Our leadership

Hear from our CEO

A letter from Chairman and CEO Brian Moynihan

To our shareholders and clients,

To my teammates,

To leaders and partners in the communities we serve across the U.S. and around the world,

I am pleased to share the 2019 Bank of America Annual Report with you. In this report, my teammates and I share highlights of the progress our company made during the year, which capped off a decade of growth for our company and for the U.S. and global economy.

In 2019, your company followed its Responsible Growth operating principles and delivered $27.4 billion in earnings, or $2.75 per share. After adjusting for a third-quarter non-cash impairment charge, we earned $29.1 billion.1 That adjusted figure exceeded our record 2018 results. We returned more than $34 billion in capital to you, our shareholders, including $28 billion in share buybacks and $6 billion in common dividends. We raised the annual dividend by 22%, from $0.54 to $0.66 cents per share. Through our capital deployment over the last few years, we reduced the number of outstanding shares to below 9 billion last year, 2.5 billion fewer than at the peak. We committed to you that we would wring out the share dilution caused by the increased capital levels required under the new capital rules and the shares we issued to rebuild our base of capital last decade. We remain committed to that reduction and will accomplish it while continuing to invest in our company.

We enter 2020 with strength and momentum after a decade of transformative change. Our capital, liquidity and capacity to serve clients are excellent, and we are delivering strong earnings. Our products are best in class, and we continue to improve them. Our team gets stronger every day, as we continue to invest heavily to make sure we are the best place to work.

Over the course of the decade that just ended, we earned $127 billion and returned $97 billion to you, our common shareholders, and $111 billion to you and our preferred shareholders together. The rest is in our capital base to serve our customers. Our stock returns have also been strong and you can see our one-, three- and five-year charts below. We have balanced our risk and streamlined our company, and our returns are well in excess of our cost of capital.

What a difference a decade makes.

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Those accomplishments are due to our team. It starts with our dedicated group of independent directors, led by Jack Bovender, our lead independent director. You can see the board’s commitment to our strategy in Jack’s letter on page 7 of this report. I thank Jack for his board leadership; his term runs through our 2021 annual meeting. Jack’s leadership is stellar, and his eventual successor will have big shoes to fill.

Our team includes the 208,000 teammates who work tirelessly every day to serve our customers well and deliver the returns for you. They are led by a talented management team, many of whom share their insights about our company in this report. I thank the board and the management team for the work they do on behalf of our company.

At Bank of America, we focus on results and we focus on how we deliver them. One of the things we should all be proud of is how we have delivered for our traditional stakeholders, customers, teammates and shareholders, and how we delivered for the broader society at the same time. A concept we embrace — the “genius of the and”3 — applies to how we are delivering for customers, for teammates, for shareholders, AND for our communities and the society in which we operate.

In a separate note on page 9 of this report, I offer a more extended discussion that addresses questions being raised about whether the challenges we face are so profound that our capitalist system itself is incapable of addressing them.

While we must acknowledge and address some short-comings within our capitalist system, I will discuss our belief at Bank of America that the remedies to these shortcomings are found within capitalism itself.

So how does Bank of America produce these results? We do it by delivering on Responsible Growth. Let’s discuss how we did in 2019.

Responsible Growth

Our 208,000 teammates delivered the 2019 results I mentioned earlier — $29.1 billion in adjusted earnings and $34 billion in capital returns to you — through their disciplined focus on Responsible Growth.

Responsible Growth has four straightforward tenets:

We have to grow — no excuses.

We have to be client focused in our growth.

We have to grow within our risk appetite.

And our growth must be sustainable, which has three elements: 1) we have to drive operational excellence; 2) we have to be a great place to work; and 3) we have to share our success with our communities.

Grow and win in the market — no excuses

The first pillar of Responsible Growth is to grow, no excuses. And we did that in 2019. Client activity was strong across all business lines, allowing the benefits of our growth in loans and deposits to offset the impact of lower rates. Average deposits grew $65 billion, or 5%, year over year. We have grown deposits every quarter over the prior year by more than $40 billion for nearly five years now. Average loans were up 3% last year, again led by Consumer Banking, where average loans grew 6%. Dean Athanasia, who leads Consumer Banking and Small Business, shares some insights in his Q&A on page 14 about how we continue to deliver for retail and preferred clients and small business with innovation and great service.

We saw commercial loan growth last year of 4% and a 10% increase in our lending to small businesses and loans to middle market clients. We are proud this year that we became the largest U.S. lender to small businesses, the lifeblood of the American economy. We also became the largest commercial and industrial lender in the U.S. Our growth efforts continue to bear fruit as we added hundreds of commercial and small business bankers across our footprint. And you can rest assured, we have done so by staying within our risk appetite, as I will discuss below. In a Q&A on page 22, Chief Operating Officer Tom Montag discusses the investments we are making to deepen our client relationships and the other opportunities ahead in our Global Banking and Global Markets businesses.

Each of our businesses contributed to our strong earnings last year. And most of them grew their market share while producing good bottom-line growth. Consumer Banking earned $13 billion last year by deepening relationships with our clients while we continued to invest in infrastructure and client capabilities. Our wealth management teams saw net new household growth of more than 20% last year, earning record income of $4.3 billion with average client deposits up $15 billion.

Our Global Banking business earned $8.1 billion, and our Global Markets business earned $3.5 billion. Combining the results for these businesses, as other financial services companies report them, would result in $11.6 billion for 2019.

We must grow and remain customer focused

We deliver Responsible Growth by focusing on our clients and what they need to live their financial lives. All our growth is organic. We call it growth that will stick to our ribs, not run off. We are seeing the results of our client focus in many areas. Client satisfaction scores across our eight lines of business, for instance, are at an all-time high. Our brand continues to be very strong. We see continued gains in attracting new clients, and importantly our current clients continue to do more with us. That means we are doing a great job for them.

Our 65,000-strong team in our consumer businesses has grown Consumer Banking checking balances 44 consecutive quarters. At the end of 2019, Consumer Banking held more than $700 billion in deposits. Our 66 million consumer and small business clients value our online and mobile capabilities along with the convenience of 4,300 financial centers and more than 16,800 ATMs. In addition to this high-touch capability, our clients value the high-tech capabilities we offer. We interact with our clients almost 28 million times every day, and 81% of these interactions come from our 38 million active digital banking clients. Our clients benefit from our investments in artificial intelligence (AI) to help personalize their individual financial habits, goals and priorities. Clients who use Zelle® for sending and receiving money through their mobile phone made 300 million transfers representing $78 billion last year. Our AI-driven digital assistant, Erica®, was launched in 2018, and we topped 10 million users last year, while roughly 10 million clients are active users of Zelle. More than 55% of our total consumer client payments are made digitally. This is more than $1.6 trillion moved digitally by Bank of America consumer clients each year.

Of our total deposit transactions, 27% were done through our mobile channels, and 79% through mobile and ATMs together. More than 50% of our clients have gone paperless. Digital channels generated 29% of overall sales, with 34% of mortgages and 56% of auto loans now originating in our mobile app or online banking site. Customers also arranged more than 2.3 million appointments through digital and mobile in 2019, up 19% from 2018. This enables our teammates in the financial centers to efficiently address the more complex needs of their clients in person and contributes to a better client experience.

There is much talk about what happens to traditional banks when digitization occurs. You can see that in the statistics above. We are enabling our clients, and the teammates who serve them, with the best, most comprehensive high-tech digital capabilities, while investing and advancing high-touch service through financial centers and other channels, for an unmatched range of access that reflects the many ways clients choose to do business with us.

Client-centered growth drove our results in our wealth management businesses, too. Wealth management client balances exceeded $3 trillion for the first time. The Bank of America Private Bank saw an increase of 64% in net new households, while Merrill saw a 25% gain. Merrill alone brought in more than 40,000 net new affluent households, and we added 60% more private bank relationships in 2019 over 2018. Our wealth management clients benefit from a high-touch and high-tech mix, too. Household mobile usage was up 39% in the private bank and 44% in Merrill, and we had the most top advisor rankings in the industry. For a deeper look at how we are transforming wealth management, look for a discussion on page 16 with Katy Knox, president of Bank of America Private Bank, and Andy Sieg, president of Merrill Lynch Wealth Management.

We’re driving deeper client engagement with our Global Banking and Global Markets teams, too. Our teams continue to grow loans, adhering to our risk framework that is more stringent than industry averages. They are growing transaction services fees nicely, too. In investment banking, we have gained share of the global fee pools with a successful retooling of the business.

We are the largest U.S. commercial lending business and have one of the top market-making and investment banking platforms that can deliver for clients globally.

Global Banking deposits grew $23 billion, a reflection of the hundreds of additional relationship bankers we have added in the U.S. and globally in the last several years. Our Global Markets business serves our clients well and last year made money on 98% of the trading days.

Grow while staying within our risk appetite

Growing within our risk appetite is another tenet of Responsible Growth. Our loan losses are at historic lows. Asset and credit quality are strong across our consumer and commercial portfolios, and our capital and liquidity are much higher than a decade ago. Even as we returned $34 billion to shareholders last year, our Tier 1 common equity ratio was 11.2%, well above our 9.5% minimum requirement. We continued to use our operational excellence work to drive operational risk out of the company. We are growing the right way.

Growing in a sustainable manner

Earlier I stated the three tenets to growth that is sustainable. They are 1) drive operational excellence, 2) be the best place for teammates to work, and 3) share our success with our communities. The combination of delivering all the results I’ve discussed rests upon a bedrock of this pillar of Responsible Growth. This ensures that we are investing long term, while delivering near-term results. This tenet ensures that we deliver for all our constituencies. And this tenet ensures we have the best team.

Operational excellence

Operational excellence generates savings and efficiencies that make it possible for us to continue to invest. By improving the way we serve clients, streamlining our internal processes and creating other efficiencies that stem from the thousands of ideas our teammates generated last year, we were able to invest in our capabilities even as we managed our expenses consistent with the $53 billion target for 2019, which we set in 2016. This has been a continuous process of improvement.

Since the beginning of 2010, we have invested $30 billion in new technology initiatives, including the mobile and digital capabilities we highlight throughout this report.

In addition, in just the last year, we completed the upgrade of our network of more than 16,800 ATMs and added 900 new ones, while modernizing more than 500 of our financial centers and opening 90 new ones. We continue to add financial centers in new markets starting where we already have wealth management and business clients — all made possible by savings from our focus on operational excellence. For instance, we opened our first financial centers in Ohio in 2019, and plan to open more than 30 centers in Cincinnati, Columbus and the Cleveland area over the next two years. We added about 100 ATMs in the state in the last year and a half.

The investment in our financial centers and ATMs goes beyond modernizing existing centers and building new ones. It connects all of our client services and experiences and creates the opportunity to build on existing relationships, attract new ones and acquaint clients with Preferred Rewards, which rewards members for doing more with us across their entire banking relationship.

As our clients’ needs and expectations evolve, the financial center client experience and design has to evolve with them. Every day, 800,000 clients visit our financial centers. The financial centers continue to evolve to better serve the range of needs of our clients. Last year, we developed 1,500 “One Team” financial centers with dedicated wealth management, Business Advantage and consumer lending specialists to make it easier for clients to connect across all our products and services.

Another example of the type of investment that operational excellence helps generate is our Aira service —  a new technology to help blind and low-vision clients gain better access to our financial centers and ATMs. Aira delivers instant access to visual information at the touch of a button. This free service connects these special needs clients with visual information on demand.

At the same time, we are making investments in technology to optimize the digital experience for chief financial officers and treasurers of our corporate clients. Some 500,000 clients now use CashPro®, our digital application for our business client treasury and lending needs. Mobile CashPro logins grew more than 100% year over year. Adoption of other new tools relying on AI and machine learning for corporate clients is growing even faster.

Even as our team maintained expense discipline over the past decade, we continued to invest in our people, our technology, infrastructure, buildings and facilities, and in helping make progress on many societal priorities. And —  by the way —  we made these investments while returning our excess of our earnings to you —  $34 billion —  through dividends and buybacks. A company like ours can invest and manage its capital.

Here are a few highlights of investments we made for 2019 alone:

  • We made $1.7 billion in capital investments in new and modernized facilities in 2019. This past decade, we invested in new buildings in Charlotte, Dallas, Houston, Chicago, Paris, Hong Kong and many other markets. We modernized more than 1,300 financial centers the last three years, and the plan we announced in 2016 to upgrade and expand our entire financial center and ATM network by 2021 is on track.
  • In 2019, we added 3,600 new teammates. We hired 32,000 employees, including 6,300 new employees from low- and moderate-income neighborhoods, and 4,000 college and MBA graduates. We passed a major milestone of our 100-year support for the military, and reached our five-year goal to hire 10,000 military veterans.
  • For our employees, it was the third consecutive year in which we recognized approximately 95% (all but the top 5% paid) of our teammates for driving Responsible Growth with a special compensation award. (In total, more than $1.5 billion in the last three years.) In the first quarter of 2020, we raised our minimum starting salary to $20 per hour, up from $17 per hour in 2019.

As you can see, operational excellence allows us to deliver industry-leading efficiency, while investing heavily. And that serves us well no matter what environment is ahead of us.

A great place to work

Being a great place to work is another driver of sustain-able Responsible Growth. To provide the best service to our clients and to support the communities in which we operate, we must continue to attract and retain the best talent. Being a great place to work includes our ongoing commitment to developing and managing talent, employee engagement, equal pay for equal work and core values anchored in our commitment to diversity and inclusion.

In 2019, we published our first Human Capital Management Report. Throughout the report, we provide detailed information about the actions our company has taken for teammates and their families across the globe. I encourage you to review it carefully; there is additional detail and insight throughout this report as well.

To highlight one area of focus, since 2012, there has been no increase in medical premiums for teammates earning less than $50,000. For all teammates, we vary the medical premium contribution by annual pay level, with larger company subsidies for those earning less. Also, our average contribution increases since 2012 have been below national health care trends. Another area of focus in the report is the progress we continue to make to ensure diverse representation at all levels of our company, including a board of directors and management team who are more than 45% diverse. Additionally, women comprise more than 45% of the management team and 40% of the top three levels of our company.

We saw significant internal and external awareness for being a great place to work. In 2019, the Diversity & Inclusion Index in our 2019 Employee Engagement Survey was the highest it has ever been. Bank of America also was the top financial institution in the 2019 LinkedIn Top Companies list, which recognizes the most sought-after places to work.

Sharing success

One way we share our success is through our local market and country teams and their support of local partners through community development lending and philanthropy. Over the last decade, we have provided around $50 billion in community development lending, including for priorities in affordable housing and economic mobility, and $2 billion in philanthropy. Last year alone, we delivered nearly $5 billion in community development financing for affordable housing and other community priorities, and made more than $250 million in philanthropic contributions. Our employees directed more than $60 million through individual giving and matching gifts and logged nearly 2 million volunteer hours to strengthen local communities.

Sharing success also includes the work we do in our Environmental Business Initiative. In 2019, we met our 10-year, $125 billion environmental business initiative — six years ahead of schedule. We established a new target of $300 billion in clean energy finance by 2030. Consistent with the objectives of our Environmental Business Initiative, we have met our 2020 goal of becoming carbon neutral in our own activities. Look for a discussion on page 24 with Vice Chairman Anne Finucane, who leads our sustainable development work and co-chairs with Tom Montag our broader work in sustainable finance, on the leadership we bring to driving progress on the societal priorities through our core financing and other activities.

In the United States, one of the important ways we engage and share success in the communities we serve is through our market president organization. Our network of 90 market presidents is responsible for leading an integrated team to deliver for clients, teammates and the community, serving as the chief executive for Bank of America in that market. You will see a more detailed discussion of how our market president organization does this through the experience of Raul Anaya, our Los Angeles market president, on page 21.

External recognition

Because of our investments in our capabilities and in our people, in 2019 we received recognition in many areas, including for our products and services, for our commitment to our team and to diversity and inclusion, and for our contributions addressing important societal priorities.

We are proud that Global Finance recognized Bank of America as the Best Bank in the World in 2019. In early 2020, Fortune named your company to its list of the 100 Great Places to Work, and as the only global financial services firm on its list of the top 18 Best Big Companies to Work For.

Also last year, our research team was recognized as Top Global Research Firm by Institutional Investor, an honor we held for most of the last decade, including each year from 2011 to 2016.

Global Finance also named Bank of America the Best Consumer Digital Bank in America and Money magazine ranked us the Best Bank for College Students. Reflecting our focus on managing risk well, for ourselves and for our clients, we earned prestigious recognition from Risk magazine, which named us Derivatives House of the Year, Equity Derivatives House of the Year and OTC Client Clearer of the Year.

The external recognition includes several areas that reflect our commitment to being a great place to work, another tenet of Responsible Growth. Euromoney named us the World’s Best Bank for Diversity & Inclusion, and Forbes included us in their JUST 100: Companies Doing Right by America ranking of how the country’s largest publicly traded companies perform in important areas including fair wages, acting ethically and setting the standard in stakeholder treatment.

Looking ahead to 2020

I hope you’ll enjoy reading about your company in the following pages, where you can look at how we’re helping make financial lives better through every connection.

Our performance and recognition took place against a backdrop of a growing U.S. and global economy, driven by solid consumer spending. While geopolitical and trade uncertainty remains, we saw some of it clear up as trade agreements with Canada, Mexico and China were concluded in 2019.

There are factors beyond our control that impact the markets and economies in which we operate. As this report is being completed, we are experiencing volatility because of uncertainties around the impacts of the coronavirus. We are taking the necessary measures to look after our employees and serve them as this situation develops.

Despite headwinds that may arise from time to time, over the last decade we have built a strong, stable platform, with significant liquidity and capital, and we will remain resilient as we maintain disciplined focus on what we can control, which is embedded in delivering Responsible Growth.

As we look ahead to 2020 and beyond, we will maintain our focus on delivering Responsible Growth through disciplined adherence to the tenets I’ve discussed: by serving our clients, managing risk well and ensuring those results are sustainable through operational excellence, being a great place to work for our teammates, and sharing our success. The three-year company strategy that our board of directors reviewed in the fall of 2019 is based on continued adherence to this approach. And as always, we will continue to learn what is most important to those we serve by asking:

What would you like the power to do?

Brian Moynihan
March 3, 2020
Source: 2019 Annual Report

1The $29.1 billion net income represents a non-GAAP financial measure, as it excludes the third-quarter $2.1 billion pre-tax, $1.7 billion after-tax, non-cash impairment charge related to the notice of termination of our merchant services joint venture which increased noninterest expense and is included in the reported net income of $27.4 billion.
2U.S. large cap (LC) peers include JPM, C, WFC, GS, and MS.
3This is a concept developed by Jim Collins in his book Built to Last: Successful Habits of Visionary Companies.

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