Good day, and welcome to the Bank of America Third Quarter Earnings announcement. Please be advised today's program may be recorded. It is now my pleasure to turn the program over to your host, Lee McEntire.

Good morning. Welcome and thank you for joining the call to review the third quarter results. I trust everybody has had a chance to review our earnings release documents, as usual they're available including earnings presentation that we will be referring to during the call on the Investor Relations section of the bankofamerica.com website.

Thank you, Lee, and thank all of you for joining and I hope all of you are staying safe. We are going to begin on slide 2. And today, before Paul takes you through the detail on the financials, I thought I'd give you some thoughts on the first three quarters of 2020 and how we're driving for you here at Bank of America. As an opening comment, the economy and markets this year have been defined more by than anything else by the impact of the global health care crisis. This has created a sinuous path for the recovery. As we have said early on here at Bank of America and what our data continues to suggest is that we are seeing a return to the fundamentals of a generally sound underlying economy, but we won't get there until we fully address the healthcare crisis and its associated effects. These effects have been lessened by the monetary and fiscal policies, and by the core health of the US consumer given those policies. There are three key themes that I'd like to comment on. One is the economy generally, what we see in our data and the impact of the projected path on the company's earnings and prospects going forward. The second is how do we continue to think about and manage the risk resulting from the economic downturn and the subsequent beginnings of the recovery, and the third is how we're making progress given all that backdrop on our corporate strategies. Before I touch on these items, just a brief summary of the quarter. Overall, a solid performance given the operating backdrop we face we. We earned around $5 billion after tax or $0.51 per share. We ended the quarter with a capital ratio of 11.9% versus 9.5% minimum. For the third period of this pandemic, we've earned more than twice our dividends, attesting to the strong balance sheet security of this company. The operating environment continues to require more operational excellence than ever before. It requires delivery of immediate technology capabilities across our franchise from our group of talented teammates. It also has to deliver a customer experience that can be redefined on a daily basis.

Thanks, Brian. I'm starting on slide 5 and 6 together. And most periods my earnings remarks are focused on year-over-year comparisons but this quarter, many of my comments will be directed towards comparisons against Q2, 2020, as most investors we speak with are more interested in our progress quarter-over-quarter as we work sequentially through this health crisis and given COVID has made year-over-year comparisons less relevant. Q3 net income of $4.9 billion or $0.51 per share compares to $3.5 billion or $0.37 in Q2. The earnings improvement was driven by lower provision expense, as we modestly added to the reserves for credit losses in Q3 compared to the more significant increase in reserves in Q2 versus Q2, the lower provision expense was mostly offset by lower NII and higher cost of litigation and costs of the covered environment. Lower rates and loan balances caused NII compression, which I will discuss in a moment. The linked quarter decline in noninterest income was driven by the more robust trading and IB environment in Q2, as well as a $700 million gain on the sale of mortgages recorded in Q2. While down linked-quarter, fees from capital markets in both market making and investment banking were solidly up year-over-year. At $1.8 billion, investment banking fees was a second best quarter in the company's history. Brian noted progress in activity levels across many of our businesses. And that showed up in increased levels of fees, which helped to mitigate the linked quarter decline in capital markets revenue.

Our first question is from Glenn Schorr with Evercore.

Hi, thanks very much. So you've historically been incredibly stable in trading. And again, you are this quarter, but I guess I have a question to rehash on during times like this, you have some peers that will have bigger spikes, and then they'll come back down to earth at other times. And I'm just curious if you could talk about – you are steady but you're not seeing the same spikes? Is that your risk tolerance? Is it a CCAR stress testing thing? Is it a mix of business and is it conscious, meaning are you investing to close some gaps? Just curious if you could tell us about that from the markets perspective? Thanks.

Sure. Well, look, again, our sales and trading results were solid with the total revenue up 4% year-over-year, equities is up 6, FICC is up 2. We had no days with trading losses again this quarter. If you kind of look at, I don't really like talking about competitors, but every competitor is going to have a different business mix. And many of our competitors, I will say, take more risk in one quarter or another, clearly that can create some differences in relative performance. We don't really focus that much on individual quarters, but instead we look at results over longer time periods. And, as noted, sales and trading is up 22% year-to-date. I would also note that we're gaining share we think in equities and other parts of our markets business, and we've gained, we certainly have gained share in investment banking. And there have been quarters where we've done better, I mean, than some of our peers go back to Q1, wherein you'll see in equities where we basically did better than all our peers. So, we're staying focused on the medium to long term, we're investing in the business, and we were taking share .

Fair enough. Maybe just one follow up on. You noted, obviously, loan demand stabilized, trough quarter for NII, don't expect to add to reserves, deferrals mostly over, and you have a $35 billion capital cushion. I'm curious what you feel is a more natural number. And at some point, we'll get off buyback suspension. So, what's a more natural number for your capital cushion? And what might be your intentions on what to do with that excess because it feels like organic growth; you're going to make more money than you can pile into organic growth for a while.

And that's a good list to work with in terms of citing things, and yes we are generating twice our dividend or more, have been for every quarter even when you put up the reserves, even while the rate structure hits. So, trough quarter for NII last quarter, expenses coming down, built the reserves, we'd expect that we'll get through the stress test, and then we'll start to go into capital redeployment as we did before. And our general goal is to run about 100 basis points over the minimum. So for us, that's 10.5, which is another reason why the mix of business is so important to us that you referenced earlier. Remember, we had a stress capital buffer that was 2.5, and we didn't use all of it. But so, we got plenty of cushions here from an operational basis in terms of the ability to use capital management once we're free and clear.

And we can move next to Jim Mitchell with Seaport Global.

Hey, good morning. Maybe one for Brian, given the pressure in the industry and your scale advantages, do you see -- is there an opportunity here to kind of pressure advantage a little bit and try to accelerate market share and sort of what that might mean for expenses if you did?

Yes, well, I think we've been able to push market share. So, if you look at the FDIC data, I think we were up 60 or 70 basis points in aggregate deposit market share June 30 to June 30, and everybody had the benefits from the monetary policy, but what we watch is where the market share is going to stick to the breadth. So think about in terms of adding commercial bankers, which we've added. Think about it in terms of entering new markets and branches. This year, we've entered several new markets, if you look at the deposits, in these markets, that we've been open a while, they're $50 million per branch moving to $100 million per branch. And think about the wealth management business, adding financial advisors, so we just keep driving that total. And if you think about -- we have $1.7 trillion in deposits, $800 billion plus in consumer, but a lot of other people forget that we also have a personal business in GWIM with $200 billion, $250 billion plus in deposits. So we have pressed our advantage in consumer, those who've been around the company, we’ve repositioned the consumer business from 60%, primary checking to 90% plus, and that's a million new checking accounts year-to-year, they're 800,000 - 900,000, something like that in a year where we've been shut down for a couple quarters from some of the activities, the branches, and that’s strong performance we are pressing at all time. The magic has been we've been able to manage expenses between 13, 13.5 a quarter. Now, you’ve got to add the merchant to it, there's a 13.7, Paul did, and still invest at that rate. And that's -- look at that page four on the digital growth. It's just -- it's very strong. Our Zelle I think was 30%, all the Zelle transactions, Erica, and then life plan, this quarter we put out a new product that you can do your own financial plan and 0.5 million customers in a couple weeks. So, across the board and each element of franchise investing $3 billion in technology. So, we're pressing our advantage organically every day, and you're seeing that come out. Our deposit market share across the board has grown and our loan share where we compete has continued to grow and our GTS business has continued to grow. And as Paul said, our investment banking has grown and we're keeping it driving.

That's helpful. And so, you feel comfortable that you can still I mean, add the $200 million to the 13 to 13.5, so 13 to 13.7. You still feel comfortable doing all that and keeping expenses in that range.

Yes, it just, that's this operational excellence platform, if you look at whatever page that was, look at all those quarters. And you go back even before that, it's been and think of all the investments we've made, make I think that's three years that we show you maybe so think a $10 billion, $9 billion to $10 billion in technology development, code development, new initiatives, and that too in a period of time and expenses stayed relatively flat. Think about redeploying, probably 300 to 400 or 500 new branches across that decade, across that three to four years in markets, you'd never been, think about refurbishing. We've done 300 or 400 branches this year so far. We've opened in the new market, et cetera. So just this quarter, just this little quarter, we open 13 branches in new markets. So we're pressing our advantage. And the board asked me and I, we'd have the discussions with our major shareholders, if you, could you press it harder, and there's a in the answers, by talk to market people sure, they'd want to spend more money on marketing, but I think we spend enough to do the trick and drive it in the way that stick to the risk.

And we can move next to Betsy Graseck with Morgan Stanley.

Hey, good morning. Thanks for the time. I wanted to dig in a little bit on the point you're making Paul earlier about the cash and the redeployment into securities. And I just wanted to get a sense as to 4Q. How much of NIM uplift do you think you're going to get from that? And then what pretty percentage of cash have you used already? What is going to be guiding you on? How much more to use here? And is there a limit for how much cash you're willing to redeploy into securities?

Yes, sure. So, in the third quarter, we deposit about $100 billion of our cash into mortgage backed securities and treasuries over the third quarter. And on a weighted average basis between the treasuries mortgage backed securities, that probably produced a lift relative to cash about close to a percentage point on what we deployed. You didn't see a lot of that come through in Q3 because of the timing of those purchases throughout the quarter; you'll see more of that impact in Q4. With respect to future deployment, we have some firepower left. I hesitate to give you a number but call it maybe another $100 billion-ish, I'm not telling you, we're going to deploy all of that in the fourth quarter. We're continuing to access deposit and will likely continue to deploy more cash, very likely to deploy more cash into securities moving forward, but no answer right yet exactly how much. The size and the pace of that will be influenced by a number of judgments, including things like loan demand and customer deposit behavior. And we'll also balance the mix of purchases as we assess the trade-offs between capital, liquidity and earning.

The one percentage point you're talking about as in is the yield left on the portfolio versus cash.

No. That is, if you compare what we're buying mortgage backed security, treasuries to what we were earning in cash or repo. The pick up in yield on that investment is a little less than 1%.

Yes. Okay. Yes, I got it. All right. And then maybe, if you could speak a little bit to both yourself and Brian, to the discussion around the C&I loan utilization, and I get that we're at a historic low or close to the lows and utilization. But what is it that you're seeing in your customer discussions that gives you an expectation that you could see that start to left in for Q1 and into 2021.

So what we see is it just isn't -- hasn't been going down, it kind of ran down throughout second quarter in the first quarter, we have panic bar, people drawing the lines, and then it ran down. And so some of these companies are making more cash flow than they've ever made in. So what you're starting to see is a couple things. One is in areas like auto, retail dealers, and stuff that the inventories are going to have to build; they're also going to have nothing to sell. So they'll build those back up, you're seeing it in suppliers of parts and things, they're building their inventories that are seeing more final demand on the products that sustain and that I think that the key, so it's more just talking to people and seeing that, frankly, that they brought it down about as far as they can, from sort of the day-to-day operational basis, when you start to think of $50 million revenue companies running the numbers that Paul gave you, which is what we call business banking. They can't get it much lower neck because they are paying their payrolls and doing other things. And so they're going to start to build back up as they start to expand to meet their client demands. And so that's what we get to this conference, just the conversation we had that we've had with them in talking to them in these deep reviews we've done, it's been clear that they're feeling better that the core demand, from May to June to July to August to September picks up. The only big question when you're -- when we're wrong on all this terms of loan balance is really in the high end and who has access to markets and how deep that goes in the middle markets, which would make these on the investment banking side, but that can move the loan balance around as you well know that.

And we can move next to Mike Mayo with Wells Fargo. Your line is open.

Hi, this is a follow up to you got pressing your advantage. I mean, it's good news, bad news. Good news is you're growing household, your deposits; the corporation up one fourth year-over-year, your digital banking is growing. So that's great. And your award is, your NII gotten crushed, right. So short term versus long term trade off. Try to look at an environment with lower rates for longer as you acquire these customers. Have you changed your assumptions for a lifetime value because I assume you eventually want to monetize the benefits of the relationship, but it's just not happening yet?

So I think, Mike, you have to think about it two ways. One is for the new customers coming on bringing us $100 billion in incremental checking deposits year-over-year. That is money coming on at basically zero that you can redeploy, as Paul said. So there's a value to that incrementally to the company. The question is when you had a quick fall down or rates that we had, if you have to kind of get underneath it come out the other side, as you well know. But, look, the value of the positive franchise represented by having core house of relationships, and that's where you see the things move forward. So what are we seeing? We're seeing a rebound in our auto lending; we're seeing a rebound in our card lending. Those are coming because we have the core relationships that are digitally inactive, 50% of the sales are coming digitally. And that helps us grow. And then you think about just on the consumer, look at, if you look at page 15 on the investment side, you're seeing that build up by $40 billion year-over-year, $20 billion linked quarter. So that materialize the balance and the good news is you've looked at the fee structure, across the platforms and the different things you're seeing the fees start to come back up, which is just core activity. So, you only have $200 million, $225 million in total quarterly deposit interest. So it can only go from 225 to zero, there's not much left. And it was a billion that in class year this quarter. So we brought that down. And now we just got to grow the volume back out, and you're seeing that start to happen. And that's what gives Paul comfort from the over rejections. And it's the depth of relationship; it's not any single product, as you well know. We're pressing the advantage because frankly, even at a low rate environment, more core deposit customers, more core checking accounts than deposit, in addition to our wealth management business in GUM, more TTS business we will make more money on it. You might get a twist of rates in a given quarter, but just think back. We had this discussion in the mid 2000s. 2013, 2014, 2015 year, you saw the earnings come up even before the rates move.

And the rates, yes, we know, this typical linchpin to a customer relationship is just getting value today for that relationship, and you're mentioning the different products. Is there a way to think about charging more fees or something? If you have a low rate environment like this, again, it's getting your money's worth more or the effort you've put into gathered these new households?

Yes, well, I think, not penalty fees clearly, Mike, does that just as a bad customer experience, because the other thing is the attrition rate and the book is dropped at a very low because the high quality customer experience our team delivers, then it gives you the permission to do more with them. So penalty fees, I think, are not the way to go. But core account fees for the structures are there and but the reality is most of is our preferred book, which is 80% of the consumer deposits by definition, is way above any minimum requirement for fees. And so you've got the volume, you get 80% of consumer deposits in a book with only about 20% of customers, so you make it up in your expenses and your operating capacity there. And that's what -- that's how you ultimately make it up even the low rate environment is just the sheer. We have 4,300 branches in this franchise, Mike, in 1999, we had 4,800 distributors.

And I think Mike you deepened with them, you deepened with them, in loans, you deepen with them in wealth management. And we're making progress in all those areas.

And we can move next to Matt O'Connor with Deutsche Bank. Your line is open. MattO'Connor: Good morning. I want to follow up on expenses. You talked about $13.7 billion in the fourth quarter. And I just wanted to figure out like is that still an elevated number from COVID? And because if you analyze it, and yes, the 1Q is seasonal bump, you're kind of call it mid $55 billion range for next year. Which feels high but I want to give you guys a benefit of doubt.

Yeah. I think the three points, the $13.7 billion roughly $13.7 billion to 4Q that probably include net COVID expenses of $300 million to $400 million. MattO'Connor: Okay and how do you think about the timing of that $300 million to $400 million coming off? I guess it can be tricky that everybody assuming at this point.

$300 million or $400 million, right, on the $300 million to $400 million per quarter. I mean, in the fourth quarter, it was higher this quarter. But in the fourth quarter it kind of baked into that number is $300 million to $400 million of net COVID expensive. So that'll come off, over 2021 and we'll get more of it at the end of the year than we were on beginning of the year, but it'll, I don't know, ratably come down. I can't, I would expect maybe half of that to be in the fourth quarter of on a full year basis. MattO'Connor: Okay then a separate on upon net income, you talked about a moving higher in 2021? I assume that's on a linked-quarter basis, and obviously from day down and challenges in the third quarter, but maybe just elaborate a bit on the outlook for net interest income for next year, based on the assumptions that you have.

Sure, look, we are not providing any specific guidance. I'll give you a few thoughts for next year. Obviously, the lower reinvestment yields are expect to continue that's going to impact NII but that headwind early in the year should be offset by the deployment of the cash into securities. And then by the middle year, we're hopeful that loan growth will be a tailwind as the economy recovers. So we think NII should move forward and up from here. MattO'Connor: If I work in that math and think about, again, to adjust for the day count and some of those nuances. Would your expectation be that net interest income dollars in 3Q of next year be higher than this year?

Yes. I mean 3Q to 3Q? MattO'Connor: Yes.

Yes. I'd have to think of it, I'd have to look at that. I mean, certainly higher than, yes, I would say that would affect the 3Q next year, it will be higher than 3Q this year. Yes.

And we can move next to John McDonald with Autonomous Research.

Hi, Paul, two NII questions just near term. So it sounds like you might be expecting a little bit of lift net of all the factors you talked about in NII in the fourth quarter or kind of flattish up a little, just kind of what's the near term outlook on NII.

So the near term outlook is, as I said, it's going to be we think, at least flat and we're optimistic is going to be up. So we think we're at the low point 3 for NII. We've got the ones of reinvestment on, on security. And we've got the lower average loan balances, given we're ending this quarter on loan balances. But we think those headwinds are going to be offset by the deployment of the excess cash that we've done. And we'll probably continue to do in the fourth quarter. So for at least flat and optimistic up.

Okay, and how, when you think about redeploying cash rates are still very low today, what -- how do you balance the risk of locking in low yields and duration risk, against looking to protect NII? And thinking loan growth might come back; you expressed some optimism there.

Yes, it's a very good question. We are always balancing our liquidity, capital and earnings. I want to go into a lot of detail, but we are maintaining the assets sensitivity of the company with these purchases.

Okay, and then one nitpick here in the other income category, the net loss and noninterest income minus $250 million. So you mentioned, tax advantaged investments and other things, is that kind of what we should expect going forward, and you're getting the benefit in the tax rate, but this other income kind of runs it a little bit of a losses, or there's some other issues there.

Yes, no, I think that I would expect that. I think other income is going to bounce around quarter-to-quarter, but it should on average, be down a couple of hundred million, given, as you said, the investment in our renewable energy products and other ESG efforts, which create partnership losses.

Okay. So that's kind of a new runway for that.

And remember in the fourth quarter, those partnership losses are always higher. So think maybe a couple hundred million higher.

Okay, more than the $250 million this quarter.

Yes, but we get the benefit in the tax line throughout the year.

Yes, 10% for the fourth quarter. And do you have an idea of like tax rate for annual basis going forward with this new arrangement?

I don't have an expectation for next year to share with you. But the fourth quarter absent unusual items, 10%. And I would just remind everybody that these tax advantaged investments are things we're doing to help society. We're talking about low income housing; we're talking about wind and solar. These are things that are part of our ESG effort. Yes, we are a militaristic company. But on the other hand, we're also doing it because it's a good business for us and helps us generate the benefits net of the cost of losses are positive the company's earnings.

And we can move next to Ken Usdin with Jefferies.

Thanks. Good morning, guys. I was wondering if you could elaborate a little bit more on just your expectations for just how the last cycle is going to evolve? Paul, I believe you mentioned that wouldn't expect losses to really start moving up until mid year, next year. And as we start to evaluate whether or not and how much stimulus we get versus what we've already gotten baked in the cake. Just how are you expecting to see both the consumer and the commercial side project us as we move forward? Thanks.

Yes, sure. So look, regarding the charge-offs, I think we've covered but in consumer, given the lack of significant delinquencies we've seen so far, even on those customers will come off deferral. And given the fact that net charge-offs don't occur without bankruptcy until 100 days past due, it's just not likely, we're going to see consumer net charge-offs, which show up until kind of mid to 2020 at mid 2021.

Yes. If you go back and think about it, what we thought was going to happen third quarter this year pushed out going back to the first quarter we looked at then the second quarter, we looked at we pushed out further, the third quarter, we pushed out further, so it just keeps pushing out based on frankly the characteristics of our consumers are stronger than the characteristics generally in the United States, and characteristics of United States are their consumers are doing better, because of all the things you mentioned, than the unemployment statistics would indicate in models. And so it's just pushed it out. And but it's now in the second half of next year.

Yeah, I guess I am just trying to wonder -- sorry, go ahead.

But remember, the near-term path of charge-offs is going to be driven by delinquency roll and things like that, if the -- what's delinquency at the end of this quarter. And as Paul said, the 30 day delinquencies are down year-over-year and mortgages and cards and things like that, it's down as a percent and down as dollar amount and down as a percent on a smaller balance. So it's, their credit quality has been strong.

Yes. And you made the point about not being quite clear yet on, if you should release reserves, just given the uncertainties, I guess, how much is future stimulus a part of that equation? What do you look forward to kind of get that comfort zone that you can say, I know, you said the builds are done, but just in terms of starting to utilize and feel comfortable that you can lead even more of those reserves kind of flow back into capital?

There were -- so a stimulus plan would help the unemployed, the businesses, they're still struggling to get their business capacity -- to get their business utilization of those obvious businesses, you all know, and then states and towns, so they don't have further reduction in budgets or, and/or in schools and other things, hospitals, all these people have been heavily affected. Stimulus affecting those would help all these speed up the pace of the estimates coming down, quite frankly. Right now, there's hasn't been -- right now there's -- it's not baked in, as Paul said earlier, but if stimulus coming in, it would move us further, and you'd see the reserves come out further, because their lifetime expectation of loss would be lower. It's kind of the way it works for less.

And we will move next to Charles Peabody with Portales. Your line is open.

Yes, two quick questions. And your guidance on no more reserve builds. I'm trying to make sure I understand that because you've also talked about the possibility of loan growth. So at the very least, you'll cover charge-offs but we also provide for loan growth.

We would but just think about a couple of percentage of loan growth given the level of reserving wouldn't change it dramatically. So if we had fast loan growth, which I don't think economy is going to support in the near term, we'd have to grow faster, but that'd be a high quality problem to have to build reserves for loan growth.

Sure. And then the second question is can you give us some color on the pipeline for investment banking? What that looks like versus the second quarter or the year ago fourth quarter?

Yes, the pipeline looks solid for investment banking; again, the second quarter was a record quarter for us. And the third quarter was the second best quarter for us. So investment banking normally down sequentially third quarter, the fourth quarter. And I don't think you could expect to see the same type of volume in the fourth quarter that we saw in the second quarter or perhaps the third quarter, but the pipeline looks solid. And we're even seeing some M&A pickup in or at least from a discussion standpoint.

And Tom Montag and I have been very pleased with the work that Matthew Koder has done with their team over the last year and a half or so that since he took over and just driving great coverage, driving great connectivity to our middle market businesses, and the fees there are continue to grow. And so they've done -- he's done a very good job of the management team in that business and we'd expect him to keep making progress.

Yes, we've gone from just a middle market alone, we've gone from fourth to second in a year with 9.5% market share; we talked about market share gains earlier.

And this does conclude the question-and-answer session. I'd like to turn the program over to Brian Moynihan for any closing remarks.

So number one; thank you all for joining us and your interest in our company. Second; a solid quarter of $5 billion plus in earnings, nearly $5 billion in earning, $0.51 a share. Good business progress across the board in terms of client activity and client household growth. And also we saw the economy continued to progress in terms of our customer spending, and it continued to see that continue in October. So nearly $5 billion in earnings, solid, very strong capital, very strong liquidity, continuing our responsible growth manager. Thank you.

Thank you for your participation. This does conclude today's program. You may disconnect at any time.