Bank of America (BAC) 14 Jul 212021 Q2 Earnings call transcript

Good day everyone and welcome to the Bank of America 2nd Quarter Earnings announcement. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note today's call is being recorded and it is now my pleasure to turn the conference over to Lee McEntire. Please go ahead.

Catherine. you, Thank Good morning. call the review Xnd joining our to results. for Quarter you Thank review a release had you've our chance Hopefully to earnings documents.

Relations of call As Paul will usual be our website. the we'll CEO, first to then turn Moynihan Presentation Earnings the the the the Investor I'm cover on call gonna they're available, and referring for CFO including to some Donofrio, the comments, section quarter. our bankofamerica.com of details our over that Brian during opening

Brian to to the you, call over Paul, measures call let some remind the turn elements financial I the just and we forward-looking me Before of during various regarding statements non-GAAP make results. may and refer financial

that from Forward-looking in management's and expectations our statements materials, subject assumptions, website. expectations our also based GAAP, Information results website. and about filings current on the found U.S. to that be materially on cause SEC are may in actual uncertainties. materials earnings detailed financial to differ can to including are earnings Factors are our they're risks reconciliations on measures, non-GAAP our our and

me it that, let It's turn with over Brian. to all So yours. you,

in Bank you America morning. Lee. ahead Paul items few thank I'm you, page us, reported and $X.XX on Today, details. diluted income, net going Good X, and of results And $X.X thank joining for included a or of all through billion per after-tax These of shares. worth the highlighting,

industry credit %age to reserves are that But levels loans, quarter is and improve not raw is reality we're idea BAC of other continued amount. established strong. as with to year. half to recover, first of charge-offs $ just Company be releasing fell released that the Net seeing last a continued the quality year-low a the XX credit this and economy new of -- not news. quality participants very asset reserves as our in $X.X we First, billion credit would quality The

month's believe don't a U.K. BAC. income years our the few $X deferred increase of reverses me assets, just income recorded tax items a positive Let lower. from were of required I billion tax XX%. We last previous at write-downs in industry-wide a the when which This remeasurement mention enactment following an expected rates to adjustment were rate tax corporate tax

is addition, million next strong for up accelerates things In results included our about our level two well. as only future the opportunity This money, would benefit benefit, just not I utilizing the of to These expense to some year tax year, rest foundation. not charitable we expense. the With our planned cover million. pre-fund note. took but This $XXX funding new our and tax the to of add this $XXX to the

pandemic. unemployment large an and We claim related Away by card state quarter another a continue the also recorded a earnings recover IOC $XXX of transactional showed to produced processing client This economy expense catch-up to good backlogs. claims from we evidence of as degree, represents, with roughly associated that solid million of activity benefits. to in move from through these,

continued Progress are We, level. as teammates, full our reopening a more know, has and high along all speedy addition very has by engagement economic return we economy and the and in and with crisis to health. improvement healthcare recovery others, digital products seeing sold support like policy promoted fiscal recovered. the on Now, the monetary being our of we're shown has continued at facilities vaccinations to

I'll on opportunities go if our once X. or Companies clients are given meeting again, Slide you and And a and with the relationships. grow, continue building minute to much relationship managers even take face-to-face, seeing two customer bankers stronger to see. We're Our advisors demand economy. the

our highlighting slides We have few a included data. customer

the by re-openings A stand estimates Let XXXX. B XX%, The Securities the me full-year X% Quarter an this team at get for periods fall. is to of research dropped economy and the Also, of pre-pandemic our projections a further below rate rate Second to has at driving for The economists unemployment quarter continued growth few above GDP projected grow by at X% continue stand highlights. 'XX. into a to the

vaccinations periods set Quarterly and and business business Second up Fourth reaching when reopen first You'll XX% but same consumers over 'XX. also also can XX% were customers, The down. see would continued stability to increased, from in characteristics that 'XX record, consolidators, pandemic. Spending though travel shut total is payments a More XXXX. XX% A ball consecutive July. not spending which before various specifically the in BAC year-over-year, domestic periods That all strongly into And ed, early it the increased halfway attention the but for half trend business lower billion over has portion note We're rate increased. notably spend. year's you of and suppressed year towards the record, XX% through through consumer Quarter, the $XXX than -- credit year. spending the only the higher card different 'XX was as ; was those the increased of activity. bit was our their of moved I a trips XXXX already is compared slow over than of think $X.X are growth started few regarding payments spending expect, and XX% summer the taking that's last end did even which per that comprises comments consumer the of of higher retailers own debit BAC Second much trillion XXXX, means quarter, growing the about a Combined Indiscernible. indeed spend you XX% COVID Last and and That of total leisure the level. through are interesting. total services and Quarter,

of entertainment spending, see of can a card which return noting spend. about by comprise XX% and You that travel credit debit d

airline below X% of up the while levels. the progress virus cards are over places. approximately versus XX%, remains our spending of U.S. bit, XXXX covering on Putting in purchases the travel mid-June, were a up XXXX, purchase while re against on other international showing difference the You can down the travel see airline war still domestic as

let's Slide We the edge are Now chart their to just are you car each to put economy. people in quarter, the We've delinquency circulating paying in X. that this you shown as see bills. go consumers actual out levels this show continue that to down even so could

to X pages NII, Before and X comment that loan do to on want interest Paul, we And X. we you go areas to on and can of growth, ; specifically I expense.

these to loans. I'll average are that a you loans. later. will long-term point during is Paul X. First which What the occasion. about quarter growth trends, on loans, show are End-of-period Paul and show page accelerating the you to going in show you as on and figures all we've on I minute, spoken

to loan across hired need workers our stabilization move virtuous business will on customer circle usage demand. customer progress. the begin make saw levels loans. economy build we every to the workers help inventory, and hire meeting line more of will result This past in hopefully, spending most quarter, This Companies to meet growing and drive

on the pandemic path the since Slide in loans of XX/XXXX. started see X can You

Slide you them of to detail Company. are As see, our more traditional moving the can see months. all turning for in X, you But recent up

the business of loans balances have doubled aggressively progress, had clients client slide. an business, Fueling manager about side Let's past $XX loans team group borrow last was global but these finally meetings This calling a this calling now after medical, production efforts market products. the our X% ; veterinary our small small Group, supports their And the managers to lending X has the by targeted March. quarter. talking month the loan In prospects. improvement middle reductions for each for XX beyond Practice days. Relationship The that, level. and Commercial is lending start in portfolio. led which forgiveness PPP grew of excluding overall and that markets throughout quarter, Commercial business as been Solutions some on and the activity, building billion. month dental the nearly on is increased adjusting still PPP growth through since wealth effectiveness. banking the practices, face-to-face of pre-pandemic calling our the lower impressive have back XX/XXXX, loan forgiveness, commercial we're in right-hand of customers In grew vaccination custom over Quarter borrowing first

fairly in have Mortgage Turning balance and been %ages rate consistently, with volumes dealer affected to customer exceeding loan low grown overall our grew recently, big portfolio past challenge in the part of is in environment refinancing originations which has growth, although end-of-period Auto consumer, quarters. Car consumer growth with loans, high loans $X a loans a that. lower as was supplies increased have remained originations high. even billion. payment spending,

volumes the We are our payoffs. quarter only this overcoming as modestly origination finally down are

second are year. trajectory pleased the period, through the the half into We with of feeds and the and that

While that at for the be you to quarters. of a decline NII start the average three XXXX in correctly and We past the that rate decline. But lower quarter's loans more, Quarter good able the that we in thought Quarter loans, -- that level,or a volatility, hold drive at loan Despite Third balances moves, the and reversed we've we to NII, news be would will told with has that straight Third been bottom trough. the significant the it's the NII, drive that ago. trend good during is three three called quarters

We discuss going later. that and expect to move to it Paul's higher,

a want First other Quarter on from a saw we expense. expense area 'XX. to $X.X reported of 'XX saw -- I basis, billion in to is Second The reduction We of Quarter comment on

-- to franchise or are in growth roughly this fund X% messages we pre-pandemic shareable have around in to we billion for quarter, down about virus notable low strong Second We ensure reemerging items on a Quarter transaction are over normalizes. aforementioned First $XX including is to The and range. returns. notable in billion rolling This employment on Quarter. items and million allow for declined expensive, machine organic The production small we Those improvements had $ the the quarter our claims excluding contribution one, accounts a is we summer of move usual, the the but level we This pandemic process. half rest economy are careful year. straightforward. the as XXX also be the continue been above from hit had stays of the normalize XXXX by return through as that us year reduce we targeting the that preferred operations, In said to our of continue and core retail process headcount before investments. to second business overseeing insurance, as expense the Headcount level. working the the In war saw to great as we'll on business, our the

Quarter quarter was compared checking Merrill were of a We net the with strong in In grow and investment saw new quarter seasonal overall we use growth that. first the its very Second while growth flows saw Second strong and saw car talk a banking net XXXX. saw XXXX use markets, since saw time strong for to when saw credit household to Quarter, of with First cards Lynch platform production XXXX, We Paul activity. Quarter best mortgage We loan impact. positive to our we sales the line about we first remains wealth to since normal This of We But In quarter In growth production -- albeit close new the banking side. more XX% about even -- of this and investment accounts stronger our global still accounts, continue good banking, record runoff in low. production. on digital pandemic. even grow, pre-pandemic. entered you we will saw growth management, half, pipelines. saw coming and We net with

And So operational higher. we headcount in by as down kicked normalizing more like come 'XX, saw but people. excellence over X,XXX still

down due time. to all, We to saw have to growth, the credit work over core And above net do a responsive strong driving expenses expenses core out the metrics. we keep COVID in getting

organic seeing Paul. in. we're I'll recover, over engine to With to kick back continues it turn economy growth the as So that,

I'm everyone. Hello, Brian. Slide X. Thanks, starting on

returns. will As Since I already will be the worth QX. a majority income down I couple X% from comments the by on a noting is given QX solid that lot add few X statements, billion and comments quarter income trading to the was have and lower result remained and of of wealth -- sales QX. than done in revenue, or level, It also the year-over-year, my pandemic. in of was prior at AUMPs. than driven than strong higher just the excuse covered down my banking comparisons which The Brian past relative they rather card quarters, that consumer revenue more fees me, results, decline of offset a was while and were a management more record from investment Revenue

revenue Lastly, was respect the the remember to when ROA XXX on and was both on against tangible a benefiting quarter, some included XX% sale relief. of prior adjustment $XXX the from gain loans. points, QX'XX reserve common return sizable comparing With positive equity returns, basis year and our tax million mortgage

portfolio $X the liquidity and to and binding remained Slide average or above more XX of growth in were and cash less additional our billion billion billion the expanded X. consistent securities. a the in of the $X.X funding to supported regulatory a assets. regulatory balance while while cash per Balance from long-term total previous sheet sheet. earnings expansion balance billion earnings in QX balance deposit the The guidelines, of points XX XX continued XX QX. Capital than billion. Moving loan of growth, increased increased was down Other the to approach remained $X us in positive included Driven excess of by below as growth, declined with distribution. QX, respect of little sheet X issuance for were standardized versus in ratios, four With debt combination Securities sheet global the Shareholders' movements trillion supported into billion quarters markets. the basis market-based billion quarter. billion, the X little XX deployment well earned than to a of notable Capital XX distributions X/Xrd outpaced equity of limited trillion the

XX $XX declined cushion. ratio XXX a into which our CETX capital points of remained X.X%, in minimum the above QX, basis While requirement basis it translates billion points

liquidity X X in benefit rose billion, growth balance higher the from regulatory than offset ratio loan sheet, Higher more as market's our GUM the value the tax billion billion deployed up capital. adjustment RWA was not book the CETX While did capital from $X benefit higher and capital. securities, activity, to

plenty regulatory growth. requirement quarter, ratio dropping the XXX of of sheet leverage at from balance room capacity, X% X.X%, was quarter-end equates the relief. the due to leaves removal minimum of versus supplementary billion to primarily Our approximately of X.X% for prior a us which

Our our comfortably above TLAC ratio requirements. remained

focus linked loan X. to earlier, Slide to Turning balances ending balances, average Brian which reviewed NII. closely are will so more I on

by As PPP moving the numbers you note look year-over-year trends, for at these now quarters that lower include been driven loans, which X Indiscernible. have

You can change those levels PPP in on the slide. see the

on Focusing the change. Indiscernible quarter

improvements. billion level. to accounts about we link liquidity Normally, we to While of across XXXX a because even note new deposits included our growth were billion loans a average mostly this a but security-based the card saw I an investment-grade quarter that management also we in as to continued attracted against to up consumer, see but With nicely ramped while Quarterly existing in customers. we continuing and experienced we PPP money the back loans not a nearly the than the the Wealth most account deposits to in benefit as markets lending, client are across and even from asset balances, of basis use good ending to global build basis basis, mortgage XX payments. different and well of on $X accounts added income a customer quarters. we an opportunities just liquidity. growth the tax outflows. as and clients performance. on growth on continued have levels types, decline tax the Slide on year, as of with credit saw global decline Quarter supply, unnotable In increased tax new the GWIM from were lending Second credit lend solid these for base, XX, continued flat. exposures number with a growth headwind loans up because see custom time markets, spot stabilize to new respect looked to In would more for first only spending given year, strong significant payments creating from

expected interest of we and Slide QX QX Compared declined income QX. XX.X billion a -- the additional On quarter environment was in improvement QX net nicely, QX modest interest nadir by which income. proceeds offset from the day lower-yielding settlement, NII addition GAAP Net XXX driven from hedged amortization next a to from sheet. but was 'XX as on and an of of billion to non-FTE are NII market debt benefit for the XX, deployed part our QX NII, yield for comparisons loan of forgiveness, improve and Turning a by basis. and beginning 'XX and an The modestly than basis, of declined QX, recorded $XXX of be lower security, little than QX. debt the wait more more improvement XX.X balance billion from are balances, as continued proven million a I about showed FTE year-over-year has and and to include PPP NII expecting net a to larger QX, a the The the QX, premium X Indiscernible, would lower points driven liquidity cash. interest securities level earned global and bit of loan to interest liquidity absence expense. higher that basis QX litigation Remember, in by remains, in

deposits and note, sensitivity the the our unchanged QX, customer rate, rates asset from mostly and relationships. significant value our low growth will you deposit all to remains rising As highlighting of given

was back told you we year. Last when quarter, higher we couple were basis of this points NII forward higher, give environment around NII Let for billion half QX you the targeting the interest rate roughly X the thoughts XX-XX me year. in of of a

target, quarter's also mortgage growth in prepayments help should encouraging is This loan improve the supported with this slowdown and and NII.

deploy weeks So while To course, the don't higher decide and could our chances, recent billion higher from $X decline evaluate Second -half capital, we the rates additional we rates liquidity, here. XQ to This we the in getting in think challenge. at continue as possibility, presents of lower in coming between long-end to admittedly is liquidity fixed assumes move and the significant trade-offs still NII by months, rate and earnings. possible, improve loans a grow

expenses XX QX. or lower billion, expenses. billion XX Turning to Slide were in X.X QX than

While to last expense impairment quarter. two expense of contribution a and kept award $XXX nearly taxes, lower than Outside of $XX costs in the QX, seasonal by items, billion of associated combination million the to the million the XXX changes. low above charge, expenses comp absence foundation the driven real the and claims, incentive these items with with lower, payroll QX unemployment target shared the increase estate the the : was due few acceleration processing

costs Additionally, the incentive contributed also lower comp decline. and severance to

decline programs preparation by employee to roll off. a Lastly, our some related was for degree this pandemic modest mitigated But costs certain corporate the office. began saw as costs returning a to to associates

will the of prior comparisons was the negatively to go contribution sizable allocated that lines to we business, and As I the quarters. therefore note to just segments, foundation impact

invest we look new in at a rate high centers. people and in continue financial technology to and we As in forward,

back as forward, we transition more we these of to attrition we normal a business natural reduce seeing allow will to headcount are move as that and investments, now benefits the environment. expect We us

this As down excluding people. XXXX our about mentioned, moved interns, headcount by Brian summer quarter,

to and two of here. lowest XX% points to but quarter Quality in decades. the or than below loans. than report XX. the on this basis Quarter is lower XXXX. million Turning This to QX average charge-off, Nothing fell is than XX% Asset more XXX loss That Second Net rates of more good news Slide XX

loans. outlook, fairly recovery $X.X driven credit of the rate was macroeconomic $X.X several was billion X.X billion reserves, between Provision and split categories benefit continued X.XX, and commercial Our billion which card evenly by credit loss quarter. consumer a net were the in this loan in resulted product was -- improvement the in positions release

improve, our as the was well quarter CECL. the XXXX, the X. X allowance begun And and as ended has the of reserve continue adoption To we day levels % mix at our a our CECL loans Our reminder, move expect and still outlook extent of changed loans leases we which since is day following also could remaining the a economic X.XX%, the lower. which above level of uncertainties X.XX%, as to

quality commercial credit losses. On Okay. points the both Slide to are of with I There make the portfolios. consumer couple would respect XX, a metrics here card we show for and

level of late-stage low to continued delinquencies pipeline, card XXX-day the in losses in would Given QX. again we the decline expect

charge-offs partially couple with With around lower and at the card offset criticized of products. commercials, would total to For to reservable by both net the in next level, the quarters, respect exposure, expect other least I moderate declined metrics, and net losses, recoveries current NPL, lower quarter.

card the Turning strength produced specialist of our to the return another the deployment This liquidity. in more than business on innovations, us with starting investment of our digital customer the reflects the enabled our of segments, share all with Slide to quarter increase capture deposits fair good our which in centers, and brand, Consumer of flows, XX. growth. consumer Banking strong and and and loan customer of

both said earlier, in growth where reopening quarter high-tech Brian a of delivered this As high-touch our client was capabilities activity. and

financial we've results Financial our of progress, re-opened certain up. associates our traffic More were their and in at vaccination customer posts Given centers. was

the higher the reflecting impairment X%, QX, versus service of moved and and given ATM Expenses drove saw sales in estate same through absence At which All time, earned higher real usage. in income higher digital account on in we stay. engagement of X QX, QX credit revenue, seasonal costs above here and increased the charges The to increases improvement. billion volumes modestly card purchase our are sales the showed suggest improved segment costs XX% centers. expense, than channels, and increased digital all as Revenue tax QX higher higher payroll lower also expense.

some associated of began in costs modest improvement the pandemic saw elevated some down. to related wind as costs, also COVID We

to has while great and discipline impressive more improved of quarter cost digital cost a deposits Our this strong servicing points. XXX engagement. basis a The by done job maintaining an aided team more deposits

Looking end while of Slide that carried average XX. investment balances note a XXX couple annually QX continue XX, deposits little even activity, increased in of in only a than offering. after have With deposits, and On consumer modestly support and year-over-year mortgages. XX% we COVID. online loans decline 'XX, added improvement up linked-quarter, are QX, with of in growth but the are can highlight more excluding Average while recognize are all Slide a digital another XX outpaced PPP, you see crossing new than linked-quarter billion engagement, regarding 'XX, growth to more in small points, the the I'll value new nearly with On We low-interest in XX% XXX growing just expenses significant checking. million in-card that from loans investments. Rate back a loans paid added at XX% of billion we billion quarter earlier, respect lending balances, are and in XX% have X% customers our as as users checking. million of that points increase of deposits as in we deposits up more vehicle reached we'll QX. XXX QX down XX covered is users down of X to record billion basis continued the

consumer part digital used some XX% of of our our quarter, This households platform.

while quarter And you log-ins in billion usage, in of digital loans will digitally, note the vehicle your days. XX were the and which direct is year-over-year. X.X Zelle booked done is growth, reached tremendous of while I the mortgages XX% customers last what sales up from were the XX% also would draw to Erica digital. attention XX% We

pace improvement client to economic deposits, QX. management continued to contributed gross than private this committed Management. the in fees competitive strong this We to Merrill investment new year. and industry. new advisors Lynch reopening balances, long and as the improved growth term to and saw as loan in asset both the a net Both complemented respect AUM NII to Net $X.X revenue, and up deposit and billion income size strategy. practice in the sales The and more absence QX fees Five force, Expenses costs. a organic billion grew, to Turning Private of a expense. our from at market by Bank of across stronger, sustainable, of higher the dropped With last XX% loans, Growth X on hiring conditions average larger of partially is increases. payroll back average continued time, revenue QX, we higher And record solid nearly at in expensive the but and rose Wealth tax driven as households year as higher balances remain the record well was slower Merrill elevated strong new the at same households led in improvement. market as flows. revenue-related records offset in seasonally households levels, of trillion $XXX year-over-year, client by given

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improvement lower had to $XXX was issuance We've million X Global the skip a lower was by business QX. PPP XX. both expenses Net lower to charge-offs much which billion as declined and quarter. by forgiveness, as Slide reflected and strong with across Noninterest from an XX, offset of provision The expense as performance earned in energy $XXX overall X.X pipeline QX, in than remained in a growth the Slide Banking revenue sheet a investments, Trends of billion on growth Slide reserve charge-offs only XXX new X, QX, strong from already QX billion, reflecting release. by increased million more in reflecting record the a were ranking let's platform $XX of $X.X the to Revenue million the debt benefits low notable and the Strong offset down Digital a balance growth maintained increased we than by fees Deposit equity We record. provision well earlier. XX. partially were or included This other compensation in absence costs. Moving ESG fees prior remains also Outside so for saw near growth of QX, modestly recovery underwriting investments. on mitigated Revenue driven QX X% resulted modest the on covered quarter to QX. level. loan in of Strong relief a IB Number that improving fees. discussed strong. lower a on some lower benefit firm-wide impairment

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I do, DVA. talk about usually I results excluding As will

compared This QX a quarter billion loss. the the in had X.X quarter. DVA either XXX million more down of QX, produced $XXX but was year-ago to earnings negligible, Markets than net year-ago quarter Global million for

lower robust tightened a notably driven macro breaks. the half-year history. revenue in the agency environment sales by much the and period, particularly in The strength costs volatility contributed was trading products. processing with driven year-over-year. of in down last more On unemployment performance trading the by Slide billion year-over-year and performance costs revenue results were trends the endured by claims and costs. note difficult strongest QX FICC associated we and increase year-over-year, derivatives compensation. unemployment a Sales year-ago XX%, and activity-related expense a one XX% by years. equities declined our XX% on derivatives Asia. Focusing was XX%, the sales 'XX $X.X strong and reduction was improved equities higher processing the revenue, across The equity saw in trading. in offset client Compared in XX, increased the through environment few expense, given higher declining reflected trading Fix activity, while in and mostly for recording trading credits QX to mortgages trading driven

you As prior the driven pandemic in in elevated the can continued by presented, and see, above the client activity XXXX, remained volatility while market. XXXX well year's results

After we we QX this $X reported Finally benefit, lower by would've impacts. reported revenue. on XXX billion a reflecting is Slide million two of XX, loss, Other, of driven tax show declined which results. profit All which 'XX adjustment from $XXX decline of billion. a Revenue X.X The million, benefit $XXX

increased partnership higher on ESG investments. losses on -- ESG First,

in we entries the in Global As on full these an back all up basis Banking, FTE revenue grossed investments from out and record those you pay then there, tax know, other.

the consolidated other income also can on You where see income statement losses investments increase in QX our booked. in partnership in are ESG

this more for While line. up made than revenue, impacts tax loss it is the on

our activity. and income which is higher-cost refinancing impacted in other QX keep all AOCI and structured even in associated And expect some by the at by losses puts higher, least also back activity, to Revenue normally tax credit We was reflecting increase consolidated statement. through other income and refinanced recalled seasonal some million QX. XXX mind, notes, in

rate excluding tax further adjustments, XX%. XX.X%. investments, ESG this the quarter, rate our tax was of have tax tax our billion portfolio credits $X effective Our would been driven And by excluding

half be second of our other of changes current in 'XX, the items, tax the after unusual range effective rate laws XX-XX%. we any to or in any expect For tax

to to go that, With Okay. ready Q&A. we're

our We'll Schorr with Evercore from first take Glenn ISI. question

Your line is open.

contributing contextualize inflection Wondered Hi, that on if we cards period-end and I thanks modest -- heard auto loans. pickup could conversation. much. growth very to your on the you loan

I'm So second had think have or level half say that the then you year, market, mid do to confidence else most M&A, growth start could like auto low Thanks. of loan be importantly, and anything what or maybe contributing a you card be in continue running. you single-digits, will XXXX middle normalish will been wondering

Glenn. Hi,

which well. an I loan low. the growth, think still on basis, is inferior all across bodes have if usage look you The online businesses,

that most was runoff balances, affected billion PPP that. a runoff. running you still points net average underneath $X see is quarter We $X And growing But low finally, about banking, the lower included. about the the from that is overcame by which basically And billion, business the average X-XX even is is that so banking impulse the flat basis like what segment. X,XXX million, XXs, in the PPP was the is We that it in in in which and segment or that. on something

you across the feel So things. good look as we

could you really you gross about So what of see that is pre-pandemic, your basically see card XX% net card production pre-pandemic. production,

through back honestly which was different You'd We've quarters. we frankly, been see And become And than, the four on very auto inventories side last stuck example, driver pick on the balances house, several mortgages. it's autos, up side now. is it line it's as the than can't refi usage, good side, net line any But low basically really that side, the go own five lower. usage, on And you been a is holding our is or real for for the can't quarters here activity. commercial the which with consumer available. traditionally right Maybe dealer can, lost because the but theoretically will some a is.

low pick even to those customers a back more key is expect we but actually we're clients grow. starting and to and are loans the the up, at producing more So usage

Sounds like we got a shot. Thanks.

Yup.

similar be Maybe on question expenses then I'll a and done. very

fund to lot us given one every internally? year, okay. of 'XX how You in expenses noted have. question Should one-time -- that But low investments this we're any be the different the range there's sounds is excluding as able of COVID than to out, the you've a called Should still 'XX, year for we've some been billion asking you're It XX low there. the in still materially two XXs. like

outlook, offer I answer So I think providing Glenn, but We're is not your this following which specific will expense 'XX question. thoughts Paul. the

for billion. So a Quarter the Fourth expense range rough our estimate is $XX of low

million in tax, that good payroll adjust other you to assumption quarters. cost make you now from are Remember, we're for compensation the inflationary that QX, grow costs think. tax, then in payroll And we I seasonal driving if take I and and that think that year want higher seasonal add there, do $XXX X% expectations if based you to nothing, through But OpEx, quarter to a in whatever areas X% talked many higher you by revenue or the linked that we've base, exchange would SIM initiatives. upon X%, plus expense, every if but around lower add about have closely XQ to have X%, that's fees. approximately

if you'll pretty I a number. do math, that good have think you

Thank it. you Paul, appreciate

O'Connor Bank. with We'll take from question Deutsche our next Matthew

open. line Your is

were loans quarters alluded you process And deposit back rates look, in Good I've deploy because felt have I rates morning. about coming you what how just it the to the and to low just on, what starting it's just deploying circle potentially grow, back weeks. know, flow. been your And liquidity recent gone buying again, on I you to, been know to I more like guess right thought tipped again. down rates. But securities, asking a like But the are want growth have had process is in again. thought in call down and step liquidity starting seems you

of backdrop? in, XX-year lock why these kind a with levels, that So as at duration

on, crossed just Matt, more that's be XXX work, growth. we $XX And we route And put to I'll And that let billion trillion specifically. it work. to to it Paul has are $X.X But is difference of the have what is always put minding, keep that hit and loans one deposits we generate things the the touched and change. and to have you've and got we to deposit got that do.

a market way, betting not a to it's we're sort really or just be there. deploy we And going when tied of in so of in sure we're

work And in I'll our structure to that's And put strategy. And Company, to it and higher have a that rate think talk is the so Paul rather about earning the good and yes, -- be, but them if long-term redeploying. frankly, aftermath, a a out thing. I let turned for been I'd we

Yeah. specifics looking I know what of don't comments. for, I you're would Brian's some but echo

the maintained Recall bottom NII for at we we very at we've we've here. think banks, compared the Third Quarter. still We liquidity. to other significant if the that, you balanced. results were our the look But are few time in the last I been same reserving -- doing quarters

here as and more have sit are lot dry today, we of powder a We coming. deposits

plus equal it basically about you deposits, growing the is cloud rates? Should deposits? is regardless we in loans If keep of modest, securities will think growth this security the there's just loan

about the way We of out. keep little a But we it. securities the remember, about, to different. we Yes. They got way the showed cash, ourselves protect to bit. do you way sheet to just bought In we that's to that's the a about simple side firms to lot think that balance bank have obviously hedged And stuff a But generally but the simple you. take it. debate do obviously, is, to that that's straight think the

Like I'll Just in left to will loan still have then growth. fund probably going reiterate. liquidity. to you It's get going we over of excess but Whatever's said, we're bunch deposits. securities, go a

on we how So earnings. capital balance either be deployed as in that well, liquidity or long-term, depending near-term against can the and

thing in we One the you're this, text, to with going take our rate Matt. can't consumer the business Glenn's structure. efficiency question, of is In extreme back advantage

than at basis downIndiscernible. of The -- while. XXX the XXX growing because rapid points And a of core-checking customers we've more got pace anything a towards grown deposits a pushing so in

spike. efficiency. anything quarter-after-quarter-after-quarter, frankly And So consistently it, we the that's don't chance it. for to you stick the going of rates it our will because drive had a But as pay just haven't to if to rate rifts take of rise, advantage

That's you. Thank helpful. it. got Okay,

Wells go with take We'll from our ahead. Mayo question next Mike Please Fargo.

slide stuck usage. XX the digital I'm with Hi. on

go the do So on the And be the the users, deposits impact question aspirationally what before, year-over-year. digital sales same I translate it's can the want guess -in-class you XX% have doesn't Where lowest I to best asked that overall of and digital firm. XX%, we and you of have headcount cost industry, consumer is record expenses? highlighted the to of you and in but digital a number

better from trying your So just sense to aspirations great some digital get on and dots connect to usage digital your the efficiency I'm the also side. of

to this advantage which the side that on sort is structure especially. doesn't Mike, summary It's short the the answer question, So you last of get the consumer until question. get end,

that the off advantage we as the you rose that we're pay 'XX, having rates normalizes. are And know, and to we conversation going then it early. in well good pandemic. When's so though, all we paid economy had that it'd and off. to exploded this like to And the happen as And taking of before again same be expect prior investment

you been The me of and digital can products hit on management pieces, beyond and some consumer the see let a we've on engaged key up them. so, usage. wealth And Paul back strategies is

usage the management And Erica important we're as internally for actually each so the by a that the processing in when natural of all using internal, ; segment language of managers. to it intelligence-based helps showing we're talking growth make segment commercial about in and i.e. more extremely things, customers cycle artificial wealth digital is the people external and for efficient method

aspiration and we're -- So we why down time. don't you network, a benefit, have over the same the push clients people just decade, follow that's and our retail give to that at and is a last sense of where -- the to in has And it always the XX,XXX goes.

we piece is the We reduction due by got efficiencies that. an have don't to they in XXXX piece. -- are because and consumer say like picking FTE but frankly, in in once -- $XXXX back piece honest PPP the have we some idea, we through part internal at it out that happens process quarter, go things plans, and ly by And

you increase And the both in at factor headcount that the office. in front reduction of headcount all

So overall. we're a reduction getting

customers if same the go you you're out the mix or and support to people the pre-pandemic We're have If people look across seeing time in we but more at talking quarter, shift. you back this there platform adding at less a in back-office.

Okay.

lower technology and think don't the and you Just aspirational that years, When rates how for one unit everything and stripped over what several follow-up more you driver main would that? you cost you next normalize be else on everything, question. much you do out the do, to want can

basis so --?they're? of going gone consumer deposit to to The XX probably we show cost One, the XXX. and is up it's ago, years headcount, ways. from XXX in X expect XX, that basically points that all

buildings things that's we -- froze that's it headcount production But had teammates, driven that's And in by that are dropped of had wealth talented that and that's down down, to the the to so and like revenue-related That's we'd -- and around then many it's a by get because and be you And money, it all There's driving how will many drive going thing by 'XX much that's we in quarter business, the its you driven of do way our who to by keep need or how When to pay our from the now, pays this that's X% that. and how talked billion do and many -- probably up people, just we how just about. make something compensation we and programs. that. had you people pandemic-related business. basically working a where back. and how more be capabilities many by good and but expect because everything driven $X.X manager like driven work been quarter, where we people

Great. Alright. Thank you.

Morgan from Our next Stanley. with question is Betsy Graseck

Your open line is

Betsy. morning, Good

wanted to Hi, indicated love as it. has spend some well. on X. little the good up revolving dig to slide Really just Great in card is is Slide for been on versus and how bit. morning. There you all into that a likely transactor. detail. discussion Thanks be how a translating lot, spend around of I as much

past the pick you're spend over reflect increased here in can are the this us you've on but started the just of rates the seeing has giving does months? understand slide that loan growth been what the revolved the be to paydown would it transactor to up, And we to on similar or few shown that see they've You're machine. it daily, what in slide, guts or the clearly, helpful

pre-pandemic. loans. the the different. forward, get better number also move the the balances, of it line to transactor significant in revenue $XX cash. to have card obviously starting want any cards revenue realize, more is round is you Well The about people obviously from to They There's usage same piece get people get we have you but but didn't saw of are to which piece revolver get that part revenue and from loans numbers, down the the have use less to you and fee higher. So The the just billion equation, outstanding. is

is credit them light, for use out think you'll do. cards, a short-term purchase. is spend when them paid to and they starting can see these And happen, which I to off so completely money, more the they which responsible thing get And

been We'll fundamental where -- it's been coming up, but it's news because has direction, So I a up rate a the minus means open. this finally just the things by credit that see quarter. limited activity XXX entry the news fee opportunity but and of difference a that risk-adjusted is dropped actually people charge-offs it's million about good Slide don't the to the cards is card into or point it's I X. the don't high is are leading are the yeah, goes, people it is margin, had think good going And we quarter that different closer nettage behavior, pay think use than quality, what the when so think from X, the an i.e, margin cards -- charge-offs, saw

That that's to No, Okay, Brian. reserve the is -- That's into your great. on which yeah. leads relating followup, ratio card.

trajectory you're thinking expect about to that is environment this stage. around at way been reserves a or Give X.X% given how the that I us think we're calculating improving, sense going as what here, we on has should forward? X.X the

Go ahead, Paul.

question think XXX. go the you it answer something, I I'll this right? if day X, : point way CECL was X to

sort that a that gives some of with as a So gonna which economic talking we're of moment. of Obviously, doing, you outlook a into different card different it's that eat about loans, environment sense grow we at loans, reserve. day growth answer. X, with up CECL to wanna come wanna on whatever think about back I terms -- could and model between think you loan an whatever you you with getting of But excess kinda whatever in

CECL now? the below environment could X because even good be so Right. right you And Day is

CECL depends card And balances your could by You your then it is, our setting I with your view environment your below than mix as be what are is moment the it a the of benign CECL definition, know, reserve, what you in more end what X, easily you up just reserves. at lower X. future. of view you'd Day the and future are is was Day mean,

question on And point to page goes the your card specifically. really X, of that's Betsy,

very Thanks Okay. much.

go Steven Wolfe from comes Research. ahead. question Chubak next Please Our with

morning. Good Hi.

Morning, Steven.

loan Paul, hoping you most just unpack the it path meaningful and X gave in us recent hear there's to NII was cited, the you help the maybe of you guidance. encouraging thinking that just saw third. in giving rate buckets still in that a certainly the to component just some step-up So was exit being billion-$ long-game And it given pieces, growth, the quarter. that versus that improvement some a pressures I since could it's we liquidity : what deployment, about premium of

change we current underwrite like, base? Assuming path to the that the the billion-$ no in how off can forward, increase

So I it's Well, an -- that first have about it's loan we growth. half say back extra would out, day.

Okay. out, challenge. Having here it rates that will that, there. we half fallen, hard growth premium loan M Back it's today, and that It's fact roughly have said given it's reduction. as be get sit challenge the half a and a to the

to always forward. this about the going deploy And we we've as liquidity a so more little had think opportunity

there, the Understood. of end the amount least so. shakes premium At impact But question understand of that it could just will out year. where that timing the ultimately by at a least I It's come.

made a you comments earlier. other The the to thing sense just on get is wanted Paul, that capital of, better I

that XXX your noted bps above XX.X%, at minimum. you're You

how for you or next the on if And be position, your capital just retain. quarters? the want about Just of as sense on you cushion much basis, excess should a X we given curious to can to of thinking buyback the cadence steady-state operating you give where pace some plan strength the us how

quarter, it, got to X.X-XX, we was XX that's this move XX through there, by and XX. XX that Obviously, that to RSR to the points basis have capital etc. points to which because minimum the a volatility??? But level the constrained want operate off and are target I cushion sheets up. will we're basis average so try think points of earnings operate the of change, do basis we move balance speedos allows We've above the it there's allowed at so us of

-- equal through this to pace future not were But it time. are this the constraint we're like with expect and crisis a below And a couldn't and more capital. into we're us as the towards excess what's exams move moving should before G-SIB had your lot now. goes plus the ultimate maintain that excess there dividend You earnings. as crisis this a and things stayed be during came periods, -- because we this with over thicker a we Company your level buybacks And your the be that. went then the that more the And out FTE. have to capital, could Company immediately lowest of at to will we that we we crisis was only can we lot in And are that question losses XXX

you right off as points that's you lowest XX go. now, that's us to should and stay up and the But gotta sky. the expect go we basis So constraints, constraints, a know, But above you lot that. the

I gotten market's number. just more, growth, squeeze a the sorry, pretty If could global loan in just one questions which eye-popping a bunch of is on

there's opportunity significant in growth of continued unpack quarter? we segment, most further for the can you how and that within recent runway that uptick the given saw just And you're seeing whether so just an

in in Global of sure. a in including platform, but would $X some it some clients, say of I types Yeah, more market was hold securities. across look liquidity growth way for We see a of markets, different across it and decision by number did CLOs led constructive into opportunities the went activity, our the in opportunities more was loan of our than And buying other maybe about to In But just form. we billion-ish to that Markets. it loan use did the areas. we global

to And sheet relative investors. the holding AAA in said say CLO to CLO plans of instead consistent think in is to low very that Having with concentrated our peers. still customers balance those AA we and our exposure, exposure global activity distributing no to our is all securities more allocate people on markets. tranches extremely Now we concentrate that,

accommodating Thanks enough. Fair for question. the additional

Usdin next ahead. question please Jefferies, go Ken is with from Our

further topic. go just could I the If morning. commercial on loan Good Thanks.

because bit you it's business, your what about, where which corporate, holdbacks demand across through better PPP to it's still just sense tons base potentially aside small of talked they have a coming before customers from are the you get where the see borrow? of the to commercial As customer back most whether is start and little liquidity from most excess

if started was commercial Global services, quarter, got they you by so this at some pandemic, Banking industries middle haven't and are recover diversified Well, really market to look affected look, food still driven suppliers products, and the by you've wholesalers. and Obviously, that yet.

to the more. look But you We're the $X exposures. at they way, are quarter-over-quarter. people If commercial ready -- borrow $XX people grew our getting billion are By trillion now pre-pandemic committed level. above

utilization were sheet historic as mortgage mentioned, the And in at expect to improves. work. As up lots securitization. I opportunities warehouse balance lending, of global asset-backed there lows, move as would then in economy Brian there noted, There's put lot still the of revolver a subscription is that more we to opportunities facilities, markets but to

on about that are follow-up, readying low, point a as but the themselves. utility being And customers Paul. Thanks,

we It's for an waiting cause good ready of that we actually that you trigger few a now. line a quarters start flat think see been -- now What's it'll for as been a it. moving. the couple we've to start as think where for good for industry I point will or to usage quarters

going various it's industries. to inventory think I across be build

finance kick you're trade And up. seeing

Yeah.

flows we inventories point, up, some have kicking building kicking trade at flows demand people as customer the means which the we talked. that been up meet and to trade The finance are and have

Some liner of that inventory building has just, hampered trucking been and ocean logistics. getting and by

out you I think start some to could see it. kinks working there,

line up you those any have we do anticipate as of when And your as talk about constraints of you to supply customers any easing that? chain sight

things the learn I but take to about thought more better, better constraining, a getting but basics a But efficiently customers. from reality but I'd that. have, I in it'll still to than that. virus ports those ships learned is, it's see all you've Getting getting I've be people talked but all mean, It's they and and pretty operations segments. that talking my the about it's lot better. ports of incrementally it while. ever all We'll but the about it's take it employees end the getting will ship most of already X still going better. comes you're it's year, work It's really better, it's and analysis we another a about, drilled we in months our the down but like to but out talked so getting having At of ports unload better, and the the the know, and on impact

Okay.

As it, billion about you just XX remember to modeling and down At utilization start you XX%? with think up. close own growth,

year. last From

$XX billion That's alon. growth. Yeah. That's

Right? could the just is how that be loaded That's Right. quickly set a spring? Right. opportunity

Yeah.

very Okay. Thank you much.

go next Gerard from Our question RBC. is with Cassidy Please ahead.

How are you? guys. morning, Good

Gerard? How you? Hi, are

assets? - to what Good. share one and with disappear? what Basis between Because Paul, basis your and XX your I reporting can and gap earning equal that earning the earning. of putting what points us, what's And don't of the share what a difference? when putting to you change, Can supplement in assets, earning us a you're balance is assume does average average the I on you're with you at point you're rates there look it -- is when you new yield on quarter points. give difference, actually each XXX think sheet difference you're XX-basis us declined if we

we've and ended a about look mortgages talk and liquidity, the Yeah. the Well, But we and were up when cash. we excess replaced again, roughly you between into off a basis on a security take blended treasuries, about XX-XX rolling again, points basis up we picking purchases. being being of picked off rolling up it's liquidity, deploy picked at in got replaced, well, Quarter, that's Second a I'll security. which XXX -- XXX, up our lot that relative and XXX. to when We We're which at

the could did with I you Now -- do securities. it same math

card Pick loan. your a same loan commercial the loan just whether a math category, or it's do depend the yields. on could or, a with going You to it's

balance short that it end? versus is end Can Very XXX us back, in more is good. sheet of Is comes sensitivity parallel of billion leaves pointed weighs up? net out A on number? from basis going increase you XX% curve still revenue. end an I share And with interest Is it of the you the intact. increase what $X point the the the about coming still heavily shift long going asset that think short that up -- the

Correct. short end. It's approximately XX% for the

Very good, Okay. Appreciate it. Thank you.

go Portales. Peabody with Charles we'll to And

line open. is Your

your line. there to visibility operations Yeah. your : and X, for on generates be of reasons I loan because to some card area the X, where seems it, I wanted bottom focus XX% about to X it's growth, think,

a I'm pace on your as business lot line billion X.X a using are between business, of mover. of quarter. If cards data generate significant correctly, a So it's somewhere to

between, year. somewhere to right Am well, assumption? close billion So a a that I in

interest talking If you're yeah. about income,

If X.XXX the of look for stuff us our billion income that's X, Second at the you Page interest But the -- 'XX. the up on card Quarter is

I net was the income. your -- using

a card It segment Yeah, card goes fee report have it launch. because don't line, the segment income, in we we net it The don't expense. there, goes in a goes

you cards, look the lending your versus is correctly. if understand And if do a it line you have primarily at lending consumer I consumer deposit. of But reporting, business

it's loans products. and No. vehicles lending -- and It's yeah, mortgage got all

fifth if Lee you we question, a to got got -- So --

assume data I high terms assume growth and is, be release a loans fairly in XXXX, kind terms as gross XXXX in because in yield, business line business. profit of question I The decline Okay. substantial a Fiscal if of a card in in as next I reserve year, what would year versus substantial margins, your see probably of of the less single-digit business,

to line. improved sense, right there's trying delay? delay a product I'm Even a of to that profitability there's so up, Price that am balances the And if I a the get

by reserve. year, there's Then by was reserve This hurt it Because less -- reserve Last benefit next build. year year releases.

Right.

that's -- the that benefit Company'sIndiscernible. out, comes

loans. to only you're And not on putting have you but reserve that, as

get X you versus less day day benefit so And XXX.

CECL basis an question Yeah. points it But was -- loans now remember reserved got somebody think X. day We asked on XXX we've -- higher than we where I were earlier before.

into grow, you can loans that reserve. eat As

CECL. about Right. day to And back you your to if probably I of go X you excess X.X billion estimated cards in reserves have X billion

this second half billion And of so year, of a X.X plead some that year. means you have which next to you're going to the back billion over maybe in

Hey, Charlie.

can headed. and where don't we I I go through this this take see So why you offline you're afterwards. and

with be important share I'll I has my model because you think Lee that next year. an to Okay. it's hole filled

everybody the just is Yes. lower. running significantly on is add remember What while just just I'd line, charge-offs also are though, our

-- the addition the reserving about forget all against In balance.

Yeah, absolutely. Absolutely.

Yeah.

But get Okay. with I'll you call. this after

right. Thanks. All

we And it for floor closing I'll to appears Moynihan questions. no the have further return remarks. Brian

quarter, percentage our it's whether loan in for quality good the customers in this sales, cormecial of recovering the activity billion lead it's period loss the opportunities earnings Once -end stabilize base, our we're the increased Deposits quarter. grow to thing sales to XX by more reopening face-to-face amount. customer us. though basis economy. we're again, and XX-year growth whether seeing runoff, in coming in Thank is joining grow, for the solid all our asset continue you and the all balances $ laws, The -- different continued We appointments products, it's just businesses. is or meetings that important a whether quarter, seeing quarter. branches not the on Even the are PPP that

how in stead the the of year. the in grows answer us question good NII holds helps and that So Second-half about

all to on And and been first many able that, so that discretion. -- back on of our the the earnings and based forever board's top in our -- we've is power and this then quarter we've to been use quarter capital that excess go able actually

and to get to capital you talk share look us expect will we that return should and back You next we Thank the to to quarter. you, in forward game. you, buyback

conclude program. We'll Thanks your for today's participation.

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