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Text: Factors that may cause our actual results to materially differ from expectations are detailed in our earnings materials and the SEC filings that are available on the website.
Information about the non-GAAP financial measures, including reconciliations to those, can also be found in our earnings materials that are available on the website.
I hope all of you continue to manage safely through the new variant.
Our new CFO has been in that role since November 1, and he's off to a great start, and you're going to hear from him in a minute.
So just stepping back on the cover slide.
Today, we reported $7 billion in after-tax net income or $0.82 per diluted share.
That's up significantly from the year-ago period.
This quarter was a repeat of the themes we discussed with you in the last few quarters.
The pre-pandemic organic growth engine that is Bank of America is fully back in place and producing success.
We had strong organic and responsible growth across all our businesses.
We grew revenue and produced positive operating leverage.
We continue to see very strong asset quality metrics.
We support our clients and our need for capital, and we made further progress in support of local community efforts across all our markets.
Let's go to start on Slide 2 and a few comments about our full-year results.
This quarter capped a record year of $32 billion in earnings for 2021 and represented significant growth in net income over 2020.
We even saw a more significant growth in earnings per share as share count dropped.
We generated more than $7 billion of earnings in every quarter in 2021.
Revenue grew 4% year over year and activity gained momentum throughout the year.
NII grew well in the second half of the year, which complemented fee growth, especially in our markets-related businesses.
Wealth management, investment banking and sales and trading revenues were all strong in '21.
Recall that in the first quarter 2021, we noted at the time that our expectation is that quarterly NII could progress up by $1 billion per quarter as we entered the fourth quarter.
And in fact, we have recorded fourth quarter NII that is $1.2 billion or 12% better than first quarter '21.
Our teams managed well through the rate volatility, and we grew loans and deposits with our customers as the year progressed.
That sets us up nicely for 2022, and Alastair is going to talk about that in a minute.
Expense was well-managed, but expense did go up as we continue to invest for growth.
Our COVID-related costs remained elevated and revenue-related costs grew.
So while we do not see full-year operating leverage, we did, however, return to strong operating leverage in each of the last two quarters of the year, restarting our streak that we had before the pandemic.
Credit remains stellar through 2021.
Charge-offs consistently improved each quarter.
Our commitment to responsible growth remains well-placed.
We are growing faster than the market and keeping credit costs in check.
The economic improvement and our strong credit allowed us to release much of the reserves we built in 2020.
When you look at the balance sheet, we grew deposits $270 billion in 2021.
That was on top of the $360 billion of growth we had in 2020.
Our loan growth accelerated throughout the year.
Fourth quarter represented the strongest quarter of organic loan growth we have experienced at Bank of America.
Now, of course, that's absent the first quarter of 2020 at the start of COVID, which had $70 billion of panic drawdowns in a few weeks.
At the end of the day, we produced strong ROA and a 17% ROTCE for you, our shareholders, and we returned $32 billion in capital during the year.
Let's go to Slide 3.
The best way to highlight the drivers behind the earnings success is to look at the momentum in client activity across the businesses.
This shows organic growth engine is running hard.
More and more of this client activity is powered by our digital transformation, which is foundational to everything we do.
We are proud of our digital stats and continue to spotlight our results later in the materials, as usual, see Pages 24 to 28.
But some key stats on this page: Consumers logged into our digital channels more than 2.7 billion times in the fourth quarter alone.
Erica, our digital financial assistant, completed more than 400 million requests from our clients in year 2021.
Half our consumer sales were digital in the fourth quarter.
86% of all the check deposit transactions are now digital.
Customers use Zelle to transfer $65 billion in the most recent quarter.
The number of Zelle transactions now surpasses the checks written by our consumers.
Cash flow approvals by our commercial and corporate clients to move money grew 240% since the pandemic.
So the digital journey continues, and that supercharged our relationship manager-driven model.
And together, that has driven the growth in loans and deposits, and fees.
Net new checking accounts have grown in each of the past 12 quarters.
This contributes to the continued growth in our core deposits.
This also demonstrates the extent of our leadership position with U.S. consumers and deposits.
We have $1.4 trillion in deposits from all American consumers.
On credit cards, at roughly 1 million new accounts in the fourth quarter alone, that's now operating at the same level of new card production as it was pre-pandemic.
We're going to continue to drive that opportunity.
When you think about consumer investments, Merrill Edge, as we call it, we opened 525,000 new accounts in the year 2021.
Those accounts carried when they renew at opening, $70,000 in balances for each of those accounts.
This demonstrates the deep penetration of the mass affluent customer base of America.
Sales of bank products in both Merrill and our private bank teams have remained strong.
Now when you combine Merrill, the private bank, and consumer investments, they produced more than $170 billion in net client flows in 2021.
In global banking, we had record years of investment banking fees combined with strong GTS results.
In global markets, we saw record equity sales and trading revenue.
These are just a few examples of the types of client activity that are driving market share gains for our company.
As I've done in the past, I want to spend a few minutes on the broader economy, and I'll use our own customer data to make a few points.
Let's go to Slide 4.
First, on consumer spending, I'd offer a few thoughts.
We are a provider of choice for individuals and businesses when paying for goods and services.
Our award-winning and easy-to-use capabilities across all forms help clients budget, save, spend and borrow carefully and confidently.
We look at all forms of consumer spending, including ACH wires bill pay, P2P cash, and checks.
Many firms focus -- many firms and many people discuss credit and debit spending, but as you look at the chart on the lower left-hand side of Page 4, you can see that 80% of the money moves in other form.
So what happened in 2021?
Well, consumers spent record amounts in context in comparing '21 against the pre-pandemic period of '19, and you can see that in the upper chart on both sides of the page.
Bank of America's 67 million clients made $3.8 trillion in total payments during 2021.
That was an increase of 24% over pre-pandemic levels, an all-time high.
Fourth quarter in December payments also reached record highs.
Fourth quarter payments were up 28% over 2019.
The December payments were up 30% over 2019.
These are the dollar volume payments, but likewise, the numbers of payments were up double digits also and showing more and more activity.
Just focus on debit and credit spending, for the holiday period of November and December, spending was up 26% over 2019.
This data confirms that consumers continue to spend into the holiday season.
And so far this year, that strength continues.
For all the spending of all types through January 17, 2022, we have seen it up over 11% versus the start of '21, which is well up over '20 and '19.
That bodes well for the rest of the year and quarter.
Focusing on the channels of payment in the lower right-hand chart that you'd expect cash and check volumes are down 24% for 2021 compared to '19.
This simply means more and more customers are using our digital capabilities to achieve their goals each year.
Now importantly, though, this allows us to grow our consumer business with lower cost.
We believe there's lots of potential spending capacity left as average deposit balances continue to move up to the end of the year despite the heavy spending you see.
We had one segment, one cohort of deposits that dipped for one month out of the last part of the year.
In November, we had a small dip in customers who had $2,000 or less in their balances pre-pandemic.
They dipped by 1%.
Other than that, every cohort from June, July, August, September, October, November, and December all grew every month.
And what's striking is that the balances for people who had less than $2,000 average balances before the pandemic, they're now sitting with five times the balances they had pre-pandemic.
For those customers at $10,000 in accounts before the pandemic, they're now sitting with two times in their accounts .
The teams track this data carefully and it shows the spending power left in the American consumer.
Another economic signpost worth noting with our customer activity was acceleration of loan growth in the fourth quarter.
Earlier this year, we -- earlier last year, we talked about the green shoots of loan growth we saw in the first quarter, and we saw that turn into growth as we move through the quarters, culminating with $50 billion in record loan growth this quarter.
We note these borrowers, both consumer and commercial, have strong capacity to continue to borrow if they so desire as lines across the border in low-usage status.
We provide Slide 5 to show you the daily outstanding loans again this quarter, which gives you a sense of progression across time.
Every loan category saw improvement this quarter except for home equity.
What I would draw your attention, too, on Slide 5 is the addition of the pre-pandemic starting point to give you some reference.
Some of the growth this quarter was in global markets, and that business ebbs and flows with the market activity.
$35 billion of that $50 billion was in the core consumer and commercial books.
So far in January, the businesses other than global markets continue to show growth over the end of the year.
So let's start and talk about the commercial portfolio where we have moved above the pre-pandemic level for the most recent growth.
Commercial loans; excluding PPP, grew $43 billion or 9% linked quarter.
Compared to quarter 3, growth this quarter was broad-based across all segments of commercial lending.
We saw improvement in both new loans, as well as improving utilization from existing clients.
This reflects the intense relationship manager effort our teams have done and -- across the last couple of years and adding more and more relationship managers.
Commercial loans of wealth management clients extended their growth trend this quarter as these customers barred for various liquidity needs for asset purchases.
In small business lending, the all-important small business segment, lending activity is running consistently above pre-pandemic levels.
And especially in our Practice Solutions Group that supports medical, dental, and veterinary practices, we continue to see continued momentum and finished one of the best years across all small business with our Business Advantage rewards cards.
Turning to consumer loans.
Card loans grew $4.6 billion or 6% from quarter 3 levels.
This occurred as spending increased and even occurred as payment rates -- paying off the card completely trended higher for the quarter.
Card balances still remain well below the pre-pandemic levels of $95 billion, and we continue to push that opportunity.
Mortgage loan levels grew 2% linked quarter as origination remained at high levels and paydown slowed down.
On the next, Slide 6, I would like -- I would say that while we deliver capital back to our shareholders, $32 billion, and we invested in our teammates, we also continue to invest in our communities through our local teams across the country focused on our markets.
I call out the reference in the bottom of the slide, middle -- bottom-middle of Slide 6 to the sweeping changes we announced last week in our NSF policies.
These updates continue the work we began over a decade ago to simplify our product set and allow a great experience for our clients and an efficient capability for our operations.
Eliminating NSF fees and reducing the overdraft charge per occurrence from $35 to $10 and the other changes we're making is a big win for our clients.
It's going to have an obvious impact on those fees, which have fallen dramatically since 2009 and 2010, but currently run about $1 billion in '21, and we'd expect them to drop by 75% over the next year or so.
I'm going to take us to our fourth quarter results on Slide 7, focusing on comparisons against the prior-year quarter.
And I'll also talk through the high-level commentary on Slide 8.
As Brian noted, we produced $7 billion in net income, which grew 28% from fourth quarter '20, while earnings per share of $0.82 improved at a faster 39% pace due to our share repurchases.
Looking at our top-line improvement on a year-over-year basis, revenue rose 10%.
The improvement was driven by a $1.2 billion increase in NII and a little more than $800 million increase in noninterest income.
Each business segment produced strong noninterest income results.
And as you look at significant components of revenue, it was pretty consistent through the quarters in 2021.
One important aspect of responsible growth has been to grow consistently and sustainably.
And I think we executed on that in 2021 with investment banking over $2 billion each quarter; sales and training -- trading near or above $3 billion each quarter; investment and brokerage services revenue over $4 billion each quarter.
With regard to expenses, our revenue-related costs increased and we continue to make investments in our people and our capabilities to grow the franchise.
At the same time, lower COVID costs and further digital engagement have helped to offset some of those increases.
In the fourth quarter, revenue growth outpaced expense growth on a year-over-year basis, which produced operating leverage of 400 basis points and a 19% year-over-year improvement in pre-tax pre-provision income to $7.3 billion.
With regard to returns, our ROTCE was 15%, ROA was 88 basis points, both of which improved nicely over the year.
Moving to Slide 9.
During the quarter, the balance sheet grew $85 billion to a little less than $3.2 trillion, and this reflected the $100 billion of growth in deposits.
These deposits funded $51 billion of loans growth.
And we also added $14 billion in securities, and so our cash increased by $68 billion.
Partially offsetting these increases were typical year-end moves in our global markets balance sheet.
Our liquidity portfolio grew to $1.2 trillion or a little more than a third of our balance sheet, and shareholders' equity declined $2.4 billion from Q3, driven by the $8.9 billion of capital distributions, which once again outpaced earnings in the fourth quarter as it did in Q3.
With regard to our regulatory ratios, CET1 under the standardized approach was 10.6% and remains well above our 9.5% minimum requirement.
The CET1 ratio declined 50 basis points from Q3, driven by excess capital reduction, as well as an increase in our RWA, due to the strong loans growth.
And we're happy to see that capital usage increasingly needed to support customers and to fuel their growth, while still producing plenty of capital to return to our shareholders.
Earnings alone in the most recent quarter contributed 45 basis points to our CET1 ratio before the other capital impacts of share repurchase.
Given our deposit growth, our supplemental leverage ratio declined to 5.5% versus a minimum requirement of 5%, which still leaves plenty of capacity for balance sheet growth.
And our TLAC ratio remained comfortably above our requirements.
Turning to Slide 10.
We included the schedule on average loan balances, but in the interest of time, I don't have anything to add beyond what Brian noted earlier.
Moving to deposits on Slide 11.
We continue to see significant growth across the client base as we deepened relationships and added net new accounts across our deposit-taking businesses.
Combining both consumer and wealth management customer balances, I would highlight that retail deposits grew $48 billion from Q3.
Our retail deposits have now grown to nearly $1.4 trillion, and we lead our competitors.
We also saw continued strong growth with our commercial clients.
And remember, the deposits we're focused on and are gathering are the operational deposits of our customers in both consumer and wholesale.
Turning to Slide 12 and net interest income.
On a GAAP non-FTE basis, NII in Q3 was $11.4 billion.
But I know, as investors, you tend to focus on the FTE NII number, which was $11.5 billion.
So focusing on the change on an FTE basis, net interest income increased $1.2 billion from Q4 '20 or 11%, driven by deposit growth and related investing of liquidity.
NII versus Q3 of '21 was up $319 million, driven by deposit growth and then higher securities levels, as well as loans growth.
Premium amortization declined roughly $100 million to $1.3 billion in Q4, and the positive NII impact of lower premium amortization offset lower PPP fees.
Given continued deposit growth and low rates, our asset sensitivity to rising rates remains significant.
It's modestly lower quarter over quarter as long-end rates moved higher, and we recognized some of that sensitivity in our now higher reported level of NII.
So I'd like to give you a couple of thoughts on NII expectations for 2022.
First, I want to start by reiterating Paul's comment last quarter that we expect to see robust NII growth in 2022 compared to 2021.
That assumes we see continued loans growth and the rising rate expectations embedded in the forward curve.
And in the first quarter specifically, we expect two headwinds.
First, there are two less interest accrual days in the quarter.
And as a reminder, we picked those back up in the subsequent two quarters.
Second, we expect less PPP fee benefits.
Combined, those two headwinds add to about $250 million.
Despite those headwinds, we would still expect Q1 to be up about a couple of hundred million from Q4 and should grow nicely each subsequent quarter in 2022.
Again, that's, of course, dependent upon the realization of the forward curve and some loans growth.
Lastly, as we see the forward curve now expecting a new rate hiking cycle to begin, we added Slide 13, as we thought it might be helpful from a historical context to see the trend of NII across the years since the last rate hike cycle.
And what I'll draw your attention to is the stark difference in the size of our balance sheet today.
And because of that balance sheet differential, today's NII is already at the NII level we saw when we were well into the middle of the last rate cycle.
And importantly, our short-end asset sensitivity today is twice what it was in the third quarter of 2015 as that cycle began.
Let's turn to costs, and we'll use Slide 14 for that discussion.
Our Q4 expenses were $14.7 billion, an increase of $291 million from Q3.
Higher revenue-related costs, and to a lesser degree, seasonally higher marketing costs, drove the increase.
As Brian noted at the mid-quarter conference, our Q4 expenses were a bit higher than we anticipated when we ended the last quarter.
Revenue continued to hold up well, and the company had a good year, both resulting then in higher incentive costs.
Compared to the year-ago period, expense growth was driven by incentive costs associated with all of our markets-related improvements.
As we look forward, we continue to invest in technology and people at a high rate across our businesses, and we continue to add new financial centers in expansion and growth markets.
So let me say two things about 2022 expenses.
First, relative to Q4 expense, we expect Q1 to include two elements of seasonality.
We typically experience seasonally higher payroll tax expense, and that was about $400 million in 2021.
Also, Q1 is typically our best period of sales and trading revenue which results in modestly higher associated costs.
Second, with regard to full-year 2022, our best expectation currently is we can hold expenses flat compared to 2021, which finished just below $60 billion.
This guidance incorporates our expected continuing investments, strong revenue performance, and the inflationary costs we experienced in the second half of 2021.
It also relies upon our continued expense discipline, operational excellence improvements, and the benefits of digital transformation to deliver the operating leverage we seek.
Turning to asset quality on Slide 15.
The asset quality of our customers remains very healthy and net charge-offs this quarter fell to a historical low of $362 million or 15 basis points of average loans.
They continued a steady decline through the quarters of 2021, with Q4 down $100 million from Q3 and down more than $500 million from Q4 last year.
Our credit card loss rate was 1.42%, and that's less than half of the pre-pandemic rate.
It improved each quarter during the year.
Several other loan product categories have been in recovery positions throughout the year.
Provision was a $489 million net benefit in Q4, driven primarily by asset quality, and macroeconomic improvement, and was partially offset by loans growth.
This included a reserve release of $850 million, primarily in our commercial portfolio.
And on Slide 16, we highlight the credit quality metrics for both our consumer and commercial portfolios.
Turning to the business segments, let's start with consumer banking on Slide 17.
I'll start by acknowledging what a strong year the consumer bank has had as they generated nearly $12 billion of earnings, which is 37% of record year results for the company.
Consumer opened over 900,000 net new checking accounts.
And in fact, this quarter represents their 12th consecutive quarter of net new consumer checking account growth.
And in turn, consumer grew deposits by more than $140 billion.
They opened 3.6 million credit cards and grew card accounts in 2021 by more than any of the past four years.
This helped card balances grow in Q4 despite payments remaining high.
They also opened 525,000 new consumer investment accounts.
And that helped us to reach a new record for investment balances of $369 billion, growing 20% year over year as customers continue to recognize the value of our online offering.
Yes, market valuations grew balances, and we also saw $23 billion of client flows since Q4 '20.
So Q4 was a strong finish to these results.
And in the quarter, the business produced $3.1 billion of earnings off $8.9 billion of revenue and managed costs well.
Our 8% revenue growth was led by NII improvement as we continue to recognize more of the value of our deposit book.
And while revenue grew, expense declined by 1% year over year, generating over 900 basis points of operating leverage.
Lower COVID costs and increased digital adoption by clients more than offset our continued investments in people and our franchise.
This expense discipline has now driven our cost of deposits to an industry-leading 111 basis points.
Net charge-offs declined and we had $380 million of reserve release in the quarter.
And as you can see, and as I already noted, deposits continued to grow strongly both year over year, as well as linked quarter.
Importantly, our rate paid remained low and stable.
Turning to the wealth management business.
Bank of America continued to deliver wealth management at scale across a full range of client segments.
The continued economic progress, strong market conditions, and the efforts of our advisors contributed to strong client flows and net new household growth.
This allowed Wealth Management to generate more than $4 billion in earnings in 2021, up more than 40% from 2020.
In Q4, this powerful combination of Merrill Lynch and our private bank produced records for revenue, earnings, investment balances, and asset management fees, as well as record levels of loans and deposits.
In fact, with regard to loans, this is the 47th consecutive quarter of average loans growth in the business.
It's consistent and it's sustained.
Q4 net income was $1.2 billion, improving 47% year over year and driven by strong revenue growth, good expense controls, and lower credit costs.
Revenue growth of 16% was led by strong improvements in both AUM and brokerage fees, as well as higher NII on the back of solid loan and deposit increases.
Expenses increased 8% in alignment with the higher revenue and resulted in 800 basis points of operating leverage.
Client balances of $3.8 trillion rose $491 billion, up 15% year over year, driven by higher market levels, as well as very strong net client flows of $149 billion.
Within these flows, deposits grew $68 billion year over year to $390 billion, and loans grew $21 billion year over year to $212 billion.
And that loan and deposit growth is further evidence that more and more Merrill and private bank clients are using the bank's products broadly.
Net new household generation is getting closer to pre-pandemic levels as advisors are meeting in person more with clients and are building their pipelines back following the shutdown during the pandemic.
This quarter, Merrill Lynch's net new households of 6,700 and private banking relationships net new of 500 were both up more than 30% from the year-ago period.
The clients of this business continue to lead our franchise in digital adoption, utilizing digital tools to access their investments and also for other banking needs like mobile check deposits and lending.
The evolution is forming a modern Merrill, which is advisor-led and powered by digital.
Moving to global banking on Slide 19.
The business momentum through the back half of the year was strong.
Net interest income grew on the back of accelerating loans growth.
Investment banking fees reached record levels and deposits continued to grow as clients navigated the pandemic.
We also saw strong demand from our clients around ESG investments driving improvements in bottom-line results.
Net income for the full year was a record $9.8 billion or 31% of the company's overall net income.
The business earned $2.7 billion in Q4, improving nearly $1 billion year over year, driven by higher revenue and lower provision costs, partially offset by higher expenses.
Revenue improvement of 24% year over year reflected more than 30% growth in investment banking fees in this segment, and net interest income increased 18%.
This investment banking performance allowed us to gain market share and record No.
3 ranking in overall fees in what was a very strong Q4 market.
1 in investment grade and No.
2 in leverage finance with market share improvement compared to the year-ago period.
And we also saw another record M&A period.
And most importantly, our investment banking pipeline remains quite healthy.
Provision expense reflected a reserve release of $435 million, compared to a $266 million release in the year-ago period.
And what I'd draw your attention to here is the reduction in net charge-offs year over year from $314 million in Q4 of '20 to small recoveries in Q4 '21.
That year-ago period included some losses from clients in those industries that were heavily impacted by COVID.
Finally, given the strength of revenue we saw expenses increase by 12%, which is still only half of our increase in revenue.
Switching to global markets on Slide 20.
Full-year net income of $4.6 billion reflects another solid year of sales and trading revenue.
This included a record year for equities, up 19% versus 2020.
Investments made in this part of the business are seeing good results as our financing clients are doing more business with our company.
As we usually do, I'll talk about the segment results, excluding DVA, even though net DVA was negligible in both Q4 '21 and Q4 '20.
In Q4, global markets produced $667 million in earnings, $167 million lower than the year-ago quarter.
Focusing on year over year, revenue was modestly down, driven by sales and trading.
Sales and trading contributed $2.9 billion to revenue, a decline of 4% year over year.
FICC, down 10%, while equities improved 3%.
FICC results reflect a weaker credit trading environment in Q4 '20, and the strength in equities was driven by growth in client financing activities and the multiplier effect.
The year-over-year expense move was driven by investments in revenue-related sales and trading costs, partially offset by the absence of costs associated with the realignment of liquidating business activity to the all other units in Q4.
Finally, on Slide 21, we show all other, which reported a loss of $673 million, which declined a little more than $250 million from the year-ago period.
Revenue declined as a result of higher volume of deals, particularly solar, and partnership losses on ESG investments.
That's offset by the tax impact in this reporting unit.
Expense increased as a result of costs now recorded here after the fourth quarter realignment out of global markets, which was partially offset by a decrease in various other expenses in the segment.
That realignment obviously had no bottom-line impact on our company overall.
And in all other, we incorporate the impact of our ESG tax credits and any other unusual items.
For the full year, the effective tax rate was 6%.
And excluding the second quarter '21 positive tax adjustment triggered by the U.K. tax law change, and other discrete items, the tax rate would have been 14%.
Further adjusting for ESG tax credits, our tax rate would have been 25%.
And looking forward, we would expect our effective tax rate in 2022 to be between 10% and 12%, absent any tax law changes or unusual items.
And with that, I think I'll stop and we'll open it up for Q&A.

user
compname reports q4 net income of $0.82 per share.
compname reports q4-21 net income of $7.0 billion; earnings per share of $0.82.
qtrly fixed income currencies and commodities (ficc) revenue of $1.6 billion and equities revenue of $1.4 billion.
qtrly provision for credit losses improved by $542 million to a benefit of $489 million.
qtrly net interest income up $1.2 billion, or 11%, to $11.4 billion.
qtrly revenue, net of interest expense, increased 10% to $22.1 billion.
bank of america - qtrly noninterest income up 8% to $10.7 billion, driven by record asset management fees and record investment banking revenue.
fourth-quarter results were driven by strong organic growth, record levels of digital engagement, and an improving economy.
qtrly noninterest expense rose 6% to $14.7 billion.
in quarter, historically low net charge-off ratio of 0.15%, down 5 basis points from the prior quarter.
in quarter, wealth management had record client flows & strongest client acquisition numbers since before pandemic.
added $100 billion of deposits during the quarter.
bank of america - in quarter, global markets had highest sales & trading revenue in a decade, led by record equities performance as we invested in business.
bank of america - asset quality remained strong with loss rates at historically low levels as global economy continued to improve.

assistant