Bank Of America Corporation · NYSE:BAC
Bank Of America — Bank of America Corp /De/ (Bac, Bac-Pb, Bac-Pe, Bac-Pk, Bac-Pl, Bac-Pm, Bac-Pn, Bac-Po, Bac-Pp, Bml-Pg, Bml-Ph, Bml-Pj, Bml-Pl) — Q2 2016 Earnings Presentation
30 slides from Bank Of America's earnings presentation, Jul 18, 2016
Slide 1: Bank of America 2Q16 Financial Results
Bank of America 2Q16 Financial Results July 18, 2016
Slide 2: 2Q16 Highlights
2Q16 Highlights 2 • Net income of $4.2B in 2Q16, or $0.36 per diluted common share – Includes negative market-related net interest income (NII) adjustments of $0.05 per share 1 – Includes negative net debit valuation adjustments (DVA) of $0.01 per share • Revenue of $20.4B ($21.8B, FTE basis, exclud
Slide 3: 2Q16 Results
2Q16 Results 3 ____________________ Note: Amounts may not total due to rounding. 1 Reported on a GAAP basis. On an FTE basis, revenue of $20.6B, $19.7B and $22.2B in 2Q16, 1Q16 and 2Q15, respectively. 2 Represents a non-GAAP financial measure. For important presentation information, see slide 29. 3
Slide 4: Business Results
$1,662 $669 $1,236 $786 $781 $1,718 $722 $1,491 $1,116 ($815) Consumer Banking GWIM Global Banking Global Markets All Other 2Q15 2Q16 2Q16 ROAAC 2 22% 16% 12% 20% Business Results 4 Net Income (Loss) ($MM) ____________________ 1 GWIM defined as Global Wealth & Investment Management. 2 ROAAC defined
Slide 5: Balance Sheet, Liquidity and Capital Highlights
Balance Sheet, Liquidity and Capital Highlights 5 $ in billions, except per share data Balance Sheet (end of period balances) Total assets $2,186.6 $2,185.5 $2,149.0 Total loans and leases 903.2 901.1 881.2 Total deposits 1,216.1 1,217.3 1,149.6 Funding & Liquidity Long-term debt $229.6 $232.8 $243.
Slide 6: Loans & Leases and Deposits
Loans & Leases and Deposits ($B) ____________________ Note: Amounts may not total due to rounding. $876 $877 $886 $893 $900 $0 $250 $500 $750 $1,000 2Q15 3Q15 4Q15 1Q16 2Q16 553 556 564 578 596 240 244 251 260 255 288 296 308 297 299 66 63 63 63 63 $1,147 $1,159 $1,186 $1,198 $1,213 $0 $250 $500 $75
Slide 7: Asset Quality Trends
$1,068 $932 $1,144 $1,068 $985 0.49% 0.43% 0.52% 0.48% 0.44% 0.0% 0.5% 1.0% $0 $300 $600 $900 $1,200 2Q15 3Q15 4Q15 1Q16 2Q16 Net charge-offs Net charge-off ratio ____________________ 1 Represents a non-GAAP financial measure. Adjusted net charge-offs exclude Department of Justice (DoJ) settlement i
Slide 8: Asset Quality – Consumer Portfolio
Asset Quality – Consumer Portfolio 8 Consumer Net Charge-offs ($MM) $1,020 $821 $958 $917 $849 0.87% 0.71% 0.84% 0.82% 0.76% 0.0% 0.5% 1.0% 1.5% $0 $300 $600 $900 $1,200 2Q15 3Q15 4Q15 1Q16 2Q16 Credit card Other Net charge-off ratio Consumer Asset Quality Metrics ($MM) 2Q16 1Q16 2Q15 Provis ion $73
Slide 9: Asset Quality – Commercial Portfolio
Asset Quality – Commercial Portfolio 9 Commercial Net Charge-offs ($MM) $48 $111 $186 $151 $136 0.05% 0.11% 0.17% 0.14% 0.12% 0.0% 0.1% 0.2% 0.3% $0 $100 $200 2Q15 3Q15 4Q15 1Q16 2Q16 C&I Small Business and Other Net charge-off ratio Commercial Asset Quality Metrics ($MM) 2Q16 1Q16 2Q15 Provis ion $
Slide 10: Net Interest Income
Net Interest Income 10 • Net interest income (NII) of $9.2B includes negative market- related adjustments of $1.0B – 1Q16 included negative market-related adjustments of $1.2B – 2Q15 included positive market-related adjustments of $0.7B • Excluding market-related adjustments, net interest income of
Slide 11: Expense Highlights
Expense Highlights ____________________ Note: Amounts may not total due to rounding. • Total noninterest expense of $13.5B in 2Q16 declined $0.5B, or 3%, from 2Q15 – Decline versus 1Q16 driven primarily by the absence of annual retirement-eligible incentive costs of $0.9B and seasonally elevated pay
Slide 12: Consumer Banking
Consumer Banking 12 ____________________ 1 FTE basis. 2 Cost of deposits calculated as annualized noninterest expense as a percentage of total average deposits within the Deposits subsegment. 3 Includes portfolios in Consumer Banking and GWIM. 4 Total mortgage production includes first mortgage and
Slide 13: Consumer Banking Trends
Consumer Banking Trends 13 • #1 U.S. Retail Deposit Market Share 1 • #1 Home Equity Lender (Inside Mortgage Finance ‘15) • #2 bank in J.D. Power 2015 U.S. Primary Mortgage Origination Satisfaction Study • #3 in U.S. Credit Card Balances 2 • #1 in Prime Auto Credit mix among peers 3 • #2 Small Busine
Slide 14: Digital Banking Trends
Digital Banking Trends 31.4 31.6 31.7 32.6 33.0 0 10 20 30 40 2Q15 3Q15 4Q15 1Q16 2Q16 Digital Appointments (000’s) $235 $229 $233 $237 $246 $100 $150 $200 $250 2Q15 3Q15 4Q15 1Q16 2Q16 Digital Transfers and Bill Payments ($B) 17.6 18.4 18.7 19.6 20.2 13% 14% 15% 16% 17% 0% 10% 20% 30% 0 5 10 15 20
Slide 15: Global Wealth & Investment Management
Global Wealth & Investment Management 15 ____________________ 1 FTE basis. 2 Includes financial advisors in Consumer Banking of 2,248 and 2,048 in 2Q16 and 2Q15. • Net income of $0.7B, up 8% from 2Q15; ROAAC of 22% – Pre-tax margin of 26%, up from 23% in 2Q15 • Revenue of $4.5B, down 2% from 2Q15 –
Slide 16: Global Wealth & Investment Management Trends
Global Wealth & Investment Management Trends 16 Market Share Positioning Average Loans and Leases ($B) Average Deposits ($B) • #1 U.S. wealth management market position across client assets, deposits and loans 1 • #1 in personal trust assets under management 2 • #1 in Barron’s U.S. high net worth cl
Slide 17: Global Banking
Global Banking 17 ____________________ 1 FTE basis. 2 Global Banking and Global Markets share in certain deal economics from investment banking and loan origination activities. • [ Bullets to come ] • Net income of $1.5B increased 21% from 2Q15; ROAAC of 16% • Revenue grew 11% from 2Q15 – NII improv
Slide 18: Global Banking Trends
Global Banking Trends 18 ____________________ Note: Amounts may not total due to rounding. 1 Ranking per Dealogic for the second quarter as of July 1, 2016; excludes self-led deals. U.S. municipal bonds ranking per Thomson Reuters. 2 Global Banking and Global Markets share in certain deal economics
Slide 19: Global Markets
Global Markets 19 • [ Bullets to come ] ____________________ 1 FTE basis. 2 Global Banking and Global Markets share in certain deal economics from investment banking and loan origination activities. 3 Represents a non-GAAP financial measure; see note E on slide 27. 4 See note F on slide 27 for defin
Slide 20: Global Markets Trends and Revenue Mix
Global Markets Trends and Revenue Mix 20 2.1 2.3 2.6 1.2 1.0 1.1 $3.3 $3.3 $3.7 $0 $1 $2 $3 $4 $5 2Q15 1Q16 2Q16 FICC Equities $442 $408 $411 $55 $42 $46 $0 $25 $50 $75 $100 $0 $100 $200 $300 $400 $500 2Q15 1Q16 2Q16 Avg. trading-related assets Avg. VaR • #1 Global Research Firm for 5th consecutive
Slide 21: All Other
• Net loss of $0.8B in 2Q16 • Revenue decline from 2Q15, driven by negative market-related NII adjustments in 2Q16 versus positive adjustments in 2Q15 and, to a lesser extent, lower gains on the sale of consumer real estate loans, as well as the absence of a benefit to representations and warranties
Slide 22: Key Takeaways
Key Takeaways 22 • Improved year-over-year earnings in all business segments, driven by operating leverage • Solid year-over-year deposit and loan growth driven by good customer activity • Managed costs while continuing to invest in the business • Asset quality remains strong • Grew book value and t
Slide 23: Appendix
Appendix
Slide 24: Significant Accomplishments in Legacy Assets & Servicing
Significant Accomplishments in Legacy Assets & Servicing (LAS) 1 24 1,393 1,156 773 325 189 103 88 0 500 1,000 1,500 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 1Q16 53.8 49.7 28.8 17.1 11.2 10.8 0 20 40 60 4Q11 4Q12 4Q13 4Q14 4Q15 1Q16 Th o u sa n d s ____________________ 1 See slide 25 for additional informatio
Slide 25: Segment Realignment Summary
Segment Realignment Summary 25 • In connection with the realignment, the company completed a review of all consumer real estate loans, including loans serviced for others, and servicing activities, in order to strategically align these with the appropriate business segment or All Other • The realign
Slide 26: Regulatory Capital – Basel transition to fully phased-in
Regulatory Capital – Basel 3 transition to fully phased-in 2Q16 1Q16 2Q15 Common equity tier 1 capital (transition) $166,173 $162,732 $158,326 Deferred tax assets arising from net operating loss and tax credit carryforwards phased in during transition (3,496) (3,764) (5,706) Accumulated OCI phased i
Slide 27: Notes
Notes 27 A Market-related NII adjustments include retrospective changes to debt security premium or discount amortization resulting from changes in estimated prepayments, due primarily to changes in interest rates, and hedge ineffectiveness. Amortization of premiums and accretion of discounts are in
Slide 28: Forward-Looking Statements
Forward-Looking Statements 28 Bank of America 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 not relate strictly to his
Slide 29: 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 to, and disclaims any duty to, updat
Slide 30: Bank of America
Bank of America