Bank of America Corporation

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

Good morning. Thank you, Catherine. Thanks for joining the call to review our fourth quarter 2019 and our full year results. By now, I hope everyone's had a chance to review the earnings release documents, which are available on the investor relations section of bankofamerica.com website. Before I turn the call over to our CEO, Brian Moynihan, for a few remarks, let me remind you that we may make forward-looking statements during the call. For further information on those forward-looking comments, please refer to either our earnings release documents, our website, or our SEC filings. After Brian's comments, our CFO, Paul D'Onofrio, will review more details on the 4Q results. We'll then open up for questions. Please try to limit your questions so that we can get to all callers. So let's get rolling. Brian?

Thank you, Lee. Good morning, everyone, and thank you for joining us to review our results. I'm going to let Paul take you through the fourth quarter, which reflected a strong finish to close out 2019. Before that, I wanted to give you a high-level view on our results. Of course, our results continue to reflect the strength of the U.S. consumer in the biggest economy in the world. We continue to be well-positioned here in driving market share gains with great service and capabilities. This quarter is also one of transition, from a period of rising rates in 2018 to one that is moving through the impact of the declining rates in the second half of 2019. How do you run a company, a big bank, and deal with lower rates? Well, we drive what we can control with our paternal commitment to responsible growth. We drive more loans, more deposits, more assets under management, and driving growth with the right pricing and at the right risk. We also have to manage our cost base carefully while making the required investments, and we have to take advantage of a strong balance sheet to provide good capital return to our shareholders. At Bank of America, we check the box in all these in a quarter. We grew average loans by 6% in our lines of businesses. We grew to deposits by 5% with very disciplined deposit pricing. Our expenses were relatively flat again, but we increased investments across our whole company. In doing that, we earned $7 billion after tax this quarter with a return on tangible common equity of 15.4%. And due to our strong balance sheet, we returned $9.1 billion in capital to our common shareholders this quarter. At the same time, we deploy capital to support growth for our clients, communities, and teammates. Let's start on slide two. I'm referring to the full year results, excluding our third quarter 19 joint venture impairment charge. We generated $29 billion net income in 2019, a record for our company. That was 3% better than the prior year's results. We were also able to reduce shares by 9%, driving earnings per share up by 12% for 2019. These results were driven by execution and all the pillars of responsible growth. We grew by serving our clients well and improved our market share across the board. We remained disciplined in our risk and our client selection framework. And by the way, our results are more sustainable as our focus on operational excellence led to a 58% efficiency ratio in 2019 while making the investments we need to make. Our return on equity was 11% for the year, and our return on tangible common equity was 15.8% for the year. Record earnings allowed us to invest And our client capability is to invest in our people and invest in our communities, all while holding the expenses in check. Take a look at slide three. You can see the investments we made across all our constituencies. And at the same time, we delivered a strong return to our shareholders. To deliver for our clients, we continued our investment in talent. In 2019, we grew the company by 3,600 teammates. Overall, we hired 32,000 teammates in 2019, including 6,300 new employees from low- and moderate-income neighborhoods, 4,000 college and MBA graduates, and we also completed our five-year goal to hire 10,000 military veterans into our company. We completed more than $3 billion in new technology code initiatives last year, building on years of investments in award-winning digital and mobile capabilities to serve our clients better and help our teammates be more efficient. Most importantly, these investments are bearing fruit, as you can see in our customer usage numbers that Paul will talk about. Just a simple example. We surpassed 10 million clients using Erica, our industry-leading consumer AI agent. We introduced Erica about 18 months ago, and now it's starting to reap the scale benefits. Erica is an example of billions of dollars of scaled innovation fueled by our work on operational excellence. These savings generated by operational excellence also enable us to make capital investments in our company of $1.7 billion during 2019 for new or modernized facilities and other related priorities. And in the past three years, we've built 207 new financial centers and modernized more than 1,300. For our employees, we will start at $20 per hour minimum starting pay beginning in March. The cost of all these enhancements, importantly, are in our run rate of expenses. providing the capacity to keep investing in the future without increasing expenses. Also for 2019, for the third consecutive year, we shared our financial success with our teammates with special compensation awards to approximately 95% of them. Three years of special compensation awards totaled over $1.6 billion in compensation in addition to all other bonuses and merit and everything else, allowing our teammates to do more with their families. Last year, we also delivered more than $5 billion of community development financing for affordable housing and other important local priorities. We made more than $250 million in philanthropic contributions to help drive economic mobility, including workforce training and development, and many other local priorities where we helped to make a difference. We also completed our 10-year, $125 billion environmental business initiative goal in 2019. We made that commitment four years ago, and it was a 10-year commitment, and we completed it six years early. That's why this year we set a new goal of 300 billion environmental initiatives across the next decade. It was a strong year for our company and our team, capping our first decade. But here at Bank of America, we have a saying, nice start. We know we can do so much more in the future. So on slide four, I want to talk about the line of business results. The team's hard work has created strong improvement earnings across the board in our lines of business. Deed Acid Age and the consumer team generate impressive $13 billion in after-tax earnings in our consumer and small business group by driving responsible growth. They continue to provide real value for clients through innovative products and services while driving improvements in upgraded facilities, entering new markets, and driving innovation. Consumers' record-level efficiency and customer satisfaction scores reflect our hard work done the right way. Andy Segan and Katie Knox together run our global wealth and investment management businesses. They drove net new household growth in 2019 and more integration across those businesses with the rest of the franchise. Merrill Lynch alone brought in more than 40,000 net new affluent households during 2019. Margins in that business remain near the record levels. We generated $1 billion plus in quarterly earnings in the quarters of 2019 and topped this quarter $3 trillion in client balances for the first time. Tom Montag and his team across the global banking and global markets franchises are running one of the biggest commercial lending businesses in the world and one of the top market-making investment banking platforms. This powerful combination of global banking and global markets generated $11.6 billion in after-tax net income this year. The team continues to get its fair share of the fee pools across the globe and became the more important partners for many of the world's largest clients. With a renewed focus, our investment banking team regained some of the lost market share from a couple years ago, and Paul will give you those numbers later. Matthew Coder and team have done a great job of doing that. In addition, that team across the board continues to drive innovation in our global treasury services platform. Paul is going to show you some of those capabilities in the slides later. All these business accomplishments across all these businesses are driving relatively flat costs. Let's move to the trends in slide five. Our strong balance sheet and strong earnings have driven a corresponding strong increase in our return of capital. We have now dropped below 9 billion shares, outstanding 9.1 billion shares on a fully diluted basis, as shown here on the left side of the page. In total, we've reduced the share count by nearly 2.5 billion shares from its peak a few years ago. As we look into 2020, it probably gives some specific guidance on the company's view of what we see in our outlook. But for more general guidance, our research team, our award-winning research team, sees more generally the U.S. GDP growth at just below 2% and a global GDP growth just above 3%. We at Bank of America have seen our consumer business a substantial amount of activity. In our consumer business, we see that our customers are coming off a strong finish in 2019 in their spending activity. In addition, there's good loan demand. This results from good employment levels and growing wages. At Bank of America, spending by our consumers grew at 5.9%, over $3 trillion in spending from 2019 over 2018. We saw solid loan demand on our commercial client base throughout the year, but that moderated in the second half of the year as worries about global economic uncertainty and all the issues that are talked about every day dragged on. Today, we see some resolution to those issues. In fact, combining the continued consumer strength leads us to expect to see businesses continue their solid activity, and we're hearing more optimism. All this provides a great backdrop to drive responsible growth and continue to deliver for you. With that, I'll turn it over to Paul.