Bank of America : Fourth Quarter 2018 Earnings Presentation

Bank of America 4Q18 Financial Results

January 16, 2019

2018 Financial Results

ReportedSummary Income Statement ($B, except per share data)

2018

2017

2018 vs. 2017 % Inc / (Dec)Excl. Tax Act

2018 Reported vs. 2017 Excl. Tax Act

2017 1,2

% Inc / (Dec)

Total revenue, net of interest expense Noninterest expense

$91.2

$87.4

4 %

$88.3

53.4

54.7

(2)

54.7 (2) leverage YoY 2,4

Provision for credit losses Pretax income

3.3

3.4

(3)

3.4 (3)

34.6

29.2

18

Income tax expense Net income

6.4

11.0

(41)

30.2 9.0

15 (29)

$28.1

$18.2

54

$21.1 33

Diluted earnings per share

$2.61

$1.56

67

$1.83 43

Average diluted common shares (in millions)

10,237

10,778

(5)

10,778 (5)

Return Metrics and Efficiency

Return on average assets

1.21 %

0.80 %

0.93 %

Return on average common shareholders' equity

11.0 6.7 7.9

Return on average tangible common shareholders' equity 3

15.5 9.4 11.0

Efficiency ratio

59 63 62

Note: Amounts may not total due to rounding.

• 1 On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was enacted, which included a lower U.S. corporate tax rate effective in 2018. The Tax Act reduced 2017 net income by $2.9B, or $0.27 per diluted common share, which included a $0.9B pretax charge in other noninterest income, predominantly related to the revaluation of certain tax-advantaged energy investments, as well as $1.9B of tax expense principally associated with the revaluation of certain deferred tax assets and liabilities.

• 2 Represents a non-GAAP financial measure. For a reconciliation to GAAP of the presented return metrics, see note A on slide 28. For important presentation information, see slide 31.

• 3 Represents a non-GAAP financial measure. For important presentation information, see note A on slide 28, and slide 31.

• 4 Reported operating leverage of 7%.

Full Year Business Results 1

Net Income (Loss) ($B)

Consumer Banking

GWIM

Global Banking

Global Markets

All Other 2

$12.0

($1.7)

201620172018

FY 2018

Consumer Banking

GWIM

ROAAC 3

33%

Efficiency ratio

Operating leverage

47% 9%

28% 71% 2%

20% 44%

(2%)4

11% 67% 1%

• 1 All business segments and All Other are presented on a fully-taxable equivalent (FTE) basis throughout this presentation.

• 2 All Other adjusted to exclude the $2.9B charge for the 2017 enactment of the Tax Act. Reported net loss for All Other for FY 2017 was $3.3B.

• 3 ROAAC defined as return on average allocated capital.

• 4 Global Banking revenue and operating leverage were negatively impacted by the Tax Act in 2018. Excluding tax reform impact on revenue in 2018, operating leverage for Global Banking was 2%.

Significantly Reduced Expenses While Investing in the Franchise

$83.1

2010

2011

2012

2013

2014

2015

2016

2017

2018

Noninterest Expense ($B)Efficiency Ratio (%)

Delivered Positive Operating Leverage for 16 Consecutive Quarters

Operating Leverage Trend 1

+22%

+21%

+29%

+3%

+8%

+3%

+5%

+6%

+8%

+6%

+3%

+8% 2

+5%

+4%

+7%

+7% 2

7%

7%

Reported revenue growth of 2% and	Reported revenue growth of 11% and operating leverage of 12%
operating leverage of 3%

7%

(31%)

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

1Q18

2Q18

3Q18

4Q18

YoY revenue growth (decline)YoY expense growth (decline)Operating leverage

Note: Amounts may not total due to rounding.

• 1 Operating leverage calculated as the year-over-year percentage change in revenue, net of interest expense, less the percentage change in noninterest expense. Quarterly expense for 2017 and 2016 has been restated to reflect the accounting change for retirement-eligible equity incentives adopted in 4Q17; 2015 and 2014 periods are as reported.

• 2 Revenue growth and operating leverage adjusted to exclude the $0.9B noninterest income charge in 4Q17 from the Tax Act; represents a non-GAAP financial measure. For important presentation information, see slide 8, Note A on slide 28, and slide 31.