Bank of America Corporation

Good day, everyone, and welcome to Bank of America's 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 will be standing by if you should need any assistance. It is my pleasure to turn the program over to Lee McIntyre.

Good morning. Welcome and thank you for joining the call to review our third quarter results. Our earnings release documents are available on the investor relations section of the bankofamerica.com website. They include the earnings presentation that we'll make reference to during this call. I hope everyone's had a chance to review those documents. Our CEO, Brian Moynihan, will make some opening comments before Alistair Borthwick, our CFO, discusses the details of the quarter. Let me just remind you that we may make forward-looking statements and refer to non-GAAP financial measures during the call. Forward-looking statements are based on management's current expectations and assumptions that are subject to risks and uncertainties. Factors that may cause our actual results to materially differ from expectations are detailed in our earnings materials and our SEC filings that are available on the website. Information about 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, Brian, take it away.

Thank you, Lee, and good morning, and thank all of you for joining us for our discussion of our third quarter results. Bank of America continued to demonstrate strength this quarter in an economy that continued to be stable, albeit with slower growth and falling inflation. So many of you have asked me from time to time, what do we see in our own consumer-customer base? As we talked about many times, our consumer payments is an indicator of activity. Those payments are up 4% to 5% year over year for the quarter in the total money those consumers moved in the economy. The pace of year-to-year money movement has been steady since late summer this year, after having fallen in the spring and early summer. This growth in consumer payments continues into October. This activity is consistent with how customers are spending money in the 2016 to 2019 timeframe, when the economy was growing and inflation was under control. This report is not meant to gainsay that consumers are wary of the cost of living. worried about higher rates and other matters. But overall, activity is fine. Unemployment is low and wage growth is steady, both of which bode well for the consumer overall and for consumer asset quality. With respect to what we see in our commercial businesses, it is consistent with a lower growth economy. Line of credit usage rates remain lower than pre-pandemic levels. This does not surprise us, what with the dramatic increase in the cost of borrowing for small and medium-sized businesses. They aren't being indolent. They want to grow. They are simply being more careful and worried if final demand will hold. Therefore, they are being cost-conscious across the board. So how did Bank of America do against this backdrop? At Bank of America, our commitment to responsible growth remains unwavering, and this quarter is another illustration of that. We grew. We did it the right way. In the third quarter, Bank of America generated $25.5 billion in revenue and earned $6.9 billion in net income after tax. Year to date, we've generated net income of just over $20 billion. Four quarters ago, we called that a bottom would occur in our net interest income in the second quarter of 2024. Even with the rain environment that has bounced around quite a bit since we said that, we got it right. As we expected then, NII indeed troughed in the quarter two. NII grew 2% this quarter. And as Alistair will note later, we expect NII to grow again in quarter four, even as the market expects two more rate cuts in quarter four. This quarter, we saw a healthy revenue growth in our wealth and investment management business and in our global markets businesses. We returned $5.6 billion of capital to shareholders while also supporting the needs of our clients. So with that brief overview, let's dive into slide two. Earnings per share came in at $0.81 this quarter. At $25.5 billion in revenue, we grew modestly from the third quarter, 23, as improvement in non-interest income more than offset a year-over-year decline in net interest income. Fees grew 5% year-over-year and represented 45% of total revenue. The strong year-over-year fee performance was led by a 15% improvement in investment and brokerage services, mostly in our global wealth management business. We also grew investment banking fees 18% year-over-year. Sales and trading revenue increased 12% year-over-year. And these market-related revenue streams rose an impressive 13% year-over-year. Our total expense in the company increased 4%. You can attribute most of the year-over-year expense growth to these market-related areas. Overall, a good job by the team. On asset quality, a few quarters ago we told you that consumer credit losses would go down this quarter given delinquency trends we'd seen at the time. We also told you that office losses would be lower. Both of these proved true again this quarter. Good asset quality resulted in net charge-off in provision expense for this quarter at $1.5 billion, which was unchanged from last quarter. Our performance is partly attributable to the diversity and balance of the company. A little more than half earnings come from our consumer and G-Win businesses serving people, and the other half come from our global banking and markets businesses serving companies and institutional investors. So let's turn to see how we grew organically this quarter. We are now on slide three. Our organic growth has been driven by a continued focus on customers and client experience throughout all our businesses. Consumer leads the way delivering solid organic growth, but high-quality accounts engage clients. For the 23rd consecutive quarter, we added significant net new consumer checking accounts and expanded our customer base and market share. We added 360,000 net new checking accounts this quarter. which brings our first nine months of 24 to more than 880,000 net new checking accounts. In wealth management, we added another 5,500 net new relationships this quarter. In our commercial businesses, we added hundreds of small business and commercial banking relationships. Also note that we saw a strong organic growth of investment balances with banking customers and growth in banking products to our investment clients in our G1 business. This has led us to now manage $5.9 trillion in client balances of loans, deposits, and investments across the consumer and wealth management clients. We saw flows of $62 billion into those businesses in the past four quarters. In our global banking business, we saw loan demand start to pick up late in the quarter. We again ranked third in geologic IB fees received and have a solid pipeline. Our global transaction services platform continues to grow around the world and shows strong deposit growth for our commercial businesses over the last year and a quarter. This quarter, global markets saw a continued momentum. Global markets recorded the 10th consecutive quarter of year-over-year growth in sales and trading. Investments we've made in this business and the intensity of the teams has enabled a 35% improvement in sales and trading revenue in the past three years. Good work by Jimmy DeMar and the team. Our customers and clients continue to want more from us, especially when it comes to our digital capabilities. So let's discuss this on slide four. Slide four highlights this continued success across our digital platforms. As usual, we included our disclosures on digital stats across the business, which we believe lead the industry. I commend you the pages in the appendix, which give you more granular disclosure for each of the business's digital activities. Our fully integrated consumer banking investment application drives the utility for our customers across GUM and consumer. The usage stats you see are strong proof points. Our second language capabilities also enhance the customer's experience. We have grown to more than 48 million active digital users, and those digital users logged in more than 3.6 billion times this quarter. We also continue to see more sales through their digital properties. Digital sales represented 54% of our total consumer sales this quarter. Note that it simply takes both high-touch and high-tech to drive continued growth with individual clients across the wealth spectrum in America. Eric, our AI-enabled virtual assistant, reached 2.4 billion client interactions since its launch, and Zelle showed continued user and usage increases. In our wealth management business, we continue to see full relationships increase with both investing and banking relationships being opened Seventy-five percent of new accounts in Merrill were opened digitally, whether they were banking accounts or investment accounts. This enables more efficient customer coverage for our advisory teams. Finally, 87 percent of our global banking relationship clients are digitally active. We have innovated and significantly streamlined service requests by enabling clients to directly initiate and track inquiries within our award-winning cash flow platform. As a result, app sign-ins with these clients increased nearly 80% in just the last 24 months. In summary, the economic environment reigns solid, while issues remain out there to external factors that could affect our business and economy generally. We still see great opportunities for continued growth across all our businesses. We are focused on driving market share in all our businesses, investing in technology to further enhance the customer experience, and continue to increase our efficiency. With NII now growth With NI now growing and complementing our fee growth, along with our continued solid expense discipline, we expect to return to operating leverage as we move through the quarters in 2025. With that, I'll turn to Alistair for additional details.