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

Question and Answer Session:

Operator

We could take our first question from Betsy Graseck with Morgan Stanley. Please go ahead.

Betsy Graseck, Morgan Stanley

Hi, good morning.

Bruce R. Thompson, Chief Financial Officer

Good morning.

Brian Moynihan, Chief Executive Officer

Good morning Betsy.

Betsy Graseck, Morgan Stanley

I just want to talk a little bit about the asset sensitivity and how we should be thinking about that from here, in particular as long end of the curve has come down since the end of this quarter. So just wanted to understand is that FAS 91 effect Q to-date, given what the long end of the curve has done? And then maybe just to speak to what you’re doing to trying to minimize any further pressure?

Brian Moynihan, Chief Executive Officer

Sure. A couple of things, so if you follow us Betsy we’ve historically have been saying that the 100 basis points is in the $3.1 billion to $3.2 billion range and think of the increase to $3.7 billion more or less just representing the recapturing of the FAS 91 that we saw this quarter. And that’s why we referenced that there has been more asset sensitivity on the long side, the short-end side really hasn’t changed at all.

Betsy Graseck, Morgan Stanley

Sure and then given the fact that the tenure is now yielding like 1.8 or so, should we assume, like if we end the quarter in 1Q at 1.8 that the same type of 10 basis points down drives FAS 91 effect it’s the same in the first quarter as it was in the fourth quarter? Or is that because you’re more asset sensitive there is a little bit higher impact?

Brian Moynihan, Chief Executive Officer

That’s a good question I think when we looked at this last night that the movement that we’ve seen in so far in the first quarter of ’15 is almost identical to what we saw during the fourth quarter, so if you were to snap it off of what we saw last night it would be a comparable type number realizing we stopped 2.5 months ago.

Betsy Graseck, Morgan Stanley

Okay. And is there any givebacks in refi activities that you’re expecting?

Brian Moynihan, Chief Executive Officer

Yes, if say, if we look at — we referenced, if refi activity increased as a percentage of overall mortgage production in the fourth quarter and as I have said in my prepared remarks, if we look at the pipelines and compare the mortgage pipeline at year-end relative to the comparable period, it’s up pretty significantly and we’ll just have to see how that plays out realizing that the first quarter does tend to be a little bit seasonally slow.

Bruce Thompson, Chief Financial Officer

The other thing Betsy is that it has been — in January it is just going to start moving and the amount of applications coming in have fairly started the upward move due to this last refi so, as those things close through we’d expect to see some pickup in production this quarter from the refi.

Betsy Graseck, Morgan Stanley

Got it. Okay, that’s super. Thank you.