Good morning, welcome to our annual meeting. I want to thank everyone for being here today, including those on our webcast. I hope all of you got a chance to go see the tech expo. It will be open a half hour after the meeting, a chance to see what your investment in this company continues to generate. When you came in, you should have received, when you registered, you should have received the agenda and the meeting rules, which are now in effect. I'd like to call the meeting to order. First, I'd like to introduce your board of directors. I'd ask them, please, to stand. Could the board of directors please stand? I'd also like to note that our newest director, Tom Woods, who will join us after the meeting today, is here.
I'd also like to recognize the retirement of Chad Gifford, as the board recognized him last night. With that, we'll get rolling today. I want to introduce Jack Bovender, your Lead Independent Director, who'll make some opening remarks. Jack?
Thank you, Brian. Good morning to everyone here. It's good to be back in my home state. Don't get here very often except when it's basketball season and Duke is playing. Sorry to all you Carolina fans about that. I want to thank you for coming to our annual meeting. On behalf of the independent directors, I also want to thank you for choosing to invest in Bank of America. Throughout 2015 and early 2016, I and members of our senior management have had the pleasure of meeting with many shareholders. Too did other independent directors. In the past year, we've met with investors owning approximately 37% of the outstanding shares of the company. Hearing directly from shareholders gives us important insights into their thoughts and their approaches to good governance practices and what they expect from independent directors.
It also provides an opportunity for dialogue on global, economic, political, social, and environmental issues that affect our ongoing strategic planning for Bank of America. Given the value we have found in this, the independent directors will continue these meetings with our shareholders throughout the coming year. Our independent directors also meet with company regulators on a consistent basis, usually as a part of our board of directors meetings. In addition, as Lead Independent Director, I talk by telephone with these same regulators once a month. As with the shareholders, we discuss the board's role in providing active, independent oversight of the management of the company. Our governance practices are strong. I encourage you to review them as they are laid out in the proxy statement.
Based upon my past experience as the Chairman and CEO of a Fortune 100 company, as well as a director or trustee of other enterprises, I can say without reservation that you have an extraordinarily strong and capable board, all of whose members are committed to devoting the time and effort to fulfilling their responsibilities to you. This board has a broad diversity of background, experience, and perspective, which is crucial to our ability to provide the guidance and oversight you expect from us. Today, you will hear from Brian and other company leaders about the strategy and progress of the company. You should know that Brian pulls us as independent directors in the process of developing this strategy and reviewing its success. We regularly evaluate the company's strategy, the operating environment, and the progress your company is making on profitability, risk, governance, and meeting our return goals.
We routinely assess our operating model and focus on ensuring the company is best positioned to deliver for customers and our shareholders. In addition to this year-round work, each fall, the board does a deep dive into the company's multi-year strategy. We look at how the company performed against the prior year's plan and how well the businesses are delivering results. We evaluate the company's plans around managing risk, reducing expenses, and growing shareholder value. Obviously, all of the above represents a substantial workload, a heavy lift, if you will. I can assure you this board is committed to doing all we need to do to assure the ongoing future success of Bank of America. Again, thank you for investing in Bank of America and for coming today to discuss our progress. Thank you.
Thank you, Jack. Thank you, Jack. Now I'd like to ask Ross Jeffries, our Corporate Secretary, to review the meeting rules and present the Corporate Secretary's report. Ross?
Thank you, Brian. Good morning. There are four items that we'll consider today for shareholder vote. After all of these items are presented, you'll have a chance to comment on them. When that portion of the meeting is completed, we will tabulate the votes. While we wait for those results, there will be a management presentation. Following that presentation, we will announce the preliminary results. Then there will be a general question and answer period for any issues not related to the proposals. Most of you have already submitted your proxy to vote on these matters, and you do not need to vote again. If you want a ballot to cast your vote, please raise your hand now. Let me remind you of a few housekeeping items. Stockholders presenting a proxy statement proposal will have up to four minutes to discuss their proposal.
Stockholders wishing to comment on the proposals will be limited to two minutes. You don't need to form a line to ask questions, just simply raise the numbered card that was in your admission package. Once Brian recognizes you, please move to the end of the aisle where a Bank of America team member will be holding a microphone. Please state your name and the proposal about which you wish to speak. In order to give all stockholders who wish to speak the opportunity to do so, please limit your remarks to two minutes. A chime will sound to remind you when your time is up. If your remarks concern an item that will be voted on today, let us hear from you during that first question and answer session so that your remarks may be considered during the voting process.
All other questions should be held until the second Q&A session, which will occur after the official business of the meeting is complete. If you have personal financial matters to discuss, we have customer service representatives available at the back of the room to assist you with those matters. Anyone not following the rules of conduct will be asked to leave the meeting. David G. Leitch, our general counsel, has joined us today to assist with clarification of the rules if necessary. I'll now present the corporate secretary's report. Notice of today's meeting and the related proxy materials, or notice of internet availability of these materials, were mailed beginning March 17th, 2016, to all stockholders of record as of March 2nd, 2016. Proof of the mailing will be filed with the records of this meeting. Rebecca Fincher of Computershare Trust Company has been appointed Inspector of Election.
She has advised me that holders of shares representing approximately 82% of the shares entitled to vote are present in person or represented by proxy, which constitutes a quorum.
Thank you, Ross. Thank you for all your work on the meeting. I now declare the quorum is present and the meeting is now officially convened. First, I want to recognize our teammates from Bank of America who are serving as proxies and ask them to stand. They are Karen Fang. Karen? Karen is the head of America's Fixed Income Currencies and Commodity Sales team in New York City. Thank you, Karen. Andy Sieg. Andy is one of our key leaders in our wealth management business, running our Global Wealth and Retirement Solutions business. Thank you, Andy. We're now ready to consider the four items that are up for stockholder vote, as listed in the proxy statement. The manager proposals are proposal number one, to elect our director nominees. Proposal number two, to adopt an advisory vote to approve executive compensation.
Proposal 3, to ratify the appointment of PricewaterhouseCoopers as the company's registered independent public accounting firm for 2016. There's also one stockholder proposal that was included in our proxy statement and will now be presented. The proposal relates to claw-back policies and was submitted by Mr. Kenneth Steiner. Mr. Davitt is here to present the proposal on Mr. Steiner's behalf. Mr. Davitt?
Thank you. Be it resolved, shareholders urge our board of directors to amend the general claw-back policy to provide that a substantial portion of the annual total compensation of executive officers identified by the board shall be deferred and forfeited in part or in whole at the discretion of the board, to help satisfy any monetary penalty associated with the violations of law, regardless of any determined responsibility by any individual officer, and that this annual deferred compensation be paid to the officers no sooner than 10 years after the absence of any monetary penalty, and any forfeiture and relevant circumstances be reported to shareholders. These amendments should operate prospectively and be implemented in a way that does not violate any contract, compensation, law, or regulation.
President William Dudley of the Federal Reserve Bank of New York outlined the utility of what he called a performance bond, and I quote, "In the case of a large fine and senior management would forfeit their performance bond. Each individual's ability to realize their deferred debt compensation would depend not only on their own behavior, but also the behavior of their colleagues. This would create a strong incentive for individuals to monitor the actions of their colleagues and to call attention to any issues. Importantly, individuals would not be able to opt out of the firm as a way of escaping the problem. If a person knew that something is amiss and decides to leave the firm, their debt compensation would be at risk," close quote. The statute of limitations under the Financial Institutions Reform, Recovery, and Enforcement Act is 10 years. Meaning that annual deferral period should be 10 years.
Please vote to protect shareholder value, claw back amendment Proposal 4.
Thank you, Mr. Davitt. We're now going to take questions and comments on these four proposals, just as Ross said earlier, please hold up your number card. We'll recognize you have two minutes to make your comment. In this session, if we keep our comments to the proposal being voted on, we're going to have a general Q&A session later in the meeting. Please raise your card here. Mr. Davitt, 137.
With respect to the vote on the directors. Before that vote, I'm seeking clarification from Ms. Allen, Chair of the Audit Committee, with respect to correspondence sent April 5, 2016, to her and the other members of the Audit Committee, relative to their fiduciary responsibilities to shareholders and stakeholders. I won't read the entire letter, but I quote in pertinent part, "As you are aware, as other members of the board have refused to provide the information requested in my letter of May 8, 2015. In the interest of transparency to shareholders and stakeholders, the urgency of receiving this information has been compounded by the fact that I have recently become aware of an apparent severe conflict of interest of Mr. Charles O. Rossotti.
Mr. Rossotti, while serving as Chairman of the Audit Committee of Bank of America, was also Senior Advisor to The Carlyle Group, whose Claren Road's hedge funds unit was busily betting on mortgages, while to date, such activities as articulated in my past correspondence, have cost Bank of America shareholders over $200 billion in equity. Shareholders and stakeholders worldwide want and are entitled to know that the board will forthwith take up and address this apparent conflict of interest in accordance with the mandates of Sarbanes-Oxley, all subsequent law and settlement agreements, report the outcome to shareholders at this year's meeting. Besides Mrs. Allen's clarification, I also ask each member of the Audit Committee to personally state their individual course of action on the record here and now.
Thank you, Mr. Davitt. Ms. Allen, do you want to confirm that you have Mr. Davitt's letter?
Yes, we do have the letter and have the rest of the.
Thank you. Next question. 350, please.
Hi, I'm Mike Mayo. I'm here as a proxy for ownership of stock of Wall Street analyst. First, I'd like to say, I'm against proposal number four. You have a very strong balance sheet, strong franchise, record capital, record liquidity. You go through the living will process to have additional compensation restrictions to make you safer. You're already safe, and that's the spirit behind it. In that event, 10-year clawbacks seems excessive. On the other hand, proposal number one, the election of directors, the election of the lead director, I'm not sure he's doing the job as well as he could. On the one hand, appreciate that he was a Fortune 100 CEO, appreciate him leading off the annual report and this meeting today, and that he and other independent directors met with 37% of the shareholders.
My issue is that the lead director and the independent directors are not holding you, Brian, and the other management team accountable enough. Number one, there's no timeframe for any key financial target. Based on consensus Wall Street expectations, the returns of Bank of America will be below the cost of capital in 2016 and 2017. If so, that will be a decade of continuous value destruction. The second thing, it kind of relates to proposal two, but it's also here as it relates to compensation. The proxy says that all key businesses exceeded the cost of capital, but that wasn't true for the firm as a whole.
The third thing, also relating to proposal two, the PRSU, the performance restricted stock units, go in the money starting at 50 basis point return on assets, and they go completely in the money at 80 basis points return on assets, which is at a level for value destruction. I don't see why the proxy, as overseen by the lead director, would allow management to get off so easily. In other words, giving extra pay for management for destroying perhaps less value than in the past. I'd like to see more oversight by the board of management.
Thank you, Mr. Mayo. Any other questions or comments from any of the shareholders on the proposals? 205, please.
My name is Zoe Postal. I was wondering, after so many years of being partnered with Bank of America, can PwC still be an independent auditor?
I think you asked if PwC could still be an independent auditor? Yes. There are very serious rules that have been in place to define what independence means, and they meet the standard of independence as set forth in the proxy and have. Sharon, anything to add there? They meet the standards of independence, and there's a series of rules and a series of determinations that require that to be made. If you look at the proxy, you'll see how that comes together in the disclosure. Okay. Thank you. Other comments or questions on the proposals? 137
With respect to my earlier question of Ms. Allen, the clarification that I was seeking is that the issues taken up with Mr. Rossotti will be in accordance with the mandates of Sarbanes-Oxley. There's a protocol to be followed. That protocol is that it be taken up at the formal meetings and that it be addressed and that the disposition of that inquiry and investigation be put into the minutes so all shareholders could see. It's that confirmation that I'm seeking.
We will follow the procedures that are required. Thank you.
Thank you.
Any other comments on the proposals? All right. Let's conclude the comments on the period for the proposals. I now declare the polls open for each item of business. Does anybody have a ballot? Did anybody get a ballot? We can collect the ballots now. Any other ballots? There's one back there. All right. With that ballot, we're going to close the polls. While we're waiting for the results, we're going to take you through a little bit of the progress on the company's efforts, as Jack mentioned earlier, then we'll come back and report the results. We're going to do this in three parts. First, I'm going to talk a little bit like we did last year about the progress we've made and how we're doing to build a strong foundation.
Second, we're going to have Paul Donofrio, our CFO, look at the first quarter and the progress there. Third, we're going to have Dean Athanasia and Thong Nguyen talk about the progress we're making in our retail business, and importantly, talking about how the technology you had seen earlier helps drive that business. We start our company with a set of principles we laid out in the annual report to you, and that's what we call Responsible Growth. The discussion that some of the shareholders had before about the hits we took in a crisis was a serious amount of hits that we just won't repeat. To do that, we have to grow but grow responsibly. It has four elements. First, we have to grow in the market, no excuses. Second, we have to stay focused on a direct customer strategy.
Third, we have to stay within a risk framework, a detailed risk framework from the board all the way through the operating units. We have to grow in a sustainable manner. Sustainability has many elements, including how we govern ourselves, how we invest in the future, and how we continue to grow our employee base and help develop them to be stronger and stronger employees every year. We go to market in a straightforward fashion. We have eight lines of business, and you can see them here. Those businesses serve different groups of customers because customers are different and have different needs. Whether it's mass market and retail banking or our wealth management business or our small, medium, large-sized businesses or our markets business. Together, these businesses represent the fifth-largest, most valuable bank in the world, on the planet. They drive these businesses and have great positions.
You can see on the next slide, you can see these industry-leading positions they have. They have segment leadership positions in each of the businesses. If you look from the Consumer Banking side through the wealth management side, through the banking side to the market side. Merrill Lynch and U.S. Trust are two of the biggest brands in wealth management. To serve the needs of the real economy, we have a small business practice, a business banking practice, a middle market practice, a large corporate practice. They help drive and invest in companies and help them employ people and drive the real economy. When we go to our institutional investors, they're served by our Global Markets firm.
We take the insight we get from having the number one research platform in the world for five years in a row, we serve that to investors to help them make investment decisions. All that provides a strong foundation for Responsible Growth. We are a financial services company, we rely on a strong foundation, as Mike said earlier, our balance sheet to help us give a foundation so we can grow. If you look at our balance sheet, we started coming out of the crisis with about $2.3 trillion in assets. It's down about $100 billion, or you can see here, about 6%. Importantly, within that balance sheet, how we changed the balance sheet and how we grew liquidity and cash is important. You can see here the cash and cash equivalents are up.
The debt securities, which are all government-guaranteed or government-issued securities, are up. The loan and leases are down, getting rid of some of the legacy assets. You can see importantly, our deposits have grown by $225 billion, which all is organic, no acquisitions. Standalone would be the 10th largest bank in the country. We've all but eliminated short-term market funding, which is one of the issues that came up in a crisis. The equity has continued to grow dramatically. Importantly, within our loan book, we have repositioned our company. Coming out of the crisis, we were two-thirds consumer, and a lot of that was unsecured, and now we're 50/50. That has shown up in the consumer asset quality and the commercial asset quality improving across the periods of time. You can see that those credit costs have come down in every period.
You don't have to assess it off of history. We also, since the crisis, perform a stress test every quarter in our company under various scenarios. That stress test is also performed once a year as part of the regulatory framework, the so-called CCAR process. This is a third party's assessment of our losses in our loan portfolios across time, and you can see in each of the years they've come down to about $24 billion or 35%. That shows we're positioned to withstand an immediate crisis without warning. The losses across nine quarters, two and a quarter years, cumulatively added up together, have dropped by that much.
One of the issues we face as a financial institution is a low U.S., especially because we're a lot in the U.S., a low growth rate, not only here in the U.S., but around the world, in a low rate environment as the fiscal policy and monetary policy tries to drive growth. This is our revenue across the last five years. You can see that it has come down. When you look at the core revenue, adjusting for the interest rate marks we took like we did in the first quarter, Paul will talk about that, you can see it's more stable. When you adjust it for the credit risk, our revenue minus charge-offs, because especially in the consumer business, effectively one of your ways that you have expense is a charge-off rate. You can see that the revenue has stabilized and grown.
Low interest rates continue to affect our company. Why? Because we have a half a trillion dollars of non-interest-bearing deposits, which are worth more when the rate structure is higher. You can see here that impact across the last five years. Importantly, two things to keep of note. First, with 100 basis points increase in rates from the current place, the 10-year being, when this was calculated, about 175, you would have a $6 billion per annum pre-tax increase in profits. The second thing to note is that we continue to drive this by adding more core deposits and more core loans and help drive the business and the core NII even if rates don't rise. Paul will show you some of that. What do you do when you're faced with that environment? You drive down expenses. We've made a lot of progress.
In the fall of 2011, we announced New BAC, and we were able to eliminate $8 billion in annualized cost off a $77 billion expense base that was continuing to rise. You can see that these costs have come down largely, and you can see this includes litigation. If you take out litigation, you see more of a relentless drive down. Core costs are down $15 billion or 21% across the five-year period. We continue to drive that cost structure down through Simplify and Improve to make our company less bureaucratic, save money, and plow it back into business. During the time we took out this much cost, and will continue to do so, we've invested $3 billion per year in technology development, some of which you saw if you walked around the room today.
When you put that all together, you have the income recovering as legacy costs were out of the system. Revenue stable, expenses coming down, credit costs coming down, and your income is recovered. With that income, we return capital to you as shareholders. How do we do it? It's pretty straightforward. Two ways. First, our dividends, and you can see this is dividends paid over the last five years. As we started to get the approval to pay more dividends, you can see that rising. Secondly, through share repurchases. The last three years, that added together is $11 billion of capital return, and our goal is to continue to return more and more capital now that we've achieved the 2019 capital levels. Importantly, one of the things we measure is your investment in the company, the tangible book value per share.
As you can see here, it's grown every year. It is a record for our company in history. It's grown 43% across the last set of periods, and we did that as we absorbed $200 billion in legacy cost or $12 a share. How did the stock price perform? That's your investment in the company going up. This is how the stock price performed during those years. The first couple of years, when the issues were coming out of the crisis, our stock lagged. We started to pick up as the recovery, the capital, and the business model was more assured. With that, I'm going to turn it over to Paul Donofrio to take you through the first quarter. Paul?
Thank you, Brian. I want to start by thanking all of you for being shareholders of Bank of America. As Brian said, I'm going to cover the first quarter. If I had to summarize Q1, I would say that market volatility and low long-term interest rates challenged our ability to grow. However, we compensated with strong expense management as well as solid loan and deposit growth. Net income was $2.7 billion, or $0.21 per share, on revenue of $19.7 billion. That's down from $3.1 billion or $0.25 a share in the quarter a year ago. What happened? Well, let me start by pointing out that our customer segments, Consumer Banking, Global Wealth & Investment Management, Global Banking, Global Markets, and LAS, they earned net income of $4.5 billion in the first quarter, up 16% year-over-year. That doesn't sound so bad. Again, what happened?
We had two adjustments in the quarter, which together lowered net income by nearly $1.3 billion. The first adjustment relates to how we account for annual incentive compensation expense for employees who are eligible for retirement. Every year in the first quarter, a portion of the incentives we award to employees who are eligible for retirement, we must expense today, even though those teammates earn those awards over three years just like everybody else in the company. That expense in Q1 totaled $527 million after tax. The second adjustment of $730 million after tax is a little bit harder to explain. Simply put, as long-term interest rates change each quarter, we need to adjust the net interest income we derive from mortgage-backed securities in our investment portfolio. Generally, when long-term interest rates decline, as they did in Q1, that adjustment is negative.
When they rise, that adjustment is positive. We've used this accounting treatment for many years, and normally it doesn't have as much of an impact on our earnings because long-term rates are generally or relatively stable. However, over the past few quarters, interest rates have been volatile, the impact has been more pronounced. Together, these two adjustments, the incentive expense for employees who are retirement eligible and the change in net interest income because interest rates changed. Together, these two adjustments lowered net income by $1.3 billion or $0.12 a share. Importantly, the aggregate impact of these two items a year ago in the first quarter was $0.08 a share. If you similarly adjust both periods, EPS in the first quarter is comparatively flat at $0.33, despite the increase in market volatility this year.
Since interest rates have such an impact on the company's financial performance, I thought I would provide an historical perspective on their levels. As you can see on this chart, the yield on 10-year treasuries has been cut nearly in half over the last five years, falling from 3.4% to 1.8%. Shorter-term rates also are at low levels. These declines impacted significantly our net interest income, which accounts for approximately half of the company's total revenue. As depicted on the chart, net interest income, or NII, has declined approximately $3 billion per quarter over the last five years. I want to make three points about interest rates. First, we obviously cannot control them. They affect the company's performance, but all we can do is react and compensate when they change. Second, we expect to benefit when they rise to more normal levels.
Third, despite the expected benefit, we are not waiting around for them to rise. Instead, we're focused on the things that we can control and drive, like growing deposits and loans, like delivering for customers and clients, and like managing expenses. How did we do in the first quarter with respect to the things that we can control and drive? The answer is we drove good growth and good performance. Total loan balances increased $28 billion or 3% year-over-year. Loans in our primary lending segments, they were up $78 billion or 11%. As you can see on this chart, we've seen steady increases in loans every quarter as we continue to deepen and focus on our customer and client relationships. Turning to deposits, total deposits were up $64 billion or 6% to $1.2 trillion.
To put this in perspective, our increase in deposits year-over-year is equivalent to the total deposits of the typical mid-sized U.S. bank. Within our lines of business, Consumer Banking increased deposits by 8%, Global Wealth & Investment Management by 7%, and Global Banking by 3%. Expenses is also another area within our control, and as Brian mentioned, we've made significant progress over the past five years, and that trend continued in the first quarter. Year-over-year, total non-interest expense declined by $1 billion or 6% to $14.8 billion. Progress was in nearly every major category across the company, from personnel expense to data processing, from marketing to equipment costs, as we continue to focus on streamlining and simplifying Bank of America. That brings me back to our Q1 financial performance.
Starting on the right, in the all other category, you can see the impact of the two items I mentioned earlier, the incentive expense for employees who are retirement eligible and the adjustment to NII. Notice our customer-facing segments, where our teams control and drive the things that I've just talked about. Here on a combined basis, our five business segments delivered for customers and clients in a very challenging market environment and earned in the process net income of $4.5 billion, which was up 16% year-over-year. Consumer Banking earned $1.8 billion, up 22%. Global Wealth & Investment Management earned $740 million, up 13%. Global Banking earned $1.1 billion, down 22%, as we build reserves for energy. And Global Markets earned nearly $1 billion, up 45% in a very volatile trading environment. While legacy assets and servicing trimmed losses to $40 million.
At the bottom of the slide, you can see the returns and efficiency ratios for each segment. Except in LAS, we earned more than our cost of capital in each one. Before I wrap up, let me briefly comment on recent volatility in our stock, in our stock price, and in that of our peers. Bank stocks declined sharply in the first six weeks of the quarter. This was caused by slumping oil prices and a slowdown in China, which heightened recession fears at home and put in question when the Fed was going to raise interest rates. Due to the sensitivity of our financial performance to interest rates, this impacted our stock price performance more than some of our peers. However, recession fears abated, interest rates rose a little in the second half of the quarter, plus investors reacted well to our progress in Q1.
They reacted well to the things that we can control and drive, and they appreciated a little bit more, I think, that we're not waiting around for interest rates to rise. Since mid-February, our stock price has recovered, rising more than our peers and more than the overall market. To sum it up, if one adjusts for a couple of items, we had a solid first quarter in a very difficult environment. Despite challenging markets, despite low interest rates, we stayed focused on the things we can control and drive. We grew loans, we grew deposits, we maintained a strong foundation in liquidity and in capital, and we continued to invest in our future by hiring sales professionals and investing in new technologies. We did all of this while we lowered expenses. Thank you very much. With that, I'll turn it back to Brian.
Thanks, Paul. Thank you, Paul. Thanks. Thank you. Before I turn it over to Dean and Thong to talk about our consumer business, I want to touch just a minute on what we call Responsible Growth and Sustainability. Sustainability, as I said earlier, has lots of elements to it. It's about how we manage expenses. Expenses are coming down. We're investing in future. More technology, more salespeople, new branches, et cetera. It's also how we support our communities. If you look here, you can talk about what we do in our communities. It's what we do through Better Money Habits that you should have seen in the other room. That helps millions of individuals and families learn how to manage their finances well. If you go to our mobile banking, it's a tile right on the front, and you can go in and see the content.
It helps people figure out what to do, buy or lease a car, own or rent a home, whatever the issue is. We've also helped the military. Last year, we hired 2,000 veterans into our company, and we donated over 2,000 homes to military veterans returning from service. Those homes not only are donated to them, but we make the house a home by the volunteer time our teammates put in to clean up the house, plant the gardens, buy furniture, and other things to make a house a home. It's what we do in our environmental work. We have $125 billion environmental commitment, one of the largest commitments to finance the new energy sources. Finally, every year, your company contributes in all the markets we serve over $180 million in philanthropic investments.
On top of that, each year, your employees donate 2 million hours of volunteer service to help nonprofits around the world. There are not many companies that do this, and I'm very proud and honored to represent this company that does it. Another way we think about our company is one of our values in the company is realize the power of our teammates or people. We're in a people business. It's what we do, and we work hard to be a great place to work for all those teammates. We have a diverse and inclusive workforce that reflects the diversity and inclusion of all the communities and countries we serve. Through our recruitment programs and our partnerships, we're investing to bring kids out of school that are the best and brightest to come to work at our company. Over 1,200 new hires a year out of school.
We continue to make changes to our benefit plans, offering wellness offerings that have over 90,000 teammates measuring their steps to help drive the wellness of them and their families. This also includes our recent announcements to move our parental leave benefits from 12 weeks to 16 weeks. As we think about all the ways we pursue sustainability, we use our size and scale, but our localness in our communities to create opportunity for customers and to grow our company responsibly. One of the ways we do that is our consumer business. That business earned $1.8 billion or $1.9 billion after tax last quarter. I'm going to ask Dean Athanasia and Thong Nguyen to come up here and talk about the progress they've made in that. Just for you to note, it's Thong's birthday today, treat him nicely, okay? Dean and Thong.
Good morning, everyone, thank you for the opportunity to present to you today as our shareholders. As Brian mentioned, we have the leading consumer franchise in the country. We're going to spend some time to talk about that, but it took us some work to get here. Coming out of the financial crisis, we faced many challenges. The new regulations, CARD Act, Reg E, Durbin, had a negative impact of $7 billion on our revenue. Those regulations increased the operational complexity, mostly to manage heightened standards of risk and compliance, which then result in higher costs of doing business. We need to strengthen our compliance and risk management processes, and we also needed to increase our technology spend to automate some manual processes. Unfortunately, while we were doing all that, our client experience declined.
This is both a challenge and opportunity, we had to keep up with emerging technologies and changing customer behaviors, such as the increased use of mobile and social media. Dean will talk about how we tackled and addressed those challenges.
All right. Thanks, Thong. Given the environment, we knew we had to change our business, we did three things. We simplified the business to make it easier for clients to interact with us. We reduced costs to make ourselves more efficient, we invested in the business, as Thong said, deploying new technologies, product capabilities, and client managers to work with our clients in the field. The chart to the right highlights our transition from where we were in 2009 when we started, and Thong talked about that, to where we are today. If you look at the top two box, in order to get ourselves more efficient, we reduced financial centers, we reduced headcounts by 23% and 37% respectively. In terms of products, we were very complex. We had over 1,500 individual consumer products. Think of the complexity around that.
We streamlined that, we're now down to 67 core products for our clients, we put all of our money behind those products to make sure they're the best in the industry. In terms of transactions, this is very important for us. We've automated over two-thirds of our transactions. The reason it's important is because we interact with our clients over 600 million times each month. This, again, produces great efficiency and speed of execution for our clients as well. As Thong said, the client satisfaction dipped, we came back up. We are now at 55% at the highest ever in our history. I'll give you a little bit of what that means because Thong's going to hit on it later. That means 55% of our clients are rating us a nine or a ten on a 10-point scale.
If I included eights, eight, nine, or 10, that number's closer to 80%. We've improved client satisfaction a great deal. We stay focused on it, and we have to keep going and keep improving on that in the future.
The reason that's important is because when clients are satisfied with us, they deepen their relationship with us. They bring us more of their assets and use more of our solutions. As you can see, that's the story on deposits, our clients added over $166 billion in deposits over this time period. That's up over 41%. We're the number one retail deposit share in the U.S., and we're also the lowest cost provider, and our costs have come down by over 34% over this time period as we've gotten more efficient, showing that we can get efficient and grow at the same time. We see the same thing in our investments. Clients are bringing us more of their investment assets to our platform called Merrill Edge. Those are up over $74 billion in the same time period or up 139%.
Merrill Edge is a four-star rated by Barron's Investment in online platform. It's a great platform for us. As of today, less than 15% of our clients are on this platform. It's a newer platform, so it can continue to grow over the years ahead. I'll touch on our loan portfolio because this is where we did the most of our work, as you heard Brian talk about and Paul talk about a little bit. From the time of the crisis in the first three years, we worked on our consumer portfolio, reducing low-performing assets and exiting non-core businesses that didn't have anything to do with our clients. In 2013, we started to overcome that. You can see since then we've grown in over $20 billion in loans, and that's up over 10%.
Most importantly, the quality has improved of our overall portfolios, and you can see our losses have declined by over 95 basis points all the way down to 141 basis points. We can grow, and we can do it with the top end and the top quality clients throughout our books, and we can continue to do this as we move forward. As we mentioned, during this whole period, we are always investing in the business. One of the big investments we made was in technology, and Thong's going to talk to you about how some of those investments did for us and the impact they had on our business.
Great. Thanks, Dean. As Brian mentioned, a big part of the $3 billion that we invest each year in technology goes to digital. For instance, mobile is particularly important because it provides a better customer experience, it costs less for us to process, and therefore allows us to reduce the infrastructure that you have seen so far. Today, we have almost 20 million mobile users, and that's five times the number in 2009. In the first quarter alone, we added 900,000 new users. Mobile deposits, for instance, represented in the red bars here, are up 10 times in the last four years. That's equivalent to 700 branches, a medium-sized regional bank. That has allowed us to reduce our expenses as mobile transaction is about 10 times cheaper than the transactions through the tellers. Another example of the shift to additional is in the credit and debit card spending.
While spending at a point of sales in the red bars have been up about 2%-3% per year, the online spending, which is 20% of total spend, in gray here, has been increasing close to 15% per year. Mobile payments and digital wallets represented in blue, such as Apple Pay, Samsung Pay, Android Pay, are starting to emerge. As we grew our business and improve our efficiency, we have also improved our client satisfaction. As Dean mentioned, we are now at an all-time high, even higher than the pre-crisis level. We increase our client experience at every touch point in the financial centers, in digital contact centers, and we continue to improve these numbers every month. All this work has positioned us very well into the leading consumer franchise that we talked about in the opening.
Thanks, Thong. That leads us to where we are today. We now, and you have the top consumer franchise in the country today. We have the best client base and a top market position. We have the best products. We have the best in banking from Bank of America and the best in investing from Merrill Lynch. We have an incredible platform to offer to our clients. We are the innovation leader with our digital and mobile capabilities, and we'll continue to invest there. We have an incredible coast-to-coast reach with over 4,700 financial centers, 16,000 ATMs, and 23,000 client managers out in the field providing advice to our clients.
This is the franchise where we're starting, where we're going to invest in in the future, and we're always looking at what's the next step, where are we going, where are we going to make investments, and Thong's going to talk to you about a few things that we're seeing and where we're going to start to look for growth in the future.
Great. As you can imagine, we're spending a lot of time thinking a lot more about our future than the past. How our customer behavior is changing. What do we need to do to stay ahead of the curve? What technology and capabilities are important to our customers? Part of the sustainable growth that Brian talked about is to create the efficiency so we can invest in both new technologies, but also in deploying resources in financial centers to help our clients. On the technology front, we're investing in biometrics for customer authentication. Think of fingerprint recognition on your mobile phone. That makes the experience seamless but also safer for our clients. We use artificial intelligence for customer service. Think of Siri.
Advice such as global investing, we have rolled out contactless interactions at the ATMs and point of sales so you can pay or withdraw money from your phones. Again, safer. We help our clients' financial lives with conversations around their life priorities, what's important to them, such as education, retirement, or leisure. We're also engaging with our clients through social media. For instance, we just announced a partnership with Facebook to communicate with our clients, such as sending them low balance alerts. We have invested very heavily in our digital platform. For instance, this year we have tripled our investments in digital to make it the best in class, and easier and safer for our clients. Today, you can do all your banking with the thumb on your cell phone. You can open an account in four easy steps. You can make deposits.
Our clients make 260,000 deposits per day. You can withdraw money from ATM, which is safer than plastics. You can invest through our Merrill Edge platform. You can get connected to a person, whether an expert in a financial center or a customer service representative in a contact center. You can pay a friend through their cell phone number, you can pay with your mobile phone at the point of sales with Apple Pay, Samsung Pay, and Android Pay that we talked about. With all the technology, we also need to educate our customers. To that end, we have deployed digital ambassadors in our financial centers to help them, the adoption rate has really gone up. While we have this great technology to make things simple for our clients, we also need to invest in financial experts to help our clients in our financial centers.
Dean will take you through that.
Just a reminder, everything that Thong talked about out there is next door in the expo. You can go actually take a look at it and use some of the capabilities. Given all the work that's going on in digital and transactions moving that way, we knew we had to change the role of the financial center as it moves forward in the future, and we're doing that now. It's going to change from a destination for where people went before to do a transaction, walking in and doing transactions, to now where they're going for advice and guidance. That's going to be advice on how to save for their retirement, their kids' education, advice on how to buy a home or an auto, or advice on how to start or grow a business.
We're going to set it up and we're going to put the client professionals in the financial centers to help our clients do that. We're renovating over 1,500 centers. We have some centers that look like this, but renovating another 1,500. We'll open 250 new centers in the years ahead in markets where we think we're under-penetrated, but they're going to follow this model here on the left-hand side, and I'm going to show you a little bit more detail of that. The most important thing that we're doing is we're setting up our financial centers for all of our clients. Certainly, the consumer clients between Thong and me, but also for our Merrill Lynch clients, our U.S. Trust clients, our commercial banking clients, and our corporate clients.
They're going to have the professional staff in them to handle the eight lines of business that Brian talked about at the outset here, and that's how they are going to be going forward. The picture's very hard to see the future of where we're going, we set up a little, hopefully, a rendition video for you just to kind of take you through in a little bit of a 360 way so you can see what these are going to look like. By the way, these are modeled after centers we already have in Boston and New York and San Francisco and some other places. I don't know. Can we roll the video? All right. Financial center of the future, I'm going to narrate. You come in, you can see the branding on the side, showing everything that's inside.
You walk in, you don't see the teller. You see a greeter who's going to help you find the right place to go. You're going to see displays, our digital bars with all of our latest technologies and experts to help you get you signed up on that. Our specialist, Merrill Edge. Business center set up for our business clients, service area for our business clients, and plenty of meeting space across the board. You'll see the latest technology and the latest capabilities. Our service areas will still have tellers. We call them client service areas now. They're towards in the back, and so we're going to provide great service, and we'll set it up specifically for clients, but that is not the feature of the center. Advice is the feature of the center.
Plenty of digital capabilities to give you the latest marketing and what's new at Bank of America and the best value for you all the way through. We can change things easily. You can see one of our specialists at Merrill Edge. If you're a client who's a Merrill Lynch client or U.S. Trust, we'll take you upstairs. We have our U.S. Trust reps up there working closely in proximity with our Merrill Lynch reps as well. If you're an affluent client, we take you right upstairs, and we have that continuity. Of course, we'll still have the greatest technology and all of our latest ATMs, cardless ATMs, and whatever the latest is set up in our center to help you out. That's the vision of our center going forward. Okay. That's it. Thank you. Just a little rendition.
We use that actually with our team just to show them where we're going and where the future's going to be and how we want them to interact with our clients. Just to sum this up, we have the best market position and a leading coast-to-coast franchise. We have the top array of products, whether that's on the banking side or the investment side. We're a top-rated lender, but we're going to be focused on the upper end and high quality of lending and portfolio. As Thong showed, we have the best digital platform to serve our clients. Again, you can go look, touch, and feel everything that we have coming and now. We're well-positioned in the market, and we can continue to grow responsibly for you. Thank you for your time today. I'll turn it back to Brian. Thank you.
Thank you. You can see the tangible results of simplifying, strengthening, and transforming our company. You can see it very clearly in the retail as we made the move, not only to preserve what makes this core to us, that advice and guides our branch, but also bring on automation at a high level and with a velocity and a capability that no one else can match. Before we open the question and answer, I'd like Ross to report the preliminary results of the vote. Ross?
Our Inspector of Election reports the following preliminary results. All of the management proposals received the required majority support and have been approved. For these proposals, all 13 director nominees have been duly elected to the board of directors with a vote of at least 94%. The advisory vote on executive compensation has been approved with approximately 93% of votes cast in favor. The appointment of PricewaterhouseCoopers has been ratified by 98%. Stockholder proposal did not receive the required majority support, as only 6% voted in favor and 94% against. Final voting results will be reported on a Form 8-K filing with the Securities and Exchange Commission within four days of today's meeting.
Thank you, Ross. Now let me open up to general Q&A. As a reminder, the rules are still in effect. Please raise your card. You have two minutes, and we'll recognize you. 206 in the back, please.
Good morning. My name is Nicholas, in regards with House Bill 2, I was wondering what the company's position was and what they're doing in the community to have the bill repealed.
Well, our position has been clear. We've been steadfast. Let's start off with what we do as a company. We are steadfast in our commitment to non-discrimination in everything we do in the company. We've been a leader in LGBT practices going back to the mid-'90s, where we first adopted practices that a lot of people didn't adopt till the recent past. We continue to support that this bill ought to be repealed, we've made it clear. We're hopeful that the recent efforts by the governor and dialogue will result in progress, we are clear and of the record that we believe the bill should be repealed. Thank you. Other questions? 104, sir.
Gary Burgess. I think Stephen Hawking would disagree with us being the fifth largest bank in the world. On a secondary note, as a CEO, you have some responsibilities, and I can think of three of them, and I think there's four major ones, is you have fiduciary responsibilities to stockholders. You have the responsibility to keep us informed, and you have the responsibility to surround yourself by the proper support staff. Without answering these gentlemen's questions, I don't think you're complying with the law. You'd gain my respect if you'd answer their questions or respond to them.
Would they ask the question? We'll answer it, sir. Mr. Davitt asked
I'd like to know too.
Mr. Davitt asked a question. He sent us a letter. The audit committee has it. They'll look at it in ordinary course, like we have with the letter he has sent every year for the last 15 or 20 years. With Mr. Mayo's question, his question was, are the ROA targets too low? I think is at the heart of it. I actually had somebody look at this today because I knew that Mr. Mayo would ask the same question he asked on continuous. The ROA targets, just so we understand it, were designed to say that for a year you're awarded an amount of compensation. Then what it says is, make sure you didn't do anything during that year to earn that will affect the earnings in the future.
We have to do the three-year average with no adjustments of 80 basis points to get the money that the management team earned for 2015. 2016, 2017, 2018, no adjustments had to come true. Of the large peers in our industry, only one company. The two companies have made above 80 basis points in three-year average periods. One is Wells which is a little bit different business model, and JP has barely made it with an average between 83 and 88 basis points. All the other peers have never made it three years in a row. If you look at our proxy statement, you'll see that the first three-year periods are now rolling through. In one of the cases was 90-odd%, 93% I think it was. The other case, it was 42%. No adjustments.
If you take the street estimates the rest of the year, we'll see similar discounts to the awards that will terminate this year. There's accountability. I take all my compensation, as does the management team take most of their compensation in equity. We don't sell shares. I have to hold the shares I get. Half of them, after I pay taxes, I have to hold until after I retire. I've never sold shares, and I think we're completely aligned. Those are not easy tests. To crystallize it, for the next three years, we have to earn $50 billion after tax for those to vest. Okay. Thank you. Next question. 119.
Robert Cobbett from Lake Lure, North Carolina. Good morning.
How you doing?
I like what I heard today and last year as well. I still have some concern about the share price and the dividend rate of return. I bought 5,000 shares of BAC stock before the crash primarily because the dividend was best in the business, 3%-4% range. I know that's ancient history. Bought another 5,000 shares at 17 on the way down. Here we are today at pretty much stuck in the teens and dividend rate of return at 1.5%. Contrast that to your competition, Wells Fargo and JPMorgan Chase, who are paying 3% dividend. I'm suggesting serious consideration to an increase in the dividend. That's a win-win for shareholders and some right now cash, and I think a bump in stock price as you get closer to that 3% range. Appreciate your comments on there.
Sure. If you see the dividend chart, we have to go through the CCAR process. If you think of the slide where we showed the earnings, those earnings obviously have been recovering because of the legacy issues and getting that behind us. To get that sustainable earnings, that then supports the dividend. The dividend's gone $0.04 a year to $0.12 a year to $0.20 a year, we'll continue to move it up through the process that we have to go through as we get not only our confidence in the earnings stream, but we have to be able to convince other people that earnings streams will be solid in the context of a deep recession.
Worse than 2008. That's what we're working towards. I understand you, sir. On the other hand, with a share price below the tangible book value, it increases your investment in the company at a faster rate if we also buy back shares. We've been clear that you should expect over time that we'll pay out about somewhere less than around 30% in dividends, and 70% will be yours for share buybacks until the price of stock is well above book. Other questions? 215.
Good morning, Mr. Moynihan. My name is Natalie Clark. I addressed you last year regarding the gender gap and appreciated your response, which introduced us to your executive and management team. Before I address my concern this year, I wanted to circle back and continue that challenge. I ask for all the women at Bank of America, not just your leadership, who I'm sure are being compensated very fairly. I also ask as a future employee of yours. Though I remain interested in your continued response, this year, I want to address the stock price. In the past three years that I've been attending this meeting, I've watched and listened to countless people get up and share their story about how much money they've lost. I've never really considered what it meant to me until now. Now that I'm looking at colleges, it really matters.
My stock was given to me by my great-grandmother when I was an infant, when it was at least two-thirds higher than it is now. Now it's at $14, what was and would have covered a great deal of my undergrad expenses will now cover maybe my first semester. Okay. I swear I'm not pandering here, as an Irish girl, I'm looking at Notre Dame. I know you know what I'm on the hook for. All the way around, you and I are both looking at some pretty bad numbers. While I've heard many talk about their perception of the drop in stock price compared to your compensation, I've never really heard anybody ask why. Why does this bank consistently have an extremely high efficiency ratio? I'm only in high school, I feel pretty certain that even my civics and economics class could figure this out.
Even with a detailed financial presentation this morning, this bank still has an extremely high efficiency ratio compared to other financial institutions. As a shareholder who depends on you and your management team, who hold a great deal of my financial future in your hands, I just have to ask.
Sure.
What's the plan?
The first quarter last year to first quarter this year, I think we improved 200 basis points in efficiency ratio when you adjust the interest rate mark that Paul talked about. We continue to improve that ratio. We're probably running, I think fairly stated, 67% or something like that. We'll run it down to 60s. We'll always be a little higher because we have a big wealth management business, which we have the highest pre-tax margins in that business, and it's a 75% efficiency ratio to make it equivalent. That's the highest of anybody in the industry by a lot. The question, our nearest competitor has like 21. That will always be a governor because it's $14 billion of the expense base goes to that business. It's just the nature of it.
We should run better, and we'll continue to take out expenses as we do that. On your question on female employees, where's Sheri? Sheri Bronstein is our Head of Human Resources. I think what you said is how do we think about this, not only of representation of women, which we're over 50% women in the company, but also pay and how we go about it. Sheri, why don't you?
Sure. Thank you. We do continue to make great progress. This year's entry-level class, so soon you'll be going to college, Our entry-level class this year is the highest we've had in history with just about 40% women joining. We're excited about that, and we'll continue to make progress there. On the topic of pay, we have had for a long period of time, both internal practices and processes to look at pay across gender as well as all diverse groups. We actually have a third party that tests that and runs analytics and tests all of those processes. We feel very comfortable that we pay fairly and equitably and, as I said, have both internal and external processes in place to ensure that's happening. Thank you.
On the stock price question, obviously, we feel the stock price should be higher. With $1.4 billion of stock to buy back this quarter, we'll take advantage of the price and buy a lot back. If you think about it year-over-year since last time we stood here, we're down about 4%. Our peers are down 10%. You get other measures, we're down more than they are. The ebb and flow that Paul explained with the interest rate environment will affect us, but we got to drive what we can control. Thank you. Good luck on getting into Notre Dame. It's very difficult these years. Mike.
To follow up on Natalie, I've been doing this job almost 30 years now, I can't figure out why you are less efficient. Your Consumer Banking looks fine. Your wholesale business line looks fine. The other category with $2 billion of expenses, I can't figure out where the inefficiency is coming from, if you can identify that. Then for the lead director, especially, he's been in the position for one year. He's met with shareholders. If you could have him respond to my second question here. I talk to these same shareholders, there's three issues pretty much across the board. Number 1, the stock price was at this level 2 decades ago. Number 2, returns below the cost of capital, what looks like will be a decade soon. You're doing better, but destroying less value doesn't cut it.
Three is lack of an adequate plan B. There's a perception that you guys shine your shoes, go to work, and wait for rates to increase. The CFO, Paul, said that you're not waiting. The question for lead director, when will you stop waiting to hold management accountable to generate returns above the cost of capital? Your peers today, Wells Fargo, JPMorgan, get that goal. I think the job of the lead director and the board is to hire a CEO and monitor the progress and hold them accountable. My question- Very clearly, when will returns, what year will returns at Bank of America exceed the cost of capital without hedging for rates or anything else? If you can't do it based on your current plan, what is the plan B?
Go ahead and restructure, sell assets, break up, get the required returns for shareholders. You guys have a great franchise. It's just not optimized whether it relates to efficiency, Natalie's question, or the returns above the cost of capital.
Sure. If you look at our cost of capital, which is in, what would you say it now, like 9%? No, that's the cost of capital calculated based on the interest rate environment today, we're learning about that last year. As rates rise up, that cost of capital rise and more and more money. The efficiency question, just to make it clear to you, is we still have half a billion dollars more LAS cost than we should have, we're clear on that. We're taking that out. We have other costs we continue to take out. Let me give you a snapshot for the people in Charlotte to think about. When you go outside this place tomorrow, today, look around at every single office building you see.
The total space in this town is 25 million sq ft of real estate for commercial use. We've gotten rid of twice that in six, seven years. It is hard to move that much space, it takes you some time, that's what we continue to do. We're from 285,000 teammates to 213,000, we continue to reposition that down 6,000 first quarter, first quarter. Not pleasant, we need to continue to do that. We continue to drive at that. Most of the efficiency ratio difference is two elements. One is the LAS cost, second is the yield on our portfolio is lower and our net interest margins 50 basis points behind what we'll get to as we reposition that portfolio. Jack, do you want to add anything on the structure?
Mr. Mayo, if I understand your question correctly, it has to do with are we doing our job as independent directors? Am I doing my job as the lead independent director? You've already stated you really don't have confidence in me or our independent directors to do that job. I don't think I'm going to try to convince you that I'm other than what I really am or our lead independent directors are other than what we really are. It does give me an opportunity to say a few words to the rest of the audience about the way we, as independent directors working with management, are thinking about the environment we're in. One of the things I learned as a CEO in past years is that you manage to the environment as it is, not to the environment as you wish it to be.
Let's think about the environment we're in now. Paul mentioned and Brian has mentioned low interest rates. We are in a declining economic growth situation, not just here in this country, although we're doing better than the rest of the world, but all over the world, particularly in China. China affects a lot of things, including the use of energy and the use of metals and mining. That has a direct impact, even if you're not directly invested a lot in China. Significant political turmoil all over the world.
An environment like this, driven by low interest rates, when you're a financial institution and you think about what you're going to do to produce value for the shareholder, one of the temptations is to, if I can use the expression, go a little bit rogue, meaning that what you're going to do is you're going to push the margins in a riskier situation and scenario than you otherwise would. What does that mean? On the consumer side, it means going for lower FICO scores. It means, relative to political situations around the world, making investments in commercial enterprises in countries that are not as stable as we are or Western Europe or other developed countries.
It means investing in more speculative commodities such as oil or metals with companies that don't have the depth and the breadth and the diversity with inside their industry to be able to stand things like the recently reduced oil prices and so forth. That's one way to look at it. The other way to look at it is to take a longer-term view and a safer view, balancing your risk along with your reward. That's the position that we at Bank of America have taken. That's what the phrase responsible growth means. That means taking a longer-term view.
It doesn't mean that you give up growing the company, but you do the things like Brian and his team have done to reduce expenses, to use mobile devices and other technology to drive costs down and serve the customer better, to build deeper, longer relationships with your customers and your consumers, so that as interest rates rise, and they will, even the Federal Reserve can't repeal the laws of gravity in this kind of situation. Interest rates will rise. We've done the things inside this company that when it does We've created significant operating leverage that will rebound to the benefit of our shareholders. At the same time, we believe we're creating an environment because we're not going for lower FICO scores.
We're balancing our investment in industries and countries so that we're not exposed, as some of our competitors are exposed, so that we don't get ourselves into a situation that repeats some of the worst things that we saw during the financial crisis. One of the things, as I've said, the benefit of going out and talking to shareholders, a lot of the shareholders I talk to are pension plans. The thing about pension plans is, as they say, I'm talking to CalPERS and CalSTRS, that they will always own our stock. Now, what does that mean for them? That means that they're interested in growth, but they're interested in the long-term stability of that growth and viability of that growth.
They're also incredibly interested that we preserve the corpus of the investment that they've made so that we don't wake up having to take significant reserves because we've overreached ourselves and driven the quality of the assets below what they should be. I'll stop. I talk too much.
Thank you.
Thank you.
Next question, please. 338.
Good morning. My name is James Breedlove. I'm a long-term shareholder of Bank of America. One of the things that's been apparent today is the recurring theme around a desire on the part of shareholders to see clearer accountability around when the operating metrics, key operating metrics, internal equity, internal assets, efficiency ratio, et cetera, will be increased to the levels of leading bank and peers. I think we'd like to see much more clarity around that. In the annual report, you refer to long-term operating goals without giving any sense of what long-term means. It leaves us, as shareholders, kind of in the dark as to what that means. I think Mr. Mayo raised some very relevant questions that hopefully you and the board will find a way to come forward with more clarity around those operating metrics.
I want to speak a little bit about another accountability issue. My understanding is that since you came on as CEO, you've maintained your personal residence in Boston. That's a matter of concern to myself and a number of other shareholders, largely because, as far as I can tell, no other CEO of a major bank has a personal residence that's not in the same area as the corporate headquarters, or at least in a major area like New York, where you have a lot of operations. I've worked at one time as a senior officer of a Fortune 300 company. I have seen firsthand that it makes a lot of difference if the CEO is in the same area as the corporate headquarters. It energizes the team more. It gives a greater sense of bonding with the team and what have you.
My question is, are you prepared to make a commitment that you will change your personal residence to Charlotte or New York?
No, sir. I would tell you that my team is in multiple locations because that's where our business operations are. We have 15,000 people here in Charlotte. We have about the same in New York. We have a ton in San Francisco. We have 700 people in Tokyo. We are on the road a lot to go out and meet the clients and teammates. I don't think it's relevant to If you question whether I work hard enough, I think the people here would tell you that I do.
If you question about our ability to have communication within our team, I'd say to you that with the investment we've made in technology and the ability that we have to discipline how we meet together, as far as when I talk to my peers, I say we have our team meetings in the same rational way that they do. Thank you. 137.
Richard Davitt. Probably the most important ingredient to good corporate governance is an independent director. The directors are the only things that protect the shareholder interest relevant to their fiduciary responsibilities of good faith dealing and the rest of their responsibilities. I've had to ask now for the third time that the issues that I brought up in a private meeting with the board, the audit committee, Mrs. Allen, last year, and then again with an earlier letter this month to follow up with that. That's what's wrong with this. You can't get a firm answer. I want a firm answer as to whether or not this issue will be taken up pursuant to Sarbanes-Oxley and that each member of the audit committee is sure. We're not interested in hearing your response. I'm reporting the mischief of management. I'm interested in hearing from the board members.
Miss Allen, do you want to?
Mr. Davitt, we have received your letter. I did meet with you, as you know, last year. We take your comments very seriously, and we are fulfilling our responsibility as a committee and as the chair of the committee to take those into consideration. We have dealt with your letters in the past and responded to you fully, and we will also uptake this information, which we have already looked at, and report back on it as it is required. Thank you. That's an affirmative.
In accordance with Sarbanes-Oxley, correct?
Yes, sir.
Thank you.
Next question. 107, please.
Thank you, Mr. Chairman. My name is Julian Martinez. I represent SER Jobs for Progress National. SER is a national nonprofit community-based organization serving more than 1 million people a year by assisting them with their employment and educational needs. SER National and many in the Hispanic community would like to thank you for the many community programs sponsored by Bank of America and help people all across our great country. The diversity of your board of directors, staff, and procurement program is outstanding. You are truly a great example of corporate responsibility. The American dream is alive and well. Hispanics born in this country are more highly educated and earn higher incomes than their immigrant parents. Hispanics outpace all other Americans in forming their own businesses. They will represent fully one-third of the U.S. population in 45 years and be an economic force of great consequence.
Latino-owned businesses increased 46.9% from 2007 to 2002. In 2012, 3.3 million Latino businesses had receipts totaling over $517 billion, making up 12% of total businesses. Female Latino business owners were 44.4% of Latino firms as compared to 35.3% for non-Latino firms. Hispanics are the youngest racial or ethnic group in the U.S. About one-third or 17.9 million of the Latino population is younger than 18. About a quarter or 14.6 million are millennials. Bank of America has positioned itself well to capture Latino business. Again, we would like to commend you for your positive efforts relating to our community. Thank you.
Thank you, sir, for your comments. 145, please.
Hi. My name is Sean Garrett. I am the Executive Director of the United Way here in Charlotte. I just want to commend and thank you all for two areas really. One, your community support, then two, your civic leadership. On the community support side, I think you are well aware that Charlotte was ranked recently as fiftieth out of 50 on economic mobility. While that is something that I don't think any of us here are proud of or want to be a part of, one of the things I am very proud of has been the reaction of this community, in particular, the leadership of this company.
You all have been incredible from your thought leadership, from your volunteerism, then your philanthropic support on every key effort that we are trying to enact in this community and really encourage and appreciate everything that you have continued to do on that. On the civic leadership side, you described the parental leave piece as a benefit. While it certainly is, as a parent of young children myself, it has had a big impact on people around the community. The number of other companies that have followed your lead on this issue has been significant.
What that means for young children born in our community today and the time they get to spend with parents and loved ones in the most critical developmental time is a significant issue for our community, really wanted to, again, commend you for what you all have done to take the leadership on that issue as both a benefit to your employees, also a benefit to our community as a whole. On behalf of the 1,800 United Ways around this world, I want to say thank you for everything that you are doing on our behalf.
Well, thank you. The group of CEOs here in Charlotte that get together periodically, we received that report, and it has been impactful in terms of the report of the 50th on mobility. It has been impactful in terms of their commitment to try to help any way we can. The group of us are trying to do what we can. Other questions? One-oh-four.
Gary Burgess again. A couple of things. Much of the world feels that if you have directors that have been with you 10 years, they're no longer independent. Most of the world, obviously not all, say when you have the CEO on the board, you're no longer independent. We made several comments that we have an independent board. Much or most of the world would disagree with that. Can we get to a truly independent board? One of the things is, I've been to a dozen-plus annual meetings, and some of them are fun. Warren's meeting is certainly fun. Nucor, DiMicco or whatever, he makes it fun. Yeah. Excuse me. One of the things is we heard that one of our problems with our low stock prices is a condition of the world. Basically, big banks got us in the problem.
It's kind of like Obama blaming Bush. I think what we really need is to see more sensitivity out of the leadership to the stockholders. I mean, hey, don't try to fool us. Just speak from the heart.
Well, sir, we have absolute sensitivity because all the directors are invested in this company, all the management team is. We continue to drive everything we control. That isn't meant to be insensitive. That's meant to be take care of what we can take care of and try to drive the simple thing of good core loan growth, good core deposit growth ebb and flow with a market-based activity on a given quarter. This quarter, we made $700 million-$800 million in markets when other people didn't make. Most of our other peers made much less than that business, and you're seeing the foreign banks now. We're driving what we can control, and we have absolute sensitivity. My entire net worth is in this company. That's what we invest in every day. You asked about tenure. Three things on that.
One is, if you actually look at our tenure aboard, it's way below the average tenure. I don't know, 70% of the board, I think, came on in the last five or seven years after the crisis. This board inherited a company which had to restructure its board and restructure the company and has done a great job of taking us through that. I think if you think of the vote results, the shareholders have voted 94% plus for the directors again this year, with 80% of the people voting. The people have resoundingly said this board is independent, it's capable of doing what Jack talked about, and they're doing it.
We are dealing with the final stages of stuff that we had to put behind us. We tried to do it in a way that was sensible for America because if it wasn't America, in terms of taking 1 million fixed delinquent loans through, we had to do it. That earning stream's coming back, the dividend stream's coming back, the share repurchase is coming back, and we'll continue to drive that forward. We're not waiting around. One or two, please.
Good morning. Francis Wanapu. I reside in Charlotte. I have a question related to Gary's question about the board independence. Is our board open to shareholder nominee for representation on our board? I know we have proxy access available in our company if 3% or more nominates a person to serve on our board. What would happen if someone, one of us nominate a director to serve on our board with the proxy statement state that your board of directors recommends a vote against this person, or would the proxy statement state that your board of directors recommends a vote for this nominee? If the statement says that your board of directors nominates a vote against this nominee, then the pension funds would probably vote against the nominee. Would the board of directors be for a nominee coming from the shareholder's perspective?
The proxy access we have has been received well by the shareholders that Jack talked about. There's a process there, the board would make a decision based on the circumstances at the time. Jack, I think you're asking a hypothetical question. We have a proxy access, that's the way that people can nominate directors when they have the 3% for three years. Next question, 350.
First, I want to say I was having fun at the Tech Expo. I love the cardless ATM. I can't wait to see those.
If you have a thumb, you can use it.
What is the ROE or ROA target for 2016 or 2017? I'd like to clear up something, Mr. Bovender, I'm not pre-judging your performance after one year. I'm just wondering how you can do your job if there's no timeframe for any key financial target. How can you hold management adequately accountable? As Mr. Breedlove said, how do you define long-term? That could be a long time. What is your financial target for 2016 or even 2017?
We do not give earnings projections, nobody in our industry does.
No, I mean, other firms do give clear financial. They might miss it, but at least we know when they miss it.
Our guidance is we are moving as fast as possible to return of 12% return on equity and 1% return on assets. That is what we have said. It is not a target for next quarter. It is a target that we are moving to as fast as possible. We have said it over and over, Mike. It is the same thing everybody else says. Nobody gives you earnings guidance for 2016. You have the chance to ask all these calls on the earnings calls and listen to the hour and a half that we had two or three weeks ago, and I think you will hear that is what we have said over and over again.
One last follow-up. What are your goals for 2016 so when we come back at next year's annual meeting, we know whether you met them or not as an outsider?
Sure. The job of this company is to drive customer growth, customer satisfaction growth. You heard Thong and Dean across all the businesses, to continue to turn that into good earnings. Depending on the economic scenario that plays out for the rest of the year, we will do that. I think first quarter, we earned $0.20, fairly stated thirties, low thirties. Our job is to keep driving that forward. We will obviously not have the charge for the employee cost in the first quarter. 338.
Yes. On the CCAR process, now that the bank has substantially strengthened its capital and liquidity, it is a much stronger balance sheet. What is your expectation around the degree to which the Fed will permit Bank of America to significantly increase its dividend and repurchases in light of those particular circumstances?
I think the process is going on as we speak, there's not much upside in talking about it while it's in the middle of it, for sure. As you know, last year, we were granted the right to pay dividends and buy back stock, which we've been doing, we resubmitted and got that approved in the late fall. You should rest assured, as we've now crossed the 10% hurdle and tangible common equity ratio, which was a measure we needed to have by 2019, we crossed this quarter, that we'll continue to ask for more and more capital return. It's part of the operating dynamic of the company. I really don't think it's in the best interest of shareholders to have this discussion other than with our regulator and get through the process. Yes, sir.
If you're traveling to Charlotte twice a week, I sense you're spending 15 hours in travel, albeit you can work while you're on the plane and things like that. How much better would we be if you were in Charlotte, not traveling?
Last week, I went to Tokyo and Korea, which I think in the space of a week. I travel a lot of other places than Charlotte and New York. Thank you. Other questions or comments? Seeing none, that's the conclusion of the question and answer. The official meeting is now adjourned. On behalf of our board of directors and the management team, thank you for being here.