Good day, everyone, and welcome to the Bank of America second quarter earnings announcement. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question- and- answer session. You can register to ask a question at any time by pressing star and one on your touch-tone phone. Please note today's call is being recorded, and it is now my pleasure to turn the conference over to Lee McEntire. Please go ahead. Thank you, Katherine. Good morning. Thank you for joining the call to review our second quarter results. Hopefully, you've had a chance to review our earnings release documents. As usual, they're available, including the earnings presentation that we'll be referring to during the call on our investor relations section of the bankofamerica.com website. I'm going to first turn the call over to our CEO Brian Moynihan for some opening comments, and then P aul Donofrio, our CFO, will cover the details of the quarter. Before I turn the call over to Brian and Paul, let me just remind you, we may make some forward-looking statements and refer to non-GAAP financial measures during the call regarding various elements of the financial results. Forward-looking statements are based on management's current expectations and assumptions. They're subject to risks and uncertainties. Factors that may cause actual results to materially differ from expectations are detailed in our earnings materials, our SEC filings on our website. Information about the non-GAAP financial measures, including reconciliations to U.S. GAAP, can also be found in our earnings materials that are on our website. With that, let me turn it over to you, Brian. It's all yours. Good morning. Thank all of you for joining us, and thank you, Lee. Today, Bank of America reported $9.2 billion in after-tax net income, or $1.03 per diluted shares. These results included a few items worth highlighting, and I'm on page two, ahead of Paul going through the details. First, as asset quality continued to improve and the economy continued to recover, we released $2.2 billion of credit reserves established in the first half of last year. The idea that a company with our credit quality and other industry participants would be releasing reserves this quarter is not new news. The reality is at BAC, we're seeing credit quality levels that are very strong. Net charge-offs fell to a 25-year low as a percentage of loans, not just raw dollar amount. Let me mention a few items I don't believe are industry-wide or expected at BAC. We recorded a $2 billion positive income tax adjustment following last month's enactment of an increase in the U.K. corporate income tax rate to 25%. This required a remeasurement of our deferred tax asset, which just reverses the write-downs from previous years when the tax rates were lower. In addition, our expense level included two things I would note. These add up to about $800 million. With our strong results and the tax benefit, we took the opportunity to pre-fund $500 million to our charitable foundation. This accelerates our planned funding for not only the rest of this year, but the next year as well. This is not new money, just utilizing some of the tax benefit to cover future expense. We also recorded roughly $300 million of expense associated with processing transactional card claims related to state unemployment benefits. This represents, to a large degree, a catch-up as we move through claim backlogs. Away from these items, we produced another quarter of solid earnings that showed evidence of good client activity in an economy that continued to recover from the pandemic. As we all know, the healthcare crisis has shown improvement and the economy has recovered. Progress on vaccinations, along with the continued support of fiscal and monetary policies, has promoted a full and speedy recovery and a return to economic health. We, like others, are reopening our facilities, and we're seeing more products being sold by our teammates, in addition to the continued digital engagement at very high levels. Our advisors and bankers and relationship managers are once again meeting with clients face to face, building even stronger relationships. We are seeing customer demand continue to grow given the opportunities our companies see. I want to take a minute or two on the economy. If you go to slide three. We have included a few slides highlighting our customer data. Let me hit a few highlights. The GDP growth estimates by our BofA Securities research team for the second quarter stand at 10% and stand at 7% for the full year 2021. The reopening is further driving projections of an economy that's continued to grow at a rate above the pre-pandemic periods into 2023. The unemployment rate dropped below 6% this quarter, projected by economists to continue to fall. You'll also note the stability increased consumer spending from our own BAC customers, which is not only much higher than the same periods in 2020, which you would expect, but is notably 22% higher than the first half of 2021 compared to 2019. You can see that on the lower right of page. That growth rate in 2019 was already growing strongly before the pandemic. A few comments regarding the characteristics of the spending I think are interesting. We are halfway through the year, and the total payments through all the different means are $1.8 trillion. That's 60% of last year's level. Last year indeed was a record, even though it was suppressed in various periods when business was shut down. More specifically, for the second quarter, the total BAC consumers' small business payments set a fourth quarterly consecutive record, reaching $976 billion, up 41% year-over-year and 23% over 2019. The trend has also continued into early July. Spending accelerated as COVID vaccinations increased, business reopened, and domestic travel increased. Combined spend at retailers and services comprises over 50% of debit and credit card spending, a portion of the total spend that increased 27% over 2019 second quarter, but did slow a bit toward the end of the quarter as consumers moved their attention and started taking summer leisure trips and activity. You can see that by noting the return of travel and entertainment spending, which comprises about 10% of debit credit card spend. You can see while recovering, travel remains below 2019 spending levels. Including travel up a bit, as of mid-June, domestic airline purchases were up 8% over 2019, while international airline purchases on our cards are still down approximately 40%, showing the difference of the progress against the war on the virus in the United States versus other places. Now let's go to slide four. We just put this chart in to show you that the consumers are paying their bills. We've shown this each quarter so you could see that the actual card delinquency levels continue to edge down even as people are out and circulating the economy. Before we go to Paul, I want to comment specifically on three areas of interest to you, loan growth, NII, and expense. We can do that on pages five and six. First on loans. Paul and I are going to show you the average loans. Paul will show you that later. End-of-period loans, I'll show you in a minute, and long-term trends, which are on page five. What all these figures point to is accelerating growth during the quarter, as we've spoken about on occasion. This quarter, we saw loan levels across most every business move past stabilization and begin to make progress. Companies need to build inventory and hire workers to meet the growing customer demand. This virtuous circle of hiring workers and meeting customer spending will help drive the economy and hopefully will result in more line usage on our loans. You can see the path on slide five of loans since the pandemic started in March 2020. As you can see, all of them are turning up in recent months. Moving to slide six, you see the more traditional detail for our company. Let's start on the lower right-hand side of that slide in talking about the commercial portfolio. Commercial loan balances, after adjusting for the reductions of PPP loans for quarter two forgiveness, grew $15 billion. This is led by Global Markets' client borrowing activity. Beyond that, and still excluding the PPP loan forgiveness, Middle Market Lending group, and our business banking team finally had growth in the month of June 2021, a first since last March. Fueling some of this improvement is calling effectiveness. Relationship managers have increased their calling efforts. We're now aggressively calling on target prospects. With vaccination progress, face-to-face meetings have nearly doubled each month over the past 90 days. Commercial loans above major clients grew an impressive 5% in the quarter as these customers borrow to our custom lending products. In small business, our Practice Solutions Group, which supports medical, dental, and veterinary practices, has been building throughout the quarter, and small business production overall is back to pre-pandemic levels. Turning to consumer loans, overall growth in end-of-period loans was $6 billion. Card loans grew with increased spending even as customer pay-in percentages remained high. Auto originations have grown fairly consistently, although recently lower dealer supplies have affected that. Mortgage balance growth, which is a big part of our loan portfolio in consumer, has been a challenge in the low rate environment, with high refinancing volumes exceeding originations in past quarters. We are only modestly down this quarter as our origination volumes are finally overcoming the payoffs. We are pleased with the trajectory through the period, and that feeds into the second half of the year. While average loan balances during the third quarter will drive NII, it is good to start with a trend that has reversed the past quarter's declines. On NII, the good news is that we correctly called a bottom three quarters ago. We told you then that we thought the third quarter of 2020 would be the trough. Despite the volatility and lower rate moves and significant decline in loans, we've been able to hold NII at that level or more for three straight quarters. We expect it to move higher. Paul's going to discuss that later. The other area I want to comment on is expense. On a reported basis, we saw a $500 million in expense reduction from first quarter of 2021 to second quarter of 2021. This quarter, we also had around $800 million in notable items for the aforementioned charitable contribution on employment claims process. Absent those notable items, expense would have been down about $1 billion and in the low $14 billion range. This is the level we are targeting expense as we move through the rest of the year. In the second half of the year, as we normalize our operations, we will continue to return to our business as usual, working on process improvements that allow us to reduce our headcount and to continue to fund franchise investment. Headcount in the second quarter, excluding the summer interns, declined by roughly 2,500 or over 1% from the first quarter. The messages for this quarter are straightforward. The organic growth machine that we had rolling before the pandemic hit is reemerging as the economy normalizes. We still have to be careful to ensure that the coronavirus stays one that we are seeing great deterrence. In Retail, Preferred, and Small Business, we saw strong production of core transactional accounts above pre-pandemic levels. This quarter was our best net sales growth in checking accounts since the second quarter of 2015. We saw card production about 90% overall pre-pandemic, but net cards, net of runoff, were positive for the first time since the first quarter of 2020 when we entered the pandemic. We saw growth in new Merrill Edge investment accounts, and Paul will talk to you about that. We saw good mortgage production. We saw stronger digital activity. In wealth management, we saw household growth and strong flows continue to grow even with the use of our banking platform to grow its credit side. In Global Banking, we saw loan growth and new production coming on while line usage still remains very low. We saw Investment Banking close this quarter with record pipelines. In markets, we saw a strong first half even compared to 2020. A strong second quarter, albeit with more normal seasonal impact. Normalizing more like 2019, but still higher. We saw headcount come down as operational excellence kicks in by over 2,000 people. We have work to do to keep driving down the core expenses and getting out the net COVID expenses over time. Above all, due to responsible growth, we saw strong core credit metrics. As the economy continues to recover, we are seeing organic growth engine kick back in. With that, I'll turn it over to Paul. Thanks, Brian. Hello, everyone. I'm starting on slide seven. As I've done in the past few quarters, the majority of my comparisons will be relative to the prior quarter rather than year-over-year, given the pandemic. Since Brian already covered a lot of the income statement, I will just add a couple of comments on revenue and returns. Revenue was down 6% from Q1. The decline was driven by lower sales and trading results that more than offset solid consumer and wealth management revenue, which was a result of higher card income and AUM fees. It is also worth noting that while Investment Banking fees were down from a record Q1 level, they remained strong at more than $2 billion in Q2. Lastly, when comparing revenue against the prior year quarter, remember Q2 2020 included a $704 million gain on the sale of some mortgage loans. With respect to returns, our return on tangible common equity was 20% and ROE was 123 basis points, both benefiting from the positive tax adjustment and sizable reserve release. Moving to slide eight. Balance sheet expanded $60 billion versus Q1 to a little more than $3 trillion in total assets. Deposit growth of $24 billion supported $16 billion of loan growth, while the combination of market-based funding and long-term debt issuance supported expansion of the balance sheet in Global Markets. Other notable movements on the balance sheet included the continued deployment of excess cash into securities. Securities increased $83 billion, while cash declined $66 billion. Driven by the additional deposit growth, our liquidity portfolio remained above $1 trillion or 1/3 of the balance sheet. Shareholders' equity increased $3 billion as earnings outpaced capital distribution. Capital distributions of $5.8 billion were limited to the average of earnings in the previous four quarters per regulatory guidelines and were well below the $9 billion earned in the quarter. With respect to regulatory ratios, consistent with Q1, standardized remained the binding approach for us and was down a little less than 30 basis points from Q1. While the CET1 ratio declined 30 basis points from Q1, it remained 200 basis points above our minimum requirement of 9.5%, which translates into a $31 billion capital cushion. While book value rose $3 billion, regulatory capital was up $1 billion as the $2 billion tax adjustment did not benefit CET1 capital. Higher RWA from the liquidity deployed to securities, growth in our markets balance sheet, and higher GWIM loan activity more than offset the benefits to the ratio from higher capital. Our supplementary leverage ratio at quarter end was 5.9%, dropping from the prior quarter, primarily due to the removal of the regulatory relief. 5.9% versus a minimum requirement of 5% equates to approximately $600 billion of balance sheet capacity, which leaves us plenty of room for growth. Our TLAC ratio remained comfortably above our requirement. Turning to slide nine. Brian reviewed ending loan balances earlier, so I will focus on average balances which are more closely linked to NII. As you look at the year-over-year trends, note that these numbers include PPP loans which have been moving lower now for two quarters, driven by forgiveness. You can see the change in those PPP levels on the slide. Focusing on the linked quarter change. While loans on an ending basis were up nicely on an average basis, even with a $3 billion decline in PPP balances, loans were flat. Wealth management and Global Markets experienced the most notable improvements. GWIM continued to benefit from securities-based lending as well as custom lending, while continuing to have solid mortgage performance. In Global Markets, we looked for opportunities to lend to clients against a number of different asset types, creating mostly investment-grade exposures as a good use of our liquidity. In consumer, we saw credit card loans stabilize for the first time in more than a year as credit spending ramped up and new accounts continued to build across the quarters. Quarterly new account levels are nearly back to 2019 levels. With respect to deposits in slide 10, we continued to see significant growth across the client base, not only because of the growth in the money supply, but also because we added new accounts and attracted increased liquidity from existing customers. I would just note that the linked quarter growth on a spot basis included a headwind of about $34 billion from customer income tax outflows. Normally, we see deposits decline in the second quarter given tax payments, but this year, we saw strong growth even with these tax payments. Turning to slide 11 and net interest income. On a GAAP, non-FTE basis, NII for Q2 was $10.2 billion, $10.3 billion on an FTE basis. Net interest income declined a little more than $600 million from Q2 2020, driven by the rate environment and lower loan balances, but showed modest improvement from Q1. Year-over-year comparisons beginning next quarter are expected to improve nicely, as Q3 2020 has proven to be the nadir for NII, and we are expecting NII improvement in Q3 and Q4. Compared to Q1, the benefit of an additional one day of interest and liquidity deployed was offset by a lower level of PPP loan forgiveness, the absence of proceeds recorded in NII from the Q1 litigation settlement, and modestly higher premium amortization expense. The net interest yield declined 7 basis points from Q1, driven by the continued addition of lower yielding debt securities in Q1 and Q2, and a larger Global Markets balance sheet. Remember, as part of our liquidity that remains, I would include about $150 billion of debt securities hedged to floating, which earn a bit more than cash. As you will note, given all the deposit growth at low rates, our asset sensitivity to rising rates remains significant and mostly unchanged from Q1, highlighting the value of our deposits and customer relationships. Let me give you a couple of thoughts around NII for the back half of the year. Last quarter, when the forward interest rate environment was 30-40 basis points higher, we told you we were targeting NII of roughly $1 billion higher in Q4 of this year. This quarter's loan growth is encouraging and supportive of this target, and the slowdown in mortgage prepayments should also help improve NII. While we still think getting NII $1 billion higher by 4Q is possible, admittedly the recent significant decline in long-end rates presents a challenge. This possibility, of course, assumes loans continue to grow in the second half and rates don't move lower from here. To improve our chances, we could decide to deploy additional liquidity at higher fixed rates in the coming weeks and months as we evaluate the trade-offs between liquidity, capital, and earnings. Turning to slide 12 in expenses. Q2 expenses were $15 billion, $500 million lower than Q1. While lower than Q1, the combination of the $500 million contribution to the foundation and the nearly $300 million increase in costs associated with unemployment claims processing kept expenses above the low $14 billion target shared with you last quarter. Outside of these two items, expense was lower, driven by the absence of a few Q1 items, seasonal payroll taxes, the real estate impairment charge, and the acceleration of expense due to incentive comp award changes. Additionally, lower incentive comp and severance costs also contributed to the decline. Lastly, our COVID costs saw a modest decline as some pandemic related employee programs began to roll off, but this was mitigated to a certain degree by preparation costs for associates returning to the office. As we go to the segments, I would just note that the sizable foundation contribution was allocated to the lines of business and therefore negatively impacts comparisons to prior quarters. As we look forward, we continue to invest at a high rate in people and in technology and in new financial centers. We are seeing the benefits of these investments, and now as we move forward, we expect that natural attrition will allow us to reduce headcount as we transition back to a more normal business environment. As Brian mentioned, excluding summer interns, our headcount this quarter moved down by about 2,500 people. Turning to asset quality on slide 13. Nothing but good news to report here. Net charge-offs this quarter fell to $595 million, or 27 basis points of average loan. This is the lowest loss rate in more than two decades. That is 28% lower than Q1 and more than 30% below the second quarter of 2019. Our credit card loss rate was 2.67%, and several loan product categories were in recovery positions this quarter. Provision was a $1.6 billion benefit. Net benefit was driven by the continued improvement in the macroeconomic outlook, which resulted in the $2.2 billion release of credit reserves split fairly evenly between consumer and commercial loans. Our allowance as a percent of loans and leases end of the quarter at 1.55%, which is still well above the 1.27%, which was the level as we began 2020 following our day one adoption of CECL. As a reminder, the mix of our loans has also changed since CECL day one. To the extent the economic outlook and remaining uncertainties continue to improve, we expect our reserve levels could move lower. Okay. On slide 14, we show the credit quality metrics for both the consumer and commercial portfolios. A couple of points I would make here. With respect to card losses, given the continued low level of late stage delinquencies in the 180-day pipeline, we would expect card losses to decline again in Q3. For at least the next couple of quarters, I would expect total net charge-offs to moderate around the current level. With lower card losses partially offset by lower net recoveries in other products. With respect to commercials, metrics, reservable criticized exposure and NPLs both declined in the quarter. Turning to the business segments, starting with Consumer on slide 15. Consumer Banking produced another good quarter with strong customer deposit and investment flows and the return of card loan growth. This reflects the strength of our brand, our digital innovations, and the deployment of specialists in our centers, all of which enabled us to capture more than our fair share of the increase in customer liquidity. As Brian said earlier, this was a quarter of reopening where both our high-tech and high-touch capabilities delivered growth in client activity. Given vaccination progress, we reopened certain financial centers, more of our associates were at their posts in our financial centers, and customer traffic was up. All of the above drove higher sales in our centers. At the same time, we also saw increased sales through digital channels, which suggest increases in digital engagement are here to stay. The segment earned $3 billion in Q2, 13% higher than Q1 as revenue, expense, and credit costs all showed improvement. Revenue improved 1%, reflecting higher card income on increased purchase volumes, and modestly higher account service charges on ATM usage. Expenses moved lower versus Q1, given the absence of the Q1-related impairment costs and seasonal higher payroll tax expense. We also saw some modest improvement in COVID costs as some of the elevated pandemic-related associated costs began to wind down. Our cost of deposits this quarter improved to an impressive 118 basis points. The team has done a great job servicing more and more deposits while maintaining a strong cost discipline aided by digital engagement. Looking back at Q2 2019, we have added 38% more deposits while expenses have only increased a little more than 3% annually in support of all that new activity, even with COVID. On slide 16, you can see the significant increase in consumer deposits and investments. Average deposits of $979 billion are up $55 billion linked-quarter and nearly $170 billion from Q2 2020. With more than 60% of that growth in checking. Rate paid is down 2 basis points as 56% of the deposits are low interest checking. We covered loans earlier, but would just note that while average loans are down linked-quarter, carried end loans are up modestly excluding PPP, as growth in card balances and vehicle lending outpaced a small decline in mortgages. With respect to investment balances, we reached a new record of $346 billion, growing 40% year-over-year as customers continue to recognize the value of our online offering. Okay, on slide 17. I'll highlight a couple of points regarding the continued improvement in engagement. After crossing 40 million digital users in Q1, we added another 250,000 users in Q2. This quarter, 70% of our consumer households used some part of our digital platform. We also reached 2.6 billion logins from customers in the last 90 days. While you will note the tremendous Erica and Zelle usage, what I would draw your attention to is the digital sales growth, which is up 26% year-over-year. 85% of booked mortgages in the quarter were done digitally, while 77% of direct vehicle loans were digital. Turning to wealth management. The continued economic reopening and strong market conditions led to records in average deposits, loans, investment balances, and asset management fees in Q2. Both Merrill and the Private Bank contributed to this improvement. Growth in gross new households at Merrill continued, and the average size of the new households is larger this year than last year. At the same time, net new households grew, but at a slower pace given expensive competitive hiring practices across the industry. We remain committed to organic growth in our advisors and private client sales force as a stronger, more sustainable long-term strategy. Net income of nearly $1 billion improved 12% from Q1 as we saw improvement in both revenue and expense. With respect to revenue, the record AUM fees complemented higher NII on the back of solid loan and deposit increases. Expenses dropped as the absence of seasonally elevated payroll tax in Q1 was partially offset by higher revenue related costs. Client balances rose to a record of $3.7 trillion, up $725 billion year-over-year, driven by higher market levels as well as strong client flows. Let's skip to slide 20, which highlights our progress to digitally engage wealth management clients. In both Merrill Lynch and the Private Bank, we are focused on three pillars for digital engagement. One, digital adoption and deeper engagement. Two, modernizing our platform for advisors and clients. Three, secure and easy collaboration with clients. We provided stats on slide 20 that show record levels of digital engagement improved further in Q2. These are some of the highest levels of digital activity across our customers. More and more clients are logging in to easily trade, check balances, and originate loans, all through one simplified sign-on. 72% of checks deposited by the Private Bank clients, and more than half of checks from Merrill clients are being deposited digitally now. Through leveraging Erica-based AI capabilities, and through use of Webex meetings and secure text messaging, we are making it easy and more efficient for clients to do business with us wherever and however they choose. This creates additional capacity for our advisors to spend more time with existing and potential clients. All right, moving to Global Banking on slide 21. The business earned $2.4 billion in Q2, improving $251 million from Q1. Strong revenue growth and lower expenses were mitigated by a lower provision benefit than Q1. Deposit growth maintained or remained strong, and increased $20 billion to a new record. Outside of PPP loan forgiveness, we saw modest growth across the platform, as discussed earlier. Revenue growth reflected the absence of the prior quarter impairment on some energy investments, as well as increased ESG investments. Revenue also included strong firm-wide IB fees of $2.1 billion, down only modestly from the record Q1 level. This performance resulted in an improvement to a number three ranking in overall fees with a pipeline that remains strong. Strong debt issuance was more than offset by lower equity underwriting fees. We had a provision benefit driven by a reserve release of $834 million in Q2, which was $328 million lower than the Q1 release. Net charge-offs were near zero, reflecting both low charge-offs and a notable recovery in the quarter. Non-interest expense declined 7% from Q1, reflecting lower compensation, partially offset by other costs. We've already covered much of the balance sheet on slide 22, so let's skip to digital trends on slide 23. We continued our investments in digital solutions that deliver efficiencies for both clients and our employees. The solutions for clients have a compounded effect since they invariably mean less manual intervention by the bank, enhancing both efficiency and satisfaction. Enhanced banking solutions are helping us capture greater market share as wholesale clients do more with banking partners that are stable and secure, and that have the capability to invest in new technologies that will provide better data and global integrated solutions. Digitization, and in particular, artificial intelligence, is helping us streamline processes and respond to clients more quickly and efficiently. As an example, our bankers are using technology powered by Erica to not only better manage credit exposure, but also identify and win new business. We present some wholesale digital highlights on slide 23. Switching to Global Markets on slide 24, results reflect solid but lower sales and trading activity, as noted earlier. While down from the more elevated pandemic periods, trading revenue is still 10% or so higher from Q2 2019. As I usually do, I will talk about results excluding DVA. This quarter net DVA was negligible, but the year-ago quarter had a $261 million loss. Global Markets produced $934 million of earnings in Q2, down more than $1.1 billion compared to either Q1 or the year-ago quarter. Focusing on the year-over-year, revenue was down 15%, driven by the reduction in sales and trading. The year-over-year expense increase was driven by higher costs associated with processing unemployment claims and the activity-related sales and trading costs. Compared to Q1 expense, the higher unemployment processing costs were mostly offset by lower compensation. Sales and trading contributed $3.6 billion to revenue, declining 19% year-over-year. FICC declined 38%, while equities improved 33%, recording one of the strongest equity performances in our history. FICC results reflected the much more robust trading environment in the year-ago period, particularly for macro products. Q2 2021 saw credit tightened, and agency mortgages endured a difficult trading environment given the volatility of rates. The strength in equities was driven by a strong trading performance in derivatives and increased client activity notably in derivatives and in Asia. On slide 25, we note half-year revenue trends across the last few years. As you can see, while the pandemic elevated results in 2020, 2021 remained well above the prior years presented, driven by continued client activity and volatility in the markets. Finally, on slide 26, we show all other, which reported profit of $1.9 billion. The $2 billion tax adjustment benefited results. Absent this benefit, we would've reported a $137 million loss, which is a decline of $239 million from Q1 2021, driven by lower revenue. Revenue declined $545 million, reflecting two effects. First, higher partnership losses on increased ESG investments. As you know, we record grossed-up revenue from these investments on an FTE basis in Global Banking, pay the full tax there, and then back out those entries in all other. You can also see the increase in ESG investments in Q2 in other income on our consolidated income statement where partnership losses are booked. While this loss impacts revenue, it is more than made up for on the tax line. We expect our tax credits and associated losses in consolidated other income to increase by at least $100 million in Q3. Keep in mind, Q4 is normally even higher, reflecting seasonal activity. Revenue in all other was also impacted by some refinancing activity. We called and refinanced higher cost structured notes, which pushed some AOCI back to the income statement. Our effective tax rate this quarter, excluding the $2 billion tax adjustment, was 10.7%. Further excluding tax credits driven by our portfolio of ESG investments, our tax rate would've been 25%. For the second half of 2021, absent any changes in current tax laws or any other unusual items, we expect our effective tax rate to be in a range of 10%-12%. Okay. With that, we're ready to go to Q&A. We'll take our first question from Glenn Schorr with Evercore ISI. Your line is open. Hi. Thanks very much. Wondered if we could contextualize your loan growth inflection conversation. I heard you on cards and auto contributing to the modest pickup on period end loans. I'm wondering what confidence level you have of that continuing in the second half. Will the card auto or will Middle Market M&A or anything else start contributing? Maybe most importantly, do you think 2022 could be a normal-ish loan growth year, say low to mid-single digits like you had been running? Thanks. Hi, Glenn. I think if you look across all the businesses on an end-of-period basis at loan growth which bodes well. The usage on lines is still low, that is still running in the low 30s, which is about 1,000 basis points on average lower in the banking segment. What you see underneath that is that even Business Banking, which is the segment for $5 million- $50 million, is net growing finally, and it was the most affected by the PPP runoff. The rough PPP in the quarter was $6 billion, $7 billion or something like that. In pulse, basically flat average balances. That included, you overcame that. We feel good as we look across the bank. What you really see is net card production back to pre-pandemic. You see gross card production basically about 90% of pre-pandemic. You see autos, which will pick back up as inventories become available. The real driver on the consumer side is mortgages. We're basically holding our own right now. That was different than, frankly, on the refi side, we lost some balances through the last several quarters. On the commercial side, it's really line usage. Honestly can't go any lower. Maybe it can, but theoretically it can't because it's been stuck here for a good four or five quarters with the activity. The auto dealer line usage, which is an outside of the house, for example, is very low than it traditionally is. We expect those to pick back up. The key is we're actually producing more customers and more clients even at the low usage, and the loans will start to grow. Sounds like we got a shot. Thanks. Yeah. Maybe a very similar question on expenses and I'll be done. You noted that there's some COVID expenses still in there, but excluding the two one-timers you called out, we're still in the low $14s. It sounds like low $57 billion range for the year is okay. We've asked this question every year, every one of us has. Should 2022 be materially different than 2021 given how you're able to fund a lot of your investments internally? Glenn, it's Paul. We're not providing specific 2022 expense outlook, but I will offer the following thoughts which I think answer your question. Our rough estimates for the fourth quarter expense is a range of low $14 billion. I think if you add to that the seasonal higher payroll tax, approximately $350 million in Q1, plus add in 1% inflationary costs that we've talked about now for many quarters. Remember, if we do nothing, costs would grow by 3% or 4%, but we're driving that lower every year and quarter through OpEx, SIM and other initiatives. If you take the 4Q expense, you add the higher seasonal payroll tax Add 1%, that's a good base, I think. Then from there, adjust based upon whatever assumption you want to make around higher revenue expectations in areas that are closely linked to compensation and exchange fees. I think if you do that math, you'll have a pretty good number. Thank you, Paul. Appreciate it. We'll take our next question from Matt O'Connor with Deutsche Bank. Your line is open. Good morning. I know in recent quarters I've been asking about just the thought process on how you deploy liquidity and securities. Look, it's been the right call because you were buying what felt like low rates, but rates have gone down again. I just want to circle back on what is the thought process you had alluded to potentially deploying more liquidity in the coming weeks. I guess I step back and it seems like your loans are starting to grow. Deposit growth is starting to slow. Again, rates have ticked down again. Why lock in kind of 10-year duration at these levels with that as a backdrop? Yeah. Matt, I'll let Paul hit it more specifically, one of the things that we just have to always keep in mind, and you've touched on is the deposits are across $1.9 trillion and the loans are $900 billion and change, and that difference has got to be put to work. The reality is we're generating $80 billion deposit growth. We've got to put it to work. That's what we do. We're not timing the market or betting in a way, we just sort of deploy it when we're sure it's really going to be there. That's been our strategy. Yes, we put some to work. It turns out to be in the aftermath a good thing. I think, frankly, I'd rather have a higher rate structure be better for long-term earnings of the company. I'll let Paul talk about redeploying. I don't know what specifics you're looking for, but I would echo some of Brian's comments. I think we've been very balanced. If you look at the results compared to other banks, we've maintained our NII for the last few quarters here. We called the bottom in the third quarter, but at the same time we were doing that, we still are reserving significant liquidity. We have a lot of dry powder as we sit here today, and more deposits are coming. Should we just think about it, loans plus securities will basically equal deposits. If the loan growth is modest, but you keep growing deposits, there's a plow into securities kind of regardless of rates. Yeah. You have to pick up. We do have to keep straight cash obviously that we show you. That's generally the way to think about it. The debate is, remember we hedged a lot of the stuff that we bought just to protect ourselves a little bit. That's the simple way to think about it. In the bank-side balance sheet, that's the simple way to think about it. Obviously, the securities firm is different. I'll just reiterate. Like you said, we're going to get deposits. It's going to fund loan growth. Whatever leftover will probably go in securities, but then we still have a bunch of excess liquidity. That can be deployed as well, either in the near- term or long- term, depending on how we balance liquidity against capital and earnings. Actually going back to Glenn's question, Matt one of the things we can't take advantage of is our extreme efficiency in the Consumer Bu siness with the rate structure. I think they got down in the pushing towards 100, 120 basis points of deposits because they're growing core checking customers at a more rapid pace than we've grown in a while. Consistently quarter after quarter after quarter, that's going to stick to our ribs. You don't pay anything for it. As rates rise, it'll drive the efficiency we just haven't had a chance to take advantage of frankly because of the rate structure. Okay, got it. That's helpful. Thank you. We'll take our next question from Mike Mayo with Wells Fargo. Please go ahead. Hi, I'm stuck on slide 17 with the digital usage. I guess you have a record number of digital users, 70%. You highlighted digital sales up 26% year-over-year. Where aspirationally do you want that to go? What can be the impact on headcount and expenses? It's the same question I asked before. You have best in class digital cost of deposits in the consumer is the lowest in the industry. Doesn't translate to the overall firm. I'm just trying to connect the dots from your great digital usage to better efficiency and also get some sense of your aspirations on the digital side. Mike, just to answer the last question is sort of that question, which is the consumer side doesn't get the advantage until you get the some rate structure on the short end especially. All that investment though it'd be like we're having the same conversation we had in 2016 before rates rose or they said, "When's this going to pay off?" It exploded and paid off, and we expect it to happen again as the economy normalizes. We are taking good advantage, as you well know prior to the pandemic. Let me back up on digital products and usage. The key strategies we've engaged on is beyond consumer, and Paul hit some of the wealth management pieces you can see. When we're talking about the digital things, we're actually showing it by each segment. The growth in the wealth management side, both for external usage, i.e. customers and internal is extremely important in using Erica internally as a method of artificial intelligence based natural language processing that helps make people more efficient in the commercial segment of wealth management. Our aspiration is just to follow and push the clients at the same time, and that always has a benefit. That's why over the last decade, we're down 40,000 people in the retail network, to give you a sense. Where it goes, we have some internal plans. We have an idea, but we don't go out and say that because frankly, it happens piece by piece. Honestly, the 2,500 FTE reduction in the quarter is in part due to the consumer efficiencies kicking back in once they got through PPP processing, things like that. That reduction in headcount, you also have to factor in the increase in headcount in the front office. We're getting a reduction overall if you go back pre-pandemic or if you look at this quarter. At the same time, you're seeing a mix shift. We're adding more people out there talking to customers across the platform, and we have less people in support in the back office. Okay. Just one follow-up on that aspirational question. When you strip out and you normalize everything, rates and everything else you want to do, how much more do you think you can lower unit costs over the next several years? What would be the main technology driver for that? There are basically three ways. One is it's all going to show up in headcount, and so we expect that the consumer cost deposits has gone from 350 basis points probably 10, 12 years ago to 120. We'd expect to keep driving that down, and that's going to be driven by everything we just talked about. When you get to revenue-related compensation in the wealth management business, that's up $500 million from this quarter in 2019 probably or something like that. That's a good thing because we make money, but that will be more driven by its production capabilities and things like that. There's basically buildings and how many do you need, and how many people. That's driven by how many people. How much you pay our teammates who are talented and drive the business, that's driven by how many people, and we had been working our way down in headcount, and it then froze because of all the work we had to do around the pandemic-related programs. Now it's dropped by 1% in the quarter, and that's where it pays back. Great. All right. Thank you. Our next question is from Betsy Graseck with Morgan Stanley. Your line is open. Morning, Betsy. Hi. Good morning. Great slide on slide five. Really love it. Thanks for all the detail. I just wanted to dig in on card a little bit. There's been some discussion around how spend is up a lot, as you indicated as well, and how much of that spend is likely to be translating into revolving versus transactor. You're giving us the daily, clearly. We can see that here on the slide. It would be helpful to understand what you're seeing in the guts of the machine. Has revolver started to pick up, or does this loan growth that you show on the slide reflect just increased spend and transactor pay-down rates are similar to what they've been over the past few months? The revolver piece is starting to move forward, but it is down obviously significantly pre-pandemic. The transactor piece is higher. We want people to use the card to get revenue, and you saw that in the fee line. You get revenue from the usage, and also you get revenue from the loans. The loans are obviously the better part of the equation. Betsy, you have to realize we have about, round numbers, the same number of cards outstanding. There's $25 billion less balances, which the people didn't get any different. They just have more cash, and so they paid off their credit cards, which is a completely responsible thing for them to do. When they can get out and spend more money, which is starting to happen, I think you'll see them use these lines as short-term purchases. The pay rate's up, but I don't think it's a fundamental difference of behavior. It's just the opportunity to use the card. Certain activity has been limited coming into this quarter when you finally saw things open. We'll see where it goes. The good news is it's going in a different direction. It had been bleeding up an entry point about slide five. The good news is the people are high credit quality. That means that the risk-adjusted margin, i.e., the margin from cards minus the charge-offs is actually closer than what people think because the card charge-offs have dropped by $300 million-$400 million a quarter. Okay, Brian. Yeah. No, that's great. That leads into the follow-up, which is relating to your reserve ratio on card. I think the way we're calculating it is around 8.5% or 8.8% at this stage. Give us a sense as to how you're thinking about that trajectory here given that the environment has been improving. What should we expect on reserves going forward? Go ahead, Paul. Well, I'll answer the question this way. If you go to CECL day one, I think it was 6 point something, right, 6.98. That gives you a sense of a different environment with a different sort of economic outlook at that moment. Obviously, as we grow loans, card loans, which we're talking about doing, they're going to eat into some of that excess reserve. I think between whatever you want to model on loan growth and whatever you want to think about in terms of getting back to CECL day one, you could kind of come up with an answer. Great. Just could you even be below CECL day one because the environment is so good right now? You could easily be below CECL day one. As you know, it just depends at the moment you're setting your reserve what your mix is, what are your card balances, and what is your view of the future. If our view of the future is a more benign environment than it was on CECL day one, then by definition, you'd end up with lower reserves. That's the point of page six that really goes to your question on cards specifically. Okay. Thanks very much. Our next question comes from Steven Chubak with Wolfe Research. Please go ahead. Hi, good morning. Paul, it was certainly encouraging to hear that there's still a path to the $1 billion improvement in that NII exit rate that you cited, just given some of the long-end pressure since you gave that guidance. I was hoping you could just help us unpack some of the component pieces given it's a meaningful step up versus what we saw in the most recent quarter. Maybe just thinking about it in three buckets, loan growth, liquidity deployment, and premium am being the third. Assuming no change in the forward, how can we underwrite that path to the $1 billion increase off the current base? I would say that it's about half loan growth. First back out we have an extra day. Okay? Back that out, and as we sit here today, it would be roughly half loan growth and half premium amortization reduction. Having said that, it's a challenge given the fact that rates have fallen, it's harder to get there. We've always had the opportunity to deploy a little more liquidity as we think about this going forward. Understood. At least the premium am ultimately will come. It's just a question of timing there. Understanding that could at least impact where it shakes out by the end of the year. The other thing I wanted to get a better sense of, Paul, is just on the capital comments that you made earlier. You noted that you're at 11.5%, 200 basis points above your minimum. Just curious if you can give us some sense as to where you plan on operating on a steady state basis, how much cushion you want to retain, and just given the strength of your excess capital position, how should we be thinking about the pace or cadence of the buyback for the next four quarters? Obviously we're allowed to do it, so that's a change. At a level that allows us to move capital off the balance sheet instead of constrained by the average of earnings, which was through this quarter. It'll move up. I think we try to operate 50 basis points above the minimum as a target because there's volatility. So our SLR of 5.9% has got 90 basis points of cushion in it, and we want to operate 50 basis points there to 9.5% is 10%, et cetera. You should expect us not immediately to be moving towards that over time. As this goes through the periods, the question will be what's the ultimate GSIB level that we have to maintain in the future and things like that. We can move at pace now, and we couldn't before because you were constrained to your dividend plus your buybacks could only equal your earnings. We were a company that went into this crisis with a lot more excess capital, and we're a company that came out of this crisis with a lot more excess capital. There were three CCAR exams during this crisis that we had the lowest losses and stayed below the 2.50% SCB, so off we go. That constraint, you've got to go to the lowest constraint and add 50 basis points, and you should expect us to stay above that. Right now that's a lot of excess cap. If I could just squeeze in one more, sorry. I've just gotten a bunch of questions on the Global Markets loan growth, which was a pretty eye-popping number. I was hoping you can just unpack the opportunity that you're seeing within that segment and whether there's further runway for continued growth, just given how significant of an uptick we saw in the most recent quarter. Yeah. Sure. That activity, the loan growth was led by Global Markets, but we did see it across the platform, including in the margin and other areas. In Global Markets, we just looked for opportunities to use some of our liquidity in a more constructive way than maybe buying more securities. It was across a number of different types of opportunities and clients. About, I would say $6 billion of it went into our decision to hold some CLOs in loan form. Now we concentrated those holdings in AAA and AA tranches instead of distributing the securities to investors. We think that activity is very consistent with our plan to allocate more balance sheet to customers in Global Markets. Having said all that, because I know people concentrate on CLO exposure, our CLO exposure is still extremely low relative to our peers. Fair enough. Thanks for accommodating the additional question. Our next question is from Ken Usdin with Jefferies. Please go ahead. Thanks. Good morning. If I could just further on the commercial loan topics. As you start to see a little bit better demand aside from PPP across, whether it's corporate, which you just talked about, commercial, small business, what's your just sense from the customer base of where it's potentially coming back the most and where the most holdbacks are because customers still have tons of excess liquidity to get through before they borrow? Well, look, if you look at Global Banking this quarter, Middle Market was driven by food products, commercial services and suppliers and diversified wholesalers. Obviously, you've still got some industries that are affected by the pandemic, and so they really haven't started to recover yet. If you look at our commercial committed exposures, by the way, they grew $30 billion quarter-over-quarter. We're now above the $1 trillion pre-pandemic level. People are getting ready to borrow more. As Brian noted, the revolver utilization is still at historic lows, but we'd expect that to move up as the economy improves. In Global Markets, as I mentioned, there were lots of opportunities in mortgage warehouse lending, subscription facilities, asset-backed securitization. There was lots of opportunities there to put more balance sheet to work. Thanks, Paul. As a follow-up, on that point about the utility being low, but customers are readying themselves. I think as an industry, we've been waiting for that for a couple of quarters now. What's that trigger point where you think that we'll start to see or that'll cause the line usage to actually start moving? It's been flat for now a good few quarters as we ready for it. I think it's going to be inventory builds across various industries. You're seeing trade finance kick up. Yeah. The trade finance flows and the trade flows that we have have been kicking up and kicking up, which means at some point, the people building inventories to meet the customer demand are going to start. Some of that inventory building has been hampered by trucking and ocean liner, just getting logistics. I think working out some kinks there you could start to see it. Do you have any line of sight into when you talk to your customers about any easing up of those supply chain constraints as we anticipate that? Getting better, but still I learned a lot more about ports than I ever thought I'd learn from our customers. It's getting better. It's getting better, but it's going to take a while. Everybody talked about the ship that's well talked about, well- known, but you're talking about basics and so it's getting better, but it really comes down to the operations of ports efficiently and the impact of the virus on employees in those ports and having people to work and unload the ships and things like that. It's a pretty drilled-out sort of analysis they have. The reality is it's still constraining, but it's getting incrementally better, but it'll take another six months kind of. Most are starting to say at the end of the year they'll be better. We'll see. As you think about loan growth and you start modeling it, just remember with revolver utilizations down close to 10%, that's $45 billion. From last year. Yeah. That's $45 billion of losses just for us. Right. Yeah. Right. That's the opportunity set is just how quickly could that be a loaded spring. Right. Yeah. Okay. Thank you very much. Our next question is from Gerard Cassidy with RBC. Please go ahead. Good morning, guys. How are you? Hey, Gerard. How are you? Good. Paul, can you share with us, when I look at your average earning balance sheet in your supplement and you give us the yield of the average earning assets, and I think it declined to 179 basis points. Can you share with us what's the difference between what you're reporting and what you're putting on each quarter of new earning assets? Is there a 20-basis point difference, 10-basis points difference? If we assume rates don't change, when does that gap disappear because what you're putting on is equal to what you're actually earning? Yeah. Well, again, I'll talk about when we take our liquidity, which again, we've got a lot of excess liquidity, and we deploy that into a security, right? Well, in the second quarter, we picked up on a blended basis between mortgages and treasuries, which were roughly 50/50 purchases. We picked up about 170 basis points relative to cash. When you look at a security that's rolling off and being replaced, they're rolling off at sort of 2.50%, and they're being replaced at 2.10%. Now you could do the same math I did with securities. You could do the same math with a loan. Pick your loan category, whether it's a card or a commercial loan, or it's going to just depend on the yield. Very good. Coming back, I think you pointed out that the asset sensitivity of the balance sheet is still intact. 100-basis point parallel shift leads to about an $8 billion increase in net interest revenue. Can you share with us what weighs more heavily on that number? Is it the short end of the curve going up? Is it 70% of that increase comes from the short end going up versus the long end? Correct. It's approximately 70% for the short end. Very good. Okay. Appreciate it. Thank you. We'll go to Charles Peabody with Portales. Your line is open. I wanted to focus on your card operations for two reasons. One, it's the area where there seems to be some visibility to loan growth, and two, because it, I think, generates about 20% of your bottom line, so it's a significant mover. If I'm using your line of business data correctly, cards as a line of business are on pace to generate somewhere between $1.8 billion a quarter. Somewhere between, well, close to $8 billion a year. Am I right in that assumption? If you're talking about interest income, yeah. If you look this up on page eight, the $1.876 billion is the card interest income for the second quarter of 2021. I was using the net income. The net income, we don't have a card segment. We don't report a card segment because it goes there, it goes in the fee line. There's an expense line item. If you look at your line of business reporting, you do have a consumer lending versus deposits, and the consumer lending is primarily cards, if I understand it correctly? No, it's got mortgage loans and auto loans and it's all lending products. If you got a specific question, we could lead it. The question is, if I assume 2019 kind of data in terms of margins, in terms of gross yield, I assume high single-digit growth in loans in 2022, because of the substantial reserve release this year versus what probably will be less next year, I see a fairly substantial decline in your card business as a line of business, as a profit business. I'm trying to get a sense, am I right that there's a delay, even if balances pick up, there's a delay to the improved profitability of that product line? There's less reserve. Last year it was hurt by reserve build. This year, it's benefit by reserve releases. Next year, t hat benefit comes out. That's the company's view. Not only that, but you have to reserve as you're putting on loans, and so you get less benefit day one versus day 100. Yeah. Remember, we've got, I think it was somebody asked an earlier question, but we're reserved on loans now 200 basis points higher than where we were CECL day one. As loans grow, you can eat into that reserve. Right. I estimated you probably have about $1 billion-$1.5 billion of excess reserves in your cards if you go back to day one CECL. You're going to bleed some of that back in with the second half of this year, which means you have maybe $500 million- $1 billion next year. Hey, Charlie, it's Lee. Why don't we take this offline and you and I can go through this afterwards? I see where you're headed. Okay. Yeah, I'll share my model with you, Lee, because I think it's an important hole that has to be filled next year. Yeah. What I'd also just add, though, just while everybody's on the line is just remember our charge-off is running significantly lower. In addition, forget about all the reserving gives and outs. Yeah, absolutely. Yeah. Okay. I'll get with you after this call. All right, thanks. It appears we have no further questions. I'll return the floor to Brian Moynihan for closing remarks. Thank you all for joining us. Once again, in the quarter, our customers are seeing good growth opportunities in the recovering economy. Deposits continue to grow $80 billion in the quarter. Loan balances stabilized and grew on a period end basis for the quarter even overcoming the PPP runoff. Asset quality is at 25-year percentage loss lows, not just dollar amounts. The solid earnings continue this quarter. The important thing is we're seeing increased activity by our customer base, whether it's sales of all the different products, whether it's the reopening of the branches and more appointments that lead to sales, whether it's our face-to-face meetings, our commercial businesses. That holds us in good stead and helps to answer the question about how NII grows in the second half of the year. On top of all that, this quarter is the first quarter in many that we've been able to, in forever that we've been able to go back and actually use excess capital based on our earnings power and our board's discretion. You should expect us to get back in the share buyback game. Thank you, and we will return that capital to you, and we look forward to talking next quarter. This will conclude today's program. Thanks for your participation. You may now disconnect.