accounts grew deposits $3 billion from quarter two.

As we look ahead, we believe this quarter's performance continues to reflect the impact of the investments we have made on a continuous basis for many years in technology talent and client experience. These continued to translate into strong financial results.

Speaker #4: Our asset management fees increased 12% compared to last year. All the business segments contributed to our earnings improvement and had growth in earnings. Two stood out this quarter.

Speaker #4: Our consumer banking team delivered $3.4 billion in after-tax earnings, up 28% year over year, with 600 basis points of operating leverage. This reflects strong revenue growth and disciplined expense management.

We have been growing loans with the right risk and deposits as we continue to gain market share through organic growth that translated into continuous NII improvements in complementary growth in our fee based businesses this quarter.

Brian Moynihan: This reflects strong revenue growth and disciplined expense management. This business is driven off the core operating accounts of our consumer customers, and we gained more of them this quarter. These accounts have strong balances per account. The customers give us great customer scores, and we operate them at lower costs with more primacy in the account and lower attrition compared to anyone in the industry. That is a winning combination. Our global wealth and investment management teams posted net income of nearly $1.3 billion, up 19%. That was driven by the strong Merrill and Bank of America Private Bank advisor productivity and the concomitant continued growth in fee-based assets. Lending in this business was particularly strong, with $12 billion in loan growth in this quarter. Q1 also opened another 32,000 banking accounts and grew deposits $3 billion from Q2.

Speaker #4: This business is driven off the core operating accounts of our consumer customers. We gained more this quarter. These accounts have strong balances per account, the customers give us great customer scores, and we operate them at lower costs with more primacy in the account and lower attrition compared to anyone in the industry.

I also as usual menu to look at the digital slides in the appendix on slides 2022 and 24.

They show the continued progression across all the businesses of applied technology.

With lots of discussions going on about technology and AI knows things. We gave you the stats what youll see any slides as a customer facing activities of Erica for example, there are many other applications of AI going on in this company, but this one has been handling successful interactions for years with scale and add applications now been applied other across other businesses and even in.

Speaker #4: That is a winning combination. Our global wealth and investment management teams posted net income of nearly $1.3 billion, up 19%. That was driven by the strong Maryland private bank advisor productivity.

Speaker #4: In concomitant continued growth in fee-based assets, lending in this business was particularly strong, with $12 billion in loan growth in this quarter. GOM also opened another 32,000 banking accounts and grew deposits by $3 billion from Q2.

<unk> our employee base.

So we're confident in our trajectory of our results and we are excited about the opportunities ahead, we look more to look forward to talking to you at Investor Day in November I'm going to turn it over to Alastair walk through the financials in more detail.

Thank you, Brian and I'm going to start with slide three to begin our discussion and I just have three things on the income statement that I want to add to Brian's comments.

Speaker #4: As we look ahead, we believe this quarter's performance continues to reflect the impact of the investments we have made on a continuous basis for many years in technology, talent, and client experience.

Brian Moynihan: As we look ahead, we believe this quarter's performance continues to reflect the impact of the investments we have made on a continuous basis for many years in technology, talent, and client experience. These continue to translate into strong financial results. We have been growing loans with the right risk and deposits as we continue to gain market share through organic growth. That translated into continuous NII improvements and complementary growth in our fee-based businesses this quarter. I also, as usual, commend you to look at the digital slides in the appendix on slides 20, 22, and 24. They show the continued progression across all the businesses of applied technology, with lots of discussions going on about technology and AI and other things. We give you the stats. What you'll see in these slides is the customer-facing activities of Erica, for example.

We're pleased with the continued demonstration of expense discipline across our businesses.

Speaker #4: These continued to translate into strong financial results. We have been growing loans with the right risk and deposits as we continue to gain market share through organic growth.

So in the third quarter, we delivered 11% year over year revenue growth significantly outpacing, 5% expense growth and resulting in that strong 6% operating leverage.

Speaker #4: That translated into continuous NII improvements and complemented our growth in our fee-based businesses this quarter. I also recommend you look at the digital slides in the appendix on slides 22 and 24.

Of the $28 2 billion in total revenue.

An aggregated amount of $11 3 billion came from our sales and trading investment banking and asset management fees three of our more highly compensable market facing areas.

Speaker #4: They show the continued progression across all the businesses of applied technology. With lots of discussions going on about technology and AI and other things, we give you the stats.

So those areas grew 15% year over year in the aggregate and we're excited to continue our investments given their strategic importance and attractive returns when coupled with investment spending and inflation. This revenue growth helps frame, 5% expense growth even better.

Speaker #4: What you'll see in these slides is the customer-facing activities of Erica, for example. There are many other applications of AI going on in this company, but this one has been handling successful interactions for years.

Brian Moynihan: There are many other applications of AI going on in this company, but this one has been handling successful interactions for years with scale, and that application has now been applied across other businesses and even across our employee base. We are confident in our trajectory of our results, and we're excited about the opportunities ahead. We look forward to talking to you at Investor Day in November. I'm going to turn it over to Alastair Borthwick to walk through the financials in more detail.

Speaker #4: With scale, that application has now been applied across other businesses and even across our employee base. So, we're confident in our trajectory of results and we're excited about the opportunities ahead.

Importantly expense growth versus the second quarter was helped to under 1% while those same compensable revenue streams grew 8% sequentially.

Speaker #4: We look forward to talking to you at Investor Day in November. I'm going to turn it over to Alastair Borthwick to walk through the financials in more detail.

Reinforcing our ability to scale efficiently and invest where it matters most.

Speaker #3: Thank you, Brian. I'm going to start with slide three to begin our discussion, and I just have three things on the income statement that I want to add to Brian's comments.

Alastair Borthwick: Thank you, Brian. I'm going to start with slide three to begin our discussion. I just have three things on the income statement that I want to add to Brian's comments. First, we're pleased with the continued demonstration of expense discipline across our businesses. In the third quarter, we delivered 11% year-over-year revenue growth, significantly outpacing 5% expense growth and resulting in that strong 6% operating leverage. Of the $28.2 billion in total revenue, an aggregated amount of $11.3 billion came from our sales and trading, investment banking, and asset management fees, three of our more highly compensable market-facing areas. Those areas grew 15% year-over-year in the aggregate, and we're excited to continue our investments given their strategic importance and attractive returns. When coupled with investment spending and inflation, this revenue growth helps frame the 5% expense growth even better.

Second provision.

Provision expense improved this quarter with net charge offs declining 10% and we had a modest reserve release as a result of both credit card and commercial real estate improvement.

Speaker #3: First, we're pleased with the continued demonstration of expense discipline across our businesses. In the third quarter, we delivered 11% year-over-year revenue growth, significantly outpacing 5% expense growth and resulting in a strong 6% operating leverage.

Strong asset quality reflects the continued strength of our credit portfolio years of disciplined risk management and higher growth of the portfolio than other banks with good credit results.

Speaker #3: Of the $28.2 billion in total revenue, an aggregated amount of $11.3 billion came from our sales and trading, investment banking, and asset management fees.

Lastly, our average diluted share count declined by 24 million shares from the second quarter.

And this quarter included the dilution we've highlighted before in our filings and that comes from our 2008 issued convertible preferred series L stock.

Speaker #3: Three of our more highly compensable market-facing areas grew 15% year over year in the aggregate. We're excited to continue our investments given their strategic importance and attractive returns.

On slide four you'll note the various earnings highlights, Brian and I have talked about I.

I don't have much to add here.

That spend just a moment on our continued organic growth, which is powering our loan and deposit activity.

Speaker #3: When coupled with investment spending and inflation, this revenue growth helps frame the 5% expense growth even better. Importantly, expense growth versus Q2 was held to under 1%, while those same compensable revenue streams grew 8% sequentially.

We added new clients, and we deepened relationships with existing clients and across consumer wealth commercial and institutional businesses. Our teams are winning in the marketplace by putting our clients first.

Alastair Borthwick: Importantly, expense growth versus the second quarter was held to under 1%, while those same compensable revenue streams grew 8% sequentially, further reinforcing our ability to scale efficiently and invest where it matters most. Second, provision expense improved this quarter, with net charge-offs declining 10%, and we had a modest reserve release as a result of both credit card and commercial real estate improvement. The strong asset quality reflects the continued strength of our credit portfolio, years of disciplined risk management, and higher growth of the portfolio than other banks with good credit results. Lastly, our average diluted share count declined by 24 million shares from the second quarter, and this quarter included the dilution we've highlighted before in our filings, and that comes from our 2008-issued convertible preferred Series L stock. On slide four, you'll note the various earnings highlights Brian and I have talked about.

Speaker #3: Further reinforcing our ability to scale efficiently and invest where it matters most. Second, provision expense improved this quarter, with net charge-offs declining 10%, and we had a modest reserve release as a result of both credit card and commercial real estate improvement.

As always we highlight the continued organic growth across each of our businesses driven by client engagement disciplined execution and strategic investment.

And you can see the results there on slide five.

Consumer banking continued to show strong momentum we grew another 212000 net new checking accounts, extending our string of consecutive growth to 27 quarters.

Speaker #3: The strong asset quality reflects the continued strength of our credit portfolio, years of disciplined risk management, and higher growth of the portfolio than other banks.

Speaker #3: With good credit results. Lastly, our average diluted share count declined by 24 million shares from Q2, and this quarter included the dilution we've highlighted before in our filings.

This includes the fourth consecutive quarter of increased average noninterest bearing deposits.

And those are important because they are the primary operating account for our relationship.

And they are quite beneficial as a low cost funding source.

Speaker #3: And that comes from our 2008 issued convertible preferred Series L stock. On slide four, you'll note the various earnings highlights that Brian and I have talked about.

Additionally, card home and auto loan balances grew year over year, reflecting healthy consumer demand and we believe those further cement the relationship beyond just the operating account alone.

Speaker #3: I don't have much to add here, and I would instead like to spend just a moment on our continued organic growth, which is powering our loan and deposit activity.

Alastair Borthwick: I don't have much to add here and would instead spend just a moment on our continued organic growth, which is powering our loan and deposit activity. We added new clients, and we deepened relationships with existing clients. Across consumer, wealth, commercial, and institutional businesses, our teams are winning in the marketplace by putting our clients first. As always, we highlight the continued organic growth across each of our businesses, driven by client engagement, disciplined execution, and strategic investment. You can see the results there on slide five. Consumer banking continued to show strong momentum. We grew another 212,000 net new checking accounts, extending our string of consecutive growth to 27 quarters. This includes the fourth consecutive quarter of increased average non-interest-bearing deposits. Those are important because they are the primary operating account for our relationship, and they're quite beneficial as a low-cost funding source.

In small business, we continued our strength our string of lending growth and we remain the number one leading provider of credit to small business in the United States.

Speaker #3: We added new clients and deepened relationships with existing clients. Across consumer, wealth, commercial, and institutional businesses, our teams are winning in the marketplace by putting our clients first.

Global wealth and investment management saw client balances climbed to more than $4 six trillion driven.

Driven by strong AUM flows of 84 billion in the past year strong loan originations and market appreciation.

Speaker #3: As always, we highlight the continued organic growth across each of our businesses, driven by client engagement, disciplined execution, and strategic investment. You can see the results there on slide five.

Our advisers continue to deliver comprehensive solutions to help clients achieve their financial goals.

And global banking, we saw a nice pickup in client activity in investment banking, resulting in market share gains leadership rankings across many products and the highest non pandemic fee quarter in our firm's history.

Speaker #3: Consumer banking continued to show strong momentum. We grew another 212,000 net new checking accounts, extending our string of consecutive growth to 27 quarters. This includes the fourth consecutive quarter of increased average non-interest-bearing deposits.

Commercial client activity showed a continuation in the demand for loans and.

And cash management needs as Treasury service fees increased 12% year over year alongside deposit growth of 15%.

Speaker #3: And those are important because they are the primary operating account for our relationship, and they're quite beneficial as a low-cost funding source. Additionally, card, home, and auto loan balances grew year over year, reflecting healthy consumer demand.

Global markets continued to deliver on their string of year over year revenue growth and also continued to grow loans from healthy demand of our clients.

Alastair Borthwick: Additionally, card, home, and auto loan balances grew year-over-year, reflecting healthy consumer demand. We believe those further cement the relationship beyond just the operating account alone. In small business, we continued our strength, our string of lending growth, and we remain the number one leading provider of credit to small business in the United States. Global wealth and investment management saw client balances climb to more than $4.6 trillion, driven by strong AUM flows of $84 billion in the past year, strong loan originations, and market appreciation. Our advisors continue to deliver comprehensive solutions to help clients achieve their financial goals. In global banking, we saw a nice pickup in client activity in investment banking, resulting in market share gains, leadership rankings across many products, and the highest non-pandemic fee quarter in our firm's history.

Speaker #3: And we believe those further cement the relationship beyond just the operating account alone. In small business, we continued our strength, our string of lending growth, and we remain the number one leading provider of credit to small businesses in the United States.

Let's transfer to a discussion of the balance sheet using slide six where you can see total assets ended the quarter at three four trillion dollars that's.

That's down 38 billion from the second quarter as good loan growth was offset by lower global markets assets and wholesale funding reductions as part of our plan to continue to tighten the balance sheet. Importantly, this balance sheet tightening we will continue to benefit the net interest yield and I why.

Speaker #3: Global Wealth and Investment Management saw client balances climb to more than $4.6 trillion, driven by strong AUM flows of $84 billion in the past year, robust loan originations, and market appreciation.

Speaker #3: Our advisors continued to deliver comprehensive solutions to help clients achieve their financial goals. In global banking, we saw a nice pickup in client activity in investment banking.

Deposits ended just over two trillion dollars and were up 72 billion from the year ago period with growth in both interest bearing and noninterest bearing deposits.

Average global liquidity sources of 961 billion remained strong.

Speaker #3: Resulting in market share gains, leadership rankings across many products, and the highest non-pandemic fee quarter in our firm’s history. Commercial client activity showed a continuation in the demand for loans and cash management needs, as treasury service fees increased 12% year over year, alongside deposit growth of 15%.

And shareholders equity of 304 billion was up $4 6 billion from last quarter as we issued $2 5 billion of preferred stock.

Alastair Borthwick: Commercial client activity showed a continuation in the demand for loans and cash management needs as Treasury service fees increased 12% year-over-year alongside deposit growth of 15%. Global markets continued to deliver on their string of year-over-year revenue growth and also continued to grow loans from healthy demand of our clients. Let's transfer to a discussion of the balance sheet using slide six, where you can see total assets ended the quarter at $3.4 trillion. That's down $38 billion from the second quarter, as good loan growth was offset by lower global markets assets and wholesale funding reductions as part of our plan to continue to tighten the balance sheet. Importantly, this balance sheet tightening will continue to benefit the net interest yield, NIY. Deposits ended just over $2 trillion, and we're up $72 billion from the year-ago period, with growth in both interest-bearing and non-interest-bearing deposits.

Otherwise a $2 billion increase in tangible common equity to 208 billion included a modest capital build as net income was slightly more than capital distributions and we saw some improvement in OCI.

Speaker #3: Global markets continued to deliver on their string of year-over-year revenue growth and also continued to grow loans from healthy demand from our clients.

We returned $7 4 billion of capital back to shareholders with $2 1 billion in common dividends paid and $5 3 billion of shares repurchased.

Speaker #3: Let's transfer to a discussion of the balance sheet using slide six, where you can see total assets ended the quarter at $3.4 trillion. That's down $38 billion from the second quarter, as good loan growth was offset by lower global markets assets and wholesale funding reductions, as part of our plan to continue to tighten the balance sheet.

Tangible book value per share of $28 13, nine rose, 8% from the third quarter of 24.

Looking at regulatory capital our CET, one level increased modestly to 203 billion, while the risk weighted assets were relatively flat and that drove our CET one ratio higher to 11, 6%.

Speaker #3: Importantly, this balance sheet tightening will continue to benefit the net interest yield (NIY). Deposits ended just over $2 trillion, which is up $72 billion from the year-ago period, with growth in both interest-bearing and non-interest-bearing deposits.

This is well above our October 1st.

10% regulatory minimum.

Our supplemental leverage ratio was five 8% versus a minimum requirement of 5%, which leaves capacity for balance sheet growth and.

Speaker #3: Average global liquidity sources of $961 billion remain strong. Shareholders' equity of $304 billion was up $4.6 billion from last quarter, as we issued $2.5 billion of preferred stock.

Alastair Borthwick: Average global liquidity sources of $961 billion remain strong, and shareholders' equity of $304 billion was up $4.6 billion from last quarter as we issued $2.5 billion of preferred stock. Otherwise, a $2 billion increase in tangible common equity to $208 billion included a modest capital build as net income was slightly more than capital distributions, and we saw some improvement in AOCI. We returned $7.4 billion of capital back to shareholders, with $2.1 billion in common dividends paid and $5.3 billion of shares repurchased. Tangible book value per share of $28.39 rose 8% from the third quarter of 2024. Looking at regulatory capital, our CET1 level increased modestly to $203 billion, while the risk-weighted assets were relatively flat, and that drove our CET1 ratio higher to 11.6%. This is well above our October 1 10% regulatory minimum.

And our 473 billion of total loss absorbing capital means our T like ratio remains comfortably above our requirements.

On slide seven we show a 10 quarter trend of average deposits to illustrate the extension of consecutive growth across those periods.

Speaker #3: Otherwise, a $2 billion increase in tangible common equity to $208 billion included a modest capital build, as net income was slightly more than capital distributions.

Average deposits were up 71 billion or three 7% from the third quarter of 24.

Speaker #3: And we saw some improvement in AOCI. We returned $7.4 billion of capital back to shareholders, with $2.1 billion in common dividends paid and $5.3 billion of shares repurchased.

Average consumer deposits were up 1% year over year, while global banking deposits grew 15% compared to a year ago.

Our global capabilities digital solutions and relationship managers continue to win clients in the marketplace.

Speaker #3: Tangible book value per share of $28.39 rose 8% from the third quarter of 2024. Looking at regulatory capital, our CET1 level increased modestly to $203 billion, while the risk-weighted assets were relatively flat, and that drove our CET1 ratio higher to 11.6%.

In addition, we remained disciplined on pricing to achieve that growth overall rate paid on total deposits declined 32 basis points year over year, reflecting both lower rates and disciplined actions in our global banking and wealth management businesses.

Rate paid on the roughly 950 billion of consumer deposits remained low at 58 basis points in Q3, driven by the operating nature of that account and client base.

Speaker #3: This is well above our October 1st 10% regulatory minimum. Our supplemental leverage ratio was 5.8%, versus a minimum requirement of 5%, which leaves capacity for balance sheet growth.

Alastair Borthwick: Our supplemental leverage ratio was 5.8% versus a minimum requirement of 5%, which leaves capacity for balance sheet growth, and our $473 billion of total loss-absorbing capital means our TLAC ratio remains comfortably above our requirements. On slide seven, we show a 10-quarter trend of average deposits to illustrate the extension of consecutive growth across those periods. Average deposits were up $71 billion, or 3.7% from the third quarter of 2024. Average consumer deposits were up 1% year-over-year, while global banking deposits grew 15% compared to a year ago. Our global capabilities, digital solutions, and relationship managers continue to win clients in the marketplace. In addition, we remain disciplined on pricing to achieve that growth. Overall, rate paid on total deposits declined 32 basis points year-over-year, reflecting both lower rates and disciplined actions in our global banking and wealth management businesses.

Compared to the second quarter total deposit rate paid rose two basis points due to mix shift into interest bearing.

Speaker #3: And our $473 billion of total loss-absorbing capital means our TLAC ratio remains comfortably above our requirements. On slide seven, we show a 10-quarter trend of average deposits to illustrate the extension of consecutive growth across those periods.

And we expect improvement next quarter driven by repricing.

After the fed funds rate cut in the late September.

Let's turn to loans by looking average balances on slide eight.

You can see loan balances in Q3 of 1.15 trillion improved 9% year over year, driven by 13% commercial loan growth.

Speaker #3: Average deposits were up $71 billion, or 3.7%, from the third quarter of 2024. Average consumer deposits were up 1% year over year, while global banking deposits grew 15% compared to a year ago.

Consumer loans grew at a slower pace and importantly were up across every loan type.

For the second consecutive quarter every business segment recorded higher average loans on both a year over year basis.

Speaker #3: Our global capabilities, digital solutions, and relationship managers continue to win clients in the marketplace. In addition, we remain disciplined on pricing to achieve that growth.

And on a linked quarter basis.

Focusing on commercial loans and global markets. We continued to take advantage of the strong financing demand in the marketplace from institutional borrowers, where we lend against diverse.

Speaker #3: Overall, the rate paid on total deposits declined 32 basis points year over year, reflecting both lower rates and disciplined actions in our Global Banking and Wealth Management businesses.

Collateral pools.

Small business is benefiting from our newly combined local market based coverage model for small business and business banking and that's creating more capacity for client expansion.

Speaker #3: Rate paid on the roughly $950 billion of consumer deposits remained low at 58 basis points in Q3, driven by the operating nature of that account and client base.

Alastair Borthwick: Rate paid on the roughly $950 billion of consumer deposits remained low at 58 basis points in Q3, driven by the operating nature of that account and client base. Compared to the second quarter, total deposit rate paid rose two basis points due to mixed shift into interest-bearing, and we expect improvement next quarter driven by repricing after the Fed funds rate cut in late September. Let's turn to loans by looking at average balances on slide eight. You can see loan balances in Q3 of $1.15 trillion improved 9% year-over-year, driven by 13% commercial loan growth. Consumer loans grew at a slower pace and, importantly, were up across every loan type. For the second consecutive quarter, every business segment recorded higher average loans on both a year-over-year basis and on a linked quarter basis.

And lastly note the 9% improvement in wealth management as affluent clients borrowed for investments in assets like sports and arts and businesses.

Speaker #3: Compared to the second quarter, total deposit rates paid rose two basis points, due to a mixed shift into interest-bearing accounts. We expect improvement next quarter driven by repricing following the Fed funds rate cut in late September.

So all of that balance sheet activity across deposits and loans results in net interest income and let's turn our focus to and I I on slide number nine.

Speaker #3: Let's turn to loans by looking at average balances on slide eight. You can see loan balances in Q3 of $1.15 trillion, improved 9% year over year, driven by 13% commercial loan growth.

On a GAAP non fully taxable equivalent basis.

NII in Q3 was $15 2 billion.

On a fully taxable equivalent basis, NII was a little less than $15 4 billion and as I said earlier, that's up 9% from the third quarter of 2004.

Speaker #3: Consumer loans grew at a slower pace, and importantly, were up across every loan type. For the second consecutive quarter, every business segment recorded higher average loans on both a year-over-year basis and on a linked quarter basis.

NII grew 1.3 billion year over year and $572 million on an FTE basis over the second quarter, driven by higher loan and deposit balances.

Speaker #3: Focusing on commercial loans in global markets, we continue to take advantage of the strong financing demand in the marketplace from institutional borrowers, where we land against diverse collateral pools.

Alastair Borthwick: Focusing on commercial loans in global markets, we continue to take advantage of the strong financing demand in the marketplace from institutional borrowers, where we lend against diverse collateral pools. Small business is benefiting from our newly combined local market-based coverage model for small business and business banking, and that's creating more capacity for client expansion. Lastly, note the 9% improvement in wealth management as affluent clients borrowed for investments in assets like sports and arts and businesses. All of that balance sheet activity across deposits and loans results in net interest income. Let's turn our focus to NII on slide number nine. On a GAAP non-fully taxable equivalent basis, NII in Q3 was $15.2 billion. On a fully taxable equivalent basis, NII was a little less than $15.4 billion. As I said earlier, that's up 9% from the third quarter of 2024.

Benefits from fixed rate asset repricing.

And versus Q2, we also gained an extra day of interest.

The net interest yield improved seven basis points from the second quarter, reflecting the growth in <unk> and I I, while the earning asset balance modestly declined as loan growth replaced lower yielding securities and global markets balances declined modestly and as I said, we reduced expensive.

Speaker #3: Small businesses are benefiting from our newly combined local market-based coverage model for small business and business banking, and that's creating more capacity for client expansion.

Speaker #3: And lastly, note the 9% improvement in wealth management, as affluent clients borrowed for investments in assets like sports, arts, and businesses. So all of that balance sheet activity across deposits and loans results in net interest income.

Wholesale funding in <unk>.

Cash.

Regarding interest rate sensitivity on the dynamic deposit basis, we provide a 12 month change in NII for an instantaneous shift in the curve.

Speaker #3: And let's turn our focus to NII on slide number nine. On a GAAP non-fully taxable equivalent basis, NII in Q3 was $15.2 billion. On a fully taxable equivalent basis, NII was a little less than $15.4 billion, and as I said earlier, that's up 9% from the third quarter of '24.

So again that means interest rates would have to instantaneously move another 100 basis points lower.

Then they expected cuts that are already contemplated in the curve.

So if you think about that 100 basis points below what the curve implies more simply put that would mean for instance on the shortened the July fed funds rate next year would be getting down to 2.25%. So.

Speaker #3: NII grew $1.3 billion year over year and $572 million on an FTE basis over the second quarter, driven by higher loan and deposit balances and benefits from fixed-rate asset repricing. Compared to Q2, we also gained an extra day of interest.

Alastair Borthwick: NII grew $1.3 billion year-over-year and $572 million on an FTE basis over the second quarter, driven by higher loan and deposit balances and benefits from fixed-rate asset repricing. Versus Q2, we also gained an extra day of interest. The net interest yield improved seven basis points from the second quarter, reflecting the growth in NII, while the earning asset balance modestly declined as loan growth replaced lower-yielding securities, and global markets balances declined modestly. As I said, we reduced expense of wholesale funding and cash. Regarding interest rate sensitivity, on a dynamic deposit basis, we provide a 12-month change in NII for an instantaneous shift in the curve. That means interest rates would have to instantaneously move another 100 basis points lower than the expected cuts that are already contemplated in the curve.

So on that basis, a 100 basis point decline would decrease NII over the next 12 months by $2 2 billion and if rates went up 100 basis points NII would benefit approximately $1 billion.

Speaker #3: The net interest yield improved seven basis points from the second quarter, reflecting the growth in NII. While the earning asset balance modestly declined as loan growth replaced lower-yielding securities, and global markets balances declined modestly.

With regard to a forward view of NII, Let me give you a few thoughts.

In January and again in April we provided our expectation that we could exit Q4 of 2025.

With NII on a fully taxable equivalent basis in a range of $15 five to $15 7 billion.

Speaker #3: And as I said, we reduced the expense of wholesale funding and cash. Regarding interest rate sensitivity, on a dynamic deposit basis, we provide a 12-month change in NII for an instantaneous shift in the curve.

We also noted our expectation for that growth to accelerate in the second half of 2025.

Despite all the uncertainties with experienced around tariffs.

Speaker #3: So again, that means interest rates would have to instantaneously move another 100 basis points lower than the expected cuts that are already contemplated in the curve.

And rates.

Seen good performance against our expectations.

And even with the third quarter late quarter interest rate cut.

And with the curve anticipating two more cuts in October and December.

Speaker #3: So if you think about that, 100 basis points below what the curve implies more simply put, that would mean, for instance, on the short end, the July Fed funds rate next year would be getting down to two and a quarter percent.

Alastair Borthwick: If you think about that, 100 basis points below what the curve implies, more simply put, that would mean, for instance, on the short end, the July Fed funds rate next year would be getting down to 2.25%. On that basis, a 100 basis point decline would decrease NII over the next 12 months by $2.2 billion. If rates went up 100 basis points, NII would benefit approximately $1 billion. With regard to a forward view of NII, let me give you a few thoughts. In January and again in April, we provided our expectation that we could exit Q4 of 2025 with NII on a fully taxable equivalent basis in a range of $15.5 to $15.7 billion. We also noted our expectation for that growth to accelerate in the second half of 2025.

We believe fourth quarter NII will be in the higher end of that range of expectations. So think of that as being 15 6 billion plus on a fully taxable equivalent basis.

And that would represent approximately 8% growth from the fourth quarter of 2004.

Speaker #3: So, on that basis, a 100 basis point decline would decrease NII over the next 12 months by $2.2 billion. And if rates went up 100 basis points, NII would benefit approximately $1 billion.

Thinking a bit more generally we just note for the full year of 2026, our expectations about the drivers of growth are largely aligned with 2025 performance.

Speaker #3: With regard to a forward view of NII, let me give you a few thoughts. In January, and again in April, we provided our expectation that we could exit Q4 of 2025 with NII on a fully taxable equivalent basis in a range of $15.5 billion to $15.7 billion.

We expect good core NII performance, driven by core loan and deposit growth a little bit above GDP.

Which will additionally benefit from sizeable fixed rate asset repricing.

And in 2026, we expect to see roughly $10 billion to $15 billion in combined quarterly mortgage backed securities.

Speaker #3: We also noted our expectation for that growth to accelerate in the second half of 2025. Despite all the uncertainties we've experienced around tariffs and rates, we've seen good performance against our expectations.

And mortgage loans, those will roll off and they'll be replaced with new assets at 150 to 200 basis points higher yield.

Alastair Borthwick: Despite all the uncertainties we've experienced around tariffs and rates, we've seen good performance against our expectations. Even with the third quarter late quarter interest rate cut and with the curve anticipating two more cuts in October and December, we believe fourth quarter NII will be in the higher end of that range of expectations. Think of that as being $15.6 billion plus on a fully taxable equivalent basis. That would represent approximately 8% growth from the fourth quarter of 2024. Thinking a bit more generally, we just note for the full year of 2026, our expectations about the drivers of growth are largely aligned with 2025 performance. We expect good core NII performance driven by core loan and deposit growth a little bit above GDP, which will additionally benefit from sizable fixed-rate asset repricing.

That should result in full year NII growth somewhat similar to 2025 performance over 2024, so think of that as something like 5% to 7% growth.

Speaker #3: And even with the third quarter late quarter interest rate cut, and with the curve anticipating two more cuts in October and December, we believe fourth quarter NII will be in the higher end of that range of expectations.

Okay, let's turn to expense and will use slide 10 for the discussion.

First I just wanted to highlight the strong operating leverage which we expect again in Q4.

Speaker #3: So think of that as being $15.6 billion plus on a fully taxable equivalent basis. And that would represent approximately 8% growth from the fourth quarter of '24.

We reported $17 3 billion in expense this quarter and that was up modestly compared to the second quarter and up 5% year over year.

As I noted earlier the year over year increase was primarily driven by incentives tied to growth.

Speaker #3: Thinking a bit more generally, we just note that for the full year of 2026, our expectations about the drivers of growth are largely aligned with 2025 performance.

Especially in our market facing businesses as well as ongoing investments across the enterprise.

Looking ahead to Q4, we expect expenses to remain roughly in line with Q3.

Speaker #3: We expect good core NII performance driven by core loan and deposit growth a little bit above GDP, which will additionally benefit from sizable fixed-rate asset repricing.

As you know.

Head Count's, the key driver of expense from compensation and benefits to occupancy costs and technology and we manage this closely not just in total numbers, but also in organizational structure, ensuring we're striking the right balance of managers and teams.

Speaker #3: And in 2026, we expect to see roughly $10 to $15 billion in combined quarterly mortgage-backed securities and mortgage loans. Those will roll off, and they'll be replaced with new assets at 150 to 200 basis points higher yield.

Alastair Borthwick: In 2026, we expect to see roughly $10 to $15 billion in combined quarterly mortgage-backed securities and mortgage loans. Those will roll off, and they'll be replaced with new assets at 150 to 200 basis points higher yield. That should result in full-year NII growth somewhat similar to 2025 performance over 2024. Think of that as something like 5% to 7% growth. Let's turn to expense, and we'll use slide 10 for the discussion. First, I just want to highlight the strong operating leverage, which we expect again in Q4. We reported $17.3 billion in expense this quarter, and that was up modestly compared to the second quarter and up 5% year-over-year. As I noted earlier, the year-over-year increase was primarily driven by incentives tied to growth, especially in our market-facing businesses as well as ongoing investments across the enterprise.

And the good news is we continue to manage head count well so looking at the past three years, we've been able to lower our head count from a peak of 217000 to 213000 now and more recently since the third quarter of last year were down 500, which includes the addition last quarter of nearly two.

Speaker #3: That should result in full-year NII growth somewhat similar to 2025 performance over 2024. So, think of that as something like 5 to 7% growth.

Speaker #3: Okay, let's turn to expenses, and we'll use slide 10 for the discussion. First, I just want to highlight the strong operating leverage, which we expect again in Q4.

Plus college grads and it's this disciplined approach that supports both efficiency and growth.

So, let's now move to credit and turn to slide 11, and you can see asset quality remains sound with improvements in several key indicators.

Speaker #3: We reported 17.3 billion in expense this quarter, and that was up modestly compared to the second quarter and up 5% year over year. As I noted earlier, the year over year increase was primarily driven by incentives tied to growth, especially in our market-facing businesses as well as ongoing investments across the enterprise.

Net charge offs were $1 4 billion down about 10% from the second quarter with the improvement split pretty evenly between credit cards and commercial real estate.

The total net charge off ratio this quarter was 47 basis points down eight basis points from Q2.

Speaker #3: Looking ahead to Q4, we expect expenses to remain roughly in line with Q3. As you know, headcount is the key driver of expenses, from compensation and benefits to occupancy costs and technology.

Alastair Borthwick: Looking ahead to Q4, we expect expenses to remain roughly in line with Q3. As you know, headcount's the key driver of expense from compensation and benefits to occupancy costs and technology. We manage this closely, not just in total numbers but also in organizational structure, ensuring we're striking the right balance of managers and teams. The good news is we continue to manage headcount well. Looking at the past three years, we've been able to lower our headcount from a.

Q3 provision expense was $1 3 billion and mostly matched net charge offs.

We had a modest reserve release associated with improved outlooks for both credit card and commercial real estate.

Speaker #3: And we managed this closely, not just in total numbers but also in organizational structure, ensuring we're striking the right balance of managers and teams.

Focusing on total net charge offs again and looking forward in the near term we would not expect much change in total net charge offs, given the steady consumer delinquency trends stability of C&I and reductions in C. R E exposures.

Speaker #3: And the good news is we continue to manage headcount well. So looking at the past three years, we've been able to lower our headcount.

On slide 12.

In addition to the improvement in consumer losses.

The reductions in both reserve criticized and nonperforming loan metrics.

Commercial portfolio was.

Nonperforming loans are down 19% from Q2.

And reserve criticized exposure in commercial real estate is now done nearly 25% from the third quarter of 24, as we dealt with the more problematic exposures across the year.

Let's turn to the performance across our lines of business, beginning with consumer banking on slide 13.

Consumer banking delivered strong results generating $11 2 billion in revenue up 7% year over year, and $3 4 billion and net income or 28% growth.

Return on allocated capital rose to 31%.

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These results reflect the value of our deposit franchise.

Scoring both the breadth of our platform and the success of our organic growth strategy and digital banking capabilities.

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Innovations such as family banking are high value cashback credit cards, and our industry, leading preferred rewards program are delivering differentiated value to clients and value. We believe is unmatched elsewhere.

This client value proposition combined with disciplined pricing helped drive a 9% year over year increase in net interest income.

Another strong highlight this quarter was expense management, which enabled us to deliver more than 600 basis points of operating leverage.

Continued innovation and the deployment of advanced technology and tools helped us to hold expense growth to just 1% year over year, while revenue grew significantly.

As a result, our efficiency ratio improved fallen below 50% for the quarter.

We continued to invest in high tech, which drove higher digital engagement.

And we continue to invest in high touch we continued our march into new markets filled out more of previously expanded markets and supported our brand in those communities. That's.

As an example, we just opened four new financial centers in Idaho over the past six months, expanding our presence and complementing our existing merrell team in the local market to better serve clients in that region.

Consumer investment balances grew 17% to 580 billion supported by market appreciation and $19 billion in full year client flows.

Third quarter average balance per new account of $110000 is up 6% from last year.

And the investment platform serves as a great catch basin.

For first time investors.

And for more affluent investors looking to manage some element of their own money.

As mentioned earlier consumer net charge offs improved on a linked quarter basis following a decline in delinquencies.

The largest component of consumer losses, as credit card and our loss rate decreased from $3 eight 2% to three 4% linked quarter.

This contributed to an improved risk adjusted margin on credit card approaching seven 5%.

Finally, as shown on the appendix slide 20, strong digital adoption and Erika engagement continues and customer experience scores remain elevated reflecting the impact of our ongoing investments in digital capabilities.

Speaker #1: Ontario. If you require assistance during your program, please press *0, and the coordinator will assist you.

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Turning to wealth management on slide 14, the business delivered a strong quarter marked by improved profitability.

Net income grew 19% year over year to nearly $1.3 billion driven by new household growth strong AUM flows loan growth and disciplined expense management that produced meaningful operating leverage and a 26% return on allocated capital.

We achieved 300 basis points of operating leverage which contributed to a 27% pre tax margin an improvement of over 200 basis points.

Speaker #3: As mentioned earlier, consumer net charge-offs improved on a linked quarter basis, following a decline in delinquencies. The large

Alastair Borthwick: As mentioned earlier, consumer net charge-offs improved on a linked quarter basis following a decline in delinquencies. The large problem.

Together, Maryland, and the private bank managed four six trillion in client balances and continued to generate organic growth with 84 billion in AUM flows over the past year.

This reflects a healthy mix of new client assets and existing clients, putting more capital to work.

During this past quarter Merrill and the private bank added 5400, net new relationships with the average size of new relationships continuing to grow across both businesses.

And importantly, we're not just adding relationships, we're deepening the ones we enjoy already and.

And reflecting the strength of our integrated model and our product offering the percentage of clients with banking products continue to rise and it's now at 63%.

In the third quarter <unk> reported record revenue of $6 3 billion up 10% year over year led by a 12% increase in asset management fees.

Loan growth remained strong and we saw a notable pickup in customer lending with both volume and wound size, increasing and that drove a 9% year over year increase in average loans.

Finally, I'd highlight the continued digital momentum as shown on slide 22.

New accounts are increasingly being opened digitally underscoring the effectiveness of our digital investments and the evolving preferences of our clients.

On Slide 15, you see the results for global banking, which benefited from improved investment banking activity significant deposit growth and solid loan performance and Q3 global banking delivered net income of $2 $1 billion up 12% year over year supported by 500 basis points of operating leverage.

And a 17% return on allocated capital.

Standout driver of performance was a 43% year over year increase in firm wide investment banking fees, which fueled 7% overall revenue growth.

<unk> investment banking fees rose across the solution set advisory was up 51%.

Debt underwriting increased 42% in equity underwriting grew 34%.

We maintained our number three position year to date and we also gained market share during the quarter.

Notably we participated in several of the industry's largest transactions a clear testament to the value clients place on our financial advice and solutions.

Noninterest expense grew compared to last year as we continue to invest in the future.

And average deposits grew 15% year over year contributing to a 6% increase in global transaction services revenue.

And importantly, disciplined pricing coupled with lower rates led to a 47 basis point decline in rate paid compared to a year ago.

Switching to global markets on Slide 16, I'll focus my comments on results, excluding DVA as we typically do.

As Brian mentioned, we extended our streak of strong revenue and earnings performance and once again achieved a solid 13% return on allocated capital.

In the third quarter global markets generated net income of $1 $6 billion up modestly year over year and consistent with the prior quarter revs.

Revenue, excluding DVA grew 10% year over year, driven by strong sales and trading performance and the benefit of higher investment banking revenue shared with global banking.

Focusing on sales and trading revenue ex DVA rose, 8% year over year to $5 $3 billion.

<unk> revenue grew 5% driven by improved performance in credit products.

Equities trading led to improvement.

With 14% revenue growth supported by increased financing activity in Asia.

<unk> growth year over year reflects both the revenue increase and higher trading related costs and certain Asian markets and those costs are passed through to clients and therefore appear in both the revenue line and the expense line.

As noted earlier, we continued to benefit from lending opportunities tied to highly collateralized pools of high quality assets.

And clients value, our expertise and the liquidity we provide in delivering these solutions.

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On slide 17, all other shows a loss of $6 million in the third quarter with very little to talk about here are.

Our third quarter effective tax rate was 10, 4% in.

And excluding the tax credits related to investments in renewable energy in affordable housing and a small number.

A small amount of discrete items the effective tax rate would have been much closer to a normal corporate tax rate at approximately 23%.

So thank you and with that we'll jump into the Q&A.

At this time, if you would like to ask a question. Please press the star and one on your telephone keypad.

May withdraw yourself from the queue at any time by pressing star two.

Well take our first question from Glenn Schorr with Evercore.

Your line is open.

Hi.

And before you start let me just say it seems like.

Speaker #3: Revenue line and the expense line. As noted earlier, we continue to benefit from lending opportunities tied to highly collateralized pools of high-quality assets. And clients value our expertise and the liquidity we provide in delivering these solutions.

Alastair Borthwick: Revenue line and the expense line. As noted earlier, we continue to benefit from lending opportunities tied to highly collateralized pools of high-quality assets, and clients value our expertise and the liquidity we provide in delivering these solutions. On slide 17, all other shows a loss of $6 million in the third quarter, with very little to talk about here. Our third quarter effective tax rate was 10.4%. Excluding the tax credits related to investments in renewable energy and affordable housing and a small amount of discrete items, the effective tax rate would have been much closer to a normal corporate tax rate at approximately 23%. Thank you. With that, we'll jump into the Q&A.

One of the phone lines may have may have cut out at some point during the year.

During the call, but the webcast was working throughout so.

Just a reminder that the the website will have the replay of the call. In case you are on one of the lines that might have had a break in it. So Glen go ahead.

Speaker #3: On slide 17, all other shows a loss of $6 million in the third quarter, with very little to talk about here. Our third quarter effective tax rate was 10.4%.

No problem no problem.

So I'll start I heard your question your comment on the expense message for the fourth quarter.

Speaker #3: And excluding the tax credits related to investments in renewable energy and affordable housing, as well as a small number of discrete items, the effective tax rate would have been much closer to a normal corporate tax rate at approximately 23%.

So appreciate that.

I guess I have a bigger picture AI question.

Okay.

Big banks still are.

You're ahead of the curve in terms of digitizing the whole franchise, but with the inclusion of AI throughout the organization.

Speaker #3: So thank you, and with that, we'll jump into the Q&A.

Speaker #1: At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw yourself from the queue at any time by pressing star two.

[Operator]: At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw yourself from the queue at any time by pressing star two. We'll take our first question from Glenn Schorr with Evercore. Your line is open.

Still have big manual functions throughout the firm why aren't you and others talking about.

AI is huge.

Efficiency driver of better margins in the years to come.

Speaker #1: We'll take our first question from Glenn Shore with Evercore. Your line is open.

Is it just a little too far off M. I, a little too optimistic I'm just curious on that.

Speaker #5: Hey, Glenn.

Speaker #3: Hi, thanks for.

[Analyst]: Hey, Glen.

Alastair Borthwick: Hi, thanks.

Speaker #5: Hey, Glenn. Before you start, let me just say it seems like one of the phone lines may have cut out at some point during the call, but the webcast was working throughout.

[Analyst]: Hey, Glen.

The operating Leverages, great I'm, not talking about that and just talking about potential.

Alastair Borthwick: Hello.

[Analyst]: Before you start, let me just say, it seems like one of the phone lines may have cut out at some point during the call, but the webcast was working throughout. Just a reminder that the website will have the replay of the call in case you were on one of the lines that might have had a break in it. Glen, go ahead. No problem. Alastair, I heard your comments on the expense message for the fourth quarter. I appreciate that. I guess I have a bigger picture AI question of, okay, you big banks still are, you're ahead of the curve in terms of digitizing the whole franchise, but with the infusion of AI throughout the organization, and you still have big manual functions throughout the firm, why aren't you and others talking about AI as a huge efficiency driver of better margins in the years to come?

Potential in general.

Glenn It's Brian.

Good to hear your voice.

Look we believe applied technology, which is a range of outcomes from the Digitization that we show on those pages in 2022 and 24.

Speaker #5: So just a reminder that the website will have the replay of the call in case you were on one of the lines that might have had a break in it.

Over a period of time.

Customer adoption of technologies and interfaces with the accompanying technology always provide that so we had 285000 people 15 years ago. We have 213000 people three years ago. We had 217000 people after the pandemic at all the manual stuff we had to build up we've worked that back down. So we believe strongly that all technologies helped drive.

Speaker #5: So Glenn, go ahead.

Speaker #2: No problem, no problem. So, Alastair, I heard your question and your comments on the expense message for the fourth quarter. I appreciate that. I guess I have a bigger picture AI question: okay, big banks still are, you're ahead of the curve in terms of digitizing the whole franchise, but with the infusion of AI throughout the organization, and you still have big manual functions throughout the firm, why aren't you and others talking about AI as a huge efficiency driver of better margins in the years to come?

That and just technology and artificial intelligence.

It allows you to do things that heretofore havent done and so I think the question is just to put it in place you have to have your data.

Appropriately Ray do you have to make sure the models I've got to give the right answer it has to be in a controlled environment because in a regulated institution like ourselves we don't.

We don't get it excuse saying the model set it sorry, it has to be right and so if we turned out a mortgage loan under automated underwriting we're liable for the outcome irrespective of how we.

Speaker #2: Is it just a little too far off? Am I a little too optimistic? I'm just curious on that front. I think you know your operating leverage is great.

[Analyst]: Is it just a little too far off? Am I a little too optimistic? I'm just curious on that front. I think your operating leverage is great. I'm not talking about that. I'm just talking about AI's potential in general.

Speaker #2: I'm not talking about that. I'm just talking about AI's potential in general.

Did it so we're seeing it go everywhere and the volumes activity of the company have gone up huge since you.

Speaker #4: So I take Glenn as Brian, good to hear your voice. Look, we believe applied technology which is a range of outcomes from the digitization that we show on those pages in 2022 and '24, over the period of time, and the customer adoption of technologies and interfacing with our company and technology always provides that.

Brian Moynihan: I think, Glen, it's Brian. Good to hear your voice. Look, we believe applied technology, which is a range of outcomes from the digitization that we show on those pages in 2022 and 2024, over the period of time, and the customer adoption of technologies and interfacing with our company and technology, always provides that. We had 285,000 people 15 years ago. We have 213,000 people. Three years ago, we had 217,000 people after the pandemic and all the manual stuff we had to build up. We've worked that back down. We believe strongly that all technologies help drive that. This technology and artificial intelligence allow you to do things that you heretofore haven't done. I think the question is just, it's to put it in place, you have to have your data appropriately arrayed. You have to make sure the models are going to give the right answer.

You know that period of time, where the head count has come down by a lot and so so we continue to apply what I'd look at it carefully on those pages as things like a on a consumer page, you'll see Eric interactions building up and Erica users building up and we've gone from 200 intense questions that can be answered at 700, but just to put that in context over the last 24 hours.

Speaker #4: So, we had 285,000 people 15 years ago. We have 213,000 people three years ago. We had 217,000 people after the pandemic and all the manual stuff we had to build up.

There were $2 million interfaces, where a consumer got an answer from Erica in our company and that the same technology as applied an institutional basis. I think you can see on page 22, if I'm right.

Speaker #4: We worked that back down, so we believe strongly that all technologies help drive that. This technology and artificial intelligence allow you to do things that you heretofore haven't done.

24, but you can see that Erika and the institutional lot smaller number of customers, but rising very fast. So that's just one model we have models all over the company. So we believe strongly that this will have an impact we will continue to manage it but the implementation. These are not proof of concept and things like that they're past tense things happening 2 million customer interfaces yet.

Speaker #4: And so I think the question is just, to put it in place, you have to have your data appropriately arrayed. You have to make sure the models are going to give the right answer.

Speaker #4: It has to be in a controlled environment because, in a regulated institution like ours, we don't, you know, we don't get it, you know, excuse saying the model said it. Sorry, it has to be right.

Brian Moynihan: It has to be in a controlled environment because in a regulated institution like ourselves, we don't get an excuse saying the model said it. Sorry. It has to be right. If we turn down a mortgage loan under automated underwriting, we're liable for the outcome irrespective of how we did it. We're seeing it go everywhere, and the volumes of activity in the company have gone up huge since that period of time where the headcount has come down by a lot. We continue to apply it. What I'd look at carefully on those pages is things like, on the consumer page, you'll see Erica interactions building up and Erica users building up. We've gone from 210 questions that could be answered to 700.

Sturdy.

This isn't something to come as we've been out a while but I think the idea of it providing constant leveraging constant reinvestment.

With the same expense base is really what we're after and then grow the revenue faster continue to take market share. So it's impact on expenses is felt we are reinvesting some of that to actually grow faster and youre seeing the results of that.

Speaker #4: And so, if we turn down a mortgage loan under automated underwriting, we're liable for the outcome irrespective of how we did it. So we're seeing it go everywhere.

Speaker #4: And the volume of activity the company has gone up significantly since that period of time where the headcount has come down by a lot. And so we continue to apply it.

Okay. So that more revenue and same expenses would still bringing us better margins in the future, that's really where I am.

Speaker #4: What I'd look at carefully on those pages is things like on the consumer page. You'll see Eric interactions building up and Erica users building up.

I'm going it sounds like you agree, but you don't want to pin you down on a point in time.

Speaker #4: And we've gone from 210 questions that could be answered to 700. But just to put that in context, you know, in the last 24 hours, there were 2 million interfaces where a consumer got an answer from Erica and our company.

I think.

The.

To say this will happen next week or the week. After you have to be a little careful because we have to get it right. If that model took us years to perfect. Its not something you can snap your fingers Ed in.

Brian Moynihan: Just to put that in context, in the last 24 hours, there were 2 million interfaces where a consumer got an answer from Erica in our company. That same technology is applied in the institutional basis. I think you can see that on page 22 if I'm right, or maybe 24. You can see that Erica in the institutional, a lot smaller number of customers but rising very fast. That's just one model. We have models all over the company. We believe strongly that this will have an impact. We will continue to manage it. The implementation, these are not proofs of concept and things like that. They're past tense things happening. 2 million customer interfaces yesterday. This isn't something to come. We've been at it a while.

Speaker #4: And that same technology is applied on an institutional basis. I think you can see it on page 22, if I'm right, or maybe 24. But you can see that Erica in the institutional space has a lot smaller number of customers but is rising very fast.

In mid cap and then we have to it's a human being change too so.

Stay tuned and we'll give you more of that broader I bought the expert to talk to you.

In early November, but it's here it's working.

Speaker #4: So that's just one model. We have models all over the company. We believe strongly that this will have an impact; we will continue to manage it.

Out of the team from taken.

Taking it to implementation across the board, but it allows us to continue to match.

Speaker #4: But the implementation of these are not proofs of concept and things like that. They're past tense things happening 2 million customer interfaces yesterday. So this isn't something to come.

<unk> company with Matt you just the last five years, we have 20% more core checking holders in consumer than we did five.

Speaker #4: We've been at it a while, but I think the idea of it providing constant leverage and constant reinvestment with the same expense base is really what we're after.

Brian Moynihan: I think the idea of it providing constant leverage and constant reinvestment, and with the same expense base is really what we're after. Then grow the revenue faster, continue to take market share. Its impact on expenses is felt. We are reinvesting some of that to actually grow faster, and you're seeing the results of that.

Five years ago think about that.

Consumer checking balances are up by 50%.

Thank you for setting that time, if you think about the leverage on that and that's why the consumer kicking in as Eni kicks in you are seeing them have such good year over year results.

Speaker #4: And then grow the revenue faster, continuing to take market share. So its impact on expenses is felt; we are reinvesting some of that to actually grow faster, and you're seeing the results of that.

Okay I appreciate that thank you.

Speaker #3: Okay, so that more revenue and same expenses would still bring us better margins in the future. That's really where I'm I'm going. Sounds like you agree, but you don't want to me to pin you down on a point in time.

[Analyst]: Okay. That more revenue and same expenses would still bring us better margins in the future. That's really where I'm going. Sounds like you agree, but you don't want me to pin you down on a point in time.

Well move next to John Mcdonald with Truest Securities. Your line is open.

Hi, Good morning, you guys had good results across all your capital markets businesses sales and trading IV wealth, it's always hard to have an outlook here, but just wondering broadly how you're feeling about the environment pipelines and investments made in those businesses against what's usually a seasonally slower fourth quarter and coming off such a <unk>.

Speaker #4: Yes, I think the to say this will happen next week or the week after, you have to be a little careful because we have to get it right.

Brian Moynihan: Yes. I think to say this will happen next week or the week after, you have to be a little careful because we have to get it right. That model took us years to perfect. It's not something you can snap your fingers at and make happen. We have to, it's a human being change too. Stay tuned. We'll give you more of that broader. We'll have the experts talk to you in early November. It's here. It's working. I'm proud of the team for taking it to implementation across the board. It allows us to continue to manage this company with, you know, just in the last five years, we have 20% more core checking holders and consumers than we did five years ago. Think about that. Consumer checking balances are up by 50% in that time. Think about the leverage in that.

Speaker #4: That model took us years to perfect. It's not something you can snap your fingers at. And make happen. And it's a human being change too.

<unk> <unk>.

Speaker #4: So stay tuned. We'll give you more of that broader update, as a lot of the experts will talk to you in early November. But it's here. It's working.

Thanks, John I'll start with investment banking.

We've obviously seen a pickup in activity here in the third quarter, we were happy to see that.

Speaker #4: I'm proud of the team for taking it to implementation across the board. But it allows us to continue to, you know, manage this company with, you know, just in the last five years, we have 20% more core checking holders and consumer than we did, you know, five years ago.

As as we've seen more certainty now around trade and tariffs.

And around taxes as well.

It's a load our client base to make longer term decisions and that's reflected in our investment banking activity.

In terms of the pipelines there up this quarter up over double digits. So we feel good about the pipeline and the way it's developing.

Speaker #4: Think about that. You know, in consumer checking balances are up by 50%. You know, 50% in that time. Think about the leverage in that.

Speaker #4: And that's why the consumer is kicking in as the NII kicks in. You're seeing them have such good year-over-year results.

Brian Moynihan: That's why the consumer kicking in as the NII kicks in, you're seeing them have such good year-over-year results.

And.

We'll need to see how the.

Transactions execute in Q4, but it feels like a good environment in terms of for example, M&A at this point.

Speaker #3: Okay, I appreciate that. Thank you.

[Analyst]: Okay, I appreciate that. Thank you.

Speaker #1: We'll move next to John McDonald with Truist Securities. Your line is open.

[Operator]: We'll move next to John McDonald with Truist Securities. Your line is open.

Around the global markets business, we've obviously invested significantly there just as we have in investment banking.

Speaker #6: Hi, good morning. You guys had good results across all your capital markets businesses—sales and trading, IB, and wealth. It's always hard to have an outlook here, but I’m just wondering broadly how you're feeling about the environment, pipelines, and investments made in those businesses against what's usually a seasonally slower fourth quarter and coming off such a strong Q3.

Brian Moynihan: Hi. Good morning. You guys had good results across all your capital markets businesses, you know, sales and trading, IB, wealth. It's always hard to have an outlook here, but just wondering broadly how you're feeling about the environment, pipelines, and investments made in those businesses against what's usually a seasonally slower fourth quarter and coming off such a strong Q3.

I should go back to investment banking and the investments we've made there we've always always profiled the investment we've made in middle markets and in international.

And in earlier stage faster growing economies. So that's been a big part of our investment banking growth and of course of the past year or so.

When we got the sales and trading.

We've obviously invested a lot there in terms of technology and people and balance sheet.

Speaker #4: Thanks, John. I'll start with investment banking. You know, we've obviously seen a pickup in activity here in the third quarter. We were happy to see that.

[Analyst]: Thanks, John. I'll start with investment banking. We've obviously seen a pickup in activity here in the third quarter. We were happy to see that. As we've seen more certainty now around trade and tariffs, and around taxes as well, it's allowed our client base to make longer-term decisions, and that's reflected in our investment banking activity. In terms of the pipelines, they're up this quarter, up over double digits. We feel good about the pipeline and the way it's developing. We'll need to see how the transactions execute in Q4, but it feels like a good environment in terms of, for example, M&A at this point. Around the global markets business, we've obviously invested significantly there, just as we have in investment banking. I should go back to investment banking and the investments we've made there.

Normally Q4, you'll see a seasonal impact from client activity slowing as you move into the fourth quarter that would be pretty normal.

Speaker #4: As we've seen more certainty now around trade and tariffs, and around taxes, as well. It's allowed our client base to make longer-term decisions. And that's reflected in our investment banking activity.

But the constructive environment for the sales and trading business remains as investor clients continued to reposition based on.

Rates and policies if they develop around the world. So it feels like a continued constructive environment for the global market sales and trading business.

Speaker #4: In terms of the pipelines, they're up this quarter, up over double digits. So we feel good about the pipeline and the way it's developing.

Yeah.

Great. Thanks, Alastair and just also you mentioned deposit data what are you expecting for deposit beta across your various businesses. If it continue to see the fed moving rates down.

Speaker #4: And you know, we'll need to see how the transactions execute in Q4. But it feels like a good environment in terms of, for example, M&A at this point.

So I think you'll see us do the same thing we've been doing.

Speaker #4: Around the global markets business, we've obviously invested significantly there, just as we have in investment banking. I should go back to investment banking and the investments we've made there.

And the wealth business, obviously, we tend to move with money market rates those tend to be a full pass through so in the wealth business I'd expect us to fully pass through rate cuts from this point forward.

Speaker #4: We've always profiled the investment we've made in middle markets, and in international, and in earlier stage, faster growing economies. So that's been a big part of our investment banking growth in the course of the past year or so.

[Analyst]: We've always profiled the investment we've made in middle markets and in international and in earlier-stage, faster-growing economies. That's been a big part of our investment banking growth in the course of the past year or so. When we get to sales and trading, we've obviously invested a lot there in terms of technology and people and balance sheet. Normally, Q4, you see a seasonal impact from client activity slowing as you move into the fourth quarter. That would be pretty normal. The constructive environment for the sales and trading business remains as investor clients continue to reposition based on rates and policies as they develop around the world. It feels like a continued constructive environment for the global markets sales and trading business.

And then around global banking, while we always do it on a client by client basis, particularly around interest bearing we'd expect the pass through is the rate cuts develop as well. So I'd expect you to see us with the same disciplined pricing on the way down as we offered on the way back up and the only thing I think you'll just have to remember is because the September rate cut came so.

Speaker #4: When we get to sales and trading, we've obviously invested a lot there in terms of technology, people, and balance sheet. Normally, Q4, you see a seasonal impact from client activity slowing as you move into the fourth quarter.

Late you won't see that in our Q3 numbers, but you will see it in our Q4 numbers.

Speaker #4: That would be pretty normal. But the constructive environment for the sales and trading business remains. As investor clients continue to reposition based on rates, and policies, as they develop around the world.

Got it okay. Thank you.

We will take our next question from Jim Mitchell with Seaport Global Securities. Your line is open.

Hey, Hey, good morning Alastair.

Speaker #4: So it feels like a continued constructive environment for the global markets, sales and trading business.

You noted you took down more expensive wholesale funding.

On the liability side, which kept the balance sheet relatively flat.

Speaker #6: Great. Thanks, Alastair. And just also, you mentioned deposit beta. What are you expecting for deposit beta across your various businesses if we continue to see the Fed moving rates down?

Brian Moynihan: Great. Thanks, Alastair. You mentioned deposit beta. What are you expecting for deposit beta across your various businesses if we continue to see the Fed moving rates down?

Which seems more NIM accretive than NII accretive. So the question I guess is how many quarters of that do you expect in and what sort of earning asset growth should we expect over the next year or so.

Speaker #4: Well, I think you'll see us do the same thing we've been doing. In the wealth business, obviously, we tend to move with money market rates.

[Analyst]: I think you'll see us do the same thing we've been doing. In the wealth business, obviously, we tend to move with money market rates. Those tend to be a full pass-through. In the wealth business, I'd expect us to fully pass through rate cuts from this point forward. Around global banking, while we always do it on a client-by-client basis, particularly around interest-bearing, we'd expect to pass through as the rate cuts develop as well. I'd expect you to see us with the same discipline pricing on the way down as we offered on the way back up. The only thing I think you'll just have to remember is because the September rate cut came so late, you won't see that in our Q3 numbers, but you will see it in our Q4 numbers.

Yeah. So we've talked about that that would be a focus for us over time when people ask us about net interest yield we.

Speaker #4: Those tend to be a full pass-through. So in the wealth business, I'd expect us to fully pass through rate cuts from this point forward.

I tried to explain it's going to improve over time based on two things first is net interest income is going to continue to increase.

Speaker #4: And around global banking, while we always do it on a client-by-client basis, particularly around interest bearing, we'd expect to pass through as the rate cuts develop as well.

And the second is the balance sheet, we don't think will grow quite as fast as the loans and deposits grow.

Speaker #4: So, I’d expect you to see us with the same discipline pricing on the way down as we offered on the way back up. And the only thing I think you’ll just have to remember is that, because the September rate cut came so late, you won’t see that in our Q3 numbers, but you will see it in our Q4 numbers.

And that's because there's still some more wholesale funding.

That we can pay down.

As you point out it doesn't cost us anything in terms of NII.

But it is net interest yield accretive so we got a little bit more of that to do it won't be the major part of our and I why net interest yield accretion.

Speaker #6: Got it. Okay, thank you.

Brian Moynihan: Got it. Okay. Thank you.

Speaker #1: We'll take our next question from Jim Mitchell with Seaport Global Securities. Your line is open.

But I think you can almost think about it being kind of like.

[Operator]: We'll take our next question from Jim Mitchell with Seaport Global Securities. Your line is open.

1% slower maybe over the course of the next year or so.

Speaker #7: Hey, good morning. Alastair, you noted you took down more expensive wholesale funding. On the liability side, which kept the balance sheet relatively flat. Which seems more mimic creative than NII creative.

[Analyst]: Hey, good morning. Alastair, you noted you took down more expensive wholesale funding on the liability side, which kept the balance sheet relatively flat, which seems more NIM accretive than NII accretive. The question, I guess, is how many quarters of that do you expect, and what sort of earning asset growth should we expect over the next year or so?

Okay.

It's helpful and then just maybe pivoting to capital.

You guys as you noted you're well above your 10% minimum.

It seems like rehab G SIB surcharges likely coming down and other reforms why not.

Speaker #7: So the question I guess is, how many quarters of that do you expect? And what sort of earning asset growth should we expect over the next year or so?

How do you think about the buffer where it is today and what prevents you from taking that down a little bit and if you have a longer term target that would be great.

Speaker #4: Yeah, so we've talked about that, and that would be a focus for us over time. When people ask us about net interest yield, we try to explain it's going to improve over time based on two things.

[Analyst]: Yeah. We've talked about that being a focus for us over time. When people ask us about net interest yield, we try to explain it's going to improve over time based on two things. First is net interest income is going to continue to increase. The second is the balance sheet we don't think will grow quite as fast as the loans and deposits grow. That's because there's still some more wholesale funding that we can pay down. As you point out, it doesn't cost us anything in terms of NII, but it is net interest yield accretive. We've got a little bit more of that to do. It won't be the major part of our NIY, net interest yield accretion, but I think you can almost think about it being kind of like 1% slower maybe, over the course of the next year or so.

Our target will be.

<unk> said before Jim.

50 basis points over the regulatory minimums, and so you should expect us to keep working that down interesting enough. The ratios are flat this quarter because of the extra earnings and stuff. So we took seven $3 billion of capital and put it back in there you would expect us to continue at a good rate.

Speaker #4: First is net interest income is going to continue to increase. And the second is the balance sheet we don't think will grow quite as fast as the loans and deposits grow.

Speaker #4: And that's because there's still some more wholesale funding that we can pay down. As you point out, it doesn't cost us anything in terms of NII.

And then through the good organic growth, which is what we use the capital for we used up some of it and it will continue to work it down if that organic growth isn't sufficient to use up the capital in the near term, but we got to get these rules finalized so we make sure all the different theaters.

Speaker #4: But it is net interest yield accretive. So we've got a little bit more of that to do. It won't be the major part of our NII, net interest yield accretion.

Ted is a 10.2 on the averaging it. This is all flopping out there you would expect in the first half of next year.

Speaker #4: But I think you can almost think about it being kind of like, you know, 1% slower maybe over the course of the next year or so.

The intent is there the outlines of rules there the adoption of the actuals is what we want to make sure. It gets through and then we'll adjust but our hope would be to grow our way through it because then you'd see a lot more earnings, but if not we'll just keep peeling down to capital.

Speaker #7: Okay. No, that's helpful. And then just maybe pivoting to capital. You guys, as you noted, you're well above your 10% minimum. Seems like we have juicy surcharges likely coming down and other reforms.

[Analyst]: Okay. No, that's helpful. Maybe pivoting to capital, you guys, as you noted, you're well above your 10% minimum. Seems like we have GSIP surcharges likely coming down and other reforms. Why not, you know, how do you think about the buffer where it is today and what prevents you from taking that down a little bit? If you have a longer-term target, that'd be great.

Okay fair enough. Thanks.

Well move next to Erika Najarian with UBS. Your line is open.

Speaker #7: Why not? You know, how do you think about the buffer where it is today, and what prevents you from taking that down a little bit?

Hi, good morning.

Speaker #7: And, you know, if you have a longer-term target, that'd be great.

No.

Reported clearly a standout quarter with a ROTC, our RTC E, 15.4% I know I'm, probably jumping ahead of what you plan to stay on November 5th Brian, but you know.

Speaker #4: Our target will be, as we said before, Jim, sort of 50 basis points over the regulatory minimums. And so, you should expect us to keep working that down. Interestingly enough, the ratios are flat this quarter because of the extra earnings and stuff.

Brian Moynihan: Our target will be, as we said before, Jim, sort of 50 basis points over the regulatory minimums. You should expect us to keep working that down. Interestingly enough, the ratios are flat this quarter because of the extra earnings and stuff. We took $7.3 billion of capital and put it back in there. You'd expect us to continue at a good rate. Through the good organic growth, which is what we use the capital for, we use up some of it, and then we'll continue to work it down if that organic growth isn't sufficient to use up the capital over the near term. We got to get these rules finalized so we make sure all the different, you know, is it 10%? Is it 10.2% on the averaging? This is all flopping out there. You'd expect in the first half of next year, the intent is there.

One of your closest peer has wells Fargo did put out a medium term target of 17% to 18% JP Morgan has had a 17% ROTC target through the cycle for a long time, you know given that you you hit this target now.

Speaker #4: So we took $7.3 billion of capital and put it back in there. You'd expect us to continue at a good rate. And then, through good organic growth—which is what we use capital for—we use up some of it and we'll continue to work it down if that organic growth isn't sufficient to use up the capital over the near term.

Should we presume that this is something that you could sustain over the near term and perhaps continue to work upwards.

Speaker #4: We got to get these rules finalized so we make sure all the different years of, you know, is it 10, is it 10.2 on the averaging?

Roessner Tito's peer targets.

Speaker #4: This is all flopping out there. You'd expect in the first half of next year, the intent is there. The outlines are rules there. The adoption of the actual rules is what we want to make sure it gets through.

So Erika I mean, I think you should expect us to continue to work our return on tangible common equity north from here.

Brian Moynihan: The outlines of the rules are there. The adoption of the actual rules is what we want to make sure it gets through, and then we'll adjust. Our hope would be to grow our way through it because then you'd see a lot more earnings. If not, we'll just keep peeling down the capital.

We plan to take you through that at Investor day, but.

Speaker #4: And then we'll adjust. But our hope would be to grow our way through it because then you'd see a lot more earnings. But if not, we'll just keep peeling down the capital.

But I think if you take the kind of NII growth that we anticipate.

Your compound that over several years when you think about the organic growth of the platform.

Speaker #7: Okay, fair enough. Thanks.

[Analyst]: Okay. Fair enough. Thanks.

It delivers.

Speaker #1: We'll move next to Erica Najariyan with UBS. Your line is open.

And then you think about the boost we got from fixed rate asset repricing.

[Operator]: We'll move next to Erika Najarian with UBS. Your line is open.

And you combine that with the fee growth it gets pretty interesting over time. So we'll walk you through that when we get together in November.

Speaker #8: Hi, good morning. You know, you reported clearly a standout quarter with a Roth C or ROTCE of 15.4%. I know I'm probably jumping ahead of what you plan to say on November 5th, Brian, but you know, one of your closest peers, Wells Fargo, did put out a medium-term target of 17 to 18%.

[Analyst]: Hi. Good morning. You reported clearly a standout quarter with a ROTCE of 15.4%. I know I'm probably jumping ahead of what you plan to say on November 5th, Brian, but one of your closest peers, Wells Fargo, did put out a medium-term target of 17 to 18%. JPMorgan has had a 17% ROTCE target through the cycle for a long time. Given that you've hit this target now, should we presume that this is something that you could sustain over the near term and perhaps continue to work upwards or closer to those peer targets?

Great.

And on.

On the efficiency ratio one of your peers talked about a natural inflation rate just in labor of 3% to 4%.

And clearly you're delivering operating leverage.

Speaker #8: You know, J.P. Morgan has had a 17% Roth C target through the cycle for a long time. Given that you've hit this target now, should we presume that this is something that you could sustain over the near term?

This quarter and what you're implying for the fourth quarter as well I guess this is a two part question.

We think about how you're framing that our TCE work and 2026.

You sort of plan to move away from the 1% to 2% expense growth.

Speaker #8: And perhaps continue to work upwards or closer to those peer targets.

And talk about efficiency instead or is.

Speaker #4: So, Erica, I think you should expect us to continue to walk our return on tangible common equity north from here. We plan to take you through that at Investor Day.

[Analyst]: Erica, I mean, I think you should expect us to continue to walk our return on tangible common equity north from here. We plan to take you through that at Investor Day. I think if you take the kind of NII growth that we anticipate, you compound that over several years. When you think about the organic growth that the platform delivers, and then you think about the boost we get from fixed-rate asset repricing, and you combine that with the fee growth, it gets pretty interesting over time. We will walk you through that when we get together in November.

Is there sort of enough still identifiable.

<unk> expenses in the franchise that you could recycle.

And perhaps can you know continue onto give on you know and this lower sort of expense rate target.

Speaker #4: But I think if you take the kind of NII growth that we anticipate, you compound that over several years. When you think about the organic growth of the platform delivers, and then you think about the boost we get from fixed-rate asset repricing, and you combine that with the fee growth, it gets pretty interesting over time.

Eric.

Because there's a lot of pieces of that but.

The expenses in our company are driven by the numbers of teammates and in what we pay them and so.

Our job is to keep using the technology as we just as I discussed earlier that continues to allow us to do more of it with the same amount of people or less people and then pay those people more in relation to the productivity of the company and so yes, there's a.

Speaker #4: So we'll walk you through that when we get together in November.

Speaker #8: Great. And on the efficiency ratio, one of your peers talked about a natural inflation rate just in labor of 3% to 4%. And you know, clearly you're delivering operating leverage this quarter and what you're implying for the fourth quarter as well.

[Analyst]: Great. On the efficiency ratio, one of your peers talked about a natural inflation rate just in labor of 3% to 4%. Clearly, you're delivering operating leverage this quarter and what you're implying for the fourth quarter as well. I guess this is a two-part question. As we think about how you're framing that ROTCE walk into 2026, do you sort of plan to move away from the 1% to 2% expense growth, and talk about efficiency instead? Is there sort of enough still identifiable, inefficient expenses in the franchise that you could recycle, and perhaps can continue on this lower sort of expense rate target?

Embedded cost of teammates that grow and we want to grow because FAA compensation grows.

PCA private client bank private bankers client compensation gross investment bankers because that grows more directly in line with revenue, but do you think about in broad context, we keep the head count basically running flattish.

Speaker #8: You know, I guess this is a two-part question. As we think about how you're framing that ROTCE walk and 2026, do you sort of plan to move away from the 1% to 2% expense growth and talk about efficiency instead?

Volumes across at the NII across it higher and the the.

The growth is coming through some of the markets related businesses, and then managing head count.

Speaker #8: Or, you know, is there sort of enough still identifiable inefficient expenses in the franchise that you could recycle and, you know, perhaps continue on sort of, you know, this lower sort of expense rate target?

Appropriately around in the back office and other types of things. So that's good.

Does it gives us a chance to manage some of the expense base, a little differently going forward than we had in the past which will be.

Helpful and so we feel good about that whether it's the.

Speaker #4: I think, Erica, there are a lot of pieces to that, but the expenses in our company are driven by the number of teammates and then what we pay them.

Idea is to grow revenue as fast or faster than expenses and create operating leverage is a simple way to think about it.

Brian Moynihan: I think, Erica, there's a lot of pieces of that, but the expenses in our company are driven by the numbers of teammates and then what we pay them. Our job is to keep using the technology, as I discussed earlier, that continues to allow us to do more with the same amount of people or less people, and then to pay those people more in relation to the productivity of the company. Yes, there's an embedded cost of teammates that grow. We want it to grow because FA compensation grows, PCA, private client, bank, private bankers' client compensation grows, investment bankers' because that grows more directly in line with revenue. Think about it in a broad context.

But it's complex and then the actual efficiency ratio remember this gets down to comparisons between companies or business mix. So our wealth management efficiency ratio inherently a 74% a 26% pre tax margin consumers at 50% Bank.

Speaker #4: And so, you know, our job is to keep using the technology as we discussed earlier. That continues to allow us to do more with the same amount of people or fewer people.

Banking is down below 50% it really you got to sit and how much of revenues coming through the various pieces will determine the aggregate efficiency ratio. Our job is just to continue to improve it.

Speaker #4: And then to pay those people more in relation to the productivity of the company. And so yes, there's a, you know, an embedded cost of teammates that grow.

Speaker #4: And we want it to grow because FA compensation grows. PCA, private bankers, compensation grows, investment bankers because that grows more directly in line with revenue.

Improved from the 62%.

Got it thank you so much.

We will take our next question from Mike Mayo with Wells Fargo Securities. Your line is open.

Speaker #4: But think about it in a broad context. If we keep the headcount basically running flattish, the volumes across at the NII are higher, and the growth that's coming is through some of the markets-related businesses, then managing headcount appropriately around in the back office and other types of things.

Brian Moynihan: If we keep the headcount basically running flattish, the volumes across it, the NII across it higher, and the growth that's coming is through some of the markets-related businesses and then managing headcount appropriately around in the back office and other types of things, that's good. What AI does is give us a chance to manage some of the expense base a little differently going forward than we had in the past, which will be helpful. We feel good about that. Whether it's the idea is to grow revenue as fast or faster than expenses and create operating leverage is a simple way to think about it, but it's complex. The actual efficiency ratio, remember, this gets down to comparisons between companies or business mix. Our wealth management efficiency ratio inherently is 74% at a 26% pre-tax margin. Consumers at 50%. Banking is down below 50%.

Hey, Brian He left me hanging with that last answer when you talked about the efficiency ratio that you expect him it was 65%.

Last year last quarter and.

62% and improve the efficiency ratio to what do we have to wait to November 5th or is that something that is kind of not you don't guide to or.

Speaker #4: You know, that's good. What AI does is give us a chance to manage some of the expense base a little differently going forward than we had in the past, which will be helpful.

Speaker #4: And so we feel good about that. Whether it's the idea is to grow revenue as fast or faster than expenses and create operating leverage is a simple way to think about it.

And also in terms of I'm, just looking for some more meat on the bone so to speak I mean, I guess year over year head Count's down 500, and revenues were up 3 billion. So I think that's kind of what you're talking about but where does that eventually take you to given your business mix.

Speaker #4: But it's complex. And then the actual efficiency ratio, remember, this gets down to comparisons between companies or business mix. So our wealth management efficiency ratio inherently is 74% at a 26% pre-tax margin.

But the question is where is the revenue coming from for the next four quarters NII is obviously much more efficient.

Speaker #4: Consumers at 50%. You know, banking is down below 50%. It really, you got to sit how much your revenue is coming through the various pieces, will determine the aggregate efficiency ratio.

In a sense of of cost because.

Brian Moynihan: It really, you got to sit how much your revenue is coming through the various pieces will determine the aggregate efficiency ratio. Our job is just to continue to improve it.

Loan balances the same people producing additional.

Credit <unk>.

Speaker #4: Our job is just to continue to improve it.

<unk> ships.

Embedded cost of production and consumer for the million cards, we do have new cards, we do a quarter that is.

Speaker #1: Improve from the 62%. Got it. Thank you so much. We'll take our next question from Mike Mayo with Wells Fargo Securities. Your line is open.

[Analyst]: Improve from the 62%.

Brian Moynihan: Yeah.

Number one small business lender in the country and producing good growth there that all falls to bottom line of the expense base is built to have that kind of activity growth. So we feel good about it I will give you more guidance, but it will be a result of where the revenue is coming from especially in the markets business and how how much that impacts but.

[Analyst]: Got it. Thank you so much.

[Operator]: We'll take our next question from Mike Mayo with Wells Fargo Securities. Your line is open.

Speaker #3: Hey, Brian, you left me hanging with that last answer. When you talked about the efficiency ratio, you expect to improve it was 65%. Last year, last quarter.

[Analyst]: All right. Hey, Brian. You left me hanging with that last answer when you talked about the efficiency ratio. You expect to improve, it was 65% last year, last quarter, and 62% and improve the efficiency ratio to what? Do we have to wait till November 5th, or is that something that is kind of a guide to, or, you know, also in terms of I'm just looking for some more meat on the bones, so to speak. I mean, I guess year-over-year, headcount's down 500 and revenues are up $3 billion. I think that's kind of what you're talking about. Where does that eventually take you to given your business mix?

You could you should be very.

Speaker #3: And 62%. And improved the efficiency ratio to what? And do we have to wait till November 5th or is that something that is kind of not, you know, guide to or you know, and also in terms of I'm just looking for some more meat on the bone, so to speak.

Very confident Mike we managed expenses well in this company and the head count well and so we'll continue to do.

Could you just give us a little bit more on AI.

Ranked top 10 globally as far as a bank and using AI and with your patents and everything else and it's getting back to that first question on this call.

Speaker #3: I mean, I guess year over year, headcount's down 500, and revenues are up $3 billion. So I think that's kind of what you're talking about.

How much savings do you have from AI, how do you measure those savings.

Speaker #3: But where does that eventually take you to given your business mix?

What are some of the best initiatives, you think you have or just help us frame how that could.

Speaker #4: Look, the question is, where's the revenue coming from for the next four quarters? NII is obviously much more efficient in the sense of cost because the same loan balances the same people, producing additional credit relationships. The embedded cost of the production and consumer for the million cards we do, new cards we do a quarter.

Brian Moynihan: Look, the question is where's the revenue coming from for the next four quarters? NII is obviously much more efficient in the sense of cost because same loan balances, the same people producing additional credit relationships, the embedded cost of production and consumer for the million cards. We do new cards. We do a quarter. The number one small business lender in the country and producing good growth there. That all falls to the bottom line. The expense base is built to have that kind of activity growth. We feel good about it. I'll give you more guidance. In the end, it'll be a result of, you know, where the revenue is coming from, especially in the markets business, and, you know, how much that impacts it. You should be very confident, Mike. We manage expenses well in this company and the headcount well. We'll continue to do that.

Transform the company a little bit more if you could.

Yes.

As I said.

A little bit more time to dedicate to that discussion will have a panel of experts show you what the work we're doing but.

I'd make three or four points about our view of AI is enhanced intelligence at the teammates are going to be critical delivering the services and therefore, it's a it's a enhanced intelligence not an artificial intelligence. The second is it's not something to think about it as something that happened as I said yesterday 2 million customers.

Speaker #4: The number one small business lender in the country is producing good growth there. That all falls to the bottom line. The expense base is built to support that kind of activity growth.

Speaker #4: So we feel good about it. We'll give you more guidance, but at the end of the day, it'll be a result of, you know, where the revenue is coming from.

Actions were handled through the Eric a platform just on the consumer side alone. So.

Speaker #4: Especially in the markets business. And, you know, how much that impacts it. But you should be very confident, Mike, we manage expenses well in this company.

And then the third thing as you.

We think the paybacks are coming in there, but what's interesting is that the places we can apply it are different than some of the other technologies had in the past so.

Speaker #4: And the headcount well. And so we'll continue to do that.

Speaker #3: Could you provide us with a bit more information on AI? I mean, you are ranked in the top 10 globally as far as a bank using AI.

[Analyst]: Could you just give us a little bit more on AI? I mean, you're ranked top 10 globally as far as a bank in using AI, with your patents and everything else. It's getting back to that first question on this call. How much savings do you have from AI? How do you measure those savings? What are some of the best initiatives you think you have, or just help us frame how that could transform the company a little bit more if you could?

And we'll take you through that so we feel good about it ought to help with the overall efficiency of the company relative to.

Speaker #3: And with your patents and everything else. And it's getting back to that first question on this call. You know, how much savings do you have from AI?

Human costs being 60% to 70% of our costs.

And but it comes with higher technology costs higher.

Speaker #3: How do you measure those savings? What are some of the best initiatives you think you have? Or just help us frame how that could transform the company a little bit more if you could.

Work so just in the coding area, we saved about 10% of the <unk>.

What amount of coders, we have working.

But we're dedicating that to drive more efficiency. So we'll take you through all of that it's it's it's exciting it's not a theoretical question at Bank of America and applied question of Bank of America, but you do have to be careful about extrapolating things that are that have to be done right in order to work in the $3 billion, we spend on data and.

Speaker #4: Yeah, well, as I said, with a little bit more time to dedicate to that discussion, we'll have a panel of experts show you the work we're doing.

Brian Moynihan: As I said, with a little bit more time to dedicate to that discussion, we'll have a panel of the experts show you the work we're doing. I'd make three or four points about AI. Our view of AI is it's enhanced intelligence, that the teammates are going to be critical delivering the services, and therefore, it's an enhanced intelligence, not an artificial intelligence. The second is it's not something to think about, it's something that happened. As I said yesterday, 2 million customer interactions were handled through the Erica platform just on the consumer side alone. The third thing is, we think the paybacks are coming in there, but what's interesting is that the places we can apply it are different than some of the other technologies we've had in the past. We'll take you through that. We feel good about it.

Speaker #4: But I'd make three or four points about AI. Our view of AI is it's enhanced intelligence that the teammates are going to be critical in delivering the services.

Sort of $2 for 2014 to 19 to get the data perfect. In this company are particularly could perfect is beyond reach but.

Speaker #4: And therefore, it's a enhanced intelligence, not an artificial intelligence. The second is it's not something to think about. It's something that happened, as I said yesterday, you know, 2 million customer interactions were handled through the Erica platform just on the consumer side alone.

That kind of number has to be spent by competitors and we spend it.

Admittedly for potentially a little bit different reason, but it takes that much work.

Alright, I will take that as a teaser for November 5th Thank you.

Speaker #4: So and then the third thing is, you know, we think the paybacks are coming in there. But what's interesting is that the places we can apply it are different than some of the other technologies we've had in the past.

Thanks.

We'll move next to Chris Mcgratty with K VW. Your line is open.

Speaker #4: So and we'll take you through that. So we feel good about it. It ought to help with the overall efficiency of the company human costs being 60, 70% of our costs.

Oh, great good morning.

On credit overall really strong results I mean under the Hood. If we go a level deep is there anything that's giving you a little bit of pause today versus maybe three to six months ago and anywhere that you are not leaving it into with the balance sheet with the growth picking up anywhere you're avoiding thank you.

Brian Moynihan: It ought to help with the overall efficiency of the company, with human costs being 60% to 70% of our costs, but it comes with higher technology costs, higher work. Just in the coding area, we've saved about 10% of the aggregate amount of coders we have working, but we're dedicating that to drive more efficiency. We'll take you through all that. It's exciting. It's not a theoretical question in Bank of America, it's an applied question in Bank of America. You do have to be careful about extrapolating things that have to be done right in order to work. The $3 billion we spent on data in 2014 to 2019 to get the data perfect in this company, or as perfect as we could—perfect is beyond reach.

Speaker #4: But it comes with higher technology costs and higher work. So just in the coding area, we've saved about 10% of the aggregate amount of coders we have working.

Well the broad the broad outline is not yet.

Speaker #4: But we're dedicating that to drive more efficiency. So we'll take you through all that. It's exciting. It's not a theoretical question that Bank of America is an applied question of Bank of America.

No.

<unk>.

Not yet we havent decided to change anything and no. We're not really observing anything other than continued strong performance in the credit portfolios.

Speaker #4: But you do have to be careful about extrapolating things that have to be done right in order to work. And you know, the $3 billion we spent on data in sort of Q4 2014 to 2019 to get the data perfect in this company, or as perfect as we could, is perfection beyond reach.

The report the results we reported today you can see consumer charge offs came down again.

And commercial charge offs came down again that.

Those commercial charge offs that are really really low level.

Credit remains in a good place.

And we built this responsible growth strategy to do two things first type of risk appetite that we're proud off through the cycle.

Brian Moynihan: That kind of number has to be spent by competitors, and we've spent it, admittedly for potentially a little bit different reason, but it takes that much work.

And second to deliver loan growth that exceeds the industry. So we feel like we're succeeding on both of those right now.

[Analyst]: All right. I'll take that as a teaser for November 5th. Thank you. We'll

You know when you see headlines do you immediately do a look across on everything yes.

Operator: Move next to Chris McGratty with KBW. Your line is open.

If something changes overnight do we spend time as a team considering is there anything we should be changing yes, but right now the broad message we need to send to people right. Now is the credit portfolios are performing very well at this point.

Lee McEntire: Oh, great. Good morning. On credit, overall really strong results. I mean, under the hood, if we go a level deep, is there anything that's giving you a little bit of pause today versus maybe three to six months ago? Anywhere that you're not leaning into with the balance sheet, with the growth picking up, anywhere you're avoiding? Thank you.

So Chris welcome to coverage of our company our core like this a salubrious in that it shows you can both grow and do it the right way and have great great credit results. So.

If you look beyond that and remember.

Brian Moynihan: The broad outline is not yet, and no, meaning not yet, we haven't decided to change anything. No, we're not really observing anything other than continued strong performance in the credit portfolios. The results we reported today, you can see consumer charge-offs came down again, and commercial charge-offs came down again. Now, those commercial charge-offs are at a really, really low level. Credit remains in a good place. We built this responsible growth strategy to do two things. First, to have a risk appetite that we're proud of through the cycle. Second, to deliver loan growth that exceeds the industry. We feel like we're succeeding on both of those right now. You know, when you see headlines, do you immediately do a look across on everything? Yes. If something changes overnight, do we spend time as a team considering, is there anything we should be changing? Yes.

Our industry the regulated part of our industry.

30 banks or so go through CCAR tests that you get to see the results on they go through a tremendous Sheridan.

Of examinations, you see and so I think if you look at the statistics by our industry and our peers. They are in strong shape and the comparisons to 2019 are interesting because that was like a 50 year low and our.

Good the best year in 50 years in our company's credit history. So we're comparing it to one of the best year. So we feel very good about it we can both grow and do it with the right risk and alister talked about that so.

But we're comfortable pushing for it.

Alright, great Brian. Thank you so much.

Thank you.

Well take our next question from Ken <unk> with Autonomous Research Your line is open.

Brian Moynihan: Right now, the broad message we need to send to people is the credit portfolios are performing very well at this point.

Yeah.

Hi, good morning. Thanks.

A follow on on the loan growth side, just a lot of the loan growth you were putting on the commercial side. It looks like it's been in the market segment I'm. Just wondering just how much capacity you have to continue to build that part of the book how much demand you're still seeing four and how you think about like the spreads and returns.

Alastair Borthwick: Chris, welcome to coverage of our company. A call like this is salubrious in that it shows you can both grow and do it the right way and have great, great credit results. If you look beyond that, remember our industry, the regulated part of our industry, the 30 banks or so, go through a CCAR test that you get to see the results on. They go through tremendous shared net credit depth of examinations you see. I think if you look at the statistics by our industry and our peers, they are in strong shape. The comparisons to 2019 are interesting because that was like a 50-year low in our, or 50-year good, the best year in 50 years in our company's credit history. We're comparing it to one of the best years. We feel very good about it.

That part of the business versus.

The banking book growth.

Yeah. So in terms of capacity, we've got a lot.

And I say that because obviously at two two trillion dollars of deposits and a trillion $1 50 of loans.

We've got substantial excess that we can provide for our clients and the economy over time. So we've got a lot of capacity.

In terms of demand I'd say, it's been reasonably robust over the course of the past couple of years.

Alastair Borthwick: We can both grow and do it with the right risk. Alastair talked about that. We're comfortable and we're pushing forward.

And we happen to be in a good place to capitalize on that because when you talk about the world's leading asset managers, we have great relationships with them in our global markets business and in investment banking.

So Chris welcome to coverage of our company a corner. Like this is salubrious and that, you know, it shows you can both grow and do it the right way and have great great credit results. So uh and if you look beyond that, remember our industry, the regulated part of our industry, the 30 Banks or so go through a a c card test that you get to see the results on. They go through, tremendous shared now credit depth of examinations. You see and and so I I think if you look at the statistics by our industry and our peers, you know they are in strong shape in the comparisons to 2019 are interesting because that was like a 50-year low in our uh, our 50 year, good the best year in 50 years, in our company's credit history. So we're comparing it to 1 of the best years, so we feel very good about it. We can both grow and do it with the right risk and Alistair, talked about that. So, um,

We're we're comfortable, we're pushing forward.

Lee McEntire: All right. Great. Brian, Alastair, thank you so much.

Brian Moynihan: Thank you.

All right, great Brian. Also, thank you so much.

And then we're in a position where we're not loaned up.

Thank you.

Operator: We'll take our next question from Ken Usdin with Autonomous Research. Your line is open.

So we have the ability to provide the lending capital.

And then you got to structure it the right way and.

We'll take our next question from Ken with Autonomous Research. Your line is open.

And we obviously have that capability. So those sorts of things put us in a good position to see that demand.

[Operator]: Hi. Good morning. Thanks. Just to follow on the loan growth side, a lot of the loan growth you've been putting on in the commercial side looks like it's been in the market segment. I'm just wondering how much capacity you have to continue to build that part of the book, how much demand you're still seeing for it, and how you think about the spreads and returns on that part of the business versus the banking book growth.

Hi, good morning, thanks. Um,

Spreads have been attractive a big part of the global markets story of improving returns over time has been growing their loan book with attractive returns and you've seen them consistently improve return on capital. So we've been happy there.

And then the only other thing I would just remind you is because these are often so well collateralized and structured they're typically investment grade.

Brian Moynihan: Yeah. In terms of capacity, we've got a lot. I say that because obviously at $2 trillion of deposits and $1.5 billion of loans, we've got substantial excess that we can provide for clients in the economy over time. We've got a lot of capacity. In terms of demand, I'd say it's been reasonably robust over the course of the past couple of years. We happen to be in a good place to capitalize on that because when you talk about the world's leading asset managers, we have great relationships with them in our global markets business and in investment banking. We're in a position where we're not loaned up, so we have the ability to provide the lending capital. You have to structure it the right way, and we obviously have that capability. Those sorts of things put us in a good position to see that demand.

Just to follow on on the on the loan growth side. Just um a lot of the loan group to be putting on in the commercial side. Uh, it it looks like it's been in the the market segments and just wondering just how much both capacity you have to continue to build that part of the book, how much demand you're still seeing for it and how you think about like the spreads. And um, and and and Returns on that part of the business versus, um, you know, kind of the, the banking book growth.

They typically are better risk ratings than some of the lending that we do in other places.

Yep. So in terms of capacity, we've got a lot.

And our <unk> and our net charge offs in this area have been close to zero. So we've had terrific empirical performance from this portfolio over a long period of time.

Uh, and I say that because obviously at 2 2 trillion dollars of deposits.

And a trillion $150 billion of loans.

We've got substantial excess that we can provide for clients in the economy over time, so we have a lot of capacity.

Got it okay and on the retail side on the consumer side.

Um, in terms of demand, I'd say it's been reasonably robust over the course of the past couple of years.

It looks like and consumer deposits on average were down a little bit sequentially I just wanted to see what youre thinking about I know that's been something that you've been looking for to get that mix going more towards retail deposit growth and it's been a little bit more wholesale in the last couple of quarters. What are you seeing just in terms of.

Um, and we happen to be in a good place to capitalize on that because when you talk about the world's leading asset managers, we have great relationships with them in our global markets, business, and investment banking.

And then we're in a position where we're not loaned up.

So we have the ability to provide the lending capital.

When do you expect that to inflect and is it just people are putting money elsewhere, whether its back in the markets or other places just your thoughts on retail deposit growth from here. Thanks.

Brian Moynihan: Spreads have been attractive. A big part of the global markets story of improving returns over time has been growing their loan book with attractive returns. You've seen them consistently improve return on capital. We've been happy there. The only other thing I would just remind you is because these are often so well collateralized and structured, they're typically investment grade. They typically have better risk ratings than some of the lending that we do in other places. Our res crit and our net charge-offs in this area have been close to zero. We've had terrific empirical performance from this portfolio over a long period of time.

And then you got to structure it the right way. Um, and we obviously have that capability, so those sorts of things put us in a good position to see that demand.

Look we're encouraged if you look back to last year's third quarter were up and we were up second quarter to second quarter. So a little bit that is second to third quarter seasonality.

We feel like we have inflicted on consumer so we're up 1% year over year I think you are detecting from me.

Spreads have been attractive. You know, a big part of the global markets story of improving returns over time has been growing their loan book with attractive returns, and you've seen them consistently improve return on capital, so we've been happy there.

Would we love to see more growth in consumer would be like to be back to the 4% plus that we typically enjoy yes, we would but remember we're coming off of a period, where consumer deposits really had to normalize after pandemic.

And then the only other thing I would just remind you is because these are often so well. Collateralized and structured. They're typically investment grade.

And it was important for us to get to the third quarter of 24, where it looks like we kind of bottomed out now we're a year further in.

They typically have better risk ratings than some of the, uh, lending that we do in other places, and our risk criteria and our net charge-offs in this area have been close to zero. So we've had terrific empirical performance from this portfolio over a long period of time.

[Operator]: Got it. Okay. On the retail side, on the consumer side, looks like consumer deposits on average were down a little bit sequentially. I just wanted to see what you're thinking about. I know that's been something that you've been looking for to get that mix going more towards retail deposit growth. It's been a little bit more wholesale in the last couple of quarters. What are you seeing in terms of when you expect that to inflect? Is it just people are putting money elsewhere, whether it's back in the markets or other places? Your thoughts on retail deposit growth from here. Thanks.

And we're growing the course, so you can see our noninterest bearing was up 1%. So look we're not at this point, we're not chasing Cds.

Broadly speaking so that's not where the growth is coming from we're trying to make sure. These are high quality operating deposits with the clients that really stick with us for the next 20 or 30 or 40 years. So that remains the strategy yes.

Also I would just add if you look at page 19, lower left Youll see that the <unk>.

The growth as I also said that the 1% 9 billion from third quarter last year. This year was all in the low interest the noninterest category, which is the more beneficial part of it. So go back to that 220000 units of new checking pharmacy.

Brian Moynihan: Yeah, look, we're encouraged. If you look back to last year's third quarter, we're up, and we were up second quarter to second quarter. A little bit of this is second to third quarter seasonality. We feel like we have inflected on consumer, so we're up 1% year over year. I think you're detecting from me, you know, would we love to see more growth in consumer? Would we like to be back to the 4% plus that we typically enjoy? Yes, we would. Remember, we're coming off of a period where consumer deposits really had to normalize after pandemic. It was important for us to get to the third quarter of 2024 where it looks like we kind of bottomed out. Now we're a year further in, and we're growing the core. You can see our non-interest bearing was up 1%.

Consumer deposits on average, we're down a little bit sequentially, just just want to just see what you're thinking about. I know that's been something that you've been looking for to get that mix Going more towards retail deposit growth. And it's been a little bit more Wholesale in the last couple quarters. What, what are you seeing just in terms of? Um, uh, you, when you expect that to inflect and and is it just people are putting money elsewhere, whether it's back in the markets or other places. Just um, your thoughts on retail deposit growth from here? Thanks, yeah. Well look, we're we're encouraged. If you look back to last year's third quarter, we're up. Um and we were up second quarter to second quarter. So a little bit of this is second to third quarter seasonality.

Your checking accounts that are all primary that we focused on our primary account in the household.

Think of that.

Compounding over the last three years.

<unk> is a million new checking accounts per year that are 90 plus percent primary household the core transactional account, that's where we'd see that compounding in against that was sort of a buildup of some of the rate seeking activity in our run run down to that and then secondly against that frankly was the higher end consumers moving their money out of it.

Um, we feel like we have inflected on consumer so we're up 1% year-over-year. I think you're detecting from me, you know, would, would we love to see more growth in consumer? Would be like to be back to the 4% plus that we? We typically enjoy. Yes, we would. But remember, we're coming off of a period where consumer deposits really had to normalize after pandemic.

In our lower end stuff as rates rose that we're behind but if you look at the.

Brian Moynihan: At this point, we're not chasing CDs, broadly speaking. That's not where the growth is coming from. We're trying to make sure these are high-quality operating deposits with the clients that really stick with us for the next 20 or 30 or 40 years. That remains the strategy.

Core bracket of consumer they're actually growing deposits in that business.

Customers continue to grow.

And it was important for us to get to the third quarter of '24, where it looks like we kind of bought them out. Now we're a year further in, and we're growing the course, so you can see our non-interest-bearing was up 1%. So look, at this point, we're not chasing CDs.

Okay got it thanks guys.

Well move next to Matt O'connor with Deutsche Bank. Your line is open.

Alastair Borthwick: Yeah. Alastair, I just said, if you look at page 19, lower left, you'll see that the growth, as Alastair said, the 1%, $9 billion from third quarter last year to this year was all in the low interest and non-interest category, which is the more beneficial part of it. Go back to that 220,000 units of new checking primacy, that you have new checking accounts that are all primary, that we focus on the primary account in the household. Think of that compounding over the last few years, three quarters of a million brand new checking accounts per year that are 90+% primary in the household, are the core transactional account. That's where we see that compounding in. You're against that was sort of a build-up of some of the rate-seeking activity and a run-down of that.

Hi, Good morning can you talk about how sensitive you are to lower medium and long term rates.

Uh, broadly speaking, that's not where the growth is coming from. We're trying to make sure these are high-quality operating deposits with the clients that really stick with us for the next 20 or 30 or 40 years. So that remains the strategy. Yep. Also, I just said, if you look at page 19, lower left, you'll see that the

You've seen it.

Decent drop here just kind of in the context.

<unk> from fixed rate pricing.

3% NIM that you've talked about looking out a couple of years.

Matt I don't have a great deal to add to what I covered earlier, so when we talk about that asset sensitivity.

<unk> and instantaneous dropping 100 basis points up with the long end and the short end.

It has an impact of $2 $2 billion of net interest income so.

That obviously requires number one it happens tomorrow number two it exists all year and number three it happens at the short end to end along and all at the same time so.

Alastair Borthwick: Secondly, against that, frankly, was the higher-end consumers moving their money out of inert lower-end stuff as rates rose that we're behind. If you look in the core bracket of consumer, they're actually growing the pods in that business, in that those customers continue to grow.

I don't know how.

How you would assign a probability to that but it's obviously on the lower end, but we provided so you get a general sense for asset sensitivity.

The growth, uh, as Alistair said that the 1% 9 billion from third quarter. Last year this year was all in the uh low interest and non-interest category which is the more beneficial part of it. So go back to that, 220,000 units of of new checking privacy uh that you do checking accounts that are all primary that we focused on the primary account in the household. You know, think of that, you know, compounding over the last few years. So, you know, 3 quarters of a million brand new, checking accounts per year that are 90 plus percent Prime in a household. You know, are the core transactional account? That's where we see that compounding in, you're against. That was sort of a build up of some of the rate seeking activity, in a run, run down to that. And then secondly, against that frankly was the higher end consumers, moving their money out of, you know, of inert lower end stuff as rates rose that were behind. But if you look in the

On the short end.

You'd end up seeing probably 80% or so.

Core bracket, a consumer. They're actually growing with the pods. It's not business in that those customers continue to grow.

[Operator]: Okay. Got it. Thanks, guys.

Okay, got it. Thanks guys.

Because so much obviously of the company's balance sheet, just re prices daily.

Operator: We'll move next to Matt O'Connor with Deutsche Bank. Your line is open.

And then the longer end is probably 20% of the sensitivity in that that tends to be the fixed rate asset repricing. Then the question becomes you've got fixed rate asset repricing over many many years, obviously, it can impact positively or negatively depending on where rates go and bounce around over that period of time. So we'll have plenty of time to guide you I think.

We'll move next to Matt O'Conor with Deutsche Bank. Your line is open.

Brian Moynihan: Hi. Good morning. Can you talk about how sensitive you are to lower, medium, and long-term rates? We've obviously seen a decent drop here, just kind of in the context of the benefits from fixed-rate asset pricing and the 2.3% NIM that you've talked about looking at a couple of years.

Each quarter as we go through and we can share with you what's actually happened with rates and then what that means looking forward.

Uh, hi. Good morning. Can you talk about how sensitive you are to lower medium and long-term rates? We've obviously seen, you know, a decent drop here, just kind of in the context of the benefits from fixed rate estimating and pricing. And the 2.3% name that you've talked about looking at a couple of years.

Alastair Borthwick: Matt, I don't have a great deal to add to what I covered earlier. When we talk about that asset sensitivity of an instantaneous drop in 100 basis points at both the long end and the short end, it has an impact of $2.2 billion of net interest income. That obviously requires, number one, it happens tomorrow. Number two, it exists all year. Number three, it happens at the short end and the long end all at the same time. I don't know how you would assign a probability to that, but it's obviously on the lower end. We provide it so you get a general sense for asset sensitivity. On the short end, you'd end up seeing probably 80% or so, because so much of the company's balance sheet just reprices daily.

Um, I don't have a great deal to add to what I covered earlier.

Okay, and then just on this kind of more medium term outlook.

So, you know, when we talk about that asset sensitivity,

But you talked about two 2% and sometimes it's due to maybe a little bit higher depending on the mix.

Of an instantaneous drop in 100 basis points of both the long end and the short end.

Earning assets in growth, but just any updates on that as you think about the medium term outlook. Thank you.

It has an impact of 2.2 billion dollars of net interest income. So,

No update other than we're one further quarter into that March we added seven basis points. This quarter were up over 2% and up the team and I know, what we need to do we just have to keep going.

That that obviously requires number 1, it happens tomorrow number 2, it exists all year and number 3, it happens at the short end and the long end all at the same time. So

I don't know how.

Okay. Thank you.

Yes.

Well take our next question from Betsy <unk> with Morgan Stanley. Your line is open.

Oh, you would assign a probability to that, but it's obviously on the lower end, but we provide it. So you get a general sense for asset sensitivity.

Um, on the short end.

Hi, good morning.

You'd end up seeing probably 80% or so.

Good morning.

<unk>.

Alistair and Brian I wanted to make sure I got the guidance right here first off on the NII as Youre thinking about 2026.

Alastair Borthwick: The longer end is probably 20% of the sensitivity, and that tends to be the fixed-rate asset repricing. The question becomes, if you've got fixed-rate asset repricing over many, many years, it can impact positively or negatively depending on where rates go and bounce around over that period of time. We'll have plenty of time to guide you, I think, each quarter as we go through, and we can share with you what's actually happened with rates and then what that means looking forward.

Uh because so much obviously if the company's balance sheet just reres daily.

Highlighting that the inputs are similar to this year.

And you indicated 5% to 7% up NII 26, 25 is that right.

Yeah, and then in the background there Betsy just so you know as we're obviously going to get pretty good core growth.

From just the organic behavior of the clients and adding some overtime. So think about that like 4% to 5% and then get a little bit of boost from fixed rate asset repricing. It got a little bit of rate cuts in the future, but when you add all that together, we feel like it's probably something like 5% to 7%.

And then the longer end is probably 20% of the sensitivity and that that tends to be the fixed rate asset pricing. Then the question becomes if you've got fixed rate asset repricing over a many, many years of obviously it can impact positively or negatively depending on where rates go and bounce around over that period of time. So we'll have plenty of time to guide you. I think each quarter as we go through and we can share with you what's actually happened with rates and then what that means, looking forward,

Brian Moynihan: Okay. Just on this kind of more medium-term NIM outlook that you've talked about, you know, 2.2%, sometimes it's 2.2%, sometimes it's maybe a little bit higher depending on the mix of earning assets and growth. Just any updates on that as you think about the medium-term NIM outlook? Thank you.

Okay, Great I thought it was what I was wondering if it's just NIM or is that NIM plus volume and it's it's all in holistic.

Okay. And then just on this kind of more medium-term, uh, Outlook that we've talked about, you know, 2.2% and then there's 22 and then there's maybe a little bit higher depending on the mix.

Uh, regarding earning assets and growth, do you have any updates on that as you think about the medium term and the outlook? Thank you.

Alastair Borthwick: No update other than we're one further quarter into that march. We added 7 basis points this quarter. We're up over 2%. The team and I know what we need to do. We just have to keep going.

And again you know here we are it's whatever it is October 15th.

So as we as we go through time, we'll be able to update you more and I think it will give you a sense also at Investor day of how that plays out over the course of multiple years, because obviously, we're going to get there.

Up team and I know what we need to do. We just have to keep going.

Brian Moynihan: Okay, thank you.

Okay, thank you.

Operator: We'll take our next question from Betsy Graczyk with Morgan Stanley. Your line is open.

This asset repricing over multiple years, and we're going to benefit from that yes.

Yes of course, and then more near term there was a comment you made about expenses being flat in <unk>.

[Operator]: Hi, good morning.

We'll take our next question from Betsy. Gray Sig with Morgan, Stanley. Your line is open.

Brian Moynihan: Morning.

[Operator]: Alastair and Brian, I wanted to make sure I got the guidance right here. First off, on the NII, as you're thinking about 2026, highlighting that the inputs are similar to this year. You indicated 5% to 7% up NII 2026 over 2025. Is that right?

Hi, good morning.

Morning. So, um,

Next quarter versus this quarter.

Yes, I said I think I said, we thought it would be flattish because.

We anticipate the headcount is going to be flattish and then just a question of what happens with the revenue side.

Allison Brown: I wanted to make sure I got the guidance right here. First off, on the knee, as you're thinking about 2026.

The head count would be flattish okay.

But I wanted to get a sense as to.

Brian Moynihan: Yeah, the background there, Betsy, just so you know, is we're obviously going to get pretty good core growth from, you know, just the organic behavior of the clients and adding some over time. Think about that, like 4 to 5%. You get a little bit of boost from fixed-rate asset repricing. You got a little bit of rate cuts in the future. When you add all that together, we feel like it's probably something like 5 to 7%.

Highlighting that the inputs are similar to this year, you indicated 5% to 7% up and II 26 over 25. Is that right?

Are you thinking about how are you thinking about NII and fees on the back of that because you know the question is coming up is hey, you're guiding down for next quarter on expenses coming in <unk>.

Yeah, and the and the background there, Betsy just so you know, is obviously going to get pretty good core growth.

Flattish not coming down, but I'm wondering what's your what's your expectation for.

[Operator]: Okay. Great. That was what I was wondering, if it's just NIM or is that NIM plus volume? It's all in holistic. Okay.

Capital markets and other compensatory revenues, because I think we would like to hear the whole picture not just one piece of the income statement and outlook.

From, you know, just the organic behavior of the clients and adding some over time. So, think about that like 4% to 5%, and then you get a little bit of boost from fixed-rate asset repricing. You got a little bit of rate cuts in the future, but when you add all that together, I feel like it's probably something like 5% to 7%.

Brian Moynihan: Yeah, here we are, it's whatever it is, October 15th. As we go through time, we'll be able to update you more. I think we'll give you a sense also at Investor Day of how that plays out over the course of multiple years because obviously, we're going to get this asset repricing over multiple years, and we're going to benefit from that.

Yeah. So let me let me try to reframe on the expense side, what I'm trying to communicate is the overall expense base for the company, we expect to be kind of flattish.

Yeah.

For the fourth quarter because the.

The head count flattish if we can just see that just that's where it is and that's the biggest part of the expense base of the company.

Okay, great. I that was what I was wondering if it's just Nim. Or is that Nim plus volume and it's, it's all in holistic. Okay. Yeah. And, and again, you know, here we are, it's whatever it is October 15th. So, as we as we go through time, we'll be able to update you more. And I think we'll give you a sense. Also, at investor day of how that plays out over the course of multiple years, because obviously, we're going to get

[Operator]: Yes, of course. There was a comment you made about expenses being flat in next quarter versus this quarter.

This asset repricing over multiple years, and we're going to benefit from that.

Uh huh.

Now obviously, we have to watch and see what happens with revenue in the fourth quarter, we don't know that yet.

But we have no reason to believe anything other than sort of flattish kind of expense at this point.

Yes, of course. And then more near-term. There was a comment you made about expenses being flat.

in, um,

Brian Moynihan: I think I said we thought they'd be flattish because we anticipate the headcount is going to be flattish. Then it's just a question of what happens with the revenue side.

Next quarter versus this quarter.

For the fourth quarter and then in terms of the net interest income I think we tried to make sure we were clear with earlier in the year thought 15, five to 15, 7%.

[Operator]: The headcount would be flattish. Okay, I wanted to get a sense as to are you thinking about how you're thinking about NII and fees on the back of that? Because, you know, the question that's coming up is, hey, you're guiding down for next quarter on expenses coming in flattish, not coming down. I'm wondering, what's your expectation for capital markets and other compensatory revenues? I think we would like to hear the whole picture, not just one piece of the income statement outlook.

Yeah. It's I said I think I said we thought it'd be flat-ish because we anticipate the headquarters going to be flat-ish and then it's just a question. What happens with the revenue site?

We're making that projection of long time ago that was a year ago.

The headcount would be flattish, okay? Um, but I wanted to get a sense as to...

And now that we're three quarters through the third quarter was probably a little ahead of where we hoped.

We kind of feel like its 15 six.

Or higher it's going to be the higher end of the range is what we're trying to communicate.

Okay, and the capital markets backlog has that shaping up and what does that look like for next quarter.

Are you thinking about how you're thinking about KNEE and fees on the back of that? Because, you know, the question that's coming up is, hey, you're guiding down for next quarter on expenses, coming in flat, not coming down. But I'm wondering, what's your expectation for?

Well in terms of the investment banking outlook I talked about that earlier, but the pipeline looks good just a question of what we can execute in Q4, but it feels to US like this is a more constructive environment for investment banking than it was earlier in the year.

Brian Moynihan: Let me try to reframe. On the expense side, what I'm trying to communicate is the overall expense base for the company. We expect it to be kind of flattish for the fourth quarter because the headcount's flattish. We can just see that. That's where it is, and that's the biggest part of the expense base of the company. Obviously, we have to watch and see what happens with revenue in the fourth quarter. We don't know that yet. We have no reason to believe anything other than sort of flattish kind of expense at this point for the fourth quarter. In terms of the net interest income, I think we tried to make sure we were clear. We'd earlier in the year thought $15.5 to $15.7 billion. We were making that projection a long time ago.

Capital markets and other compensatory revenues, because I think we would like to hear the whole picture, not just one piece of the income statement outlook.

And then in terms of the sales and trading business. Obviously, we have to think about the normal Q4 seasonality. When you think about it relative to Q3, but it is a I'd say it remains a very constructive environment for sales and trading business in particular, so we feel good about that we're off to a good start.

Yeah, so let me, let me try to reframe on the expense side. What I’m trying to communicate is that the overall expense base for the company we expect to be kind of flattish.

for the fourth quarter, because

The headcount flat is we can just see that, it's just, that's where it is. And that's the, the biggest part of the expense base of the company.

This quarter, but obviously it will depend on what happens with the.

Now, obviously, we have to watch and see what happens with revenue in the fourth quarter. We don't know that yet.

It will obviously depend on what happens with the markets overall and then.

but with no reason to believe ending other than sort of flattish, kind of expensive at this point,

Just taking a big zoom out.

As always the key for US. It's just we got to manage those businesses for the long term.

And we're looking forward to talking about that when we get together in November together for Investor Day.

Brian Moynihan: That was a year ago, and now that we're three quarters through, and now that the third quarter is probably a little ahead of where we hoped, we kind of feel like it's $15.6 billion or higher. It's going to be the higher end of the range is what we're trying to communicate.

For the fourth quarter, in terms of net interest income, I think we tried to make sure we were clear. Earlier in the year, we thought it would be $155 million to $157 million. We made that projection a long time ago, that was a year ago.

Sounds great. Thanks, so much appreciate it.

Okay.

Well take our next question from Gerard Cassidy with RBC. Your line is open.

Um, and and now that we're 3 quarters through and now that the third quarter was, you know, probably a little ahead of where we hoped.

We kind of feel like it's 156.

Hi, Alastair Hi, Brian.

Uh, or higher. It's going to be the higher end of the range is what we're trying to communicate.

[Operator]: Okay. The capital markets backlog, how is that shaping up, and what does that look like for next quarter?

Hi, there.

Let's say you guys were talking about your consumer deposits and when you look at your consumer deposits back in the fourth quarter of 2019 and compare it to today, obviously, they're higher.

Brian Moynihan: In terms of the investment banking outlook, I talked about that earlier. The pipeline looks good. It's just a question of what we can execute in Q4. It feels to us like this is a more constructive environment for investment banking than it was earlier in the year. In terms of the sales and trading business, obviously, we have to think about the normal Q4 seasonality when you think about it relative to Q3. It remains a very constructive environment for the sales and trading business in particular. We feel good about that. We're off to a good start this quarter. It will depend on what happens with the markets overall. Just taking a big zoom out, always the key for us is just we got to manage those businesses for the long term. We're looking forward to talking about that when we get together in November for Investor Day.

Okay. And the capital markets backlog has that shaping up. And what does that look like for next quarter?

And the trend shows the entire industries consumer deposits household checking account deposits.

Well, in terms of the investment banking outlook, I talked about that earlier. The pipeline looks good; it's just a question of what we can execute in Q4. But it feels to us like this is a more constructive environment for investment banking than it was earlier in the year.

Significantly higher from pre pandemic, so that pandemic surge hasnt left the banking system you guys have any color on what youre seeing from that behavior from pre pandemic I know <unk>.

um, and then in terms of the sales and trading business,

Obviously, we have to think about the normal Q4 seasonality, when you think about it, relative to Q3.

Youre, taking market share and youre growing more years of growing but any color on why we still have some elevated levels of deposits.

Yep.

So I think if you remember back in we're all.

But it is, um, I'd say it remains a very constructive environment for the sales and trading business in particular. So we feel good about that. We're off to a good start this quarter, but obviously it will depend on what happens with the, um.

In 'twenty, one and stuff trying to.

uh well obviously depending on what happens with the markets overall

The great debate about where all this cash that was put into the economy is going to flow right back out et cetera, and if you drew a line of the growth rate.

and then, you know, just taking a big zoom out.

Always the key for us is just we’ve got to manage those businesses for the long term.

Leading up to 19 over a long period of time, and then saw bubble above it it was working.

[Operator]: Sounds great. Thanks so much. Appreciate it.

And uh, we're looking forward to talking about that when we get together in November together for investor day.

Great. Thanks so much. I appreciate it.

Basically worked its way back down relative.

Operator: We'll take our next question from Gerard Cassidy with RBC. Your line is open.

In the aggregate amount of deposits relative to synchrony synchronicity to the to the to the.

We'll take our next question from Gerard Cassidy with RBC.

[Analyst]: Hi, Alastair. Hi, Brian.

Long term growth rate so the size of economies bigger than notional economies bigger we can get economists in our company and I'm sure in your company that will have a great debate notional real economy sizes and stuff, but it's just the economy's bigger the amount of cash in circulation is bigger. So therefore, you expected now the most important thing though is that we've gained share during that time in terms of core transact.

Your line is open.

Brian Moynihan: Hi there.

Hi Alistair. Hi Brian.

[Analyst]: Alastair, you guys were talking about your consumer deposits. When you look at your consumer deposits back in the fourth quarter of 2019 and compare it to today, obviously, they're higher. The Fed shows the entire industry's consumer deposits, household checking account deposits are significantly higher from pre-pandemic. That pandemic surge hasn't left the banking system. Do you guys have any color on what you're seeing from that behavior from pre-pandemic to today? I know you're taking market share and you're growing while yours are growing. Any color on why we still have such elevated levels of deposits?

Hi there.

<unk>.

We're 20% 30% more.

Core deposit transaction accounts in our consumer business, that's numbers of customers, who are carrying instead of $67000 and averaged $9000 and average and at the same time, we're probably we've reduced the numbers of branches because of more digitization automation.

Or is the teammates in consumer dedicated to service et cetera. So it's a great operating leverage so even though the economy grew and everything else.

Higher interest rates from the FED indicate that the entire industry is focusing on consumers. Household checking account deposits are significantly higher than pre-pandemic levels. The surge in deposits during the pandemic has not left the banking system. Do you have any insights on the behavioral changes you've observed from pre-pandemic to today? I know you're taking market share and growing, but could you provide any additional context on why we still see such elevated levels of deposits?

Alastair Borthwick: Gerard, if you remember back in 2021, we were all trying to have the great debate about where all this cash that was put into the economy was going to flow right back out, etc. If you drew a line of the growth rate leading up to 2019 over a long period of time and then saw a bubble above it, it was working. It has basically worked its way back down in the aggregate amount of deposits and in relative synchronicity to the long-term growth rate. The size of the economy is bigger. The notional economy is bigger. We can get economists in our company and I'm sure in your company that will have a great debate about notional and real economy sizes and stuff, but the economy is just bigger. The amount of cash in circulation is bigger, so you expect it.

Right? So I think if you're a member.

The fact that matters those deposits that are core and the all in cost of all consumer deposits 58 basis points against the current rate environment is a big profit improvement in our consumer business and just in the last year, you saw a 3% increase and its still gaining the efficiency not from cost reduction as much.

back in we're all in 21 and stuff, trying to

But cost levels against the NII improvement as Eni. It comes in the company. They are a big beneficiary of that amount. So it's so I'd say I think you are now seeing deposits grow and the industry now for it.

You know, have the great debate about where all this cash that was put into the economy. We're going to flow right back out Etc, and if you do a line of the growth rate you leading up to 19 over a long period of time and then saw a bubble above it. It, it was working. It, it's basically worked. Its way back down relative.

At our company now for many quarters.

Amid of.

Almost two years or year and a half to two years ago, when we bought them to outnumber grown since then.

Alastair Borthwick: The most important thing, though, is that we've gained share during that time in terms of core transactional. We're 20%, 30% more core deposit transaction accounts in our consumer business. That's numbers of customers who are carrying instead of $6,000, $7,000 on average, $9,000 on average. At the same time, we've probably reduced the numbers of branches because of more digitization, automation, the numbers of teammates in consumer dedicated to service, etc. It's a great operating leverage. Even though the economy grew and everything else, the fact of the matter is those deposits that are core and the all-in cost of all consumer deposits, 58 basis points against the current rate environment, is a big profit improvement in that consumer business. In just the last year, you saw a 30% increase. It's still gaining the efficiency, not from cost reduction as much, but cost levels against the NII improvement.

And so you ought to grow with the kind of economic growth and take share you go a little faster that's the gig.

Don't see any dynamic that even as they continue to.

At, in the aggregate amount of deposits and relative synchronization to the long-term growth rate. So, the size of the economy is bigger; the notional economy is bigger. We can get economists in our company and I'm sure in your company that will have a great debate about notional vs. real economy sizes and stuff. But it's just that the economy is bigger than the amount of cash in circulation is bigger. So, therefore, you expect it. Now, the most important thing, though, is that we've gained share during that time in terms of core transactions, so we're, you know, we're 20% to 30% more.

Adjusted interest rates and stuff that you see a lot of money flowing back out of the banking system. It is kind of already happened frankly.

Got it okay. Thank you.

We'll move next to solve Martinez with HSBC. Your line is now open.

Hi, good morning, Thanks for taking my question.

Obviously, you've had pretty impressive growth in.

In commercial loans in <unk>.

Markets lending up 36%.

Overall commercial overall commercial loan growth.

Well into the double digits you you obviously have a.

Very good track record.

Versus your peers in terms of credit and underwriting but.

Alastair Borthwick: As the NII comes in the company, they are a big beneficiary of that amount. I'd say I think you're now seeing deposits grow in the industry now for at our company now for many quarters. I think it was the middle of almost two years, a year and a half to two years ago when we bottomed out and have been growing since then. You have to grow with the economic growth. If you take share, you grow a little faster. That's the gig. We don't see any dynamic that, even as they continue to adjust interest rates and stuff, that you see a lot of money flowing back out of the banking system. It's kind of already happened, frankly.

I guess the question is what I.

I guess, what should give us confidence that.

You are not compromising on risk to get that kind of the kind of growth that youre seeing what's allowing you to take share and grow.

Core deposit transaction accounts and our consumer business. That's numbers of customers who are carrying instead of 6 7 thousand dollars on average $9,000 in average and at the same time we're probably we've reduced the, you know, numbers of branches. Because of more digitization automation, uh, the numbers of teammates in consumer dedicated to service Etc. So it's a great operating leverage. So even though the economy grew and everything else, the the fact of the matter is those deposits that are core and the all-in cost of all considered deposits 58 basis. Points against the current rate, environment is a big profit Improvement and that consumer business in. Just in the last year, you saw a 30% increase and it's still gaining the efficiency. Not from cost reduction as much, uh, but it cost levels against the knee Improvement as the knee comes in the company. They are a big beneficiary of of that amount. So it's so I I'd say, I I think you're now seeing deposits grow in the industry now, for at at our company. Now, for many quarters, I think it was

An outsized way versus your peers without.

the mid of, uh,

Without changes to pricing.

Risk assessment.

Yep well.

Remember this is this is not new for US and this is all focused on our clients. That's a core part of responsible growth.

Almost 2 years, a year and a half to 2 years ago, we bought them out and we've grown since then. Um, and so you ought to grow with the economic growth, and if you take share, you grow a little faster. That's the gig. But we don't see any dynamic that, you know, even as they continue to.

Got to be focused on clients and the clients that we're talking about here are typically the top asset managers or the top financial institutions in the world. So that's that's who we're interested in working with here.

[Operator]: Got it. Okay, thank you.

Adjust interest rates and stuff that you see a lot of money flowing back out of the banking system. It's kind of already happened, frankly.

Got it. Okay, thank you.

Operator: We'll move next to Saul Martinez with HSBC. Your line is open.

Beyond that we're looking for.

[Analyst]: Hi. Good morning. Thanks for taking my question. Obviously, you've had pretty impressive growth in commercial loans and, you know, markets lending up 36%. Just look at overall U.S. commercial, overall loan growth, well into the double digits. You obviously have a very good track record versus your peers in terms of credit and underwriting. I guess the question is, what should give us confidence that you're not compromising on risk to get that kind of growth that you're seeing? What's allowing you to take share and grow in an outsized way versus your peers without any changes to pricing or risk assessment?

We'll move next to Saul Martinez with HSBC. Your line is open.

Collateral pools, we want high quality, we want diversified.

We're looking for.

Structures.

That have.

Security credit enhancement performance triggers mark to market.

They typically tend to be shorter duration.

And then you know what we don't put all our eggs in one basket, we're diversified across multiple sectors. So that can be mortgage or it can be asset based.

It can be business lending or private equity it can be.

Consumer assets or subscription facilities.

Hi, good morning. Thanks for taking my question. Um, you obviously, you, you've had pretty impressive growth in, in, in commercial loans and, you know, markets, lending up. 36% is just look at overall us commercial overall commercial loans growth, well into the double digits you. You obviously have a, you know a a very good track record uh versus your peers in terms of credit in underwriting but you know that but I guess the question is what I guess what should give us confidence that

And when you add all that up you end up with a diversified book.

It's typically investment grade, it's lower risk.

And the loss the loss content, if you look at our Reg credits less than a basis point.

Brian Moynihan: Yeah. Remember, this is not new for us, and this is all focused on our clients. That's a core part of responsible growth. It's got to be focused on clients. The clients that we're talking about here are typically the top asset managers or the top financial institutions in the world. That's who we're interested in working with here. Beyond that, we're looking for collateral pools. We want high quality. We want diversified. We're looking for structures that have security, credit enhancement, performance triggers, mark-to-market. They typically tend to be shorter duration. You know, we don't put all our eggs in one basket. We're diversified across multiple sectors. That can be mortgage, or it can be asset-based. It can be business lending or private equity. It can be consumer assets or subscription facilities. When you add all that up, you end up with a diversified book that's typically investment grade.

you're not compromising on risk to get that kind of the kind of growth that you're seeing, what's allowing you to take share and and grow in and outside the way versus your peers without, you know, any without changes to pricing or or risk, uh, risk assessment

If you look at our end Ncl's.

Yep. Well

It's less than 1% so by the time you have those great clients you have good collateral if good structures.

Remember, this is this is not new for us um and this is all focused on our clients. That's a core part of responsible growth.

Generally speaking incentive with the losses and then.

It's got to be focused on clients.

The acid test ultimately shows up in returns for the global markets business, because any losses they absorb.

And the clients that we're talking about here are typically the top asset managers.

And over time, they've done a good job of deploying capital.

Or the top financial institutions in the world. So, that's who we're interested in working with here.

Beyond that. Um, we're looking for.

While increasing our ROA and return on capital. So we feel like that business has worked well final thing I would just say is I mean I feel like we have we have differentiated capability here in that.

Collateral pools: we want high quality; we want diversified.

Um, we're looking for structures.

We tend to have very strong relationships with these global markets claims that we talked about.

that have UM security credit enhancement performance triggers mark-to-market

Typically, they tend to be short-term duration.

Structuring in the underwriting.

And we've got the <unk>.

Excess in the form of lots of deposits and less loans that where we can actually make loans to those clients to satisfy the demand then it's just a question of are.

And then, you know, we don’t put all our eggs in one basket. We’re diversified across multiple sectors, so that can be mortgage or it can be asset-based.

It can be business lending or private equity. It can be.

Are we getting a return for the risk we believe that we are.

consumer assets or subscription facilities and

Okay. That's helpful.

A related question and I'd love to get your perspective.

You, you end up with a diversified book.

Brian Moynihan: It's lower risk. The loss content, if you look at our res crit, is less than a basis point. If you look at our NCLs, it's less than 0.1%. By the time you have those great clients, you have good collateral, you have good structures, generally speaking, you tend to have low losses. The asset test ultimately shows up in returns for the global markets business because any losses they absorb. Over time, they've done a good job of deploying capital while increasing ROA and return on capital. We feel like that business has worked well. Final thing I'll just say is, I feel like we have differentiated capability here in that we tend to have very strong relationships with these global markets clients that we talked about. We have the structuring and the underwriting.

That's typically investment grade. It's lower risk.

The sustainability of the results of your capital markets business is not just the market.

And the loss, you know, the loss content, if you look at our res credit it's less than a basis point.

Investment banking as well.

If you look at our N NCL's,

In this quarter investment banking fees were at levels, we haven't seen since 2021 and it feels like.

We really are in a sweet spot, where we're seeing research and investment banking activity.

It's less than 0.1%. So by the time you, you have those great clients. You have good collateral, you have good structures.

generally speaking attentive to the losses and then

Sort of optimism that this has legs.

This is also occurring environment, where the markets businesses are performing well I'm not sure you guys before.

The asset test ultimately shows up in returns for the global markets business because any losses they absorb, and over time, they've done a good job of deploying capital.

For a lot of folks and I'm just curious if.

It's an environment, where we do see investment banking continuing to grow over multi year period is that consistent is that an environment, where the markets businesses can continue to stay at current levels in terms of revenues because those are businesses that generally benefit from more more more volatile.

While increasing Roa and return on Capital. So we feel like that business has worked well, final thing. I'll just say is, I mean, I feel like we have, we have differentiated capability here in that

We tend to have very strong relationships with these global market clients that we talked about.

Brian Moynihan: We've got the excess in the form of lots of deposits and less loans where we can actually make loans to those clients to satisfy the demand. It's just a question of, are we getting the return for the risk? We believe that we are.

We have the structuring and the underwriting.

and we've got the,

Economic and market backdrop. So I'm curious if you have a view on sort of the interplay between.

<unk> and weather.

Yes.

Excess in the form of lots of deposits and less loans where we can actually make loans to those clients to satisfy the demand. Then it's just a question of

Markets business, if you do.

Well an environment that is a little bit more stable that is more suited to our investment banking continued to grow.

Are we getting the return for the risk? We believe that we are.

[Analyst]: Okay. That's helpful. I guess a related question. I'd love to get your perspective on the sustainability of the results of your capital markets businesses. I'm not just, you know, the markets business, but investment banking as well. I mean, is this core investment banking? These are at levels you haven't seen since 2021, and it feels like we really are in a sweet spot where we're seeing resurgent investment banking activity, a lot of optimism that this has legs. This is also occurring in an environment where the markets businesses are performing well, not just for you guys, but for a lot of folks. I'm just curious if, in an environment where we do see investment banking continuing to grow over a multi-year period, is that consistent? Is that an environment where the markets businesses can continue to stay at current levels in terms of revenues?

Okay, that's helpful. Like I said, hey a related question and love to get your perspective.

Okay.

So, let's sort that in one of the reasons why we started a long time ago disclosing global markets separately.

On the sustainability of the results of your Capital markets businesses. So I'm not not just, you know, the Market's business that

Separately.

Operating unit because it supports the whole company, including the wealth management business, including the consumer business for excess FX transaction. So we just thought was it separately.

Investment banking as well. I mean, there are these court investment banking fees. We're at levels we haven't seen since, you know, 2021, and it feels like.

To show its breath in the company, but also to show it's less volatile than people assume it is when you're running the way that Jim and the team have run it so 14 quarters in a row of year over year revenue growth is a pretty sustainable record and there might be some day. That's broken it has been broken for three plus years. So that's good.

And the profitability are you the returns of business continue to go up and that has a lot to do with how they conduct their business and how they do.

It's a moving business not a storage business its not holding a lot of risk on a given day on the lending it's high quality assets underneath of no sub prime et cetera et cetera. So that's so we feel that it's sustainable and yes. It does it benefit and especially on the equity side.

[Analyst]: Those are businesses that do generally benefit from a more volatile economic and market backdrop. I'm curious if you have a view on the interplay between those two and whether the markets businesses can continue to do well in an environment that is a little bit more stable, that is more suited to investment banking continuing to grow.

Markets are moving around and people are trading more sure you saw that this quarter, but overall it just keeps grinding its way forward.

Now when you look on the investment banking $2 billion in fees.

Alastair Borthwick: Let's sort that. One of the reasons why we started a long time ago disclosing global markets separately as a separate operating unit is because it supports the whole company, including the wealth management business and the consumer business for ex-FX transactions. We disclosed it separately to show its breadth in the company, but also to show it's less volatile than people assume it is when you're running the way that Jim and the team have run it. Fourteen quarters in a row of year-over-year revenue growth is a pretty sustainable record. There might be some day that's broken. It has been broken for three-plus years. That's good. The profitability, i.e., the returns of the business, continue to go up. That has a lot to do with how they conduct the business and how they, you know, it's a moving business, not a storage business.

You know, we really aren't in a sweet spot where we're seeing resurgent Investment Banking activity. You know, a lot of optimism that this has legs, and um, this is also occurring in an environment where, you know, the markets businesses are performing well—not just for you guys, but for, you know, for a lot of folks. I'm just curious if, you know, if in an environment where we do see Investment Banking continuing to grow for a multi-year period, is that consistent with the environment where the markets businesses can continue to stay at, you know, current levels in terms of revenues? Because those are businesses that do generally benefit from more M&A, more volatile economic and market backdrops. So, I'm curious if you have a view on sort of the interplay between, you know, those two and whether, you know, um, you know, the markets business is going to continue to do well in an environment that is a little bit more stable, that is more suited to, you know, Investment Banking continuing to grow.

Coming in the quarter, everybody expected it to be less than that it came but youre seeing the activity spread out geographically you're seeing a lot of activity in the mid sized market in the U S, which we are capturing through the combination of our investment banking.

Teammates and our commercial banking teammates do cover all the markets are out there in our middle market franchise, and capturing market share from those customers, but I think one of the things you need to think about is that business. We run a global corporate investment banking business as a consolidated as a business and that goes into global banking laws, our middle market and our.

So I think. So, let's sort that. And 1 of the reasons why we started a long time ago, disclosing Global markets separately as a separate operating unit because it's it supports the whole company including the wealth management business including the consumer business, for excess FX transactions. So we just closed it separately, but

Business banking business why that's important to think about it with our relationship with these customers we have there credit relationship.

Transaction services relationship and the fees for that client grew 12% year over year, and our investment banking and our.

Alastair Borthwick: It's not holding a lot of risk on a given day. On the lending, it's high-quality assets underneath them, no subprime, etc. We feel that it's sustainable. Yes, it does benefit, especially on the equity side, when markets are moving around and people are trading more. You saw that this quarter. Overall, it just keeps grinding its way forward. Now, when you look on the investment banking, you have $2 billion in fees coming in the quarter. Everybody expected it to be less than that. It came. You're seeing the activity spread out geographically. You're seeing a lot of activity in the mid-size market in the U.S., which we are capturing through the combination of our investment banking teammates and our commercial banking teammates to cover all the markets and are out there in our middle market franchise and capturing strong market share from those customers.

Hedging and other types of things on top of that in the markets and by doing all of that you actually have a more stable revenue stream attached to that business. So whether investment banking goes up or down by $100 million. If you look at the global banking results.

The volume of revenue is coming from the lending side and the deposit side. So.

To do to show its breadth in the company but also to show it's less volatile than people assume it is. When you're running the way that Jim and the team have run it, so 14 quarters in a row of year-over-year. Revenue growth is is a pretty sustainable record and there might be some data that's broken. It has been broken for 3 plus years so that's good. And the profitability are you the returns of the business continued to go up and and that has a lot to do with how they conduct the business and how they, you know, it's a, it's a, it's a moving business, not a storage business, it's not holding a lot of risk on a given day, at on the lending, its high quality assets underneath them, know, subprime, etc, etc. So that's, you know, so we feel that it's sustainable. And yes, it does it benefit, and especially on the equity side, you know, when markets are moving around and people are trading more sure, you saw that this quarter but it overall it just keeps grinding its way forward.

It's great to see match and her team have a good quarter, but Matthew himself I'll tell you. It's also great to the loans grew.

<unk> grew up year over year the loans are solid.

And then working with the middle market and the loan growth. We're seeing there. It's a holistic view of the customer and I think thats sustainable.

Great. That's very helpful. Thank you.

Yes.

And it does appear that there are no further questions at this time I would now like to return the call to Brian.

Alastair Borthwick: I think one of the things you need to think about is that business. We run a global corporate investment banking business as a consolidated business. That goes into global banking along with our middle market and our business banking business. Why that's important to think about is with our relationship with these customers, we have their credit relationship, their transaction services relationship, and the fees for that bank group, 12% year-over-year, and their investment banking, and their hedging and other types of things on top of that in the markets. By doing all that, you actually have a more stable revenue stream attached to that business. Whether investment banking goes up or down by $100 million, if you look at the global banking results, the volume of revenue is coming from the lending side and the deposit side.

Thank you operator first I want to thank our team here at Bank of America.

Like this is this olivia setting for us to finish up 25, it had to 'twenty six.

Now when you look on the investment banking, you have 2 billion dollars in fees, uh, coming in the quarter, you know, everybody expected it to be less than that. It came but you're seeing the activity spread out geographically. You're seeing a lot of activity in the mid-size Market in the US which we are capturing through. The combination of our investment banking uh teammates and our Commercial Banking, teammates, do a cover. All the markets and are out there in our middle market franchise, and capturing strong market share from those customers. But I think 1 of the things you need to think about is, is that business? We we run a global corporate Investment Banking business, as a Consolidated business, as a business and that goes into the global banking law of our Middle Market. And our

The amount of work done by the talent team and I want to thank them for doing that next I think for your shareholders. You also saw a good quarter. Good returns good operating leverage good growth in our core businesses, some extra kick from investment banking and else, but I think as we started just focus on all of the businesses grew their earnings all the businesses have strong returns and the.

Business banking, uh, business. Why that's important to think about is with our relationship with these customers. We have their credit relationship, their transaction services relationship, and the fees for that link are up 12% year-over-year, and their investment banking. And their, you know,

All created operating leverage by and large by and large so we feel very good about that as we turned to 26. So we look forward to seeing a few weeks at Investor day, and thank you for your time and attention.

Alastair Borthwick: It's great to see Matthew and the team have a good quarter. Matthew himself would tell you it's also great that the loans grew, or the deposits grew year-over-year, the loans are solid, that in the end, working with the middle market and the loan growth we're seeing there, it's a holistic view of the customer. I think that's sustainable.

This does conclude today's program. Thank you for your participation you may disconnect at any time and have a wonderful afternoon.

[Analyst]: Great. That's very helpful. Thank you.

Have a more stable Revenue stream attached to that business. So whether Investment Banking goes up or down by a hundred million dollars. If you look at the global banking results, the the volume of Revenue is coming from The Lending side and the deposit side. So it you know it's great to see matching the team, have a good quarter, but Matthew themselves will tell you it's also great that the loans grew uh or the deposits grew over year over year, the loans are solid that and then the working with the Middle Market and the loan growth, we're seeing there. It's a it's a holistic view of the customer. And I think that sustainable

Great. That's very helpful. Thank you.

Operator: It does appear that there are no further questions at this time. I would now like to return the call to Brian.

No further questions at this time, I would now like to return the call to Brian.

Alastair Borthwick: Thank you, operator. First, I want to thank our team here at Bank of America. A quarter like this is a salubrious setting for us to finish up 2025 and head to 2026. It's a great amount of work done by a talented team. I want to thank them for doing that. Next, I think for you as shareholders, you also saw a good quarter, good returns, good operating leverage, good growth in the core businesses, some extra kick from investment banking and else. I think as we started, just focus on all the businesses grew their earnings. All the businesses have strong returns. They all created operating leverage by and large. We feel very good about that as we turn to 2026. We look forward to seeing you in a few weeks at Investor Day. Thank you for your time and attention.

Time attention.

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

This does conclude today's program, thank you for your participation. You may disconnect at any time and have a wonderful afternoon.