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

All right. Thanks, everybody. Appreciate everyone coming today, and very happy to have Brian Moynihan, CEO of Bank of America, joining us again. Brian, thanks so much for coming back. It's great to have you in person this year.

Maybe we could talk about just an update on the spending and the health of the consumer. You've got visibility into the bank accounts of over 67 million American consumers in small business. Maybe give us a sense of what you're seeing in terms of spending trends and then deposit growth.

Well, John, it's great to be here again, and thanks for giving me to shop between here and cocktails for all these people. So we try to -- let's just think about -- I actually pulled -- had to rush to get me the numbers for the May month end, which was yesterday obviously, and so on debit and credit card spending, just debit and credit card spending and that's about 20-odd percent, 25% of the way consumer spends money. For the month of May, the dollar volume is up 9% to 10%, the transaction up 7% to 8%. Now you have to remember last May people paid their -- this May -- last May people paid taxes, this May they didn't. So you're going to see some -- and people use credit cards to pay that. So that's very strong. Memorial Day weekend was a record. It was -- it's 30% over Memorial Day in '19 to give you a sense and so up year-over-year double digits, et cetera. So the spending on debit and credit card is strong through the end of the month. If you go back to broader checks written, cash taken out of the ATMs, ACH payments, through May 23, that number is also up double digits and transactions up about 8%. And so the transaction is important because people debate about whether inflation is causing spending, if you actually adjust for the rate of inflation in the asset class, if you were spending money on -- the only thing that the real spending is up on gasoline, everything is up way through the inflationary price. But it shifted a little bit from goods to services. So travel booked in May for taking in the rest of summer, but also travel taken in May indicated there is the car rentals and other things actually happened in the month, up double digits. So -- and everybody has been to airport lately the TSA numbers are through '19 and beyond. So travel is good, restaurants are good. Goods down a little bit, and then that's very good. So the spending is strong and then customers have us -- have more money in accounts than they did pre-pandemic by multiples, and we can talk about it. But if they got plenty of money to spend.

It's impressive numbers. And we thought after stimulus checks faded, that we'd see this resilience start to fade a little bit. Can the consumer keep this off. We've got energy prices up, food prices up, rates are going up.

Yes. It seems they have kept it up and that's -- so the thesis that we got asked a lot about was -- and people were writing about was the stimulus January and March or whenever it was last year in '21. After that, people would start to spend on accounts from the month of June or July last year, every month, they've grown and including March to April this year, and the May data, I'll have in a bit here, but -- and we'll publish [indiscernible] that data coming up. But the interesting thing is if you take like a person had, the household had a core account structure, 1,000 to 2,000 pre-pandemic they're now -- they had an average balance of 1,400 -- they're 7,000 now. And if you go to the next bracket, 2,000 to 5,000, 3,500, they're 13,000. And so they'll spend it down, but it's going to be a good while. And so the ability to spend is really, am I employed and are my wages growing, that you can check that off unemployment rate and wage growth strong. The second question is, do I have money in my count, you can check that off. The third then is do I have an ability to borrow even under the credit card balance, even though they started rising, they're going to still way below where they were pre-pandemic. And our book of credit cards isn't massively different size. It's just that people are not using the lines. And so in their home equity lines, we went from $30-odd billion of loans to $20 billion, and that's starting to flatten and come up. And so all that means they have borrowing capacity less. And then the question is willingness. And what I'm telling you is as of yesterday, the willingness was very strong. They were coming through. So they're spending, and that's good news because the end of the day, U.S. consumer economy is as big as China's economy and all this kind of stuff, and that's going to have a good impact on the world. And by the way, in Europe and through our corporate cards and stuff, we can see travel in Europe and stuff for business, still very strong, even though the wars that's more a question mark on that.

And how about the broader macro picture, how do you handicap the degree of difficulty that the Fed has in front of it? Should we put you on Hurricane Watch in terms of the economy here?

We're in North Carolina. You've got hurricanes that come every year. So we're always prepared for, we don't have a choice. Look, the Fed has a tough job because sheer amount of stimulus so far overwhelmed the actual economic impact and those of you -- Larry Summers has written on this multiple times. Other people have too, but the talent that he is and the brain that he has, he talks about it, it's just multiples. So and that's going to cause inflation, and it was clear last fall, it was coming. The debate was temporary. That's gone now. So it's here. Now they're moving and they've got to move. But their job is to slow it down. So our economists have gone from sort of last year's 5%, this year they would have started almost at 4%. They brought it down to some 3%, 2.75% to 3% and they brought next year, 23%, down from 2.5% down to high 1s. And so what you're seeing is the impact of slowdown. So -- and they have a -- their pick would be 1 and 3 that they've written on, but that's always about 1 in 6 or 1 in 5. So it's not -- it's doubled, but on the other hand, it's not. So I think here is a basic case. The Fed has a tough job to do. It's made tougher by the low unemployment and the wage growth and the fact that people are spending money, but on the other hand, it's made easier by that because that's -- they can work against that. And so they've been very clear that 50 basis points, 3 meetings, they keep confirming that. That's as fast as they've ever gone except for 1 or 2 times. And I think they always stick to that. Will they slow down the economy? That's our job right now is to get it back in the equilibrium. Nobody we see out there in the blue chip and anything has an actual recession predicted in the next 2 years other than 1 person out of 40-odd people. So we'll see it play out. It's a tough job, but it's made tough by what makes it easy. And that's why I think people have to sort of square up their unemployment estimates versus their economic estimates because if everybody is employing and getting paid more and the unemployment is around 3%, 3.5% year-end '23, a lot of these people on the models, you can't have an economy that is that slow. It's just sort of hard. So tough job. They have committed to do it. They're making it clear. They made it clear the markets, the balance sheet started today going down. But the reality is it's the best thing about the tough job is the part that makes it tough is actually a good thing, a low unemployment and good wage growth and good consumer spending. Those are good things.

Well, bank stock investors are certainly confused. It seems like we've been waiting a long time for higher rates and now the party seems over before it started. Do you sense any kind of disconnect between the big picture of bank profitability and how the industry stands versus what's in valuations sentiment?

You can understand why people will look and say, look, there's going to be a recession, these companies are going to see interruptions in market-based revenue streams, and we could talk about that. You're going to see higher credit costs. Remember, 14 basis points make it real numbers like $400 million of charge-offs a quarter. We were $900 million in '19, $800 million, $900 million a quarter. So that's not even normal. That was very low. So you went from 40 basis points, which was really low to 14 or something like that. Think about that. So we're -- the industry's capital liquidity, everything is built differently. And we stress test all the time as if the 10% unemployment happened tomorrow, as if the market dropped by generally it's 1/3, as if housing prices went down by half or whatever the numbers are, 20%, 30% and there is a stress test. And we all come out, we're okay. And so that provides a good anchor to win and you saw that in early 2020. So I think people should realize the volatility around our outcomes is probably less. At the end of the day, our NII grew strong from the fourth quarter to the first quarter. actually starting second to third quarter last year, started growing strong, keeps growing every, I think, quarter and we estimated what we think will be next quarter. We look at that year-over-year, it's $2 billion more NII per quarter before the rate structure is actually coming through the system. That's just loan growth and restored back to the levels and deposit growth and then ultimately, the rate will help too. So I can understand why people are concerned about the economy's effect on banks. That's what we do. We translate the combat. On the other hand, I think these companies are in great shape, and we just got to stick to our knitting and drive through.

You've articulated a responsible growth strategy for the last 10 years of the company. Could you just remind folks what the kind of core tenets of that is and how you think it positions you well for tougher times?

Got to grow, no excuses. We've got to do it on a customer focus. We've got to do it with the right risk and have to do it on a basis that is sustainable, which means we have to be the best place for teammates to work. So we have a great team. We have to share our success with our communities. That's the work we do around supporting communities and everything. And the last is we have to drive operational excellence to pay for it all. And that means we've been able to bring the cost structure of the company around numbers from $70 billion plus to as low as $53 billion on a core operating basis, it's backed up now just because of inflation and market levels and compensation. But we think it will be flat this year to last year, meaning '22 to '21 and that OpEx pays for all. So we got to have all the things balanced, we got to grow, we got to do it the right risk. We got to grow, we got to be customer focused, no acquisitions, we got to grow on a sustainability, so we can keep investing the $3.5 trillion -- $3.5 billion a year in technology and sustain it. We're keeping the expense in check because we have commodity pricing pressures in our business, like every other business does.

So you mentioned the NII growth and the pickup that's happened already before we even get the rate hike benefits. Maybe just talk a little bit about the drivers of the robust NII growth that you're looking at this year. How about loan growth? What are you seeing right now? And what kind of outlook do you have for loan growth this year?

So we sort of think you had all that borrowing go on in '20, and it came out of the system. And the loans basically went from $1 trillion to $900 billion, to make it simple. And then that all went out. And then what you've done is now started to recapture most of that finally. And so what's happened lately in the fourth quarter, we had $50 billion of loan growth, $15 billion of it was in the markets business, which can ebb and flow. So we sort of said, don't look at that, that's $35 billion driven -- last quarter, we had less, but we had a solid growth quarter. This quarter, they grow nicely, frankly. And so we feel we're outgrowing the industry a little bit. You can see it across the board. The nice thing is car balances start to pick back up. Commercial loans were sort of leading the pack. Card balance picked up and frankly, mortgage balances have ticked over and grown now largely because the payoff rate has come down and the new originations are down, but the portfolio is not -- we're up to 30-odd percent payoff rate at one point. So 1/3 of the portfolio, theoretically, it's going out the door on a given year. Home equity stabilized. So and autos are strong if people get product, we can finance it. So loan growth has been solid, and we expect to have a quarter this quarter, similar to last quarter and now numbers. Yes, we'll see how it plays out, but it's setting up that way.

Just on the NII.

And this is all course stuff. I mean this is not changing our credit underwriting. It's just grinding out one more commercial client, a little bit more of these clients. And so led by commercial, consumer catching up now.

Yes. And just to kind of level set on the net interest income expectations you had talked about for the second quarter being up at least $650 million.

From first quarter.

From the first to second. Any change in that outlook?

No, we still feel good about that. So up $650 million first quarter, second quarter per quarter, and that will produce almost $2 billion in the lift from the second quarter last year to the second quarter this year. So it's starting to capture. And again, the rate effect is just coming through and you think about it because think about when rates go up and we're not -- we talk about the 30 years something like that, that's not where we invest. It's all relatively short.

So the sequencing should be beneficial throughout the year and as you annualize out of this year, should set you are pretty good for next year in terms of NII growth as well.

Yes, that's on -- you capture $2 billion a quarter, that's a good place to get up in the morning.

Yes. How about on deposit betas. We've had almost 100 basis points of hikes already. And the industry has yet to see much pressure on repricing and outflows. How do you see that? I guess, near term, is there kind of seasonality issues to keep in mind on deposit growth?

Yes. So I almost want to say on, we just go get the tape from 2019 in -- 2017 or whatever it was we could really run it, which is on the deposit beta. But very near term, just to be clear, taxes paid by our customers in the specialty wealth management business were up like 50%. And so there'll be that seasonal impact from first quarter to second quarter, even though it's April, May, forget that it's still second quarter. You'll see that come down. Year-over-year, they'll be up, but you'll see it come down in like quarter, I think. And commercial deposit is fine and general consumer deposit balances, again, fine because they're not spending it down. But that number is not small when you have $300-odd billion deposits in the wealth management business and people paid out and it accumulates back during the year. And so -- but overall, we feel very good. About betas, at the end of the day, our deposit balances, which drive the value on the people side, both wealth management and consumer or transactional accounts. And so we're -- we've got, I don't know, $30 billion CDs or something like that. I mean -- so it's transactional checking accounts, which are $700 million or so the $2 billion or something like that. And then you got the money markets and then move really by stratification of a customer, but the 0 interest checking and low-interest checking, last time when rates got to 250, consumer went up to 13 basis points in total to -- 11 basis points of total deposit base. So I don't see it being a lot different unless rate structure goes up higher and then you'll do it. But wealth management is different. I think they got the 40-odd basis points in the last cycle up to that level. And that's because more of the money is investment equivalent on it. But the good news is from that to then the deposit penetration in our wealth management business with Katy and Andy and Tony working on it well, is a lot of the growth is core transactional accounts from wealthy people. They tied them up a little differently, but still they carry an average balance to higher, we're up to about 15,000. I think Holly said this morning an average balance per account in consumer, which is up from 7%, 8%. And so some of that will -- if they spend down at will draft down but still all 0 priced for term.

So just back to expenses, if you're able to hold expenses flattish this year versus '21, that's quite an impressive achievement given the inflationary environment. And -- of course, while we're all patting you on the back for that, we'll ask you, are you also spending enough? So maybe just talk about the mechanics of how you're holding expenses flat while also making these investments? How are you doing both of those?

It really comes down to what we've been doing over the last 5 years to continue to drive the digitization of the franchise. So it just -- it compounds on itself. So checks written from '19 to '21 -- '21 and now '22 are down 25%. The dollar volume is actually flat. So what happened? All those little payments went to Zelle, which has grown dramatically went to other things, the cost differential is huge because checks written have 2 elements. One is the cost of processing check one way, but also people come and deposit them. So you -- so it gets to two ways, right? Because it's written on us a lot of time as a customer anyway, but if it's -- so getting those out of systems save. So what happens is it's just a whole bunch of singles and doubles on those elements, continuing to synthesize the base of the various technology systems and continue to improve and continue to get the leverage out of ones we've been building courts in our markets business, which is a big data environment, the ability to use that risk and finance and things and pushing that. And there's still a lot of work to do on that. We spent $1 billion developing that over a bunch of years. It's not like it was an easy system to develop to think about holding all that data and being readily accessible and were different purposes. So that's that. And then you invest a ton in cybersecurity, basically 10 multiple from when I became CEO to now in terms of cost on a given day, but you pay for it by just engineering out the routine activities of the company. And big moves like in wealth management, we probably went sub-50% maybe or less digital usage of the platforms prior to COVID to like in 80s now. And so that kind of change in a very paper-intensive business is just a lot less work a lot of those questions, a lot less errors or waste as we call it in terms of something like the wrong mailbox that got tied together, digitally just cleaner and more predictable. So it's -- everybody says, what's the magic thing. It's the $0.5 billion we spend on discretely in our spending every year to drive efficiencies in the business, it's actually $900 million less, that we spend every year that is -- that the business has come up with the projects that they want to fund and drive it because that then pays you really not often next year, but next year and the next year and picks up steam, and it takes out. If you really get fundamental customer change of behavior, it takes it out forever. So cash out of the ATM to pay -- the [indiscernible] teacher versus Zelle is multiples different in terms of cost when you take all the different attributes that go on in that transaction. And so you just -- you have to think about that.

Wrapped into all those investments, you've also made investments in teammates for many years, including this year, you recently raised compensation and in wage again. Can you talk a little bit about that? And then also just kind of the overall wafer talent and how real the inflationary pressure is?

Well, we started with a basic view that we want a career mindset for the team in 2010. And one thing to define a career mindset is a job which a person can support their family and have a career. So we've always said our minimum wage across the country will be at least what the MIT family for sort of poverty level is even for a kid who is 18, it's a single individual. And that's been dictated this rise and starting wage. What we looked at the data 2 weeks ago now or about a week before last was as we looked at attrition, so attrition has gone from probably in early 2010, '12, '13, maybe almost 20% in the high-volume jobs, even higher. We brought the overall attrition down from 20 to 15 to 12 before the pandemic, all-time low. Customer delight all-time high, teammate delight all-time high, attrition all-time low, et cetera. You go to the pandemic because nobody lost their job, $100 a day for child care in your home, all these things we did and it dropped to like 4%, 5%. Then it moved back up because it's a job market and the competition. So we are fine and then we started to see some areas where we had to tighten up. And what we did you really have -- the difference between what we've done in the past, which is starting wages, which has a push-up effect in the middle, obviously, as we basically said to our teammates that with duration 0 to 2 years, 2 to 5 years and 5 years and above, we're going to reward you for the career mindset in the company, here's 3%, 5% and 7%, and we'll just absorb it. And you'll always be engineering the headcount. We had $212,000 in the beginning of '21. We had $208,000 at the end of '21. We have $207,000 or something now. We watch that every 2 weeks, a deep assessment of where the heads are and see if reengineering takes them out, and we put them back where we want the new branches, new commercial teammates, new financial advisers and new training program and so you can pay for itself. But it's -- but that investment really is for the shareholder and for the teammate both because we want a career mindset. And so you got to put that wages next to the benefits. We just increased our child care to $275 per child per month. The mental wellness impact, multiple unlimited sessions and things like that to help people in the pandemic setting. You keep doing that to keep people really want to work in a company, and that's -- and when the market gets really hot, that gets a little more challenging. And so we move, but each point for us is 2,000 people. So higher trend and the churn, it's not when you go with seniority and with things, the turnover rate drops like a rock. It's the higher-volume jobs, and that's where you need to -- what we found out is career mindset, benefits, education, everything lowers turnover, increases customer delight and just that virtuous circle. I mean, it's pretty impressive. We -- it is the reason why we get net new checking accounts $1 million a year now versus basically flat 10 years ago selling less checking counts.

And it's letting you do both in terms of investment people and keep expenses flat.

Yes. But reengineering that OpEx part of the responsible growth is critical in people. I always say everything I'd like to do in the company, invest in technology, people, new branches, rehab branches, everything else. Everything is fun comes from OpEx. So work on that and the rest of it will be easy, more marketing, whatever you want to do, we have to fund it through OpEx. It's sort of an operating principle we have.

And thinking about some of your businesses, many people think first about consumer and wealth management when they think about Bank of America. But can you talk a little bit about capital markets, investment banking and end markets overall, the importance of the franchise and the investments you've made on that side of the business?

Well, I think -- so we run 3 discrete commercial segments, Business Banking, up to $50 million of revenue -- we have a small business, which is part of the consumer franchise. Business Bank up to $50 million, $50 million to $2 billion middle market, and so Raul Anaya, Wendy Stewart and then [indiscernible] Matthew Koder has done a fantastic job for us in that. And then you have the markets business, and we show you the P&L about those because the GCI business is a relationship business, and has obviously investment banking, lending and transaction services and a lot of other things. And then the markets business, service and investors. And look, the markets are down and investment banking fee pools 50%. We're not going to look a lot different, we'll be $1 billion, $1.25 billion this quarter, I don't know exactly, but it's just the nature of the markets kind of seized up and clean up and then there's a big backlog. It's not like people stop doing things. It's just they're waiting for all the debate about rates and movement in spreads, they got to settle in a place and then we can clear out. And then on the trading side, just near term, it looks like we're up mid- -- 10% to 15%, we'll see where it comes up, probably in the middle of that and year-over-year so far and nothing goes crazy in the month of June. We expect it to finish that way. And that's good performance by them too, Jim DeMare and the team. Now why they're important is knitting together middle market to investment banking, that's -- I don't know produce -- another 30%, 40% of the revenue investment bank. It comes from middle market clients and stuff. And then thinking about the international capability, you can't have a good middle market business, I believe, in the U.S., especially in the upper end of the middle market, unless you have a great international platform, both on transaction services, investment banking. These companies are global despite all the [indiscernible] globalization. They have factories all over the world. They produce stuff there in the supply chain, in other countries for other types of companies. And then for large companies are global companies. So that's why we have it. And then markets, again, large investors, you guys in the investment house don't invest in U.S.-based stock and say, well, that's -- we're done for the day. You go across the world, you need the insight from a research team and you need the execution in the market. So they all make money and have good returns and once in a while get a little bumpy, if some marks on leveraged finance on $100 million, $150 million this quarter across $10 billion plus of quarterly revenue. You got to remember, these are all the same customers on the investor side and the issuer side and the sponsors and everything, and it's all fine.

You mentioned like you could have some marks in leveraged finance. But just overall volatility seems to have been helpful to the markets businesses in the first quarter and just from what you described. Is it any demarcation between FICC and equities that you can elaborate on there?

I think in the last several quarters, so equities has really been -- this quarter, fixed. It's a little different just because of the nature of what's going on. But volatility is your friend in markets business, but you'd rather have the markets operating in the throughput coming because that's what your customers need is access to that capital and having spent week before last -- or last week, I guess, in Davos. And every time you come away from that, you realize the power of the capital markets in the U.S. is such a differentiating factor. So yes, they're all doing fine.

And how about in terms of capital ratios. For the industry overall, capital cushions have gotten thinner. There's a lot of demands on capital now in terms of the loan growth you mentioned, you got rates.

For years, you said when are you going to get the capital levels buyback, stocking did it. Now you're saying you didn't.

So yes, no, I mean you've returned a lot of capital over the years. And are you kind of running at the levels you said a couple of years ago, you'd like to run at, so how should we think about that in terms of how you maintain the dividend growth? And then also, you've got businesses that need capital right now?

Yes. So for a long time, we really had one use of capital, which is to pay a modest dividend, and then we got the right to start buying back stock as a company, as an industry, and that started happening and then we had it interrupted by the pandemic and then we got back in. So we brought the capital ratio of 10, 40-ish. If you think about the G-SIB score growth because of the markets business, we invested $200 billion on balance sheet and technology that gives them a better competitive position. They've grown that market share. We've -- you think 10.5% would be where you are -- well, 10.75% if you assume we go from 9.5% to 10%, then you put another 75 to 100. As you get bigger, you can actually bring it closer because, frankly, the earnings power and stuff has a different thing. So we think we got to get from 10.4% to 10.75%, we've got 6 or 7 quarters. We'll just chop it away. Now what was interesting in first quarter is because the rate move was so dramatic, you saw this pop. And if you looked at our sort of waterfall we put in there, you saw that our impact was less because we'd hedged out a lot of that risk on purpose. So as rates stop and start to creep that back in. So we'll get there through that accreting back in. In terms of use of capital, we now -- we used to have one use, and then we had one uses. Now we need it to support some organic growth. We -- acquisitions aren't the game. So basically, it's not a bad thing if we need to retain the capital to grow loans and deposits in the core business because the returns are very strong. And so you'll see us the stock buyback has to come down a little bit to let us build that cushion back up. We still bought back stock this quarter and last quarter, and we'll continue to do it. It's just to be a little more balanced.

Okay. Fair enough. Other banks have used bolt-on acquisitions and M&A, a little bit more than you have. And have you found it just better to build organically what you need and be able to do that?

Well, we -- like in transaction services, we bought a medical payments company, which was a nice little pickup for us. in the end of the day, if you look at what we're doing, a straightforward business model, consumer, the greatest wealth management business, we got the commercial banking business. So it's going to be around payments. And we do a lot of partnerships and affiliations, even Apple Pay and things like that, we were early in and pushed it with PayPal. We've done a lot of work with them, getting our cards and their wallets and stuff. And so we work with a lot of these companies and partnership, bigger ones and smaller ones. What you'll see us as partner on the smaller technology side, some of the data analytics and robotics companies and things like that, that we use them and sometimes we make and make investments in some of these things along with some of our peers and stuff. But we don't see something we need to own to make a workforce. And that's because these companies are difficult to merge in. And by the way, they have a nice business prospect. That's why we're using. And so let them run, and we'll see what happens in the end, but -- so we haven't found anything that's compelling. We're not in the asset management business from what you do. We are -- we've got $4 trillion of assets from our clients that we're managing new portfolios and [indiscernible] and team and [indiscernible] and the team run them, but you've run that in the financial advisers and the PCAs, but it's not really compelling, you buy something because it's disruptive, it slows you down. And we looked at an online bank overseas and came back instead of $60 billion, $70 billion deposits. If you work at it, this was 7 years ago. And we kind of looked at that point year-over-year in consumer on a given quarter, we're going $30 billion or $40 billion and it costs you nothing. And you're saying, why don't we actually get our market share in the U.S. to where we think it might get to just build and boom. So that's 8 cities open branches, that's getting the top 10 in those things after a few years. It's $100 million of branch in those cities because you're concentrating your efforts, and if something comes down the road, it changes it from my successor or something they may have a different view. But right now, we just have so much opportunity in the U.S. and non-acquisition opportunity.

Yes. I mean you've certainly carved out a leadership position on digital and mobile, especially in the consumer bank, what's the next phase for digital and mobile? I noticed that you did move the marketing function under David Tyrie, Head of Digital. What's the rationale there? And what should we take away from that and your prospects there?

Well, the rationale David was the top talent. And as Andy retired -- Andrew retired, we had to sort of reset some of the pieces of the company, and David was top talent, great at what he did. And so that was one rationale. But the second, and frankly, more important rationale is, at the end of the day, the waving market now is inherently a lot of digital. So you'll see the ads about never stop banking, all that stuff, but the route is the day-to-day combat and the digital interface is not only of our own platform, which has 1 billion-plus interactions every quarter and how you use that to market offer branches, which have you have 300,000, 400,000 visits every day and how you use a digital follow-up on that and perceive that, et cetera. So we are driving that. And so David has that both. Where does digital go. It's really just taking a deeper and deeper advantage of the products and services and adding capabilities to them. So life plan started from scratch, I don't know, 2 or 3 years ago, 2 years ago, 3 years ago, whatever blew up to 6 million people, and now it's kind of getting them to use it more and more and then getting 25 million more people, 30 million. So let's get that done there. Mobile Check Deposit -- when you see the deposits you see, oh my god, look at how much is coming to Mobile Check Deposit. It's now -- if you think about the 3 pieces, ATMs, mobile and branches, Mobile Check Deposit is basically -- ATMs have been flat and actually going down. Mobile has taken over and branches are down to like 13% of deposits. That's good except for why are people going to ATM to deposit check when they do with their phone. And that difference is 10x in terms of cost structure. So there's a lot of -- so what's the future functionality and the interface, what makes them -- once we get them over the hump, we do it. And so -- there's a lot of that Erica has a lot of room to go, tying Erica, the reward system deeper and deeper tied, so people can see a better Bank of America awards. These programs that you've seen for years, we've had for years that you can discounts load in your car with that interface. So it's all that digital feature functionality capabilities, ease of use, better and better interaction, scale and using as a core way customers handle themselves, it's all like the wealth management now, if you have the guided investments in Merrill Edge, which can go across the platform, there up and sizable and growing fast, self-directed business lack a better term is growing well. And so there's a different strategy there. That becomes -- it's a core backbone across all the consumer side business, including the wealth management business for the financial adviser to have customer who, frankly, 90% of the loyalty customers have a self-directed account somewhere, so why not with us, that difference is like doubling the size of the business or tripling the size of the business without much -- we're only working on our people. So to trigger that is all around digital. How do you get them to see the future functionality capabilities and make it resident, and then you can do it. Digital sales are half the platform, but there's the other half.

We still have a multipronged approach where you're building branches in some of your expansion markets, right? So there's still a role for the physical store.

110% is high touch, high tech, it's a way to think about it. And the difficult questions. So the service element is no longer service element, it's really a relationship element branches, it's always. It's always much more difficult. It's not changed my address that went away years ago. It's my mother died, how do I -- what do I do? I've got a mother who's sick or father who is sick. What do I do? I've got a kid that's sick and I want to take care of him, what do I do? Those are the questions that come in, that takes -- go back to that, why are we raising wages and driving that clear mindset. Those questions are intricate to answer, take a certain skill set. And so we want duration of teammates because they get better at it, but that's what's going on. So it's just but it's absolutely an integrated capability now.

Just on the Wealth Management. It's been a good organic growth story at BofA, the growth there. And I think you're targeting 3% to 4% growth in advisers over the next 3 years. How do you go about that? Is that an ambitious goal or something that you feel like you've got pretty good line of sight on.

Yes, it's all really developing people at a faster pace. So we took the program. So Merrill had a program, the Private Bank had a program and Aron Levine and the team in the consumer business, we could buy them together. But what that allows you to do is have many career choices for people coming in the business. It gives us a chance to see them for 5 or 6 years before they get into the -- a little bit more self-determined operations, and they can also do a great job servicing clients. So it's -- but getting that capability really leveraged is it's 4,000 or 5,000 people in there at a given moment. So it's not an easy task, and they've done a good job. But we'll grow the adviser. So it's deeper penetration of all products that grow in the advisers and then, frankly, working a combined expansion, whereas, frankly, in some markets where we have great banking share, we don't have as great wealth management there. So we compare we do a series of analysis across all markets. It says we expect every market that looks like another market to be the 75th percentage of where the markets are. So in the case of Los Angeles, our wealth management share is here and our consumer share is here, in the case of Washington and like that, you're sort of saying, so why, why is that? So that means probably 500,000 advisers around Greater Los Angeles to get up there. Well, that's a lot of work. And so that keeps us busy. And so you just keep working at that. But that's -- you need the advisers, so you've got to start a getting them through the training system. And we changed paying 3 multiple or something for somebody. It's hard to make that scale honestly.

You've been a big proponent that banks have to serve all stakeholders, and they'll be successful to shareholders when they serve all stakeholders. How is the industry doing on that front? I know you spent some time in Davos talking about climate, you've had a leadership position on that. Can you just give us a little bit of a report card about the industry and what are the challenges there?

Yes. So I think the idea of a bank serving its customers, its teammates, its shareholders and society, it's not foreign. It's actually the way banks reform to provide capital and ability to grow in markets, and by the way, it's ability to have the capital markets for being down by the tree of Wall Street and all [indiscernible] stories, but that's not a new idea. The question is how do you make sure that you're aiming them. People often thought how you have the communities was giving away money. And that was -- that's the mindset that went on for years. What we've done is change it, how you help the community is how you actually run the business. So our vendor management practices drive 25% -- 20%, 25% of women and minority-owned suppliers and across our scale, that's a big number. That creates a lot of businesses. We looked at private equity investments in women, Hispanic, Latin and Asian American business, very well. So what do we say we'll go out and help some funds for them to do it by making anchor investments. 100 funds later $300 million of commitments. And those funds are out making and those are all clients of ours and all clients underneath it, and that helps the capital get for growth capital in smaller bite size. So we think it's all balanced. But believe me, if you read the shareholder letter I write every year, it's got to deliver to the shareholders and you got to deliver for society, you got to deliver for the teammates and you got to deliver for the customers. These aren't ours, and it's a false choice to say it's or, and we've shown that. And so on the environment, the question is, our clients have got to make a transition. It's not us. And so the oil and gas companies are our clients have to make it, the renewal energy clients have to make it. And by the way, the average manufacturing firm has to make it because the net 0 commitments by in their supply chain, whether it's a big auto company, a big technology company or whoever are going to drive those midsized companies to have to be able to answer the question, what is net 0? Are you net 0 and things like that because that's what society wants, but it's really a business question. It isn't us telling them. It's -- they're going to get a knock on the door some day and say, you produce this for me. XYZ says they can do it net 0, I got to be net 0, I'm going to go with them. And so we're saying those clients get -- understand that. And some of those midsized clients are unbelievable. They're already there. They're already -- and they were winning business because of it. And so -- but it's our clients make the transition, we translate. So we have a net 0 commitment, we did $250 billion of financing and environment stuff last year. This is a big business for us in environment and other related matters. We have a huge tax benefit we disclosed in our financials every quarter for renewables and low income housing. It's worth 1,000 basis points on the tax rate to give you a sense of business keeps going. I mean, this is a big business for us. And so -- but it's getting capitalism in the line to solve the problems, not a false choice between capitalism and not capitalism. And again, the United States system can actually make the change happen because otherwise, it's not charity is wonderful. This is enough governments run deficits say on the money. If you line capitalism, you change the course of history, and that's where whether it's our commitments of all our companies to diverse populations working, whether it's our commitment to vendor management, whether it's our commitment to where we buy energy from, that's what changes the business system. And we're -- I think we're -- we're working on that to make sure people understand is the financial services business is the translator of our customers' activity. So how -- let's get our customers there and then the change takes place.

And there's a lag. I mean we hear from investors that are ESG minded that banks don't score well on the traditional ESG metrics that consultants use and others. So hopefully, those will evolve to a broader and banks, we'll do better on those metrics and that people can invest.

We supply the metrics to all those people, but a group of -- we got 150 companies committed to a simple set of metrics. It's the big 4 developed across the 4 pillars of sustainable development goals called the IBC metrics, International Business Council. And we got 150 companies, about half of those are actually disclosed and we're in the second year disclosing. They're in the annual report on Pages 46 or something to 52 in our annual report. There's -- but people place prosperity principal of governance. And there's all this other stuff that we get hung up on a lawsuit from 10 years ago or something that you're saying, this isn't relevant to the company. But there's many, many providers of metrics and analysis. And so normalizing that, the ISSD effort in Europe is actually good for that, will be good for companies because we'll spend a lot of those time trying to produce the metrics and more time actually trying to change them and that's what you want. And -- so we've got a set of metrics, we believe and we're trying -- investors are in there and others and operators, all industries, and they cut across and people say, well, they don't include my metric or that metric. And you kind of say, "Well, these are good enough." If you put that in, you will see our TCFD compliance, your Scope 3 emissions for what you can actually figure them out. You'll see your ones and twos. You'll see our adversity, you'll see your management diversity, sort of the EEO-1 stuff you'll see in there your tax -- how you pay your taxes in foreign jurisdiction, which is a matter of [indiscernible]. You'll see your Board and your principal of governance, that's enough. I think for people to make a good judgment. Now remember, our researches, the panel before is having to debate about outperformance. Our researchers actually have shown a different thing. So [indiscernible] shown, which is if you avoid the companies that score poorly, avoid 90% of all bankruptcies, that's actually great for portfolio manager. Whether they outperform, you leave to your understanding of the business model. But if you say something is going to go wrong, that's an interesting point that proves true in all jurisdictions and across many, many years. And so what I would say to the investor side is this is a metric you can measure that sort of meet those standards. What I say to the company side is capital will move away from you unless you can tell people that you're managing the business in a way that has long-term value.

So just got a couple of minutes left, I just do a little bit of lightning around in some audience questions here. One clarification someone is asking here if the grow no excuses is inconsistent with responsible growth, but I think it's part of the tenant. So maybe you could just explain that.

Grow no excuses has got to do with the right risk, and that's what we call the Genius of the AND, not the terrorist of the war. It's not one or the other. And so believe me, the reason why we started with grow no excuses is from 2010 to 2015, our company had shrunk. And people thought that, that was the thing. We said, "No, you have to grow." That means you're getting more customers to use you and do it, but you can't change a risk. And since then, you've seen the company grow organically, outgrowing the industry in deposits, outgrowing the industry in loans, you have fixed income business growing as market share. All with the same risk consistently applied now across 10, 15 years. So if they are -- they're absolutely inconsistent. And what I -- we had a town hall or if you were my teammates, we have what we call a place mat up there and we talk about it, but that's what we get paid for is to manage that inconsistency. That big leveraged finance deal coming to market, how do we structure it so we can get it to market, how do we manage a risk or an -- or a $2 million loan, how do we underwrite it well, consumer loan. And so -- but you got to grow. There's no excuse. Our underwriting criteria like a consumer, people kind of say, well, there's we don't do below 660 or something. You say, okay, that's 15%, 20%. You're telling me you can't get your market share out the other 60%, 70%, 80%, what's wrong with you. It's kind of the response. There's plenty of customers to get that meet the risk brand.

On a similar line of risk, this person writes the subway ride here this morning was empty. Do you worry about commercial real estate in big cities and as an asset class and then your own exposure to commercial real estate as you're thinking about tougher times ahead.

Well, we -- when was it -- the commercial real estate, that was 2000, right? So there's some bumps in night around that. We've written -- underwritten it pretty consistently. You see now the stress effects it and stuff. Am I worried about cities, yes, because they're vibrant. But by the way, when you walk down Sixth Avenue, over there, whatever it is, you get run over. I mean it's in try to go to a restaurant, try to go to play, try to go to things, they're all walking. They're not taking the subway, that's a question that public services have to -- public side has to figure out, but the reality is people are back in cities. Do we -- are we concerned about, yes, because remember, we shed 6 million square feet in New York across the last 15 years on the island in Manhattan, just through the nice that we are all using before, we were shrinking the footprint constantly. 130 million square feet over on the company down to about 60. This new work would have it works out will have impact on it. But it won't happen overnight because you have 10-year leases, 20-year leases, those [indiscernible] period, 10 years. And so you walk away from something and gets repositioned and was over Hudson yard or something and the people left some place in Midtown and that will fill up. But you have to be careful right now, but we have 60-odd billion you've underwritten it well. And it's one of the reasons why we brought it down at the time, we were probably $100 billion against a $400 billion commercial portfolio. Now we're $60 million against the $500 billion. If you think about it across that period, I'm talking about yes. So we're -- we know what we do, we go hit the bid on the stuff we want and the other stuff we stay away from a pure company. But overall, I think judging by the number of teammates will bring in next week into the city, record number of kids coming here to work permanently and some are in a month and the summer teammates, I think New York will be fine.

And the last question, just on fintech. So we hear a lot about fintech threats. But it doesn't seem like fintechs have been able to grow deposits in any size relative to big banks. So is it something that you see as a threat? Or are they really just kind of on the margins with secondary accounts and things like that on the deposit front?

So the trick of being a big company is you always got to doubt yourself constructively at all times. Do you -- are you really paying attention. So when we looked at the fintech, whether it's on the payment side, lending side or the sort of deposit taking side and you looked at all those companies, we studied the heck out of them. We look at them and say, what are they bringing -- or even on the brokerage side, what do they bring to consumer? Why is the consumer making that decision? Is it something we're missing? Is it something -- irrespective of whether the business model is going to work or not, that's not our concern. What's -- why would a person take them versus what we have, what's -- and so we keep retooling, and that's where David Tyrie and others drive this DNA [indiscernible] drive that competency to say we have to be as good as they are. But then we have this nice size in this business as business has about $40 billion revenue makes what a $3 billion last quarter something like that, it's kind of nice to be investing off that platform, $36 million -- 60 million customers, 55 million to 57 million, whatever customers, 35 million checking accounts, cardholders. It's nice to be that size, but you can never be sanguine. So a perfect example in the range of all the lending came in on a small business side 5 years ago. They sat down. We were 20 days of underwriting, having come out of a financial crisis and rented everything down, and that's kind of crazy. So we got the 2 days. We didn't need to be 20 minutes because frankly, somebody asked the bar money on that kind of standpoint, you question what's driving the behavior. And by the way, we were the best model in the business in 2004, '05, '06. You can go read the books about the people we had in the company could model credit. $50 billion of credit card charge-offs later. I'm not sure these models all really, really are tested. And so we have a healthy experience. But on the other hand, if people can digitally apply for a credit card, and we don't have it, what the hell is wrong with us. And so we built that. So that's -- so we study and we look at them what the business models will do. I'll let them explain to you. But the reality is that we don't ever take for granted that they're not better than we are at any given moment. And then we figure out what's attracting customer, and we say, why don't we have it. In some cases, we decide we don't want to have it.

In other cases, you've built it. Brian, thanks so much. We covered a lot of ground. We appreciate you coming today. Thank you.

Thanks.