Bank of America CFO Says Biggest Q4 Story Is in Deposits

Bank of America’s fourth quarter earnings, released Thursday (Jan. 16) indicated continued momentum in the digital shift that has now resulted in 61% of its consumer sales made through digital channels, up from 49% a year ago. And 78% of all households signed up with the bank are defined as being “digitally active,” up from 75% a year ago.

Interactions with Erica, the company’s virtual financial assistant, were 171.5 million in the latest quarter, up significantly from 122.9 million last year. Zelle peer-to-peer payments logged $127 billion in the fourth quarter, up from $101 billion in last year’s fourth quarter.

During the earnings call, CEO Brian Moynihan noted that the company grew revenue year over year in each of its business segments.

“The economy appears to be now settled into a 2- to 3%-GDP-type growth environment,” he remarked, adding that the economy’s healthy employment has helped make consumers resilient, and the strength “of the American consumer can be seen in our data. So far, this in the first two  weeks in January, they’re spending money at 4% to 5% clip over last year,” Moynihan said.

Growth in Checking Accounts

The bank also has seen growth in net new checking accounts and new commercial accounts, which has enabled Bank of America to grow its loans and deposit base. The company’s earnings materials indicated that during 2024 the firm added 1.1 million net new checking accounts and 4 million credit card accounts. Consumer deposits stood at $942 billion in the latest quarter, growing a bit from $938 billion in the third quarter.

“Early in the year, we highlighted that our expectation on consumer credit is that they would stabilize to normal levels,” Moynihan said. Credit card loss rates of 3.79% in the fourth quarter were up 0.09% from the third quarter.

CFO Alastair Borthwick said that commercial loans were up 5% year over year, and said that loan and deposit growth in the current year should outpace last year’s.

Bank of America shares were down less than 1% on Thursday.

“The biggest story in consumer this quarter is deposits because these are the most valuable deposits in the franchise, And in the last six months, we believe we’ve seen the floor begin to form after several periods of slowing decline,” said the CFO, who added that “consumer banking deposits appear to have bottomed in mid-August.”

During the question-and-answer session with analysts, Borthwick said that Bank of America is seeing “more optimism with clients, a little more activity, a little more demand from clients for loan growth. So those two things a little more confidence around deposit growth, a little more confidence around loan growth — which  obviously compound through the course of the year.”

Management also noted on the call that average checking account balances are now stable at around $9,000 after having peaked in past years at $11,000 — and checking is helping to fund deposit accounts.

Asked on the call about small business optimism and lending prospects, Moynihan said that “in our business banking category … we have small business bank and we have our Global Commercial Bank, for middle market. Across that environment, the draw rates and lines of credit stuff are still much lower than they were in pre-pandemic.”

He said that after the recent environment of high interest rates “their optimism has changed” as the regulatory environment may be shifting and the uncertainty about the election is now a thing of the past.

“That’s why you’re seeing the optimism come up,” said Moynihan, who added, “We’ve got to translate that optimism into activity, and then you’ll see the loan growth come.”