Bank Of America Corporation · NYSE:BAC
Bank Of America — Q2 2020 Earnings Presentation
35 slides from Bank Of America's earnings presentation, Jul 16, 2020
Slide 1: Bank of America 2Q20 Financial Results
Bank of America 2Q20 Financial Results July 16, 2020
Slide 2: 2Q20 Financial Results: Summary Income Statement
2Q20 Financial Results 1 Summary Income Statement $ Inc / 2Q20 2Q19 (Dec) % Inc / (Dec) ($B, except per share data) Total revenue, net of interest expense $22.3 $23.1 ($0.8) (3) % Provision for credit losses 5.1 0.9 4.3 N/M Net charge-offs 1.1 0.9 0.3 29 2 Reserve build 4.0 (0.0) 4.0 N/M Noninterest
Slide 3: 2Q20 Highlights
2Q20 Highlights (Comparisons are to 2Q19 unless otherwise noted) • Diluted earnings per share of $0.37, down 50% • Net income of $3.5B declined $3.8B — Provision increased $4.3B, to $5.1B, and included a $4.0B reserve build primarily associated with a weaker economic outlook related to COVID-19 — Pr
Slide 4: Continuing Support for Employees, Clients and Communities
Continuing Support for Employees, Clients and Communities ► physical Expanded employee benefits (no-cost COVID-19 testing in U.S.; no-fee Teladoc; enhanced back-up childcare; and emotional wellness resources; vacation and personal day flexibility) ► ofCompleted ~334,000 PPP loans YTD to deliver $25B
Slide 5: Supporting Consumer Clients Through Payment Deferrals
Supporting Consumer Clients Through Payment Deferrals • Starting March 16th, enacted Client Assistance Program – offering assistance to 66MM Consumer and Small Business clients in response to the unprecedented challenges of COVID-19, allowing clients to defer payments; processed ~1.8MM total deferra
Slide 6: Consumer and Small Business Payments and Spending Trend
Consumer and Small Business Payments and Spending Trend Year-over-Year % Growth – 7 Day Moving Average Total Payments 1 30% Credit 2 Debit 20% 10% 0% (10%) (20%) (30%) (40%) (50%) Jan Feb Mar Apr May Jun • On a YoY basis, total payments were down 36% at their lowest point during 2Q20, but improved a
Slide 7: Lending Activity
Lending Activity • Line of business loans increased $28B, or nearly 3%, from year end 2019; excluding PPP activity, loans are up modestly • Commercial loans (ex PPP) grew $5B YTD, as clients paid down $62B of the $67B of loan growth seen in 1Q20 — Approved new or expanded commitments of nearly $160B
Slide 8: Record Breaking Customer Deposit Activity
Record Breaking Customer Deposit Activity • Total Corporation deposits increased $135B in Q2, taking YTD deposit growth to $284B, or 20%, since year-end, as Bank of America continues to provide safety and soundness for customers and support corporate clients • YTD Global Banking deposits have grown
Slide 9: Digital Engagement
Digital Engagement (Data is for 2Q20 and comparisons are YoY unless otherwise noted) • 2.3B digital banking logins, up 20% • Average logins per user up 14% • Over 2MM mobile Spanish users, up 15% • Over 1MM new mobile check deposit users, ~22% of which were baby boomers • Record • Digital Consumer s
Slide 10: Consumer Banking Digital Usage Trends
Consumer Banking Digital Usage Trends 1 (13% ) Active Digital Banking Users (MM) Total Payments ($B) Person-to-Person Payments (Zelle) 4 YoY YoY 3.1 5.5 8.0 11.3 14.4MM Erica users $900 $791 users (MM) 50 $740 $679 140 $60 37.3 39.3 +5% $690 (13%) 117.2 40 34.0 35.7 $600 363 105 361 263 (27%) 30 27.
Slide 11: Balance Sheet, Liquidity and Capital
Balance Sheet, Liquidity and Capital (EOP basis unless noted) 4 Balance Sheet ($B) 2Q20 1Q20 2Q19 Basel 3 Capital ($B) 2Q20 1Q20 2Q19 Total assets $2,741.7 $2,620.0 $2,395.9 Common equity tier 1 capital (CET1) $171.0 $168.1 $171.5 Total loans and leases 998.9 1,050.8 963.8 Standardized approach Tota
Slide 12: Net Interest Income
Net Interest Income Net Interest Income (FTE, $B) 1 • Net interest income of $10.8B ($11.0B FTE 1) $15 – Decreased $1.3B, or 11%, from 2Q19, driven by lower interest rates, $12.3 $12.3 $12.3 $12.3 partially offset by loan and deposit growth $11.0 – YoY spot 1M LIBOR fell 222 bps; 10yr treasury rate
Slide 13: Expense and Efficiency
Expense and Efficiency Total Noninterest Expense ($B) $15.2 $15 $13.8 $13.2 $13.0 $13.1 $13.2 $13.3 $13.2 $13.5 $13.4 2.1 5.4 5.3 5.3 5.3 5.0 5.3 5.3 5.3 5.1 5.4 $10 $5 8.5 7.9 7.7 7.7 8.2 8.0 7.8 8.0 8.3 8.0 $0 1 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Compensation and benefits Other JV i
Slide 14: Asset Quality
Asset Quality Net Charge-offs ($MM) 1 • Total net charge-offs of $1.1B are relatively unchanged from $1,400 1.0% 1Q20 $1,122 $1,146 $1,200 $959 • Net charge-off (NCO) ratio of 45 bps decreased 1 bp from 1Q20 $1,000 $887 $811 — Consumer net charge-offs of $0.7B decreased $138MM $800 0.5% primarily dr
Slide 15: Asset Quality – Consumer and Commercial Portfolios
Asset Quality – Consumer and Commercial Portfolios Consumer Net Charge-offs ($MM) Consumer Metrics ($MM) 2Q20 1Q20 2Q19 $1,000 $838 $872 1.3% $691 Provi s i on $2,614 $2,093 $640 $800 $622 $734 Nonperformi ng l oa ns a nd l ea s es 2,191 2,204 3,027 $600 0.72% 0.75% 0.7% % of l oa ns a nd l ea s es
Slide 16: Allowance for Credit Losses Has More Than Doubled YTD to $21.1B
Allowance for Credit Losses Has More Than Doubled YTD to $21.1B ($MM) 4Q19 1Q20 2Q20 % of Loans % of Loans % of Loans Amount and Leases Amount and Leases Amount and Leases Outstanding Outstanding Outstanding Residential mortgage $325 0.14% $430 0.18% $439 0.18% Home equity 221 0.55% 378 0.96% 394 1.
Slide 17: Consumer Banking
Consumer Banking Inc / (Dec) Summary Income Statement ($MM) 2Q20 1Q20 2Q19 • Net income of $71MM declined from several COVID-19 impacts Total revenue, net of interest expense $7,851 ($1,278) ($1,866) — Weaker economic outlook related to COVID-19 drove a $2.2B Provision for credit losses 3,024 766 2,
Slide 18: Consumer Banking Trends
Consumer Banking Trends Business Leadership 1 Total Revenue ($B) Total Expense ($B) and Efficiency • #1 Consumer Deposit Market Share A $9.7 $9.7 $9.5 $4.7 • #1 Small Business Lender B $10 $9.1 $5 $4.4 $4.4 $4.5 $4.5 65% • #1 Online Banking and Mobile Banking 2.6 2.7 $7.9 60% $8 2.6 2.3 $4 Functiona
Slide 19: Global Wealth & Investment Management
Global Wealth & Investment Management Inc / (Dec) Summary Income Statement ($MM) 2Q20 1Q20 2Q19 • Net income of $0.6B decreased 42% from 2Q19 Total revenue, net of interest expense $4,425 ($511) ($475) — Pretax margin of 19% Provision for credit losses 136 (53) 115 • Revenue of $4.4B decreased 10% f
Slide 20: Global Wealth & Investment Management Trends
Global Wealth & Investment Management Trends Business Leadership 1 Average Deposits ($B) Average Loans and Leases ($B) • #1 U.S. wealth management market position $300 $263 $287 $182 across client assets, deposits and loans I $254 $254 $256 $200 $174 $179 $166 $170 • #1 in personal trust assets unde
Slide 21: Global Banking
Global Banking Inc/(Dec) Summary Income Statement ($MM) 2Q20 1Q20 2Q19 • Net income of $0.7B decreased $1.2B from 2Q19 due to higher provision expense Total revenue, net of interest expense 1 $5,091 $491 $116 Provision for credit losses 1,873 (220) 1,748 — Pretax, pre-provision income up 4% YoY 2 Ne
Slide 22: Global Banking Trends
Global Banking Trends Business Leadership 1 Average Deposits ($B) Average Loans and Leases ($B) • North America’s Best Bank for Small to $494 Medium-sized Enterprises L $500 $500 $424 • Best Overall Brand Middle Market Banking M $363 $360 $379 $382 $373 $377 $377 $386 $400 $400 15 • North America an
Slide 23: Global Banking Digital Update
Global Banking Digital Update 1 CashPro® Online Users CashPro® Mobile CashPro® Mobile across commercial, corporate and business App Logins Payment Approvals Value banking clients +77% $184B ~500K Rolling 12 mos. YoY up 49% Rolling 12 mos. YoY CashPro® Mobile Incoming receivables digitally matched wi
Slide 24: Global Markets
Global Markets Inc/(Dec) Summary Income Statement ($MM) 2Q20 1Q20 2Q19 • Net income of $1.9B increased 81% from 2Q19 Total revenue, net of interest expense 1 $5,349 $123 $1,205 • [ Bullets to come ] — Excluding net DVA, net income of $2.1B increased 96% 2 Net DVA (261) (561) (230) Total revenue (exc
Slide 25: Global Markets Trends and Revenue Mix
Global Markets Trends and Revenue Mix Business Leadership 1 2020 YTD Global Markets Revenue Mix 2020 YTD Total FICC S&T Revenue Mix • CMBS Bank of the Year P (excl. net DVA) 2 (excl. net DVA) 2 • Derivatives House of the Year Q, R • Derivatives and Interest Rate Derivatives House of the Year s • Mos
Slide 26: All Other
All Other 1 Inc/(Dec) Summary Income Statement ($MM) 2Q20 1Q20 2Q19 • Net income of $216MM in 2Q20 compared to net income of Total revenue, net of interest expense ($262) $718 $241 $9MM in 2Q19 Provision (benefit) for credit losses (21) (135) 220 — 2Q20 included a $704MM gain on certain mortgage loa
Slide 27: Appendix
Appendix
Slide 28: Average Deposits
Average Deposits Bank of America Ranked #1 in U.S. Deposit Market Share 1 Total Corporation ($B) Consumer Banking ($B) $1,658 YoY YoY $1,750 +21% $900 $811 +15% $1,301 $1,375 $707 $1,400 $1,213 $1,257 $653 $688 542 +36% $596 250 399 $600 192 203 +19% $1,050 437 428 178 432 163 199 150 162 174 $700 1
Slide 29: Average Loans and Leases
Average Loans and Leases 1 Total Loans and Leases ($B) Total Loans and Leases in All Other ($B) $1,250 YoY $125 $112 $1,031 +9% $900 $915 $935 $951 10 $88 $1,000 $100 20 7 $750 $75 16 $63 12 $45 $500 $50 $30 82 7 65 5 $250 $25 51 38 25 $0 $0 2Q16 2Q17 2Q18 2Q19 2Q20 2Q16 2Q17 2Q18 2Q19 2Q20 Resident
Slide 30: BAC's Transformation Over a Decade
BAC’s Transformation Over a Decade • Transformational changes allow us to be prepared to support our clients. Responsible growth has been embedded in how we run the company for years; we are focused on core, relationship customers and strong client selection • We have strengthened our capital level
Slide 31: Notes
Notes A Reserve Build (or Release) is calculated by subtracting net charge-offs for the period from the provision for credit losses recognized in that period. The period-end allowance, or reserve, for credit losses reflects the beginning of the period allowance adjusted for net charge-offs recorded
Slide 32: Sources
Sources A Estimated retail consumer deposits based on June 30, 2019 FDIC deposit data. B FDIC, 1Q20. C Keynova 2Q20 Online Banker Scorecard and 1Q20 Mobile Banker Scorecard; Javelin 2020 Online and Mobile Banking Scorecards. D Inside Mortgage Finance, Home Equity new HELOC commitments, 1Q20. E Exper
Slide 33: Forward-Looking Statements
Forward-Looking Statements Bank of America Corporation (the “Company”) and its management may make certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do n
Slide 34: Important Presentation Information
Important Presentation Information • The information contained herein is preliminary and based on Company data available at the time of the earnings presentation. It speaks only as of the particular date or dates included in the accompanying slides. Bank of America does not undertake an obligation t
Slide 35: Bank of America
BANK OF AMERICA