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

Jim Mitchell, Buckingham Research

Okay and I think, as to your point that sort of the deleveraging around China improve the leverage ratio as the impact of that should be easing going forward. Is that what you said?

Brian Moynihan, Chief Executive Officer

That’s correct.

Jim Mitchell, Buckingham Research

Okay. And just one last, a follow-up on — I don’t know if you mentioned this — where you guys are in the NSFR?

Brian Moynihan, Chief Executive Officer

Yeah, we’ve done a lot of — we’ve not put anything out public on that but as we’ve looked through it and sort of we do not see that being a constraint as we go forward.

Jim Mitchell, Buckingham Research

Okay, great. That’s it for me. Thanks.

Brian Moynihan, Chief Executive Officer

Thank you.

Operator

And our next question will come from Matt O’Connor with Deutsche Bank. Please go ahead.

Matt O’Connor, Deutsche Bank

Good morning.

Brian Moynihan, Chief Executive Officer

Good morning.

Matt O’Connor, Deutsche Bank

The capital ratios grew more than expected, obviously the decline in rates helped the positive earnings, and you mentioned the DTA consumption. As we think about 2015 and the drivers of capital, is it more of the same? Or is there, call it, optimization overall? Not just the loan runoff that you address, but as we think about — you’ve had final rules for the last few months, there are still some adjustments to the business throughout. How should we think about the capital build? And if you have an estimate for 2015, that would be interesting as well.

Bruce Thompson, Chief Financial Officer

Sure, we’re not going to provide an estimate but what I’d say is that as you look at overall capital levels, if you start with the numerator, is we project out and look at the earnings stream, we think that at least through ’15 and possibly into the first part of ’16, that on average you can have some quarterly bounces around based on timing and payments but that generally we should accrete capital over the course of at least four and up to six quarters largely based on the pretax earnings for the company as oppose to the aftertax earnings, and that’s what you saw during the fourth quarter. The other thing on the numerator, as I referenced that, there is if we were to snap a quarter today there would be OCI benefit from the downward movement in rates. As it relates to what we’re seeing under risk weighted asset side, I would say generally we continue to benefit although it declines a little bit each period. We continue to benefit from the runoff of some of the global markets position that would have been put on in the 2005 to 2008 time frame that they tended to have tenures of seven to 10 years. In addition to that as we continue to have payoffs and as we continue to move out some of the comfort consumer real estate assets and put higher quality real estate assets on that are better credit borrowers, while the asset levels may stay comparable, you do have an RWA pick up from that as well.