Bank of America Corp (BAC)’s Fourth Quarter 2014 Earnings Conference Call Transcript

Brian Moynihan, Chief Executive Officer

Mike, you don’t get specific projections but our goal is to continue to take for instance, a billion dollar level this quarter and driving forward. And our view of it is, that based on everything we see as we see the impact of all the work we’re doing plus the rollover to cost base, the reduction of LAS cost, the litigation falling back to the kinds of level you saw this quarter, you will see this move towards that those long term goals of 1% ROA and 12% return of ample common equity.

Mike Mayo, CLSA

One last try, that 1% and 12%, that assumes higher interest rates. If your forecasts do not expect higher interest rates as soon as they do right now, at what point would you take additional action with expenses and how do you think about that?

Brian Moynihan, Chief Executive Officer

We take additional action expenses every afternoon. In other words we had 4,000 reductions FVA in the fourth quarter of 2014, Mike. That was a core franchise to keep getting efficient. So, we work on expenses every day, and we have teams of people working to do all things that you expect us to do.

Mike Mayo, CLSA

Alright, thank you.

Operator

And we can take our last question from Nancy Bush with NAB Research, please go ahead.

Nancy Bush, NAB Research

Good morning guys. Two questions. Brian, I’m a little bit confused about the card growth. I think you said you got 1.2 million new cards out in the fourth quarter. And didn’t you mention something about it being seasonal? You’ve got lots of ground that you can gain in that business and I just want to clarify whether this is something extraordinary going on here and what your projections are for the future for growth there?

Brian Moynihan, Chief Executive Officer

Yes, Nancy, sorry if we confused you. Let’s talk about the production of new cards units. That’s the one 1.84 million. If you look at Page 19, you can see it building from the fourth quarter ’12, 830,000. So the first is production of units and the second was balances. Balances in card business are up in the fourth quarter. Almost $3 billion — $2.5 billion to $3 billion. That we got to careful because Christmas people even spend on borrowing and then pay down. So the point there is, that has a seasonal health to it but if you look back in prior quarters we’ve seen a stability in our card balances which is continues on more units the people continue to use the card, we ought to expect the positive growth there. But it’s units at 1.2 million, balance is good $2.5 billion to $3 billion. And the balance is permanent seasonality. Unit then above 1 million new production units each quarter of the last several quarters.

Nancy Bush, NAB Research

Is there one particular card that’s proving to be very popular? I see your ads for the cash-back cards, et cetera. Is that the card of choice at this point?

Brian Moynihan, Chief Executive Officer

Yes, in fact that is our core card offering. We’ve simplified our offering to three or four core products and that’s the biggest one and it’s contributing to sort of card income being up year-over-year by about 7%. And so, yeah, it that card selling well. And the good news is we see is 67% came through basically our web online sales process and our branch sales process in the core customer so we continue to drive that.

Nancy Bush, NAB Research

Okay. Secondly, the 25% margin in wealth management, I think back to the old days when you had much fatter margins in that business. What do you see as a normalized margin in wealth management? Number two, to what impact is the wealth management margin being maybe impacted by high liquidity levels that customers are maintaining and do you see that changing?