Bank of America Corporation (NYSE:BAC.PRC) Q4 2016 Earnings Conference Call - Final Transcript

Jan 13, 2017 • 08:30 am ET


Bank of America Corporation (NYSE:BAC.PRC) Q4 2016 Earnings Conference Call - Final Transcript


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Good day everyone and welcome to the Bank of America earnings announcement call. [Operator Instructions] It is now my pleasure to turn the conference over to Mr Lee McEntire. Please go ahead, sir.

Lee McEntire

Good morning. Thanks everybody for joining us. I know it's a busy morning for all of you for the fourth quarter 2016 results. Hopefully, everybody has got a chance to review the earnings release documents that are available on our website. Before I turn the call over to Brian and Paul, let me remind you we may make some forward-looking statements. For further information on those, please refer to our earnings release documents, our website or SEC filings.

With that, let me turn it over to Brian Moynihan, our Chairman and CEO for some opening comments before Paul Donofrio, our CFO goes through the details. Brian?

Brian Moynihan

Good morning. Thank you, Lee and thank all of you for joining us to review our results today. Results this year in the fourth quarter complete a solid year of execution in driving our responsible growth strategy. We have produced earnings of $17.9 billion in 2016, that's a 13% growth over 2015. In a year in which we had a series of unexpected and sizable events around the world and a rough start in the capital markets, we are able to achieve 1% growth in revenue against the backdrop of a slow growth US economy. Importantly focused on driving what we could control, cost, production and risk.

So, how do we do on all that? We lowered our costs to improve productivity, with result in reduction expenses by almost 5% compared to 2015. That's nearly $3 billion in expense reductions continuing a long-term trend. From their peak in 2011 at $77 billion, expenses are now down $22 billion at 29%. And reductions coupled with the revenue growth drove 6% in operating leverage. In improving economy, a relentless focus on client selection and growth through responsible lending combined to result in a historical low charge-off rate of 39 basis points for our Company this quarter. We also returned more capital to shareholders through higher dividends and more share repurchases during 2016.

As you may have seen in the news release this morning, we announced an additional $1.8 billion expansion to our share buyback program. So adding the $1.8 billion to the $2.5 billion left, that brings us to $4.3 billion for the first 6 months of 2017. Our approach has resulted in a 2% reduction in share count at the end of 2016, which adds to the earnings growth to produce a 15% growth in earnings per share. For the year, our return on tangible common equity was 9.5%, while return on assets was 82 basis points. And the efficiency ratio improved from 70% to 66%.

From a balance sheet perspective, let me mention a few things that are noteworthy as items continued to grow with the business, while optimizing the balance sheet at the same time. Our average deposits grew $64 billion