Bank of America Corp at Sanford C Bernstein Strategic Decisions Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John McDonald - Sanford C. Bernstein - Analyst : Great. Well, I think we'll start off like we always do with your macro view. It's been almost a year since the last Fed hike. Unemployment's good, but inflation a little sticky. What's your recent Bank of America data telling you about the health of the consumer?

Question: John McDonald - Sanford C. Bernstein - Analyst : How about on the commercial side? How are the clients adjusting to this environment?

Question: John McDonald - Sanford C. Bernstein - Analyst : Okay, so let's leave the macro for a little bit. This is called Strategic Decisions Conference. And for years that you've been coming here, you've talked about the organic engine of strong account customer growth. So let's just talk a little bit about how you strategize for compounding that customer growth across all your different businesses. Maybe we'll start with the consumer bank. You've had 21 straight quarters of new checking account growth. And this quarter alone, a lot of good new checking accounts, credit cards. What are the key drivers of this, and what's your differentiated kind of proposition to consumers that helps that?

Question: John McDonald - Sanford C. Bernstein - Analyst : It's all we wish.

Question: John McDonald - Sanford C. Bernstein - Analyst : How about the importance of branches? we've heard from yourself and [Aaron Levine,] Dean about your financial center strategy and you've been on offense in terms of growing. How important are branches still to driving organic growth?

Question: John McDonald - Sanford C. Bernstein - Analyst : One of the debates this week has been whether banks have kind of cracked the code on pairing wealth management with mass affluent and consumers. It feels like B of A has done that. The growth in Merrill Lynch suggests good progress. What's kind of the report card there and what's the longer term opportunity for you there?

Question: John McDonald - Sanford C. Bernstein - Analyst : So that graduation strategy is working. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 3:00PM, BAC.N - Bank of America Corp at Sanford C Bernstein Strategic Decisions Conference

Question: John McDonald - Sanford C. Bernstein - Analyst : So Bank of America is a global company. I'm not sure investors fully appreciate that roughly 15% of your revenues come from international sources. So if you give us some perspective on your international businesses and where you're investing for growth there.

Question: John McDonald - Sanford C. Bernstein - Analyst : Any thoughts someday of taking the consumer show on the road internationally.

Question: John McDonald - Sanford C. Bernstein - Analyst : Yeah. And you mentioned the US retail share being in the low 10s. And JP Morgan talked about that yesterday and they have aspirations to get to mid-10s, maybe 20 over time. Is that something fully in the possibility for you as you think about your share aspirations?

Question: John McDonald - Sanford C. Bernstein - Analyst : So we talked a little bit about digital, but just as we look at that, you've got a lead position, clearly made a lot of progress in retail and digital. How much runway is there still? And what are the runways for financial benefits from digitization across consumer and commercial from here?

Question: John McDonald - Sanford C. Bernstein - Analyst : What are some of the other use cases for AI for banks in general across consumer and commercial? And where are we on kind of that adoption and realizing some of the benefits today I can offer in terms of efficiencies and revenue growth. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 3:00PM, BAC.N - Bank of America Corp at Sanford C Bernstein Strategic Decisions Conference

Question: John McDonald - Sanford C. Bernstein - Analyst : Yeah. So as you get more comfortable with that and the way that digitization has created efficiency, the way Erica has AI more broadly, should continue to do that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 3:00PM, BAC.N - Bank of America Corp at Sanford C Bernstein Strategic Decisions Conference

Question: John McDonald - Sanford C. Bernstein - Analyst : Great. Okay. Let's go back to old school stuff. Talk a little bit about deposits. How are deposit balances and a mix pricing performing so far in the second quarter, things kind of playing out as you'd expect. And what are we seeing in terms of deposit growth?

Question: John McDonald - Sanford C. Bernstein - Analyst : And in terms of kind of the yield seeking behavior, have we gone through most of that transition? Does it feel like? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 3:00PM, BAC.N - Bank of America Corp at Sanford C Bernstein Strategic Decisions Conference

Question: John McDonald - Sanford C. Bernstein - Analyst : Yeah. So when you put the data together on the loans, how does that affect the net interest income outlook? I think for the second quarter, you were kind of looking at $14 billion or so down a little bit from the first and then some growth in the back half.

Question: John McDonald - Sanford C. Bernstein - Analyst : So maybe, I mean, still dropping, maybe a little bit below the 14, 13 or something like that. And then going up from there and then starts moving up.

Question: John McDonald - Sanford C. Bernstein - Analyst : I think you've talked a little bit about, like, your net interest margin is kind of around 2% today. Historically, it's been a bit higher. And where can you see that normalizing out over the next few years?

Question: John McDonald - Sanford C. Bernstein - Analyst : Is there scenarios in transition to get higher net? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 3:00PM, BAC.N - Bank of America Corp at Sanford C Bernstein Strategic Decisions Conference

Question: John McDonald - Sanford C. Bernstein - Analyst : Okay, yeah. So maybe you could just kind of give us a little update in terms of what you're seeing. You mentioned markets, sales, and trading for the quarter, and how things are shaping up there.

Question: John McDonald - Sanford C. Bernstein - Analyst : Your relative performance has been good, and your volatility as well. I think it's been more.

Question: John McDonald - Sanford C. Bernstein - Analyst : On the [Ivfront], so you're seeing a rebound year-over-year, and you had a big quarter in the first quarter, I think $1.5 billion, $1.6 billion. Any perspective on how things are shaping up there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 3:00PM, BAC.N - Bank of America Corp at Sanford C Bernstein Strategic Decisions Conference

Question: John McDonald - Sanford C. Bernstein - Analyst : And then just kind of rounding things out, you've had a great track record of delivering on positive operating leverage. You gave us the perspective of how much the company's grown and how much the headcount has shrunk. How are you managing kind of that dynamic of, net interest income's a little tougher to grow this year, obviously kind of balancing that goal of operating leverage with the longer term investments you want to make?

Question: John McDonald - Sanford C. Bernstein - Analyst : And on credit, you mentioned credit in general is in a good place for you and the industry. Any diverging trends between commercial and consumer to point out?

Question: John McDonald - Sanford C. Bernstein - Analyst : Yeah, so well-reserved on the CRE side. Nothing much on the C&I side. And the consumer kind of started to see the signs of that.

Question: John McDonald - Sanford C. Bernstein - Analyst : That's a good point. It's normalized, but too historically very strong.

Question: John McDonald - Sanford C. Bernstein - Analyst : Okay. So just on capital then, just under 12% CET1, you've got a healthy excess on your current rules. You've got enough to absorb even the harshest version of Basel three on capital. What are you looking for in terms of more clarity, to ramp up some of the distributions? You've done some buybacks. I think it was $2.5 billion last quarter. But it just feels like you're in a good capital position. You have excess. Do you need more clarity, or can you start ramping up a bit here?

Question: John McDonald - Sanford C. Bernstein - Analyst : You've already made that move.

Question: John McDonald - Sanford C. Bernstein - Analyst : Yeah. So you wrapped it all together. You talked about being a quality compounder, compounding tangible book value growth. And do you think a mid-teens ROTC is the right target for the company?

Question: John McDonald - Sanford C. Bernstein - Analyst : Great. That's great, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 30, 2024 / 3:00PM, BAC.N - Bank of America Corp at Sanford C Bernstein Strategic Decisions Conference