Bank of America : Q3 News Release

Bank of America Reports Quarterly Earnings of $7.2 Billion, EPS $0.66

Record Quarterly Pretax Income of $9.0 Billion, up 18% on Strong Operating Leverage

Q3-18 Financial Highlights1

Q3-18 Business Segment Highlights1

• •Net income up 32% to $7.2 billion, driven by continuing strong operating leverage and asset quality, as well as the benefit of tax reformConsumer Banking

• •Diluted earnings per share up 43% to $0.66

• •Pretax income up 18% to $9.0 billion

• •Revenue, net of interest expense, increased 4% to $22.8 billion

  • - Net interest income (NII) increased $709 million, or 6%, to $11.9 billion, reflecting benefits from higher interest rates, as well as loan and deposit growth; net interest yield of 2.42%, up 6 bps(A)

    • •Net income rose 49% to $3.1 billion

    • •Loans up 6% to $285 billion

    • •Deposits up 4% to $688 billion

    • •Merrill Edge brokerage assets exceeded $200 billion, up 22%

    • •19thconsecutive quarter of positive operating leverage

    • •25.9 million active mobile banking users

    Global Wealth and Investment

    • •Net income rose 31% to $1.0 billion

      Management

    • •Pretax margin increased to 28%

  • - Noninterest income increased $229 million, or 2%, to $10.9 billion

• •Provision for credit losses decreased $118 million to $716 million - Net charge-off ratio remained low at 0.40%

  • •Record client balances of $2.8 trillion

  • •Loans increased 5% to $162 billion

  • •Increased wealth advisors, U.S. Trust Private Client Advisors, and household relationships

• •Noninterest expense declined $327 million, or 2%, to $13.1 billion; efficiency ratio improved to 57%

  Global Banking

• •Average loan and lease balances in business segments rose $29 billion, or 3%, to $871 billion - Consumer up 5% and commercial up 2%

• •Average deposit balances rose $45 billion, or 4%, to $1.3 trillion

  • •Net income rose 13% to $2.0 billion

  • •Firmwide investment banking fees of

    •$1.2 billion

• •Repurchased $14.9 billion in common stock and paid $4.0 billion in common dividends YTDGlobal Markets

• •Net income rose 21% to $912 million

  CEO Commentary

  "Responsible growth, backed by a solid U.S. economy and a healthy U.S. consumer, combined to deliver the highest quarterly pre-tax earnings in our company's history. This marks the 15thconsecutive quarter of positive operating leverage, driven by continued growth in deposits, client balances in wealth management, solid loan growth, and disciplined expense management. Our strong balance sheet has allowed us to return $19 billion to shareholders so far this year in dividends and share buybacks. Our high-tech, high-touch approach continues to drive both client satisfaction and efficiencies. More than 3 million users have accessed Erica, the industry's only AI virtual assistant, since its April rollout, and nearly a quarter of deposit transactions this quarter were performed via mobile device. We also have opened 53 financial centers and renovated more than 400 others in the last 12 months. We continue to expand into new markets, recently opening our first financial center in Pittsburgh, and we plan to open in Salt Lake City in the coming months, with additional markets to follow. In Global Banking, deposit growth reflects GTS investments, and Global Markets profitability improved. Bank of America is helping our clients address the straightforward question of what they would like the power to do, and delivering capabilities and solutions to help them reach their goals."

• •Sales and trading revenue of $3.0 billion, including net debit valuation adjustment (DVA) of $(99) million

• •Excluding net DVA, sales and trading revenue down 3% to $3.1 billion(B)

  -Equities up 3% to $1.0 billion(B)-FICC down 5% to $2.1 billion(B)

- Brian Moynihan, Chairman and Chief Executive Officer

Financial Highlights2

($ in billions, except per share data)

Three months ended 9/30/2018 6/30/2018 9/30/2017

Total revenue, net of interest expense Net income

$22.8

$22.6 $21.8

$7.2

$6.8 $5.4

Diluted earnings per share Return on average assets

$0.66

$0.63 $0.46

1.23%

1.17% 0.95%

Return on average common shareholders' equity

10.99

10.75 7.89

Return on average tangible common shareholders' equity3Efficiency ratio

15.48

57

15.15 59

10.98 61

• 1Financial Highlights and Business Segment Highlights compare to the year-ago quarter unless noted. Loan and deposit balances are shown on an average basis unless noted.

• 2On December 22, 2017, the Tax Cuts and Jobs Act (the Tax Act) was enacted, which included a lower U.S. corporate tax rate effective in 2018.

• 3Represents a non-GAAP financial measure. For additional information (including reconciliation information), see endnote C.

CFO Commentary

"Our earnings growth year-over-year was driven by operating leverage, asset quality, and a lower tax rate. Net income increased 32% to $7.2 billion, and diluted earnings per share improved by 43%. For 12 straight quarters, our average deposits have grown year-over-year by more than $40 billion, reflecting the value to customers of our deposit capabilities and franchise - and driving both growth of net interest income and improvement in net interest yield. Responsible growth is also reflected in our asset quality where we reported a net charge-off ratio near a decade-low, complemented by virtually all other credit metrics continuing to improve across both consumer and commercial loans."

- Paul M. Donofrio, Chief Financial Officer

Consumer Banking

Financial Results1

• • Net income increased $1.0 billion, or 49%, to $3.1 billion, driven by strong operating leverage of 10%

• • Revenue increased $629 million, or 7%, to $9.4 billion

  • - NII increased $651 million, or 10%, driven by higher interest rates and deposit and loan growth

  • - Noninterest income decreased modestly as higher card income and service charges were more than offset by lower mortgage banking income

• • Provision for credit losses decreased $97 million to $870 million, due primarily to a smaller reserve build in credit card

  • - Net charge-offs increased $53 million to $853 million due to credit card portfolio seasoning and loan growth

  • - Net charge-off ratio was 1.19% compared to 1.18%

• • Noninterest expense decreased $106 million, or 2%, to $4.4 billion as investments for business growth were more than offset by improved productivity

Business Highlights1,2

• • Average deposits grew $29 billion, or 4%; average loans grew $16 billion, or 6%

• • Merrill Edge brokerage assets grew $37 billion, or 22%, to $204 billion, driven by strong client flows and market performance

• • Combined credit/debit card spending up 7%

• • Digital usage continued to grow

  • - 25.9 million active mobile banking users, up 10%

  • - Digital sales were 23% of all Consumer

    Banking sales

  • - Mobile channel usage up 17%

  • - 42.5 million person-to-person payments through Zelle®, more than double the year-ago quarter

• • Efficiency ratio improved to 46% from 51%

($ in millions)	9/30/2018 6/30/2018	9/30/2017
Total revenue (FTE)2	$9,403$9,211	$8,774
Provision for credit losses	870944	967
Noninterest expense	4,3554,395	4,461
Pretax income	4,1783,872	3,346
Income tax expense	1,065988	1,260
Net income	$3,113$2,884	$2,086

Three months ended

• 1Comparisons are to the year-ago quarter unless noted.

• 2Revenue, net of interest expense. Revenue, pretax income and income tax expense are shown on an FTE basis. Tax expense compared to prior year impacted by a lower U.S. corporate tax rate.

Investing for the future

• • Added 6,000 client-facing professionals since 2015; plans to add 5,000 more over next four years

• • Launched industry's only AI virtual assistant (Erica); 3.4 million users since April rollout

• • 4,385 financial centers: 53 new openings and 404 renovations in past 12 months

• • Adding mobile digital identity functions, such as biometrics, that will integrate across channels, including call centers

($ in billions)

Average deposits Average loans and leases Brokerage assets (EOP)

Active mobile banking users (MM)

Number of financial centers Efficiency ratio (FTE)

Return on average allocated capital

9/30/2018 6/30/2018 9/30/2017 $687.5$687.8 $659.0

285.0 203.9 25.9

Total U.S. Consumer Credit Card2

Average credit card outstanding balances

Total credit/debit spend Risk-adjusted margin

Three months ended

280.7 268.8

191.5 167.3

25.3 23.6

4,385 46% 33

146.4 8.2%

• 1Comparisons are to the year-ago quarter unless noted.

  4,433 4,515

  48% 51%

  $93.5 $91.6

  147.5 137.0

  8.1% 8.6%

• 2The U.S. consumer credit card portfolio includes Consumer Banking and GWIM.

Global Wealth and Investment Management

Financial Results1

• • Net income increased $240 million, or 31%, to $1.0 billion

• • Revenue increased $163 million, or 4%, as 9% growth in asset management fees and higher net interest income were partially offset by lower transactional revenue

• • Noninterest expense increased 1% ashigher revenue-related incentives and investment in sales professionals were mostly offset by continued expense discipline

Investing for the future

• • Improved GWIM digital capabilities to enhance integration between banking and investing, including seamless transition across mobile apps

• • Introduced low-cost investment portfolios centrally managed by Chief Investment Office (CIO), which powers Merrill Edge Guided Investing

Business Highlights1

• • Total client balances increased $165 billion, or 6%, to $2.8 trillion, driven by higher market valuations and solid AUM flows

• • Average loans and leases grew $8 billion, or 5%, driven by mortgages and custom lending

• • Record AUM balances over $1.1 trillion, up 10%

• • Pretax margin improved to 28%

• • Wealth advisors up 1% to 19,3442

• • Accelerated net new household growth

  • - Pace of YTD organic growth in net new Merrill Lynch households roughly four times 2017 level (annualized basis)

  • - YTD U.S. Trust organic net new high net worth relationships increased 7% from 2017

($ in millions)

Total revenue (FTE)2Provision for credit losses Noninterest expense Pretax income Income tax expenseNet income

Three months ended 9/30/2018 6/30/2018 9/30/2017 $4,783$4,709 $4,6201312 16

3,414 1,356 346 $1,010

• 1Comparisons are to the year-ago quarter unless noted.

  3,395 3,369

  1,302 1,235

  332 465

  $970 $770

• 2Revenue, net of interest expense. Revenue, pretax income and income tax expense are shown on an FTE basis. Tax expense compared to prior year impacted by a lower U.S. corporate tax rate.

($ in billions)

Average deposits Average loans and leases Total client balances (EOP) AUM flows

Pretax margin

Return on average allocatedcapital

Three months ended 9/30/2018 6/30/2018 9/30/2017

$238.3

161.9

2,841.4

7.6

28%

28

• 1Comparisons are to the year-ago quarter unless noted.

  $236.2 160.8

  $239.6 154.3

  2,754.2 2,676.2

  10.8 20.7

  28% 27%

  27

• 2Includes financial advisors in Consumer Banking of 2,618 and 2,267 in Q3-18 and Q3-17.

22

Global Banking

Financial Results1

• • Net income increased $231 million, or 13%, to $2.0 billion

• • Revenue decreased $249 million, or 5%, to $4.7 billion

  • - NII increased $64 million, or 2%,primarily due tothe benefit of higher interest rates and growth in deposits

  • - Noninterest income decreased $313 million, or 13%, primarilydue to lower investment banking fees and the impact of tax reform on certain tax advantaged investments

• • Provision improved to a benefit of $70 million, driven primarily by continued improvements in energy and broader asset quality

• • Noninterest expense was flat despite continued investment in the business including sales professionals

Business Highlights1,2

• • Average deposits increased $22 billion, or 7%, to $338 billion

• • Average loans and leases grew $7 billion, or 2%, to $353 billion

• • Total firmwide investment banking fees (excluding self-led deals) decreased 18% to $1.2 billion, driven primarily by declines in advisory and leveraged finance, partially offset by an increase in equity underwriting fees

• • Efficiency ratio remained low at 45%

($ in millions)

Total revenue (FTE)2, 3Provision for credit losses Noninterest expense Pretax income Income tax expenseNet income

Three months ended 9/30/2018 6/30/2018 9/30/2017 $4,738$4,922 $4,987

(70)(23) 48

2,120 2,688 699 $1,989

• 1Comparisons are to the year-ago quarter unless noted.

  2,156 2,119

  2,789 2,820

  726 1,062

  $2,063 $1,758

• 2Global Banking and Global Markets share in certain deal economics from investment banking, loan origination activities and sales and trading activities.

• 3Revenue, net of interest expense. Revenue, pretax income and income tax expense are shown on an FTE basis. Tax expense compared to prior year impacted by a lower U.S. corporate tax rate.

Investing for the future

• • Hired more than 450 commercial and business bankers since 2015 to expand local coverage; adding regional investment bankers

• • Enhanced CashPro Mobile (+180% users YoY) and CashPro Assistant AI and predictive analytics capabilities; client logins and payment approvals both up 4x YoY

($ in billions)

Average deposits Average loans and leases

Total Corp. IB fees (excl. self-led)2

Global Banking IB fees2Business Lending revenue

Global Transaction Services revenue

Efficiency ratio (FTE)

Return on average allocated capital

Three months ended 9/30/2018 6/30/2018 9/30/2017 $337.7$323.2 $315.7

352.7

0.6 2.1 2.0

45% 19

• 1Comparisons are to the year-ago quarter unless noted.

  355.1 346.1

  0.7 0.8

  2.2 2.3

  2.0 1.8

  44% 43%

  20

  17

• 2Global Banking and Global Markets share in certain deal economics from investment banking, loan origination activities and sales and trading activities.

Global Markets

Financial Results1

• • Net income increased $156 million, or 21%, to $912 million

• • Revenue decreased $58 million, or 1%, to $3.8 billion; excluding net DVA, revenue increased 1%4

  - Reflects lower sales and trading revenue and investment banking fees, mostly offset by a gain on sale of an equity investment

  ($ in millions)

  Total revenue (FTE)2,3Net DVA4

  Total revenue

  (excl. net DVA) (FTE)2,3,4

  Provision for credit losses Noninterest expense Pretax income

• • Noninterest expense decreased $99 million, or 4%, to Income tax expense

$2.6 billion, driven by lower operating costs

• •Average VaR of $31 million remained low5

  Investing for the future

  • • Equities electronic trading platform upgraded to support 25x order volume, and FX platform is now 50x faster than two years ago

  • • Reduced manual processes across Global Banking and Markets through the use of AI, robotics and automation, saving 84,000 hours annually

  • • Migrated to new cross-asset trading platform with enhanced functionality and reporting

Business Highlights1,2

• • Sales and trading revenue decreased $157 million, or 5%, to $3.0 billion

• • Excluding net DVA, sales and trading revenue decreased 3% to $3.1 billion(B)

  • - FICC revenue of $2.1 billion decreased 5%, primarily due to lower client activity in rates products and a weaker environment for municipal bonds

  • - Equities revenue of $1.0 billion increased 3%, driven by increased client activity in financing

Net income $912$1,116

Three months ended

Net income (excl. net $987$1,252

9/30/2018 6/30/2018	9/30/2017
$3,843$4,221	$3,901
(99)(179)	(21)
$3,942$4,400	$3,922
(6)
2,711
1,196
440
$756
$769

(2)(1)2,6122,7151,2331,507321391

DVA)4

• 1Comparisons are to the year-ago quarter unless noted.

• 2Global Banking and Global Markets share in certain deal economics from investment banking, loan origination activities and sales and trading activities.

• 3Revenue, net of interest expense. Revenue, pretax income and income tax expense are shown on an FTE basis. Tax expense compared to prior year impacted by a lower U.S. corporate tax rate.

• 4Revenue and net income, excluding net DVA, are non-GAAP financial measures. See endnote B for more information.

• 5VaR model uses a historical simulation approach based on three years of historical data and an expected shortfall methodology equivalent to a 99% confidence level. Average VaR was $31MM, $30MM and $41MM for Q3-18, Q2-18 and Q3-17, respectively.

($ in billions)

Average total assets

Average trading-related assets

Average loans and leases Sales and trading revenue2

Sales and trading revenue (excl. net DVA)(B),2

Global Markets IB fees2Efficiency ratio (FTE)

Return on average allocated capital

Three months ended 9/30/2018 6/30/2018 9/30/2017 $652.5$678.5 $642.4460.3473.1 442.3

71.2 3.0 3.1

0.5 68% 10

• 1Comparisons are to the year-ago quarter unless noted.

  75.1 72.3

  3.4 3.1

  0.7 0.6

  64% 69%

  13 9

• 2Global Banking and Global Markets share in certain deal economics from investment banking, loan origination activities and sales and trading activities.