Bank of America Corporation

Good day, everyone, and welcome to the 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. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing the pound key. Please note, this call may be recorded. I'll be standing by if you should need any assistance. It is my pleasure to turn the conference over to Lee McIntyre of Bank of America.

Good morning. Thank you, Leo. Welcome and thank you for joining the call to review our first quarter results. Our earnings release documents are available on the Investor Relations section of the bankofamerica.com website. That includes the earnings presentation that we will be referring to during the call. I trust that everyone's had a chance to review the documents. I'm going to first turn the call over to our CEO, Brian Moynihan, for some opening comments. before Alistair Borthwick, our CFO, discusses the details of the quarter. Before they begin, let me just remind you, we may make forward-looking statements and refer to non-GAAP financial measures during the call. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties. Factors that may cause our actual results to materially differ from expectations are detailed in our earnings materials our SEC filings that are available on our website. Information about non-GAAP financial measures, including the reconciliations to U.S. GAAP, can also be found in our earnings materials that are available on the website. So with that, I'll turn the call over to you, Brian. Thanks.

Thank you, Lee, and good morning to all of you, and thank you for joining us. I am starting on slide two of the earnings presentation. We once again delivered a strong set of results in quarter one. We reported net income of $6.7 billion after tax and EPS of 76 cents. This included the additional expense accrual for the industry's special assessment by the FDIC to recover losses from the failures of Silicon Valley Bank and Signature Bank. This lowered our quarter one EPS by seven cents. Including net expense, net income was $7.2 billion and EPS of 83 cents per share in quarter one. Alistair's going to walk you through the details of the quarter momentarily, but first let me give you a few thoughts on our performance. We delivered good improvement in our fee-based business driven both by continued organic growth and good market conditions. Investment banking saw a nice rebound this quarter. We delivered nearly $1.6 billion in investment banking fees and grew 35% from the first quarter of 2023. Matthew Coder and the team have done a great job. delivering market share growth. In addition, our results reflect the benefits of investments made in our middle market investment banking teams and dual coverage teams. Matthias has utilized his power wisely to grow our middle market team from 15 bankers in 2018 across a dozen cities to more than 200 bankers in twice as many cities today. Both groups work with our commercial bankers and wealth management advisors in those cities to deliver for our clients. Investment in brokerage services revenue across Merrill and the private bank grew 11% year-over-year in quarter one to nearly $3.6 billion. Continued investments in our advisor training programs and digital delivery for our clients, as well as positive market, helped us deliver strong revenue. Ad center management flows were $25 billion in the quarter. Sales and trading, excluding DBA, delivered its eighth consecutive quarter of year-over-year revenue improvements. At $5.2 billion, this is the highest first quarter result in over a decade. We have allocated more balance sheet invested in talent to build on our strengths over the last five years in this business. Those investments, plus the intensity of the teams under Jimmy DeMar's leadership, has resulted in good momentum and market share improvement. From a balance sheet perspective, we entered the quarter expecting modest moves in loan growth and a decline in deposits. Those were our expectations. What we actually delivered was growth in ending deposits of more than $20 billion. Ending loans are down modestly due to the expected credit card seasonality. Otherwise, loans are pretty stable. This fallacy performance, along with our continued pricing discipline, allowed us to deliver better than expected NII performance. We told you last quarter that we expected NII to decline significantly. From the fourth quarter of 2023 to the first quarter of 2024, a decline of about $100 to $200 million. We actually reported today an I of $14.2 billion. That was $100 million higher than quarter four, exceeding our guidance. We continued to deliver strong expense management. Year-over-year expenses adjusted for the FDIC assessment was up a little less than 2%. That compares to a 4% plus inflation rate. We also continued to invest in our company while managing those expenses. We had several categories of stronger fee-based revenue in the first quarter of this year. This drove higher formulaic compensation and processing costs of the increased activity. Fees and commissions were up 10% year over year. We were happy to pay for that revenue and deliver more earnings to the bottom line because of it. So how did we do all that and hold expenses under the inflation rate? Well, we remained focused on three primary drivers of Bank of America. First, our operational excellence platform continues to deliver and improve processes. These savings from that growth help fund the future growth in the company and lower the risk. Secondly, managed headcount as we eliminated work. Recall we noted the expectation in January of last year that our headcount would be down throughout the year. Our headcount at the end of first quarter 2024 is down by more than 4,700 people from the first quarter 2023. It declined 650 people just from the end of 2023. The digitization activity is also driving ongoing expense cost savings, customer retention, and market share improvement, driving across all three factors. It also supports the ever-increasing volumes of client activity with little increased cost. I would highlight our continued capital strength with common equity tier one capital of $197 billion. That amount of capital is $31 billion over the current regulatory minimums for our company. That capital has allowed us to both support our clients and return $4.4 billion to shareholders this quarter and share repurchases and dividends. Let me highlight a few points on organic growth before I pass over to Alistair. Now I'm turning to slide three. You can see slide three, the highlights of the quarter one success of organic activity across the businesses. We continue to invest and enhance our digital platforms. We provide our customers with convenient and secure banking experiences. By leveraging our technology and continuous investment in that technology and putting customers at the center of everything we do, we have successfully deepened our relationships and expanded our customer base across all our businesses. In consumer, we added 245,000 net new checking accounts this quarter. This completes 21 straight quarters of net additions. Dean Anthony, Aaron Levine, and Holly O'Neill helped drive that business for us and continue to perform well, driving strong performance across our consumer franchise. These checking balances continue to drive the performance of our consumer deposits. These checking additions are important for many other reasons. On average, 68% of our deposit balances have been with us for more than 10 years. 92% of the customer checking accounts are primary checking accounts in the household, meaning that they're the core operating account for the household for their financial lives. So when we onboard a client, we start a long-term valuable relationship. About 60% of our checking accounts customers use a debit card, and on average they do about 400 transactions per year on that card. The new checking accounts have traditionally opened savings accounts about 25% of the time within a few months of opening that checking account. That opening a new checking account on average brings about $4,000 in balances below our averages. But that continues to grow, and within a year, it's two times that amount. Likewise, when we open a new savings account, it on average brings about $7,000 in balances. This also deepens the buy about two times during the year. Investment relationships and credit card account openings continue to be strong in the first quarter as well. And while we believe some of these statistics are best in class, rest assured there are plenty of opportunities for further growth in our franchise and our company. As we think about our global wealth team, led by Eric Schimpf, Lindsay Hans, and Katie Knox, that team added 7,300 net new wealth relationships to Merrill and the private bank. Our advisors opened 29,000 new bank accounts in the quarter with our customers, deepening the relationships. More than 60% are investing clients in Merrill, and 90% of our private banking clients now have a core banking relationship with us. In addition, across our wealth spectrum, we saw $60 billion in total flows over the last year. As you can see on the slide, we now manage more than $5.6 trillion in total client balances across loans, deposits, and investments in consumer and wealth management. When we moved to global banking, we added more new relationships in this quarter than we did in last year's first quarter. We also increased the number of solutions per relationship with pre-existing clients. Just like in our consumer business, we have seen good growth in customers seeking the benefits of both our physical and our online capabilities and also the care of our talented relationship managers who provide financing solutions and advice for our clients with global needs. A couple other points I'd make on our digital success. Erica, our virtual banking assistant, reached a key milestone of more than 2 billion interactions since its introduction about six years ago. It took four years to reach 1 billion interactions. It took just 18 months to reach the second billion. In August, we extended Erica's reach and launched Erica in our global treasury services business and cash pro. Erica has resolved 43% of the cash pro chat inquiries automatically, demonstrating more and more clients are able to self-solve. This is a great example of best practices being shared across the scale of our company. Second, as an example of our digital success, Zelle continues to grow. It wasn't long ago that we noted that the number of Zelle transactions in a quarter had surpassed the numbers of checks written. Shortly after that, Zelle transactions reached two times the number of checks written. This quarter, Zelle transactions has now passed the combined number of checks written plus the amount of cash withdrawals from tellers and from ATMs. That is a rapid adoption and represents continued cost savings and convenience and security for the customers. These stats and others are included in our quarterly economic for our digital banking progress. That's included in slides 20, 22, and 24. I encourage you to read them. They show our market-leading efforts, representing billions of dollars of our investment over the years. and we are continuing to drive growth with expense growth under control. This solid earnings results achieved this quarter are testament to the dedication and talent of our 212,000 people who work here and deliver for our customers every day. I thank them for another great quarter. With that, I'll turn it over to Alistair.