As a coda to Bank of America’s Q4 earnings call on January 19, CEO Brian Moynihan recapped the tumult of 2020 in an unusually reflective moment. Moynihan recalled “the wild operating environment,” the “work at home” revolution, the “massive loan deferrals,” the “multiple government programs and multiple changes in government programs,” and the panic borrowing when the pandemic struck by companies and people who then did an about-face and “massively paid us back.”

But Moynihan’s main message is that a new, upbeat narrative is replacing the dark banking story of last year (that being the consumer’s retreat and the threat of huge defaults-to-come, especially on credit cards). Although he announced a 21% quarterly drop in 2020 profits from $7.0 billion to $5.5 that was largely expected, the CEO forecast that B of A’s earnings should climb back to 2019’s levels in what he called “a four or five quarter fight to get back.” The big driver: a resurgent consumer. Moynihan noted that it’s his Main Street bank that’s taken the “brunt of the damage” from COVID-19. During the pandemic, Americans staved of pleasures to spend on, and set on saving for safety, parked their cash in B of A’s checking and savings accounts at a never-before-seen rate. Yet they’re also borrowing a lot less. Hence, B of A’s forced to invest those gigantic balances super-low-paying securities.

“It’s been a tidal wave of deposits and no loan demand,” says Jim Shanahan, an analyst with brokerage Edward Jones. “A key for B of A’s future profitability is turning those new relationships that came during COVID into lending relationships that drive returns on that cash horde a lot higher.” That’s because even in today’s low-rate environment, mortgages and credit card balances pay a lot more than short-term Treasuries.

On the call, Moynihan pointed to two metrics B of A sees up-close. First, its 66 million consumers and small businesses are now spending at a pace even faster than at this time last year. Second, they’re paying off the riskiest loans (their credit card balances) at an amazingly strong and improving rate, presaging that defaults will be a lot lower, and families find themselves in far better shape than lenders feared when joblessness rampaged in mid-year.

Here are four other takeaways from B of A’s results.

B of A’s earnings are a lot lower than last year’s, but are on the upswing.

For all of 2020, B of A posted net income of $17.4 billion, a 35% drop from its all-time-high of $27.43 billion last year. But its performance improved substantially in Q4. Earnings jumped 12.1% over Q3 to notch the year’s best quarterly numbers by far. The main reason the trajectory has bottomed and is rising: B of A is experiencing as well as forecasting far lower bad loans than when it booked big allowances, and losses, in the dire days of Q1 and Q2. A new rule requires banks to forecast all the loans it judges will become uncollectible, at any time in the future, and take the entire, projected hit up-front. For the first half of 2020, B of A took “provisions” for the write-offs it saw coming, what Moynihan calls “lifetime losses,” of nearly $10 billion, six-times the total for the previous two quarters.

Provisions dropped to $1.4 billion in Q3. And in Q4, the credit outlook improved so dramatically that the hit shrank to a negligible $53 million. A drill-down into B of A’s reserve math reveals a fuller picture. B of A’s forecasters reckoned that around $880 million in loans it previously deemed sound would go bad. But it also reclassified over $800 million forecast for future write-offs that had it expected to pay in full; that number shifts from reserves to profits as a “reversal.” So the reversal almost offset the stuff newly expected to become uncollectible.

Moynihan noted that the economy now looks far better than the bank’s numbers-crunchers foresaw in the Spring, when it started taking those gigantic provisions. B of A was predicting a year-end jobless rate of 7.8% that turned out to be 6.8%, he said. Moynihan says the improved outlook is clearing a dense fog of uncertainty and “clarifying the end of the COVID era,” implying that B of A’s credit cushion is far bigger than what’s needed in today’s economy-on-the-mend. That suggests that in the absence of a severe downturn, B of A will continue to book reversals that should at a minimum erase credit costs, or probably boost profits, in future quarters.

As credit cards go, so go the consumer

It’s a remarkable that although banks gigantically boosted their reserves predicting big “lifetime losses,” the deluge hasn’t happened. In Q4 of 2019, one of the balmiest periods in recent banking history, B of A charged-off just $959 million in bad loans, or .39% of its portfolio. In last year’s final quarter, the figure dropped to $881 million, or .38% of the total book.

Moynihan cites the consumer’s performance in credit card loans, unsecured balances that are both much riskier than borrowings backed by homes and cars and fare far worse in a downturn, as a sign that families’ finances are healing. B of A has a relatively modest credit card portfolio of $78.2 billion. But although it’s one-third the size of the residential mortgage business, its rates are so lofty that, by Fortune‘s estimate, they make just as much if not more money. In Q4, B of A’s charge-offs on cards were just 2.06%, down from over 3% a year earlier. “That’s shockingly low,” says Shanahan. He notes that B of A boasts the best numbers in the business. J.P. Morgan’s figure for Q4 was close at 2.17%, and while the largest card lender Citi posted charge-offs of 3.81%, chiefly due to a spike in losses in Latin America. Still, observes Shanahan, losses in the U.S. are remarkably muted compared to previous downturns, let alone crises.

For credit card lenders, it’s almost as if the COVID cataclysm never happened. Richard Fairbank, CEO of card giant Capital One, remarked that he’d never seen a time when unemployment spiked and card write-off fell. For Shanahan, the stimulus checks and extra jobless payments are largely responsible for that stalwart performance. He says that losses could rise substantially unless the new round of stimulus bridges families to the point where at least one unemployed spouse finds a job.

B of A has also been prudent in its choice of clients. “It benefits from a policy of lending only to prime borrowers,” says Shanahan. On the call, Moynihan acknowledged that in cards, “our unemployment rate is lower than the rest of American society.” Still, B of A’s numbers, as well as those of its rivals, are so good that they suggest that consumers are a lot better off, and won’t unleash the cascading defaults, predicted earlier this year.

Moynihan focused on a revealing slide to predict that credit card defaults could actually drop below 2020 rock-bottom numbers next year. He shows that loans 5-29, 30-59, and 60-89 days overdue all declined from in the first half of the year, partly because so many borrowers paid down their balances. Then in the fall, the troubled credits in all three buckets jumped to new highs for the year, though the peaks at most matched the levels of Q4, 2019. But starting in October and November, defaults started dropping.

For Moynihan, the charts are showing that loans 90-days past due, meaning most will go bad, will peak in the first quarter of 2020, as the highest numbers from the fall in all three buckets work their way through the 90-day-plus stage. Then, defaults will trend downwards. Those charge-offs “will be the primary driver of consumer loan defaults in Q1, and decline in Q2,” he adds. Moynihan says that the 90 day bucket showing the largest number of defaults will reach 180 days––the stage when they officially go to charge-offs––late in Q1. And after that, he says, defaults will retreat starting in Q2. Naturally, B of A could suffer a relapse if high joblessness outlasts stimulus checks and enhanced unemployment insurance. But his analysis suggests that the consumer’s demise is greatly exaggerated.

Moynihan sees a resurgence in spending by the bank’s Main Street customers and businesses

Moynihan also marvels that all spending by B of A retail clients and small businesses, exceeded 2019’s robust levels. While the dollars Americans charge on their credit and debit cards is usually the metric experts cite as a proxy for where overall spending is heading, Moynihan collected comprehensive data that encompasses not just cards but checks, wire transfers, cash out from ATMs, and digital payments. The CEO displayed a chart showing that after rising 10% in January and February versus the same month of 2019, total payments collapsed almost 30% by April. But they quickly rebounded, and in June, they were beating last year.

In December, he says, total spend stood 8% higher than in 2019 at $304 billion, and for the entire year, it scored a narrow beat of 2% at $3.1 trillion. Best of all, he adds, “2020 began as a very strong year.” His customers received $11 billion in stimulus checks so far from the IRS, and two-out-of-three have yet to get the extra cash. In the first half of January, payments exceeded the robust, pre-crisis January 2019 numbers by 6.7%. Moynihan’s charts tell a story: Americans are paying on their credit cards and reopening their wallets. For the CEO, those are a bellwether they’re ready to do what B of A needs most: A lot more borrowing.

B of A is loaded with deposits it needs to lend

While the hit from credit losses may be over, the longstanding headwind of low interest rates only gained in severity during 2020. The problem is two-fold: First, rates dropped sharply during the year to record lows. Second, B of A’s loan portfolios shrank as families and businesses built their savings and lowered their debt, and the bank, in the depths of crisis, curbed its exposure to high-risk customers. The confluence of those two forces hammered its net interest income (NII—what it earns on its loans after deducting expenses for the likes of operating bank branches and paying its consumer-serving staff), from $48.9 billion in 2019 to $43.4 billion, a drop of 11.2%.

In one sense, 2020 should have been cause for celebration. B of A’s deposits soared as folks and businesses built their cash hordes instead of spending. From Q4 2019 to Q4 2029, deposits jumped from 23% to $1.74 trillion. But B of A didn’t get to lend out any of those cheap, fresh deposits. That’s because at the same time, its customers were shedding debt. Over that period, its total loan portfolios shrank from $974 to $935 billion.

To push profits back to 2019 levels, B of A needs a combination of higher rates and a lot more loans. On the former, the news is improving: The yield on 10-year treasuries has jumped from .65% in late September to 1.1%. In Q4, total loans rose slightly from Q3, regaining mid-year 2019 levels. That’s the trend Moynihan’s certain will continue. He forecasts that NII will begin to grow again in Q2 of next year as the same folks and business owners who were retrenching once again start taking out mortgages, and putting restaurant tabs and vacation flights on their cards. “It’s all about getting loans growing,” says Shanahan. “B of A has a great opportunity to turn all those new deposit relationships into lending relationships.”

Towards the end of the call, an analyst asked Moynihan if he was tempted to discourage clients from giving B of A their deposits, since the new cash is going into securities yielding such paltry returns, and B of A is shouldering the costs of managing their accounts. Not at all, he replied. Those deposits mark the start of long-term partnerships where customers advance to getting cards, buying cars on credit and refinancing their home loans. It’s a vision that’s worked brilliantly for Moynihan, who’s deployed it to orchestrate one of the great turnarounds in the annals of financial services. The smart money’s betting this is vision has legs.

More must-read finance coverage from Fortune:

• Biden’s economic plan rests on a daring wager that rates stay low. But watch out if they don’t

• Why Big Tech regulation is good for private equity, according to one CEO

• Bitcoin bull market sparks boom in crypto news media

• The lesson lenders learned from the Great Recession: Forbearance works

• From a disillusioned youth precariat to state collapse—WEF ranks the risks to our post-COVID world

This story was originally featured on Fortune.com