Bank of America 4Q16 Earnings Call Notes

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Bank of America’s (BAC) CEO Brian Moynihan on Q4 2016 Results

Optimism is palpable

“This quarter, investors have a lot – asked a lot of questions that they usually asked, but importantly, questions about the incoming new Presidential administration. Their questions have ranged from corporate tax reform and what do we think about that, regulatory changes, economic growth and the impacts of these things and interest rate changes. The optimism for positive change here at Bank of America and among our customers is palpable and has driven bank stock prices higher. We will have to see how these topics play out, but that we are optimistic and we will continue – but in the interim, we will continue to operate the company by controlling and driving what we can. We are going to drive responsible growth.”

Got approval to return $4b in the first half

“Yes. John, so this morning and as part of our release, we announced that we got approval for de minimis of $1.8 billion, that’s the $2.5 billion we have for the first half of this year to bring the repurchased volume for – to $4.3 billion for the first half year. So we applied to that obviously in December and got the approval and our Board has approved it.”

Deposit growth strong driven by consumer

“Well, Marty, we – so let’s start. We saw a $50-odd billion of deposit growth year-over-year. Consumer business was the lion’s share of that. To give you a sense, fourth quarter ‘15 to fourth quarter ‘16, checking balance in the consumer business grew 12%, so the growth is strong. And as you said, we expect to maintain pricing discipline in the company, not – obviously, those are non-interest bearing, but on the interest bearing side. So – and you have seen that so far as the first couple of – the first rate happened last year. In terms of deployment economy, we made $20 billion more loans, And we will continue to drive the economy and we can will invest in mortgage backed securities and things like that, so we are able to fund easily all the loan demand that we think is responsible to take on. ”

Did see some acceleration in consumer spending coming into the fall

“What I’d reflect on is that as you came from – through the summer into the fall through the election, you saw both on the consumer side and commercial side, you saw increasing optimism. On the consumer side, you saw a bit of an acceleration in spending coming into the fall. And so just if you think about the middle-market business, as I said earlier, the revolver utilization is on the high end of where it’s been the past several years at 40% plus in a – that group, which is our middle-market business, a commercial real estate business, etcetera, at about $4 billion with loans in quarter four, so all that really relates to greater business confidence. And so I think we feel very good where businesses stand and if you get the same reports in the small business side, so they are very – as I go out and visit these clients, they are very optimistic.”

Paul Donofrio

Mobile banking now represents 19% of all deposit transactions

“I won’t go through all the details on this slide, but mobile devices now represent 19% of all deposit transactions and represent the volume of more than 880 financial centers. Sales on digital devices continued to grow and now represent 20% of total sales. ”

We need to return capital to shareholders in order to push our ROE higher

“We need to get our capital down. We are returning more capital to shareholders. That’s going to help. We need to continue to grow. So we feel really good about the progress that we have made. Our return on assets metric is tracking in the right direction. Our return on tangible common equity metrics is tracking in the right direction. So we will just have to wait and see. I think we would get there even without a rate rise eventually, but certainly rate rise is going to help.”