Bank of America Corporation (BAC) Earnings Call Transcript & Summary

Remarks made during today's Annual Meeting of Shareholders may contain forward-looking statements. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties. Factors that may cause actual results to materially differ from expectations are detailed in Bank of America's SEC filings, including the 2020 Form 10-K available on the website www.bankofamerica.com. I'll now turn the call over to Brian Moynihan, Chairman and Chief Executive Officer.

Good morning. This is Brian Moynihan and welcome to our 2021 Bank of America Corporation Annual Meeting of Shareholders. I want to thank everyone for joining us today by webcast. At our company, we are continuing to follow the advice of our medical experts and make decisions with an eye to what's best and safe for our team, our customers, our community and you our shareholders and believe holding our annual meeting again this year virtually is the right decision for us. I hope you and your families are staying safe and healthy as we continue to make steps towards resolving this global health crisis. The meeting agenda and rules of conduct for today's meeting are available on the virtual meeting website. These rules are now in effect. In the event if a technical malfunction or other disruption interferes with our ability to continue the webcast meeting prior to the opening and closing of the polls, the meeting may be adjourned, recessed or expedited. If that happens, the polls will open immediately and will close 5 minutes thereafter. All votes received prior to the time the polls are closed will be counted, the meeting will not be reconvened and the results will be announced publicly. With that, I now call the 2021 Bank of America Corporation Annual Meeting of Shareholders to order. At today's meeting, we're going to hear remarks from our outgoing Lead Independent Director, Jack Bovender; as well as his successor, Lionel Nowell. I will then present an update of our company, and then we'll consider the proposals to be voted on in the meeting. We'll then answer questions about the proposals from the shareholders, which can now be submitted on our virtual meeting website. [Operator Instructions] In addition, please indicate if your question relates to one of the proposals to be voted on so we can answer before the poll is closed. We'll then provide preliminary voting results before concluding today's meeting on an official basis. To follow the official agenda of the meeting, we have reserved the 30 minutes to address general questions from shareholders about Bank of America's business and operations. If you have personal financial matters or questions related to your specific account, I encourage our customers to contact our customer service representatives directly for personalized assistance through the link or phone number included in the rules of conduct for this meeting. In addition to Jack and Lionel, we are joined today by other members of our Board of Directors: Sharon Allen, Sue Bies, Frank Bramble, Pierre de Weck, Arnold Donald, Linda Hudson, Monica Lozano, Tom May, Denise Ramos, Clayton Rose, Mike White, Tom Woods, David Yost and Maria Zuber. I'll now ask -- Jack's going to now make a few remarks. Now before he does so, we should recognize Jack. He's been a director since August 2012 and served as our Lead Independent Director since October 2014. Jack will retire from the Board after this meeting due to our corporate governance guidelines. I want to thank Jack for his dedication to our company, his deep commitment to strong corporate governance and his tireless work to develop our industry-leading shareholder engagement practices. We're also going to here from Lionel Nowell. Lionel has served on our Board since January 2013. He was chosen last September by our independent directors to succeed Jack as our Lead Independent Director beginning after this meeting. Lionel's leadership skills, his demonstrated strong business acumen, his extensive risk management and strategic planning skills and his experience and leadership across many highly regulated global businesses make him an excellent choice to serve as our next Lead Independent Director. So first, we're going to go to our colleague, Jack. Jack?

Thank you, Brian, and welcome to all of you joining us virtually today for our 2021 shareholders' meeting. On behalf of all the independent directors, thank you for your continued investment in Bank of America. You've already received our 2020 annual report and 2021 proxy materials. The annual report highlights how a decade-long focus on responsible growth helped Bank of America respond to the challenges of 2020 and how the company is well positioned to continue delivering for its shareholders and all of its stakeholders going forward. I would like to take a moment to recognize the extraordinary efforts made by Bank of America employees over the past year to support clients, communities and each other. The independent directors have engaged regularly with Brian and the leadership team throughout this crisis and are grateful for the dedication and determination of the Bank of American team. As we have shared previously, this will be my last annual meeting as a director of Bank of America. My retirement from the Board will be effective as of the conclusion of this meeting. It has been an honor and a pleasure to serve on the Bank of America Board to represent this great company and to have the opportunity to engage with so many of you, our shareholders. The feedback you've shared with me along the way has been invaluable to the Board, and I thank you for your time and input. Since 2014, I've been privileged to serve as the Board's Lead Independent Director. Today, Lionel Nowell will assume the role of Lead Independent Director. Lionel has been a valuable member of our Board for many years. He is totally committed to his new role and will continue to meet regularly with shareholders to hear what's on your minds. Thank you once again. With that, I'll turn it over to Lionel to say a few words.

Thank you, Jack, for the kind words, your friendship and for the independent oversight and strong corporate governance you have provided to the Board and the company over the past 9 years. Also, thank you, Brian, for your leadership and for the outstanding work you and your team do every day for Bank of America and our shareholders. And thanks to all of you for being with us today. I've had the pleasure to serve as a director of Bank of America since 2013, and I'm honored to have been chosen by my fellow Board members to serve as Lead Independent Director. The 15 independent directors bring a wealth of diverse experiences and unique perspectives to our Board and committee meeting. And we will continue to work closely with Brian and the leadership team as they remain focused on driving responsible growth. As Jack mentioned, I value the input of all our shareholders. And I'm committed to maintaining a consistent rhythm of engagement in the same fashion as Jack has done. I appreciate your investment in our company and look forward to meeting and getting to know many of you in the future. And now I will turn it back to Brian to continue our meeting.

Thank you, Lionel, and thank you, Jack, and thank you on behalf of all the shareholders for your service. The -- let's go to the company update. It has been quite a year since our last annual meeting as this pandemic took hold across the world. At the -- when we gathered last year, the health and humanitarian crises was just beginning. Since then, our teammates have been working around the clock to address the immediate health and safety needs of each other, continue to serve our clients and deliver ongoing support to the communities in which we work and live. As we join here today, we're encouraged by the progress we see that's being made in response to the health crisis driven currently by the distribution of vaccines. And we also are encouraged by the accelerating economic recovery we see as the economies reopen. And so before we begin, I'd like to thank all of my teammates, all 200,000-plus of them, for their extraordinary efforts and contributions over the last year. I'd like to add a special thanks to those teammates working in our financial centers and others who have come in the office every day during the crisis, all of you who have continued to support the everyday financial needs of our clients and economic health of our local communities. At our annual meeting a year ago, we talked about how our decade-plus long focus on responsible growth has prepared us for a situation like this. And our results over the past year confirm that point and illustrate how a company can truly deliver profits and purpose. As a reminder, there are 4 tenets to responsible growth. We must grow in the market, no excuses. We must grow with a customer focus. We must grow within our risk framework. And we must grow in a sustainable manner that has the following elements: you have to drive operational excellence to pay for all the work we do, we have to be the best place for our teammates to work because that's how we do a great job for our customers and we have to share the success we have as our company with our communities. Through this framework, Bank of America has not only delivered strong results, we have emerged as a stronger company with a stronger balance sheet than when we entered the health care crisis. Compared to a year ago, we have more capital with higher capital ratios and record liquidity. Our customer base has grown across every one of our diverse and complementary businesses. Our clients are using our digital platforms at record levels with more than 40 million active digital users. Satisfaction levels across our customer base and employees are at record highs as is our overall brand loyalty, according to third parties. In 2020, we earned approximately $18 billion after tax and net income or $1.87 per share. That was done through one of the worst economic environments in modern history. And just last week, we reported a strong quarter with $8.1 billion in after-tax net income or $0.86 per share. That's up nearly 50% over the prior quarter. Our results for the quarter reflect the improving economic conditions as well as our diverse and complementary business model, which remains key to delivering sustainable results in virtually any market environment. As an example of that, our Global Markets and wealth management businesses, which typically benefit from a healthy capital markets environment, continued to perform well throughout the past year. Our Consumer and Global Banking business has also performed well but was more negatively impacted for several quarters by interest rates and credit costs. Those businesses continue their strong recovery. Looking forward, we see continued progress being made in the health crisis. More businesses are now opening up. Unemployment continues to decline. Consumers are spending at record levels. We are optimistic that expanding economic activity will, in turn, fuel loan growth as companies borrow, build inventory, invest and hire more employees. We are well positioned to continue driving responsible growth as the economy continues to gain momentum. This means delivering for you, our shareholders. It also means delivering for our clients, our teammates, our communities and, at the same time, delivering progress on important issues facing society. I'd like to touch quickly on each of these. For our shareholders, our long dedication to responsible growth has put us in a position to both earn money and deliver more back to you. Last year, we returned $12 billion in capital through dividends and net share repurchases. We did this even as we halted share repurchases late in the first quarter of 2020, in line with additional federal banking restrictions. In the first quarter, we returned -- first quarter of 2021, we returned an additional $5 billion of capital to shareholders through common dividends and share repurchases. And as sure as many of you saw, we recently announced our expectation to increase those repurchases. And following the current Federal Reserve Board restrictions still applicable through the second quarter of 2021, we expect to increase dividends over the coming quarters. We have repurchased the stock and returned this capital all while investing heavily in our firm, in our products, in our physical plant and in our brand and serving the record demand from our customers. We move to our customers. Our purpose is, of course, to make their financial lives better. And over the past years, through the efforts big and small, we have lived that purpose. Through responsible growth, we have remained a source of strength and stability for our clients, and clients have in turn increased their business with us. During the first quarter of 2021, average deposits across our company were up over $366 billion from the previous year. In consumer, we saw record deposits to remain the #1 U.S. bank by retail deposits. We also reported the most number of consumer checking accounts opened in our company's history. We also hit record consumer investment and wealth management client balances by adding thousands of new households even in a virtual client engagement environment. Combined across our investment platform, investment flows from our customers were a record $48 billion. We raised hundreds of billions of dollars on behalf of our clients, companies that employ people, make products and serve the economy. And we reported investment banking fees due to that. Our digital capabilities continue to be a competitive advantage for us, and we've seen strong client engagement across all our businesses. At the end of the first quarter, we had 70% of consumer and small business households actively using our digital platforms. Digital sales now total 49% of all consumer banking sales. 19.5 million Erica users, up 60% from last year. Erica interactions are up nearly 3x in the last year. 13.5 million active Zelle users, up nearly 1/3 over last year, while dollar volume is up 80%. A record number of 80% of Merrill Lynch households actively used an online or mobile platform this quarter. A 49% year-over-year increase in active users of our CashPro App, our commercial digital app, which allows company treasurers and CFO to make payments and transact with the same ease as our consumer bank clients do. Those digital capabilities help us to deliver personalized experience to our clients that spans their entire relationship with us while at the same time reducing costs for us. We spent more than 10 years and $30 billion investing in technology to create and extend our digital leadership, and investment in technology clearly remains a strategic priority for us going forward. At last year's meeting, we talked about our commitment to supporting clients negatively impacted by the coronavirus through our own programs and by helping to deliver federal relief programs. At the outset, that was about deferrals, and we had -- over 2 million deferrals came in through our client base that was totaled up -- payments of $55 billion were deferred through our Client Assistance Program. Today, due in part to government stimulus efforts, clients are better positioned to manage through the pandemic. Our deferrals today only cover $6 billion mostly in first mortgage loan balance. We're the first major bank to begin accepting Paycheck Protection Program, or PPP, applications about a year ago. To date, we have extended nearly 0.5 million PPP loans to small business owners, delivering more than $34.5 billion in funding to help our clients continue to operate and pay their employees. We've also processed more than $73 billion in stimulus payments into our customers' accounts. Now moving to our teammates. They've come together like never before to deliver all this for our clients. We have remained committed to supporting them however we can. This is our commitment to be a great place to work, part of being -- having responsible growth that's sustainable. This includes additional benefits and resources aimed at promoting health and well-being, both physical and mental. That included on-site coronavirus testing, no-cost access to virtual medical doctors and mental health specialists. We provided child and elder care systems to ease our teammates' ability to work from home as schools closed and nursing homes closed and our teammates had to deal with a different situation when they entered to pandemic. We gave them the right to hire somebody to come and work in their home, pay them $100 a day at the company's expense, to date worth $3.7 million of that child care and elder care. Recently, we expanded our support, providing resources to help teammates get back [ as soon as ] they can be. That includes paid time off for U.S. employees to receive their vaccine, local vaccine tip sheets to help them find out how and when they get a vaccine and access to available appointments to vaccine clinics. As we see progress in the health crisis, we continue to make plans for our teammates who are currently working from home to return to the office. We will do so on a business-by-business, market-by-market, office-by-office basis driven by our health and safety framework. Provided that we continue to see the trends we're seeing today, our expectation in the U.S. is we'll be back -- generally back towards a more normal operating posture as we move past Labor Day. In other areas around the world, it's different. Of course, the health and safety of our team remains a top priority as we make plans to return to office, and we'll continue to monitor and adjust our plans as needed. Whether working in our financial centers, our offices or working from home, our teammates have gone to extraordinary lengths to support our clients and each other. And this year, we recognized approximately 97% of our teammates globally by delivering together compensation. That is the fourth year of similar... [Audio Gap] of the commitments to 10 community colleges to help drive skill development in our communities served. We distributed 25 million masks to -- as well as hand sanitizer and other personal protective equipment to underserved communities across the U.S. We also recently tripled our affordable housing commitment to $15 billion from $5 billion and issued a $2 billion Equality Progress Sustainability Bond designed to advance racial equality, economic opportunity and environmental sustainability. In 2020 alone, we provided $6.17 billion in affordable housing and economic development financing to help build strong and sustainable communities across the U.S. Earlier this month, we significantly expanded our Environmental Business Initiative to target $1 trillion by 2030 and accelerate's the transition to a low-carbon, sustainable economy. This is a transition. And this is also part of a broader $1.5 trillion sustainable finance goal, which includes both the environmental transition investments and a social and inclusive development investments and spans our activities across the globe. As you know, earlier this year, we outlined our initial plans to achieve our goal of net zero greenhouse gas emissions in financing activities, operations and supply chain before 2050. For over a decade, we have focused on driving responsible growth so we can create value for every stakeholder for society through every economic environment. That focus has positioned us well for the unforeseen events of 2020. That focus positions us well for 2021 and beyond for this company. Thank you for your support as shareholders, and I'd like to ask Ross Jeffries, our Corporate Secretary, to review the meeting rules and present the Corporate Secretary's report. Mr. Jeffries?

Thank you, Brian. As Brian noted, today we will consider the 8 items for shareholder vote, 4 management proposals and 4 shareholder proposals, included in our 2021 Proxy Statement. Shareholder proponents will have up to 3 minutes to discuss their proposals. After the proposals have been presented, we will close the voting, tabulate the votes and announce the preliminary voting results. [Operator Instructions] If a shareholder submits more than 1 question, we may address only 1 of those questions and respond to questions submitted by other shareholders before addressing the additional questions. We ask that you please briefly state your question in 1 to 2 sentences. Lengthy questions may be paraphrased. Questions from multiple shareholders on the same topic may be pruned, summarized and answered together to avoid repetition. You may vote the shares you hold through the virtual meeting website until the polls are closed. However, if you've already submitted your proxy to vote on these matters, you do not need to vote again unless you want to change your vote. Notice of today's meeting and the related proxy materials or a notice of Internet availability of these materials were mailed beginning March 8, 2021, to all shareholders of record as of March 1, 2021. [ Calenda Massafora ], a representative of Broadridge Financial Services, has been appointed inspector of election and is participating in today's meeting by phone. She has advised me that holders of shares representing at least 84.5% of the shares entitled to vote are present in person or represented by proxy, which constitutes a quorum. Brian?

Thank you, Ross. I declare the quorum is present, and I'd like to take a moment to recognize my Bank of America teammates who are serving as proxies for today's meeting. They are: Raul Anaya, who is on the management team and runs our Business Banking group; and Cynthia Bowman, our Chief Diversity & Inclusion and Talent Acquisition Officer, who is a senior colleague in our Human Resources team. Thank you to Raul and Cynthia for joining us today by phone. Also joining us by phone today are Lisa Sawicki, Jay Harris and Richard Sleigh, representatives from our registered public independent accounting firm, PricewaterhouseCoopers. We're now ready to consider the 8 items that are up for a shareholder vote. The polls are now open to vote on these proposals. The 4 management proposals are: number one, electing our 16 director nominees; number two, approving our executive compensation through an advisory nonbinding say-on-pay resolution; number three, ratifying the appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for the year 2021; and number four, amending and restating our Key Employee Equity Plan. There are also 4 shareholder proposals that are included in our proxy statement to be presented. The first shareholder proposal relates to proxy access that was submitted by John Chevedden. And James McRitchie is on line to present the proposal on behalf of Mr. Chevedden. Mr. McRitchie, you have 3 minutes to present this first proposal, then we'll get to your second proposal. You'll hear a double beep when you have 30 seconds remaining. And when 3 minutes elapses, the line will be muted. And Mr. McRitchie, please go ahead.

Thank you very much. This is Proposal 5 to improve our catch-22 proxy access. Shareholders request that our Board of Directors take the steps necessary to enable as many shareholders as may be needed to combine their shares to equal 3% of our stock owned continuously for 3 years in order to enable shareholder proxy access. This could really be called a baby step proposal. It's asking for so little. And adopting this proposal would show management's commitment to diversity. This proposal would not result in a need for management to verify the ownership of even one more share. As a practical matter, this proposal could even result in management verifying fewer shares if shareholders plan to make use of this proposal. It is disappointing that management does not support the diversity that this proposal calls for. As a practical matter, it is unlikely that more than 50 shareholders would participate in nominating directors using proxy access. The beauty of good governance proposals like this proposal is that it would not result in more cost because the mere presence of good governance serves as a guardrail to make sure that management elects the best directors on their own, because if management does not, then shareholders have a practical remedy with teeth to make their Director nominations known to management. Our current proxy access is way out of balance and much too difficult to make use of. There has not been 1 proxy access candidate placed on the ballot of any company during the past 5 years, yet 500 companies have a right to proxy access during those 5 years. No chance is not a balance that shareholders can live with. Even with the requested amendment, a proxy access candidate still faces the challenge of getting more votes than at least 1 established director. This would require overwhelmingly diverse shareholder support. Please vote yes. Improve our catch-22 proxy access. Vote for Proposal #5. Thank you very much.

Thank you. The next shareholder proposal that relates to shareholder action by written consent was submitted by Kenneth Steiner. Mr. McRitchie will also present this proposal on behalf of Mr. Steiner. Again, Mr. McRitchie, you have 3 minutes. And you'll hear a double beep, as you just did, when you have 30 seconds remaining. Please go ahead.

Okay. So this is a shareholder right to act by written consent. Shareholders request that our Board of Directors take the necessary steps to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present and voting. This proposed topic won 95% at Dover Corporation, 88% support at AT&T. Taking action by written consent in place of a meeting allows shareholders to raise important issues outside the normal meeting cycle, like the election of a new director. For instance, a new director could be elected to replace a director who received substantial negative votes. For example, in 2020, Maria Zuber received a whopping 407 million negative votes. According to the argument in the 2020 BAC proxy, management should at least tactically be in favor of this proposal. Management said that giving a choice -- given a choice, shareholders are better served by calling for a special meeting and acting by written consent. If that's really the case, then the management should tactically favor giving shareholders the right to act by written consent. It's supposedly less effective, and management could thus have an easier path to resist shareholders. In any event, a major advantage of special shareholder meetings has been completely blown out of the water since the publication of the 2020 BAC annual meeting proxy. The cornerstone of that argument was a special meeting permits shareholders, the Board and company management to discuss applicable shareholder concerns. However, let's reflect. Do shareholders really get a chance to discuss concerns at shareholder meetings? To the contrary, with the near universal use of tightly controlled online shareholder meetings, which can only be 10 minutes in some cases, shareholders can be severely restricted in engaging with management and making their views known because all challenging questions and comments directed to management can be screened out. For instance, Goodyear management hit the Mute button right in the middle of a formal shareholder proposal presentation at its 2020 meeting. AT&T would not allow proponents to call in by telephone. In 2020, BAC management was apparently ignorant of the fact that written consent can be -- notice can be given to all shareholders of a proposed action. Now more than ever, shareholders need to have the option to take action outside of a shareholder meeting. Please vote yes.

Thank you, Mr. McRitchie. The next shareholder proposal relates to a change in the company's corporate organizational form and was submitted by John Harrington. [ Sarah Murphy ] is on the line to present this proposal on behalf of Mr. Harrington. As a reminder, you have 3 minutes to present your proposal. You'll hear a double beep when you have 30 seconds remaining. Ms. [ Murphy ]?

Thank you very much. This is Proposal 7, requesting a change in organizational form. In August 2019, our company's Chairman and CEO signed a Statement on the Purpose of a Corporation, committing our company to all stakeholders, supporting the communities in which we work and protecting the environment by embracing sustainability practices across our businesses. And consistent with our bank's embrace of sustainability, our bank from 2016 through 2019 loaned more than $156 billion in fossil fuel financing, helping to drive multigenerational climate change. The commitment of bank policy to all stakeholders and to sustainability, such as addressing climate impacts, raises potential conflicts for Board members bound by fiduciary duty, as reflected in our company's bylaws, Articles of Incorporation, committee charters and Delaware law. Fortunately, the state of Delaware in 2013 enacted a lot to permit Delaware corporations to amend their certificates of incorporation to become a public benefit corporation, thereby committing to operate in a responsible and sustainable manner. Pursuant to Delaware law, a public benefit is to encourage corporations to operate in such a manner that is in the best interest of those materially affected by its conduct, which includes other stakeholders in addition to shareholders. Conventional corporations, by contrast, are required to privilege shareholder interests over those of stakeholders in cases where those conflict. Our bank's responsible growth strategy fails to address this conundrum and relies upon the convenient trope that business can do well by doing good, when in reality, business can often do better by doing bad. Delaware adopted new amendments to the public benefit law that makes the adoption of the new structure more attractive and accessible. The amended law reduces certain Board member fiduciary liabilities for breaches of stakeholder interest and reduces the required shareholder approval of the conversion to a majority vote. This law is consistent with our company's commitment to the Statement on the Purpose of the Corporation, providing the opportunity for the Board to legally articulate the purpose of our corporation in a manner that would reconcile accountability to stakeholders. Shareholders request the Board to approve an amendment to the company's Restated Certificate of Incorporation to become a public benefit corporation pursuant to Delaware law and to submit the proposed amendment to the shareholders for approval. Such a change would enable the company to operate in a responsible and sustainable manner that balances the stockholders' pecuniary interests and the best interests of those stakeholders affected by the corporation's conduct. I hereby move Item #7.

Thank you. The next and final shareholder proposal relates to racial equity audit and was submitted by CtW Investment Group. Tejal Patel is on the line to present the proposal. As a reminder, you have 3 minutes to present your proposal. You'll hear a double beep when you have 30 seconds remaining. At 3 minutes, your line will be muted. Ms. Patel?

Thank you. On behalf of the CtW Investment Group, I hereby move Proposal 8 urging the Board of Directors to oversee a racial equity audit based on input from stakeholders. A racial equity audit would help Bank of America identify, remedy and avoid adverse impacts on nonwhite stakeholders and communities of color, particularly in light of the bank's $1.25 billion commitment to advance racial equality. Bank of America has a conflicted history when it comes to addressing racial inequality within the communities it serves. Regulators have cited the bank for racial imbalances in its mortgage lending practices. The bank has also profited from underwriting bonds partially used to pay for police-related settlements at a time when law enforcement agencies are being scrutinized for discrimination and excessive use of force against black and brown communities. It has also donated to police foundations in multiple cities. Additionally, there's a lack of racial diversity in Bank of America's executive leadership and a pattern of attrition among employees of color when comparing employees in lower ranks to higher ranks based on the bank's EEO-1 Data. As with any other operational or financial review, the real benefit of a racial equity audit lies in its independence. The auditor must have a civil rights background in order to produce credible and useful information. The objective perspective and civil rights expertise required for an audit of this nature cannot be provided by management, internal counsel or the Board. For Bank of America and its investors, the racial equity audit is an important risk management tool. In the banking industry, trust is paramount. Changes in public, consumer and employee sentiment have put systemic racism and racial injustice at the forefront of our national dialogue. Concerns about reputation, brand damage and talent attraction have prompted other major consumer-facing companies such as Facebook, Starbucks and Airbnb to conduct these audits. The racial equity audit is an important investment in Bank of America's long-term sustainability and value protection. An audit of this nature would provide an objective assessment of the bank's policies and practices as it relates to lending, human capital management and its philanthropic work. The proposal looks to evaluate the effectiveness of the company's policies in addressing racial equality. And no existing regulatory requirement or inspection is sufficient to ensure that Bank of America is meeting its commitments. The Community Reinvestment Act does not evaluate discrimination based on race. And while data collected from the Consumer Financial Protection Board examinations may be helpful in assessing if Bank of America is meeting minimum standards, it is not sufficient to stay ahead of the risks. Bank of America has committed $1.25 billion to advance racial equality. Given such a significant sum, investors need assurances that the bank's policies are effective at addressing these issues and that Bank of America is not acting in other ways that could negate any positive impact. Therefore, we urge shareholders to vote for Proposal 8 requesting that the Board oversee a racial equity audit. Thank you.

Thank you. We'll now respond to any questions from shareholders related to the 8 proposals to be voted on today, specifically on these proposals. We'll pick up the general Q&A later. Lee McEntire, our Head of Investor Relations; David Leitch, our General Counsel; and Ross Jeffries, our Corporate Secretary, are here today to assist with those questions. I'll pause for a moment to see if there's any questions that are submitted specifically on the proposals.

Have there been any questions on the proposals?

Brian, we have one question that is somewhat related to the proposals. I would ask the Corporate Secretary, how long will you keep the polls open after the last proposal has been presented?

As Brian noted earlier, he -- the Chair opened the polls at the beginning, and we've asked for shareholders to submit questions on the proposals. There are no other questions on the proposals, so when the Chair closes the polls, having addressed all of the shareholder questions on proposals, that's when we would close the polls.

Okay. That's -- all the questions in, Mr. McEntire or Mr. Jeffries, on the proposals?

Yes. That is correct, Mr. Moynihan.

Okay. Thank you and -- for that question.

And there being no further questions, I declare the polls are now closed. I'm now going to ask to review the preliminary voting results. Ross, would you please report on the preliminary results of the votes today?

Our inspector of election reports on the following preliminary results: all 16 director nominees have been duly elected to the Board of Directors, the advisory vote on executive compensation has been approved, the appointment of PricewaterhouseCoopers has been ratified and the proposed amendments to the Key Employee Equity Plan have been approved. None of the shareholder proposals received the required majority support. Final voting results will be reported in a Form 8-K filing with the Securities and Exchange Commission within 4 business days of today's meeting.

We have now completed the official business of the meeting, and the formal meeting is now adjourned. We're now going to turn to our general questions about Bank of America that were submitted by you, our shareholders. As a reminder, the rules of the meeting remain in effect. If you have questions about a personal financial matter, I encourage you to go to the link or phone number in the rules of the meeting for direct, personalized assistance. If we don't have time to answer your question during today's meeting, please contact -- please be directed to our Investor Relations website. As I stated earlier, for the convenience of all, we're going to have 30 minutes of questions. Now I could ask Mr. McEntire to read any pertinent questions?

Yes, Brian. The first question relates to -- and we have a few questions around when do you think BAC will be able to resume increasing dividends again.

The rules of the Federal Reserve for the second quarter of 2001 -- '21, excuse me, require that we continue to pay dividends at the same rate we paid them going into the period, last year's second quarter. I think it was the first quarter of that restriction. And we will continue to do that. As we come to the third quarter of 2021, we will move to what is called the SCB rules, so the rules that are proposed by the Federal Reserve, and they've announced it at that time. And then we'd expect to -- the Board would expect to start to follow our general capital management policies, which would include continued return of capital and increasing dividends aligned with earnings.

Brian, then the next general set of questions relates to buybacks and what the share buybacks were in 2020 and what the program or the prospects are for 2021.

Well, going back to the last few years, in 2019, we had about $28 billion in buybacks, again, because of the extra capital we had accumulated through the decade. In 2020, because the restrictions that we voluntarily agreed to last year, at the end of the first quarter, we only repurchased $7 billion in stock. And that was mostly in the first quarter prior to agreeing to those restrictions to apply basically in the second, third and fourth quarter. In the first quarter so far this year, the rules are you can buy back up to your total earnings minus your dividends. We've bought back around -- a little over $3 billion. And then just recently, we authorized a purchase program on a go-forward basis beginning this -- now in the second quarter of 2021 for $25 billion. Under the rules of the -- the current restrictions has rolled forward a quarter because we have higher earnings. We'll be a little over $4 billion of buybacks this quarter, and then it will be under the SCB rules, so called.

Thank you, Brian. The next question comes in that, "Does BAC need physical locations to be successful? And can you talk about what the bank has done for financial centers?"

Yes. We need to be high touch and high tech, as we call it, across all our businesses. And so we continue to fine-tune our physical plant not only in our financial centers but also in our operations areas, our administrative buildings across the whole platform. Now those of you who've been shareholders for a while, we started the decade in 2010 with about 120 million to 130 million square feet of real estate. We're down to about 70 million across the decade, which the team did a great job of continuing to make our company more efficient and effective. In terms of financial centers specifically, we opened about 57 new ones last year, and 11 were in low- and moderate-income neighborhoods. We renovated about 400. And then in 2021, we've added about 35. At the same time, we have closed centers in areas that the customers don't demand them. But at the end of the day, we'll continue to have both -- we'll have financial centers and phones and digital and all things so that we can do a great job for our customers across all our different customer segments.

Thank you, Brian. The next question, "Can you talk about the increase of business checking accounts in 2020?"

Well, in the area of small business, on the deposit side, we're up $40 billion over the course of the year, round numbers and small business. And that -- remember, small business for us is a segment that serves companies up to $5 million in revenue. It's a very small business. At the same time, we've opened -- we're up about 7% per year in accounts opened. And recently, we've seen the loan origination practices in small business back to their levels of originations closer to where we were before the pandemic. And on top of that, remember, we did $500,000, round number, of PPP loans, which really is the lion's share more in this segment for our company. And so that was a tremendous amount of loans, $30-odd billion, that were done on top of it. So the team has done a great job in small business led by Sharon Miller, and we continue to do it. When you move to the commercial side, our commercial deposits are about $800 billion. That moves to a -- that moves to the segment for $50 million for Business Banking and $2.5 billion-and-up revenue companies, [indiscernible] $5 million to $50 million for Business Banking, and $50 million and $2.5 billion for middle market. And those teammates are doing well and continue to do more with each customer.

Brian, the next set of questions, there are several around inflation. And perhaps give your view on inflation over the next year or so.

Well, there is a great discussion about the prospects of inflation. Is it a -- and that's why you've seen rates move up but now have moved back down over the last few weeks. But -- so what is the discussion? The discussion is whether the amount of stimulus that was starting the economy last year and continued through this year is such that it'll cause inflation in prices, wages, et cetera. Purchase levels by consumers exceed -- that Bank America exceed what they were in 2019 and -- by a lot. In other words, by 17% year-to-date of -- through April '21 versus April '12 -- or '16 and '20 and -- excuse me, '19. So there was a downdraft in '19/'20. But now we're almost 17%, 18% above where it was in '19. That kind of purchase power with the issues about supply chains could lead to price. And those of you that see it in the housing markets, I know you've seen that. so the question is whether it's temporary or whether it's permanent, and that will play out as we see how the economy recovers more fully, unemployment returns to normal, and then, frankly, how the consumption behavior and expectations by consumers and businesses are going forward.

Thank you, Brian. So Mr. Chester would like to ask as a follow-on to that, "Is the accommodative Fed policy and higher or lower interest rate policy better for BAC?

Well, lower rates are a necessity to accommodate the economy and make sure it's growing. Our team has projected economic growth of 7% for GDP for 2021 and 5.5% for 2022. Those are both good for us. That kind of economic activity ought to result in more activity by our customers, and you're seeing that in the deposit balances and the market activity, underwritings and things like that. The core -- the other side of that, frankly, is that we're not seeing strong loan growth just because of the amount of liquidity consumers and companies have, which we got to get to. But the other side of it also is lower rates when you have the biggest noninterest-bearing deposit franchise in the world probably, at least in the United States and probably worldwide. The issue is you just have a problem that we can't go below 0 on the floors. And therefore, as rates come down, our margins get pinched. As rates go up, we'll recover that, and that's the job of the team. So the only way to recover the interest income dollar number is to grow balances and deposits and loans, and the team is busy with what we're doing.

Thank you, Brian. "Is Bank of America finding a shortage of workers?"

We hired 4,500 people in the first quarter, so I think we're okay. I hear from clients that they're more concerned about this, especially certain skills that are in short supply because the amount of -- there are a couple of things. One is that some of the various -- the workers -- the skilled workers in terms of welders and stuff were downsized years ago and now with the boom need to be -- people need to be reskilled for that. And then in other areas, you read in the papers, and it'll be interesting as they fully open, that restaurants and others are trying to get the workers back. But I think people ought to remember we're in a very transitional period in the economy from 30% down, 30% up, et cetera, by quarters, and now we have 7%, that it'll take a while for this to all work through. The unemployment rate is still high at 6%. There's lots of workers available. The question is getting new skills and getting hired.

Thank you, Brian. The next question is from Scott Shepard with the National Center for Public Policy Research. It reads, "CEO Brian Moynihan has said that Georgia voter integrity legislation increases racial inequality and must be opposed in order to stand united in our advocacy for equal voting rights for all. Can you explain specifically why requiring voters to show ID in order to avoid fraud is racist? And also, Bank of America's time line for ending all requests for ID from job candidates, employees, visitors to your facilities, borrowers, lenders and attendees at your annual shareholder meetings in conformance with their race-based claims?"

I don't think any statement was made by the company. The statements made by the company were clear that the right to vote is core to America and that we want to make sure it's preserve and extended to the fullest extent possible. One of the things is there's lots of provisions in these laws, and that's why last week, after looking at some of the discussion, I asked -- I got to the conclusion that maybe we need a bipartisan commission. In the elections of 2000 and 2004, President George W. Bush appointed president -- former President Carter and James Baker to -- Secretary James Baker to form a commission to look at voting rules. And they made a series of recommendations that were delivered in 2005, and they were implemented. I think similarly, we need to get the set of voting rules that people believe elections are fair here in the country on all sides and address these issues. And I think it'd be good to get a bipartisan commission to do it. But we are for -- the right to vote is paramount to being an American.

Thank you. Brian, the next is really a comment as opposed to a question but was asked to be read. "BAC has done well in 2021, in this pandemic mess in '20 and '21. The hard and harsh lessons of banking, oversight and consequent regulations learned in '08 and '09 has proven resilient and well applied through the pandemic. Nothing has been easy about all of this for anyone of our nation. You've done well. Carry on and continue to serve us well throughout."

Well, thank you for those comments. And on behalf of the team, I thank you for the comments. They did a marvelous work to support our clients, our customers and our communities during this time and delivered for you, our shareholders. The lessons of capital, liquidity, et cetera, that were learned out of the financial crisis and the mortgage crisis and the overborrowing crisis in the mid-2000s that led to the late-2000s issues were well learned, and that's why I think he felt the bank industry through this crisis has been there to support.

Thank you. Brian, the next question, "Will the Board of Directors commit to not coercing our employees into getting the COVID vaccine?"

Our job is to educate our teammates to have them take care of them and their families, and so we've provided lots of fact sheets and information. And so we will continue to educate them about the benefits of getting vaccinated today -- about getting vaccinated to preserve the safety of their family. We have, over the last year, done a lot of work with our 200,000 people plus their 600,000 to 700,000 people that we insure on top of that to try to help those teammates through the vagaries of this disease. And we will support people who can get vaccinated by trying to get them the facts out to do it and the education and let them make their decision.

Thank you, Brian. The next question is from [ Gilbert Lau ]. His question requests for the executives of Bank of America to drop the mask mandate or at least have a vote to decide to drop the mask mandate because the -- they must be overturned and is tyrannical. So that was the gist of the question, Brian.

The -- we are following our medical advisors and the CDC's rules and suggestions about how to conduct business when you have hundreds of thousands of customers come through our retail team -- retail stores every day, and we'll continue to follow that guidance based on their advice to protect our teammates, to protect the customers and to protect the assets of the company, frankly.

[indiscernible]

Okay.

Brian, we have a question here from Ben Cushing. On behalf of the Sierra Club, which is America's oldest and largest grassroots environmental organization, the Sierra Club notes that Bank of America has committed to achieve net zero emissions from its financing portfolio before the year 2050. However, this pledge does not go nearly far enough or fast enough to address the firm's role in the climate crisis. A recent report shows that Bank of America provided $199 billion in lending and underwriting to the fossil fuel industry, making it the world's fourth-largest funder of fossil fuels in 5 years since the adoption of the Paris Climate Agreement, which the firm claims to support. How does Bank of America plan to take action this year to begin phasing out fossil fuel financing in order to provide a credible pathway to reaching the firm's long-term climate commitment?

Well, we've made the necessary commitment. It's by 2050. We are looking to have specific pathways by portfolios in connection with the guidelines of United Nations and other bodies outside our company, and we'll continue to operate our company. This will take a transition, and we have helped companies make that transition, including companies engaged in production and use and -- of energy broadly and including fossil fuels. And so those companies are making great gains, and you can read about them every day, and our job is to help them make those transitions. And our company has worked, and the leadership here, of driving not only our own commitments but also working with other colleagues to help make those commitments understood so more people can join them and help meet the goals of the Paris Agreement.

Brian, the next question, I'm going to direct to our Corporate Secretary. "Mr. Jeffries, can you track the number of minutes a meeting attendee stays logged into the annual meeting?"

No, we cannot track that.

And then the next question, "How many shareholders are attending this meeting who are not employees or directors?"

There are approximately 375 shareholder attendees. We can't distinguish between employees and nonemployees. So 375. And then there are also 375 guests at the meeting.

Thank you. Brian, the next question is, "What is the percentage of residential mortgage that you still have in forbearance and, if you know, nationwide? What is the condition of commercial real estate vacancies? What are you doing with your own office space? Please highlight how the banks are in a better position this time? And aside from your balance sheet, will the economy solve this? And where do you think weaknesses may exist?"

I think there are lots of questions in that question. But in terms of consumer real estate, across all our portfolios, we have, I think, $6.1 billion, round numbers, in forbearance, I think, is the total. That is several hundreds of billions of dollars of commercial real estate loans and home equity loans. So it's down to a small balance, and it was due to the responsible growth across the last decade. And those forbearance commitments are well secured by the consumer real estate. And as you know, house price appreciation continues now. The -- when you go to commercial real estate, it's going to be years to play this out in the sense that we were already repositioning our real estate, moving to high-performing workplaces and things like that. The statistics I gave you earlier represent that. We have to see what our teammates want to do in terms of working. We are a work-from-office company that may be in center cities. It may be in suburban office space. But we are a work-from-office company. We've been clear with that. We have always had a work-from-home program, but this is -- but it requires great discipline to execute on that appropriately. And we -- as we said earlier in the call today, we're moving thereafter Labor Day as long as the virus and vaccine paths stay steady. The impact to commercial real estate broadly for us, it's a small part of our portfolios. In the affected areas of hotels and things like that, we have very limited exposure. We've put up reserves against it. We feel very comfortable, again, due to responsible growth from the last decade. And total commercial real estate exposures is, I don't know, 6% of the portfolio or something like that. Maybe it's 7%. It's down from the last crisis, last recession in the United States. So we feel good about what we've done. More broadly, I think there's lots of equity on the sidelines. Rates are still low. So we'll see how it all play out. And I think -- also, the last point I'd make is people -- we have 10-year leases in place. It's not like we can change our commercial real estate posture overnight, but we work at it every day. And I think we're not alone in that. So I think people will realize this will probably take a decade to play through in terms of the commercial real estate office market. In terms of retail markets and things, those trends were going on for years. And maybe they were accelerated by the crisis -- by the pandemic, but it's been an inextricable trend to have less retail sales at physical. But we would note that just as April came, it's -- you saw people going back in stores and physically buying stuff at a -- in clothing stores and stuff at a pretty good clip over the prior month. So it'll be interesting to see how this plays out.

Thank you. The next question, Brian, "What advice has Warren Buffett given you in running this company?"

He gives me one piece of advice. "Run it well."

Thank you. And then, Brian, there's a question on governance. "How can a Board of Director be independent if they own Bank of America shares or long term -- for -- or a long-term comp?"

I think that you want shareholders aligned -- top management and the Board to be aligned to shareholders, and ownership of shares is one of the ways that alignment occurs. So I'm not sure it has any conflict of interest. I'd rather have a Board and a management team and an employee base, including all our employees, to own stock in the company because then they have the interest of the shareholders front and center as they're shareholders also. You might note that over the last 4 years, that we've done 4 different broad-based incentive plans beginning after tax reform in '17. Other people did it once. We did it 4 times and most recently in the first quarter. All those include cash for people up to have a certain amount of compensation, $100,000 generally in the most recent, and stock for everyone else. And my teammates write me notes every day that they appreciate being stockholders and want to help drive this company to great success because of it.

Thank you, Brian. The next question, "What are your goals in the percentage increase of tangible book value each year?"

The idea is to grow it at 5%, 6%, 7%, 8%. I mean it really depends on what's going on in the environment, and we've been able to do that. And if you -- you see it sort of embedded in our performance metrics for the various senior executives to receive their -- half their compensation or 40% in the case of my direct reports. So we -- our interests are aligned. The interest -- the tangible book value has grown in the company consistently, and that's important.

Thank you, Brian. The next question is around risk management. "With the incident of Archegos, how does BAC protect against this type of risk?"

I think our team led by Geoff Greener and Tom Montag and Jimmy DeMare in the trading business continues to always be paying attention to the risk limits that the Board of Directors sets. The Board of Directors sets a set of risk limits for the company that then cascade all the way through the trading desk level. Those limits are minded carefully, the amount of leverage, now the average ADV, trading daily volume and things like that. And so the team has done a good job of managing the company. I think across the volatility from last year to this year, if you think about the earnings we've had but, more importantly, even with some extreme volatility and interest rate environments in credit, the markets team has done a great job and I think made money in all but a very small handful of trading days in the last 200-plus trading days in the last year.

Thank you. "Brian, we invest in several different industries and efforts in building communities. How do you determine or set internal requirements for sustainability for support from the bank?"

Well, I think we have an ESG Committee that consists of the lines of business and other teammates in our areas that focus on this, our ESG group, and areas like that, our teammate that works on environmental matters. And they set goals and parameters in which we're willing to do business. So that committee works with us to set goals. So the $1 trillion is based on that committee and lines of business establishing goals that they believe they can hit over the next -- or committed to hit, frankly, over the next decade. And that's how we do it. So we're were built through a committee and a structure that's explicit led by Anne Finucane and Tom Montag and various other colleagues. It's not left to mystery. It's explicit commitments. Now where do we do it? Obviously, the mortgage area. I spoke earlier about our lending -- neighborhood lending commitment from $5 billion to $15 billion. I talked about our, last year alone, $6 billion-plus in not only mortgage lending but also other types of community development lending. If you go to the environmental, we have major investments in solar and wind and other things to help the transition take place. Then those provide tax benefits that we show you the effect of every quarter. And so it's really different depending on the industry, for lack of a better term, that is the operating industry. But it's all based on our views It's a real business opportunity. So whether it's Alastair Borthwick in our middle market business or Matthew Koder in our large corporate business, they are after the business opportunity of helping companies make the transition that was mentioned earlier.

Thank you, Brian. The next question, "Why did Merrill Edge not allow customers to buy shares of companies such as GameStop in January?"

I think you have to go and put your January mindset around it. And when there's certain volatility, we have to adjust accordingly and we did. And that's the decision we made to protect our -- the company and protect the clients, and we made it.

Thank you. Brian, the next 2 questions relate to the PPP program with the government. Number one, "The bank appears to have applied a policy to its PPP application process of only taking applications from small businesses who do not have existing credit lines with other banks. Did the bank reconsider this policy?"

We -- a long time ago, it seems, in the very first PPP wave, to maintain order -- we had 100,000 applications in the first 24 hours, if I remember right -- we focused on our clients because, frankly, other companies could focus on their clients and that was it. But at the end of the day, we've done 350,000 in the first few rounds, and we've done about another 140,000 or so in the most recent round. And we served all kinds of customers, but we started with customers of our company that were borrowing customers and then customers that had transactional and other relationships with us and we're able to serve them. And right now, the demand, frankly, has been running out in terms of there's money left with the SBA, and we continue to get several hundred a day, but we're -- there's not a lot of demand left in the system. And so the team -- the 10,000-plus teammates who worked at peak on this, they did a great job to deliver this in this society. This was multiple years of applications of any type of loan and multiple changes in programs in development. So we're proud of what we've done there, and we're finishing up as we speak.

Brian, the second question around PPP is, "Did we change our -- has PPP loan forgiven changed between the first and second installments, of which there have now been 4, I guess?"

So the rules -- all these things continue to change in terms of the SBA issuing rules that we have to follow. And so we're heavily into the forgiveness. Now I think we've processed -- 205,000 to 210,000 forgiveness applications are processed through the SBA. So the rules change from time to time. We adjust the technology, we adjust the teammates, and they go off and do it. And again on forgiveness, we've done a very good job. Like I said, we processed over 200,000-plus clients through forgiveness already.

Thank you, Brian. The next question, "Where do you see mergers and advisories in the banking industry in 2021? And how will Bank of America respond?"

Well, it's -- it'll be business for our Investment Banking team and our financial institutions group. Because for about, I don't know, 25 years or maybe or so, there has been no right for Bank of America to make a deposit acquisition in the United States because we've been -- if you have more than 10% of deposits, you're not allowed to make an acquisition of another depository institution. And so we are not a buyer of depository institutions by law. It's not something -- the policy is by law. And so I think there'll be lots of consolidations by others. We will advise them and work with them to help make that happen, and -- but -- if they want to, our clients. But in terms of our participation in the U.S., there's really nothing for us to do on depository acquisitions. It's not by the law.

Brian, the next question is on cryptocurrencies. "What is Bank of America's strategy on accepting cryptocurrencies and adopting blockchain and smart contracts?"

Well, on blockchain and smart contracts, I don't have the current number, but we have several hundred patents already. We are trying to -- we're applying the capabilities in our treasury services business, our transactions services business where we support companies. And we think there's usefulness of blockchain and others in areas like that where there's information and money moving and being able to move it. In terms of cryptocurrency, we have a policy that we've stated, and we haven't changed them. But we always are looking at what's going on in the markets to understand, both from the investment side and the transactional side, what's the interest of the customers out there and do we need to rethink our position. Importantly, the idea of digital movement of money is not something new. We've moved -- 65% of our consumer money moved digitally this quarter or whatever the -- in the quarter and has -- and 99% of all the corporate money moves digitally. So it's not a new idea to move digital money. Zelle payments are up, as I said earlier, about 80% year-over-year and continues to grow. We're bringing all the banks into that system by -- through their service providers and actually paying for them to get on the system. 4,000 banks have used the Zelle system, so -- and that's U.S. dollars and easily transacted in real time. It's being attached to it as we speak. And those are powerful engines to make digital what is paper. But by this time tomorrow, there'll be another couple of hundred million dollars go out of the ATMs in cash and another couple of hundred million dollars go over the teller line in cash, meaning $100 bills, $20 bills, $50 bills, $10 bills, et cetera. So America still has a lot of cash going on, and we continue to work with -- to make the means of payment more beneficial to our customers.

Brian, all other questions at this point relate to a personal nature for things that they need to contact company representatives for. But I do have one comment from a tennis enthusiast. Mr. [ Sachin ] would like to say, "Great shareholder meeting. Congrats to Brian Moynihan and the BAC management team. You run the company like Bjrn Borg." So with that, Brian, I am going to end the question session here. And just as a reminder, if you do have questions of a personal nature, please contact our company representatives, as seen in the rules.

All right. Well, thank you, Lee, and thanks for that last comment. At this point, if there are no further questions, that concludes today's meeting. On behalf of Jack Bovender, who we really say thank you to Jack for the great stewardship he has had as Lead Independent Director for the last several years; and to our new -- and on behalf of our new incoming Lead Independent Director, Lionel Nowell, and the rest of our Board of Directors and our management team, thank you for being a shareholder in our company and thank you for your support of our company. We look forward to seeing you next year. Thank you.

This now concludes the meeting. Thank you for joining and have a pleasant day.