Bank of America Corporation 2026 Q3 Earnings Call

Thank you, Leo. Good morning, everyone, and thanks for joining us to talk through our third quarter results. I am joined by Brian Moynihan, our Chair and CEO, and Alastair Borthwick, our CFO. As always, the earnings release and presentation are posted on the investor relations section of bankofamerica.com, and we will reference those materials during the call. Before we begin, a quick reminder, during the call, we may make forward-looking statements and refer to non-GAAP financial measures. These reflect management's current views and are subject to risks and uncertainties. Those are outlined along with the relevant GAAP reconciliations in our earnings materials and SEC filings on our website. With that, I will turn it over to you, Brian.

Morning, and thank you for joining us today. Our third quarter results show the importance of a diversified company. The businesses closest to customers, wealth clients, and commercial clients, the Main Street businesses, show continued strength, higher loans and deposits, strong wealth management flows, higher NII, and better credit drove solid earnings. While the sales and trading revenue, investment banking revenue were lower. We reported net income of $6.9 billion after tax and earnings per share of $0.91. On slide 2, we have adjusted those results to take into account the non-tax deductible regulatory settlement charge of $1.2 billion, which is a $0.17 per share impact. Three points to understand about the settlement. We understand the seriousness of compliance, and we are responsible for getting it right. Second, we have invested billions of dollars in technology and dedicated thousands of employees to combat financial crime.

The team is far along with and committed to completing the work required to be addressed by the regulators. Third, we have committed the resources, and the ongoing cost remediation is embedded in our company's expense base. Excluding the regulatory settlement charge, our net income was $8.1 billion, or approximately $1.08 per share, up from last year. Our leadership across our businesses and products and geographies allows us to meet more of each client's needs, deepen relationships, and drive growth across our company. The connectivity between business units is strong and continues to be a competitive advantage. When we think about our results, it starts with the health and activity of our clients, which brings us to slide 3. We believe at Bank of America, our clearest economic signal comes from the daily activity of the 70 million clients and thousands of businesses that bank with us.

The message has been consistent. Consumers continue to spend, with year-to-date money movement up 5% from 2025, and you can see that on slide 3, and that is similar to what it was for the third quarter and similar to what has shown up so far in early October. Our business clients invested and hired selectively, supported solid growth in jobs and wages across various income levels in our customer base. Wealth clients remain engaged and continue to seek advice, while commercial clients use more of our lending, treasury, and payments capabilities. Payment volumes, digital activity, loan demand, and wealth flows all remained healthy. You can see the digital activity in the slides in the appendix, as we always put in our results. The economic uncertainty that prevails and the geopolitical instability are always present.

What our clients are actually doing is continuing to point to a resilient and growing economy in the U.S. That activity has produced organic growth across our company, coupled with great credit quality, and we show that in slide 4. Slide 4 shows an addition of organic growth for the quarter. In quarter 3, once again, we grew through both client acquisition and doing more with our current client customers. We added another 200,000 in the quarter of net new core consumer checking accounts. We now have 39 million checking account customers. It has been nearly eight straight years of quarterly progress and growth. That is quite a flywheel. We opened more than 1 million new card accounts. Importantly, we grew our card balances nearly 5%, consistent with our medium-term goals disclosed at Investor Day. The focus on investment in that card product is producing results.

Our wealth clients generated approximately $41 billion of flows during the quarter. We continue to add affluent and high-net-worth relationships across global wealth and consumer investments. Across those businesses, clients entrust us with more than $5.7 trillion of their families' balances. Commercial loans grew across every single segment, from small business to business banking to global commercial banking to global corporate investment banking. That is from small businesses to largest companies in the world. Our treasury services, i.e. cash management relationships, also expanded. This bodes well for our loan growth that we will talk about later, but also shows you the strength in the economy as these commercial customers continue to be active. Growth that you see on this page reflects the investments in our people, our technology, our capabilities in digital, and our physical network. These deep relationships support earnings, balance sheet growth, and long-term shareholder value.

With that overview, let me turn it over to Alastair Borthwick for more detail on the quarter.

Thanks, Brian. I'll start with a few other income statement highlights on slide 5. As Brian said, momentum continued in our core banking businesses. Consumer banking, wealth management, and global banking's commercial businesses drove most of the revenue and earnings growth, while markets and investment banking revenue declined from prior periods. Equities delivered a record third quarter, and reduced client activity and changing market conditions, including a major shift in interest rates, significantly affected our leading FICC micro businesses, including credit mortgages and munis. Those declines more than offset growth elsewhere in trading. Revenue is approximately $30 billion, up around 3% year-over-year, and an 8% increase in NII and 17% growth in asset management fees more than offset lower investment banking and sales and trading revenue. NII reached $16.6 billion on an FTE basis, up 8% year-over-year, and was up $450 million from the second quarter.

Net interest yield of 2.16% improved 15 basis points year-over-year and 8 basis points from the prior quarter, moving us closer to the 2.3% medium-term target we outlined at Investor Day. Credit quality improved, capital and liquidity remained strong, and earnings remained solid. Let's turn to the balance sheet on slide 6, where you can see we remained strong and became more efficient as evidenced by the improvement in our net interest yield. Total assets were $3.4 trillion. That was down 2% from Q2. Ending deposits increased $14 billion from Q2 and remained above $2 trillion. Quarter-end loans rose $34 billion to $1.25 trillion, and we funded that growth by reducing securities balances, while lower markets assets and higher deposits allowed us to reduce short-term wholesale funding, thereby continuing to improve the net interest yield.

Loans have now grown for 10 consecutive quarters, reflecting continued activity across both commercial and consumer clients. Global liquidity sources remained strong at $914 billion, and capital stayed well above regulatory minimums. CET1 was 10.9%, down roughly 35 basis points from Q2, primarily reflecting higher funded and unfunded loans and a $3 billion reduction in CET1 capital. Capital distributions exceeded net income due to the regulatory settlement charge, and we also had a $1.8 billion portion of AOCI of AFS securities that impacted CET1 from higher rates. Our hedging continued to limit the AOCI effect of higher long-term rates on much of the AFS securities portfolio, and a little less than half of the total Q3 AOCI decline related to cash flow hedges and did not affect CET1. Despite the AOCI impact, tangible common equity ratio, or TCE ratio, was stable with the second quarter.

We returned $8.3 billion to shareholders this quarter through dividends and share repurchases, and this combination of balance sheet strength and capital generation continues to support clients and shareholders. Let's turn to deposits on slide 7, where you can see they're at $2 trillion now, up $31 billion from the third quarter of 2025, despite our intentional runoff of $11 billion of higher-cost deposits recorded in all other. Global banking deposits grew 6%, and consumer deposits increased modestly with low interest and non-interest-bearing balances up nearly 3%. GWIM deposits remained stable and well-priced. Our deposit mix remained attractive, with non-interest-bearing deposits accounting for more than 75% of year-over-year deposit growth. We also remain disciplined on pricing with the total deposit rate rising just 3 basis points to 1.49%. Our focus on operating deposits and our low loan-to-deposit ratio allow us to compete on capabilities rather than price.

Clients value the safety and convenience we provide, and a significant share of balances remains in relationship-based operating accounts and other low-cost funding. Our deposit franchise remains an important competitive advantage for us and continues to fund healthy client activity. Let's turn to the loan trends Brian mentioned on slide 8. Here we show average loans up approximately 6% year-over-year, led by broad-based gains in commercial. Wealth-related lending also remained strong, and card balance growth continued to improve. Commercial loans increased 8% year-over-year, with growth across every line of business, with small business up 2%, business banking up 9%, global commercial up 6%, global corporate up 10%, and GWIM custom lending was up 22%. Within that performance, global banking international commercial loans grew 15%. Further, we saw broad-based middle-market growth across the commercial banking segments in key sectors including real estate, sports, technology, healthcare, and biopharmaceuticals.

In consumer, card balances grew nearly 5%, while higher consumer real estate balances and small business growth were more than offset by lower auto balances. Securities-based lending and wealth management grew 21%. Fortunately, the growth remains consistent with our underwriting standards and credit discipline. It also supported another strong quarter for net interest income, which we show on slide 9. As I noted earlier, both net interest income of $16.6 billion and the net interest yield were up strongly from both Q2 and a year ago. Fixed-rate asset repricing and global markets activity both remain contributors, and commercial loans, card balances, and deposits have increasingly been the ones driving the growth. Looking forward, we expect NII to improve sequentially in Q4 and again through 2027 based on anticipated modest loan and deposit growth and continued fixed-rate asset repricing.