Hello and thank you for joining the Bank of America Third Quarter Earnings Announcement. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question-and-answer session. Please note this call maybe recorded. I’ll be standing by should you need any assistance. It is now my pleasure to turn today's conference over to Lee McEntire. Please go ahead.

Good morning. Thanks for joining the call to review our third quarter results. I trust everybody has had a chance to review the earnings release documents. They are available on the Investor Relations section of bankofamerica.com’s website. Before I turn the call over to our CEO Brian Moynihan, let me remind you that we may make forward-looking statements during the call. After Brian's comments, our CFO, Paul Donofrio will review more details of the third quarter results. We'll then open up for questions. Please try to limit your questions so that we can get to all the callers. And for more information on the forward-looking comments we may make, please refer to either our earnings release documents, our website, or the SEC filings. With that, take it away, Brian.

Thank you, Lee. Good morning, everyone, and thank you for joining us to review our third quarter of 2019 results. These results reflect our success, and the U.S. economy continues to grow at around the 2% GDP level. In that kind of economy, our job is simple, drive solid customer activity, manage risk well, manage expenses well, all while investing heavily in our competitive advantage. That's what we've been telling you, it’s been what we call responsible growth. The investments we have been making in the franchise for many years and our disciplined responsible growth approach are evident across every line of business results in respective customer basis you'll see in the materials. Today, we reported $5.8 billion in after-tax net income and $0.56 per share for the third quarter. Those results include a previously announced $2.1 billion pre-tax impairment charge. This charge relates to the investment in our Bank of America merchant services joint venture from 2009 that negatively impacted our EPS by $0.19. That charge, however, positioned us to meaningfully invest in our -- integrate our payments platforms in our commercial side businesses over the next several years. Excluding that charge, third quarter net income was a record $7.5 billion after-tax and EPS of $0.75 per share. On this adjusted basis, net income increased 4% from the third quarter of 2018 while earnings per share increased 14%. This reflects an 8% reduction in average diluted shares from third quarter of 2018. Returns after adjusting for the impairment charge were strong. Return on assets, about 123 basis points, return on tangible common equity of 15.6%. So, before Paul dives into the quarter's results through the lines of business, I wanted to cover a little bit about client activity costs and operating leverage at an enterprise level. These are the…

Thanks, Brian. I'm starting on Slide 8 with the balance sheet. Overall, compared to the end of Q2, the balance sheet grew $30 billion, driven by loan growth, which ended the quarter more than $9 billion higher. We also grew the balance sheet in Global Markets to support additional client activity. Liquidity remained strong, as average liquidity sources were unchanged, linked quarter. Shareholders' equity declined $3 billion, driven by a $2 billion decline in common equity. As positive OCI from lower rates and net income totaling $7 billion was more than offset by $9 billion of capital return to shareholders through common dividends and share repurchases. The remaining $1 billion decline in equity resulted from the redemption of preferred stock in Q3 after issuing lower yielding preferred shares in Q2. With respect to regulatory metrics we remain comfortably above our minimum requirements. Regarding CET1 ratios given the reduction in capital I just reviewed, our CET1 ratio standardized, decreased to 11.4%, which is nearly 200 basis points above our minimum requirement. And as mentioned in our SEC filings, the impairment charge recorded this quarter reduced regulatory capital, but had no impact on our capital plans announced in July. Our risk-weighted assets increased modestly as a result of increased client activity and higher loan balances across the businesses. Lastly, our TLAC ratios also remained comfortably above our requirements. Turning to Slide 9 and net interest income, on a GAAP non-FTE basis NII was $12.2 billion, $12.3 billion on an FTE basis. Compared to Q3 2018 GAAP NII was up $126 million or 1%. The year-over-year improvement reflects solid loan and deposit growth as well as modestly higher average short-term rates year-over-year. As you know lower rates are a headwind. The Fed cut short-term rates in July and September and average long end…

[Operator Instructions] And we’ll take our first question from Jim Mitchell with Buckingham Research. Please go ahead.

Hey, good morning, guys. I guess I’ll ask the question and you can decide not to answer, but just if there is any help you can give us on sort of the NII outlook beyond 4Q. I know there’s a lot of moving parts, but given the forward curve and maybe you could also help us think about the premium amortization year-to-date, what that drag has been and how that would play out in a stable rate environment from here. Thanks.

Sure. So, let me start with the premium amortization, if – I’m not going to give you any precise number, but if you think about the extra day we had from Q2 to Q3, the increase in premium amortization in the quarter more than offset that. In terms of, but going forward, unless long-end rates fall meaningfully from here, we wouldn’t expect that level of increase in premium amortization in Q4 even next year without significant increases – significant decrease among the rates. In terms of the outlook for 2020, obviously that’s going to be highly dependent on future Fed activity and on deposit pricing across the industry. We don’t think it’s really prudent right now to provide specific guidance at this point. You have our thoughts on. Well, I’m sure we’re going to be talking about Q4, and you have our thoughts on that from our prepared remarks. You’re also going to have our asset sensitivity disclosures. So, the only thing I would remind you is, when you think about Q1, we will have one less day of interest which impacts NII by about $80 million, but we’ll get that day back in the third quarter.

Right. So maybe just a follow-up on that, just on the balance sheet growth. It seems like both loans and deposits have accelerated a little bit. You indicated some pretty strong trends and sort of new account growth both consumer and wealth. Do you – and coupled with sort of the lower rate environment, do you see deposit growth picking up across? You had good commercial across the consumer franchise broadly whether it’s wealth or traditional banking.

Yeah. I think, we have – if you go back many quarters ago, we discussed -- our thought process is to tell our teammates to price to achieve sustainable deposit growth of 3% or more faster than the economy, which means you are in axiomatic point there as you’re gaining share at all times if economy is growing less. So, they’ve been doing that. We are staying very careful and disciplined. There were some adjustments made on the wealth management business. If you look back last year, we had some growth there that we slowed down because it was a little too tied to bidding too much rate. They changed that process, they flattened out, now they are growing again. On the commercial side, the changes of interest-bearing and non-interest-bearing and the fees for services and all that stuff, calculations change, but I’d say you should expect us to continue to grow at the rate we’re growing now or faster because frankly, we’ve been very disciplined about how we’ve been driving. It gets core checking accounts on the consumer side, core checking and savings accounts on the wealth management business, and obviously GTS business, and so I’d expect it to continue to grow maybe faster, 3%, 4%, and 5%, but the thing about that is – that is incredible amounts of new customers at very advantaged price and that we can put to work .

That’s great. Thanks.

I think one thing. Jim, just, as I said in my prepared remarks, there’s a lot of discussion when the Fed started raising rates, what would happen? And what I said back there was consumer increased their deposit balances by about $145 billion since the first Fed rate increase, and now there has been two decreases, right. So, think about that machine just churning out growth and growth and growth, 75% of that was checking balances. That’s the real encouraging part of the store in consumer. All time customer satisfaction, high in those businesses. All time employee satisfaction high. All time customer growth rates, high for 15 years or so, and you just take that and play it out, it’s pretty important.

Yes, it seems like it could be a good leading indicator. Thanks.

Our next question will come from Mike Mayo with Wells Fargo. Please go ahead.

Hi, I’m a little stuck on Slide 7 with the efficiency. And you mentioned all the investing that you’re doing. So, are you willing to go to negative operating leverage or with the investments like, we have the new sales people in the branches and you had more deposit growth. You have new regional banking coverage. You have more investment banking. So, the investments are paying off. So, what’s your confidence in growing revenues faster than expenses over the next year, even though you’re not giving specific guidance, but more generally, what’s the role of technology inside the firm that’s enabling this operating leverage? For example, how many data centers do you have and how many you are going to close? What percent of your applications you expect to migrate to the cloud? Just a little bit more color on what’s happening behind the scenes that enables your operating leverage and your expectations for continuing that.

Mike, those are good questions. I think we are going to invest for long-term value of this company and our clients. And so, if this quarter we are sort of flattish on operating leverage, if we happen to go negative I’d argue, and that was the right thing to do based on everything we’re assessing at the time you do it. These quick changes in rates obviously have an impact that you then outgrow with the volumes coming in and producing the value. So, but that takes some compounding for the quarter. So, our attitude in talking to our investors is, if we’re gaining share and doing the right things, keep going. But the real key is back to your – sort of your second question, which is we are getting the benefits of sustained long-term investment, and the change the way this company operates that continues to push through. And so, three years – 2.5 years ago, we said we’d operate this year on $53 billion and change in expenses, and we hit that number and a lot of you had assumed a $57 billion or something like that. Next year, we told you, we’d be in a low $53 billion as again and we still are sticking to that. And so that’s – three, four years out, you’re saying how can you plan out with all the investments we’re making. That is because, we know we’re making investments at the same time they are taking out costs. The cloud journey for Bank of America is an interesting one. We started about really the new BAC framework for those of you, remember that, that came out of that into early days as simplified, improved. We had 200,000 plus servers, those server accounts now down to 70,000. The first decision…

Well. Thanks for providing data that others have not provided yet, so just one follow-up then. Again and the spirit behind this is, you’re getting the operating efficiency, while we’re making investments you’re doing stuff behind the scenes like this. So if you’ve gone from 60 data centers to 23 data centers. How much further you have to go? If you’ve gone from 200,000 servers to 70,000 servers, how much more do you have to go? And what percent of your applications do you expect to migrate to the cloud over time?

The last question I’d leave to people more expertise. But Mike in the spirit of constant improvement, I never give people a number that I’m satisfied and you should neither. In other words, if we think where you can – we’re at X for Howard and the team in this case or any of our businesses, you can improve it every day. And so that is the cultural change we made in this company and frankly the stability of having not had any acquisition activity since 2009 and any other inorganic movement. You can play any things out and execute. Some of these things take three to four years to get done. So you have to be patient, you have to be consistent. You have to keep allocating investment to them to cause a change to happen and be disciplined about the cost coming out the other side. But I’ll never tell people we’re done, because then they’d stop working at it.

All right, thank you.

Our next question will come from Glenn Schorr with Evercore. Please go ahead.

Hi, thanks very much. I’m curious, now that you’ve taken a charge on the merchant servicing JV. I’m curious about the go forward. Like, can you talk a little bit about what is built, what do you want to build? Is there going to be an impact on expenses that we’ll see and how soon we’ll see progress and what we’d see. Just curious to learn more.

Sure. Glenn, let me start with a high level comment and then I’ll let Paul, because remember, many of you don’t know – don’t probably remember that Paul ran GTS for a while and had his part of this portfolio. But he can hit some of the details, but philosophically – we want to control our destiny to be able to provide this type of service to our clients in a much cleaner way and we had a great partner in FDR. And at some point that was good for what was going on in the world, then it’s changed. So we’re making a change. So, lot of the discussions on in terms of where we take this. The team is working with FDR closely to unwind the venture as per the contract, et cetera, but it’s been a good relationship, expect that to continue in various ways, but on the other hand, we had to get control of our destiny. The sales force of implementation. Paul, I want you to hit some of the pieces in terms of the numbers and sort of impact on expenses and things like that, revenue.

Yes. I mean, I guess in terms of expenses, I would remind you that the accounting for BBAMs doesn’t change until, the JV actually ends in June, that’s the first point. And so when you get out to Q3 2020, we’ll begin reporting our share of the revenue and our share of the expenses versus today where we record that share as net earnings in the other income line under the equity accounting method, right. As we sit here today, given all we have to do between now and then, we’re not disclosing specifics, there’s a lot of work to do. And the bottom line impact is really not that impactful. As we get closer to, I think the actual dissolution, we’ll give you some more guidance.

Do you have a lot to build in terms of being able to service the clients and deliver everything that you want to deliver to them, everything that you’re doing now, I’m assuming your current partner is doing. So, I’m just curious how much of that you can do behind the scenes as you lead up to June 2020.

We’re working on our plans and we have a fair amount to do. But as you think about technology spend and incremental bill costs I would – that’s going to be prioritized within our normal $3 billion or plus a year that we’re investing.

Okay. Brian, maybe one just high level. One on loan growth, I think, growing loans, core loan, 6% and a 2% world like you described would be considered great by most metrics, just curious if you think that’s sustainable, if we’re going to sustain this 2% world.

Yes. I think, it will ebb and flow and you’ve seen it over the last, if you look that one page on the low end quarter. It shows you across 6% to 3% to 6% for commercial. So what we’ve been doing, that’s helping drive that, one of the major things we did is, I think if you calculate. We have four segments which go against commercial lending, the Small Business segment, and our consumer business. Business Banking segment, Global Commercial Banking segment, which most be called middle market and in our GCIB for large companies. If you look across those segments, especially in small business, and importantly in Business Banking and Global Commercial Banking, Ather Williams, who runs Business Banking and Alastair Borthwick, those guys have been investing in headcount and people and relationship manager and – precise number for each of them. But I think 25% more bankers today than there were three years ago, which gave us an opportunity to divide the portfolios of clients further. So people had less clients to get more depth of relationship and that’s why you see statistics about key products per relationship. And then secondly, with the capacity we added to get new relationships all consistent with our credit. So we often get asked you’re growing commercial loans. We’re not – we always ask ourselves, okay, we’re sticking to our credit standards and we’ve been able to do that. So I think it’s sustainable and mid-single digits, maybe 6% a little higher, maybe 5%, maybe 4%, maybe 6%, if economy is a 2%, but this taking market share, because of the deployment of the capabilities into the middle market and business banking franchise is along with some of the work that’s going on now with investment banking and others is a good place to be. And it’s a three or four year investment, it takes about three years to get a commercial banker coming into our franchise up to speed, honestly. And then on top of that, there is a fellow named Robert Schleusner who runs a group, the – who does the underwriting process for the whole enterprise behind all these businesses and we’ve invested tremendously in the technology and the support of that Group for their underwriting capabilities turnaround time all the things and that is allowing us to frankly have – we’re told the fastest turnaround time of the banks, large, small or bigger or smaller. And so, we feel, that we’re creating the kind of competitive advantage that this franchise has embedded.

Awesome. Thank you, Brian.

Our next question will come from John McDonald with Autonomous Research. Please go ahead.

Hi. Wanted to follow-up on Jim’s questions around NII. Paul, you mentioned the full year outlook for the 1% hasn’t changed. The prior year outlook for the fourth quarter was to be around $12 billion. You came in a little bit higher this quarter. Just as we think about jumping off point into next year, are you still thinking about a fourth quarter NII around that $12 billion. Is that a fair reading of your disclosures and things like that?

Yes, that’s a fair reading.

Okay. And then just could you remind us how to read those disclosures and think about the impact of another Fed cut from here? There are some differences to the 10-Q disclosure you mentioned prior, like it’s only the banking book, it’s relative to the forward curve, how should we needle that and think about what one rate cut, if we’re going to model that going forward.

Sure. So you’ll have our sensitivity disclosures in our normal filings. But when you look at them, you’re going to see that, over the next – but if the Fed were to cut rates by 25 basis points. And remember that disclosure is beyond the forward curve, which has three rate cuts in it, right? But if you look at that disclosure, you will see that full 100 basis points would equate to around $3.3 billion on the short end, you just divide by 16, and you’re going to get the impact on quarterly basis of about $200 million. But it’s going to be a little bit less of that, because again that forward curve includes three rate cuts and then you’re talking about 100 basis points on top of that. So you’d literally be – that forward curve is literally, I mean that sensitivity disclosure literally means should be at zero interest rates. And obviously the next rate cut, we’re not going to be at zero interest rates. So it’s not going to be the full $200 million when you do the math on that disclosure. In addition, as you point out or alluded to, that’s just our banking book. And if you include Global Markets, which is modestly liability sensitive that decline would be even further mitigated.

Okay. So something I think you said maybe before $125 million to $175 million or something less than $200 million.

Yes. It’s going to be less than $200 million and I’d even tell you it’s going to be meaningfully less than $200 million.

John, these things – I know, you guys would like us to round it out to six digit each time and give it to you for next years. But the reality is, we gave you an estimate for this quarter, last quarter, I mean, fourth quarter – the current quarter and we gave it to you last quarter. And in fact, there has been more rate cuts and we’re still holding the same guidance of $12 billion in change and stats shows you that we’re managing the heck to try to avoid some of these impacts and how we’d price deposits and better growth in deposits when you may have estimated that. So there’s a lot of estimation, but we’re trying to give is, dramatically as Paul has talked about it over time, but it’s – there is a – it’s not, it’s in precise, there’s just a lot of moving parts that frankly we’ve managed better than we thought we could.

I totally get it. And that’s totally appreciated, Brian. Just with that, one more nitpick Paul, just from the third to the fourth quarter $12.3 billion this quarter. The pressure is that you have in the fourth is kind of the combination of the LIBOR. And then also the premium amort, is that why you could come down a little more than $200 million in the fourth quarter and again subject to all the caveats.

Look, as you’re thinking about the second quarter to the third quarter, remember, we had one extra day. We had a second rate cut that came at the end of the quarter. So as we sit here today, we don’t have that extra day, you’ve got two rate cuts fully baked in that are going to affect asset yields. Plus, you’ve got in that forward curve, so everything we’re talking about here as soon as the forward curve. You’ve got another rate cut. I already told you that, I thought that the premium amort would not be as significant anywhere near as significant as it was second quarter and the third quarter. We’re going to have loan and deposit growth. We’re going to have – we’re going to, again, as Brian just said work hard on all the other levers we have like deposit pricing. And so you get to, I’m not giving you guidance I gave you, kind of how to think about it based upon those sensitivity disclosures. But that’s why it’s a little bit different going from 3Q to 4Q versus Q2 to 3Q.

Okay, great. Thanks. Very helpful. Thank you.

Our next question will come from Betsy Graseck with Morgan Stanley.

Good morning, Betsy.

Hi, good morning. The question that we get, with everybody we speak with is around how you’re thinking about the competition in retail brokerage, with some of the e-brokers obviously going to zero commission on cash and options and different players, different price points there on different products, but just wanted to understand, how you think about that? I realize it’s a small piece of the revenue line you’ve got, but just want to see if you think that this is at all, something that you need to address in the marketplace?

So, Betsy, let me take that. Because if you remember, right? I had that business when we introduced $0 commissions in 2006, so it’s not a new concept of Bank of America. And so, about 87% of the current commission – current trades are $0 in the area of that – in the Merrill Edge and the self-directed platform that’s been true forever. So this is not a change to our operating strategy, but we don’t focus on trying to drive a pure trading type of thing. We think about the relationship in the Merrill Edge and things like that. So if you look at the consumer investment assets on Page 13, you can see, they’re up $20 billion year-over-year. We’re driving a whole relationship into these managed portfolios that’s based on financial advice to that. Yet, we still have a very confident, capable, I guess some doubtful competition. We have a very strong platform that grows also but if $0 change won’t affect as much larger, because we frankly introduced it 13 years ago.

Right, that’s with preferred accounts. And so when people look at Page 16 and they see the brokerage rev line there, it’s like $700 million this quarter. That is really commissioned on other things than stocks and options. Is that a fair way to read it?

That’s really not relevant here, because that’s in the wealth management business, where this stuff shows up is actually back in the consumer side, because Merrill Edge is in that area and that’s where the lion’s share of this is. So it’s not – that $700 million is. The financial advisory team under Andy selling things that closed end funds, mini bonds, stocks and a lot of other things. So if that – that’s under pressure for years. And as you will know and so that’s a constant change of fighting the average yield for the total client assets in that business, but that’s not affected by this decision.

Got it.

And you will see us push a little bit on some of the qualification for to open up this capability and another set of clients, but we only have 13% less to go, so.

Got it. Okay. And then just separately, one more question on NII, Paul, if you don’t mind, but in the quarter, the markets NII helped out this quarter. I believe and just let me know if I’m reading that right.

Yes, yes, you’re reading right. Market’s NII went up this quarter. And we’ve said that the markets business is liability sensitive. So it does help NII, if rates decline. I just would point out that we really manage that business looking at total sales and trading revenue not NII. And although the trading book is liability sensitive, it is really important to remember that client activity and product mix in Global Markets can vary quarter-over-quarter. And we’ll drive sort of income statement geography, which can produce an increase as you saw this quarter, NII or maybe reduced NII in another quarter, with the offset is going to be in trading account profits. So that’s why the real key here is to focus on the sales and trading disclosures as opposed to the mix between NII and trading account profits.

Got it. Okay, thank you.

Thank you.

Our next question will come from Saul Martinez with UBS. Please go ahead.

Hey, good morning, guys. I’ll also ask a question on NII. The one – it seems like obviously third quarter is a little bit better than maybe expected and you’re retaining the 1% growth in kind of implies, $12 billion for the fourth quarter. You obviously have had rates come in, long-end to come in forward curves pricing and at least two more rate cut. But it also feels like, maybe you’re a little bit more optimistic than about the NII trajectory than you were maybe earlier this quarter. Is that a fair reading, Paul? And if so, I mean, what makes you a little bit more optimistic about your ability to sustain NII? Is it just that loan growth is coming in better you’ve been able to reprice deposits a little bit faster? What gives you a little bit – what makes you a little bit more confident that your NII trajectory could be a little bit better than what you thought, maybe even a couple of months ago?

I think we do feel good. And I think we feel that way, because we’ve seen how our teams are performing in a different interest rate environment. We’ve seen how teams and our clients by the way, have reacted to appropriate adjustments on deposit pricing, given the change in LIBOR. You got to remember all of our clients are getting a huge benefit and what their paying on their loans. So it’s appropriate to adjust deposit pricing. I think we’re obviously growing loans and deposits well. We’ve deepen relationships and we’ve improved our capability to service some of both the loan deposit side. So I think it’s just another quarter under our belt where rates were different. And we’ve seen how the teams have performed and we’re feeling good.

Okay. No, that’s helpful. And on the deposit cost side, you did – I mean obviously, interest bearing deposit costs were down 5 basis points, and it seems like that’s going to be given the limited scope in retail, wealth and commercial, you’re being proactive there as you should, but you’re coming from a lower starting point on deposit cost the most of your competitors to begin with. So I mean, just can you just talk to how much more room you feel like you have as we get further along in the rate cycle? How difficult does it become or does it become more difficult to be more proactive in terms of lowering your deposit costs?

I think back to the – in the earlier discussion, that sort of general guidance we give our teams is you have to get us 3% in the current economic environment. We want to see 3% in core growth and deposits, and you have to then price to achieve that both. And then also at the same time achieve your goals on NII and things like that. So I think we try to be consistent. We value relationships. We focus on the core. On the commercial side the GTS relationships drive the economics in the business, as you well know. On the wealth management side, we’re driving not only the investment cash, but all the transactional cash and you have to think of those as two separate executions and putting teammates investing by putting teammates into the Merrill Lynch offices who can help the client associates and others who have always done a good job, doing better job of getting core checking relationships and mortgages and things like that, which will help. And then on a consumer side, obviously, it’s just the power of the brand and the franchise and digital competency. So but we don’t let people off the hook either way, and I – that’s said, we want them to grow, we want them to grow with the right kind of pricing that, somebody comes in and says I can grow by issuing a bunch of term CDs and premium price, we say that’s kind of interesting, but that doesn’t qualify for what we want. So and that then if you look at it by business you’re seeing, leave aside the movements as rates moved up and following you’re seeing as you stabilize and even come down little bit, you’re seeing able to, continue to grow and managing rate paid carefully.

And should we expect non-interest bearing deposits to grow disproportionately in this environment? It seems with lower rate, it seems like higher yielding CDs become less attractive, and this is a – for a bank like you, to National Bank and this great franchise and the national franchise, it seems like a pretty attractive environment or good environment for you guys to take share and suck up demand deposits at maybe a faster rate than some of your peers.

I think, yes, we expect to grow at a faster rate than our peers. That’s kind of axiomatic when you’re gaining the shares for this. But if you look at the – if you look at the slides on the deposits, you can see that growth in consumer drives the equation on the non-interest bearing and very low interest cost deposits. And we’re seeing there, Dean and the team have a good job of – they’ve gone from 6 basis points to 11 basis points. That’s due to mix. It’s – and as Paul said earlier, we are liability insensitive to some degree, because we have got the mix of deposits. And but you’ve got to remember on the $700 billion, 11 basis points, $700 million some a year of cost, there’s only so much leverage in there. So we say, just keep growing and grow in the right categories. Yes. They have CDs and the CDs grew year-over-year.

The only thing I’ll add there is – I think you all know this, but if interest rates are lower than deposit rate paid is less important relative to all the other things people reasons why people invest with us or I should say deposit with us. So theoretically, you might see more deposit growth in a lower interest rate environment, because trust is more important. The deep relationship they have with us across preferred rewards and other things we do for them. We can be mobile. The online capability, the nationwide network of financial centers, our global GTS capabilities, those just all become more valuable to customers if rates are lower.

Great. Thanks so much.

Our next question will come from Ken Usdin with Jefferies.

Hey guys, just a quick one, Brian, you mentioned that obviously delivering positive operating leverage gets harder with their – and rate environment where it is, but as you look ahead and you’ve done this good job of keeping this $53 billion or so, what are the incremental things that become more productive underneath that allows you to fund the incremental investments, like do we transition to other parts of the business becoming more productive or other pieces that you haven’t – maybe still haven’t yet attacked that could still provide that underlying support. Thanks.

Sure. I mean we have the operational excellence platform, which that only Tom Scribner had. Now he’s moved over to work on part of the operations group under Cathy. But Ann Walker has – she had simplified and improved. This is an ongoing program, which has literally every manager in the company that are couple of levels down from my team constantly working on coming up with the mapping of the process, improving our processes and asking for investment to help improve those processes. So there are areas where we’re very digitize and very, no paper and very electronic and you can think of that in some of consumer, there’s areas where we’re still just now getting the benefits of major investments. You may think about the underwriting area and commercial I talked about earlier that we’re now bringing the people the teammates onto the platform to drive it. And so all our platforms have major improvements available to – even though we’re very efficient and our efficiency ratio in each of the business units are industry-leading part from our scale and part from just the discipline of the teammates. So and we look at deployment of the relationship management town. Are we getting the calls and the clients from our visits and the productivity out of that? We’re looking at – we continue to work on a real estate configurations that were down 50 million square feet real estate from the start of 2010, and yet we don’t satisfy with ourselves in the occupancy rates. Can we push it up? Can we densify the space? The new building we’ve build, New York will be also this new modern style of work environment that allow us to make economic, higher rental costs. If – hence you look at every aspect…

Thanks a lot, Brian.

Our next question will come from Brian Kleinhanzl with KBW. Please go ahead.

Yes, thanks. I just – two quick questions here. On the Wealth and Investment Management, I heard that you were bringing down the non-interest expense. Can you get into a little bit more detail, if there is still more that can be done on expenses in there, I mean – the positive operating leverage with expenses down.

Yes. It’s – we have the pre-tax margin if you think about it, once you pay the talent team mates we have and the financial advisory platform and the private banking platform. You’re working on about half the revenue and we’re getting 30% of that – to the pre-tax line. So the idea is, you got to improve all directions, it’s not just expenses and its efficiency expense, simplification of product, especially for the – for the clients, with $500,000, $600,000 to continue to add straightforward products that are digitized on both the way they are delivered and the way they’re statement and everything. And then making the advisors able to handle more clients and that allows us get more efficiency, real estate configuration. There is a lot of papers still in this business just because the history of it, so they’re probably in the first inning of really, it’s a very digital business in some ways when you think about trades and how they go through, but it’s a very paper intensive business in other ways. The way we do AML, KYC refreshes – we’re going to recognize the team that took a several 100,000 hours out of, several 1,000 hours out of the work to do that, it’s just a 1,000 things. And so, but importantly also by driving the growth in loans and deposits and stuff that is less, creates more pre-tax profit margin frankly off the strength of the bank’s balance sheet in the size of our company and that gives us unique positioning. So we’re running the industry leading margins. And we know we can continue to push them up. It is a very slow thing and we – we don’t change the way we pay people. We really focus in on you’re working around and making our team mates ability. Have a great career make more money and sort of the clients better while we keep making the place, more efficient.

And then a separate one for the U.S cards, I mean, I think you saw the gross interest yield, still pick up in the quarter despite the breakup and change in prime rates there, was there something unique going on. It allows you to kind of expand yields and by the way, if…

The card portfolio, right.

Correct. Card portfolio.

Yes. Look, we’ve been focused on profitability. We have been careful about growth as we’re growing. We’re adding 1 million new cards a year and again with the focus on profitability. So we’ve reduced we’ve sort of scale back on people we think are trying to game the system or just going after promotions. So that’s improving the profitability overall. I think you saw that in the RAM that you’re referencing, which is up year-over-year and that’s mostly being driven by NII. I mean NIM growth in the card.

Great. Thanks.

Our next question will come from Matt O’Connor from Deutsche Bank. Please go ahead.

Hey, Matt. Matt O’Connor: Good morning. If you look at your expenses, ex the impairment and the legal cost is about $12.7 billion. Obviously if you annualize that it’s below the $53 billion. You’re talking about next year and I know there’s some seasonality in the first half of the year that drives cost higher, but I guess, first, is there anything in the $12.7 billion, that’s kind of not are not sustainable or unusual and why isn’t there may be some downward flexibility to $53 billion.

You mean, benefit. You’re saying... Matt O’Connor: Correct. Correct.

Yes, I think it’s just – the third quarter was just a little bit of timing. We’re increasing our investment in people in financial centers, in marketing, but it’s not even throughout the whole year. So you got to think about the guidance we’ve given for the full year as opposed to just any given quarter. Matt O’Connor: Okay. So just some ebbing and flowing there?

Yes. Just ebbing and flowing on marketing and other areas, which will rebound investments we expect some of that to rebound in the fourth quarter.

And Matt, that’s why, if you go back to that earlier page in the deck, why we should. If you think about the last couple of years, there’s always ebbing and flowing. But we’re showing that we’re kind of holding it here. And as you look over the next couple of years, we think we can hold it here, and then at some point, we’ll start growing. And we’re trying to grow the we’re trying to spend 3% more year but only grow the expense base 1% kind of long-term picture. We’re trying to take maybe 1% to 2% and with revenue growth of 3% to 4% in a normal environment that was great operating leverage and EPS growth, that’s the long-term view that we keep holding to. When interest rates move quickly in a quarter, those are things that deal with it, but over time, that’s what you’re trying to achieve. And so, you could take that is where the general operating principles we push our teams toward. Matt O’Connor: Okay. And then just separately, you talked about deposit growth potentially, 4% or 5% accelerating little bit from where we’re at right here, and then you talked about loan growth potentially being in the, call it 4% to 6% range. As you think about the overall balance sheet should that grow in line with deposits or are there some opportunities to bring down debt and you’ll see a little bit less earning asset growth?

Yes. Look on the specific point, there are opportunities to bring down debt. There is a little bit of opportunity there. Our TLAC ratios are probably little bit higher than we want them to be. But that was because we were adding a new bank in Dublin, adding a new broker dealer in Paris, and by the way, putting up our broker dealer here in the U.S for resolution planning. So we have a little bit of opportunity there. I wouldn’t make too much of a big deal about that. Basically our balance sheet is going to grow as we grow deposits with all that deposit growth going into loan growth, we still have the non-core portfolio running off a little bit. And whatever doesn’t go to loans is going to go into the securities portfolio.

And then you have the markets business, which also because of the financing activities and equities, not a lot of risk, but notional growth of balance sheet that you’ve seen. Matt O’Connor: Yes. Okay, thank you.

And we will take our last question from Gerard Cassidy with RBC. Please go ahead.

Thank you. Hi, Brian.

Hey, Gerard. How are you?

Good. Firstly, I just wanted to thank you and Bank of America for the continued support of the Bank Analysts Association meeting. You guys do that every year like you’re doing this year. So thank you very much. We really appreciate that. The second point, credit is very good for you folks in the industry. Can you share with us, when you look out over the next cycle, where are you guys spending extra time today just making sure that you don’t take your eye off the ball because some potential problems that could be on the horizon.

So, Gerard, you asked the question, Paul and I, and Geoff Greener, our Chief Risk Officer. And importantly, our Enterprise Risk Committee led by Frank Bramble, our Board of Directors. If we keep saying, how do we make sure that we’re sticking it through our knitting, so to speak, and you do that by you see all this goes industry – industry limits, country limits, leveraged underwriting limits. You pick just limit after limits house guidelines exception. So I think one of the things I think my peers and I would say is, with stress testing and other things you’re required to think of the worst of times in whole capital forward. So I think in the industry generally, that has had a good, a great impact in terms of us all thinking through the long-term impacts, but importantly, the data and the capabilities that we built starting 10, 12 years ago, are just tremendous. So when we asked the question, we can actually see in very discrete areas, whereas our exposure to this or that. The other thing and that’s important because then you can manage at that level. And team under Geoff has done a great job of sort of bringing that data to four and making sure we’re always watching all the different pieces. So, Mick Ankrom, who is in charge of credit risk of the company. I called him up after the Houston hurricanes, couple of years ago. I said, Mick what’s our exposure. So what zip code you want it for and which product, do you want it for? You want the card versus mortgage of people at both. In all – just as this is Saturday night or something like that, not to say he doesn’t have more fun things to do, but it’s. So I think that allows us to keep track of it, but it’s just all those limits and this granular limits. And then the intrusion of underwriting profit requires, really for any reasonably sized loan, a risk manager to specifically sign off along with a banker on the commercial side and consumer side, the parameters of the buy box of so-called, set by – with risk and joined there. And that’s, it’s kind of beaten in the system, it’s not something we – people argue about or think about. So, our real estate exposure is limited by limit that you, tomorrow presents and as ahead of the real estate exposure for the whole company and from the line side and supported by the team on the risk side. So it’s just 30 years I’ve been around this business you just see the granular – where we used to say, what do we have, the people have to run outlook. Now you have it. And then you can manage a lot more effectively on a go-forward basis.

Very good. And then pivoting a bit you touched on it in your prepared remarks about the regional bankers that you guys have been hiring here in the States. Tom talked about it at a conference recently. You had good numbers in your investment banking area this quarter and are taking some wallet share. Is it because of hires that you’re making across the globe or is it because some of your competitors are still struggling to really get back into the whole group of what they were let’s say 10 or 12 years ago?

Yes. I think that Matthew Koder and the team have just realized, we had the capabilities of the franchise tools. We just needed to really drive the calling effort and he has done a great job of doing that. Alastair Borthwick and Matthew together have been working on building out this middle-market team, which is good. It’s not only just pure investment banking everything’s M&A or maybe debt capital markets. And also the exposure plays into a lot into the markets business, hedging fuel cost or hedging interest rate risk or currency risk. The average mid-sized U.S. company is engaging all over the world. And that’s a competitive advantage. Only a few of us have us to be able to deliver in. India for a mid-sized company, United States and help them, think through that or other places. So I think the team has done a good job there. We work very closely with a wealth management team in terms of referrals and coverage of the entrepreneurs segment thinking of a private bank or a financial advisor Merrill Lynch and their clients working with the commercial that we measure that we would goal it. Has to come sort of naturally by money motion of transactional activity but the awareness of the capabilities in the coverage is they’ve done a good job. And so we will always be susceptible of the biggest deals of that activity slows down. All of us have that issue, but that underlying middle market just a lot more companies 10,000, 5,000 companies that you can get out that there’s just a lot higher probability of one I’m doing something on a given day than the top 1,000 companies.

No, very good. Thank you. And look forward to seeing you in three weeks. Thank you.

Okay. Thanks, Gerard.

And there are no further questions at this time, so I will turn it back to Brian.

Thank you very much for your time and attention. And thank you for attending our earnings call. I think the themes for this call, and you heard them in the Q&A in earlier presentations are the years of investments that the team has made and managed are paying off. We’re using loans. Our loan and deposit growth, above industry averages and above the market on a conservatively responsible growth basis continues to help offset the NII pressure due to rate changes which is – which all of you are focused on, it should be. We still continue to make sure we stay dedicated responsible growth to make sure that the credit risk and market risk we take on is consistent with how you expect us to manage it. And we continue to manage investments and expenses and run that sort of – do a brain size of saying we can grow our investments and we can also continue to manage our expenses carefully and relatively flat. And then on top of all that. Over the last few years, our ability to have sustainable predictable earnings in excess capital is coming back to you, along with 100% of the earnings at levels which are unprecedented among our peers. So that’s helping drive down the share count and help produce EPS growth that we need. So consistent with responsible growth and we look forward to seeing you next time.

This does conclude today’s program. Thank you for your participation. You may now disconnect.