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

Thank you, and good morning, everyone. I'm Ebrahim Poonawala, Head of North American Banks Research at BofA. On behalf of my colleagues in research, including Craig Siegenthaler, who recently joined the firm to lead the coverage on asset managers, brokers and exchanges, I'd like to welcome everyone to Bank of America's 2021 Banking and Financials Conference. To kick off the conference, I'm delighted to welcome our very own, Bank of America's Chairman and CEO, Brian Moynihan. Brian, thank you so much for joining us today.

It's good to be here, Ebrahim.

And I was coming into the train this morning, and it occurred to me, this is my 10th year hosting the conference. And I guess I could not have asked for a better way to mark this than having the opportunity to host you, so really delighted you could join us.

It's a pleasure to be here and talk to your clients. And thank you for all the great work you and all your colleagues in research do on behalf of the company.

And I guess maybe just to kick it off, big picture, Brian, there's a fair amount of uncertainty when I talk to investors around what's going to happen. Are we entering a period of [ stagnation ] over the next year or 2? You have an amazing vantage point running the bank. What are you hearing from our clients when you think about making decisions around investments, hiring? Would love to start out there.

I think you have to start off with your colleagues had the U.S. economy growing really strong this year. And then next year, what happens is it moves towards trends. So in '23, it's around 2.5-or-so percent or whatever the current projection is but sort of normalizing. So we're in this period where the economy took a big sink, started recovering, now has gotten as big as it was nominally before the crisis, now predicted to grow because of all the monetary and fiscal combination -- monetary combination, fiscal stimulus, predicted to grow next year at 4.5% to 5%, which is 2x the rate it was growing then. And then it's predicted as during the course of the year to normalize with the expectation of monetary policy begins, it normalizes and PE normalizes. And frankly, that the fiscal policy runs out. Now let's step back and think about what's going on. If you look at consumer spending at Bank of America in the month of October, so this is very recent data, it's about -- year-over-year, it's up 17%, 18% or so. Year-over-2 year, it's up 25%. So what is that really saying? It's last year this time, the [ nonmoney ] spent by consumers, which is about $300 billion a month, to give you a sense, it's big. And then credit card is only about 20-something percent of that, so people get fixated on the credit card and debit card spending. It actually is much broader than that. So credit and debit is about 25%. So $300 billion a month, growing at double-digit plus rates is completely different than anything we've seen in the last 15 years. So consumers are spending. Now the question -- then the next question be let's think about a couple of aspects of consumers. They still have money. Their account balances with us are growing every month for the last 7 months. So even though stimulus largely stopped for most American consumers several months ago, their account balances continue to grow, which means they're cash flow positive, and so they have more money to spend today than they did back then, to put it and make it simply. Then if you think about especially when you get into the consumers who were under $5,000 average balances, they have 3x as much money in their account type of number. So it's a lot of money stored up. Then the question on their borrowing and capacity, they have line usage, they have equity in their home. They have that. So the consumer is in very good shape. When you go to the business side, the question comes down to, will they change their decision path based on shortages, based on views of the economy slowing down? And if you talk to the businesses we talk to, they're desperate to get their inventories where they can do to sell them. They know they can sell [ everything ]. Frankly, they are raising prices, and inflation is a real risk across wages and into goods and services even though the more temporary stuff of fuel and stuff people say will straighten out. But they wish they had the inventory to push to the system now, so they're going to restack, starting with the auto dealers, some cars will become available moving to the -- across industrial world. And those will ease over time. But the interesting thing is you'd say how consumers spend that much money when you hear about such shortages. Consumers are going to where they can spend. And when they -- frankly, it goes well for unemployment because where they're going to spend is travel and so hotels and miles driven and travel spending and restaurant spending, all of which are very heavily employment-heavy places. You can't ship somebody the hotel room to go have the experience to their homes. So even if they can have virtual experiences, it's still not the same. So we feel very good about the economy. Your team predicts it to grow strong. And you got to remember, we're sitting on economy growing at -- predicted to grow 3x the rate that it grew before the pandemic, same size, less -- the population growth hasn't been that high, so GDP per capita will start going up. And then the [indiscernible] is a lot more money to spend and businesses ready to move. Now the big risk are getting inflation wrong and the big risk that shortage is at it so bad that businesses have to pull back and reduce employment and things like that. We haven't seen that yet, but that -- those are the big risks ahead of us.

Got it, Brian. And I guess just add to that, and even most of us have lived through the financial crisis. And when I look at the economy today, very different in terms of what's emerging as you've outlined coming out of the pandemic versus what we saw coming out of the 2008, 2009 crisis. Give us your perspective in terms of how you view some of the big areas in which the economy is different today than back in the day 10 years ago.

Well, clearly, the -- there's a lot of differences. Number one, you didn't have the excesses building up at the rate you had in early 2000. A lot of people talk about 2008, Lehman and all that stuff. The excess is about [ 3, 4, 5 and 6 ], where home values rose very quickly, no down payments, and all the structuring came in, so that drove home prices up. And then on the other hand, other excesses took place. Now home prices are -- have risen quickly, and you see that your comparisons are pretty strong. But if you look at the long-term trend, it went down and came back up. And so the question is how does it start to reverse to the norm now. And so there are excess that could build up. But the big difference is this was a pandemic. There had to be a shutdown. People stopped working. The government flooded the zone with stimulus at well over -- it was multiples of the lost wages, the PPP program and all those things. And so the government did what it should do at a time of stress around the world, which was try to stabilize the people most affected by small businesses through PPP, unemployment insurance, different forms through -- for people to the now the reality is until those people could cross the river. We are now across the river. Most industries are across the river. Still, some airlines are still getting international travel back and things like that. And so the government did a great job. That's the fundamental difference. In the banking system, the other fundamental difference, banking system is in great shape. We are all there to take on the risk that we had to take on from our clients, both in the markets business and the borrowing business. We had $70 billion of loans come in a few weeks, to staff up to do the work on PPP and other things, which was 10,000 people at the high point working for us. The banking industry stepped in and helped provide the cushion. And that was another big difference. And we have to remember that the other big difference was science. In other words, this was a pandemic, and the vaccine development path that was fueled by fundamental research in these companies taking that research and applying it enabled the vaccine to come out within a year's time frame that actually worked. And that's a pretty amazing question. And now pills have come out, which are actually a fundamentally new idea. And that they can actually change the treatment regimen as this moves to other societies. And so that's far different because the cause was the virus, and now we're winning the war on the cause, therefore, you can have a lot more assuredness of what was going on in the underlying economy. That's why unemployment is back to levels that in prior regimes, we'd have said is full employment. But we're still seeing some need for a couple of million more jobs. But 4.5%, 4.6% is a pretty low unemployment rate for a lot of us.

I guess shifting gears a little bit, talking about the bank, I was in one of your other interviews, and you talked about Bank of America as being a powerful organic growth engine. And I think given our size, I think it's an easy thing to overlook. So maybe spend some time talking about just the growth opportunities you see across the bank across all our lines of businesses.

Well, if you look at what's out there, our growth opportunities across all the lines of businesses, and so there are fundamental opportunities like in the consumer business, the mass market consumer business, what we call retail, they're growing their checking accounts at the fastest rate they've ever done. And that's because we have great products, great services. We basically have eliminated for the SafeBalance account and the emerging loans the company have sort of eliminated the churn and account base, and that's led in that growth. And so there's a -- so why can we grow that? Because of the digital capabilities, because of new markets like Cleveland, Columbus, Cincinnati and Salt Lake City and Indianapolis and Minneapolis and Denver, where we -- a lot of these markets, we started nowhere, without a branch to now we're in the top 10, top 5, which is good. So that gives -- those are markets we haven't touched. And then in the digital presence across the platform. And so when they take that into the preferred business, which is the higher end consumer business across the board. So as we look at it, we put the -- some stuff in our recent quarterly results where you could see the year-over-2 year growth. So we said, look, if people are focused on '20 as being a year which was messed up. Look at '19 year-to-date and look at wealth management net flow of assets, that flow of assets is multiples of what it was before. Net checking accounts up 30%. Those types of figures are there. So where is the opportunity to grow? Across the whole company. Now there are places, the merchant business which we bought in and now our position is starting to grow to catch up. The 401(k) business and the benefits business, which we have a position and we're starting to see that pick up and grow. There's places where our market shares are -- investment banking in the middle markets, we've gone from 0 people 5, 6 years ago to 100-or-so people covering that market exclusively and pushing the numbers of percentage of fees that Matthew Koder and the team get from the middle market client base of Wendy Stewart. There's just all these places we can grow. We think there's -- we look at our market share in Los Angeles for wealth management, 7%, 8%. We look at our retail touching those households, 1 in 2 or 1 in 3 households we touch in Los Angeles. Why can't we get the wealth management share up? So we're deploying FAs and private bankers into that market at a heavy pace. And so we think about all these things at the micro level, at the macro level and at the connectivity level, which provides great growth opportunities. If you remember, before the pandemic, even through it, we were growing at 2x the rate of GDP. And you're seeing that come through the other side.

Wonderful. Sounds like it should be an exciting few years ahead. I guess another area of, obviously, great focus for bank investors is asset sensitivity. Would love to spend some time, remind us around just how you think about the asset sensitivity of the balance sheet as it is today. Like I often hear from investors around Bank of America has been a little more active in deploying some of that cash into the bond book. So I would love to hear your thoughts around how we are positioned to benefit from higher interest rates.

Yes. So if you think about the bank side, which is $2 trillion of ship deposits, and we have $900 billion of -- $900-some billion of loans, so just step back and think that we have $1 trillion we have to put to work and it grows. So I guess then this quarter, we'll have another tens of billions -- multiple tens of billions more money from September 30 till December 31 we have to put to work. And so largely, we put that into treasuries and mortgage-backed securities. And so -- but if you think about what's happening there, the growth is -- we're over $1 trillion in our consumer businesses. And then if you had the wealth management business to do a comparison, we're $1.4 trillion in deposits in those 2 businesses. So start to think about that. That is half checking and low interest checking. The highest rate had ever paid as rates came up before the cycle was about 11, 12 basis points in the consumer business, to give you a sense. It's not asset sensitivity, it's liability insensitivity. If you have 0 rate checking accounts, they stay at 0 rate. And the great debate we had in '17, '18 was all that money is going to run off. It didn't because these are the core transaction accounts people have in their household, therefore, the money is moving through them and improved out. So I think what drives our -- you got to start from what drives our asset sensitivity, it's the strong deposit base, the strong transactional deposit base, a strong 0 interest deposit base, low-interest checking, no CDs at all -- $60 billion or something like that. No, the money markets are really core to people's cash flow, et cetera. So that's what drives it. So do we -- basically, our asset sensitivity is a little over $7 billion or 100 basis points increase, that's based on a bunch of models which we actually continue to always better because they have deposit pricing build in, which is not relevant. But really, we feel very good about where we are. And we deploy the cash and keep -- we have more cash that's -- cash at the Fed and more overnight money than we've ever had. At the same time, we deployed some money. And it's really because at some point, we've got to put the money to work because the deposit franchise is up $350 billion year-over-year. So just think about that. That's the size of a relatively large bank.

Got it. And before I move to the next question, those on the line, if you have any questions, you can submit that on your screen, and hopefully, we can ask your questions to Brian. I guess moving on, you talked about the strength of the consumer. I think our team estimates about $2 trillion in excess savings that the consumer is sitting on. As we think about just tied to the U.S. consumer and the growth opportunities that come along with that, give us a sense of just how the bank is going about targeting and monetizing those opportunities. And you mentioned earlier, Brian, about credit card balances. Any signs of life in terms of those balances picking up?

So the way we think of a stair step, the first step is to get the core transaction count in the household. By the way, that's true with the commercial client too, which is, in our small business, we have 12 million customers in the vast majority of our deposit customers and transactional customers [ and deals ] in the midsize and large businesses. So you always have to remember that the core anchor for what we do as a company is provide ability to store and move people's money at their request in very fast ways through digital, through paper, through whatever way they want to do it. That's the core business. So when you think about the opportunities in consumer, you have to start with that first stair step. And the next stair step is when they start to borrow. There's 2 dimensions in that. One is the credit card, and we are seeing balances pick up in the credit card business, which is good because they come off the floor of utilization, still a pay rate side -- what is in the credit card side. And then the second is into the other products, the autos loans. And we only really -- well, I think it's basically, we have card loans, which can be our transactional card loans. And as you know, the business has changed the payments business in the way of auto loans, which we continue to drive our share up especially direct-to-consumer through our digital practice. And then we have home loans and home equity loans. And home loans are turned over and started to grow, which is good. And then home equity loans are still fighting the payoffs from the cash out refis and right now the home equity loan. But I think we're seeing that mitigate, which is good. So I think, think of those stair steps. And so then every stair step as you basically say, we have a core customer base of 35 million checking holders. How many of them use us for all those products and how do you drive that connectivity, and that's where our Preferred Rewards program is up to something completely different. We reward across all products and services. We have about 8 million people in it. They are 80% of the deposits in the consumer business and drive the value, that's always a given. And they will drive the business, as we said, because they are the customers that tend to be more affluent, tend to have more balances, but also tend to build their other different product sets with us. And they're very good. And then Merrill Lynch is the other leg in that stool which is starting investing $300 billion and growing it. You have 25% a year and more new accounts coming in and all core accounts. Average balance of Merrill Lynch compared to the people out there is well over $100,000. So this is not let me throw some money and play around. This is their core investment, things like the guided investments, which is an automated rebalance. Remember, we all talked about this 3, 4 years ago, the big new thing was going to be sort of automated rebalancing platforms. You guys build it. It goes through [indiscernible], it goes through the [indiscernible], those numbers are up dramatically. And there's 2 parts of one with adviser helping and what not, and those numbers are up in the double digits from scratch. And that's what we keep driving. So the idea is just to keep driving that penetration measured everywhere we go and then connect it with the digital offers and proceedings, connect it with Preferred Rewards and then just keep driving at it. And that customer base continues to mature, and it's pretty exciting.

Got it. Got it. So you mentioned digital, and I think that's a good segue into us for the next few questions I had. Like to me, digital is where the battle is going to be won or lost over the next few years in terms of financial services, and it's a topic that comes up very frequently talking to investors. Talk to us in terms of when you think about digitization of banking services, how is Bank of America approaching this? And how are you making sure that we not only defend market share, but we are actually winning market share in this?

We -- the idea of digital is it doesn't -- it's a different way of doing the same thing. In other words, that you are providing the core transaction. So there's a lot of people that have entered the field with slices of it, whether it's on the payment side or whether it's on sort of the aggregation side or other different things. We've had an aggregation product out there for 20 years. There's a certain amount of demand in that product in reality, and we continue to fill that. These are not new [ lines ] or new concepts. But -- so what do we do on the digital? Remember, what's really going on in the general business, the consumer business, and we go through the other business. In consumer business, we are a high touch, high tech. It takes both. You need the branches. You need the capacity. We'll have hundreds of thousands of people go in every day at the branches. It's important for them to be able to see people at the same time support and have great digital comps. And so what's happened over the last 4 or 5 years, you went from digital really being a transaction thing to more of a lending thing and advising. So we did 1.4 million digital sales last quarter in terms of numbers of sales units, which is a pretty good size. Unit sales are up to half or more overall in the sales and consumer business, more than half in certain areas and driving at it the ability to give a loan and follow all the way through is really relatively recent. So you'll start with we're going to digitize everything. The lending side is now complete that you can do all the capabilities to it. The opening account is complete. They're getting -- moving all your money around Zelle and other things is complete. And now it's just driving usage. And so when I challenged, David Tyrie does a good job, it's just literally measure usage of every product and every capability. So Mobile Check Deposits saves us money, and it's more convenient for the customer. Still the people who are digitally active in checking, I don't know, 30% or 40% of them deposit checks mobilely. What's inverse that, the rest of them will go in the ATM at the branch. Now we're down to 15% of checks deposit at branch in total, so it's really going to the ATM. And you're saying somebody's going to ATM doing exactly the same thing they could do with their phone. It's just getting -- and it's still cheaper for us to do it through the phone. And so how do we get people to think about that? And so we drive usage that save this money. We drive paper out of the system through Zelle and checks are down 25% over the last couple of years. Dollar volume checks written is up, and you got [ Google ] on that, which means the average check written is going up, but they're converting it to Zelle and other payment forms, which drives it. So that saves money. And then you go to the sales side, and that's the 1.4 million units. So it has an aspect of everything we do. Recently, Erica, we just started using it to sort of help people answer the questions they would ask to call us. In other words, they try to call us through asking Erica what's the numbers or something. And we say to them, we can solve your problem. We solve it through Erica, which is artificial intelligence, interactive text or talking. And so we save millions of calls a year because Erica can truncate those simple calls or direct them to where to fix the thing. You want to change your address or turn on rewards or something like that, just simple straightforward calls, Erica can direct you right in the mobile app to take care of it. And so the person who's already in the app because they're going to Erica, so they're already there and [indiscernible]. So there's all these different ways we use it. When you go to wealth management, it's an FA, private banker-driven business but powered by digital, and the capabilities have been different. That's the major change in this pandemic has actually been the ability to connect to the customers through digital means, which sounds tedious, but it's very important, document signing, [ product ] presentation. All these things which accelerate the ability to get things done is strong. Then you go into the cash flow on the banking side, it's all about GTS and the transaction service and driving digital through that. You've seen that for a [ business to send all its money digitally ], its interface was still different. Now we're driving that through and things like the ability for a commercial customer to use Zelle to pay micro payroll payments or to pay different types of insurance payments. All these ways that you can use digital initiation by the customer through to the end consumer, through the network that we have in Zelle and the industry is really kind of fascinating. So with [ LogiPay ], a million people slightly different payments of a file, that's itinerant, and that what happens today and it goes away tomorrow and because we capture almost all the American consumers in that database, basically all those payments can go through. And so those are big helps to the commercial businesses on digital. Why? Because they would issue paper checks before. They get lost. They get reprocessed. They have to come in. By the way, we have to process them when they come in, and this is business all the way through. So it applies everywhere. And then in markets, obviously, the digitization of fixed income business, [ Jimmy ] and the team continue to pound away at that. The equity business has been digital since you and I were born, probably, but continued in the way it moved electronically. But there's aspects of that and the derivatives and stuff we keep trying to digitize and practice faster. And so all this is pretty exciting stuff.

Got it. And pretty comprehensive, Brian. I guess you mentioned Zelle a few times, and I think Zelle comes up a lot when I'm talking to investors around -- the bank investors think about Zelle taking on some of the fintech, big tech products. What I hear is why -- a question that I receive often is why is Zelle not doing more. And like you heard last night, there's a partnership announced by Venmo and Amazon in terms of enabling Venmo at check out. Just talk to us in terms of the evolution of Zelle, one, how successful it has been and what's the path forward?

Well, in the aggregate, Zelle exceeds. Venmo is growing faster. And you can see this just kind of public domain with all our partner banks driving. At Bank of America, it continues to grow as a percentage of payments. I just looked, interestingly enough in the month of October, Zelle was about equal to cash. It gets a little interesting when you start to see that how the ATM [ over a ] teller, you're starting to see it become a replacement. So you have -- so it's becoming more and more meaningful in size and scale of the business. So we are driving it because -- from a P2P basis. But the other thing we've done is enable it to be B2B and it's enabling real time. So now you have a real-time P2P payment, probably a QR code or off just having the information of the merchant. So you basically have a direct merchant pay, which is good for the -- which really works well for the last node type of thing. The [ pay ] feature that everybody want [ to pay a little bit to ] and the QR code makes it more anonymous. And you can do this, that's out there and starting to move through the system. And all these things are networks that take time to get up to speed because all the banks have to get on them. So we're starting to initiate some B2B payments in the real time is being initiated as we speak and adopted by the banks. And so the clearinghouse works on the real time for us, and it's up and operating going. EWS and the team working and Zelle team connecting that together. And then all of us as banks using it as a platform, you should expect more and more to come out about how Zelle is used over time because it's just -- and we're now connecting the real-time transfer system in the U.S. to the international ones, allows international cross-border payments to move real time between banking consumers without really any freight to it at all. And so these are pretty interesting things. And you're going to just see them, but we have to do them in the safety security name of KYC that the world expects of us. And that's why sometimes, this takes a little bit more because of the sheer amount we're driving.

Got it. I guess it looks like there's a lot more in store coming up. Maybe -- and you alluded to the capital markets business, Brian. We had some changes not too long ago in terms of leadership. It seems like at least the results we announced, Jimmy, [ Bernie ], the rest of the team have started out quite strongly. Just give us an update in terms of the capital markets business, how things are going and just competitively how the bank is positioned there.

Sure. So Tom Montag has been in that business, and it's been his heritage where he grew up and took it over and has the commercial business too but -- and did a great job of getting the town in place. And so Tom said it was time to retire, we had a -- we started last year, meaning in '20, elevating some members of the management team to get them more used to operating. And then now the transition is taking place. And there's a great team, Jimmy and Bernie obviously. But underneath them, there's a great team of people that's been with us a long time and do a great job. And so that also paired up with basically, we -- if you go back and think about how we restack the company and how we drove shareholder value, and as you know, our returns exceed 1, 3, 5, 10 years bank index and everything, the team has done a great job. So the question is, as we create that value, one of the things was to get the markets business from a business pre-financial crisis that was taking the risk the wrong way and getting settled down and getting in position and then make it modern into what a bank can do and then keep it at a place that allows us to really support it. And so that was sort of 30% of our balance sheet and stuff. Well, the company kept growing, and it has gotten down to 20s, so Tom came and said we need to push our strategic position forward. We built that. We're up $100 billion plus in terms of balance sheet size come into the business today. We'll move to $200 billion. And it's a tricky business and -- a difficult business, not a tricky business but a difficult business that you have to spend hundreds of millions of dollars a year in systems architecture to be current and manage the risk well. You have to really [ counter risk ] teammates and auto teammates and technology teammates and operations teammates because there's a myriad of products in the connectivity market. And I think what you're seeing from the competitive thing is the competitor share shifts that people have the scale and capabilities and talent and the capital base of which our markets business is part of our company and connected to our issuer business, all our commercial clients and our investment side and the wealth management business. The reason for us to own it is not in and of itself only, it's how it works for all these businesses. So we can bring it to a size of 30% of our balance sheet, taking up a couple of hundred billion dollars, become more competitive in some areas, the team under [indiscernible] has done a great job in equities and building that business up. And so we feel very good about the share we can pull out of it. And it's a business which we manage the risk well. If you look across the last quarter and all the way back, there's very few days that we get bumped around. And the team does a great job of trading, and it's really doing it in a way that's repetitive and can service the clients, and the investment side does a great job.

That's helpful. And you mentioned risk, Brian. And this comes up too during investor conversations, do you think from a risk standpoint, has the bank been too conservative? Not that I'm complaining. I think as you said, the stock is has been phenomenal, I think shareholders are happy. But just address this a little bit for us in terms of your message around responsible growth, I think, has been resounding success over the last decade. But when you think about approaching risk, are we being too conservative? Are we just right? How do you think about that?

Well, we -- it all starts with client selection, whether it's in the consumer business and the commercial business or anywhere. And so we are sure we select clients. But if you think about it, we have expanded the risk from a platform over time. We have more credit to commercial clients outside the United States than we do inside the United States in the large corporate business in Matthew Koder's business. So it's the [indiscernible] on that question and Lisa Clyde does a great job. And so the idea is that we take a lot of risk, and we have $700 billion, $800 billion in the markets every day. In the balance sheet, we have trillion dollars of commercial credit lines outstanding. We have credit cards, we're doing 1 million units, 1/4 of new credit cards. So we know how to take risk. We are careful where we play, right, and we go after it hard. And that's where you're seeing. So our mortgage origination share of people, say, has fallen, but the place that we play, we continue to have great market share. And it's growing, and our production goes up faster, which is -- and those are the things we have to be careful. But given where -- how well we fared the crisis and needed less reserves and got them out faster, needed -- it didn't have any capital issues, weren't needing SLR relief, it was kind of irrelevant to all that discussion, and we just said, fine, whatever comes at us, we can handle $70 billion of loans and things like that came on in a week. We continue to look. And so Bruce Thompson and the team in the wholesale markets continue to push our people. They say, wait a second, you can take more of that deal because we're a bigger company, and we have the national geographic and industry spread. We've managed our portfolios to make sure our real estate is carefully managed. So we don't have problems when people get worried about real estate and some of your companies are covered, and there's a lot of talk about real estate exposure. You don't hear that with us. So it's all things in moderation, but it's taking the risk we want and driving it. And that's -- that sometimes people get confused about what responsible growth means. The first part of responsible growth is that you have to grow, no excuses. You will fail as Bank of America as a customer, as a teammate. And whether you're running a business or whether [ individual] , if you don't understand, you have to grow. And if you don't grow, we'll get somebody in there that can do that, and they know that. So the question is then you have to grow with the right risk and right customer focus. So we're not going to go out and buy growth by buying credit, but this is -- every mortgage loan we've done, we've looked in the eyes of the borrower with our people and said we're here to close the loan, not coming from brokers and correspondents, which is where other people can get a lot of their share. So it's a way to build the business, and yet it produces revenue growth that exceed GDP and great operating leverage because of it.

Good. Got it. That's helpful. I know we have just about 10 minutes left. And 2 issues I wanted to touch upon, Brian. First was diversity. I know this is personally, you have been part of some of the leadership, the diversity council. You chair the Bank of America's Global Diversity & Inclusion Council. Just talk to us why is diversity important. And what is the bank doing to encourage that more, both internally and through external efforts?

Well, in terms of the way we think about diversity inclusion and equity and the different thought process is we look at what we call the mirror and the window. And the mirror, we look at our company: are we diverse from top to bottom; male, female; different ethnicities; have we driven that; and do we have programs that help us in that in terms of our recruiting from schools and stuff. Very diverse populations are recruiting from low to moderate income neighborhoods, 10,000 people. We recruited over 3 or 4 years, supposed to be 5, we just announced another 10,000. The work we do on promotion and hiring, we test every bonus. We got 90,000 people get bonuses. We test every one of equal pay for equal work, so making sure there's no variances about that. So the key is to get the representation -- match it in America because that's where we can actually test this, which is kind of an interesting thought process around the world is a lot of places, you're not allowed to gather the information. But in America, we can match the society of the [ societal ] representation of various ethnicities, of male and female and gender, and then drive that through. Then the second question is do people feel good when they work here, and that's inclusion. And we define that by people saying I can come here and work and do everything I want to be no matter who I am. And it was interesting yesterday, I just gave -- I just had a conversation with some of our 45-year employees. And a number of them have started out of high school and then got further training here and stuff, who came from backgrounds that never thought they'd be working in a bank. One of them immigrated from Poland and other places and come to this country, done a great job and moved through the ranks and been here 40-plus years, 40 to 45 years and moved through the ranks and done greater things. This company is a great company of opportunity, and that's what looking in the mirror is. Are we the company of opportunity we were supposed to be for everybody, and everybody can be who they want to be and still be a success? When you go outside now, it's how do we help society do that. So inside the company also, do we [ lend our ] female entrepreneurs and businesses and all the work we do in terms of outside the questions, how do we create opportunity for others. And that comes down to the programs we have where we work with various groups of CEOs and other things -- a thing called [ 110 ]. And then there's a Charlotte business group, a Massachusetts business group, a [ Orion ] business group and many other cities and states around the country are working to say how do we reach to the Title I high schools to bring more people, community college to bring more people into the career. There are companies, frankly, large companies in America that can provide great pay, who start at $40,000, tuition reimbursement in advance, full benefits. You think about that from 18 to 24 or 20 to 24 as opposed to trying to figure out how to pay for all my education and get set up and go through it, so the kids come out of college, we hired 4,000, 5,000 of those a year. So it's not like we're not hiring at both ends of the thing. So the question is how do we create that opportunity. And the real hole we saw around the -- one of the real holes we saw when we announced our $1 billion program was the issue of equity investments in growth -- for growth in companies that are run by women, Blacks, Hispanics, Asian-Americans, Native Americans. And so the issue was it wasn't [ private equity ]. And so we said, let's gather, and so we got [indiscernible] and he grabbed 28-year colleagues, and they sat down, and we said, bring us investment funds from our market presence. And so we started that program. We have $350 million of commitments. These aren't huge funds. These are funds that are making $300 million, $500 million investments in the company to help it grow. All these funds are run by those cohorts of ethnicity and race. And they are going to invest in companies that are owned by those cohorts of ethnicity and race. And by the way, they should be employing those cohorts of it. And so that creates opportunity outside, along with all the programs we do in hiring into our company and other companies. But that program is kind of unique. And that then also fed the minority depository institutions, investments we made and the CDFIs we made. We made 20 -- based on the total of [ 140 ], you want common equity so you can grow, not preferred and not other things. We had $130 billion of deposits in the MDIs. We had almost $2 billion deployed to the CDFIs. We did that [ regular way ]. The question is did you need equity to grow. And then basically, anybody that needed it, if we could figure out a deal, we got it done.

Got it. I guess time for maybe one last question. I just wanted to touch upon climate risk. You were all over COP26 over the last week, have been watching. Just talk to us, I mean, it seems like it's going to be a defining issue for our generation as we look over the next decade or 2. As a private, there's a lot of talk around just countries and governments talking about their goals. But as a private entity, as a bank, what can sort of the private markets do in terms of achieving this goal? And is there a real actual business revenue opportunity as a function of focusing on this?

Let me quickly answer the last question, which is it's already a big business opportunity for us, and that's why your colleagues out there try to figure out our tax rate and everything on a given day as the amount of tax -- we get 1,000 basis points tax differential that we disclosed clearly due to renewables and other types of low to moderate income housing and stuff. So that's where we get it from. And so that's a major part of what we do today. And we did $80 billion of financing last year. So this is not just in renewable, it's in green bonds and stuff. So this is not something that already isn't big and important. But let's step back. This transition won't happen unless the private sector drives it because what it takes is everybody moving. And so -- and then the second thing, it takes the patience to say it's a just transition. In other words, we've got to bring everybody along, rich countries, poor countries, urban environments, rural environments. But importantly, the heavy emitters or producers of energy, the people who actually bring it out of the ground and sell it and/or the people who have to use a lot of it, cement, steel and things like that, we [ haven't gone ] through the transition to get to where we want to go. If the baseline is we got to get to net zero by 2050. So our company is committed to net zero, so are a lot of other financial institutions and the work I do with the sustainable markets initiatives, where there's Royal Highness Prince Charles and the World Economic Forum climate leaders. All these groups have the net zero commitments that are coming through. So that's where I think this gets kind of interesting. It's a net zero commitment by a company making autos or making -- building homes or buildings or whatever, causes their whole supply chain to have to change. Now we as a big bank with tens of thousands of middle market clients and business banking clients and small businesses, what we need to do is help those clients understand what's coming at them because, at some point, they're going to get a knock on the door from the person who's their major customers saying, I need you to be net zero, and they're going to need to -- been working in advance of that so they can sort of certify because in order for that big company to be net zero, they've got to get all their supply chain. By the way, that applies to services firms, too. So we're net zero by 2050 -- 2030, I guess. And so we -- 2050, excuse me. And we'll have carbon targets by lending portfolio and all that stuff. But we're carbon-neutral today. That's a relatively different demand on us because of the nature of our business. We basically have our energy uses and flights. We've offset all our flights with sustainable aviation fuels. Then we have the energy uses, which we basically continue to buy renewables as a source for. When you go to different types of industries, that's not the question. So our job is it's a just transition. The banking industry is going to reflect our client transition. We've got to help everybody understand the implications and the supply chains and others if people make these net zero commitments, which they have across all industries and all commitments. And that's the most exciting thing is the private company, not public sector enterprises saying we're committing to net zero changes and change. When the airlines are saying they commit to net zero, use of SAF, that creates a [ margin ]. Therein lies next opportunity. How do we capitalize companies getting capital to make -- drive into that market so that they'll be ready when the SAF mandates, self-imposed by the airlines. By the way, we asked the G20 and asked G7 to make a mandate that was universal across the world because that would make it easier. But that creates a market, and then we can build the facilities -- not we, we can finance the building of facilities, and facilities could be built into it. So that net zero commitment is the thing to pay attention to. And that societies are committed to 70% of GDP or whatever number they're up to now. Industries have committed to it and individual participants. But the key is when a steel company or a shipping company commits to it or an oil and gas producer, that's an amazing commitment. Our job is to help them through it and that's when the opportunity comes.

And just tied to that, when you think about the reporting standards of climate, like what needs to be done there to get those sort of marked appropriately?

Well, in the work that we've been doing with the International Business Council at the World Economic Forum starting about 3 or 4 years ago with the big 4 accounting firms, the CEOs in that group, which is 100-plus CEOs of big company sort of said we just have too many metrics. There are too many people [ setting ]. And so we started saying, here's a set of metrics that matches sustainable development goals, which one of them is about the environment. Here's a set of metrics that almost any company should do. And by the way, 50 companies are reporting those metrics, and another 50 committed to it. So it's true. And they are all in different kinds of industries and all over the world. So that standardization of metrics allows you to measure who's above the line. So Savita and the team in your research group has said, if you don't do well and if people [ would put on ] ESG, if you avoid them as a portfolio manager, you can avoid the losers. That's actually a big statement for a large cap manager is how do I avoid the losing people. There's research that says they outperform, and that sometimes people get in debates about it. But the key is it's a standard metrics and measures. So across all industries, what's the baseline? If you're above it, you have to be the top 1 because, frankly, that let's say everybody could only invest or lend to or buy products from one company, so who's over the bar? That requires a disclosure of your plan, and that's what's going on in some of these shareholder cases recently. It requires metrics to measure that plan. For us, in order for us to measure our climate risk and all the work, we're going to have to do stress testing and all that, but also society. And so it needs a standard set of metrics. The good news is out of that work of World Economic Forum, out of the work of working with SASB and TCFD and all these different groups, you're seeing the International Accounting Standards Board sort of take ownership of putting more official sector. And we expect in the U.S., you'll see that ultimately should be more FASB than in some ways because that's the project. This becomes kind of the official sector. Therefore, even private companies owned by private equity firms or entrepreneurs still have the same standard. And I think that's very, very important.

Got it. I know we've already gone over time. So Brian, thank you so much for joining us today. This is amazing. And Lee, I'd like to also thank Lee for his partnership over the last few months going back and forth and making this happen. Thank you so much.

Thank you. Have a good conference now. Thank you to all the clients and customers out there. Thanks.