Bank of America 4Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

Building Momentum

“Each quarter, you have seen the progress our teammates have made and the momentum is becoming more evident.”

Still haven’t seen real earnings power of BAC yet

“earnings have improved significantly, but we still have not approached the true earnings potential of Bank of America.”

Not getting rid of branches any time soon

“branches to remain a critical component of everything we do.”

Enough capital to meet Basel III Requirements

“If we look at Basel III, on a fully phased-in basis, we remain above our 8.5% 2019 minimum requirement under both the standardized as well as the advanced approaches.”

“Under the standardized approach, our estimate of Basel III tier one common ratio improved a touch from the third quarter of ’13, and remained slightly above 9%.”

Strong competition in middle market C&I loans

“We see solid customer demand for loans as we head into 2014, but would note that competition is particularly aggressive for middle market loans”

Trying to get back to 1% ROA, 14% ROTE

“we’re looking to get to the point where we’re returning 1% on assets, which translates into a 14% return on tangible common equity. And those are the types of levels that we see ourselves looking to achieve over the course of the next three years.”

Q: Where’s the inflection point in loan growth

“If you look at the various portfolios, I think in card we’ve kind of seen it. As Bruce talked about, we got a sale. I think in home equity, you’ve still got a ways to go, because remember, we’ve got about 40% or so of our home equity is still in the noncore portfolio. And then I think in the commercial side, you’ve seen the straight growth, whether it’s large corporate or commercial middle market. So I think that would be the overall summary”

Mortgage volume picking back up in January

“in January, with the rates moving down a little bit and stuff, you saw another tick up of about 20-25% in application volume in our book already.”

“we’re looking for this business to start to grow again, but it obviously suffered both the rate effect and also the HARP effect in the fourth quarter.”

Debt footprint has come down

“our company has shrunk and our equity has gone up. So when you think about that, if you shrunk the company about $300 billion to $400 billion in size across the last three or four years, and your equity balance has gone up, and your deposit balance has gone up, what you’re going to do to balance the balance sheet is take the long term debt footprint down. ”

Share count coming down, hint, hint?

“The one piece, and once again, we’re not going to give it, is that if you’re just doing that simple math, you’ve not made any assumption with respect to the change in shares. So once again, given that we’re in the middle of CCAR, we’re not going to comment on that. But you do have some benefit over time through share count.”

Reserve releases coming to an end

“I think you’re closer to the end on magnitude, from a reserve release perspective. It’s always a little bit hard to predict, obviously, because the reserve releases are a function of what’s happening in the underlying credit. But generally, I would say that you would expect to see chargeoffs continue to decline, and you’re obviously going to see the reserve releases, given the magnitude they’ve been, you’re going to see those slow down as well”