Bank of America : Earnings Release Q4 2022

Bank of America Reports Q4-22 Net Income of $7.1 Billion; EPS of $0.85

Revenue Grew 11%1 led by 29% Improvement in Net Interest Income to $14.7 Billion

Sixth Consecutive Quarter of Operating Leverage(A); CET1 Ratio of 11.2%

Full-Year 2022 Net Income of $27.5 Billion; EPS of $3.19

Q4-22 Financial Highlights2

• Net income of $7.1 billion, or $0.85 per diluted share, compared to $7.0 billion, or $0.82 per diluted share for Q4-21
• Pretax income up 1% to $7.9 billion impacted by a reserve build compared to a reserve release in Q4-21(C)
• • Pretax, pre-provision income(D) increased 23% to $9.0 billion
• Revenue, net of interest expense, increased 11% to $24.5 billion
• • Net interest income (NII)(E) up $3.3 billion, or 29%, to $14.7 billion, driven by benefits from higher interest rates, including lower premium amortization expense, and solid loan growth
  • Noninterest income of $9.9 billion declined $799 million, or 8%, as declines in investment banking and asset management fees as well as lower service charges more than offset higher sales and trading revenue
• Provision for credit losses of $1.1 billion increased $1.6 billion
• • Net reserve build of $403 million vs. net reserve release of $851 million in Q4-21(C)
  • Net charge-offs of $689 million increased compared to prior year but remained well below pre-pandemic levels
• Noninterest expense increased $812 million, or 6%, to $15.5 billion driven by investments in the franchise across people and technology, partially offset by lower revenue- related incentive compensation; operating leverage of 6%; efficiency ratio of 63%
• Average loan and lease balances up $94 billion, or 10%, to $1.0 trillion led by strong commercial loan growth as well as higher credit card balances
• Average deposits down $92 billion, or 5%, to $1.9 trillion; End of period balances relatively flat compared to Q3-22
• Average Global Liquidity Sources of $868 billion(F)
• Common equity tier 1 (CET1) ratio of 11.2% (Standardized) increased 25 bps from Q3-22(G); returned $12 billion to shareholders in 2022 through common stock dividends and share repurchases7
• Return on average common shareholders' equity ratio of 11.2%; return on average tangible common shareholders' equity ratio of 15.8%8

From Chair and CEO Brian Moynihan:

"We ended the year on a strong note growing earnings year over year in the 4th quarter in an increasingly slowing economic environment. The themes in the quarter have been consistent all year as organic growth and rates helped deliver the value of our deposit franchise. That coupled with expense management helped drive operating leverage for the sixth consecutive quarter. Our earnings of $27.5 billion for the year represent one of the best years ever for the bank, reflecting our long-term focus on client relationships and our responsible growth strategy. We believe we are well positioned as we begin 2023 to deliver for our clients, shareholders and the communities we serve."

Q4-22 Business Segment Highlights2,3(B)

Consumer Banking

• Record net income of $3.6 billion
• Client balances relatively flat at $1.6 trillion4
• Average deposits of more than $1 trillion, up $20 billion, or 2%
• Combined credit/debit card spend of $223 billion, up 5%
• Client Activity
• • Added ~195,000 net new Consumer checking accounts in Q4-22; 16th consecutive quarter of growth; added 1.1 million net new Consumer checking accounts in full-year 2022
  • Record 35.9 million Consumer checking accounts with 92% being primary5
  • Small Business checking accounts of 3.8 million, up 5%
  • Consumer investment accounts of 3.5 million grew 7%; record client flows of $11 billion in Q4-22 and $28 billion in full-year 2022
  • Digital logins ~3 billion while digital sales grew 8% and represented 49% of total sales

Global Wealth and Investment Management

• Net income of $1.2 billion
• Client balances of $3.4 trillion, down 12%, driven by lower market valuations, partially offset by positive net client flows
• Pretax margin of 29%, down from 30%
• Client Activity
• • AUM balances of $1.4 trillion declined $237 billion; $21 billion of AUM flows since Q4-21
  • Average loan and lease balances of $225 billion, up $20 billion, or 10%
  • Added more than 800 wealth advisors in second half of 2022
  • Added more than 9,000 net new relationships across Merrill and Private Bank, up 25% in Q4-22

Global Banking

• Net income of $2.5 billion
• Total investment banking fees (excl. self-led) of $1.1 billion, a decrease of 54%, reflecting weaker industry-wide underwriting activity this year
• No. 3 in investment banking fees6 for 2022
• Client Activity
• • Average loan and lease balances of $380 billion, up $42 billion, or 12%
  • Global Transaction Services revenue of $3.1 billion, up $1.0 billion, or 50%

Global Markets

• Net income of $504 million
• Sales and trading revenue up 20% to $3.5 billion, including net debit valuation adjustment (DVA) losses of $193 million; Fixed Income Currencies and Commodities (FICC) revenue up 37% to $2.2 billion and Equities revenue up less than 1% to $1.4 billion
• Record Q4-22 sales and trading revenue and highest full-year since 2010
• Excluding net DVA(H), sales and trading revenue up 27% to $3.7 billion; FICC up 49% to $2.3 billion; Equities up 1% to $1.4 billion

See page 10 for endnotes. Amounts may not total due to rounding.

• Revenue, net of interest expense

• Financial Highlights and Business Segment Highlights are compared to the year-ago quarter unless noted. Loan and deposit balances are shown on an average basis unless noted.
  3 The Corporation reports the results of operations of its four business segments and All Other on a fully taxable-equivalent (FTE) basis. 4 Sum of ending deposits, loans and leases, including margin receivables, and consumer investments, excluding deposit sweep balances.

• Represents the percentage of consumer checking accounts that are estimated to be the customer's primary account based on multiple relationship factors (e.g., linked to their direct deposit).
  6 Source: Dealogic as of January 2, 2023.
  7 Includes repurchases to offset shares awarded under equity-based compensation plans.

8 Return on average tangible common shareholders' equity ratio represents a non-GAAP financial measure. For more information, see page 19.	1

From Chief Financial Officer Alastair Borthwick:

"Our focus on responsible growth and solid client activity helped produce loan growth and increase net interest income by $3.3 billion versus the year-ago quarter. We passed that along largely to the benefit of shareholders. Asset quality remained strong with loss rates increasing modestly off recent historic lows. Prudent management of capital in the quarter helped us to grow loans, buy back shares and increase our capital buffer on top of our regulatory requirements."

Bank of America Financial Highlights

($ in billions, except per share data)	Q4-22	Q4-21
Total revenue, net of interest expense	$24.5	$22.1
Provision for credit losses	1.1	(0.5)
Noninterest expense	15.5	14.7
Pretax income	7.9	7.8
Pretax, pre-provision income1(D)	9.0	7.3
Income tax expense	0.8	0.8
Net Income	7.1	7.0
Diluted earnings per share	$0.85	$0.82
($ in billions, except per share data)	FY 2022	FY 2021
Total revenue, net of interest expense	$95.0	$89.1
Provision for credit losses	2.5	(4.6)
Noninterest expense	61.4	59.7
Pretax income	31.0	34.0
Pretax, pre-provision income1(D)	33.5	29.4
Income tax expense	3.4	2.0
Net Income	27.5	32.0
Diluted earnings per share	$3.19	$3.57

• Pretax, pre-provision income represents a non-GAAP financial measure. For more information, see page 19.

Spotlight on Loan and NII Growth ($B)

	Average Loans and Leases			Net Interest Income
					Net Interest Income		Net Interest Yield 1
$945	$978	$1,015	$1,034	$1,039					$13.8	$14.7
						$12.4
					$11.4	$11.6
								2.22%
									2.06%
							1.86%
					1.67%	1.69%
Q4 2021	Q1 2022	Q2 2022	Q3 2022	Q4 2022	Q4 2021	Q1 2022	Q2 2022	Q3 2022	Q4 2022

• Fully taxable equivalent (FTE) basis(E)

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Consumer Banking1,2

• Record net income of $3.6 billion increased 15%, as revenue improvement was partially offset by higher provision for credit losses and business investments
• • Pretax income of $4.7 billion increased 14%
  • Pretax, pre-provision income(D) of $5.7 billion increased 36%
  • 7th consecutive quarter of operating leverage(A); efficiency ratio improved to 47%
• Revenue of $10.8 billion improved 21% due to increased NII driven by higher interest rates and balances, partially offset by the impact of reduced customer non-sufficient funds and overdraft fees
• Provision for credit losses was $944 million, primarily driven by loan growth and a dampened macroeconomic outlook, and increased $912 million from Q4-21 as the prior year benefited from an improved macroeconomic outlook
• Noninterest expense of $5.1 billion increased 8% primarily driven by investments in the business, including technology and compensation and benefits

Business Highlights1,3(B)

• Average deposits exceeded $1 trillion and were up $20 billion, or 2%; 6th straight quarter of average deposits greater than $1 trillion
• • 56% of deposits in checking accounts; 92% primary accounts5
• Average loans and leases of $300 billion increased $18 billion, or 6%
• Consumer investment assets4 of $320 billion declined $49 billion, or 13%, driven by lower market valuations, partially offset by record $28 billion of client flows from new and existing clients
• • Record 3.5 million consumer investment accounts, up 7%
• Combined credit / debit card spend up $11 billion, or 5%; credit up 6% and debit up 5%
• 10.2 million Total clients6 enrolled in Preferred Rewards, up 9%, with 99% annualized retention rate

Digital Usage Continued to Grow1

• Record 73% of overall households7 actively using digital platforms
• Record 44 million active digital banking users, up 7% or ~2.7 million
• ~1.6 million digital sales, up 8%
• Record 3.0 billion digital logins, up 11%
• 18.2 million active Zelle® users sent and received 273 million transfers worth $81 billion, up 25% and 24% YoY, respectively
• Clients booked ~809,000 digital appointments

Financial Results
	Three months ended
($ in millions)	12/31/2022	9/30/2022	12/31/2021
Total revenue2	$10,782	$9,904	$8,912
Provision for credit losses	944	738	32
Noninterest expense	5,100	5,097	4,742
Pretax income	4,738	4,069	4,138
Income tax expense	1,161	997	1,014
Net income	$3,577	$3,072	$3,124
Business Highlights3(B)
	Three months ended
($ in billions)	12/31/2022	9/30/2022	12/31/2021
Average deposits	$1,047.1	$1,069.1	$1,026.8
Average loans and leases	300.4	295.2	282.3
Consumer investment assets	319.6	302.4	368.8
(EOP)4
Active mobile banking users	35.5	34.9	33.0
(MM)
Number of financial centers	3,913	3,932	4,173
Efficiency ratio	47 %	51 %	53 %
Return on average allocated	35	30	32
capital
Total Consumer Credit Card3
Average credit card	$89.6	$85.0	$78.4
outstanding balances
Total credit/debit spend	223.0	218.2	211.9
Risk-adjusted margin	9.9 %	10.1 %	10.9 %

• Comparisons are to the year-ago quarter unless noted.
  2 Revenue, net of interest expense.
  3 The Consumer credit card portfolio includes Consumer Banking and GWIM.
  4 Consumer investment assets includes client brokerage assets, deposit sweep balances and
  AUM in Consumer Banking.
  5 Represents the percentage of consumer checking accounts that are estimated to be the customer's primary account based on multiple relationship factors (e.g., linked to their direct
  deposit).
  6 As of November 2022. Includes clients in Consumer, Small Business and GWIM.
  7 Household adoption represents households with consumer bank login activities in a 90-day period, as of November 2022.

Continued Business Leadership

• No. 1 in estimated U.S. Retail Deposits(a)
• No. 1 Online Banking and Mobile Banking Functionality(b)
• No. 1 in customer satisfaction with Merchant Services by J.D. Power(c)
• No. 1 Small Business Lender(d)
• Best Bank in the U.S.(e)
• Best Consumer Digital Bank in the U.S.(f)
• Best Bank in the U.S. for Small and Medium Enterprises(g)

See page 11 for Business Leadership sources.

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Global Wealth and Investment Management1,2

• Net income of $1.2 billion decreased 2%
• • Pretax income of $1.6 billion decreased 2%
  • Pretax, pre-provision income(D) of $1.6 billion increased 4%
  • 7th consecutive quarter of operating leverage(A)
  • Pretax margin 29%
• Record fourth-quarter revenue of $5.4 billion increased marginally as higher NII was mostly offset by the impact of lower market valuations on noninterest income
• Noninterest expense of $3.8 billion decreased 1%, driven by lower revenue-related incentives, partially offset by investments in the business, including strategic hiring and marketing

Business Highlights1(B)

• Total client balances of $3.4 trillion decreased 12%, driven by lower market valuations, partially offset by net client flows
• • AUM flows of $21 billion since Q4-21
  • Average deposits of $318 billion, decreased $43 billion, or 12%
  • Average loans and leases of $225 billion increased $20 billion, or 10%, driven by residential mortgage lending, custom lending, and securities-based lending; 51st consecutive quarter of average loan and lease balance growth

Merrill Wealth Management Highlights1 Client Activity and Advisor Engagement

• Client balances of $2.8 trillion
• AUM balances of $1.1 trillion
• Added ~8,500 net new households in Q4-22, up 27%, best Q4 ever

Strong Digital Usage Continued

• 82% of Merrill households digitally active across the enterprise
• Continued strength of advisor/client digital communications; 390,000 households exchanged ~1.4 million secure messages
• 77% households enrolled in eDelivery; 223,000 planning reports generated, up 26% from Q4-21
• 75% of eligible checks deposited through automated channels
• Erica® interactions up 23%

Bank of America Private Bank Highlights1

Client Engagement

• Client balances of $564 billion
• AUM balances of $314 billion
• Added ~550 net new relationships in Q4-22, up 5%

Financial Results
	Three months ended
($ in millions)	12/31/2022	9/30/2022	12/31/2021
Total revenue2	$5,410	$5,429	$5,402
Provision for credit losses	37	37	(56)
Noninterest expense	3,784	3,816	3,834
Pretax income	1,589	1,576	1,624
Income tax expense	389	386	398
Net income	$1,200	$1,190	$1,226
Business Highlights(B)
	Three months ended
($ in billions)	12/31/2022	9/30/2022	12/31/2021
Average deposits	$317.8	$339.5	$360.9
Average loans and leases	225.1	223.7	205.2
Total client balances (EOP)	3,386.8	3,248.8	3,840.3
AUM flows	0.1	4.1	21.6
Pretax margin	29 %	29 %	30 %
Return on average allocated	27	27	30
capital

• Comparisons are to the year-ago quarter unless noted.
  2 Revenue, net of interest expense.

Continued Business Leadership

• No. 1 on Forbes' Best-in-State Wealth Advisors (2022), Top Women Wealth Advisors (2022), Top Women Wealth Advisors Best-in State (2022), and Top Next Generation Advisors (2022)
• No. 1 on Barron's Top 100 Women Financial Advisors List (2022)
• No. 1 on Financial Planning's 'Top 40 Advisors Under 40' List (2022)
• Celent Model Wealth Manager award for Client Experience (2022)
• Aite-Novaricaaward for Digital Client Experience (2022)
• No. 1 in personal trust AUM(h)
• Best Private Bank in the U.S. by Family Wealth Report(i) and Global Private Banking(j)
• Best Philanthropy Offering by WealthBriefing(k), PWM(l) and Global Finance(m)

See page 11 for Business Leadership sources.

Strong Digital Usage Continued

• Record 86% of clients digitally active across the enterprise
• 76% of eligible checks deposited through automated channels
• Clients increasingly leveraging the convenience and effectiveness of our digital capabilities:
• • Record Zelle® transactions up 39%
  • Record Digital wallet transactions up 60%

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Global Banking1,2,3

• Net income of $2.5 billion decreased 5%
• • Pretax income of $3.5 billion decreased 5%
  • Pretax, pre-provision income(D) of $3.6 billion increased 13%
• Revenue of $6.4 billion increased $531 million driven by higher NII from the benefit of higher interest rates and loan growth, partially offset by lower investment banking fees and lower treasury service charges due to higher earnings credit rates
• Provision for credit losses was $149 million, primarily driven by a dampened macroeconomic outlook and loan growth, with an increase of $612 million from Q4-21 as the prior year benefited from asset quality improvement and an improved macroeconomic outlook
• Noninterest expense of $2.8 billion increased 4%, primarily reflecting continued investments in the business, including strategic hiring and technology

Business Highlights1,2(B)

• Average loans and leases of $380 billion increased $42 billion, or 12%, reflecting strong client demand in the first half of 2022
• Average deposits of $503 billion decreased $59 billion, or 10%
• Total investment banking fees (excl. self-led) of $1.1 billion decreased $1.3 billion, or 54%

Strong Digital Usage Continued1

• 75% digitally active clients across commercial, corporate, and business banking clients (CashPro & BA360 platforms) (as of November 2022)
• Record quarterly CashPro App Active Users increased 25% and sign-ins increased 50%
• Record quarterly CashPro App Payment Approvals value was $186 billion, increased 40%
• Record quarterly percentage of eligible credit monitoring documents uploaded digitally at 42%, increased 1,069 bps (as of November 2022)

Financial Results
	Three months ended
($ in millions)	12/31/2022	9/30/2022	12/31/2021
Total revenue2,3	$6,438	$5,591	$5,907
Provision for credit losses	149	170	(463)
Noninterest expense	2,833	2,651	2,717
Pretax income	3,456	2,770	3,653
Income tax expense	916	734	986
Net income	$2,540	$2,036	$2,667
Business Highlights2(B)
	Three months ended
($ in billions)	12/31/2022	9/30/2022	12/31/2021
Average deposits	$503.5	$495.2	$562.4
Average loans and leases	380.4	384.3	338.6
Total Corp. IB fees (excl. self-	1.1	1.2	2.4
led)2
Global Banking IB fees2	0.7	0.7	1.5
Business Lending revenue	2.7	2.1	2.2
Global Transaction Services	3.1	2.8	2.1
revenue4
Efficiency ratio	44 %	47 %	46 %
Return on average allocated	23	18	25
capital

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

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

• Revenue, net of interest expense.

• Prior periods have been revised to conform to current-period presentation.

Continued Business Leadership

• Global Most Innovative Financial Institution - 2022(m)
• World's Best Bank, North America's Best Bank for Small to Medium-sized Enterprises, and Best Bank in the US(n)
• Best Global Bank for Payments & Collections(o)
• Model Bank for Corporate Digital Banking - For CashPro App(p)
• World's Best Bank for Payments and Treasury and North America's Best Bank for Transaction Services(n)
• Best Global Bank for Trade Finance FX - 2023 (m)
• Outstanding Global Leadership in Sustainable Project Finance, and Outstanding Leadership in Sustainable Finance for North America(m)
• Relationships with 73% of the Global Fortune 500; 95% of the U.S. Fortune 1,000 (2022)

See page 11 for Business Leadership sources.

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