Bank of America Reports Q2 Net Income of $9.2 Billion, EPS of $1.03 CET1 Ratio of 11.5%, Average Deposits up $231 Billion to $1.9 Trillion(A)

Q2-21 Financial Highlights1

  • Net income of $9.2 billion, or $1.03 per diluted share, including:
    • $1.6 billion provision for credit losses benefit(C)
    • $2.0 billion positive tax adjustment related to revaluation of UK deferred tax assets
  • Revenue, net of interest expense, decreased 4% to $21.5 billion
    • Net interest income (NII)(D) declined 6% to $10.2 billion, driven primarily by lower interest rates
    • Noninterest income down 2% to $11.2 billion, driven by lower sales and trading revenue and the absence of a $704 million gain in the year- ago quarter, partially offset by higher Consumer and Wealth Management revenues
  • Provision for credit losses decreased $6.7 billion to a benefit of $1.6 billion, reflecting a reserve release of $2.2 billion amid an improved macroeconomic outlook(C)
  • Noninterest expense rose $1.6 billion, or 12%, to $15.0 billion, including higher compensation and benefits costs, a $500 million contribution to the Bank of America Foundation to support ESG initiatives, and $300 million associated with processing transactional card claims related to state unemployment benefits
  • Average loan and lease balances in business segments declined 11% YoY to $889 billion but increased $1.8 billion QoQ; excluding Paycheck Protection Program, loan balances grew $5.1 billion QoQ
  • Deposits rose $231 billion, or 14%, to $1.9 trillion
  • Average Global Liquidity Sources rose $267 billion, or 34%, to a record $1.1 trillion, reflecting strong deposit balance growth(E)
  • Common equity tier 1 (CET1) ratio strong at 11.5% (Standardized)(A)
  • Returned $5.8 billion to shareholders through common dividends and share repurchases

From Chairman and CEO Brian Moynihan

"We delivered solid earnings and returned more capital to shareholders during the quarter as we moved to a more open economy. Our team continued to do a great job serving clients, as shown by the increased levels of client activity across all of our businesses.

"More than 85% of our buildings and offices are open, and we're welcoming our teammates back. This means more face-to-face meetings; helping to increase sales of Consumer products and drive strong household growth in Wealth Management, and increased prospect calling in Commercial Banking.

"Consumer spending has significantly surpassed pre- pandemic levels, deposit growth is strong, and loan levels have begun to grow."

Q2-21 Business Segment Highlights1,2(B)

Consumer Banking

  • Net income of $3.0 billion
  • Deposits up 21% to a record $979 billion
  • Consumer investment assets up $100 billion, or 40%, to a record $346 billion, driven by market valuations and client flows of $21 billion since Q2-20
  • Accelerated Client Activity
    • Combined credit and debit card spend up 16% QoQ to $200 billion
    • Total mortgage originations up 36% QoQ to $21.4 billion
    • 70% of overall households actively using digital platforms

Global Wealth and Investment Management

  • Net income of $991 million
  • Record client balances of $3.7 trillion, up $725 billion, or 25%, driven by higher market valuations and positive client flows; including Consumer Investments, total client balances of $4.1 trillion, up 26%
  • Deposits up 16% to $333 billion
  • Pretax margin of 26%
  • Accelerated Client Activity
    • Record quarterly loan balance growth of $8.3 billion, ending balances up 8% to $198 billion
    • Merrill Lynch Wealth Management added ~6,000 net new households; Private Bank added ~475 net new relationships

Global Banking

  • Net income of $2.4 billion
  • Total investment banking fees (excl. self-led) of $2.1 billion remained near record levels
    • No. 3 in investment banking fees3
  • Deposits up 3% to $507 billion
  • Accelerated Client Activity
    • Total Commercial Committed Exposure increased $24 billion QoQ to $1.1 trillion
    • Raised $500 billion in capital on behalf of clients YTD4

Global Markets

  • Net income of $908 million
  • Sales and trading revenue of $3.6 billion, including net debit valuation adjustment (DVA) losses of $34 million, with FICC revenue of $1.9 billion and Equities revenue of $1.6 billion
  • Excluding net DVA, sales and trading revenue down 19% to $3.6 billion; FICC down 38% to $2.0 billion;(F) Equities up 33% to $1.6 billion(F)
  • Accelerated Client Activity
    • Average assets increased $134 billion to $798 billion, driven by higher client balances in equities and loan growth

See page 10 for endnotes.

  • 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.
    2 The Corporation reports the results of operations of its four business segments and All Other on a fully taxable-equivalent (FTE) basis.

3 Source: Dealogic as of July 1, 2021

1

  • Source: Dealogic as of July 1, 2021. Global Capital Raise includes Equity, Debt, Loans (MBS, ABS, and self-funded deals are excluded). Shown on a proportional share basis.

From Chief Financial Officer Paul Donofrio:

"Despite the continued challenge of low interest rates, the diversity and leadership positions of our eight lines of business enabled us to benefit from a faster economic recovery this quarter. We believe our continued focus on client selection and responsible growth has positioned us well. Total loan balances grew for the first time since the first quarter of 2020 even as we recorded the lowest credit loss rates in 25 years.

"At the same time, our balance sheet remains a source of strength, as supported by our performance in the most recent stress tests, which showed significant excess capital. We returned nearly $6 billion this quarter in common dividends and share repurchases and we expect to return a higher amount in the coming quarters, while we continue to deliver for our clients and the communities that we are so fortunate to serve."

Bank of America Financial Highlights(G)

Three Months Ended

($ in billions, except per share data)

6/30/2021

3/31/2021

6/30/2020

Total revenue, net of interest expense

$21.5

$22.8

$22.3

Provision for credit losses

(1.6)

(1.9)

5.1

Noninterest expense

15.0

15.5

13.4

Pretax income

8.0

9.2

3.8

Pretax, pre-provision income1(G)

6.4

7.3

8.9

Income tax expense

(1.2)

1.1

0.3

Net Income

9.2

8.1

3.5

Diluted earnings per share

$1.03

$0.86

$0.37

1 Pretax, pre-provision income represents a non-GAAP financial measure. For more information, see page 18.

Strength of Responsible Growth

Well Capitalized

Strong Liquidity

Low Loss Rates

11.4%

11.8%

11.5%

$1,003

$1,063

0.45%

0.37%

$796

0.27%

Regulatory minimum 9.5%

Q2-20

Q1-21

Q2-21

Q2-20

Q1-21

Q2-21

Q2-20

Q1-21

Q2-21

CET-1 Ratio (A)

Avg. Global Liquidity Sources

Net Charge-off Ratio

($B) (E)

2

Consumer Banking1,2

  • Net income increased to $3.0 billion, reflecting higher revenue and lower credit costs
  • Revenue of $8.2 billion increased 4%, driven by increased card income and higher deposit balances
  • Provision for credit losses improved $3.7 billion to a benefit of $697 million, reflecting an improved macroeconomic outlook
    • Net charge-off ratio improved to 0.89%, compared to 1.05%
  • Noninterest expense increased 3% to $4.9 billion, as lower COVID-19 costs were more than offset by investments for business growth

Business Highlights1,3(B)

  • Average deposits grew $168 billion, or 21%, to $979 billion; average loans declined $40 billion, or 12%, to $282 billion, driven by lower first mortgage and card balances
  • Consumer investment assets grew $100 billion, or 40%, to $346 billion, driven by market performance and strong client flows
    • $21 billion of client flows since Q2-20
    • 3.2 million client accounts, up 9%
  • Combined credit/debit card spend up $57 billion, or 40%; credit card up 46% and debit card up 36%
  • 7.5 million Consumer clients enrolled in Preferred Rewards, up 14%, with 99% annualized retention rate

Digital Usage Continued to Grow1

  • 40.5 million active digital banking users, up 3%
  • 1.4 million digital sales, up 26%
  • 2.6 billion digital logins
  • 14.3 million active Zelle® users, now including small businesses, sent and received 189 million transfers worth $56.5 billion, up 62% and 76% YoY, respectively
  • Clients booked a record ~871,000 digital appointments with an associate

Financial Results1

Three months ended

($ in millions)

6/30/2021

3/31/2021

6/30/2020

Total revenue2

$8,186

$8,069

$7,852

Provision for credit losses

(697)

(617)

3,024

Noninterest expense

4,859

5,131

4,735

Pretax income

4,024

3,555

93

Income tax expense

986

871

23

Net income

$3,038

$2,684

$70

Business Highlights1,3(B)

Three months ended

($ in billions)

6/30/2021

3/31/2021

6/30/2020

Average deposits

$979.1

$924.1

$810.7

Average loans and leases

281.8

290.9

321.6

Consumer investment assets

345.8

324.5

246.1

(EOP)

Active mobile banking users

31.8

31.5

30.3

(MM)

Number of financial centers

4,296

4,324

4,298

Efficiency ratio

59 %

64 %

60 %

Return on average allocated

32

28

1

capital

Total Consumer Credit Card3

Average credit card

$73.4

$74.2

$86.2

outstanding balances

Total credit/debit spend

200.3

172.5

143.3

Risk-adjusted margin

9.8 %

9.3 %

8.5 %

  • 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.

Continued Business Leadership

  • No. 1 in customer satisfaction for U.S. Online(A) Banking among National Banks by J.D. Power(B)
  • No. 1 in customer satisfaction for U.S. Mobile Banking Apps among National Banks by J.D. Power(B)
  • No. 1 in customer satisfaction for U.S. Retail Banking Advice by J.D. Power (2021)
  • No. 1 Consumer Deposit Market Share (Estimated retail consumer deposits based on June 30, 2020 FDIC deposit data)
  • No. 1 Online Banking and Mobile Banking Functionality (Keynova Q2-21 Online Banker Scorecard, Keynova Q1-21 Mobile Banker Scorecard, Javelin 2021 Online and Mobile Banking Scorecards)
  • No. 1 in Prime Auto Credit Distribution of New Originations Among Peers (Experian AutoCount; Franchised Dealers; largest percentage of 680+ Vantage 3.0 loan originations among key competitors as of April 2021)
  • Best Mortgage Lender for First Time Homebuyers (Nerdwallet, 2021)
  • Merrill Edge Self-Directed - No. 1 for Overall Client Experience, ESG Investing, Client Dashboard and Banking (StockBrokers.com, January 2021)
  1. Tied in the national segment of the J.D. Power 2021 U.S. Online Banking Satisfaction Study
  2. J.D. Power's 2021 U.S. Banking Mobile App Satisfaction, U.S. Online Banking Satisfaction studies measure overall satisfaction with banking digital channels based on four factors: navigation; speed; visual appeal; and information/content. The studies are based on responses from 9,926 retail bank customers nationwide and were fielded in March-April 2021. For J.D. Power award information, visit jdpower.com/awards.

3

Global Wealth and Investment Management1,2

  • Net income increased $368 million, or 59%, to $991 million, reflecting record asset management fees and lower credit costs
  • Record revenue of $5.1 billion, up 14%, driven by a $656 million increase in asset management fees
  • Noninterest expense increased 10% to $3.8 billion, primarily driven by higher revenue-related incentives

Business Highlights1(B)

  • Total client balances up $725 billion, or 25%, to a record of $3.7 trillion, driven by higher market valuations and positive client flows
    • Average deposits increased $46 billion, or 16%, to $333 billion; average loans and leases grew $12 billion, or 6%, to $194 billion, driven by securities- based lending and custom lending
    • Strong AUM flows of $12 billion in Q2-21

Merrill Lynch Wealth Management Highlights1

  • Strong Client Growth and Advisor Engagement
    • Record client balances of $3.1 trillion, up 25%
    • Record AUM balances of $1.2 trillion, up 29%
    • Added ~6,000 net new households in Q2-21
  • Digital Usage Continued to Grow
    • 79% of Merrill Lynch households actively using an online or mobile platform; 39% Merrill Lynch mobile app usage, up from 32%
    • Continued growth of advisor/client digital communications; 348,000 households exchanged ~1.5 million messages through Secure Messaging
    • 279,000 forms signed digitally in Q2-21, 53% of eligible transactions
    • Number of checks deposited through automated channels: 51% of all eligible checks deposited in Q2-21, up from 45%

Bank of America Private Bank Highlights1

  • Strong Client Engagement
    • Record client balances of $580 billion, up 21% YoY
    • Record AUM balances of $340 billion, up 22% YoY
    • Added ~475 net new relationships in Q2-21
    • Conducted ~8,200 client WebEx sessions in Q2-21
  • Digital Usage Continued to Grow
    • Record 81% of clients digitally active across the enterprise, up from 78% in Q2-20
    • 73% of checks deposited through automated channels, up from 69%
    • Logins up 6%; once clients are digitally engaged they are using features more frequently:
      • Erica sessions up 115%
      • Zelle transactions up 61%
      • Digital wallet transactions up 84%

Financial Results1

Three months ended

($ in millions)

6/30/2021

3/31/2021

6/30/2020

Total revenue2

$5,065

$4,971

$4,425

Provision for credit losses

(62)

(65)

136

Noninterest expense

3,814

3,868

3,464

Pretax income

1,313

1,168

825

Income tax expense

322

286

202

Net income

$991

$882

$623

Business Highlights1(B)

Three months ended

($ in billions)

6/30/2021

3/31/2021

6/30/2020

Average deposits

$333.5

$326.4

$287.1

Average loans and leases

194.0

188.5

182.2

Total client balances (EOP)

3,652.8

3,480.3

2,927.8

AUM flows

11.7

18.2

3.6

Pretax margin

26 %

23 %

19 %

Return on average allocated

24

22

17

capital

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

Continued Business Leadership

  • Most advisors (286) on Barron's 2021 Top 1,200 Financial Advisors list for the 12th consecutive year
  • Most advisors (1,319) on Forbes' Best-In-State Wealth Advisors list (2021)
  • No. 1 in Forbes' Top Next Generation Advisors (2020)
  • No. 1 in Financial Times Top 401K Retirement Plan Advisors (2020)
  • No. 1 in Barron's Top 100 Women Advisors (2021)
  • No. 1 in personal trust assets under management (industry Q1-21 FDIC call reports)
  • Recognized as best Private Bank for Customer Service (North America) and Best Private Bank for Philanthropy Services (globally) by Professional Wealth Management (2020)

Digital Investment Recognition

  • Recognized by Celent with the 2021 Wealth Manager Award for emerging technology
  • Received Aite Group's 2021 Digital Wealth Management Impact Innovation Award for digital engagement
  • Awarded by Professional Wealth Management, a Financial Times publication, in the 2021 Wealth Tech Awards for best use of technology (North America) and best use of technology for client acquisition (North America)
  • Recognized by WealthManagement.com in the 2020 industry awards for best technology for digital advice & collaboration and best social media leadership

4

Global Banking1,2

  • Net income increased $1.7 billion to $2.4 billion, driven primarily by lower provision for credit losses
  • Revenue of $5.1 billion was relatively flat as higher leasing-related revenue and treasury fees were offset by lower NII
  • Provision for credit losses improved $2.7 billion to a benefit of $831 million, reflecting an improved macroeconomic outlook
  • Noninterest expense increased $377 million, or 17%, to $2.6 billion, reflecting higher operating costs

Business Highlights1,2(B)

  • Average deposits increased $13 billion, or 3%, to $507 billion, reflecting client liquidity and valued relationships
  • Average loans and leases declined $99 billion, or 23%, to $325 billion, driven by continued paydowns
  • Total corporation investment banking fees of $2.1 billion (excl. self-led), remained near record levels

Digital Usage Continued to Grow1

  • 75% digitally active clients across commercial, corporate, and business banking clients (CashPro & BA360 platforms) (as of May 2021)
  • CashPro App Active Users increased 57% and sign- ins increased 39% (rolling 12 months), surpassing 1 million sign-ins in the past year
  • CashPro App Payment Approvals value was $248 billion, with volumes increasing 54% (rolling 12 months)
  • Number of checks deposited via CashPro App increased 88% and dollar volume increased 89% (rolling 12 months)
  • ~22 million incoming receivables were digitally matched in last 12 months using Intelligent Receivables, which uses AI to match payments and accounts receivables (as of May 2021)
  • Digital Wallet Enrollment adoption for commercial cards grew by 5% YoY (as of May 2021)
  • Global Digital disbursements up 30% YTD YoY (as of May 2021), 85% of volume sent via Zelle (as of May 2021)

Financial Results1

Three months ended

($ in millions)

6/30/2021

3/31/2021

6/30/2020

Total revenue2,3

$5,089

$4,633

$5,091

Provision for credit losses

(831)

(1,126)

1,873

Noninterest expense

2,599

2,781

2,222

Pretax income

3,321

2,978

996

Income tax expense

897

804

269

Net income

$2,424

$2,174

$727

Business Highlights1,2(B)

Three months ended

($ in billions)

6/30/2021

3/31/2021

6/30/2020

Average deposits

$506.6

$487.0

$493.9

Average loans and leases

325.1

330.1

423.6

Total Corp. IB fees (excl. self-

2.1

2.2

2.2

led)2

Global Banking IB fees2

1.2

1.2

1.2

Business Lending revenue

1.9

1.6

1.9

Global Transaction Services

1.7

1.6

1.8

revenue

Efficiency ratio

51 %

60 %

44 %

Return on average allocated

23

21

7

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.

Continued Business Leadership

  • Outstanding Financial Innovator 2021 - Global (Global Finance, 2021)
  • North America's Best Bank for Small to Medium-sized Enterprises (Euromoney, 2020)
  • Best Global Bank for Cash Management and Payments & Collections (Global Finance Treasury & Cash Management Awards, 2021)
  • Best Mobile Cash Management Software (Global Finance Treasury & Cash Management Awards, 2021)
  • North America and Latin America's Best Bank for Transaction Services (Euromoney, 2020)
  • 2020 Quality, Share and Excellence Awards for U.S. Large Corporate Banking and Cash Management (Greenwich, 2021)
  • Relationships with 74% of the Global Fortune 500; 95% of the U.S. Fortune 1,000 (2020)

5

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Bank of America Corporation published this content on 14 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 July 2021 10:54:02 UTC.