Bank of America Corporation

Good day, everyone, and welcome to the Bank of America earnings announcement. It is now my pleasure to turn the program over to Lee McIntyre. Please go ahead, sir.

Thank you, Catherine. Good morning. Welcome and thank you for joining the call to review our second quarter results. I trust everyone has had a chance to review our earnings release documents. They're available on the investor relations section of the bankofamerica.com website and and include the earnings presentation that we'll be referring to during the call. I'm going to first turn the call over to our CEO, Brian Moynihan, for some opening comments before Alistair Barthwick, our CFO, discusses the details of the quarter. Before I do that, let me 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. that are subject to risks and uncertainties. Factors that may cause the actual results to materially differ from expectations are detailed in our earnings materials and SEC filings that are available on the website. Information about our non-GAAP financial measures, including reconciliations to U.S. GAAP, can also be found in our earnings materials that are available on the website. So with that, it's my pleasure to turn the call over to you, Brian. Thanks.

Thanks, Lee, and good morning to all of you, and thank you for joining us. I'm starting on slide two of the earnings presentation. This morning, Bank of America reported one of the best quarters and one of the best first halves of net income in the company's history. Our results this quarter once again include solid performance on things we control by delivering organic growth and operating leverage. We did that in an economy that remains healthy but had a slowing rate of growth. It was also a quarter that included volatility from the debate about the debt ceiling and continuation of central bank monetary tightening action, and a slowing in consumer spending and a slowing inflation. As you look at it now, our customer spending pattern is now more consistent with a pre-pandemic lower growth, lower inflation economy. Before Alistair takes the details, let me summarize Bank of America's quarter two performance. On slide two, you can see the highlights. We earned $7.4 billion after tax and grew earnings per share 21% over the second quarter of 2022. All business segments performed well, and I want to thank all my teammates for doing so. We grew clients and accounts organically and at a strong pace. We delivered our eighth straight quarter of operating leverage, led by 11% year-over-year revenue growth. We further strengthened our balance sheet, improving our common equity tier one ratio more than 110 basis points year-over-year at 11.6%. And we have $867 billion in global liquidity sources. We also produce strong returns for our shareholders, with a return on tangible common equity of 15.5%, continuing the streak of many quarters at that level or above. While our business has performed well this quarter, I would particularly highlight our global markets and sales and trading team and our investment banking teams. Both have appeared to outperform their industry peers. Investments made over the past couple of years in global markets capabilities under Jimmy DeMar's leadership, as well as Matthew Koda's leadership in the corporate global corporate investment banking area, allowed us to prove our market shares for both of these fee pools. I'd also note the strong contribution by our middle market clients and our teammates there, led by Wendy Stewart. I'd also like to touch a few additional points before turning the call over to Alistair. These points will help illustrate the continued investment in the franchise and work we do to drive growth. Let's start with the organic growth slide on page three. On that page, we highlight some of the important elements of organic growth. You can see evidence in every business segment as you look at the page. In consumer, in quarter two, we opened 157,000 net new checking accounts. Consumers now had 18 straight cores of positive net new checking account growth. Now, these are core primary checking accounts across the board, allowing our tremendous deposit franchise to continue to prosper and take market share. While the progress here may appear inchmeal, over the last three years, we've grown our core customers and consumer checking account customers from $33 million to $36 million. We opened another $1 million-plus credit card accounts this quarter and have 10% more investment accounts this year than we did last year in the consumer business. Consumer investment business balances reached a new high of $387 billion, aided by a 30% increase in new funded consumer investment accounts year over year and, frankly, moving our money from our depositors into the market as they've done so. In global wealth, we added $12,000 net new relationships to Merrill and the private bank. and our advisors opened more than 36,000 new banking relationships in the quarter, showing a strong differentiation in our model of fulfilling both investment and banking needs for clients. In the past nine days, we added 190 experienced advisors to our sales force, in addition to digital capabilities to help us deliver at scale. In global banking, we added clients and increased the number of solutions per relationship. Over the past three years, we've added net new relationship managers and increased our client-facing headcount by nearly 10%. We've also improved our tools for prospect calling through investments in technology, and it's benefiting our ability to add customers and improve our solutions per existing client. Year-to-date, we've added over 1,000 new commercial and business banking clients across the United States, which is the same number we added in the full year of last year. Again, operationalizing that ability to do this at scale increases our speed of onboarding these clients. In our global markets area, we saw one of the highest second quarters for sales and trading in our history. It's another quarter of good organic growth. To achieve that growth while managing our expense trajectory, which Alistair is going to cover, requires inherent efficiency progress from digital and other applied technology across all our units. Digital superiority is key to our operating dynamics. First, it produces a great customer experience, resulting in strong customer retention and strong customer scores. Second, it ensures our position as a lead transactional bank for our customers, whether they're consumers, companies, or investors. Third, it preserves a strong deposit balance as a good price and due to the core nature of transactional deposits. And last, but importantly, it leads to efficiency. So how are we doing on digital progress? You can see that on slide four. First, with the consumer. In consumer, we now have 46 million active users that are digitally engaged with our digital platform and are logging over 1 billion times a month. And even with this scale, the stage of maturity of logins is up double digits from last year. Customer uses of Erica continues to be the expectations. This was an early application of natural language processing and artificial intelligence that we built in our company, and it continues to learn about it with additional use. Interactions with Erica rose 35% in just the past year, and now has crossed over 1.5 billion client interactions in the first five years of introduction. There's a lot of questions about artificial intelligence out there, but one can't glue together a series of systems. We have to build a system It's a highly regulated, highly customer-focused business, and Erica is one such application. You can see its impact. Likewise, Zelle hasn't slowed down either. The number of people using Zelle grew 19% this past year. Remember, these are new functionalities at this point. They've been around for years, but they continue to grow at very strong growth rates, showing customer desire and acceptance to the activities. You can see the digital sales continue to grow. We continue to have both great high-tech and high-touch options. As part of that, we've added 310 new financial centers since 2019. And by the end of this year, we have refurbished every one of our existing centers in our company. We plan on opening 50 more centers a year for the next few years, which includes an expansion in nine new markets we announced a few weeks ago. Our entrance to these markets is enhanced by digital and leads to strong success. Just to give you a point of reference, for all the expansion markets over the last several years, For branches open a year or more in those expansion markets, our average deposit balances per those branch are $160 million in each branch. If you go to the wealth management digital on slide five, you can see that they continue to be the most digitally engaged clients in our company. Our advisors have led the way in driving a personal-driven advice model supplemented by our digital tools. You can see the client adoption rate of 83% in Maryland and 92% in a private bank. 78% have embraced digital delivery as a tool of service, providing more convenience for them and our advisors. Eric and Zoe also continue expanding these client sets. A new program we announced just a few quarters ago has generated 20,000 digital leads to 7,000 advisors. It's called Advisor Match, matching our clients with advisors of their choice. On slide six, you can see the digital engagement in the global banking area. Corporate treasury teams and our clients appreciate these doing business with us digitally. Cash Pro app sign-ins are up nearly 60% from last year, while the value of payments through Cash Pro app are up 20%. As you can see, every line of business is delivering strong organic growth. Investments made in technology have enabled us to grow industry-leading positions in digital tools while enabling our clients to do great things and making us more efficient. This provides for a very satisfied, stable customer and client base with Bank of America's primary provider. And by doing it with a digital application, that also produces operating leverage. On slide seven, you can see our streak of operating leverage continued in the second quarter of 2023. We're now back at eight quarters in a row. The chart on slide seven covers eight and a half years of 34 quarters, and all but eight of those quarters, and you can see those identified, six of which were in the heart of the pandemic, we've achieved operating leverage. Operating leverage is that simple task of growing revenue at a better growth rate than expense. As I said, Alistair is going to discuss with you our good and declining expansion trajectory, which sets us up to continue to provide operating leverage even with a shifting economy. In sum, in the quarter, we delivered earnings at a 19% higher and a 15% return on tangible common equity. That was driven by continued strong organic growth and operating leverage in a volatile economic environment. Alistair's going to talk to you about a bit more strength we see ahead in our net income for the balance of the year, and that provides a better start as we think about 2024. You're going to hear our expectations for the quarterly decline in expenses in the following quarters for the rest of 2023, even as we keep investing. And you'll hear about the resilience of credit and strong trajectory capital. This all positions us well to continue both our streak's organic growth and operating leverage. With that, let me turn it over to Alistair.