UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number:
1-6523
Exact name of registrant as specified in its charter:
Bank of America Corporation
State or other jurisdiction of incorporation or organization:
Delaware
IRS Employer Identification No.:
56-0906609
Address of principal executive offices:
Bank of America Corporate Center
100 N. Tryon Street
Charlotte, North Carolina 28255
Registrant’s telephone number, including area code:
(704) 386-5681
Former name, former address and former fiscal year, if changed since last report:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Common Stock, par value $0.01 per share | BAC | New York Stock Exchange | ||||||
| Depositary Shares, each representing a 1/1,000th interest in a share | BAC PrE | New York Stock Exchange | ||||||
| of Floating Rate Non-Cumulative Preferred Stock, Series E | ||||||||
| Depositary Shares, each representing a 1/1,000th interest in a share | BAC PrB | New York Stock Exchange | ||||||
| of 6.000% Non-Cumulative Preferred Stock, Series GG | ||||||||
| Depositary Shares, each representing a 1/1,000th interest in a share | BAC PrK | New York Stock Exchange | ||||||
| of 5.875% Non-Cumulative Preferred Stock, Series HH | ||||||||
| 7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series L | BAC PrL | New York Stock Exchange | ||||||
| Depositary Shares, each representing a 1/1,200th interest in a share | BML PrG | New York Stock Exchange | ||||||
| of Bank of America Corporation Floating Rate | ||||||||
| Non-Cumulative Preferred Stock, Series 1 | ||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
| Depositary Shares, each representing a 1/1,200th interest in a share | BML PrH | New York Stock Exchange | ||||||
| of Bank of America Corporation Floating Rate | ||||||||
| Non-Cumulative Preferred Stock, Series 2 | ||||||||
| Depositary Shares, each representing a 1/1,200th interest in a share | BML PrJ | New York Stock Exchange | ||||||
| of Bank of America Corporation Floating Rate | ||||||||
| Non-Cumulative Preferred Stock, Series 4 | ||||||||
| Depositary Shares, each representing a 1/1,200th interest in a share | BML PrL | New York Stock Exchange | ||||||
| of Bank of America Corporation Floating Rate | ||||||||
| Non-Cumulative Preferred Stock, Series 5 | ||||||||
| Floating Rate Preferred Hybrid Income Term Securities of BAC Capital | BAC/PF | New York Stock Exchange | ||||||
| Trust XIII (and the guarantee related thereto) | ||||||||
| 5.63% Fixed to Floating Rate Preferred Hybrid Income Term Securities | BAC/PG | New York Stock Exchange | ||||||
| of BAC Capital Trust XIV (and the guarantee related thereto) | ||||||||
| Income Capital Obligation Notes initially due December 15, 2066 of | MER PrK | New York Stock Exchange | ||||||
| Bank of America Corporation | ||||||||
| Senior Medium-Term Notes, Series A, Step Up Callable Notes, due | BAC/31B | New York Stock Exchange | ||||||
| November 28, 2031 of BofA Finance LLC (and the guarantee | ||||||||
| of the Registrant with respect thereto) | ||||||||
| Depositary Shares, each representing a 1/1,000th interest in a share of | BAC PrM | New York Stock Exchange | ||||||
| 5.375% Non-Cumulative Preferred Stock, Series KK | ||||||||
| Depositary Shares, each representing a 1/1,000th interest in a share | BAC PrN | New York Stock Exchange | ||||||
| of 5.000% Non-Cumulative Preferred Stock, Series LL | ||||||||
| Depositary Shares, each representing a 1/1,000th interest in a share of | BAC PrO | New York Stock Exchange | ||||||
| 4.375% Non-Cumulative Preferred Stock, Series NN | ||||||||
| Depositary Shares, each representing a 1/1,000th interest in a share of | BAC PrP | New York Stock Exchange | ||||||
| 4.125% Non-Cumulative Preferred Stock, Series PP | ||||||||
| Depositary Shares, each representing a 1/1,000th interest in a share of | BAC PrQ | New York Stock Exchange | ||||||
| 4.250% Non-Cumulative Preferred Stock, Series QQ | ||||||||
| Depositary Shares, each representing a 1/1,000th interest in a share | BAC PrS | New York Stock Exchange | ||||||
| of 4.750% Non-Cumulative Preferred Stock, Series SS | ||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||||||||||||||||
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).
Yes ☐ No ☑
On July 29, 2024, there were 7,759,577,413 shares of Bank of America Corporation Common Stock outstanding.
Bank of America Corporation and Subsidiaries
June 30, 2024
Form 10-Q
INDEX
Part I. Financial Information
| Item 1. Financial Statements | Page | |||||||
Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses | ||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||||||
1 Bank of America | ||||||||
Part II. Other Information
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Bank of America Corporation (the “Corporation”) and its management may make certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “hopes,” “estimates,” “intends,” “plans,” “goals,” “believes,” “continue” and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.” Forward-looking statements represent the Corporation’s current expectations, plans or forecasts of its future results, revenues, liquidity, net interest income, provision for credit losses, expenses, efficiency ratio, capital measures, strategy, deposits, assets, and future business and economic conditions more generally, and other future matters. These statements are not guarantees of future results or performance and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict and are often beyond the Corporation’s control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements.
You should not place undue reliance on any forward-looking statement and should consider the following uncertainties and risks, as well as the risks and uncertainties more fully discussed under Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K and in any of the Corporation’s subsequent Securities and Exchange Commission filings: the Corporation’s potential judgments, orders, settlements, penalties, fines and reputational damage, which are inherently difficult to predict, resulting from pending, threatened or future litigation and regulatory investigations, proceedings and enforcement actions, of which the Corporation is subject to in the ordinary course of business, including matters related to our processing of unemployment benefits for California and certain other states, the features of our automatic credit card payment service, the adequacy of the Corporation’s anti-money laundering and economic sanctions programs, the processing of electronic payments and related fraud and the rates paid on uninvested cash in investment advisory accounts that is swept into interest-paying bank deposits, which are in various stages; the possibility that the Corporation's future liabilities may be in excess of its recorded liability and estimated range of possible loss for litigation, and regulatory and government actions; the possibility that the Corporation could face increased claims from one or more parties involved in mortgage securitizations; the Corporation's ability to resolve representations and warranties repurchase and related claims; the risks related to the discontinuation of reference rates, including increased expenses and litigation and the effectiveness of hedging strategies; uncertainties about the financial stability and growth rates of non-U.S. jurisdictions, the risk that those jurisdictions may face difficulties servicing their sovereign debt, and related stresses on financial markets, currencies and trade, and the Corporation’s exposures to such risks, including direct, indirect and operational;
the impact of U.S. and global interest rates, inflation, currency exchange rates, economic conditions, trade policies and tensions, including tariffs, and potential geopolitical instability; the impact of the interest rate, inflationary, macroeconomic, banking and regulatory environment on the Corporation’s assets, business, financial condition and results of operations; the impact of adverse developments affecting the U.S. or global banking industry, including bank failures and liquidity concerns, resulting in worsening economic and market volatility, and regulatory responses thereto; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior, adverse developments with respect to U.S. or global economic conditions and other uncertainties, including the impact of supply chain disruptions, inflationary pressures and labor shortages on economic conditions and our business; potential losses related to the Corporation’s concentration of credit risk; the Corporation’s ability to achieve its expense targets and expectations regarding revenue, net interest income, provision for credit losses, net charge-offs, effective tax rate, loan growth or other projections; variances to the underlying assumptions and judgments used in estimating banking book net interest income sensitivity; adverse changes to the Corporation’s credit ratings from the major credit rating agencies; an inability to access capital markets or maintain deposits or borrowing costs; estimates of the fair value and other accounting values, subject to impairment assessments, of certain of the Corporation’s assets and liabilities; the estimated or actual impact of changes in accounting standards or assumptions in applying those standards; uncertainty regarding the content, timing and impact of regulatory capital and liquidity requirements; the impact of adverse changes to total loss-absorbing capacity requirements, stress capital buffer requirements and/or global systemically important bank surcharges; the potential impact of actions of the Board of Governors of the Federal Reserve System on the Corporation’s capital plans; the effect of changes in or interpretations of income tax laws and regulations; the impact of implementation and compliance with U.S. and international laws, regulations and regulatory interpretations, including, but not limited to, recovery and resolution planning requirements, Federal Deposit Insurance Corporation assessments, the Volcker Rule, fiduciary standards, derivatives regulations and potential changes to loss allocations between financial institutions and customers, including for losses incurred from the use of our products and services, including electronic payments and payment of checks, that were authorized by the customer but induced by fraud; the impact of failures or disruptions in or breaches of the Corporation’s operations or information systems, or those of third parties, including as a result of cybersecurity incidents; the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learning; the risks related to the transition and physical impacts of climate change; our ability to achieve environmental, social and governance goals and commitments or the impact of any changes in the Corporation’s sustainability strategy or commitments generally; the impact of uncertain political conditions or any future federal government
Bank of America 2 | ||||||||
shutdown and uncertainty regarding the federal government’s debt limit or changes in fiscal, monetary or regulatory policy; the emergence or continuation of widespread health emergencies or pandemics; the impact of natural disasters, extreme weather events, military conflicts (including the Russia/Ukraine conflict, the conflict in the Middle East, the possible expansion of such conflicts and potential geopolitical consequences), terrorism or other geopolitical events; and other matters.
Forward-looking statements speak only as of the date they are made, and the Corporation undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.
Notes to the Consolidated Financial Statements referred to in Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) are incorporated by reference into the MD&A. Certain prior-period amounts have been reclassified to conform to current-period presentation. Throughout the MD&A, the Corporation uses certain acronyms and abbreviations which are defined in the Glossary.
Executive Summary
Business Overview
The Corporation is a Delaware corporation, a bank holding company (BHC) and a financial holding company. When used in this report, “Bank of America,” “the Corporation,” “we,” “us” and “our” may refer to Bank of America Corporation individually, Bank of America Corporation and its subsidiaries, or certain of Bank of America Corporation’s subsidiaries or affiliates. Our principal executive offices are located in Charlotte, North Carolina. Through our various bank and nonbank subsidiaries throughout the U.S. and in international markets, we provide a diversified range of banking and nonbank financial services and products through four business segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking and Global Markets, with the remaining operations recorded in All Other. We operate our banking activities primarily under the Bank of America, National Association (Bank of America, N.A. or BANA) charter. At June 30, 2024, the Corporation had $3.3 trillion in assets and a headcount of approximately 212,000 employees.
As of June 30, 2024, we served clients through operations across the U.S., its territories and more than 35 countries. Our retail banking footprint covers all major markets in the U.S., and we serve approximately 69 million consumer and small business clients with approximately 3,800 retail financial centers, approximately 15,000 ATMs, and leading digital banking platforms (www.bankofamerica.com) with approximately
47 million active users, including approximately 39 million active mobile users. We offer industry-leading support to approximately four million small business households. Our GWIM businesses, with client balances of $4.0 trillion, provide tailored solutions to meet client needs through a full set of investment management, brokerage, banking, trust and retirement products. We are a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world.
The Corporation’s website is www.bankofamerica.com, and the Investor Relations portion of our website is https://investor.bankofamerica.com. We use our website to distribute company information, including as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. We routinely post and make accessible financial and other information, including environmental, social and governance (ESG) information, regarding the Corporation on our website. Investors should monitor our website, including the Investor Relations portion, in addition to our press releases, U.S. Securities and Exchange Commission (SEC) filings, public conference calls and webcasts. Notwithstanding the foregoing, the information contained on our website as referenced in this paragraph is not incorporated by reference into this Quarterly Report on Form 10-Q.
Recent Developments
Capital Management
On June 26, 2024, the Board of Governors of the Federal Reserve System (Federal Reserve) announced the results of the 2024 Comprehensive Capital Analysis and Review (CCAR) supervisory stress tests. Based on the results, our stress capital buffer (SCB) is expected to be 3.2 percent, and the Common equity tier 1 (CET1) minimum requirement will be 10.7 percent when finalized. The new SCB will be effective from October 1, 2024 through September 30, 2025.
On July 24, 2024, the Corporation’s Board of Directors (the Board) authorized a $25 billion common stock repurchase program, effective August 1, 2024, to replace the Corporation’s existing program, which will expire on the same date. For more information, see Capital Management – CCAR and Capital Planning on page 21. The Board also declared a quarterly common stock dividend of $0.26 per share, an increase of eight percent compared to the prior dividend, payable on September 27, 2024 to shareholders of record as of September 6, 2024.
For more information on our capital resources and regulatory developments, see Capital Management beginning on page 21.
3 Bank of America | ||||||||
Financial Highlights
| Table 1 | Summary Income Statement and Selected Financial Data | |||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| (Dollars in millions, except per share information) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Income statement | ||||||||||||||||||||||||||
| Net interest income | $ | 13,702 | $ | 14,158 | $ | 27,734 | $ | 28,606 | ||||||||||||||||||
| Noninterest income | 11,675 | 11,039 | 23,461 | 22,849 | ||||||||||||||||||||||
| Total revenue, net of interest expense | 25,377 | 25,197 | 51,195 | 51,455 | ||||||||||||||||||||||
| Provision for credit losses | 1,508 | 1,125 | 2,827 | 2,056 | ||||||||||||||||||||||
| Noninterest expense | 16,309 | 16,038 | 33,546 | 32,276 | ||||||||||||||||||||||
| Income before income taxes | 7,560 | 8,034 | 14,822 | 17,123 | ||||||||||||||||||||||
| Income tax expense | 663 | 626 | 1,251 | 1,554 | ||||||||||||||||||||||
| Net income | 6,897 | 7,408 | 13,571 | 15,569 | ||||||||||||||||||||||
| Preferred stock dividends | 315 | 306 | 847 | 811 | ||||||||||||||||||||||
| Net income applicable to common shareholders | $ | 6,582 | $ | 7,102 | $ | 12,724 | $ | 14,758 | ||||||||||||||||||
| Per common share information | ||||||||||||||||||||||||||
| Earnings | $ | 0.83 | $ | 0.88 | $ | 1.60 | $ | 1.83 | ||||||||||||||||||
| Diluted earnings | 0.83 | 0.88 | 1.59 | 1.82 | ||||||||||||||||||||||
| Dividends paid | 0.24 | 0.22 | 0.48 | 0.44 | ||||||||||||||||||||||
| Performance ratios | ||||||||||||||||||||||||||
Return on average assets (1) | 0.85 | % | 0.94 | % | 0.84 | % | 1.00 | % | ||||||||||||||||||
Return on average common shareholders’ equity (1) | 9.98 | 11.21 | 9.67 | 11.84 | ||||||||||||||||||||||
Return on average tangible common shareholders’ equity (2) | 13.57 | 15.49 | 13.15 | 16.42 | ||||||||||||||||||||||
Efficiency ratio (1) | 64.26 | 63.65 | 65.53 | 62.73 | ||||||||||||||||||||||
| June 30 2024 | December 31 2023 | |||||||||||||||||||||||||
| Balance sheet | ||||||||||||||||||||||||||
| Total loans and leases | $ | 1,056,785 | $ | 1,053,732 | ||||||||||||||||||||||
| Total assets | 3,257,996 | 3,180,151 | ||||||||||||||||||||||||
| Total deposits | 1,910,491 | 1,923,827 | ||||||||||||||||||||||||
| Total liabilities | 2,964,104 | 2,888,505 | ||||||||||||||||||||||||
| Total common shareholders’ equity | 267,344 | 263,249 | ||||||||||||||||||||||||
| Total shareholders’ equity | 293,892 | 291,646 | ||||||||||||||||||||||||
(1)For definitions, see Key Metrics on page 103.
(2)Return on average tangible common shareholders’ equity is a non-GAAP financial measure. For more information and a corresponding reconciliation to the most directly comparable financial measures defined by accounting principles generally accepted in the United States of America (GAAP), see Non-GAAP Reconciliations on page 48.
Net income was $6.9 billion and $13.6 billion, or $0.83 and $1.59 per diluted share, for the three and six months ended June 30, 2024 compared to $7.4 billion and $15.6 billion, or $0.88 and $1.82 per diluted share, for the same periods in 2023. The decrease in net income was primarily due to higher noninterest expense and provision for credit losses.
Total assets increased $77.8 billion from December 31, 2023 to $3.3 trillion primarily driven by higher securities borrowed or purchased under agreements to resell and trading account assets to support Global Markets client activity.
Total liabilities increased $75.6 billion from December 31, 2023 to $3.0 trillion primarily driven by higher securities loaned or sold under agreements to repurchase to support Global Markets client activity.
Shareholders’ equity increased $2.2 billion from December 31, 2023 primarily due to net income, partially offset by returns of capital to shareholders through common stock repurchases, common and preferred stock dividends, and preferred stock redemptions.
Net Interest Income
Net interest income decreased $456 million to $13.7 billion, and $872 million to $27.7 billion for the three and six months ended June 30, 2024 compared to the same periods in 2023. Net interest yield on a fully taxable-equivalent (FTE) basis decreased 13 basis points (bps) to 1.93 percent and 17 bps to 1.96 percent for the same periods. The decreases were primarily driven by higher deposit costs, partially offset by higher asset yields and higher net interest income related to Global Markets activity. For more information on net interest yield and FTE basis, see Supplemental Financial Data on page 6, and for more information on interest rate risk management, see Interest Rate Risk Management for the Banking Book on page 44.
Bank of America 4 | ||||||||
Noninterest Income
| Table 2 | Noninterest Income | |||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Fees and commissions: | ||||||||||||||||||||||||||
| Card income | $ | 1,581 | $ | 1,546 | $ | 3,044 | $ | 3,015 | ||||||||||||||||||
| Service charges | 1,507 | 1,364 | 2,949 | 2,774 | ||||||||||||||||||||||
| Investment and brokerage services | 4,320 | 3,839 | 8,507 | 7,691 | ||||||||||||||||||||||
| Investment banking fees | 1,561 | 1,212 | 3,129 | 2,375 | ||||||||||||||||||||||
| Total fees and commissions | 8,969 | 7,961 | 17,629 | 15,855 | ||||||||||||||||||||||
| Market making and similar activities | 3,298 | 3,697 | 7,186 | 8,409 | ||||||||||||||||||||||
| Other income | (592) | (619) | (1,354) | (1,415) | ||||||||||||||||||||||
| Total noninterest income | $ | 11,675 | $ | 11,039 | $ | 23,461 | $ | 22,849 | ||||||||||||||||||
Noninterest income increased $636 million to $11.7 billion and $612 million to $23.5 billion for the three and six months ended June 30, 2024 compared to the same periods in 2023. The following highlights the significant changes.
● Service charges increased $143 million and $175 million primarily driven by higher treasury service charges.
● Investment and brokerage services increased $481 million and $816 million primarily driven by higher asset management fees due to higher average equity market valuations and positive assets under management (AUM) flows, partially offset by the impact of lower AUM pricing.
● Investment banking fees increased $349 million and $754 million primarily due to higher debt and equity issuance fees.
● Market making and similar activities decreased $399 million and $1.2 billion primarily driven by lower trading revenue from macro products in Fixed Income, Currencies and Commodities (FICC). The decreases were partially offset by higher trading revenue in Equities.
Provision for Credit Losses
The provision for credit losses increased $383 million to $1.5 billion and $771 million to $2.8 billion for the three and six months ended June 30, 2024 compared to the same periods in 2023. The provision for credit losses for the current-year periods was primarily driven by credit card loans and the commercial real estate office portfolio, partially offset by an improved macroeconomic outlook. For more information on the provision for credit losses, see Allowance for Credit Losses on page 40.
Noninterest Expense
| Table 3 | Noninterest Expense | |||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Compensation and benefits | $ | 9,826 | $ | 9,401 | $ | 20,021 | $ | 19,319 | ||||||||||||||||||
| Occupancy and equipment | 1,818 | 1,776 | 3,629 | 3,575 | ||||||||||||||||||||||
| Information processing and communications | 1,763 | 1,644 | 3,563 | 3,341 | ||||||||||||||||||||||
| Product delivery and transaction related | 891 | 956 | 1,742 | 1,846 | ||||||||||||||||||||||
| Marketing | 487 | 513 | 942 | 971 | ||||||||||||||||||||||
| Professional fees | 654 | 527 | 1,202 | 1,064 | ||||||||||||||||||||||
| Other general operating | 870 | 1,221 | 2,447 | 2,160 | ||||||||||||||||||||||
| Total noninterest expense | $ | 16,309 | $ | 16,038 | $ | 33,546 | $ | 32,276 | ||||||||||||||||||
Noninterest expense increased $271 million to $16.3 billion and $1.3 billion to $33.5 billion for the three and six months ended June 30, 2024 compared to the same periods in 2023. The increases in both periods were primarily driven by higher investments in people and revenue-related compensation,
partially offset by lower litigation expense. The increase in the six-month period also included the additional accrual of $700 million for the Federal Deposit Insurance Corporation (FDIC) special assessment recorded in the first quarter of 2024, as well as higher investments in technology.
5 Bank of America | ||||||||
Income Tax Expense
| Table 4 | Income Tax Expense | |||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Income before income taxes | $ | 7,560 | $ | 8,034 | $ | 14,822 | $ | 17,123 | ||||||||||||||||||
| Income tax expense | 663 | 626 | 1,251 | 1,554 | ||||||||||||||||||||||
| Effective tax rate | 8.8 | % | 7.8 | % | 8.4 | % | 9.1 | % | ||||||||||||||||||
The effective tax rates for the three and six months ended June 30, 2024 and 2023 were primarily driven by our recurring tax preference benefits that mainly consist of tax credits from investments in affordable housing and renewable energy. Also included in the effective tax rate for the six months ended June 30, 2024 was the discrete benefit from the $700 million charge recorded in the first quarter for the FDIC special assessment. Absent the tax credits and discrete tax benefits, the effective tax rates would have been approximately 25 percent and 26 percent for the three months ended June 30, 2024 and 2023 and 26 percent for both the six months ended June 30, 2024 and 2023.
Supplemental Financial Data
Non-GAAP Financial Measures
In this Quarterly Report on Form 10-Q, we present certain non-GAAP financial measures. Non-GAAP financial measures exclude certain items or otherwise include components that differ from the most directly comparable measures calculated in accordance with GAAP. Non-GAAP financial measures are provided as additional useful information to assess our financial condition, results of operations (including period-to-period operating performance) or compliance with prospective regulatory requirements. These non-GAAP financial measures are not intended as a substitute for GAAP financial measures and may not be defined or calculated the same way as non-GAAP financial measures used by other companies.
When presented on a consolidated basis, we view net interest income on an FTE basis as a non-GAAP financial measure. To derive the FTE basis, net interest income is adjusted to reflect tax-exempt income on an equivalent before-tax basis with a corresponding increase in income tax expense. For purposes of this calculation, we use the federal statutory tax rate of 21 percent and a representative state tax rate. Net interest yield, which measures the basis points we earn over the cost of funds, utilizes net interest income on an FTE basis. We believe that presentation of these items on an FTE basis allows for comparison of amounts from both taxable and tax-exempt sources and is consistent with industry practices.
We may present certain key performance indicators and ratios excluding certain items (e.g., debit valuation adjustment (DVA) gains (losses)), which result in non-GAAP financial measures. We believe that the presentation of measures that exclude these items is useful because such measures provide additional information to assess the underlying operational performance and trends of our businesses and to allow better comparison of period-to-period operating performance.
We also evaluate our business based on certain ratios that utilize tangible equity, a non-GAAP financial measure. Tangible equity represents shareholders’ equity or common
shareholders’ equity reduced by goodwill and intangible assets (excluding mortgage servicing rights (MSRs)), net of related deferred tax liabilities (“adjusted” shareholders’ equity or common shareholders’ equity). These measures are used to evaluate our use of equity. In addition, profitability, relationship and investment models use both return on average tangible common shareholders’ equity and return on average tangible shareholders’ equity as key measures to support our overall growth objectives. These ratios are:
● Return on average tangible common shareholders’ equity measures our net income applicable to common shareholders as a percentage of adjusted average common shareholders’ equity. The tangible common equity ratio represents adjusted ending common shareholders’ equity divided by total tangible assets.
● Return on average tangible shareholders’ equity measures our net income as a percentage of adjusted average total shareholders’ equity. The tangible equity ratio represents adjusted ending shareholders’ equity divided by total tangible assets.
● Tangible book value per common share represents adjusted ending common shareholders’ equity divided by ending common shares outstanding.
We believe ratios utilizing tangible equity provide additional useful information because they present measures of those assets that can generate income. Tangible book value per common share provides additional useful information about the level of tangible assets in relation to outstanding shares of common stock.
The aforementioned supplemental data and performance measures are presented in Table 5 on page 7.
For more information on the reconciliation of these non-GAAP financial measures to the corresponding GAAP financial measures, see Non-GAAP Reconciliations on page 48.
Key Performance Indicators
We present certain key financial and nonfinancial performance indicators (key performance indicators) that management uses when assessing our consolidated and/or segment results. We believe they are useful to investors because they provide additional information about our underlying operational performance and trends. These key performance indicators (KPIs) may not be defined or calculated in the same way as similar KPIs used by other companies. For information on how these metrics are defined, see Key Metrics on page 103.
Our consolidated key performance indicators, which include various equity and credit metrics, are presented in Table 1 on page 4 and Table 5 on page 7.
For information on key segment performance metrics, see Business Segment Operations on page 10.
Bank of America 6 | ||||||||
| Table 5 | Selected Financial Data | |||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||||
| 2024 Quarters | 2023 Quarters | |||||||||||||||||||||||||||||||||||||||||||
| (In millions, except per share information) | Second | First | Fourth | Third | Second | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||
| Income statement | ||||||||||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 13,702 | $ | 14,032 | $ | 13,946 | $ | 14,379 | $ | 14,158 | $ | 27,734 | $ | 28,606 | ||||||||||||||||||||||||||||||
| Noninterest income | 11,675 | 11,786 | 8,013 | 10,788 | 11,039 | 23,461 | 22,849 | |||||||||||||||||||||||||||||||||||||
| Total revenue, net of interest expense | 25,377 | 25,818 | 21,959 | 25,167 | 25,197 | 51,195 | 51,455 | |||||||||||||||||||||||||||||||||||||
| Provision for credit losses | 1,508 | 1,319 | 1,104 | 1,234 | 1,125 | 2,827 | 2,056 | |||||||||||||||||||||||||||||||||||||
| Noninterest expense | 16,309 | 17,237 | 17,731 | 15,838 | 16,038 | 33,546 | 32,276 | |||||||||||||||||||||||||||||||||||||
| Income before income taxes | 7,560 | 7,262 | 3,124 | 8,095 | 8,034 | 14,822 | 17,123 | |||||||||||||||||||||||||||||||||||||
| Income tax expense | 663 | 588 | (20) | 293 | 626 | 1,251 | 1,554 | |||||||||||||||||||||||||||||||||||||
| Net income | 6,897 | 6,674 | 3,144 | 7,802 | 7,408 | 13,571 | 15,569 | |||||||||||||||||||||||||||||||||||||
| Net income applicable to common shareholders | 6,582 | 6,142 | 2,838 | 7,270 | 7,102 | 12,724 | 14,758 | |||||||||||||||||||||||||||||||||||||
Average common shares issued and outstanding | 7,897.9 | 7,968.2 | 7,990.9 | 8,017.1 | 8,040.9 | 7,933.3 | 8,053.5 | |||||||||||||||||||||||||||||||||||||
Average diluted common shares issued and outstanding | 7,960.9 | 8,031.4 | 8,062.5 | 8,075.9 | 8,080.7 | 7,996.2 | 8,162.6 | |||||||||||||||||||||||||||||||||||||
| Performance ratios | ||||||||||||||||||||||||||||||||||||||||||||
Return on average assets (1) | 0.85 | % | 0.83 | % | 0.39 | % | 0.99 | % | 0.94 | % | 0.84 | % | 1.00 | % | ||||||||||||||||||||||||||||||
Four-quarter trailing return on average assets (2) | 0.76 | 0.78 | 0.84 | 0.98 | 0.96 | n/a | n/a | |||||||||||||||||||||||||||||||||||||
Return on average common shareholders’ equity (1) | 9.98 | 9.35 | 4.33 | 11.24 | 11.21 | 9.67 | 11.84 | |||||||||||||||||||||||||||||||||||||
Return on average tangible common shareholders’ equity (3) | 13.57 | 12.73 | 5.92 | 15.47 | 15.49 | 13.15 | 16.42 | |||||||||||||||||||||||||||||||||||||
Return on average shareholders’ equity (1) | 9.45 | 9.18 | 4.32 | 10.86 | 10.52 | 9.32 | 11.22 | |||||||||||||||||||||||||||||||||||||
Return on average tangible shareholders’ equity (3) | 12.42 | 12.07 | 5.71 | 14.41 | 14.00 | 12.25 | 14.97 | |||||||||||||||||||||||||||||||||||||
| Total ending equity to total ending assets | 9.02 | 8.97 | 9.17 | 9.10 | 9.07 | 9.02 | 9.07 | |||||||||||||||||||||||||||||||||||||
Common equity ratio (1) | 8.21 | 8.10 | 8.28 | 8.20 | 8.16 | 8.21 | 8.16 | |||||||||||||||||||||||||||||||||||||
| Total average equity to total average assets | 8.96 | 9.01 | 8.98 | 9.11 | 8.89 | 8.98 | 8.92 | |||||||||||||||||||||||||||||||||||||
Dividend payout (1) | 28.66 | 31.11 | 67.42 | 26.39 | 24.88 | 29.84 | 23.99 | |||||||||||||||||||||||||||||||||||||
| Per common share data | ||||||||||||||||||||||||||||||||||||||||||||
| Earnings | $ | 0.83 | $ | 0.77 | $ | 0.36 | $ | 0.91 | $ | 0.88 | $ | 1.60 | $ | 1.83 | ||||||||||||||||||||||||||||||
| Diluted earnings | 0.83 | 0.76 | 0.35 | 0.90 | 0.88 | 1.59 | 1.82 | |||||||||||||||||||||||||||||||||||||
| Dividends paid | 0.24 | 0.24 | 0.24 | 0.24 | 0.22 | 0.48 | 0.44 | |||||||||||||||||||||||||||||||||||||
Book value (1) | 34.39 | 33.71 | 33.34 | 32.65 | 32.05 | 34.39 | 32.05 | |||||||||||||||||||||||||||||||||||||
Tangible book value (3) | 25.37 | 24.79 | 24.46 | 23.79 | 23.23 | 25.37 | 23.23 | |||||||||||||||||||||||||||||||||||||
| Market capitalization | $ | 309,202 | $ | 298,312 | $ | 265,840 | $ | 216,942 | $ | 228,188 | $ | 309,202 | $ | 228,188 | ||||||||||||||||||||||||||||||
| Average balance sheet | ||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | 1,051,472 | $ | 1,047,890 | $ | 1,050,705 | $ | 1,046,254 | $ | 1,046,608 | ||||||||||||||||||||||||||||||||||
| Total assets | 3,274,988 | 3,247,159 | 3,213,159 | 3,128,466 | 3,175,358 | |||||||||||||||||||||||||||||||||||||||
| Total deposits | 1,909,925 | 1,907,462 | 1,905,011 | 1,876,153 | 1,875,353 | |||||||||||||||||||||||||||||||||||||||
| Long-term debt | 243,689 | 254,782 | 256,262 | 245,819 | 248,480 | |||||||||||||||||||||||||||||||||||||||
| Common shareholders’ equity | 265,290 | 264,114 | 260,221 | 256,578 | 254,028 | |||||||||||||||||||||||||||||||||||||||
| Total shareholders’ equity | 293,403 | 292,511 | 288,618 | 284,975 | 282,425 | |||||||||||||||||||||||||||||||||||||||
| Asset quality | ||||||||||||||||||||||||||||||||||||||||||||
Allowance for credit losses (4) | $ | 14,342 | $ | 14,371 | $ | 14,551 | $ | 14,640 | $ | 14,338 | ||||||||||||||||||||||||||||||||||
Nonperforming loans, leases and foreclosed properties (5) | 5,691 | 6,034 | 5,630 | 4,993 | 4,274 | |||||||||||||||||||||||||||||||||||||||
Allowance for loan and lease losses as a percentage of total loans and leases outstanding (5) | 1.26 | % | 1.26 | % | 1.27 | % | 1.27 | % | 1.24 | % | ||||||||||||||||||||||||||||||||||
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases (5) | 242 | 225 | 243 | 275 | 314 | |||||||||||||||||||||||||||||||||||||||
| Net charge-offs | $ | 1,533 | $ | 1,498 | $ | 1,192 | $ | 931 | $ | 869 | ||||||||||||||||||||||||||||||||||
Annualized net charge-offs as a percentage of average loans and leases outstanding (5) | 0.59 | % | 0.58 | % | 0.45 | % | 0.35 | % | 0.33 | % | ||||||||||||||||||||||||||||||||||
Capital ratios at period end (6) | ||||||||||||||||||||||||||||||||||||||||||||
Common equity tier 1 capital | 11.9 | % | 11.9 | % | 11.8 | % | 11.9 | % | 11.6 | % | ||||||||||||||||||||||||||||||||||
Tier 1 capital | 13.5 | 13.6 | 13.5 | 13.6 | 13.3 | |||||||||||||||||||||||||||||||||||||||
Total capital | 15.1 | 15.2 | 15.2 | 15.4 | 15.1 | |||||||||||||||||||||||||||||||||||||||
Tier 1 leverage | 7.0 | 7.1 | 7.1 | 7.3 | 7.1 | |||||||||||||||||||||||||||||||||||||||
Supplementary leverage ratio | 6.0 | 6.0 | 6.1 | 6.2 | 6.0 | |||||||||||||||||||||||||||||||||||||||
Tangible equity (3) | 7.0 | 7.0 | 7.1 | 7.0 | 7.0 | |||||||||||||||||||||||||||||||||||||||
Tangible common equity (3) | 6.2 | 6.1 | 6.2 | 6.1 | 6.1 | |||||||||||||||||||||||||||||||||||||||
| Total loss-absorbing capacity and long-term debt metrics | ||||||||||||||||||||||||||||||||||||||||||||
| Total loss-absorbing capacity to risk-weighted assets | 28.2 | % | 28.7 | % | 29.0 | % | 29.3 | % | 28.8 | % | ||||||||||||||||||||||||||||||||||
| Total loss-absorbing capacity to supplementary leverage exposure | 12.5 | 12.8 | 13.0 | 13.3 | 13.0 | |||||||||||||||||||||||||||||||||||||||
| Eligible long-term debt to risk-weighted assets | 13.7 | 14.2 | 14.5 | 14.8 | 14.6 | |||||||||||||||||||||||||||||||||||||||
| Eligible long-term debt to supplementary leverage exposure | 6.0 | 6.3 | 6.5 | 6.7 | 6.6 | |||||||||||||||||||||||||||||||||||||||
(1)For definitions, see Key Metrics on page 103.
(2)Calculated as total net income for four consecutive quarters divided by annualized average assets for four consecutive quarters.
(3)Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. For more information on these ratios and corresponding reconciliations to GAAP financial measures, see Supplemental Financial Data on page 6 and Non-GAAP Reconciliations on page 48.
(4)Includes the allowance for loan and lease losses and the reserve for unfunded lending commitments.
(5)Balances and ratios do not include loans accounted for under the fair value option. For additional exclusions from nonperforming loans, leases and foreclosed properties, see Consumer Portfolio Credit Risk Management – Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity on page 33 and corresponding Table 25 and Commercial Portfolio Credit Risk Management – Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page 37 and corresponding Table 31.
(6)For more information, including which approach is used to assess capital adequacy, see Capital Management on page 21.
n/a = not applicable
7 Bank of America | ||||||||
| Table 6 | Quarterly Average Balances and Interest Rates - FTE Basis | |||||||||||||||||||||||||||||||||||||
| Average Balance | Interest Income/ Expense (1) | Yield/ Rate | Average Balance | Interest Income/ Expense (1) | Yield/ Rate | |||||||||||||||||||||||||||||||||
| (Dollars in millions) | Second Quarter 2024 | Second Quarter 2023 | ||||||||||||||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||||||||||||||||
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks | $ | 345,423 | $ | 4,498 | 5.24 | % | $ | 359,042 | $ | 4,303 | 4.81 | % | ||||||||||||||||||||||||||
| Time deposits placed and other short-term investments | 10,845 | 123 | 4.55 | 11,271 | 129 | 4.56 | ||||||||||||||||||||||||||||||||
Federal funds sold and securities borrowed or purchased under agreements to resell | 318,380 | 5,159 | 6.52 | 294,535 | 4,955 | 6.75 | ||||||||||||||||||||||||||||||||
| Trading account assets | 202,295 | 2,542 | 5.05 | 187,420 | 2,091 | 4.47 | ||||||||||||||||||||||||||||||||
| Debt securities | 852,427 | 6,352 | 2.98 | 771,355 | 4,717 | 2.44 | ||||||||||||||||||||||||||||||||
Loans and leases (2) | ||||||||||||||||||||||||||||||||||||||
| Residential mortgage | 227,567 | 1,824 | 3.21 | 228,758 | 1,704 | 2.98 | ||||||||||||||||||||||||||||||||
| Home equity | 25,529 | 405 | 6.38 | 25,957 | 353 | 5.45 | ||||||||||||||||||||||||||||||||
| Credit card | 98,983 | 2,825 | 11.48 | 94,431 | 2,505 | 10.64 | ||||||||||||||||||||||||||||||||
| Direct/Indirect and other consumer | 103,689 | 1,428 | 5.54 | 104,915 | 1,274 | 4.87 | ||||||||||||||||||||||||||||||||
| Total consumer | 455,768 | 6,482 | 5.71 | 454,061 | 5,836 | 5.15 | ||||||||||||||||||||||||||||||||
| U.S. commercial | 386,232 | 5,267 | 5.49 | 379,027 | 4,786 | 5.06 | ||||||||||||||||||||||||||||||||
| Non-U.S. commercial | 123,094 | 2,170 | 7.09 | 125,827 | 1,949 | 6.21 | ||||||||||||||||||||||||||||||||
Commercial real estate (3) | 71,345 | 1,285 | 7.24 | 74,065 | 1,303 | 7.06 | ||||||||||||||||||||||||||||||||
| Commercial lease financing | 15,033 | 196 | 5.22 | 13,628 | 149 | 4.38 | ||||||||||||||||||||||||||||||||
| Total commercial | 595,704 | 8,918 | 6.02 | 592,547 | 8,187 | 5.54 | ||||||||||||||||||||||||||||||||
| Total loans and leases | 1,051,472 | 15,400 | 5.89 | 1,046,608 | 14,023 | 5.37 | ||||||||||||||||||||||||||||||||
| Other earning assets | 107,093 | 2,940 | 11.04 | 102,712 | 2,271 | 8.88 | ||||||||||||||||||||||||||||||||
| Total earning assets | 2,887,935 | 37,014 | 5.15 | 2,772,943 | 32,489 | 4.70 | ||||||||||||||||||||||||||||||||
| Cash and due from banks | 24,208 | 26,098 | ||||||||||||||||||||||||||||||||||||
| Other assets, less allowance for loan and lease losses | 362,845 | 376,317 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 3,274,988 | $ | 3,175,358 | ||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||
| U.S. interest-bearing deposits | ||||||||||||||||||||||||||||||||||||||
| Demand and money market deposits | $ | 941,109 | $ | 5,234 | 2.24 | % | $ | 951,403 | $ | 3,565 | 1.50 | % | ||||||||||||||||||||||||||
| Time and savings deposits | 348,689 | 3,331 | 3.84 | 230,008 | 1,452 | 2.53 | ||||||||||||||||||||||||||||||||
| Total U.S. interest-bearing deposits | 1,289,798 | 8,565 | 2.67 | 1,181,411 | 5,017 | 1.70 | ||||||||||||||||||||||||||||||||
| Non-U.S. interest-bearing deposits | 106,496 | 1,090 | 4.12 | 96,802 | 768 | 3.18 | ||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 1,396,294 | 9,655 | 2.78 | 1,278,213 | 5,785 | 1.82 | ||||||||||||||||||||||||||||||||
| Federal funds purchased and securities loaned or sold under agreements to repurchase | 371,372 | 6,171 | 6.68 | 322,728 | 5,807 | 7.22 | ||||||||||||||||||||||||||||||||
| Short-term borrowings and other interest-bearing liabilities | 152,742 | 2,899 | 7.64 | 163,739 | 2,548 | 6.24 | ||||||||||||||||||||||||||||||||
| Trading account liabilities | 53,895 | 540 | 4.03 | 44,944 | 472 | 4.22 | ||||||||||||||||||||||||||||||||
| Long-term debt | 243,689 | 3,887 | 6.40 | 248,480 | 3,584 | 5.78 | ||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 2,217,992 | 23,152 | 4.20 | 2,058,104 | 18,196 | 3.55 | ||||||||||||||||||||||||||||||||
| Noninterest-bearing sources | ||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 513,631 | 597,140 | ||||||||||||||||||||||||||||||||||||
Other liabilities (4) | 249,962 | 237,689 | ||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 293,403 | 282,425 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 3,274,988 | $ | 3,175,358 | ||||||||||||||||||||||||||||||||||
| Net interest spread | 0.95 | % | 1.15 | % | ||||||||||||||||||||||||||||||||||
| Impact of noninterest-bearing sources | 0.98 | 0.91 | ||||||||||||||||||||||||||||||||||||
Net interest income/yield on earning assets (5) | $ | 13,862 | 1.93 | % | $ | 14,293 | 2.06 | % | ||||||||||||||||||||||||||||||
(1)Includes the impact of interest rate risk management contracts. For more information, see Interest Rate Risk Management for the Banking Book on page 44.
(2)Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis.
(3)Includes U.S. commercial real estate loans of $65.3 billion and $68.0 billion, and non-U.S. commercial real estate loans of $6.0 billion for both the second quarter of 2024 and 2023.
(4)Includes $46.6 billion and $39.9 billion of structured notes and liabilities for the second quarter of 2024 and 2023.
(5)Net interest income includes FTE adjustments of $160 million and $135 million for the second quarter of 2024 and 2023.
Bank of America 8 | ||||||||
| Table 7 | Year-to-Date Average Balances and Interest Rates - FTE Basis | |||||||||||||||||||||||||||||||||||||
| Average Balance | Interest Income/ Expense (1) | Yield/ Rate | Average Balance | Interest Income/ Expense (1) | Yield/ Rate | |||||||||||||||||||||||||||||||||
| Six Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks | $ | 345,943 | $ | 9,029 | 5.25 | % | $ | 281,303 | $ | 6,302 | 4.52 | % | ||||||||||||||||||||||||||
| Time deposits placed and other short-term investments | 10,286 | 239 | 4.67 | 10,928 | 237 | 4.37 | ||||||||||||||||||||||||||||||||
Federal funds sold and securities borrowed or purchased under agreements to resell | 311,600 | 10,334 | 6.67 | 291,053 | 8,667 | 6.01 | ||||||||||||||||||||||||||||||||
| Trading account assets | 202,377 | 5,024 | 4.99 | 185,549 | 4,131 | 4.49 | ||||||||||||||||||||||||||||||||
| Debt securities | 847,455 | 12,514 | 2.95 | 811,046 | 10,202 | 2.51 | ||||||||||||||||||||||||||||||||
Loans and leases (2) | ||||||||||||||||||||||||||||||||||||||
| Residential mortgage | 227,658 | 3,627 | 3.19 | 229,015 | 3,388 | 2.96 | ||||||||||||||||||||||||||||||||
| Home equity | 25,526 | 795 | 6.26 | 26,234 | 670 | 5.15 | ||||||||||||||||||||||||||||||||
| Credit card | 99,399 | 5,611 | 11.35 | 93,110 | 4,931 | 10.68 | ||||||||||||||||||||||||||||||||
| Direct/Indirect and other consumer | 103,529 | 2,827 | 5.49 | 105,284 | 2,460 | 4.71 | ||||||||||||||||||||||||||||||||
| Total consumer | 456,112 | 12,860 | 5.66 | 453,643 | 11,449 | 5.08 | ||||||||||||||||||||||||||||||||
| U.S. commercial | 382,898 | 10,503 | 5.52 | 377,945 | 9,257 | 4.94 | ||||||||||||||||||||||||||||||||
| Non-U.S. commercial | 124,059 | 4,340 | 7.03 | 126,412 | 3,727 | 5.95 | ||||||||||||||||||||||||||||||||
Commercial real estate (3) | 71,666 | 2,596 | 7.28 | 72,337 | 2,447 | 6.82 | ||||||||||||||||||||||||||||||||
| Commercial lease financing | 14,946 | 396 | 5.31 | 13,657 | 296 | 4.35 | ||||||||||||||||||||||||||||||||
| Total commercial | 593,569 | 17,835 | 6.04 | 590,351 | 15,727 | 5.37 | ||||||||||||||||||||||||||||||||
| Total loans and leases | 1,049,681 | 30,695 | 5.88 | 1,043,994 | 27,176 | 5.24 | ||||||||||||||||||||||||||||||||
| Other earning assets | 106,915 | 5,622 | 10.57 | 98,592 | 4,563 | 9.33 | ||||||||||||||||||||||||||||||||
| Total earning assets | 2,874,257 | 73,457 | 5.14 | 2,722,465 | 61,278 | 4.53 | ||||||||||||||||||||||||||||||||
| Cash and due from banks | 24,197 | 26,936 | ||||||||||||||||||||||||||||||||||||
| Other assets, less allowance for loan and lease losses | 362,617 | 386,478 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 3,261,071 | $ | 3,135,879 | ||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||||||||||||||
| U.S. interest-bearing deposits | ||||||||||||||||||||||||||||||||||||||
| Demand and money market deposits | 948,912 | 10,246 | 2.17 | % | 963,178 | 6,355 | 1.33 | % | ||||||||||||||||||||||||||||||
| Time and savings deposits | 337,228 | 6,390 | 3.81 | 213,587 | 2,371 | 2.24 | ||||||||||||||||||||||||||||||||
| Total U.S. interest-bearing deposits | 1,286,140 | 16,636 | 2.60 | 1,176,765 | 8,726 | 1.50 | ||||||||||||||||||||||||||||||||
| Non-U.S. interest-bearing deposits | 105,434 | 2,157 | 4.11 | 94,218 | 1,373 | 2.94 | ||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 1,391,574 | 18,793 | 2.72 | 1,270,983 | 10,099 | 1.60 | ||||||||||||||||||||||||||||||||
| Federal funds purchased, securities loaned or sold under agreements to repurchase | 360,939 | 12,197 | 6.80 | 289,556 | 9,358 | 6.52 | ||||||||||||||||||||||||||||||||
Short-term borrowings and other interest-bearing liabilities | 146,917 | 5,408 | 7.40 | 160,331 | 5,177 | 6.51 | ||||||||||||||||||||||||||||||||
| Trading account liabilities | 52,826 | 1,086 | 4.14 | 44,451 | 976 | 4.43 | ||||||||||||||||||||||||||||||||
| Long-term debt | 249,234 | 7,921 | 6.37 | 246,630 | 6,793 | 5.53 | ||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 2,201,490 | 45,405 | 4.15 | 2,011,951 | 32,403 | 3.24 | ||||||||||||||||||||||||||||||||
| Noninterest-bearing sources | ||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 517,119 | 613,468 | ||||||||||||||||||||||||||||||||||||
Other liabilities (4) | 249,505 | 230,607 | ||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 292,957 | 279,853 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 3,261,071 | $ | 3,135,879 | ||||||||||||||||||||||||||||||||||
| Net interest spread | 0.99 | % | 1.29 | % | ||||||||||||||||||||||||||||||||||
| Impact of noninterest-bearing sources | 0.97 | 0.84 | ||||||||||||||||||||||||||||||||||||
Net interest income/yield on earning assets (5) | $ | 28,052 | 1.96 | % | $ | 28,875 | 2.13 | % | ||||||||||||||||||||||||||||||
(1)Includes the impact of interest rate risk management contracts. For more information, see Interest Rate Risk Management for the Banking Book on page 44.
(2)Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis.
(3)Includes U.S. commercial real estate loans of $65.8 billion and $66.8 billion, and non-U.S. commercial real estate loans of $5.9 billion and $5.5 billion for the six months ended June 30, 2024 and 2023.
(4)Includes $45.3 billion and $38.6 billion of structured notes and liabilities for the six months ended June 30, 2024 and 2023.
(5)Net interest income includes FTE adjustments of $318 million and $269 million for the six months ended June 30, 2024 and 2023.
9 Bank of America | ||||||||
Business Segment Operations
Segment Description and Basis of Presentation
We report our results of operations through four business segments: Consumer Banking, GWIM, Global Banking and Global Markets, with the remaining operations recorded in All Other. We manage our segments and report their results on an FTE basis. For more information, see Business Segment Operations in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
We periodically review capital allocated to our businesses and allocate capital annually during the strategic and capital planning processes. We utilize a methodology that considers the effect of regulatory capital requirements in addition to internal risk-based capital models. The capital allocated to the business segments is referred to as allocated capital. Allocated equity in the reporting units is comprised of allocated capital plus capital
for the portion of goodwill and intangibles specifically assigned to the reporting unit. For more information, including the definition of a reporting unit, see Note 7 – Goodwill and Intangible Assets to the Consolidated Financial Statements.
For more information on our presentation of financial information on an FTE basis, see Supplemental Financial Data on page 6, and for reconciliations to consolidated total revenue, net income and period-end total assets, see Note 17 – Business Segment Information to the Consolidated Financial Statements.
Key Performance Indicators
We present certain key financial and nonfinancial performance indicators that management uses when evaluating segment results. We believe they are useful to investors because they provide additional information about our segments’ operational performance, client trends and business growth.
Consumer Banking
| Deposits | Consumer Lending | Total Consumer Banking | |||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||
| Net interest income | $ | 5,220 | $ | 5,733 | $ | 2,898 | $ | 2,704 | $ | 8,118 | $ | 8,437 | (4) | % | |||||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||||||||||||
| Card income | (10) | (10) | 1,371 | 1,351 | 1,361 | 1,341 | 1 | ||||||||||||||||||||||||||||
| Service charges | 614 | 524 | — | 1 | 614 | 525 | 17 | ||||||||||||||||||||||||||||
| All other income | 95 | 177 | 18 | 44 | 113 | 221 | (49) | ||||||||||||||||||||||||||||
| Total noninterest income | 699 | 691 | 1,389 | 1,396 | 2,088 | 2,087 | — | ||||||||||||||||||||||||||||
Total revenue, net of interest expense | 5,919 | 6,424 | 4,287 | 4,100 | 10,206 | 10,524 | (3) | ||||||||||||||||||||||||||||
| Provision for credit losses | 74 | 103 | 1,207 | 1,164 | 1,281 | 1,267 | 1 | ||||||||||||||||||||||||||||
| Noninterest expense | 3,385 | 3,428 | 2,079 | 2,025 | 5,464 | 5,453 | — | ||||||||||||||||||||||||||||
| Income before income taxes | 2,460 | 2,893 | 1,001 | 911 | 3,461 | 3,804 | (9) | ||||||||||||||||||||||||||||
| Income tax expense | 616 | 723 | 250 | 228 | 866 | 951 | (9) | ||||||||||||||||||||||||||||
| Net income | $ | 1,844 | $ | 2,170 | $ | 751 | $ | 683 | $ | 2,595 | $ | 2,853 | (9) | ||||||||||||||||||||||
Effective tax rate (1) | 25.0 | % | 25.0 | % | |||||||||||||||||||||||||||||||
| Net interest yield | 2.22 | % | 2.29 | % | 3.78 | % | 3.58 | % | 3.29 | % | 3.24 | % | |||||||||||||||||||||||
| Return on average allocated capital | 54 | 64 | 10 | 10 | 24 | 27 | |||||||||||||||||||||||||||||
| Efficiency ratio | 57.20 | 53.33 | 48.49 | 49.43 | 53.54 | 51.81 | |||||||||||||||||||||||||||||
| Balance Sheet | |||||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| Average | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||
| Total loans and leases | $ | 4,299 | $ | 4,078 | $ | 307,955 | $ | 302,584 | $ | 312,254 | $ | 306,662 | 2 | % | |||||||||||||||||||||
Total earning assets (2) | 946,784 | 1,002,528 | 308,116 | 302,944 | 992,304 | 1,045,743 | (5) | ||||||||||||||||||||||||||||
Total assets (2) | 979,302 | 1,035,969 | 313,070 | 309,228 | 1,029,777 | 1,085,469 | (5) | ||||||||||||||||||||||||||||
| Total deposits | 944,363 | 1,001,307 | 4,817 | 5,030 | 949,180 | 1,006,337 | (6) | ||||||||||||||||||||||||||||
| Allocated capital | 13,700 | 13,700 | 29,550 | 28,300 | 43,250 | 42,000 | 3 | ||||||||||||||||||||||||||||
(1) Estimated at the segment level only.
(2) In segments and businesses where the total of liabilities and equity exceeds assets, we allocate assets from All Other to match the segments’ and businesses’ liabilities and allocated shareholders’ equity. As a result, total earning assets and total assets of the businesses may not equal total Consumer Banking.
Bank of America 10 | ||||||||
| Deposits | Consumer Lending | Total Consumer Banking | |||||||||||||||||||||||||||||||||
| Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||
| Net interest income | $ | 10,489 | $ | 11,549 | $ | 5,826 | $ | 5,481 | $ | 16,315 | $ | 17,030 | (4) | % | |||||||||||||||||||||
| Noninterest income: | |||||||||||||||||||||||||||||||||||
| Card income | (20) | (20) | 2,653 | 2,635 | 2,633 | 2,615 | 1 | ||||||||||||||||||||||||||||
| Service charges | 1,191 | 1,122 | 1 | 2 | 1,192 | 1,124 | 6 | ||||||||||||||||||||||||||||
| All other income | 197 | 374 | 35 | 87 | 232 | 461 | (50) | ||||||||||||||||||||||||||||
| Total noninterest income | 1,368 | 1,476 | 2,689 | 2,724 | 4,057 | 4,200 | (3) | ||||||||||||||||||||||||||||
Total revenue, net of interest expense | 11,857 | 13,025 | 8,515 | 8,205 | 20,372 | 21,230 | (4) | ||||||||||||||||||||||||||||
| Provision for credit losses | 150 | 286 | 2,281 | 2,070 | 2,431 | 2,356 | 3 | ||||||||||||||||||||||||||||
| Noninterest expense | 6,764 | 6,843 | 4,175 | 4,083 | 10,939 | 10,926 | — | ||||||||||||||||||||||||||||
| Income before income taxes | 4,943 | 5,896 | 2,059 | 2,052 | 7,002 | 7,948 | (12) | ||||||||||||||||||||||||||||
| Income tax expense | 1,236 | 1,474 | 515 | 513 | 1,751 | 1,987 | (12) | ||||||||||||||||||||||||||||
| Net income | $ | 3,707 | $ | 4,422 | $ | 1,544 | $ | 1,539 | $ | 5,251 | $ | 5,961 | (12) | ||||||||||||||||||||||
Effective tax rate (1) | 25.0 | % | 25.0 | % | |||||||||||||||||||||||||||||||
| Net interest yield | 2.22 | % | 2.30 | % | 3.80 | % | 3.67 | % | 3.30 | % | 3.25 | % | |||||||||||||||||||||||
| Return on average allocated capital | 54 | 65 | 11 | 11 | 24 | 29 | |||||||||||||||||||||||||||||
| Efficiency ratio | 57.04 | 52.53 | 49.04 | 49.77 | 53.70 | 51.46 | |||||||||||||||||||||||||||||
| Balance Sheet | |||||||||||||||||||||||||||||||||||
| Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| Average | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||
| Total loans and leases | $ | 4,270 | $ | 4,099 | $ | 308,376 | $ | 301,126 | $ | 312,646 | $ | 305,225 | 2 | % | |||||||||||||||||||||
Total earning assets (2) | 948,489 | 1,012,432 | 308,515 | 301,378 | 993,931 | 1,055,419 | (6) | ||||||||||||||||||||||||||||
Total assets (2) | 981,080 | 1,045,933 | 313,433 | 307,760 | 1,031,439 | 1,095,302 | (6) | ||||||||||||||||||||||||||||
| Total deposits | 946,103 | 1,011,285 | 4,720 | 4,949 | 950,823 | 1,016,234 | (6) | ||||||||||||||||||||||||||||
| Allocated capital | 13,700 | 13,700 | 29,550 | 28,300 | 43,250 | 42,000 | 3 | ||||||||||||||||||||||||||||
| Period end | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | % Change | ||||||||||||||||||||||||||||
| Total loans and leases | $ | 4,357 | $ | 4,218 | $ | 308,444 | $ | 310,901 | $ | 312,801 | $ | 315,119 | (1) | % | |||||||||||||||||||||
Total earning assets (2) | 948,823 | 965,088 | 308,592 | 311,008 | 995,348 | 1,009,360 | (1) | ||||||||||||||||||||||||||||
Total assets (2) | 981,546 | 999,372 | 314,481 | 317,194 | 1,033,960 | 1,049,830 | (2) | ||||||||||||||||||||||||||||
| Total deposits | 946,420 | 964,136 | 6,053 | 5,436 | 952,473 | 969,572 | (2) | ||||||||||||||||||||||||||||
Consumer Banking, comprised of Deposits and Consumer Lending, offers a diversified range of credit, banking and investment products and services to consumers and small businesses. For more information about Consumer Banking, see Business Segment Operations in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Consumer Banking Results
Three-Month Comparison
Net income for Consumer Banking decreased $258 million to $2.6 billion primarily due to lower revenue. Net interest income decreased $319 million to $8.1 billion primarily driven by lower deposit balances, partially offset by higher loan balances. Noninterest income was $2.1 billion, largely unchanged from the same period a year ago.
The provision for credit losses was $1.3 billion, relatively unchanged from the same period a year ago. Noninterest expense was $5.5 billion, relatively unchanged from the same period a year ago.
The return on average allocated capital was 24 percent, down from 27 percent, due to an increase in allocated capital and lower net income. For information on capital allocated to the business segments, see Business Segment Operations on page 10.
Six-Month Comparison
Net income for Consumer Banking decreased $710 million to $5.3 billion primarily due to lower revenue. Net interest income decreased $715 million to $16.3 billion primarily due to the same factors as described in the three-month discussion. Noninterest income decreased $143 million to $4.1 billion, primarily due to lower other income driven by the allocation of asset and liability management (ALM) results.
The provision for credit losses increased $75 million to $2.4 billion primarily driven by credit card loans. Noninterest expense was $10.9 billion, relatively unchanged from the same period a year ago.
The return on average allocated capital was 24 percent, down from 29 percent, primarily due to an increase in allocated capital and lower net income.
11 Bank of America | ||||||||
Deposits
Three-Month Comparison
Net income for Deposits decreased $326 million to $1.8 billion primarily due to lower revenue. Net interest income decreased $513 million to $5.2 billion primarily driven by lower deposit balances. Noninterest income was $699 million, relatively unchanged from the same period a year ago.
Noninterest expense was $3.4 billion, relatively unchanged from the same period a year ago.
Average deposits decreased $56.9 billion to $944.4 billion primarily due to net outflows of $60.9 billion in money market savings and $26.1 billion in checking, partially offset by growth in time deposits of $40.1 billion.
Six-Month Comparison
Net income for Deposits decreased $715 million to $3.7 billion primarily due to lower revenue. Net interest income decreased $1.1 billion to $10.5 billion primarily due to the same factor as described in the three-month discussion. Noninterest income decreased $108 million to $1.4 billion primarily driven by the allocation of ALM results.
Average deposits decreased $65.2 billion to $946.1 billion primarily due to net outflows of $67.2 billion in money market savings and $29.1 billion in checking, partially offset by growth in time deposits of $41.8 billion.
The table below provides key performance indicators for Deposits. Management uses these metrics, and we believe they are useful to investors because they provide additional information to evaluate our deposit profitability and digital/mobile trends.
| Key Statistics – Deposits | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
Total deposit spreads (excludes noninterest costs) (1) | 2.77% | 2.67% | 2.73% | 2.60% | |||||||||||||||||||
| Period end | |||||||||||||||||||||||
Consumer investment assets (in millions) (2) | $ | 476,116 | $ | 386,761 | |||||||||||||||||||
Active digital banking users (in thousands) (3) | 47,304 | 45,713 | |||||||||||||||||||||
Active mobile banking users (in thousands) (4) | 38,988 | 37,329 | |||||||||||||||||||||
| Financial centers | 3,786 | 3,887 | |||||||||||||||||||||
| ATMs | 14,972 | 15,335 | |||||||||||||||||||||
(1)Includes deposits held in Consumer Lending.
(2)Includes client brokerage assets, deposit sweep balances, Bank of America, N.A. brokered CDs and AUM in Consumer Banking.
(3)Represents mobile and/or online active users over the past 90 days.
(4)Represents mobile active users over the past 90 days.
Consumer investment assets increased $89.4 billion from June 30, 2023 to $476.1 billion at June 30, 2024 driven by market performance and positive net client flows. Active mobile banking users increased approximately two million, reflecting continuing changes in our clients’ banking preferences. Since June 30, 2023, we have had a net decrease of 101 financial centers and 363 ATMs as we continue to optimize our consumer banking network.
Consumer Lending
Three-Month Comparison
Net income for Consumer Lending increased $68 million to $751 million primarily due to higher revenue. Net interest income increased $194 million to $2.9 billion primarily due to higher loan balances. Noninterest income was $1.4 billion, relatively unchanged from the same period a year ago.
The provision for credit losses was $1.2 billion, relatively unchanged from the same period a year ago. Noninterest expense increased $54 million to $2.1 billion, relatively unchanged from the same period a year ago.
Average loans increased $5.4 billion to $308.0 billion primarily driven by an increase in credit card loans.
Six-Month Comparison
Net income for Consumer Lending was $1.5 billion, relatively unchanged from the same period a year ago. Net interest income increased $345 million to $5.8 billion primarily due to the same factor as described in the three-month discussion. Noninterest income was $2.7 billion, relatively unchanged from the same period a year ago.
The provision for credit losses increased $211 million to $2.3 billion primarily driven by credit card loans. Noninterest expense increased $92 million to $4.2 billion, relatively unchanged from the same period a year ago.
Average loans increased $7.3 billion to $308.4 billion primarily driven by the same factor as described in the three-month discussion.
The following table provides key performance indicators for Consumer Lending. Management uses these metrics, and we believe they are useful to investors because they provide additional information about loan growth and profitability.
Bank of America 12 | ||||||||
| Key Statistics – Consumer Lending | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
Total credit card (1) | |||||||||||||||||||||||
Gross interest yield (2) | 12.32 | % | 11.66 | % | 12.28 | % | 11.75 | % | |||||||||||||||
Risk-adjusted margin (3) | 6.75 | 7.83 | 6.78 | 8.25 | |||||||||||||||||||
| New accounts (in thousands) | 951 | 1,137 | 1,949 | 2,324 | |||||||||||||||||||
| Purchase volumes | $ | 93,296 | $ | 93,103 | $ | 180,307 | $ | 178,647 | |||||||||||||||
Debit card purchase volumes | $ | 140,346 | $ | 132,962 | $ | 272,753 | $ | 257,338 | |||||||||||||||
(1)Includes GWIM's credit card portfolio.
(2)Calculated as the effective annual percentage rate divided by average loans.
(3)Calculated as the difference between total revenue, net of interest expense, and net credit losses divided by average loans.
During the three and six months ended June 30, 2024, the total risk-adjusted margin decreased 108 bps and 147 bps primarily driven by higher net credit losses and lower net fee income, partially offset by higher interest margin. During the
three and six months ended June 30, 2024, total credit card purchase volumes increased $193 million and $1.7 billion, and debit card purchase volumes increased $7.4 billion and $15.4 billion, reflecting higher levels of consumer spending.
Key Statistics – Loan Production (1) | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Consumer Banking: | |||||||||||||||||||||||
| First mortgage | $ | 2,696 | $ | 2,889 | $ | 4,384 | $ | 4,845 | |||||||||||||||
| Home equity | 2,027 | 2,171 | 3,627 | 4,354 | |||||||||||||||||||
Total (2): | |||||||||||||||||||||||
| First mortgage | $ | 5,728 | $ | 5,940 | $ | 9,171 | $ | 9,877 | |||||||||||||||
| Home equity | 2,393 | 2,542 | 4,284 | 5,138 | |||||||||||||||||||
(1)The loan production amounts represent the unpaid principal balance of loans and, in the case of home equity, the principal amount of the total line of credit.
(2)In addition to loan production in Consumer Banking, there is also first mortgage and home equity loan production in GWIM.
First mortgage loan originations for Consumer Banking and the total Corporation decreased $193 million and $212 million during the three months ended June 30, 2024 primarily driven by lower demand. During the six months ended June 30, 2024, first mortgage loan originations for Consumer Banking and the total Corporation decreased $461 million and $706 million primarily driven by lower demand.
Home equity production in Consumer Banking and the total Corporation decreased $144 million and $149 million during the three months ended June 30, 2024 primarily driven by lower demand. During the six months ended June 30, 2024, home equity production in Consumer Banking and the total Corporation decreased $727 million and $854 million primarily driven by lower demand.
13 Bank of America | ||||||||
Global Wealth & Investment Management
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 1,693 | $ | 1,805 | (6) | % | $ | 3,507 | $ | 3,681 | (5) | % | ||||||||||||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||||||||||||||||
| Investment and brokerage services | 3,707 | 3,251 | 14 | 7,307 | 6,489 | 13 | ||||||||||||||||||||||||||||||||
| All other income | 174 | 186 | (6) | 351 | 387 | (9) | ||||||||||||||||||||||||||||||||
| Total noninterest income | 3,881 | 3,437 | 13 | 7,658 | 6,876 | 11 | ||||||||||||||||||||||||||||||||
| Total revenue, net of interest expense | 5,574 | 5,242 | 6 | 11,165 | 10,557 | 6 | ||||||||||||||||||||||||||||||||
| Provision for credit losses | 7 | 13 | (46) | (6) | 38 | (116) | ||||||||||||||||||||||||||||||||
| Noninterest expense | 4,199 | 3,925 | 7 | 8,463 | 7,992 | 6 | ||||||||||||||||||||||||||||||||
| Income before income taxes | 1,368 | 1,304 | 5 | 2,708 | 2,527 | 7 | ||||||||||||||||||||||||||||||||
| Income tax expense | 342 | 326 | 5 | 677 | 632 | 7 | ||||||||||||||||||||||||||||||||
| Net income | $ | 1,026 | $ | 978 | 5 | $ | 2,031 | $ | 1,895 | 7 | ||||||||||||||||||||||||||||
| Effective tax rate | 25.0 | % | 25.0 | % | 25.0 | % | 25.0 | % | ||||||||||||||||||||||||||||||
| Net interest yield | 2.15 | 2.21 | 2.19 | 2.20 | ||||||||||||||||||||||||||||||||||
| Return on average allocated capital | 22 | 21 | 22 | 21 | ||||||||||||||||||||||||||||||||||
| Efficiency ratio | 75.34 | 74.86 | 75.80 | 75.70 | ||||||||||||||||||||||||||||||||||
| Balance Sheet | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||
| Average | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||||||
| Total loans and leases | $ | 222,776 | $ | 218,604 | 2 | % | $ | 220,696 | $ | 220,018 | — | % | ||||||||||||||||||||||||||
| Total earning assets | 317,250 | 327,066 | (3) | 322,471 | 336,671 | (4) | ||||||||||||||||||||||||||||||||
| Total assets | 330,958 | 340,105 | (3) | 336,039 | 349,582 | (4) | ||||||||||||||||||||||||||||||||
| Total deposits | 287,678 | 295,380 | (3) | 292,525 | 304,648 | (4) | ||||||||||||||||||||||||||||||||
| Allocated capital | 18,500 | 18,500 | — | 18,500 | 18,500 | — | ||||||||||||||||||||||||||||||||
| Period end | June 30 2024 | December 31 2023 | % Change | |||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | 224,837 | $ | 219,657 | 2 | % | ||||||||||||||||||||||||||||||||
| Total earning assets | 310,055 | 330,653 | (6) | |||||||||||||||||||||||||||||||||||
| Total assets | 324,476 | 344,626 | (6) | |||||||||||||||||||||||||||||||||||
| Total deposits | 281,283 | 299,657 | (6) | |||||||||||||||||||||||||||||||||||
GWIM consists of two primary businesses: Merrill Wealth Management and Bank of America Private Bank. For additional information on GWIM, see Business Segment Operations in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Three-Month Comparison
Net income for GWIM increased $48 million to $1.0 billion primarily due to higher revenue, largely offset by higher noninterest expense. The operating margin was 25 percent, unchanged from the same period a year ago.
Net interest income decreased $112 million to $1.7 billion primarily driven by an increase in the deposit rate paid and lower average deposit balances.
Noninterest income, which primarily includes investment and brokerage services income, increased $444 million to $3.9 billion. The increase was primarily driven by higher asset management fees due to higher average equity market valuations and positive AUM flows, partially offset by the impact of lower AUM pricing.
Noninterest expense increased $274 million to $4.2 billion primarily due to higher revenue-related incentives.
The return on average allocated capital was 22 percent, up from 21 percent, due to higher net income. For information on capital allocated to the business segments, see Business Segment Operations on page 10.
Average loans increased $4.2 billion to $222.8 billion primarily driven by custom lending and residential mortgage, partially offset by securities-based lending. Average deposits decreased $7.7 billion to $287.7 billion primarily driven by a higher level of client tax payments as well as clients moving deposits to higher yielding investment cash alternatives, including offerings on our investment and brokerage platforms.
Merrill Wealth Management revenue of $4.6 billion increased seven percent primarily driven by higher asset management fees due to the impact of higher average equity market valuations and positive AUM flows, partially offset by the impact of lower AUM pricing and lower net interest income.
Bank of America Private Bank revenue of $951 million increased five percent primarily driven by higher asset management fees due to the impact of higher average equity market valuations and the impact of positive AUM flows.
Bank of America 14 | ||||||||
Six-Month Comparison
Net income for GWIM increased $136 million to $2.0 billion primarily due to the same factors as described in the three-month discussion. The operating margin was 24 percent, unchanged from the same period a year ago.
Net interest income decreased $174 million to $3.5 billion primarily due to the same factors as described in the three-month discussion.
Noninterest income, which primarily includes investment and brokerage services income, increased $782 million to $7.7 billion due to the same factors as described in the three-month discussion.
Noninterest expense increased $471 million to $8.5 billion due to the same factor as described in the three-month discussion.
The return on average allocated capital was 22 percent, up from 21 percent, due to the same factor as described in the three-month discussion.
Average loans increased $678 million to $220.7 billion primarily due to the same factors as described in the three-month discussion. Average deposits decreased $12.1 billion to $292.5 billion due to the same factors as described in the three-month discussion.
Merrill Wealth Management revenue of $9.3 billion increased six percent primarily driven by the same factors as described in the three-month discussion.
Bank of America Private Bank revenue of $1.9 billion increased four percent primarily driven by the same factors as described in the three-month discussion.
Key Indicators and Metrics | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Revenue by Business | |||||||||||||||||||||||
| Merrill Wealth Management | $ | 4,623 | $ | 4,340 | $ | 9,270 | $ | 8,737 | |||||||||||||||
| Bank of America Private Bank | 951 | 902 | 1,895 | 1,820 | |||||||||||||||||||
| Total revenue, net of interest expense | $ | 5,574 | $ | 5,242 | $ | 11,165 | $ | 10,557 | |||||||||||||||
| Client Balances by Business, at period end | |||||||||||||||||||||||
| Merrill Wealth Management | $ | 3,371,418 | $ | 3,057,680 | |||||||||||||||||||
Bank of America Private Bank | 640,467 | 577,514 | |||||||||||||||||||||
| Total client balances | $ | 4,011,885 | $ | 3,635,194 | |||||||||||||||||||
| Client Balances by Type, at period end | |||||||||||||||||||||||
| Assets under management | $ | 1,758,875 | $ | 1,531,042 | |||||||||||||||||||
| Brokerage and other assets | 1,779,881 | 1,628,294 | |||||||||||||||||||||
| Deposits | 281,283 | 292,526 | |||||||||||||||||||||
Loans and leases (1) | 227,657 | 222,280 | |||||||||||||||||||||
| Less: Managed deposits in assets under management | (35,811) | (38,948) | |||||||||||||||||||||
| Total client balances | $ | 4,011,885 | $ | 3,635,194 | |||||||||||||||||||
| Assets Under Management Rollforward | |||||||||||||||||||||||
| Assets under management, beginning of period | $ | 1,730,005 | $ | 1,467,242 | $ | 1,617,740 | $ | 1,401,474 | |||||||||||||||
| Net client flows | 10,790 | 14,296 | 35,445 | 29,558 | |||||||||||||||||||
Market valuation/other | 18,080 | 49,504 | 105,690 | 100,010 | |||||||||||||||||||
| Total assets under management, end of period | $ | 1,758,875 | $ | 1,531,042 | $ | 1,758,875 | $ | 1,531,042 | |||||||||||||||
(1)Includes margin receivables, which are classified in customer and other receivables on the Consolidated Balance Sheet.
Client Balances
Client balances increased $376.7 billion, or 10 percent, to $4.0 trillion at June 30, 2024 compared to June 30, 2023. The increase in client balances was primarily due to the impact of higher end-of-period market valuations and positive net client flows.
15 Bank of America | ||||||||
Global Banking
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 3,275 | $ | 3,690 | (11) | % | $ | 6,735 | $ | 7,597 | (11) | % | ||||||||||||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||||||||||||||||
| Service charges | 775 | 735 | 5 | 1,525 | 1,449 | 5 | ||||||||||||||||||||||||||||||||
| Investment banking fees | 835 | 718 | 16 | 1,685 | 1,386 | 22 | ||||||||||||||||||||||||||||||||
| All other income | 1,168 | 1,319 | (11) | 2,088 | 2,233 | (6) | ||||||||||||||||||||||||||||||||
| Total noninterest income | 2,778 | 2,772 | — | 5,298 | 5,068 | 5 | ||||||||||||||||||||||||||||||||
| Total revenue, net of interest expense | 6,053 | 6,462 | (6) | 12,033 | 12,665 | (5) | ||||||||||||||||||||||||||||||||
| Provision for credit losses | 235 | 9 | n/m | 464 | (228) | n/m | ||||||||||||||||||||||||||||||||
| Noninterest expense | 2,899 | 2,819 | 3 | 5,911 | 5,759 | 3 | ||||||||||||||||||||||||||||||||
| Income before income taxes | 2,919 | 3,634 | (20) | 5,658 | 7,134 | (21) | ||||||||||||||||||||||||||||||||
| Income tax expense | 803 | 981 | (18) | 1,556 | 1,926 | (19) | ||||||||||||||||||||||||||||||||
| Net income | $ | 2,116 | $ | 2,653 | (20) | $ | 4,102 | $ | 5,208 | (21) | ||||||||||||||||||||||||||||
| Effective tax rate | 27.5 | % | 27.0 | % | 27.5 | % | 27.0 | % | ||||||||||||||||||||||||||||||
| Net interest yield | 2.37 | 2.80 | 2.44 | 2.92 | ||||||||||||||||||||||||||||||||||
| Return on average allocated capital | 17 | 22 | 17 | 21 | ||||||||||||||||||||||||||||||||||
| Efficiency ratio | 47.88 | 43.59 | 49.12 | 45.46 | ||||||||||||||||||||||||||||||||||
| Balance Sheet | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||
| Average | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||||||
Total loans and leases | $ | 372,738 | $ | 383,058 | (3) | % | $ | 373,173 | $ | 382,039 | (2) | % | ||||||||||||||||||||||||||
| Total earning assets | 555,834 | 527,959 | 5 | 555,895 | 525,181 | 6 | ||||||||||||||||||||||||||||||||
| Total assets | 624,189 | 595,585 | 5 | 623,631 | 592,254 | 5 | ||||||||||||||||||||||||||||||||
| Total deposits | 525,357 | 497,533 | 6 | 525,528 | 495,069 | 6 | ||||||||||||||||||||||||||||||||
| Allocated capital | 49,250 | 49,250 | — | 49,250 | 49,250 | — | ||||||||||||||||||||||||||||||||
| Period end | June 30 2024 | December 31 2023 | % Change | |||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | 372,421 | $ | 373,891 | — | % | ||||||||||||||||||||||||||||||||
| Total earning assets | 550,525 | 552,453 | — | |||||||||||||||||||||||||||||||||||
| Total assets | 620,217 | 621,751 | — | |||||||||||||||||||||||||||||||||||
| Total deposits | 522,525 | 527,060 | (1) | |||||||||||||||||||||||||||||||||||
Global Banking, which includes Global Corporate Banking, Global Commercial Banking, Business Banking and Global Investment Banking, provides a wide range of lending-related products and services, integrated working capital management and treasury solutions, and underwriting and advisory services through our network of global offices and client relationship teams. For more information about Global Banking, see Business Segment Operations in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Three-Month Comparison
Net income for Global Banking decreased $537 million to $2.1 billion primarily driven by lower revenue and higher provision for credit losses.
Net interest income decreased $415 million to $3.3 billion primarily due to the impact of interest rates, partially offset by the benefit of higher average deposit balances.
Noninterest income was $2.8 billion, relatively unchanged from the same period a year ago.
The provision for credit losses increased $226 million to $235 million primarily driven by the commercial real estate office portfolio.
Noninterest expense increased $80 million to $2.9 billion due to higher regulatory costs and continued investments in the business, including technology.
The return on average allocated capital was 17 percent, down from 22 percent, due to lower net income. For information on capital allocated to the business segments, see Business Segment Operations on page 10.
Six-Month Comparison
Net income for Global Banking decreased $1.1 billion to $4.1 billion driven by higher provision for credit losses, lower revenue and higher noninterest expense.
Net interest income decreased $862 million to $6.7 billion primarily due to the same factors as described in the three-month discussion.
Noninterest income increased $230 million to $5.3 billion due to higher investment banking fees and treasury service charges, partially offset by lower leasing-related revenue.
The provision for credit losses increased $692 million to $464 million primarily driven by the commercial real estate office portfolio compared to a benefit in the prior year due to certain improved macroeconomic conditions.
Noninterest expense increased $152 million to $5.9 billion primarily due to the same factors as described in the three-month discussion.
The return on average allocated capital was 17 percent, down from 21 percent, due to lower net income.
Bank of America 16 | ||||||||
Global Corporate, Global Commercial and Business Banking
The following table and discussion present a summary of the results, which exclude certain investment banking and other activities in Global Banking.
| Global Corporate, Global Commercial and Business Banking | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Global Corporate Banking | Global Commercial Banking | Business Banking | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Lending | $ | 1,260 | $ | 1,359 | $ | 1,247 | $ | 1,270 | $ | 58 | $ | 63 | $ | 2,565 | $ | 2,692 | ||||||||||||||||||||||||||||||||||
| Global Transaction Services | 1,261 | 1,483 | 938 | 1,045 | 362 | 395 | 2,561 | 2,923 | ||||||||||||||||||||||||||||||||||||||||||
Total revenue, net of interest expense | $ | 2,521 | $ | 2,842 | $ | 2,185 | $ | 2,315 | $ | 420 | $ | 458 | $ | 5,126 | $ | 5,615 | ||||||||||||||||||||||||||||||||||
| Balance Sheet | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Average | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | 162,283 | $ | 174,280 | $ | 197,906 | $ | 196,069 | $ | 12,439 | $ | 12,508 | $ | 372,628 | $ | 382,857 | ||||||||||||||||||||||||||||||||||
| Total deposits | 287,350 | 267,949 | 186,975 | 177,901 | 51,032 | 51,682 | 525,357 | 497,532 | ||||||||||||||||||||||||||||||||||||||||||
| Global Corporate Banking | Global Commercial Banking | Business Banking | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Lending | $ | 2,325 | $ | 2,393 | $ | 2,527 | $ | 2,503 | $ | 117 | $ | 130 | $ | 4,969 | $ | 5,026 | ||||||||||||||||||||||||||||||||||
| Global Transaction Services | 2,596 | 3,032 | 1,908 | 2,174 | 723 | 782 | 5,227 | 5,988 | ||||||||||||||||||||||||||||||||||||||||||
Total revenue, net of interest expense | $ | 4,921 | $ | 5,425 | $ | 4,435 | $ | 4,677 | $ | 840 | $ | 912 | $ | 10,196 | $ | 11,014 | ||||||||||||||||||||||||||||||||||
| Balance Sheet | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Average | ||||||||||||||||||||||||||||||||||||||||||||||||||
Total loans and leases | $ | 163,662 | $ | 174,783 | $ | 197,091 | $ | 194,442 | $ | 12,285 | $ | 12,563 | $ | 373,038 | $ | 381,788 | ||||||||||||||||||||||||||||||||||
Total deposits | 288,871 | 263,587 | 186,351 | 180,245 | 50,305 | 51,241 | 525,527 | 495,073 | ||||||||||||||||||||||||||||||||||||||||||
| Period end | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | 162,276 | $ | 173,248 | $ | 197,546 | $ | 195,899 | $ | 12,467 | $ | 12,324 | $ | 372,289 | $ | 381,471 | ||||||||||||||||||||||||||||||||||
| Total deposits | 283,248 | 265,104 | 187,766 | 177,235 | 51,509 | 50,391 | 522,523 | 492,730 | ||||||||||||||||||||||||||||||||||||||||||
Business Lending revenue decreased $127 million for the three months ended June 30, 2024 compared to the same period a year ago primarily driven by lower leasing-related revenue and the impact of lower average loan balances. Business lending revenue decreased $57 million for the six months ended June 30, 2024 compared to the same period a year ago primarily driven by the same factors as described in the three-month discussion.
Global Transaction Services revenue decreased $362 million for the three months ended June 30, 2024 primarily driven by the impact of interest rates, partially offset by the benefit of higher average deposit balances and treasury service charges. Global Transaction Services revenue decreased $761 million for the six months ended June 30, 2024 primarily driven by the same factors as described in the three-month discussion.
Average loans and leases of $372.6 billion decreased three percent for the three months ended June 30, 2024, and average loans and leases of $373.0 billion decreased two percent for the six months ended June 30, 2024 due to lower client demand.
Average deposits of $525.4 billion and $522.5 billion for the three and six months ended June 30, 2024 increased six percent for both periods. The increases were due to growth in both domestic and international balances.
Global Investment Banking
Client teams and product specialists underwrite and distribute debt, equity and loan products, and provide advisory services and tailored risk management solutions. The economics of certain investment banking and underwriting activities are shared primarily between Global Banking and Global Markets under an internal revenue-sharing arrangement. Global Banking originates certain deal-related transactions with our corporate and commercial clients that are executed and distributed by Global Markets. To provide a complete discussion of our consolidated investment banking fees, the table below presents total Corporation investment banking fees and the portion attributable to Global Banking.
17 Bank of America | ||||||||
| Investment Banking Fees | |||||||||||||||||||||||||||||||||||||||||||||||
| Global Banking | Total Corporation | Global Banking | Total Corporation | ||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||
| Products | |||||||||||||||||||||||||||||||||||||||||||||||
| Advisory | $ | 322 | $ | 333 | $ | 374 | $ | 375 | $ | 639 | $ | 646 | $ | 747 | $ | 738 | |||||||||||||||||||||||||||||||
| Debt issuance | 363 | 263 | 880 | 600 | 746 | 553 | 1,765 | 1,244 | |||||||||||||||||||||||||||||||||||||||
| Equity issuance | 150 | 122 | 357 | 287 | 300 | 187 | 720 | 455 | |||||||||||||||||||||||||||||||||||||||
Gross investment banking fees | 835 | 718 | 1,611 | 1,262 | 1,685 | 1,386 | 3,232 | 2,437 | |||||||||||||||||||||||||||||||||||||||
| Self-led deals | (5) | (16) | (50) | (50) | (18) | (20) | (103) | (62) | |||||||||||||||||||||||||||||||||||||||
Total investment banking fees | $ | 830 | $ | 702 | $ | 1,561 | $ | 1,212 | $ | 1,667 | $ | 1,366 | $ | 3,129 | $ | 2,375 | |||||||||||||||||||||||||||||||
Total Corporation investment banking fees, which exclude self-led deals and are primarily included within Global Banking and Global Markets, were $1.6 billion and $3.1 billion for the three and six months ended June 30, 2024. The three-month period increased 29 percent compared to the same period in 2023, and the six-month period increased 32 percent compared to the same period in 2023. The increases in both periods were primarily due to higher debt and equity issuance fees.
Global Markets
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 770 | $ | 297 | n/m | $ | 1,451 | $ | 406 | n/m | ||||||||||||||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||||||||||||||||
| Investment and brokerage services | 516 | 499 | 3 | % | 1,011 | 1,032 | (2) | % | ||||||||||||||||||||||||||||||
| Investment banking fees | 719 | 503 | 43 | 1,427 | 972 | 47 | ||||||||||||||||||||||||||||||||
| Market making and similar activities | 3,218 | 3,409 | (6) | 7,048 | 7,807 | (10) | ||||||||||||||||||||||||||||||||
| All other income | 236 | 163 | 45 | 405 | 280 | 45 | ||||||||||||||||||||||||||||||||
| Total noninterest income | 4,689 | 4,574 | 3 | 9,891 | 10,091 | (2) | ||||||||||||||||||||||||||||||||
| Total revenue, net of interest expense | 5,459 | 4,871 | 12 | 11,342 | 10,497 | 8 | ||||||||||||||||||||||||||||||||
| Provision for credit losses | (13) | (4) | n/m | (49) | (57) | n/m | ||||||||||||||||||||||||||||||||
| Noninterest expense | 3,486 | 3,349 | 4 | 6,978 | 6,700 | 4 | ||||||||||||||||||||||||||||||||
| Income before income taxes | 1,986 | 1,526 | 30 | 4,413 | 3,854 | 15 | ||||||||||||||||||||||||||||||||
| Income tax expense | 576 | 420 | 37 | 1,280 | 1,060 | 21 | ||||||||||||||||||||||||||||||||
| Net income | $ | 1,410 | $ | 1,106 | 27 | $ | 3,133 | $ | 2,794 | 12 | ||||||||||||||||||||||||||||
| Effective tax rate | 29.0 | % | 27.5 | % | 29.0 | % | 27.5 | % | ||||||||||||||||||||||||||||||
| Return on average allocated capital | 13 | 10 | 14 | 12 | ||||||||||||||||||||||||||||||||||
| Efficiency ratio | 63.83 | 68.74 | 61.52 | 63.82 | ||||||||||||||||||||||||||||||||||
| Balance Sheet | Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||||||||||||||||
| Average | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||||||
| Trading-related assets: | ||||||||||||||||||||||||||||||||||||||
| Trading account securities | $ | 321,204 | $ | 317,928 | 1 | % | $ | 322,207 | $ | 328,529 | (2) | % | ||||||||||||||||||||||||||
| Reverse repurchases | 139,901 | 139,480 | — | 136,991 | 133,155 | 3 | ||||||||||||||||||||||||||||||||
| Securities borrowed | 139,705 | 120,481 | 16 | 137,278 | 118,392 | 16 | ||||||||||||||||||||||||||||||||
| Derivative assets | 38,953 | 43,236 | (10) | 38,318 | 43,490 | (12) | ||||||||||||||||||||||||||||||||
| Total trading-related assets | 639,763 | 621,125 | 3 | 634,794 | 623,566 | 2 | ||||||||||||||||||||||||||||||||
| Total loans and leases | 135,106 | 128,539 | 5 | 134,431 | 126,802 | 6 | ||||||||||||||||||||||||||||||||
| Total earning assets | 706,383 | 657,947 | 7 | 699,615 | 643,024 | 9 | ||||||||||||||||||||||||||||||||
| Total assets | 908,525 | 877,471 | 4 | 901,952 | 873,727 | 3 | ||||||||||||||||||||||||||||||||
| Total deposits | 31,944 | 33,222 | (4) | 32,265 | 34,658 | (7) | ||||||||||||||||||||||||||||||||
| Allocated capital | 45,500 | 45,500 | — | 45,500 | 45,500 | — | ||||||||||||||||||||||||||||||||
| Period end | June 30 2024 | December 31 2023 | % Change | |||||||||||||||||||||||||||||||||||
| Total trading-related assets | $ | 619,122 | $ | 542,544 | 14 | % | ||||||||||||||||||||||||||||||||
| Total loans and leases | 138,441 | 136,223 | 2 | |||||||||||||||||||||||||||||||||||
| Total earning assets | 701,978 | 637,955 | 10 | |||||||||||||||||||||||||||||||||||
| Total assets | 887,162 | 817,588 | 9 | |||||||||||||||||||||||||||||||||||
| Total deposits | 33,151 | 34,833 | (5) | |||||||||||||||||||||||||||||||||||
n/m = not meaningful
Global Markets offers sales and trading services and research services to institutional clients across fixed-income, credit, currency, commodity and equity businesses. Global Markets
product coverage includes securities and derivative products in both the primary and secondary markets. For more information about Global Markets, see Business Segment
Bank of America 18 | ||||||||
Operations in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
The following explanations for period-over-period changes in results for Global Markets, including those disclosed under Sales and Trading Revenue, are the same for amounts including and excluding net DVA. Amounts excluding net DVA are a non-GAAP financial measure. For more information on net DVA, see Supplemental Financial Data on page 6.
Three-Month Comparison
Net income for Global Markets increased $304 million to $1.4 billion for the three months ended June 30, 2024 compared to the same period in 2023. Net DVA losses totaled $1 million compared to $102 million in 2023. Excluding net DVA, net income increased $227 million to $1.4 billion. These increases were primarily driven by higher revenue, partially offset by higher noninterest expense.
Revenue increased $588 million to $5.5 billion primarily due to higher sales and trading revenue and investment banking fees. Sales and trading revenue increased $394 million, and excluding net DVA, increased $293 million. These increases were primarily driven by higher revenue in Equities.
Noninterest expense increased $137 million to $3.5 billion, primarily driven by revenue-related expenses and continued investments in the business, including technology.
Average total assets increased $31.1 billion to $908.5 billion for the three months ended June 30, 2024 compared to the same period in 2023 driven by increased securities financing activity, higher levels of inventory and loan growth in FICC.
The return on average allocated capital was 13 percent, up from 10 percent in the same period a year ago, reflecting higher net income. For information on capital allocated to the business segments, see Business Segment Operations on page 10.
Six-Month Comparison
Net income for Global Markets increased $339 million to $3.1 billion for the six months ended June 30, 2024 compared to the same period in 2023. Net DVA losses were $86 million compared to $88 million in 2023. Excluding net DVA, net income increased $337 million to $3.2 billion. These increases were primarily driven by higher revenue, partially offset by higher noninterest expense.
Revenue increased $845 million to $11.3 billion primarily due to the same factors as described in the three-month discussion. Sales and trading revenue increased $419 million, and excluding net DVA, sales and trading revenue increased $417 million. These increases were driven by higher revenue in Equities, partially offset by lower revenue in FICC.
Noninterest expense increased $278 million to $7.0 billion, driven by the same factors as described in the three-month discussion.
Average total assets increased $28.2 billion to $902.0 billion, and period-end total assets increased $69.6 billion from December 31, 2023 to $887.2 billion. The increases were driven by higher securities financing activity and higher levels of inventory in FICC.
The return on average allocated capital was 14 percent, up from 12 percent in the same period a year ago, reflecting higher net income.
Sales and Trading Revenue
For a description of sales and trading revenue, see Business Segment Operations in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K. The following table and related discussion present sales and trading revenue, substantially all of which is in Global Markets, with the remainder in Global Banking. In addition, the following table and related discussion also present sales and trading revenue, excluding net DVA, which is a non-GAAP financial measure. For more information on net DVA, see Supplemental Financial Data on page 6.
Sales and Trading Revenue (1, 2, 3) | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
Sales and trading revenue (2) | |||||||||||||||||||||||
| Fixed-income, currencies and commodities | $ | 2,742 | $ | 2,667 | $ | 5,973 | $ | 6,107 | |||||||||||||||
| Equities | 1,937 | 1,618 | 3,798 | 3,245 | |||||||||||||||||||
| Total sales and trading revenue | $ | 4,679 | $ | 4,285 | $ | 9,771 | $ | 9,352 | |||||||||||||||
Sales and trading revenue, excluding net DVA (4) | |||||||||||||||||||||||
| Fixed-income, currencies and commodities | $ | 2,737 | $ | 2,764 | $ | 6,044 | $ | 6,193 | |||||||||||||||
| Equities | 1,943 | 1,623 | 3,813 | 3,247 | |||||||||||||||||||
| Total sales and trading revenue, excluding net DVA | $ | 4,680 | $ | 4,387 | $ | 9,857 | $ | 9,440 | |||||||||||||||
(1)For more information on sales and trading revenue, see Note 3 – Derivatives to the Consolidated Financial Statements.
(2)Includes FTE adjustments of $142 million and $291 million for the three and six months ended June 30, 2024 compared to $85 million and $175 million for the same periods in 2023.
(3)Includes Global Banking sales and trading revenue of $186 million and $330 million for the three and six months ended June 30, 2024 compared to $154 million and $331 million for the same periods in 2023.
(4)FICC and Equities sales and trading revenue, excluding net DVA, is a non-GAAP financial measure. FICC net DVA gains (losses) were $5 million and $(71) million for the three and six months ended June 30, 2024 compared to $(97) million and $(86) million for the same periods in 2023. Equities net DVA gains (losses) were $(6) million and $(15) million for the three and six months ended June 30, 2024 compared to $(5) million and $(2) million for the same periods in 2023.
Three-Month Comparison
Including net DVA, FICC revenue increased $75 million for the three months ended June 30, 2024 compared to the same period in 2023. Excluding net DVA, FICC revenue decreased $27 million. FICC revenue, including and excluding net DVA, was driven by a weaker trading environment for foreign exchange and rates products, largely offset by improved client activity in mortgages, credit and commodities. Including and excluding net DVA, Equities revenue increased $319 million and $320 million driven by a strong trading performance in cash and derivatives.
Six-Month Comparison
Including and excluding net DVA, FICC revenue decreased $134 million and $149 million for the six months ended June 30, 2024 compared to the same period in 2023 driven by a weaker trading environment for macro products, partially offset by improved trading in mortgages. Including and excluding net DVA, Equities revenue increased $553 million and $566 million driven by the same factors as described in the three-month discussion.
19 Bank of America | ||||||||
All Other
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 6 | $ | 64 | (91) | % | $ | 44 | $ | 161 | (73) | % | ||||||||||||||||||||||||||
| Noninterest income (loss) | (1,761) | (1,831) | (4) | (3,443) | (3,386) | 2 | ||||||||||||||||||||||||||||||||
| Total revenue, net of interest expense | (1,755) | (1,767) | (1) | (3,399) | (3,225) | 5 | ||||||||||||||||||||||||||||||||
| Provision for credit losses | (2) | (160) | (99) | (13) | (53) | (75) | ||||||||||||||||||||||||||||||||
| Noninterest expense | 261 | 492 | (47) | 1,255 | 899 | 40 | ||||||||||||||||||||||||||||||||
| Loss before income taxes | (2,014) | (2,099) | (4) | (4,641) | (4,071) | 14 | ||||||||||||||||||||||||||||||||
| Income tax benefit | (1,764) | (1,917) | (8) | (3,695) | (3,782) | (2) | ||||||||||||||||||||||||||||||||
| Net loss | $ | (250) | $ | (182) | 37 | $ | (946) | $ | (289) | n/m | ||||||||||||||||||||||||||||
| Balance Sheet | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||
| Average | 2024 | 2023 | % Change | 2024 | 2023 | % Change | ||||||||||||||||||||||||||||||||
| Total loans and leases | $ | 8,598 | $ | 9,745 | (12) | % | $ | 8,735 | $ | 9,910 | (12) | % | ||||||||||||||||||||||||||
Total assets (1) | 381,539 | 276,728 | 38 | 368,010 | 225,014 | 64 | ||||||||||||||||||||||||||||||||
| Total deposits | 115,766 | 42,881 | n/m | 107,552 | 33,842 | n/m | ||||||||||||||||||||||||||||||||
| Period end | June 30 2024 | December 31 2023 | % Change | |||||||||||||||||||||||||||||||||||
| Total loans and leases | $ | 8,285 | $ | 8,842 | (6) | % | ||||||||||||||||||||||||||||||||
Total assets (1) | 392,181 | 346,356 | 13 | |||||||||||||||||||||||||||||||||||
| Total deposits | 121,059 | 92,705 | 31 | |||||||||||||||||||||||||||||||||||
(1)In segments where the total of liabilities and equity exceeds assets, which are generally deposit-taking segments, we allocate assets from All Other to those segments to match liabilities (i.e., deposits) and allocated shareholders’ equity. Average allocated assets were $941.7 billion and $949.8 billion for the three and six months ended June 30, 2024 compared to $977.8 billion and $995.1 billion for the same periods in 2023, and period-end allocated assets were $931.1 billion and $972.9 billion at June 30, 2024 and December 31, 2023.
n/m = not meaningful
All Other primarily consists of ALM activities, liquidating businesses and certain expenses not otherwise allocated to a business segment. ALM activities encompass interest rate and foreign currency risk management activities for which substantially all of the results are allocated to our business segments. For more information on our ALM activities, see Note 17 – Business Segment Information to the Consolidated Financial Statements.
Three-Month Comparison
The net loss in All Other increased $68 million to $250 million primarily due to a lower income tax benefit, partially offset by lower noninterest expense.
Noninterest expense decreased $231 million to $261 million primarily due to lower expenses related to a liquidating business activity.
The income tax benefit decreased $153 million to $1.8 billion due to lower tax preference benefits primarily related to
tax credit investment activity. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking and Global Markets.
Six-Month Comparison
The net loss in All Other increased $657 million to $946 million primarily due to higher noninterest expense.
Noninterest expense increased $356 million to $1.3 billion primarily due to a $700 million accrual for the increase in the Corporation’s estimated share of the FDIC special assessment, partially offset by lower expenses related to a liquidating business activity.
The income tax benefit was $3.7 billion, relatively unchanged from the same period a year ago. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking and Global Markets.
Bank of America 20 | ||||||||
Managing Risk
Risk is inherent in all our business activities. The seven key types of risk faced by the Corporation are strategic, credit, market, liquidity, compliance, operational and reputational. Sound risk management enables us to serve our customers and deliver for our shareholders. If not managed well, risk can result in financial loss, regulatory sanctions and penalties, and damage to our reputation, each of which may adversely impact our ability to execute our business strategies. We take a comprehensive approach to risk management with a defined Risk Framework and an articulated Risk Appetite Statement, which are approved annually by the Enterprise Risk Committee and the Board.
Our Risk Framework serves as the foundation for the consistent and effective management of risks facing the Corporation. The Risk Framework sets forth roles and responsibilities for the management of risk and provides a blueprint for how the Board, through delegation of authority to committees and executive officers, establishes risk appetite and associated limits for our activities.
Our risk appetite provides a common framework that includes a set of measures to assist senior management and the Board in assessing the Corporation’s risk profile across all risk types against our risk appetite and risk capacity. Our risk appetite is formally articulated in the Risk Appetite Statement, which includes both qualitative statements and quantitative limits.
For more information on the Corporation’s risks, see Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K. These risks are being managed within our Risk Framework and supporting risk management programs. For more information on our Risk Framework, risk management activities and the key types of risk faced by the Corporation, see the Managing Risk section in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Capital Management
The Corporation manages its capital position so that its capital is more than adequate to support its business activities and aligns with risk, risk appetite and strategic planning. For more information, see Capital Management in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
CCAR and Capital Planning
The Federal Reserve requires BHCs to submit a capital plan and planned capital actions on an annual basis, consistent with the rules governing the CCAR capital plan, which includes supervisory stress testing by the Federal Reserve. We submitted our 2024 CCAR capital plan and related supervisory stress tests in April 2024 and received our results on June 26, 2024. Based on the results, our SCB is expected to be 3.2 percent, and the CET1 minimum requirement will be 10.7 percent when finalized. The new SCB will be effective from October 1, 2024 through September 30, 2025.
The Board has authorized the repurchase of up to $25 billion of common stock over time, which includes common stock repurchases to offset shares awarded under the Corporation’s equity-based compensation plans. Pursuant to Board authorization, during the three months ended June 30, 2024, we repurchased $3.5 billion of common stock. For more
information, see Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds on page 105 and Capital Management – CCAR and Capital Planning in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
On July 24, 2024, the Corporation’s Board authorized a $25 billion common stock repurchase program, effective August 1, 2024, to replace the Corporation’s existing program adopted by the Board in October 2021 and subsequently modified in September 2023. The existing repurchase program will expire on August 1, 2024.
The timing and amount of common stock repurchases are subject to various factors, including the Corporation’s capital position, liquidity, financial performance and alternative uses of capital, stock trading price, regulatory requirements and general market conditions, and may be suspended at any time. Such repurchases may be effected through open market purchases or privately negotiated transactions, including repurchase plans that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (Exchange Act).
Regulatory Capital
As a BHC, we are subject to regulatory capital rules, including Basel 3, issued by U.S. banking regulators. The Corporation's depository institution subsidiaries are also subject to the Prompt Corrective Action (PCA) framework. The Corporation and its primary affiliated banking entity, BANA, are Advanced approaches institutions under Basel 3 and are required to report regulatory risk-based capital ratios and risk-weighted assets (RWA) under both the Standardized and Advanced approaches. The lower of the capital ratios under Standardized or Advanced approaches compared to their respective regulatory capital ratio requirements is used to assess capital adequacy, including under the PCA framework. As of June 30, 2024, the CET1 capital, Tier 1 capital and Total capital ratios under the Standardized approach were the binding ratios.
Minimum Capital Requirements
In order to avoid restrictions on capital distributions and discretionary bonus payments to executive officers, the Corporation must meet risk-based capital ratio requirements that include a capital conservation buffer of 2.5 percent (under the Advanced approaches only), an SCB (under the Standardized approach only), plus any applicable countercyclical capital buffer and a global systemically important bank (G-SIB) surcharge. The buffers and surcharge must be comprised solely of CET1 capital. For the period from January 1, 2024 through September 30, 2024, the Corporation's minimum CET1 capital ratio requirements are 10.0 percent under both the Standardized approach and the Advanced approaches.
The Corporation is required to calculate its G-SIB surcharge on an annual basis under two methods and is subject to the higher of the resulting two surcharges. Method 1 is consistent with the approach prescribed by the Basel Committee’s assessment methodology and is calculated using specified indicators of systemic importance. Method 2 modifies the Method 1 approach by, among other factors, including a measure of the Corporation’s reliance on short-term wholesale funding. Effective January 1, 2024, the Corporation’s G-SIB surcharge, which is higher under Method 2, increased 50 bps, resulting in an increase in our minimum CET1 capital ratio
21 Bank of America | ||||||||
requirement under the Standardized approach to 10.0 percent from 9.5 percent. At June 30, 2024, the Corporation’s CET1 capital ratio of 11.9 percent under the Standardized approach exceeded its CET1 capital ratio requirement.
The Corporation is also required to maintain a minimum supplementary leverage ratio (SLR) of 3.0 percent plus a leverage buffer of 2.0 percent in order to avoid certain restrictions on capital distributions and discretionary bonus payments to executive officers. At June 30, 2024, our insured depository institution subsidiaries exceeded their requirement to
maintain a minimum 6.0 percent SLR to be considered well capitalized under the PCA framework.
Capital Composition and Ratios
Table 8 presents Bank of America Corporation’s capital ratios and related information in accordance with Basel 3 Standardized and Advanced approaches as measured at June 30, 2024 and December 31, 2023. For the periods presented herein, the Corporation met the definition of well capitalized under current regulatory requirements.
| Table 8 | Bank of America Corporation Regulatory Capital under Basel 3 | |||||||||||||||||||
Standardized Approach (1) | Advanced Approaches (1) | Regulatory Minimum (2) | ||||||||||||||||||
| (Dollars in millions, except as noted) | June 30, 2024 | |||||||||||||||||||
| Risk-based capital metrics: | ||||||||||||||||||||
| Common equity tier 1 capital | $ | 198,119 | $ | 198,119 | ||||||||||||||||
| Tier 1 capital | 224,641 | 224,641 | ||||||||||||||||||
Total capital (3) | 251,434 | 241,423 | ||||||||||||||||||
| Risk-weighted assets (in billions) | 1,661 | 1,469 | ||||||||||||||||||
| Common equity tier 1 capital ratio | 11.9 | % | 13.5 | % | 10.0 | % | ||||||||||||||
| Tier 1 capital ratio | 13.5 | 15.3 | 11.5 | |||||||||||||||||
| Total capital ratio | 15.1 | 16.4 | 13.5 | |||||||||||||||||
| Leverage-based metrics: | ||||||||||||||||||||
Adjusted quarterly average assets (in billions) (4) | $ | 3,196 | $ | 3,196 | ||||||||||||||||
| Tier 1 leverage ratio | 7.0 | % | 7.0 | % | 4.0 | |||||||||||||||
| Supplementary leverage exposure (in billions) | $ | 3,757 | ||||||||||||||||||
| Supplementary leverage ratio | 6.0 | % | 5.0 | |||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Risk-based capital metrics: | ||||||||||||||||||||
| Common equity tier 1 capital | $ | 194,928 | $ | 194,928 | ||||||||||||||||
| Tier 1 capital | 223,323 | 223,323 | ||||||||||||||||||
Total capital (3) | 251,399 | 241,449 | ||||||||||||||||||
| Risk-weighted assets (in billions) | 1,651 | 1,459 | ||||||||||||||||||
| Common equity tier 1 capital ratio | 11.8 | % | 13.4 | % | 9.5 | % | ||||||||||||||
| Tier 1 capital ratio | 13.5 | 15.3 | 11.0 | |||||||||||||||||
| Total capital ratio | 15.2 | 16.6 | 13.0 | |||||||||||||||||
| Leverage-based metrics: | ||||||||||||||||||||
Adjusted quarterly average assets (in billions) (4) | $ | 3,135 | $ | 3,135 | ||||||||||||||||
| Tier 1 leverage ratio | 7.1 | % | 7.1 | % | 4.0 | |||||||||||||||
| Supplementary leverage exposure (in billions) | $ | 3,676 | ||||||||||||||||||
| Supplementary leverage ratio | 6.1 | % | 5.0 | |||||||||||||||||
(1)Capital ratios as of June 30, 2024 and December 31, 2023 are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of the current expected credit losses (CECL) accounting standard on January 1, 2020.
(2)The CET1 capital regulatory minimum is the sum of the CET1 capital ratio minimum of 4.5 percent, our G-SIB surcharge of 3.0 percent at June 30, 2024 and 2.5 percent at December 31, 2023, and our capital conservation buffer (under the Advanced approaches) or SCB (under the Standardized approach) of 2.5 percent, as applicable. The countercyclical capital buffer was zero for both periods. The SLR regulatory minimum includes a leverage buffer of 2.0 percent.
(3)Total capital under the Advanced approaches differs from the Standardized approach due to differences in the amount permitted in Tier 2 capital related to the qualifying allowance for credit losses.
(4)Reflects total average assets adjusted for certain Tier 1 capital deductions.
At June 30, 2024, CET1 capital was $198.1 billion, an increase of $3.2 billion from December 31, 2023, primarily due to earnings, partially offset by capital distributions. Tier 1 capital increased $1.3 billion primarily driven by the same factors as CET1 capital, partially offset by preferred stock redemptions. Total capital under the Standardized approach increased $35 million primarily due to the same factors driving the increase in Tier 1 capital and an increase in the adjusted allowance for
credit losses included in Tier 2 capital, largely offset by a decrease in subordinated debt. RWA under the Standardized approach, which yielded the lower CET1 capital ratio at June 30, 2024, increased $10.2 billion during 2024 to $1,661 billion primarily driven by client activity in Global Markets and lending activity in GWIM. Supplementary leverage exposure at June 30, 2024 increased $80.2 billion primarily driven by increased activity in Global Markets and ALM activities in All Other.
Bank of America 22 | ||||||||
Table 9 shows the capital composition at June 30, 2024 and December 31, 2023.
| Table 9 | Capital Composition under Basel 3 | |||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | ||||||||||||
| Total common shareholders’ equity | $ | 267,344 | $ | 263,249 | ||||||||||
CECL transitional amount (1) | 627 | 1,254 | ||||||||||||
| Goodwill, net of related deferred tax liabilities | (68,648) | (68,648) | ||||||||||||
| Deferred tax assets arising from net operating loss and tax credit carryforwards | (8,074) | (7,912) | ||||||||||||
| Intangibles, other than mortgage servicing rights, net of related deferred tax liabilities | (1,467) | (1,496) | ||||||||||||
| Defined benefit pension plan net assets | (787) | (764) | ||||||||||||
| Cumulative unrealized net (gain) loss related to changes in fair value of financial liabilities attributable to own creditworthiness, net-of-tax | 1,511 | 1,342 | ||||||||||||
Accumulated net (gain) loss on certain cash flow hedges (2) | 7,762 | 8,025 | ||||||||||||
| Other | (149) | (122) | ||||||||||||
| Common equity tier 1 capital | 198,119 | 194,928 | ||||||||||||
| Qualifying preferred stock, net of issuance cost | 26,547 | 28,396 | ||||||||||||
| Other | (25) | (1) | ||||||||||||
| Tier 1 capital | 224,641 | 223,323 | ||||||||||||
| Tier 2 capital instruments | 13,583 | 15,340 | ||||||||||||
Qualifying allowance for credit losses (3) | 13,564 | 12,920 | ||||||||||||
| Other | (354) | (184) | ||||||||||||
| Total capital under the Standardized approach | 251,434 | 251,399 | ||||||||||||
Adjustment in qualifying allowance for credit losses under the Advanced approaches (3) | (10,011) | (9,950) | ||||||||||||
| Total capital under the Advanced approaches | $ | 241,423 | $ | 241,449 | ||||||||||
(1)June 30, 2024 and December 31, 2023 include 25 percent and 50 percent of the CECL transition provision’s impact as of December 31, 2021.
(2)Includes amounts in accumulated other comprehensive income (OCI) related to the hedging of items that are not recognized at fair value on the Consolidated Balance Sheet.
(3)Includes the impact of transition provisions related to the CECL accounting standard.
Table 10 shows the components of RWA as measured under Basel 3 at June 30, 2024 and December 31, 2023.
| Table 10 | Risk-weighted Assets under Basel 3 | |||||||||||||||||||||||||
| Standardized Approach | Advanced Approaches | Standardized Approach | Advanced Approaches | |||||||||||||||||||||||
| (Dollars in billions) | June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||
| Credit risk | $ | 1,588 | $ | 991 | $ | 1,580 | $ | 983 | ||||||||||||||||||
| Market risk | 73 | 73 | 71 | 71 | ||||||||||||||||||||||
| Operational risk | n/a | 359 | n/a | 361 | ||||||||||||||||||||||
| Risks related to credit valuation adjustments | n/a | 46 | n/a | 44 | ||||||||||||||||||||||
| Total risk-weighted assets | $ | 1,661 | $ | 1,469 | $ | 1,651 | $ | 1,459 | ||||||||||||||||||
n/a = not applicable
23 Bank of America | ||||||||
Bank of America, N.A. Regulatory Capital
Table 11 presents regulatory capital information for BANA in accordance with Basel 3 Standardized and Advanced approaches as measured at June 30, 2024 and December 31, 2023. BANA met the definition of well capitalized under the PCA framework for both periods.
| Table 11 | Bank of America, N.A. Regulatory Capital under Basel 3 | |||||||||||||||||||
Standardized Approach (1) | Advanced Approaches (1) | Regulatory Minimum (2) | ||||||||||||||||||
| (Dollars in millions, except as noted) | June 30, 2024 | |||||||||||||||||||
| Risk-based capital metrics: | ||||||||||||||||||||
| Common equity tier 1 capital | $ | 190,106 | $ | 190,106 | ||||||||||||||||
| Tier 1 capital | 190,106 | 190,106 | ||||||||||||||||||
Total capital (3) | 205,041 | 195,264 | ||||||||||||||||||
| Risk-weighted assets (in billions) | 1,406 | 1,124 | ||||||||||||||||||
| Common equity tier 1 capital ratio | 13.5 | % | 16.9 | % | 7.0 | % | ||||||||||||||
| Tier 1 capital ratio | 13.5 | 16.9 | 8.5 | |||||||||||||||||
| Total capital ratio | 14.6 | 17.4 | 10.5 | |||||||||||||||||
| Leverage-based metrics: | ||||||||||||||||||||
Adjusted quarterly average assets (in billions) (4) | $ | 2,492 | $ | 2,492 | ||||||||||||||||
| Tier 1 leverage ratio | 7.6 | % | 7.6 | % | 5.0 | |||||||||||||||
| Supplementary leverage exposure (in billions) | $ | 2,944 | ||||||||||||||||||
| Supplementary leverage ratio | 6.5 | % | 6.0 | |||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Risk-based capital metrics: | ||||||||||||||||||||
| Common equity tier 1 capital | $ | 187,621 | $ | 187,621 | ||||||||||||||||
| Tier 1 capital | 187,621 | 187,621 | ||||||||||||||||||
Total capital (3) | 201,932 | 192,175 | ||||||||||||||||||
| Risk-weighted assets (in billions) | 1,395 | 1,114 | ||||||||||||||||||
| Common equity tier 1 capital ratio | 13.5 | % | 16.8 | % | 7.0 | % | ||||||||||||||
| Tier 1 capital ratio | 13.5 | 16.8 | 8.5 | |||||||||||||||||
| Total capital ratio | 14.5 | 17.2 | 10.5 | |||||||||||||||||
| Leverage-based metrics: | ||||||||||||||||||||
Adjusted quarterly average assets (in billions) (4) | $ | 2,471 | $ | 2,471 | ||||||||||||||||
| Tier 1 leverage ratio | 7.6 | % | 7.6 | % | 5.0 | |||||||||||||||
| Supplementary leverage exposure (in billions) | $ | 2,910 | ||||||||||||||||||
| Supplementary leverage ratio | 6.4 | % | 6.0 | |||||||||||||||||
(1)Capital ratios as of June 30, 2024 and December 31, 2023 are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of the CECL accounting standard on January 1, 2020.
(2)Risk-based capital regulatory minimums at both June 30, 2024 and December 31, 2023 are the minimum ratios under Basel 3 including a capital conservation buffer of 2.5 percent. The regulatory minimums for the leverage ratios as of both period ends are the percent required to be considered well capitalized under the PCA framework.
(3)Total capital under the Advanced approaches differs from the Standardized approach due to differences in the amount permitted in Tier 2 capital related to the qualifying allowance for credit losses.
(4)Reflects total average assets adjusted for certain Tier 1 capital deductions.
Total Loss-Absorbing Capacity Requirements
Total loss-absorbing capacity (TLAC) consists of the Corporation’s Tier 1 capital and eligible long-term debt issued directly by the Corporation. Eligible long-term debt for TLAC ratios is comprised of unsecured debt that has a remaining maturity of at least one year and satisfies additional requirements as prescribed in the TLAC final rule. As with the
risk-based capital ratios and SLR, the Corporation is required to maintain TLAC ratios in excess of minimum requirements plus applicable buffers to avoid restrictions on capital distributions and discretionary bonus payments to executive officers. Table 12 presents the Corporation's TLAC and long-term debt ratios and related information as of June 30, 2024 and December 31, 2023.
Bank of America 24 | ||||||||
| Table 12 | Bank of America Corporation Total Loss-Absorbing Capacity and Long-Term Debt | |||||||||||||||||||||||||
TLAC (1) | Regulatory Minimum (2) | Long-term Debt | Regulatory Minimum (3) | |||||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | |||||||||||||||||||||||||
| Total eligible balance | $ | 467,863 | $ | 226,808 | ||||||||||||||||||||||
Percentage of risk-weighted assets (4) | 28.2 | % | 22.0 | % | 13.7 | % | 9.0 | % | ||||||||||||||||||
| Percentage of supplementary leverage exposure | 12.5 | 9.5 | 6.0 | 4.5 | ||||||||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||||
| Total eligible balance | $ | 479,156 | $ | 239,892 | ||||||||||||||||||||||
Percentage of risk-weighted assets (4) | 29.0 | % | 22.0 | % | 14.5 | % | 8.5 | % | ||||||||||||||||||
| Percentage of supplementary leverage exposure | 13.0 | 9.5 | 6.5 | 4.5 | ||||||||||||||||||||||
(1)As of June 30, 2024 and December 31, 2023, TLAC ratios are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of the CECL accounting standard on January 1, 2020.
(2)The TLAC RWA regulatory minimum consists of 18.0 percent plus a TLAC RWA buffer comprised of 2.5 percent plus the Method 1 G-SIB surcharge of 1.5 percent. The countercyclical buffer is zero for both periods. The TLAC supplementary leverage exposure regulatory minimum consists of 7.5 percent plus a 2.0 percent TLAC leverage buffer. The TLAC RWA and leverage buffers must be comprised solely of CET1 capital and Tier 1 capital, respectively.
(3)The long-term debt RWA regulatory minimum is comprised of 6.0 percent plus the Corporation’s G-SIB surcharge of 3.0 percent at June 30, 2024 and 2.5 percent at December 31, 2023. The long-term debt leverage exposure regulatory minimum is 4.5 percent. Effective January 1, 2024, the Corporation’s G-SIB surcharge, which is higher under Method 2, increased 50 bps, resulting in an increase in our long-term debt RWA regulatory minimum requirement to 9.0 percent from 8.5 percent.
(4)The approach that yields the higher RWA is used to calculate TLAC and long-term debt ratios, which was the Standardized approach as of June 30, 2024 and December 31, 2023.
Regulatory Developments
For information on regulatory developments, see Capital Management – Regulatory Developments in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Regulatory Capital and Securities Regulation
The Corporation’s principal U.S. broker-dealer subsidiaries are BofA Securities, Inc. (BofAS) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S). The Corporation's principal European subsidiaries undertaking broker-dealer activities are Merrill Lynch International (MLI) and BofA Securities Europe SA (BofASE).
The U.S. broker-dealer subsidiaries are subject to the net capital requirements of Rule 15c3-1 under the Exchange Act. BofAS computes its capital requirements as an alternative net capital broker-dealer under Rule 15c3-1e, and MLPF&S computes its capital requirements in accordance with the alternative standard under Rule 15c3-1. BofAS is registered as a futures commission merchant and is subject to Commodity Futures Trading Commission (CFTC) Regulation 1.17. The U.S. broker-dealer subsidiaries are also registered with the Financial Industry Regulatory Authority, Inc. (FINRA). Pursuant to FINRA Rule 4110, FINRA may impose higher net capital requirements than Rule 15c3-1 under the Exchange Act with respect to each of the broker-dealers.
BofAS provides institutional services, and in accordance with the alternative net capital requirements, is required to maintain tentative net capital in excess of $5.0 billion and net capital in excess of the greater of $1.0 billion or a certain percentage of its reserve requirement in addition to a certain percentage of securities-based swap risk margin. BofAS must also notify the SEC in the event its tentative net capital is less than $6.0 billion. BofAS is also required to hold a certain percentage of its customers' and affiliates' risk-based margin in order to meet its CFTC minimum net capital requirement. At June 30, 2024, BofAS had tentative net capital of $22.0 billion. BofAS also had regulatory net capital of $19.3 billion, which exceeded the minimum requirement of $4.1 billion.
MLPF&S provides retail services. At June 30, 2024, MLPF&S' regulatory net capital was $4.2 billion, which exceeded the minimum requirement of $158 million.
Our European broker-dealers are subject to requirements from U.S. and non-U.S. regulators. MLI, a U.K. investment firm, is regulated by the Prudential Regulation Authority and the Financial Conduct Authority and is subject to certain regulatory
capital requirements. At June 30, 2024, MLI’s capital resources were $33.8 billion, which exceeded the minimum Pillar 1 requirement of $12.1 billion.
BofASE, an authorized credit institution with its head office located in France, is regulated by the Autorité de Contrôle Prudentiel et de Résolution and the Autorité des Marchés Financiers, and supervised under the Single Supervisory Mechanism by the European Central Bank. At June 30, 2024, BofASE's capital resources were $9.8 billion, which exceeded the minimum Pillar 1 requirement of $3.5 billion.
In addition, MLI and BofASE remained conditionally registered with the SEC as security-based swap dealers, and maintained net liquid assets at June 30, 2024 that exceeded the applicable minimum requirements under the Exchange Act. The entities are also registered as swap dealers with the CFTC and met applicable capital requirements at June 30, 2024.
Liquidity Risk
Funding and Liquidity Risk Management
Our primary liquidity risk management objective is to meet expected or unexpected cash flow and collateral requirements, including payments under long-term debt agreements, commitments to extend credit and customer deposit withdrawals, while continuing to support our businesses and customers under a range of economic conditions. To achieve that objective, we analyze and monitor our liquidity risk under expected and stressed conditions, maintain liquidity and access to diverse funding sources, including our stable deposit base, and seek to align liquidity-related incentives and risks. These liquidity risk management practices have allowed us to effectively manage market fluctuations from the rising interest rate environment, inflationary pressures and changes in the macroeconomic environment.
We define liquidity as readily available assets, limited to cash and high-quality, liquid, unencumbered securities that we can use to meet our contractual and contingent financial obligations as they arise. We manage our liquidity position through line-of-business and ALM activities, as well as through our legal entity funding strategy, on both a forward and current (including intraday) basis under both expected and stressed conditions. We believe that a centralized approach to funding and liquidity management enhances our ability to monitor liquidity requirements, maximizes access to funding sources,
25 Bank of America | ||||||||
minimizes borrowing costs and facilitates timely responses to liquidity events. For more information on the Corporation’s liquidity risks, see the Liquidity section within Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K. For more information regarding global funding and liquidity risk management, as well as liquidity sources, liquidity arrangements, contingency planning and credit ratings discussed below, see Liquidity Risk in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
NB Holdings Corporation
Bank of America Corporation, as the parent company (the Parent), which is a separate and distinct legal entity from our bank and nonbank subsidiaries, has an intercompany arrangement with our wholly-owned holding company subsidiary, NB Holdings Corporation (NB Holdings). We have transferred, and agreed to transfer, additional Parent assets not required to satisfy anticipated near-term expenditures to NB Holdings. The Parent is expected to continue to have access to the same flow of dividends, interest and other amounts of cash necessary to service its debt, pay dividends and perform other obligations as it would have had it not entered into these arrangements and transferred any assets. These arrangements support our preferred single point of entry resolution strategy, under which only the Parent would be resolved under the U.S. Bankruptcy Code.
Global Liquidity Sources and Other Unencumbered Assets
We maintain liquidity available to the Corporation, including the Parent and selected subsidiaries, in the form of cash and high- quality, liquid, unencumbered securities. Our liquidity buffer, referred to as Global Liquidity Sources (GLS), is comprised of assets that are readily available to the Parent and selected subsidiaries, including holding company, bank and broker-dealer subsidiaries, even during stressed market conditions. Our cash is primarily on deposit with the Federal Reserve Bank and, to a lesser extent, central banks outside of the U.S. We limit the composition of high-quality, liquid, unencumbered securities to U.S. government securities, U.S. agency securities, U.S. agency mortgage-backed securities and other investment-grade securities, and a select group of non-U.S. government securities. We can obtain cash for these securities, even in stressed conditions, through repurchase agreements or outright sales. We hold our GLS in legal entities that allow us to meet the liquidity requirements of our global businesses, and we consider the impact of potential regulatory, tax, legal and other restrictions that could limit the transferability of funds among entities.
Table 13 presents average GLS for the three months ended June 30, 2024 and December 31, 2023.
| Table 13 | Average Global Liquidity Sources | |||||||||||||
| Three Months Ended | ||||||||||||||
| (Dollars in billions) | June 30 2024 | December 31 2023 | ||||||||||||
| Bank entities | $ | 745 | $ | 735 | ||||||||||
Nonbank and other entities (1) | 164 | 162 | ||||||||||||
Total Average Global Liquidity Sources | $ | 909 | $ | 897 | ||||||||||
(1) Nonbank includes Parent, NB Holdings and other regulated entities.
Our bank subsidiaries’ liquidity is primarily driven by deposit and lending activity, as well as securities valuation and net debt activity. Bank subsidiaries can also generate incremental liquidity by pledging a range of unencumbered loans and securities to certain Federal Home Loan Banks (FHLBs) and the
Federal Reserve Discount Window. The cash we could have obtained by borrowing against this pool of specifically-identified eligible assets was $317 billion and $312 billion at June 30, 2024 and December 31, 2023. We have established operational procedures to enable us to borrow against these assets, including regularly monitoring our total pool of eligible loans and securities collateral. Eligibility is defined in guidelines from the FHLBs and the Federal Reserve and is subject to change at their discretion. Due to regulatory restrictions, liquidity generated by the bank subsidiaries can generally be used only to fund obligations within the bank subsidiaries, and transfers to the Parent or nonbank subsidiaries may be subject to prior regulatory approval.
Liquidity is also held in nonbank entities, including the Parent, NB Holdings and other regulated entities. The Parent and NB Holdings liquidity is typically in the form of cash deposited at BANA, which is excluded from the liquidity at bank subsidiaries, and high-quality, liquid, unencumbered securities. Liquidity held in other regulated entities, comprised primarily of broker-dealer subsidiaries, is primarily available to meet the obligations of that entity, and transfers to the Parent or to any other subsidiary may be subject to prior regulatory approval due to regulatory restrictions and minimum requirements. Our other regulated entities also hold unencumbered investment-grade securities and equities that we believe could be used to generate additional liquidity.
Table 14 presents the composition of average GLS for the three months ended June 30, 2024 and December 31, 2023.
| Table 14 | Average Global Liquidity Sources Composition | |||||||||||||
| Three Months Ended | ||||||||||||||
| (Dollars in billions) | June 30 2024 | December 31 2023 | ||||||||||||
| Cash on deposit | $ | 344 | $ | 380 | ||||||||||
| U.S. Treasury securities | 256 | 197 | ||||||||||||
U.S. agency securities, mortgage-backed securities, and other investment-grade securities | 286 | 299 | ||||||||||||
| Non-U.S. government securities | 23 | 21 | ||||||||||||
| Total Average Global Liquidity Sources | $ | 909 | $ | 897 | ||||||||||
Our GLS are substantially the same in composition to what qualifies as High Quality Liquid Assets (HQLA) under the final U.S. Liquidity Coverage Ratio (LCR) rules. However, HQLA for purposes of calculating LCR is not reported at market value, but at a lower value that incorporates regulatory deductions and the exclusion of excess liquidity held at certain subsidiaries. The LCR is calculated as the amount of a financial institution’s unencumbered HQLA relative to the estimated net cash outflows the institution could encounter over a 30-day period of significant liquidity stress, expressed as a percentage. Our average consolidated HQLA, on a net basis, was $592 billion and $590 billion for the three months ended June 30, 2024 and December 31, 2023. For the same periods, the average consolidated LCR was 113 percent and 115 percent. Our LCR fluctuates due to normal business flows from customer activity.
Liquidity Stress Analysis
We utilize liquidity stress analysis to assist us in determining the appropriate amounts of liquidity to maintain at the Parent and our subsidiaries to meet contractual and contingent cash outflows under a range of scenarios. For more information on liquidity stress analysis, see Liquidity Risk – Liquidity Stress Analysis in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Bank of America 26 | ||||||||
Net Stable Funding Ratio
The Net Stable Funding Ratio (NSFR) is a liquidity requirement for large banks to maintain a minimum level of stable funding over a one-year period. The requirement is intended to support the ability of banks to lend to households and businesses in both normal and adverse economic conditions and is complementary to the LCR, which focuses on short-term liquidity risks. The U.S. NSFR applies to the Corporation on a consolidated basis and to our insured depository institutions. For the three months ended March 31, 2024 and June 30, 2024, the average consolidated NSFR was 120 percent and 119 percent.
Diversified Funding Sources
We fund our assets primarily with a mix of deposits, and secured and unsecured liabilities through a centralized, globally coordinated funding approach diversified across products, programs, markets, currencies and investor groups. We fund a substantial portion of our lending activities through our deposits, which were $1.91 trillion and $1.92 trillion at June 30, 2024 and December 31, 2023. Our trading activities in other regulated entities are primarily funded on a secured basis through securities lending and repurchase agreements, and these amounts will vary based on customer activity and market conditions.
Deposits
Our deposit base is well-diversified by clients, geography and product type across our business segments. At June 30, 2024, 50 percent of our deposits were in Consumer Banking, 15 percent in GWIM and 27 percent in Global Banking. We consider a substantial portion of our deposit base to be a stable, low-
cost and consistent source of liquidity. At June 30, 2024 approximately 68 percent of consumer and small business deposits and 79 percent of U.S. deposits in Global Banking were held by clients who have had accounts with us for 10 or more years. In addition, at June 30, 2024 and December 31, 2023, 27 percent and 28 percent of our deposits were noninterest bearing and included operating accounts of our consumer and commercial clients. Deposits at June 30, 2024 decreased $13.3 billion from December 31, 2023 primarily due to seasonal deposit outflows and customers’ movement of balances to higher yielding investment alternatives, partially offset by time deposit growth.
During the three months ended June 30, 2024 and 2023, rates paid on deposits were 60 bps and 22 bps in Consumer Banking, 314 bps and 235 bps in GWIM, and 318 bps and 224 bps in Global Banking. For information on rates paid on consolidated deposit balances, see Table 6 on page 8.
Long-term Debt
During the six months ended June 30, 2024, we issued $29.8 billion of long-term debt consisting of $7.8 billion of notes issued by Bank of America Corporation, which were primarily TLAC compliant, $10.6 billion of notes issued by Bank of America, N.A. and $11.4 billion of other debt.
During the six months ended June 30, 2024, we had total long-term debt maturities and redemptions in the aggregate of $33.7 billion consisting of $20.9 billion for Bank of America Corporation, $6.8 billion for Bank of America, N.A. and $6.0 billion of other debt. Table 15 presents the carrying value of aggregate annual contractual maturities of long-term debt at June 30, 2024.
| Table 15 | Long-term Debt by Maturity | |||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Remainder of 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | |||||||||||||||||||||||||||||||||||||
| Bank of America Corporation | ||||||||||||||||||||||||||||||||||||||||||||
Senior notes (1) | $ | — | $ | 13,013 | $ | 24,560 | $ | 21,349 | $ | 27,423 | $ | 102,997 | $ | 189,342 | ||||||||||||||||||||||||||||||
| Senior structured notes | 317 | 1,550 | 1,281 | 927 | 1,056 | 11,231 | 16,362 | |||||||||||||||||||||||||||||||||||||
| Subordinated notes | 3,105 | 5,129 | 4,865 | 2,085 | 913 | 9,122 | 25,219 | |||||||||||||||||||||||||||||||||||||
| Junior subordinated notes | — | — | — | 191 | — | 557 | 748 | |||||||||||||||||||||||||||||||||||||
| Total Bank of America Corporation | 3,422 | 19,692 | 30,706 | 24,552 | 29,392 | 123,907 | 231,671 | |||||||||||||||||||||||||||||||||||||
| Bank of America, N.A. | ||||||||||||||||||||||||||||||||||||||||||||
| Senior notes | — | 4,913 | 3,261 | — | 662 | — | 8,836 | |||||||||||||||||||||||||||||||||||||
| Subordinated notes | — | — | — | — | — | 1,424 | 1,424 | |||||||||||||||||||||||||||||||||||||
| Advances from Federal Home Loan Banks | 4,750 | 3,712 | 8 | 3 | 8 | 40 | 8,521 | |||||||||||||||||||||||||||||||||||||
Securitizations and other Bank VIEs (2) | — | 2,392 | 3,475 | 1,249 | 1,234 | 274 | 8,624 | |||||||||||||||||||||||||||||||||||||
| Other | 21 | 572 | 82 | 18 | 57 | 80 | 830 | |||||||||||||||||||||||||||||||||||||
| Total Bank of America, N.A. | 4,771 | 11,589 | 6,826 | 1,270 | 1,961 | 1,818 | 28,235 | |||||||||||||||||||||||||||||||||||||
| Other debt | ||||||||||||||||||||||||||||||||||||||||||||
| Structured Liabilities | 2,045 | 4,702 | 4,677 | 4,211 | 1,983 | 12,399 | 30,017 | |||||||||||||||||||||||||||||||||||||
Nonbank VIEs (2) | 35 | 8 | 6 | — | 6 | 496 | 551 | |||||||||||||||||||||||||||||||||||||
| Total other debt | 2,080 | 4,710 | 4,683 | 4,211 | 1,989 | 12,895 | 30,568 | |||||||||||||||||||||||||||||||||||||
| Total long-term debt | $ | 10,273 | $ | 35,991 | $ | 42,215 | $ | 30,033 | $ | 33,342 | $ | 138,620 | $ | 290,474 | ||||||||||||||||||||||||||||||
(1)Total includes $176.5 billion of outstanding notes that are both TLAC eligible and callable one year before their stated maturities, including $9.6 billion during the remainder of 2024, and $21.8 billion, $21.3 billion, $24.6 billion and $19.4 billion during each year of 2025 through 2028, respectively, and $79.8 billion thereafter. For more information on our TLAC eligible and callable outstanding notes, see Liquidity Risk – Diversified Funding Sources in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
(2)Represents liabilities of consolidated variable interest entities (VIEs) included in total long-term debt on the Consolidated Balance Sheet.
Total long-term debt decreased $11.7 billion to $290.5 billion during the six months ended June 30, 2024 primarily due to debt maturities and valuation adjustments, partially offset by debt issuances. We may, from time to time, purchase outstanding debt instruments in various transactions, depending on market conditions, liquidity and other factors. Our other regulated entities may also make markets in our debt instruments to provide liquidity for investors.
During the six months ended June 30, 2024, we issued $14.2 billion of structured notes, which are debt obligations that pay investors returns linked to other debt or equity securities, indices, currencies or commodities. These structured notes are typically issued to meet client demand, and notes with certain attributes may also be TLAC eligible. We typically hedge the returns we are obligated to pay on these liabilities with derivatives and/or investments in the underlying
27 Bank of America | ||||||||
instruments, so that from a funding perspective, the cost is similar to our other unsecured long-term debt. We could be required to settle certain structured note obligations for cash or other securities prior to maturity under certain circumstances, which we consider for liquidity planning purposes. We believe, however, that a portion of such borrowings will remain outstanding beyond the earliest put or redemption date.
Substantially all of our senior and subordinated debt obligations contain no provisions that could trigger a requirement for an early repayment, require additional collateral support, result in changes to terms, accelerate maturity or create additional financial obligations upon an adverse change in our credit ratings, financial ratios, earnings, cash flows or stock price. For more information on long-term debt funding, including issuances and maturities and redemptions, see Note 11 – Long-term Debt to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
We use derivative transactions to manage the duration, interest rate and currency risks of our borrowings, considering the characteristics of the assets they are funding. For more information on our ALM activities, see Interest Rate Risk Management for the Banking Book on page 44.
Credit Ratings
Credit ratings and outlooks are opinions expressed by rating agencies on our creditworthiness and that of our obligations or securities, including long-term debt, short-term borrowings, preferred stock and other securities, including asset securitizations. Table 16 presents the Corporation’s current long-term/short-term senior debt ratings and outlooks expressed by the rating agencies.
The ratings and outlooks from Moody's Investors Service, Standard & Poor’s Global Ratings and Fitch Ratings for the Corporation and its subsidiaries have not changed from those disclosed in the Corporation's 2023 Annual Report on Form 10-K.
For more information on additional collateral and termination payments that could be required in connection with certain over-the-counter derivative contracts and other trading agreements in the event of a credit rating downgrade, see Note 3 – Derivatives to the Consolidated Financial Statements herein and Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K.
| Table 16 | Senior Debt Ratings | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Moody’s Investors Service | Standard & Poor’s Global Ratings | Fitch Ratings | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term | Short-term | Outlook | Long-term | Short-term | Outlook | Long-term | Short-term | Outlook | ||||||||||||||||||||||||||||||||||||||||||||||||
| Bank of America Corporation | A1 | P-1 | Stable | A- | A-2 | Stable | AA- | F1+ | Stable | |||||||||||||||||||||||||||||||||||||||||||||||
| Bank of America, N.A. | Aa1 | P-1 | Negative | A+ | A-1 | Stable | AA | F1+ | Stable | |||||||||||||||||||||||||||||||||||||||||||||||
| Bank of America Europe Designated Activity Company | NR | NR | NR | A+ | A-1 | Stable | AA | F1+ | Stable | |||||||||||||||||||||||||||||||||||||||||||||||
| Merrill Lynch, Pierce, Fenner & Smith Incorporated | NR | NR | NR | A+ | A-1 | Stable | AA | F1+ | Stable | |||||||||||||||||||||||||||||||||||||||||||||||
| BofA Securities, Inc. | NR | NR | NR | A+ | A-1 | Stable | AA | F1+ | Stable | |||||||||||||||||||||||||||||||||||||||||||||||
| Merrill Lynch International | NR | NR | NR | A+ | A-1 | Stable | AA | F1+ | Stable | |||||||||||||||||||||||||||||||||||||||||||||||
| BofA Securities Europe SA | NR | NR | NR | A+ | A-1 | Stable | AA | F1+ | Stable | |||||||||||||||||||||||||||||||||||||||||||||||
NR = not rated
Finance Subsidiary Issuers and Parent Guarantor
BofA Finance LLC, a Delaware limited liability company (BofA Finance), is a consolidated finance subsidiary of the Corporation that has issued and sold, and is expected to continue to issue and sell, its senior unsecured debt securities (Guaranteed Notes) that are fully and unconditionally guaranteed by the Corporation. The Corporation guarantees the due and punctual payment, on demand, of amounts payable on the Guaranteed Notes if not paid by BofA Finance. In addition, each of BAC Capital Trust XIII, BAC Capital Trust XIV and BAC Capital Trust XV, Delaware statutory trusts (collectively, the Trusts) is a 100 percent owned finance subsidiary of the Corporation that has issued and sold trust preferred securities (the Trust Preferred Securities) or capital securities (the Capital Securities and, together with the Guaranteed Notes and the Trust Preferred Securities, the Guaranteed Securities), as applicable, that remained outstanding at June 30, 2024. The Corporation has fully and unconditionally guaranteed (or effectively provided for the full and unconditional guarantee of) all such securities issued by such finance subsidiaries. For more information regarding such guarantees by the Corporation, see Liquidity Risk – Finance Subsidiary Issuers and Parent Guarantor in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Representations and Warranties Obligations
For information on representations and warranties obligations in connection with the sale of mortgage loans, see Note 12 –
Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Credit Risk Management
For information on our credit risk management activities, see the following: Consumer Portfolio Credit Risk Management on page 29, Commercial Portfolio Credit Risk Management on page 33, Non-U.S. Portfolio on page 39, Allowance for Credit Losses on page 40, Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements, and Credit Risk Management in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K. For information on the Corporation’s loan modification programs, see Note 1 – Summary of Significant Accounting Principles and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements. For more information on the Corporation’s credit risks, see the Credit section within Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K.
During the six months ended June 30, 2024, our net charge-off ratio increased primarily driven by credit card loans and the commercial real estate office portfolio. Commercial reservable criticized exposure increased compared to December 31, 2023 driven by an increase across a broad range of industries excluding commercial real estate, while nonperforming loans remained relatively unchanged. Uncertainty remains regarding
Bank of America 28 | ||||||||
broader economic impacts as a result of inflationary pressures, elevated rates and the current geopolitical environment and could lead to adverse impacts to credit quality metrics in future periods.
Consumer Portfolio Credit Risk Management
Credit risk management for the consumer portfolio begins with initial underwriting and continues throughout a borrower’s credit cycle. Statistical techniques in conjunction with experiential judgment are used in all aspects of portfolio management including underwriting, product pricing, risk appetite, setting credit limits, and establishing operating processes and metrics to quantify and balance risks and returns. Statistical models are built using detailed behavioral information from external sources, such as credit bureaus, and/or internal historical experience and are a component of our consumer credit risk management process. These models are used in part to assist in making both new and ongoing credit decisions as well as portfolio management strategies, including authorizations and line management, collection practices and strategies, and determination of the allowance for loan and lease losses and allocated capital for credit risk.
Consumer Credit Portfolio
During the six months ended June 30, 2024, the U.S. unemployment rate remained relatively stable and home prices continued to rise. During the three and six months ended June 30, 2024, net charge-offs increased $339 million and $714 million to $1.1 billion and $2.1 billion compared to the same periods in 2023, primarily due to higher credit card loan charge-offs.
The consumer allowance for loan and lease losses was $8.5 billion, relatively unchanged from December 31, 2023. For more information, see Allowance for Credit Losses on page 40.
For more information on our accounting policies regarding delinquencies, nonperforming status, charge-offs and loan modifications for the consumer portfolio, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.
Table 17 presents our outstanding consumer loans and leases, consumer nonperforming loans and accruing consumer loans past due 90 days or more.
| Table 17 | Consumer Credit Quality | |||||||||||||||||||||||||||||||||||||
| Outstandings | Nonperforming | Accruing Past Due 90 Days or More | ||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | ||||||||||||||||||||||||||||||||
Residential mortgage (1) | $ | 227,870 | $ | 228,403 | $ | 2,097 | $ | 2,114 | $ | 211 | $ | 252 | ||||||||||||||||||||||||||
| Home equity | 25,442 | 25,527 | 422 | 450 | — | — | ||||||||||||||||||||||||||||||||
| Credit card | 99,450 | 102,200 | n/a | n/a | 1,257 | 1,224 | ||||||||||||||||||||||||||||||||
Direct/Indirect consumer (2) | 103,834 | 103,468 | 152 | 148 | 6 | 2 | ||||||||||||||||||||||||||||||||
| Other consumer | 117 | 124 | — | — | — | — | ||||||||||||||||||||||||||||||||
Consumer loans excluding loans accounted for under the fair value option | $ | 456,713 | $ | 459,722 | $ | 2,671 | $ | 2,712 | $ | 1,474 | $ | 1,478 | ||||||||||||||||||||||||||
Loans accounted for under the fair value option (3) | 231 | 243 | ||||||||||||||||||||||||||||||||||||
| Total consumer loans and leases | $ | 456,944 | $ | 459,965 | ||||||||||||||||||||||||||||||||||
Percentage of outstanding consumer loans and leases (4) | n/a | n/a | 0.58 | % | 0.59 | % | 0.32 | % | 0.32 | % | ||||||||||||||||||||||||||||
Percentage of outstanding consumer loans and leases, excluding fully-insured loan portfolios (4) | n/a | n/a | 0.60 | 0.60 | 0.28 | 0.27 | ||||||||||||||||||||||||||||||||
(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At June 30, 2024 and December 31, 2023, residential mortgage included $125 million and $156 million of loans on which interest had been curtailed by the Federal Housing Administration (FHA), and therefore were no longer accruing interest, although principal was still insured, and $86 million and $96 million of loans on which interest was still accruing.
(2)Outstandings primarily includes auto and specialty lending loans and leases of $53.6 billion and $53.9 billion, U.S. securities-based lending loans of $46.7 billion and $46.0 billion at June 30, 2024 and December 31, 2023, and non-U.S. consumer loans of $2.8 billion at both June 30, 2024 and December 31, 2023.
(3)For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.
(4)Excludes consumer loans accounted for under the fair value option. At June 30, 2024 and December 31, 2023, loans accounted for under the fair value option past due 90 days or more and not accruing interest were insignificant.
n/a= not applicable
29 Bank of America | ||||||||
Table 18 presents net charge-offs and related ratios for consumer loans and leases.
| Table 18 | Consumer Net Charge-offs and Related Ratios | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net Charge-offs | Net Charge-off Ratios (1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | $ | — | $ | 2 | $ | 3 | $ | 3 | — | % | — | % | — | % | — | % | ||||||||||||||||||||||||||||||||||
| Home equity | (14) | (16) | (27) | (28) | (0.23) | (0.25) | (0.21) | (0.21) | ||||||||||||||||||||||||||||||||||||||||||
| Credit card | 955 | 610 | 1,854 | 1,111 | 3.88 | 2.60 | 3.75 | 2.41 | ||||||||||||||||||||||||||||||||||||||||||
| Direct/Indirect consumer | 51 | 17 | 116 | 18 | 0.20 | 0.06 | 0.23 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||
| Other consumer | 67 | 107 | 141 | 269 | n/m | n/m | n/m | n/m | ||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 1,059 | $ | 720 | $ | 2,087 | $ | 1,373 | 0.93 | 0.64 | 0.92 | 0.61 | ||||||||||||||||||||||||||||||||||||||
(1)Net charge-off ratios are calculated as annualized net charge-offs divided by average outstanding loans and leases, excluding loans accounted for under the fair value option.
n/m = not meaningful
We believe that the presentation of information adjusted to exclude the impact of the fully-insured loan portfolio and loans accounted for under the fair value option is more representative of the ongoing operations and credit quality of the business. As a result, in the following tables and discussions of the residential mortgage and home equity portfolios, we exclude loans accounted for under the fair value option and provide information that excludes the impact of the fully-insured loan portfolio in certain credit quality statistics.
Residential Mortgage
The residential mortgage portfolio made up the largest percentage of our consumer loan portfolio at 50 percent of consumer loans and leases at June 30, 2024. Approximately 51 percent of the residential mortgage portfolio was in Consumer Banking, 46 percent was in GWIM and the remaining portion was in All Other.
Outstanding balances in the residential mortgage portfolio decreased $533 million during the six months ended June 30, 2024, as paydowns and payoffs outpaced new originations.
At June 30, 2024 and December 31, 2023, the residential mortgage portfolio included $10.5 billion and $11.0 billion of outstanding fully-insured loans, of which $2.1 billion and $2.2 billion had FHA insurance, with the remainder protected by Fannie Mae long-term standby agreements.
Table 19 presents certain residential mortgage key credit statistics on both a reported basis and excluding the fully-insured loan portfolio. The following discussion presents the residential mortgage portfolio excluding the fully-insured loan portfolio.
| Table 19 | Residential Mortgage – Key Credit Statistics | |||||||||||||||||||||||||||||||||||||||||||
Reported Basis (1) | Excluding Fully-insured Loans (1) | |||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | ||||||||||||||||||||||||||||||||||||||||
| Outstandings | $ | 227,870 | $ | 228,403 | $ | 217,377 | $ | 217,439 | ||||||||||||||||||||||||||||||||||||
| Accruing past due 30 days or more | 1,452 | 1,513 | 987 | 986 | ||||||||||||||||||||||||||||||||||||||||
| Accruing past due 90 days or more | 211 | 252 | — | — | ||||||||||||||||||||||||||||||||||||||||
Nonperforming loans (2) | 2,097 | 2,114 | 2,097 | 2,114 | ||||||||||||||||||||||||||||||||||||||||
| Percent of portfolio | ||||||||||||||||||||||||||||||||||||||||||||
| Refreshed LTV greater than 90 but less than or equal to 100 | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||||||||||||||||||||||
| Refreshed LTV greater than 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Refreshed FICO below 620 | 1 | 1 | 1 | 1 | ||||||||||||||||||||||||||||||||||||||||
(1)Outstandings, accruing past due, nonperforming loans and percentages of portfolio exclude loans accounted for under the fair value option.
(2)Includes loans that are contractually current that have not yet demonstrated a sustained period of payment performance following a modification.
Nonperforming outstanding balances in the residential mortgage portfolio remained relatively unchanged during the six months ended June 30, 2024. Of the nonperforming residential mortgage loans at June 30, 2024, $1.3 billion, or 63 percent, were current on contractual payments. Loans accruing past due 30 days or more of $987 million also remained relatively unchanged.
Of the $217.4 billion in total residential mortgage loans outstanding at June 30, 2024, $63.5 billion, or 29 percent, of loans were originated as interest-only. The outstanding balance of interest-only residential mortgage loans that had entered the amortization period was $3.5 billion, or six percent, at June 30, 2024. Residential mortgage loans that have entered the amortization period generally experience a higher rate of early stage delinquencies and nonperforming status compared to the residential mortgage portfolio as a whole. At June 30, 2024,
$49 million, or one percent, of outstanding interest-only residential mortgages that had entered the amortization period were accruing past due 30 days or more compared to $987 million, or less than one percent, for the entire residential mortgage portfolio. In addition, at June 30, 2024, $197 million, or six percent, of outstanding interest-only residential mortgage loans that had entered the amortization period were nonperforming, of which $75 million were contractually current. Loans that have yet to enter the amortization period in our interest-only residential mortgage portfolio are primarily well-collateralized loans to our wealth management clients and have an interest-only period of three years to 10 years. Substantially all of these loans that have yet to enter the amortization period will not be required to make a fully-amortizing payment until 2026 or later.
Bank of America 30 | ||||||||
Table 20 presents outstandings, nonperforming loans and net charge-offs by certain state concentrations for the residential mortgage portfolio. In the New York area, the New York-Northern New Jersey-Long Island Metropolitan Statistical Area (MSA) made up 15 percent of outstandings at both
June 30, 2024 and December 31, 2023. The Los Angeles-Long Beach-Santa Ana MSA within California represented 14 percent of outstandings at both June 30, 2024 and December 31, 2023.
| Table 20 | Residential Mortgage State Concentrations | |||||||||||||||||||||||||||||||||||||||||||||||||
Outstandings (1) | Nonperforming (1) | Net Charge-offs | ||||||||||||||||||||||||||||||||||||||||||||||||
| June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| California | $ | 81,240 | $ | 81,085 | $ | 634 | $ | 641 | $ | — | $ | (1) | $ | 2 | $ | (1) | ||||||||||||||||||||||||||||||||||
| New York | 25,864 | 25,975 | 317 | 320 | 1 | 1 | 1 | 3 | ||||||||||||||||||||||||||||||||||||||||||
| Florida | 15,605 | 15,450 | 138 | 131 | (1) | — | (1) | (2) | ||||||||||||||||||||||||||||||||||||||||||
| Texas | 9,313 | 9,361 | 88 | 88 | — | 1 | — | 1 | ||||||||||||||||||||||||||||||||||||||||||
| New Jersey | 8,626 | 8,671 | 94 | 97 | (1) | (1) | (1) | (1) | ||||||||||||||||||||||||||||||||||||||||||
| Other | 76,729 | 76,897 | 826 | 837 | 1 | 2 | 2 | 3 | ||||||||||||||||||||||||||||||||||||||||||
| Residential mortgage loans | $ | 217,377 | $ | 217,439 | $ | 2,097 | $ | 2,114 | $ | — | $ | 2 | $ | 3 | $ | 3 | ||||||||||||||||||||||||||||||||||
| Fully-insured loan portfolio | 10,493 | 10,964 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total residential mortgage loan portfolio | $ | 227,870 | $ | 228,403 | ||||||||||||||||||||||||||||||||||||||||||||||
(1)Outstandings and nonperforming loans exclude loans accounted for under the fair value option.
Home Equity
At June 30, 2024, the home equity portfolio made up six percent of the consumer portfolio and was comprised of home equity lines of credit (HELOCs), home equity loans and reverse mortgages. HELOCs generally have an initial draw period of 10 years, and after the initial draw period ends, the loans generally convert to 15- or 20-year amortizing loans. We no longer originate home equity loans or reverse mortgages.
At June 30, 2024, 84 percent of the home equity portfolio was in Consumer Banking, 10 percent was in GWIM and the remainder of the portfolio was in All Other. Outstanding balances in the home equity portfolio decreased $85 million during the six months ended June 30, 2024 primarily due to paydowns outpacing draws on existing lines and new originations. Of the
total home equity portfolio at June 30, 2024 and December 31, 2023, $9.7 billion and $10.1 billion, or 38 percent and 39 percent, were in first-lien positions. At June 30, 2024, outstanding balances in the home equity portfolio that were in a second-lien or more junior-lien position and where we also held the first-lien loan totaled $4.4 billion, or 17 percent, of our total home equity portfolio.
Unused HELOCs totaled $45.3 billion and $45.1 billion at June 30, 2024 and December 31, 2023. The HELOC utilization rate was 35 percent at both June 30, 2024 and December 31, 2023.
Table 21 presents certain home equity portfolio key credit statistics.
| Table 21 | Home Equity – Key Credit Statistics (1) | ||||||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | |||||||||||||||
| Outstandings | $ | 25,442 | $ | 25,527 | |||||||||||||
| Accruing past due 30 days or more | 87 | 95 | |||||||||||||||
Nonperforming loans (2) | 422 | 450 | |||||||||||||||
| Percent of portfolio | |||||||||||||||||
| Refreshed CLTV greater than 90 but less than or equal to 100 | — | % | — | % | |||||||||||||
| Refreshed CLTV greater than 100 | — | — | |||||||||||||||
| Refreshed FICO below 620 | 3 | 3 | |||||||||||||||
(1)Outstandings, accruing past due, nonperforming loans and percentages of the portfolio exclude loans accounted for under the fair value option.
(2)Includes loans that are contractually current that have not yet demonstrated a sustained period of payment performance following a modification.
Nonperforming outstanding balances in the home equity portfolio decreased $28 million to $422 million at June 30, 2024, primarily driven by paydowns and payoffs and returns to performing status outpacing new additions. Of the nonperforming home equity loans at June 30, 2024, $253 million, or 60 percent, were current on contractual payments. In addition, $94 million, or 22 percent, were 180 days or more past due and had been written down to the estimated fair value of the collateral, less costs to sell. Accruing loans that were 30 days or more past due remained relatively unchanged during the six months ended June 30, 2024.
Of the $25.4 billion in total home equity portfolio outstandings at June 30, 2024, as shown in Table 21, 10 percent require interest-only payments. The outstanding balance of HELOCs that had reached the end of their draw period and
entered the amortization period was $3.6 billion at June 30, 2024. The HELOCs that have entered the amortization period have experienced a higher percentage of early stage delinquencies and nonperforming status when compared to the HELOC portfolio as a whole. At June 30, 2024, $36 million, or one percent, of outstanding HELOCs that had entered the amortization period were accruing past due 30 days or more. In addition, at June 30, 2024, $262 million, or seven percent, were nonperforming.
For our interest-only HELOC portfolio, we do not actively track how many of our home equity customers pay only the minimum amount due on their home equity loans and lines; however, we can infer some of this information through a review of our HELOC portfolio that we service and is still in its revolving period. During the six months ended June 30, 2024, 29 percent
31 Bank of America | ||||||||
of these customers with an outstanding balance did not pay any principal on their HELOCs.
Table 22 presents outstandings, nonperforming balances and net recoveries by certain state concentrations for the home equity portfolio. In the New York area, the New York-Northern New Jersey-Long Island MSA made up 11 percent of the
outstanding home equity portfolio at both June 30, 2024 and December 31, 2023. The Los Angeles-Long Beach-Santa Ana MSA within California made up 10 percent of the outstanding home equity portfolio at both June 30, 2024 and December 31, 2023.
| Table 22 | Home Equity State Concentrations | |||||||||||||||||||||||||||||||||||||||||||||||||
Outstandings (1) | Nonperforming (1) | Net Charge-Offs | ||||||||||||||||||||||||||||||||||||||||||||||||
| June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| California | $ | 6,960 | $ | 6,966 | $ | 105 | $ | 109 | $ | (2) | $ | (1) | $ | (5) | $ | (2) | ||||||||||||||||||||||||||||||||||
| Florida | 2,539 | 2,576 | 49 | 53 | (2) | (2) | (4) | (5) | ||||||||||||||||||||||||||||||||||||||||||
| New Jersey | 1,830 | 1,870 | 38 | 46 | (2) | (3) | (4) | (3) | ||||||||||||||||||||||||||||||||||||||||||
| New York | 1,527 | 1,590 | 66 | 71 | (2) | (2) | (2) | (4) | ||||||||||||||||||||||||||||||||||||||||||
| Texas | 1,457 | 1,410 | 15 | 16 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Other | 11,129 | 11,115 | 149 | 155 | (6) | (8) | (12) | (14) | ||||||||||||||||||||||||||||||||||||||||||
| Total home equity loan portfolio | $ | 25,442 | $ | 25,527 | $ | 422 | $ | 450 | $ | (14) | $ | (16) | $ | (27) | $ | (28) | ||||||||||||||||||||||||||||||||||
(1)Outstandings and nonperforming loans exclude loans accounted for under the fair value option.
Credit Card
At June 30, 2024, 97 percent of the credit card portfolio was managed in Consumer Banking with the remainder in GWIM. Outstandings in the credit card portfolio decreased $2.8 billion during the six months ended June 30, 2024 to $99.5 billion as payments more than offset purchase volume and card transfers. Net charge-offs increased $345 million to $955 million and $743 million to $1.9 billion during the three and six months ended June 30, 2024 compared to the same periods in 2023.
Credit card loans 30 days or more past due and still accruing interest of $2.4 billion, and 90 days or more past due and still accruing interest of $1.3 billion remained relatively unchanged at June 30, 2024.
Unused lines of credit for credit card increased to $396.5 billion at June 30, 2024 from $390.2 billion at December 31, 2023.
Table 23 presents certain state concentrations for the credit card portfolio.
| Table 23 | Credit Card State Concentrations | |||||||||||||||||||||||||||||||||||||||||||||||||
| Outstandings | Accruing Past Due 90 Days or More | Net Charge-offs | ||||||||||||||||||||||||||||||||||||||||||||||||
| June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| California | $ | 16,518 | $ | 16,952 | $ | 235 | $ | 216 | $ | 177 | $ | 109 | $ | 338 | $ | 197 | ||||||||||||||||||||||||||||||||||
| Florida | 10,325 | 10,521 | 172 | 168 | 130 | 80 | 253 | 149 | ||||||||||||||||||||||||||||||||||||||||||
| Texas | 8,739 | 8,978 | 127 | 125 | 94 | 57 | 184 | 105 | ||||||||||||||||||||||||||||||||||||||||||
| New York | 5,574 | 5,788 | 79 | 84 | 60 | 51 | 122 | 90 | ||||||||||||||||||||||||||||||||||||||||||
| Washington | 5,339 | 5,352 | 43 | 41 | 31 | 18 | 58 | 32 | ||||||||||||||||||||||||||||||||||||||||||
| Other | 52,955 | 54,609 | 601 | 590 | 463 | 295 | 899 | 538 | ||||||||||||||||||||||||||||||||||||||||||
| Total credit card portfolio | $ | 99,450 | $ | 102,200 | $ | 1,257 | $ | 1,224 | $ | 955 | $ | 610 | $ | 1,854 | $ | 1,111 | ||||||||||||||||||||||||||||||||||
Direct/Indirect Consumer
At June 30, 2024, 52 percent of the direct/indirect portfolio was included in Consumer Banking (consumer auto and recreational vehicle lending) and 48 percent was included in
GWIM (principally securities-based lending loans). Outstandings in the direct/indirect portfolio increased $366 million during the six months ended June 30, 2024 to $103.8 billion driven by increases in securities-based lending.
Bank of America 32 | ||||||||
Table 24 presents certain state concentrations for the direct/indirect consumer loan portfolio.
| Table 24 | Direct/Indirect State Concentrations | |||||||||||||||||||||||||||||||||||||||||||||||||
| Outstandings | Nonperforming | Net Charge-offs | ||||||||||||||||||||||||||||||||||||||||||||||||
| June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| California | $ | 15,502 | $ | 15,416 | $ | 30 | $ | 27 | $ | 12 | $ | 4 | $ | 27 | $ | 6 | ||||||||||||||||||||||||||||||||||
| Florida | 13,953 | 13,550 | 18 | 18 | 6 | 3 | 15 | 3 | ||||||||||||||||||||||||||||||||||||||||||
| Texas | 9,859 | 9,668 | 15 | 14 | 7 | 3 | 15 | 3 | ||||||||||||||||||||||||||||||||||||||||||
| New York | 7,365 | 7,335 | 13 | 11 | 3 | 2 | 7 | 2 | ||||||||||||||||||||||||||||||||||||||||||
| New Jersey | 4,401 | 4,376 | 6 | 5 | 2 | 1 | 4 | 1 | ||||||||||||||||||||||||||||||||||||||||||
| Other | 52,754 | 53,123 | 70 | 73 | 21 | 4 | 48 | 3 | ||||||||||||||||||||||||||||||||||||||||||
| Total direct/indirect loan portfolio | $ | 103,834 | $ | 103,468 | $ | 152 | $ | 148 | $ | 51 | $ | 17 | $ | 116 | $ | 18 | ||||||||||||||||||||||||||||||||||
Other Consumer
Other consumer primarily consists of deposit overdraft balances. Net charge-offs decreased $40 million to $67 million and $128 million to $141 million during the three and six months ended June 30, 2024 compared to the same periods in 2023, primarily driven by lower overdraft losses from fraud activity.
Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity
Table 25 presents nonperforming consumer loans, leases and foreclosed properties activity for the three and six months
ended June 30, 2024 and 2023. During the six months ended June 30, 2024, nonperforming consumer loans of $2.7 billion remained relatively unchanged.
At June 30, 2024, $460 million, or 17 percent, of nonperforming loans were 180 days or more past due and had been written down to their estimated property value less costs to sell. In addition, at June 30, 2024, $1.6 billion, or 61 percent, of nonperforming consumer loans were current and classified as nonperforming loans in accordance with applicable policies.
During the six months ended June 30, 2024, foreclosed properties of $114 million remained relatively unchanged.
| Table 25 | Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity | |||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Nonperforming loans and leases, beginning of period | $ | 2,697 | $ | 2,714 | $ | 2,712 | $ | 2,754 | ||||||||||||||||||
| Additions | 223 | 258 | 477 | 511 | ||||||||||||||||||||||
| Reductions: | ||||||||||||||||||||||||||
| Paydowns and payoffs | (118) | (131) | (249) | (234) | ||||||||||||||||||||||
| Sales | (1) | (2) | (2) | (4) | ||||||||||||||||||||||
Returns to performing status (1) | (121) | (92) | (234) | (262) | ||||||||||||||||||||||
| Charge-offs | (7) | (13) | (17) | (25) | ||||||||||||||||||||||
| Transfers to foreclosed properties | (2) | (5) | (16) | (11) | ||||||||||||||||||||||
Total net additions (reductions) to nonperforming loans and leases | (26) | 15 | (41) | (25) | ||||||||||||||||||||||
Total nonperforming loans and leases, June 30 | 2,671 | 2,729 | 2,671 | 2,729 | ||||||||||||||||||||||
Foreclosed properties, June 30 | 114 | 97 | 114 | 97 | ||||||||||||||||||||||
Nonperforming consumer loans, leases and foreclosed properties, June 30 (2) | $ | 2,785 | $ | 2,826 | $ | 2,785 | $ | 2,826 | ||||||||||||||||||
Nonperforming consumer loans and leases as a percentage of outstanding consumer loans and leases (3) | 0.58 | % | 0.60 | % | ||||||||||||||||||||||
Nonperforming consumer loans, leases and foreclosed properties as a percentage of outstanding consumer loans, leases and foreclosed properties (3) | 0.61 | 0.62 | ||||||||||||||||||||||||
(1)Consumer loans may be returned to performing status when all principal and interest is current and full repayment of the remaining contractual principal and interest is expected, or when the loan otherwise becomes well-secured and is in the process of collection.
(2)Includes repossessed non-real estate assets of $22 million and $0 at June 30, 2024 and 2023.
(3)Outstanding consumer loans and leases exclude loans accounted for under the fair value option.
Commercial Portfolio Credit Risk Management
Commercial credit risk is evaluated and managed with the goal that concentrations of credit exposure continue to be aligned with our risk appetite. We review, measure and manage concentrations of credit exposure by industry, product, geography, customer relationship and loan size. We also review, measure and manage commercial real estate loans by geographic location and property type. In addition, within our non-U.S. portfolio, we evaluate exposures by region and by country. Tables 30, 32 and 35 summarize our concentrations. We also utilize syndications of exposure to third parties, loan sales, hedging and other risk mitigation techniques to manage
the size and risk profile of the commercial credit portfolio. For more information on our industry concentrations, see Table 32 and Commercial Portfolio Credit Risk Management – Industry Concentrations on page 37.
For more information on our accounting policies regarding delinquencies, nonperforming status, net charge-offs and loan modifications for the commercial portfolio, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.
33 Bank of America | ||||||||
Commercial Credit Portfolio
Outstanding commercial loans and leases increased $6.1 billion during the six months ended June 30, 2024 due to growth in U.S. commercial, primarily in GWIM and Global Markets. During the six months ended June 30, 2024, commercial credit quality deteriorated as reservable criticized utilized exposure increased primarily driven by U.S. commercial across a broad range of industries while commercial nonperforming loans remained relatively unchanged. Commercial net charge-offs increased $325 million and $641 million to $474 million and $944 million during the three and six months ended June 30, 2024 compared to the same periods in 2023 primarily due to higher losses in the commercial real estate office portfolio.
With the exception of the office property type, which is further discussed in the Commercial Real Estate section herein, credit quality of commercial real estate borrowers has remained relatively stable since December 31, 2023; however, we are closely monitoring emerging trends and borrower performance in the higher interest rate environment. Recent demand for office space has been stagnant, and future demand for office space continues to be uncertain as companies evaluate space needs with employment models that utilize a mix of remote and conventional office use.
The commercial allowance for loan and lease losses decreased $98 million during the six months ended June 30, 2024 to $4.7 billion. For more information, see Allowance for Credit Losses on page 40.
Total commercial utilized credit exposure increased $1.5 billion during the six months ended June 30, 2024 to $697.8 billion primarily driven by increased loans and leases, partially offset by lower derivative assets. The utilization rate for loans and leases, standby letters of credit (SBLCs) and financial guarantees, and commercial letters of credit, in the aggregate, was 55 percent at both June 30, 2024 and December 31, 2023.
Table 26 presents commercial credit exposure by type for utilized, unfunded and total binding committed credit exposure. Commercial utilized credit exposure includes SBLCs and financial guarantees and commercial letters of credit that have been issued and for which we are legally bound to advance funds under prescribed conditions during a specified time period, and excludes exposure related to trading account assets. Although funds have not yet been advanced, these exposure types are considered utilized for credit risk management purposes.
| Table 26 | Commercial Credit Exposure by Type | |||||||||||||||||||||||||||||||||||||
Commercial Utilized (1) | Commercial Unfunded (2, 3, 4) | Total Commercial Committed | ||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | ||||||||||||||||||||||||||||||||
| Loans and leases | $ | 599,841 | $ | 593,767 | $ | 512,178 | $ | 507,641 | $ | 1,112,019 | $ | 1,101,408 | ||||||||||||||||||||||||||
Derivative assets (5) | 35,956 | 39,323 | — | — | 35,956 | 39,323 | ||||||||||||||||||||||||||||||||
| Standby letters of credit and financial guarantees | 31,290 | 31,348 | 1,912 | 1,953 | 33,202 | 33,301 | ||||||||||||||||||||||||||||||||
| Debt securities and other investments | 17,902 | 20,422 | 4,595 | 3,083 | 22,497 | 23,505 | ||||||||||||||||||||||||||||||||
| Loans held-for-sale | 5,996 | 4,338 | 5,482 | 4,904 | 11,478 | 9,242 | ||||||||||||||||||||||||||||||||
| Operating leases | 5,191 | 5,312 | — | — | 5,191 | 5,312 | ||||||||||||||||||||||||||||||||
| Commercial letters of credit | 874 | 943 | 165 | 232 | 1,039 | 1,175 | ||||||||||||||||||||||||||||||||
| Other | 763 | 846 | — | — | 763 | 846 | ||||||||||||||||||||||||||||||||
| Total | $ | 697,813 | $ | 696,299 | $ | 524,332 | $ | 517,813 | $ | 1,222,145 | $ | 1,214,112 | ||||||||||||||||||||||||||
(1)Commercial utilized exposure includes loans of $3.0 billion and $3.3 billion accounted for under the fair value option at June 30, 2024 and December 31, 2023.
(2)Commercial unfunded exposure includes commitments accounted for under the fair value option with a notional amount of $3.2 billion and $2.6 billion at June 30, 2024 and December 31, 2023.
(3)Excludes unused business card lines, which are not legally binding.
(4)Includes the notional amount of unfunded legally binding lending commitments, net of amounts distributed (i.e., syndicated or participated) to other financial institutions. The distributed amounts were $10.3 billion at both June 30, 2024 and December 31, 2023.
(5)Derivative assets are carried at fair value, reflect the effects of legally enforceable master netting agreements and have been reduced by cash collateral of $27.4 billion and $29.4 billion at June 30, 2024 and December 31, 2023. Not reflected in utilized and committed exposure is additional non-cash derivative collateral held of $56.8 billion and $56.1 billion at June 30, 2024 and December 31, 2023, which consists primarily of other marketable securities.
Bank of America 34 | ||||||||
Table 27 presents our commercial loans and leases portfolio and related credit quality information at June 30, 2024 and December 31, 2023.
| Table 27 | Commercial Credit Quality | |||||||||||||||||||||||||||||||||||||
| Outstandings | Nonperforming | Accruing Past Due 90 Days or More | ||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | ||||||||||||||||||||||||||||||||
| Commercial and industrial: | ||||||||||||||||||||||||||||||||||||||
| U.S. commercial | $ | 369,139 | $ | 358,931 | $ | 700 | $ | 636 | $ | 68 | $ | 51 | ||||||||||||||||||||||||||
| Non-U.S. commercial | 122,183 | 124,581 | 90 | 175 | 3 | 4 | ||||||||||||||||||||||||||||||||
| Total commercial and industrial | 491,322 | 483,512 | 790 | 811 | 71 | 55 | ||||||||||||||||||||||||||||||||
| Commercial real estate | 70,284 | 72,878 | 1,971 | 1,927 | 59 | 32 | ||||||||||||||||||||||||||||||||
| Commercial lease financing | 14,874 | 14,854 | 19 | 19 | 7 | 7 | ||||||||||||||||||||||||||||||||
| 576,480 | 571,244 | 2,780 | 2,757 | 137 | 94 | |||||||||||||||||||||||||||||||||
U.S. small business commercial (1) | 20,395 | 19,197 | 22 | 16 | 189 | 184 | ||||||||||||||||||||||||||||||||
| Commercial loans excluding loans accounted for under the fair value option | $ | 596,875 | $ | 590,441 | $ | 2,802 | $ | 2,773 | $ | 326 | $ | 278 | ||||||||||||||||||||||||||
Loans accounted for under the fair value option (2) | 2,966 | 3,326 | ||||||||||||||||||||||||||||||||||||
| Total commercial loans and leases | $ | 599,841 | $ | 593,767 | ||||||||||||||||||||||||||||||||||
(1)Includes card-related products.
(2)Commercial loans accounted for under the fair value option includes U.S. commercial of $2.0 billion and $2.2 billion and non-U.S. commercial of $945 million and $1.2 billion at June 30, 2024 and December 31, 2023. For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.
Table 28 presents net charge-offs and related ratios for our commercial loans and leases for the three and six months ended June 30, 2024 and 2023.
| Table 28 | Commercial Net Charge-offs and Related Ratios | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net Charge-offs | Net Charge-off Ratios (1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. commercial | $ | 87 | $ | 5 | 153 | $ | 52 | 0.10 | % | 0.01 | % | 0.08 | % | 0.03 | % | |||||||||||||||||||||||||||||||||||
| Non-U.S. commercial | (3) | — | (12) | 20 | (0.01) | — | (0.02) | 0.03 | ||||||||||||||||||||||||||||||||||||||||||
| Total commercial and industrial | 84 | 5 | 141 | 72 | 0.07 | — | 0.06 | 0.03 | ||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate | 272 | 69 | 576 | 91 | 1.53 | 0.37 | 1.62 | 0.25 | ||||||||||||||||||||||||||||||||||||||||||
| Commercial lease financing | — | 1 | 1 | — | — | — | 0.01 | — | ||||||||||||||||||||||||||||||||||||||||||
| 356 | 75 | 718 | 163 | 0.25 | 0.05 | 0.25 | 0.06 | |||||||||||||||||||||||||||||||||||||||||||
| U.S. small business commercial | 118 | 74 | 226 | 140 | 2.35 | 1.62 | 2.28 | 1.55 | ||||||||||||||||||||||||||||||||||||||||||
| Total commercial | $ | 474 | $ | 149 | $ | 944 | $ | 303 | 0.32 | 0.10 | 0.32 | 0.10 | ||||||||||||||||||||||||||||||||||||||
(1)Net charge-off ratios are calculated as annualized net charge-offs divided by average outstanding loans and leases, excluding loans accounted for under the fair value option.
Table 29 presents commercial reservable criticized utilized exposure by loan type. Criticized exposure corresponds to the Special Mention, Substandard and Doubtful asset categories as defined by regulatory authorities. Total commercial reservable criticized utilized exposure increased $1.5 billion during the six
months ended June 30, 2024 primarily driven by U.S. commercial, partially offset by commercial real estate. At June 30, 2024 and December 31, 2023, 90 percent and 89 percent of commercial reservable criticized utilized exposure was secured.
| Table 29 | Commercial Reservable Criticized Utilized Exposure (1, 2) | |||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||
| Commercial and industrial: | ||||||||||||||||||||||||||
| U.S. commercial | $ | 13,758 | 3.48 | % | $ | 12,006 | 3.12 | % | ||||||||||||||||||
| Non-U.S. commercial | 1,835 | 1.44 | 1,787 | 1.37 | ||||||||||||||||||||||
| Total commercial and industrial | 15,593 | 2.98 | 13,793 | 2.68 | ||||||||||||||||||||||
| Commercial real estate | 8,314 | 11.62 | 8,749 | 11.80 | ||||||||||||||||||||||
| Commercial lease financing | 211 | 1.42 | 166 | 1.12 | ||||||||||||||||||||||
| 24,118 | 3.96 | 22,708 | 3.76 | |||||||||||||||||||||||
| U.S. small business commercial | 643 | 3.16 | 592 | 3.08 | ||||||||||||||||||||||
| Total commercial reservable criticized utilized exposure | $ | 24,761 | 3.94 | $ | 23,300 | 3.74 | ||||||||||||||||||||
(1)Total commercial reservable criticized utilized exposure includes loans and leases of $23.7 billion and $22.5 billion and commercial letters of credit of $1.0 billion and $795 million at June 30, 2024 and December 31, 2023.
(2)Percentages are calculated as commercial reservable criticized utilized exposure divided by total commercial reservable utilized exposure for each exposure category.
35 Bank of America | ||||||||
Commercial and Industrial
Commercial and industrial loans include U.S. commercial and non-U.S. commercial portfolios.
U.S. Commercial
At June 30, 2024, 62 percent of the U.S. commercial loan portfolio, excluding small business, was managed in Global Banking, 22 percent in Global Markets, 15 percent in GWIM (loans that provide financing for asset purchases, business investments and other liquidity needs for high net worth clients) and the remainder primarily in Consumer Banking. U.S. commercial loans increased $10.2 billion, or three percent, during the six months ended June 30, 2024 primarily driven by Global Banking and GWIM. Reservable criticized utilized exposure increased $1.8 billion, or 15 percent, driven by a broad range of industries.
Non-U.S. Commercial
At June 30, 2024, 60 percent of the non-U.S. commercial loan portfolio was managed in Global Banking, 39 percent in Global Markets and the remainder primarily in GWIM. Non-U.S. commercial loans decreased $2.4 billion, or two percent, during the six months ended June 30, 2024 primarily driven by Global Banking. Reservable criticized utilized exposure increased $48 million, or three percent. For information on the non-U.S. commercial portfolio, see Non-U.S. Portfolio on page 39.
Commercial Real Estate
Commercial real estate primarily includes commercial loans secured by non-owner-occupied real estate and is dependent on the sale or lease of the real estate as the primary source of repayment. Outstanding loans decreased $2.6 billion, or four percent, during the six months ended June 30, 2024 to $70.3 billion primarily driven by the office property type. The
commercial real estate portfolio is primarily managed in Global Banking and consists of loans made primarily to public and private developers, and commercial real estate firms. The portfolio remains diversified across property types and geographic regions. California represented the largest state concentration at 20 percent of commercial real estate at both June 30, 2024 and December 31, 2023.
Reservable criticized utilized exposure decreased $435 million, or five percent, during the six months ended June 30, 2024 primarily driven by office loans. Office loans represented the largest property type concentration at 23 percent of the commercial real estate portfolio at June 30, 2024, and approximately two percent of total loans for the Corporation. This property type is roughly 75 percent Class A and had an origination loan-to-value of approximately 55 percent. Reservable criticized exposure for the office property type was $5.1 billion at June 30, 2024, and approximately $4.8 billion of office loans are scheduled to mature by the end of 2024.
During the three and six months ended June 30, 2024, net charge-offs increased by $203 million and $485 million to $272 million and $576 million compared to the same periods in 2023 driven by office loans. We use a number of proactive risk mitigation initiatives to reduce adversely rated exposure in the commercial real estate portfolio, including transfers of deteriorating exposures for management by independent special asset officers and the pursuit of loan restructurings or asset sales to achieve the best results for our customers and the Corporation.
Table 30 presents outstanding commercial real estate loans by geographic region, based on the geographic location of the collateral, and by property type.
| Table 30 | Outstanding Commercial Real Estate Loans | |||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | ||||||||||||
| By Geographic Region | ||||||||||||||
| Northeast | $ | 15,966 | $ | 15,920 | ||||||||||
| California | 14,085 | 14,551 | ||||||||||||
| Southwest | 8,566 | 9,318 | ||||||||||||
| Southeast | 7,245 | 8,368 | ||||||||||||
| Florida | 4,654 | 4,986 | ||||||||||||
| Midwest | 3,414 | 3,149 | ||||||||||||
| Illinois | 3,266 | 3,361 | ||||||||||||
| Midsouth | 2,833 | 2,785 | ||||||||||||
| Northwest | 2,100 | 2,095 | ||||||||||||
| Non-U.S. | 5,891 | 6,052 | ||||||||||||
| Other | 2,264 | 2,293 | ||||||||||||
Total outstanding commercial real estate loans | $ | 70,284 | $ | 72,878 | ||||||||||
| By Property Type | ||||||||||||||
| Non-residential | ||||||||||||||
| Office | $ | 16,314 | $ | 17,976 | ||||||||||
| Industrial / Warehouse | 14,675 | 14,746 | ||||||||||||
| Multi-family rental | 11,561 | 10,606 | ||||||||||||
| Shopping centers / Retail | 5,640 | 5,756 | ||||||||||||
| Hotel / Motels | 5,051 | 5,665 | ||||||||||||
| Multi-use | 2,131 | 2,681 | ||||||||||||
| Other | 14,080 | 14,201 | ||||||||||||
| Total non-residential | 69,452 | 71,631 | ||||||||||||
| Residential | 832 | 1,247 | ||||||||||||
Total outstanding commercial real estate loans | $ | 70,284 | $ | 72,878 | ||||||||||
Bank of America 36 | ||||||||
U.S. Small Business Commercial
The U.S. small business commercial loan portfolio is comprised of small business card loans and small business loans primarily managed in Consumer Banking. Credit card-related products were 54 percent of the U.S. small business commercial portfolio at both June 30, 2024 and December 31, 2023 and represented 99 percent and 98 percent of net charge-offs for the three and six months ended June 30, 2024 compared to 98 percent for the same periods in 2023. Accruing past due 90 days or more of $189 million remained relatively unchanged.
Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity
Table 31 presents the nonperforming commercial loans, leases and foreclosed properties activity during the three and six months ended June 30, 2024 and 2023. Nonperforming loans do not include loans accounted for under the fair value option. During the six months ended June 30, 2024, nonperforming commercial loans and leases increased $29 million to $2.8 billion. At June 30, 2024, 94 percent of commercial nonperforming loans, leases and foreclosed properties were secured, and 42 percent were contractually current. Commercial nonperforming loans were carried at 79 percent of their unpaid principal balance, as the carrying value of these loans has been reduced to the estimated collateral value less costs to sell.
| Table 31 | Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity (1, 2) | |||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Nonperforming loans and leases, beginning of period | $ | 3,186 | $ | 1,204 | $ | 2,773 | $ | 1,054 | ||||||||||||||||||
| Additions | 704 | 484 | 1,710 | 903 | ||||||||||||||||||||||
| Reductions: | ||||||||||||||||||||||||||
| Paydowns | (505) | (171) | (725) | (243) | ||||||||||||||||||||||
| Sales | (9) | (3) | (10) | (3) | ||||||||||||||||||||||
Returns to performing status (3) | (129) | (7) | (133) | (59) | ||||||||||||||||||||||
| Charge-offs | (357) | (87) | (725) | (175) | ||||||||||||||||||||||
| Transfers to foreclosed properties | (88) | (23) | (88) | (23) | ||||||||||||||||||||||
| Transfers to loans held-for-sale | — | — | — | (57) | ||||||||||||||||||||||
Total net additions (reductions) to nonperforming loans and leases | (384) | 193 | 29 | 343 | ||||||||||||||||||||||
Total nonperforming loans and leases, June 30 | 2,802 | 1,397 | 2,802 | 1,397 | ||||||||||||||||||||||
Foreclosed properties, June 30 | 104 | 51 | 104 | 51 | ||||||||||||||||||||||
Nonperforming commercial loans, leases and foreclosed properties, June 30 | $ | 2,906 | $ | 1,448 | $ | 2,906 | $ | 1,448 | ||||||||||||||||||
Nonperforming commercial loans and leases as a percentage of outstanding commercial loans and leases (4) | 0.47 | % | 0.24 | % | ||||||||||||||||||||||
Nonperforming commercial loans, leases and foreclosed properties as a percentage of outstanding commercial loans, leases and foreclosed properties (4) | 0.49 | 0.25 | ||||||||||||||||||||||||
(1)Balances do not include nonperforming loans held-for-sale of $707 million and $174 million at June 30, 2024 and 2023.
(2)Includes U.S. small business commercial activity. Small business card loans are excluded as they are not classified as nonperforming.
(3)Commercial loans and leases may be returned to performing status when all principal and interest is current and full repayment of the remaining contractual principal and interest is expected, when the loan otherwise becomes well-secured and is in the process of collection, or when a modified loan demonstrates a sustained period of payment performance.
(4)Outstanding commercial loans exclude loans accounted for under the fair value option.
Industry Concentrations
Table 32 presents commercial committed and utilized credit exposure by industry. For information on net notional credit protection purchased to hedge funded and unfunded exposures for which we elected the fair value option, as well as certain other credit exposures, see Commercial Portfolio Credit Risk Management – Risk Mitigation.
Commercial credit exposure is diversified across a broad range of industries. Total commercial committed exposure increased $8.0 billion during the six months ended June 30, 2024 to $1.2 trillion. The increase in commercial committed exposure was concentrated in Asset managers and funds, Software and services and Consumer services.
For information on industry limits, see Commercial Portfolio Credit Risk Management – Risk Mitigation in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Asset managers and funds, our largest industry concentration with committed exposure of $174.3 billion, increased $5.0 billion, or three percent, during the six months ended June 30, 2024, which was primarily driven by investment-grade exposures.
Real estate, our second largest industry concentration with committed exposure of $97.3 billion decreased $3.0 billion or three percent during the six months ended June 30, 2024. For more information on the commercial real estate and related portfolios, see Commercial Portfolio Credit Risk Management – Commercial Real Estate on page 36.
Capital goods, our third largest industry concentration with committed exposure of $92.2 billion, decreased $4.8 billion, or five percent, during the six months ended June 30, 2024. The decline in committed exposure was primarily due to decreases in Industrial conglomerates and Aerospace and defense, partially offset by an increase in Building products.
Various macroeconomic challenges, including geopolitical tensions, inflationary pressures and elevated interest rates, have led to uncertainty in the U.S. and global economies and have adversely impacted, and may continue to adversely impact, a number of industries. We continue to monitor all industries, particularly higher risk industries that are experiencing or could experience a more significant impact to their financial condition.
37 Bank of America | ||||||||
| Table 32 | Commercial Credit Exposure by Industry (1) | |||||||||||||||||||||||||
| Commercial Utilized | Total Commercial Committed (2) | |||||||||||||||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | ||||||||||||||||||||||
| Asset managers and funds | $ | 106,806 | $ | 103,138 | $ | 174,326 | $ | 169,318 | ||||||||||||||||||
Real estate (3) | 71,734 | 73,150 | 97,266 | 100,269 | ||||||||||||||||||||||
| Capital goods | 48,192 | 49,698 | 92,243 | 97,044 | ||||||||||||||||||||||
| Finance companies | 60,950 | 62,906 | 89,871 | 89,119 | ||||||||||||||||||||||
| Healthcare equipment and services | 34,369 | 35,037 | 62,557 | 61,766 | ||||||||||||||||||||||
| Materials | 25,662 | 25,223 | 56,069 | 55,296 | ||||||||||||||||||||||
| Retailing | 25,016 | 24,561 | 53,432 | 54,523 | ||||||||||||||||||||||
| Consumer services | 27,525 | 27,355 | 51,504 | 49,105 | ||||||||||||||||||||||
| Food, beverage and tobacco | 24,317 | 23,865 | 49,745 | 49,426 | ||||||||||||||||||||||
| Government and public education | 31,755 | 31,051 | 47,840 | 45,873 | ||||||||||||||||||||||
| Individuals and trusts | 34,124 | 32,481 | 46,069 | 43,938 | ||||||||||||||||||||||
| Commercial services and supplies | 23,282 | 22,642 | 42,292 | 41,473 | ||||||||||||||||||||||
| Utilities | 17,426 | 18,610 | 39,416 | 39,481 | ||||||||||||||||||||||
| Energy | 12,332 | 12,450 | 37,122 | 36,996 | ||||||||||||||||||||||
| Transportation | 23,798 | 24,200 | 34,860 | 36,267 | ||||||||||||||||||||||
| Technology hardware and equipment | 11,033 | 11,951 | 29,585 | 29,160 | ||||||||||||||||||||||
| Software and services | 10,901 | 9,830 | 26,734 | 22,381 | ||||||||||||||||||||||
| Global commercial banks | 21,621 | 22,749 | 24,819 | 25,684 | ||||||||||||||||||||||
| Media | 12,626 | 13,033 | 24,302 | 24,908 | ||||||||||||||||||||||
| Vehicle dealers | 18,179 | 16,283 | 23,546 | 22,570 | ||||||||||||||||||||||
| Consumer durables and apparel | 8,803 | 9,184 | 21,201 | 20,732 | ||||||||||||||||||||||
| Pharmaceuticals and biotechnology | 6,778 | 6,852 | 20,920 | 22,169 | ||||||||||||||||||||||
| Insurance | 9,903 | 9,371 | 20,115 | 19,322 | ||||||||||||||||||||||
| Telecommunication services | 9,165 | 9,224 | 17,685 | 17,269 | ||||||||||||||||||||||
| Automobiles and components | 8,044 | 7,049 | 16,192 | 16,459 | ||||||||||||||||||||||
| Food and staples retailing | 7,956 | 7,423 | 12,911 | 12,496 | ||||||||||||||||||||||
| Financial markets infrastructure (clearinghouses) | 2,953 | 4,229 | 5,156 | 6,503 | ||||||||||||||||||||||
| Religious and social organizations | 2,563 | 2,754 | 4,367 | 4,565 | ||||||||||||||||||||||
| Total commercial credit exposure by industry | $ | 697,813 | $ | 696,299 | $ | 1,222,145 | $ | 1,214,112 | ||||||||||||||||||
(1)Includes U.S. small business commercial exposure.
(2)Includes the notional amount of unfunded legally binding lending commitments, net of amounts distributed (i.e., syndicated or participated) to other financial institutions. The distributed amounts were $10.3 billion at both June 30, 2024 and December 31, 2023.
(3)Industries are viewed from a variety of perspectives to best isolate the perceived risks. For purposes of this table, the real estate industry is defined based on the primary business activity of the borrowers or counterparties using operating cash flows and primary source of repayment as key factors.
Risk Mitigation
We purchase credit protection to cover the funded portion as well as the unfunded portion of certain credit exposures. To lower the cost of obtaining our desired credit protection levels, we may add credit exposure within an industry, borrower or counterparty group by selling protection.
At June 30, 2024 and December 31, 2023, net notional credit default protection purchased in our credit derivatives portfolio to hedge our funded and unfunded exposures for which we elected the fair value option, as well as certain other credit exposures, was $10.4 billion and $10.9 billion. We recorded net gains of $9 million and net losses of $16 million for the three and six months ended June 30, 2024 compared to net losses of $34 million and $111 million for the three and six months ended June 30, 2023. The gains and losses on these instruments were largely offset by gains and losses on the
related exposures. The Value-at-Risk (VaR) results for these exposures are included in the fair value option portfolio information in Table 38. For more information, see Trading Risk Management on page 42.
Tables 33 and 34 present the maturity profiles and the credit exposure debt ratings of the net credit default protection portfolio at June 30, 2024 and December 31, 2023.
| Table 33 | Net Credit Default Protection by Maturity | |||||||||||||
| June 30 2024 | December 31 2023 | |||||||||||||
| Less than or equal to one year | 18 | % | 36 | % | ||||||||||
Greater than one year and less than or equal to five years | 82 | 64 | ||||||||||||
| Total net credit default protection | 100 | % | 100 | % | ||||||||||
Bank of America 38 | ||||||||
| Table 34 | Net Credit Default Protection by Credit Exposure Debt Rating | |||||||||||||||||||||||||
Net Notional (1) | Percent of Total | Net Notional (1) | Percent of Total | |||||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||
Ratings (2, 3) | ||||||||||||||||||||||||||
| AAA | $ | (399) | 3.8 | % | $ | (479) | 4.4 | % | ||||||||||||||||||
| AA | (633) | 6.1 | (1,080) | 9.9 | ||||||||||||||||||||||
| A | (5,151) | 49.3 | (5,237) | 48.2 | ||||||||||||||||||||||
| BBB | (3,134) | 30.0 | (2,912) | 26.8 | ||||||||||||||||||||||
| BB | (616) | 5.9 | (698) | 6.4 | ||||||||||||||||||||||
| B | (284) | 2.7 | (419) | 3.9 | ||||||||||||||||||||||
| CCC and below | (233) | 2.2 | (52) | 0.5 | ||||||||||||||||||||||
NR (4) | 1 | — | 2 | (0.1) | ||||||||||||||||||||||
Total net credit default protection | $ | (10,449) | 100.0 | % | $ | (10,875) | 100.0 | % | ||||||||||||||||||
(1)Represents net credit default protection purchased.
(2)Ratings are refreshed on a quarterly basis.
(3)Ratings of BBB- or higher are considered to meet the definition of investment grade.
(4)NR is comprised of index positions held and any names that have not been rated.
For more information on credit derivatives and counterparty credit risk valuation adjustments, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Non-U.S. Portfolio
Our non-U.S. credit and trading portfolios are subject to country risk. We define country risk as the risk of loss from unfavorable economic and political conditions, currency fluctuations, social instability and changes in government policies. A risk management framework is in place to measure, monitor and manage non-U.S. risk and exposures. In addition to the direct risk of doing business in a country, we also are exposed to indirect country risks (e.g., related to the collateral received on secured financing transactions or related to client clearing activities). These indirect exposures are managed in the normal course of business through credit, market and operational risk governance rather than through country risk governance. For more information on our non-U.S. credit and trading portfolios, see Non-U.S. Portfolio in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K. For more information on risks related to our non-U.S. portfolio, see the Geopolitical section within Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K.
Table 35 presents our 20 largest non-U.S. country exposures at June 30, 2024. These exposures accounted for 89 percent of our total non-U.S. exposure at both June 30, 2024 and December 31, 2023. Net country exposure for these 20 countries increased $10.0 billion in 2024 primarily driven by an increase in the United Kingdom.
| Table 35 | Top 20 Non-U.S. Countries Exposure | |||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Funded Loans and Loan Equivalents | Unfunded Loan Commitments | Net Counterparty Exposure | Securities/ Other Investments | Country Exposure at June 30 2024 | Hedges and Credit Default Protection | Net Country Exposure at June 30 2024 | Increase (Decrease) from December 31 2023 | ||||||||||||||||||||||||||||||||||||||||||
| United Kingdom | $ | 38,443 | $ | 19,266 | $ | 5,098 | $ | 5,820 | $ | 68,627 | $ | (1,816) | $ | 66,811 | $ | 10,876 | ||||||||||||||||||||||||||||||||||
| Germany | 24,453 | 9,659 | 1,245 | 2,268 | 37,625 | (4,019) | 33,606 | (2,049) | ||||||||||||||||||||||||||||||||||||||||||
| Canada | 13,565 | 9,944 | 1,339 | 3,074 | 27,922 | (453) | 27,469 | (546) | ||||||||||||||||||||||||||||||||||||||||||
| France | 13,946 | 9,069 | 1,078 | 3,159 | 27,252 | (1,671) | 25,581 | 723 | ||||||||||||||||||||||||||||||||||||||||||
| Australia | 12,059 | 4,856 | 439 | 1,840 | 19,194 | (361) | 18,833 | (2,489) | ||||||||||||||||||||||||||||||||||||||||||
| Brazil | 9,781 | 1,367 | 1,055 | 4,171 | 16,374 | (94) | 16,280 | 997 | ||||||||||||||||||||||||||||||||||||||||||
| Japan | 8,874 | 1,985 | 1,777 | 4,367 | 17,003 | (735) | 16,268 | (706) | ||||||||||||||||||||||||||||||||||||||||||
| India | 6,334 | 254 | 873 | 5,299 | 12,760 | (55) | 12,705 | 780 | ||||||||||||||||||||||||||||||||||||||||||
| Ireland | 7,822 | 2,078 | 63 | 473 | 10,436 | (162) | 10,274 | (59) | ||||||||||||||||||||||||||||||||||||||||||
| Singapore | 4,464 | 526 | 159 | 4,905 | 10,054 | (37) | 10,017 | (800) | ||||||||||||||||||||||||||||||||||||||||||
| China | 5,341 | 285 | 562 | 3,637 | 9,825 | (239) | 9,586 | 1,074 | ||||||||||||||||||||||||||||||||||||||||||
| Switzerland | 4,085 | 4,865 | 282 | 245 | 9,477 | (182) | 9,295 | 66 | ||||||||||||||||||||||||||||||||||||||||||
| South Korea | 4,727 | 1,306 | 590 | 1,937 | 8,560 | (128) | 8,432 | (28) | ||||||||||||||||||||||||||||||||||||||||||
| Mexico | 5,167 | 1,735 | 445 | 986 | 8,333 | (131) | 8,202 | (717) | ||||||||||||||||||||||||||||||||||||||||||
| Netherlands | 2,995 | 3,870 | 691 | 673 | 8,229 | (1,038) | 7,191 | 42 | ||||||||||||||||||||||||||||||||||||||||||
| Italy | 4,559 | 2,319 | 155 | 545 | 7,578 | (738) | 6,840 | 225 | ||||||||||||||||||||||||||||||||||||||||||
| Spain | 2,838 | 2,023 | 166 | 1,044 | 6,071 | (302) | 5,769 | 173 | ||||||||||||||||||||||||||||||||||||||||||
| Hong Kong | 3,200 | 550 | 420 | 1,111 | 5,281 | (29) | 5,252 | (600) | ||||||||||||||||||||||||||||||||||||||||||
| Saudi Arabia | 3,728 | 1,454 | 151 | 77 | 5,410 | (1,396) | 4,014 | 1,506 | ||||||||||||||||||||||||||||||||||||||||||
| Indonesia | 741 | — | 31 | 3,056 | 3,828 | (38) | 3,790 | 1,555 | ||||||||||||||||||||||||||||||||||||||||||
Total top 20 non-U.S. countries exposure | $ | 177,122 | $ | 77,411 | $ | 16,619 | $ | 48,687 | $ | 319,839 | $ | (13,624) | $ | 306,215 | $ | 10,023 | ||||||||||||||||||||||||||||||||||
Our largest non-U.S. country exposure at June 30, 2024 was the United Kingdom with net exposure of $66.8 billion, which increased $10.9 billion from December 31, 2023 primarily due to increased deposits with the central bank. Our second largest non-U.S. country exposure was Germany with net exposure of $33.6 billion at June 30, 2024, which decreased $2.0 billion from December 31, 2023 primarily due to lower exposure with financial institutions.
39 Bank of America | ||||||||
Allowance for Credit Losses
The allowance for credit losses decreased $209 million from December 31, 2023 to $14.3 billion at June 30, 2024, which included a $33 million and $176 million reserve decrease related to the consumer and commercial portfolios. The reserve
decrease was primarily driven by the commercial portfolio due to an improved macroeconomic outlook.
Table 36 presents an allocation of the allowance for credit losses by product type at June 30, 2024 and December 31, 2023.
| Table 36 | Allocation of the Allowance for Credit Losses by Product Type | |||||||||||||||||||||||||||||||||||||
| Amount | Percent of Total | Percent of Loans and Leases Outstanding (1) | Amount | Percent of Total | Percent of Loans and Leases Outstanding (1) | |||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses | ||||||||||||||||||||||||||||||||||||||
| Residential mortgage | $ | 283 | 2.14 | % | 0.12 | % | $ | 339 | 2.54 | % | 0.15 | % | ||||||||||||||||||||||||||
| Home equity | 64 | 0.48 | 0.25 | 47 | 0.35 | 0.19 | ||||||||||||||||||||||||||||||||
| Credit card | 7,341 | 55.45 | 7.38 | 7,346 | 55.06 | 7.19 | ||||||||||||||||||||||||||||||||
| Direct/Indirect consumer | 751 | 5.67 | 0.72 | 715 | 5.36 | 0.69 | ||||||||||||||||||||||||||||||||
| Other consumer | 75 | 0.57 | n/m | 73 | 0.55 | n/m | ||||||||||||||||||||||||||||||||
| Total consumer | 8,514 | 64.31 | 1.86 | 8,520 | 63.86 | 1.85 | ||||||||||||||||||||||||||||||||
U.S. commercial (2) | 2,586 | 19.54 | 0.66 | 2,600 | 19.49 | 0.69 | ||||||||||||||||||||||||||||||||
| Non-U.S. commercial | 822 | 6.21 | 0.67 | 842 | 6.31 | 0.68 | ||||||||||||||||||||||||||||||||
| Commercial real estate | 1,279 | 9.66 | 1.82 | 1,342 | 10.06 | 1.84 | ||||||||||||||||||||||||||||||||
| Commercial lease financing | 37 | 0.28 | 0.25 | 38 | 0.28 | 0.26 | ||||||||||||||||||||||||||||||||
| Total commercial | 4,724 | 35.69 | 0.79 | 4,822 | 36.14 | 0.82 | ||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses | 13,238 | 100.00 | % | 1.26 | 13,342 | 100.00 | % | 1.27 | ||||||||||||||||||||||||||||||
| Reserve for unfunded lending commitments | 1,104 | 1,209 | ||||||||||||||||||||||||||||||||||||
| Allowance for credit losses | $ | 14,342 | $ | 14,551 | ||||||||||||||||||||||||||||||||||
(1)Ratios are calculated as allowance for loan and lease losses as a percentage of loans and leases outstanding excluding loans accounted for under the fair value option.
(2)Includes allowance for loan and lease losses for U.S. small business commercial loans of $1.2 billion and $1.0 billion at June 30, 2024 and December 31, 2023.
n/m = not meaningful
Net charge-offs for the three and six months ended June 30, 2024 were $1.5 billion and $3.0 billion compared to $869 million and $1.7 billion for the same periods in 2023 primarily due to credit card loans and the commercial real estate office portfolio. The provision for credit losses increased $383 million to $1.5 billion and $771 million to $2.8 billion for the three and six months ended June 30, 2024 compared to the same periods in 2023. The provision for credit losses for the current-year periods was primarily driven by credit card loans and the commercial real estate office portfolio. The provision for credit losses for the consumer portfolio, including unfunded lending commitments, of $1.1 billion and $2.1 billion was largely unchanged for the three and six months ended June 30, 2024 compared to the same periods in 2023. The provision for credit
losses for the commercial portfolio, including unfunded lending commitments, increased $255 million to $414 million and $764 million to $774 million for the three and six months ended June 30, 2024 compared to the same periods in 2023.
Table 37 presents a rollforward of the allowance for credit losses, including certain loan and allowance ratios for the three and six months ended June 30, 2024 and 2023. For more information on the Corporation’s credit loss accounting policies and activity related to the allowance for credit losses, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.
Bank of America 40 | ||||||||
| Table 37 | Allowance for Credit Losses | |||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Allowance for loan and lease losses, December 31 | n/a | n/a | $ | 13,342 | $ | 12,682 | ||||||||||||||||||||
| January 1, 2023 adoption of credit loss standard | n/a | n/a | n/a | (243) | ||||||||||||||||||||||
| Allowance for loan and lease losses, beginning of period | $ | 13,213 | $ | 12,514 | $ | 13,342 | $ | 12,439 | ||||||||||||||||||
| Loans and leases charged off | ||||||||||||||||||||||||||
| Residential mortgage | (5) | (10) | (13) | (18) | ||||||||||||||||||||||
| Home equity | (3) | (5) | (6) | (11) | ||||||||||||||||||||||
| Credit card | (1,106) | (756) | (2,151) | (1,406) | ||||||||||||||||||||||
| Direct/Indirect consumer | (89) | (56) | (191) | (96) | ||||||||||||||||||||||
| Other consumer | (72) | (112) | (150) | (283) | ||||||||||||||||||||||
| Total consumer charge-offs | (1,275) | (939) | (2,511) | (1,814) | ||||||||||||||||||||||
U.S. commercial (1) | (226) | (106) | (422) | (240) | ||||||||||||||||||||||
| Non-U.S. commercial | — | (8) | (1) | (31) | ||||||||||||||||||||||
| Commercial real estate | (278) | (71) | (582) | (95) | ||||||||||||||||||||||
| Commercial lease financing | — | (1) | (1) | — | ||||||||||||||||||||||
| Total commercial charge-offs | (504) | (186) | (1,006) | (366) | ||||||||||||||||||||||
| Total loans and leases charged off | (1,779) | (1,125) | (3,517) | (2,180) | ||||||||||||||||||||||
| Recoveries of loans and leases previously charged off | ||||||||||||||||||||||||||
| Residential mortgage | 5 | 8 | 10 | 15 | ||||||||||||||||||||||
| Home equity | 17 | 21 | 33 | 39 | ||||||||||||||||||||||
| Credit card | 151 | 146 | 297 | 295 | ||||||||||||||||||||||
| Direct/Indirect consumer | 38 | 39 | 75 | 78 | ||||||||||||||||||||||
| Other consumer | 5 | 5 | 9 | 14 | ||||||||||||||||||||||
| Total consumer recoveries | 216 | 219 | 424 | 441 | ||||||||||||||||||||||
U.S. commercial (2) | 21 | 27 | 43 | 48 | ||||||||||||||||||||||
| Non-U.S. commercial | 3 | 8 | 13 | 11 | ||||||||||||||||||||||
| Commercial real estate | 6 | 2 | 6 | 4 | ||||||||||||||||||||||
| Total commercial recoveries | 30 | 37 | 62 | 63 | ||||||||||||||||||||||
| Total recoveries of loans and leases previously charged off | 246 | 256 | 486 | 504 | ||||||||||||||||||||||
| Net charge-offs | (1,533) | (869) | (3,031) | (1,676) | ||||||||||||||||||||||
| Provision for loan and lease losses | 1,562 | 1,309 | 2,932 | 2,209 | ||||||||||||||||||||||
| Other | (4) | (4) | (5) | (22) | ||||||||||||||||||||||
Allowance for loan and lease losses, June 30 | 13,238 | 12,950 | 13,238 | 12,950 | ||||||||||||||||||||||
| Reserve for unfunded lending commitments, beginning of period | 1,158 | 1,437 | 1,209 | 1,540 | ||||||||||||||||||||||
| Provision for unfunded lending commitments | (54) | (50) | (105) | (153) | ||||||||||||||||||||||
| Other | — | 1 | — | 1 | ||||||||||||||||||||||
Reserve for unfunded lending commitments, June 30 | 1,104 | 1,388 | 1,104 | 1,388 | ||||||||||||||||||||||
Allowance for credit losses, June 30 | $ | 14,342 | $ | 14,338 | $ | 14,342 | $ | 14,338 | ||||||||||||||||||
Loan and allowance ratios (3): | ||||||||||||||||||||||||||
Loans and leases outstanding at June 30 | $ | 1,053,588 | $ | 1,046,897 | $ | 1,053,588 | $ | 1,046,897 | ||||||||||||||||||
Allowance for loan and lease losses as a percentage of total loans and leases outstanding at June 30 | 1.26 | % | 1.24 | % | 1.26 | % | 1.24 | % | ||||||||||||||||||
Consumer allowance for loan and lease losses as a percentage of total consumer loans and leases outstanding at June 30 | 1.86 | 1.70 | 1.86 | 1.70 | ||||||||||||||||||||||
Commercial allowance for loan and lease losses as a percentage of total commercial loans and leases outstanding at June 30 | 0.79 | 0.88 | 0.79 | 0.88 | ||||||||||||||||||||||
| Average loans and leases outstanding | $ | 1,048,300 | $ | 1,041,976 | $ | 1,046,511 | $ | 1,039,172 | ||||||||||||||||||
Annualized net charge-offs as a percentage of average loans and leases outstanding | 0.59 | % | 0.33 | % | 0.58 | % | 0.33 | % | ||||||||||||||||||
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases at June 30 | 242 | 314 | 242 | 314 | ||||||||||||||||||||||
Ratio of the allowance for loan and lease losses at June 30 to annualized net charge-offs | 2.15 | 3.71 | 2.17 | 3.83 | ||||||||||||||||||||||
Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases at June 30 (4) | $ | 8,453 | $ | 5,481 | $ | 8,453 | $ | 5,481 | ||||||||||||||||||
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases at June 30 (4) | 87 | % | 181 | % | 87 | % | 181 | % | ||||||||||||||||||
(1)Includes U.S. small business commercial charge-offs of $130 million and $248 million for the three and six months ended June 30, 2024 compared to $84 million and $159 million for the same periods in 2023.
(2)Includes U.S. small business commercial recoveries of $12 million and $22 million for the three and six months ended June 30, 2024 compared to $10 million and $19 million for the same periods in 2023.
(3)Ratios are calculated as allowance for loan and lease losses as a percentage of loans and leases outstanding excluding loans accounted for under the fair value option.
(4)Primarily includes amounts related to credit card and unsecured consumer lending portfolios in Consumer Banking.
n/a = not applicable
41 Bank of America | ||||||||
Market Risk Management
For more information on our market risk management process, see Market Risk Management in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K. For more information on market risks, see the Market section within Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K.
Market risk is the risk that changes in market conditions may adversely impact the value of assets or liabilities, or otherwise negatively impact earnings. This risk is inherent in the financial instruments associated with our operations, primarily within our Global Markets segment. We are also exposed to these risks in other areas of the Corporation (e.g., our ALM activities). In the event of market stress, these risks could have a material impact on our results.
Trading Risk Management
To evaluate risks in our trading activities, we focus on the actual and potential volatility of revenues generated by individual positions as well as portfolios of positions. VaR is a common statistic used to measure market risk. Our primary VaR statistic is equivalent to a 99 percent confidence level, which means that for a VaR with a one-day holding period, there should not be losses in excess of VaR, on average, 99 out of 100 trading days.
Table 38 presents the total market-based portfolio VaR, which is the combination of the total covered positions (and less liquid trading positions) portfolio and the fair value option portfolio. For more information on the market risk VaR for trading activities, see Trading Risk Management in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
The total market-based portfolio VaR results in Table 38 include market risk to which we are exposed from all business segments, excluding credit valuation adjustment (CVA), DVA and related hedges. The majority of this portfolio is within the Global Markets segment.
Table 38 presents period-end, average, high and low daily trading VaR for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023 using a 99 percent confidence level. The amounts disclosed in Table 38 and Table 39 align to the view of covered positions used in the Basel 3 capital calculations. Foreign exchange and commodity positions are always considered covered positions, regardless of trading or banking treatment for the trade, except for structural foreign currency positions that are excluded with prior regulatory approval.
The average of total covered positions and less liquid trading positions portfolio VaR increased for the three months ended June 30, 2024 compared to the prior quarter due to an increase in interest rate and debt risk.
| Table 38 | Market Risk VaR for Trading Activities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | March 31, 2024 | June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Period End | Average | High (1) | Low (1) | Period End | Average | High (1) | Low (1) | Period End | Average | High (1) | Low (1) | 2024 Average | 2023 Average | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange | $ | 30 | $ | 32 | $ | 40 | $ | 25 | $ | 34 | $ | 34 | $ | 42 | $ | 27 | $ | 22 | $ | 29 | $ | 42 | $ | 16 | $ | 33 | $ | 31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate | 76 | 70 | 91 | 50 | 56 | 63 | 89 | 41 | 42 | 50 | 74 | 36 | 66 | 47 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit | 66 | 54 | 69 | 44 | 48 | 46 | 55 | 42 | 50 | 50 | 54 | 47 | 50 | 67 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity | 19 | 20 | 26 | 14 | 19 | 17 | 25 | 13 | 24 | 24 | 56 | 13 | 18 | 21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commodities | 10 | 9 | 12 | 8 | 10 | 10 | 12 | 8 | 8 | 9 | 12 | 7 | 10 | 10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Portfolio diversification | (120) | (104) | n/a | n/a | (97) | (103) | n/a | n/a | (85) | (98) | n/a | n/a | (103) | (110) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total covered positions portfolio | 81 | 81 | 99 | 64 | 70 | 67 | 86 | 55 | 61 | 64 | 85 | 53 | 74 | 66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact from less liquid exposures (2) | 2 | 9 | n/a | n/a | 6 | 13 | n/a | n/a | 8 | 12 | n/a | n/a | 11 | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total covered positions and less liquid trading positions portfolio | 83 | 90 | 110 | 73 | 76 | 80 | 100 | 69 | 69 | 76 | 105 | 63 | 85 | 92 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value option loans | 15 | 21 | 45 | 12 | 12 | 14 | 17 | 11 | 19 | 20 | 26 | 15 | 18 | 31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value option hedges | 8 | 16 | 27 | 8 | 8 | 9 | 12 | 6 | 12 | 16 | 20 | 12 | 12 | 16 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value option portfolio diversification | (10) | (23) | n/a | n/a | (11) | (11) | n/a | n/a | (19) | (24) | n/a | n/a | (17) | (29) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fair value option portfolio | 13 | 14 | 24 | 10 | 9 | 12 | 16 | 9 | 12 | 12 | 14 | 11 | 13 | 18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Portfolio diversification | (8) | (8) | n/a | n/a | (5) | (7) | n/a | n/a | (6) | (7) | n/a | n/a | (7) | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total market-based portfolio | $ | 88 | $ | 96 | 117 | 82 | $ | 80 | $ | 85 | 106 | 74 | $ | 75 | $ | 81 | 113 | 66 | $ | 91 | $ | 102 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)The high and low for each portfolio may have occurred on different trading days than the high and low for the components. Therefore the impact from less liquid exposures and the amount of portfolio diversification, which is the difference between the total portfolio and the sum of the individual components, is not relevant.
(2)Impact is net of diversification effects between the covered positions and less liquid trading positions portfolios.
n/a = not applicable
Bank of America 42 | ||||||||
The following graph presents the daily covered positions and less liquid trading positions portfolio VaR for the previous five quarters, corresponding to the data in Table 38.
Additional VaR statistics produced within our single VaR model are provided in Table 39 at the same level of detail as in Table 38. Evaluating VaR with additional statistics allows for an increased understanding of the risks in the portfolio, as the historical market data used in the VaR calculation does not necessarily follow a predefined statistical distribution. Table 39 presents average trading VaR statistics at 99 percent and 95 percent confidence levels for the three months ended June 30, 2024, March 31, 2024 and June 30, 2023.
| Table 39 | Average Market Risk VaR for Trading Activities – 99 percent and 95 percent VaR Statistics | ||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||
| June 30, 2024 | March 31, 2024 | June 30, 2023 | |||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 99 percent | 95 percent | 99 percent | 95 percent | 99 percent | 95 percent | |||||||||||||||||||||||||||||||||||
| Foreign exchange | $ | 32 | $ | 21 | $ | 34 | $ | 21 | $ | 29 | $ | 19 | |||||||||||||||||||||||||||||
| Interest rate | 70 | 36 | 63 | 32 | 50 | 27 | |||||||||||||||||||||||||||||||||||
| Credit | 54 | 30 | 46 | 26 | 50 | 29 | |||||||||||||||||||||||||||||||||||
| Equity | 20 | 10 | 17 | 7 | 24 | 12 | |||||||||||||||||||||||||||||||||||
| Commodities | 9 | 5 | 10 | 6 | 9 | 5 | |||||||||||||||||||||||||||||||||||
| Portfolio diversification | (104) | (63) | (103) | (57) | (98) | (56) | |||||||||||||||||||||||||||||||||||
| Total covered positions portfolio | 81 | 39 | 67 | 35 | 64 | 36 | |||||||||||||||||||||||||||||||||||
| Impact from less liquid exposures | 9 | 6 | 13 | 8 | 12 | 7 | |||||||||||||||||||||||||||||||||||
Total covered positions and less liquid trading positions portfolio | 90 | 45 | 80 | 43 | 76 | 43 | |||||||||||||||||||||||||||||||||||
| Fair value option loans | 21 | 13 | 14 | 9 | 20 | 13 | |||||||||||||||||||||||||||||||||||
| Fair value option hedges | 16 | 9 | 9 | 5 | 16 | 10 | |||||||||||||||||||||||||||||||||||
| Fair value option portfolio diversification | (23) | (14) | (11) | (7) | (24) | (15) | |||||||||||||||||||||||||||||||||||
| Total fair value option portfolio | 14 | 8 | 12 | 7 | 12 | 8 | |||||||||||||||||||||||||||||||||||
| Portfolio diversification | (8) | (5) | (7) | (4) | (7) | (6) | |||||||||||||||||||||||||||||||||||
| Total market-based portfolio | $ | 96 | $ | 48 | $ | 85 | $ | 46 | $ | 81 | $ | 45 | |||||||||||||||||||||||||||||
Backtesting
The accuracy of the VaR methodology is evaluated by backtesting, which compares the daily VaR results, utilizing a one-day holding period, against a comparable subset of trading revenue. For more information on our backtesting process, see Trading Risk Management – Backtesting in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
During the three and six months ended June 30, 2024, there were no days where this subset of trading revenue had losses that exceeded our total covered portfolio VaR, utilizing a one-day holding period.
Total Trading-related Revenue
Total trading-related revenue, excluding brokerage fees, and CVA, DVA and funding valuation adjustment gains (losses), represents the total amount earned from trading positions,
including market-based net interest income, which are taken in a diverse range of financial instruments and markets. For more information, see Trading Risk Management – Total Trading-related Revenue in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
The following histogram is a graphic depiction of trading volatility and illustrates the daily level of trading-related revenue for the three months ended June 30, 2024 compared to the three months ended March 31, 2024. During the three months ended June 30, 2024, positive trading-related revenue was recorded for 100 percent of the trading days, of which 95 percent were daily trading gains of over $25 million. This compares to the three months ended March 31, 2024 where positive trading-related revenue was recorded for 100 percent of the trading days, of which 97 percent were daily trading gains of over $25 million.
43 Bank of America | ||||||||
Trading Portfolio Stress Testing
Because the very nature of a VaR model suggests results can exceed our estimates and it is dependent on a limited historical window, we also stress test our portfolio using scenario analysis. This analysis estimates the change in the value of our trading portfolio that may result from abnormal market movements. For more information, see Trading Risk Management – Trading Portfolio Stress Testing in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Interest Rate Risk Management for the Banking Book
The following discussion presents net interest income for banking book activities. For more information, see Interest Rate Risk Management for the Banking Book in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Table 40 presents the spot and 12-month forward rates used in our baseline forecasts at June 30, 2024 and December 31, 2023.
| Table 40 | Forward Rates | |||||||||||||||||||
| Federal Funds | SOFR | 10-Year SOFR | ||||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||
| Spot rates | 5.50 | % | 5.33 | % | 3.98 | % | ||||||||||||||
| 12-month forward rates | 4.50 | 4.42 | 3.79 | |||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Spot rates | 5.50 | % | 5.38 | % | 3.47 | % | ||||||||||||||
| 12-month forward rates | 3.89 | 3.93 | 3.32 | |||||||||||||||||
Table 41 shows the potential pretax impact to net interest income over the next 12 months from June 30, 2024 and December 31, 2023 resulting from instantaneous parallel and non-parallel shocks to the market-based forward curve. Periodically, we evaluate the scenarios presented so that they are meaningful in the context of the current rate environment.
| Table 41 | Estimated Banking Book Net Interest Income Sensitivity to Curve Changes | |||||||||||||||||||||||||||||||
| Short Rate (bps) | Long Rate (bps) | Dynamic Deposits (1) | Static Deposits (1) | Static Deposits (1) | ||||||||||||||||||||||||||||
| (Dollars in billions) | June 30 2024 | June 30 2024 | December 31 2023 | |||||||||||||||||||||||||||||
| Parallel Shifts | ||||||||||||||||||||||||||||||||
+100 bps instantaneous shift | +100 | +100 | $ | 1.7 | $ | 3.3 | $ | 3.5 | ||||||||||||||||||||||||
-100 bps instantaneous shift | -100 | -100 | (2.2) | (3.3) | (3.1) | |||||||||||||||||||||||||||
+200 bps instantaneous shift | +200 | +200 | 2.7 | 5.9 | n/a | |||||||||||||||||||||||||||
-200 bps instantaneous shift | -200 | -200 | (5.1) | (6.7) | n/a | |||||||||||||||||||||||||||
| Flatteners | ||||||||||||||||||||||||||||||||
Short-end instantaneous change | +100 | — | 1.8 | 3.2 | 3.2 | |||||||||||||||||||||||||||
Long-end instantaneous change | — | -100 | 0.1 | (0.2) | (0.3) | |||||||||||||||||||||||||||
| Steepeners | ||||||||||||||||||||||||||||||||
Short-end instantaneous change | -100 | — | (2.1) | (3.0) | (2.8) | |||||||||||||||||||||||||||
Long-end instantaneous change | — | +100 | (0.1) | 0.2 | 0.3 | |||||||||||||||||||||||||||
(1)Dynamic Deposit sensitivity reflects behavioral customer deposit balance changes that could occur under various scenarios while Static Deposits assumes no deposit balance change.
n/a = not applicable
Bank of America 44 | ||||||||
We continue to be asset sensitive to a parallel upward move in interest rates, with the majority of that impact coming from the short end of the yield curve. Additionally, higher interest rates negatively impact the fair value of our debt securities classified as available for sale and adversely affect accumulated OCI and thus capital levels under the Basel 3 capital rules. Under instantaneous upward parallel shifts, the near-term adverse impact to Basel 3 capital would be reduced over time by offsetting positive impacts to net interest income generated from banking book activities. For more information on Basel 3, see Capital Management – Regulatory Capital on page 21.
As part of our ALM activities, we use securities, certain residential mortgages, and interest rate and foreign exchange derivatives in managing interest rate sensitivity. The sensitivity analysis in Table 41 assumes that we take no action in response to these rate shocks and does not assume any change in other macroeconomic variables normally correlated with changes in interest rates. Beginning in the second quarter of 2024, the sensitivity analysis incorporates potential movements in customer behavior that could result in changes in both total customer deposit balances and deposit balance mix, (e.g., interest bearing versus noninterest bearing), under the various interest rate scenarios. In higher rate scenarios, the analysis assumes that a portion of low-cost or noninterest-bearing deposits are replaced with higher yielding deposits or market-based funding. Conversely, in lower rate scenarios, the analysis assumes that a portion of higher yielding deposits or market-based funding are replaced with low-cost or noninterest-bearing deposits.
For larger interest rate scenarios, the interest rate sensitivity may behave in a non-linear manner as there are numerous estimates and assumptions, which require a high degree of judgment and are often interrelated, that could impact the outcome. Pertaining to the mortgage-backed securities and residential mortgage portfolio, if long-end interest rates were to significantly decrease over the next twelve months, for example over 200 bps, there would generally be an increase in customer prepayment behaviors with an incremental reduction to net interest income, noting that the extent of changes in customer prepayment activity can be impacted by multiple factors and is not necessarily limited to long-end interest rates. Conversely, if long-end interest rates were to significantly increase over the next twelve months, for example, over 200 bps, customer prepayments would likely modestly decrease and result in an incremental increase to net interest income. In addition, deposit pricing is rate sensitive in nature. This sensitivity is assumed to have non-linear impacts to larger short-end rate movements. In decreasing interest rate scenarios, and particularly where interest rates have decreased to small amounts, the ability to further reduce rates paid is reduced as customer rates near zero. In higher short-end rate scenarios, deposit pricing will likely increase at a faster rate, leading to incremental interest expense and reducing asset sensitivity. While the impact related to the above assumptions used in the asset sensitivity analysis can provide directional analysis on how net interest income will be impacted in changing environments, the ultimate impact is dependent upon the interrelationship of the assumptions and factors, which vary in different macroeconomic scenarios.
Economic Value of Equity
In addition to interest rate sensitivity described above, the Corporation’s management of its interest rate exposures in the banking book also considers a long-term view of interest rate sensitivity through the measurement of Economic Value of Equity (EVE). EVE captures changes in the net present value of banking book assets and liabilities under various interest rate scenarios and its impact to Tier 1 capital. Similar to net interest income, the Corporation establishes limits for EVE. EVE is largely driven by the Corporation’s longer duration fixed-rate products, such as investment securities, residential mortgages and deposits. For assets or liabilities that have no stated maturity, such as deposits, the Corporation estimates the duration for measurement purposes.
Interest Rate and Foreign Exchange Derivative Contracts
We use interest rate and foreign exchange derivative contracts in our ALM activities to manage our interest rate and foreign exchange risks. Specifically, we use those derivatives to manage both the variability in cash flows and changes in fair value of various assets and liabilities arising from those risks. Our interest rate derivative contracts are generally non-leveraged swaps tied to various benchmark interest rates and foreign exchange basis swaps, options, futures and forwards, and our foreign exchange contracts include cross-currency interest rate swaps, foreign currency futures contracts, foreign currency forward contracts and options.
The derivatives used in our ALM activities can be split into two broad categories: designated accounting hedges and other risk management derivatives. Designated accounting hedges are primarily used to manage our exposure to interest rates as described in the Interest Rate Risk Management for the Banking Book section and are included in the sensitivities presented in Table 41. The Corporation also uses foreign currency derivatives in accounting hedges to manage substantially all of the foreign exchange risk of our foreign operations. By hedging the foreign exchange risk of our foreign operations, the Corporation's market risk exposure in this area is not significant.
Risk management derivatives are predominantly used to hedge foreign exchange risks related to various foreign currency-denominated assets and liabilities and eliminate substantially all foreign currency exposures in the cash flows of the Corporation’s non-trading foreign currency-denominated financial instruments. These foreign exchange derivatives are sensitive to other market risk exposures such as cross-currency basis spreads and interest rate risk. However, as these features are not a significant component of these foreign exchange derivatives, the market risk related to this exposure is not significant. For more information on the accounting for derivatives, see Note 3 – Derivatives to the Consolidated Financial Statements.
45 Bank of America | ||||||||
Mortgage Banking Risk Management
We originate, fund and service mortgage loans, which subject us to credit, liquidity and interest rate risks, among others. We determine whether loans will be held for investment or held for sale at the time of commitment and manage credit and liquidity risks by selling or securitizing a portion of the loans we originate.
Changes in interest rates impact the value of interest rate lock commitments (IRLCs) and the related residential first mortgage loans held-for-sale (LHFS), as well as the value of the MSRs. Because the interest rate risks of these hedged items offset, we combine them into one overall hedged item with one combined economic hedge portfolio consisting of derivative contracts and securities. For more information on IRLCs and the related residential mortgage LHFS, see Mortgage Banking Risk Management in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
There were no significant gains or losses related to the change in fair value of MSRs, IRLCs and LHFS, net of gains and losses on the hedge portfolio, for the three and six months ended June 30, 2024 and 2023. For more information on MSRs, see Note 14 – Fair Value Measurements to the Consolidated Financial Statements.
Climate Risk
Climate Risk Management
Climate risk is the risk that climate change or actions taken to mitigate climate change expose the Corporation to economic, legal/regulatory, operational or reputational harm. Climate-related risks are divided into two major categories, both of which span across the seven key risk types discussed in the Managing Risk section in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K: (1) Physical Risk: risks related to the physical impacts of climate change, driven by extreme weather events such as hurricanes and floods, as well as chronic longer-term shifts such as rising average global temperatures and sea levels, and (2) Transition Risk: risks related to the transition to a low-carbon economy, which may entail extensive policy, legal, technology and market changes.
Physical risks of climate change, such as more frequent and severe extreme weather events, can increase the Corporation’s risks, including credit risk by diminishing borrowers’ repayment capacity or collateral values, and operational risk by negatively impacting the Corporation’s facilities, employees, or vendors. Transition risks of climate change may amplify credit risks through the financial impacts of changes in policy, technology or the market on the Corporation or our counterparties. Unanticipated market changes can lead to sudden price adjustments and give rise to heightened market risk.
Reputational risk can arise if we do not meet our climate-related goals and/or targets, or are perceived to be inadequately responsive to climate change or otherwise.
Our approach to managing climate risk is consistent with our risk management governance structure, from senior management to our Board and its committees, including the Enterprise Risk Committee (ERC) and the Corporate Governance, ESG and Sustainability Committee (CGESC) of the Board, which regularly discuss climate-related topics. The ERC oversees climate risk as set forth in our Risk Framework and Risk Appetite Statement. The CGESC is responsible for overseeing the Corporation’s environmental and sustainability-related activities and practices, and regularly reviews the Corporation’s climate-related policies and practices. Our Climate Risk Council consists of leaders across risk, Front Line Unit and control functions, and meets routinely to discuss our approach to managing climate-related risks.
Our climate risk management efforts are overseen by an officer who reports to the Chief Risk Officer. The Corporation has a Climate and Environmental Risk Management function that is responsible for overseeing climate risk management. They are responsible for establishing the Climate Risk Framework (described below) and governance structure, and providing an independent assessment of enterprise-wide climate risks.
Based on the Corporation’s Risk Framework, in 2023 we created our internal Climate Risk Framework, which addresses how the Corporation identifies, measures, monitors and controls climate risk by enhancing existing risk management processes and also includes examples of how climate risk manifests across the seven risk types. The framework details the roles and responsibilities for climate risk management across our three lines of defense (i.e., Front Line Units, Global Risk Management and Corporate Audit).
For more information on our governance framework, see the Managing Risk section in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K. For more information on climate risk, see Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K.
Climate-related Goals and Targets
In 2021, the Corporation announced a goal of achieving net zero greenhouse gas emissions before 2050 in our financing activities, operations and supply chain (Net Zero goal). As part of this goal, we have set interim 2030 targets across our financing activities related to certain high-emitting sectors (2030 Financing Activity Emissions Targets), operations and supply chain, all of which are further supported and complemented by our 10-year goal to mobilize and deploy $1.5 trillion in sustainable finance by 2030 in support of the U.N.
Bank of America 46 | ||||||||
Sustainable Development Goals, of which $1 trillion is dedicated to supporting the transition to a low-carbon economy, including capital mobilized across clean energy sectors and tailored financial solutions for emerging areas of the low-carbon economy. In particular, we have announced 2030 Financing Activity Emissions Targets for auto manufacturing, aviation, cement, energy, iron and steel, maritime shipping and power generation sectors.
Achieving our climate--related goals and targets, including our Net Zero goal and 2030 Financing Activity Emissions Targets, may require technological advances, clearly defined roadmaps for industry sectors and better emissions data reporting. Required changes may also include new standards and public policies, including those that improve the cost of capital for the transition to a low-carbon economy, as well as strong and active engagement with customers, suppliers, investors, government officials and other stakeholders. Activities related to our climate-related goals and targets have not resulted in a significant effect on our results of operations or financial position in the relevant periods presented herein.
For more information on climate-related matters and the Corporation’s climate-related goals and targets, including the Corporation’s plans to achieve its Net Zero goal and its 2030 targets, and progress on its sustainable finance goal, see the Corporation’s website, including its 2023 Task Force on Climate-related Financial Disclosures (TCFD) Report (2023 TCFD Report) and Addendum to the 2023 TCFD Report (2023 TCFD Addendum). The contents of the Corporation’s website, including the 2023 TCFD Report and 2023 TCFD Addendum are not incorporated by reference into this Quarterly Report on Form 10-Q.
The foregoing discussion and the statements on the Corporation’s website, including in the 2023 TCFD Report and 2023 TCFD Addendum, regarding the Corporation’s climate-related goals and targets, its approach with respect to climate risk management, and the nature and extent of climate-related risks, contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future results or performance and involve certain known and unknown risks, uncertainties and assumptions that are difficult to predict and are often beyond the Corporation’s control. Actual outcomes and results may differ materially from those expressed in, or implied by, any of these forward-looking statements.
Complex Accounting Estimates
Our significant accounting principles, are essential in understanding the MD&A. Many of our significant accounting principles require complex judgments to estimate the values of assets and liabilities. We have procedures and processes in place to facilitate making these judgments. For more information, see Complex Accounting Estimates in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Goodwill and Intangible Assets
The nature of and accounting for goodwill and intangible assets are discussed in Note 7 – Goodwill and Intangible Assets to the Consolidated Financial Statements herein and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. As of June 30, 2024, goodwill recorded on our consolidated balance sheet was as follows.
| Table 42 | Goodwill by Reporting Segment | |||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | ||||||||||||
| Consumer Banking | $ | 30,137 | $ | 30,137 | ||||||||||
| Global Wealth and Investment Management | 9,677 | 9,677 | ||||||||||||
| Global Banking | 24,026 | 24,026 | ||||||||||||
| Global Markets | 5,181 | 5,181 | ||||||||||||
| Total | $ | 69,021 | $ | 69,021 | ||||||||||
We completed our annual goodwill impairment test as of June 30, 2024 by using a qualitative assessment. Factors considered in the qualitative assessment include, among others, macroeconomic conditions, industry and market considerations, financial performance of the respective reporting unit and other relevant entity and reporting-unit specific considerations. Based on our assessment, we have concluded that none of our reporting units are at risk of impairment, as each of the reporting units’ fair values are substantially in excess of their carrying values.
47 Bank of America | ||||||||
Non-GAAP Reconciliations
Table 43 provides reconciliations of certain non-GAAP financial measures to the most directly comparable GAAP financial measures.
| Table 43 | Average and Period-end Supplemental Financial Data and Reconciliations to GAAP Financial Measures (1) | |||||||||||||||||||||||||||||||||||||||||||
| 2024 Quarters | 2023 Quarters | Six Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Second | First | Fourth | Third | Second | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||
| Reconciliation of average shareholders’ equity to average tangible shareholders’ equity and average tangible common shareholders’ equity | ||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | $ | 293,403 | $ | 292,511 | $ | 288,618 | $ | 284,975 | $ | 282,425 | $ | 292,957 | $ | 279,853 | ||||||||||||||||||||||||||||||
| Goodwill | (69,021) | (69,021) | (69,021) | (69,021) | (69,022) | (69,021) | (69,022) | |||||||||||||||||||||||||||||||||||||
| Intangible assets (excluding MSRs) | (1,971) | (1,990) | (2,010) | (2,029) | (2,049) | (1,980) | (2,058) | |||||||||||||||||||||||||||||||||||||
| Related deferred tax liabilities | 869 | 874 | 886 | 890 | 895 | 871 | 897 | |||||||||||||||||||||||||||||||||||||
| Tangible shareholders’ equity | $ | 223,280 | $ | 222,374 | $ | 218,473 | $ | 214,815 | $ | 212,249 | $ | 222,827 | $ | 209,670 | ||||||||||||||||||||||||||||||
| Preferred stock | (28,113) | (28,397) | (28,397) | (28,397) | (28,397) | (28,255) | (28,397) | |||||||||||||||||||||||||||||||||||||
| Tangible common shareholders’ equity | $ | 195,167 | $ | 193,977 | $ | 190,076 | $ | 186,418 | $ | 183,852 | $ | 194,572 | $ | 181,273 | ||||||||||||||||||||||||||||||
| Reconciliation of period-end shareholders’ equity to period-end tangible shareholders’ equity and period-end tangible common shareholders’ equity | ||||||||||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | $ | 293,892 | $ | 293,552 | $ | 291,646 | $ | 287,064 | $ | 283,319 | ||||||||||||||||||||||||||||||||||
| Goodwill | (69,021) | (69,021) | (69,021) | (69,021) | (69,021) | |||||||||||||||||||||||||||||||||||||||
| Intangible assets (excluding MSRs) | (1,958) | (1,977) | (1,997) | (2,016) | (2,036) | |||||||||||||||||||||||||||||||||||||||
| Related deferred tax liabilities | 864 | 869 | 874 | 886 | 890 | |||||||||||||||||||||||||||||||||||||||
| Tangible shareholders’ equity | $ | 223,777 | $ | 223,423 | $ | 221,502 | $ | 216,913 | $ | 213,152 | ||||||||||||||||||||||||||||||||||
| Preferred stock | (26,548) | (28,397) | (28,397) | (28,397) | (28,397) | |||||||||||||||||||||||||||||||||||||||
| Tangible common shareholders’ equity | $ | 197,229 | $ | 195,026 | $ | 193,105 | $ | 188,516 | $ | 184,755 | ||||||||||||||||||||||||||||||||||
| Reconciliation of period-end assets to period-end tangible assets | ||||||||||||||||||||||||||||||||||||||||||||
| Assets | $ | 3,257,996 | $ | 3,273,803 | $ | 3,180,151 | $ | 3,153,090 | $ | 3,123,198 | ||||||||||||||||||||||||||||||||||
| Goodwill | (69,021) | (69,021) | (69,021) | (69,021) | (69,021) | |||||||||||||||||||||||||||||||||||||||
| Intangible assets (excluding MSRs) | (1,958) | (1,977) | (1,997) | (2,016) | (2,036) | |||||||||||||||||||||||||||||||||||||||
| Related deferred tax liabilities | 864 | 869 | 874 | 886 | 890 | |||||||||||||||||||||||||||||||||||||||
| Tangible assets | $ | 3,187,881 | $ | 3,203,674 | $ | 3,110,007 | $ | 3,082,939 | $ | 3,053,031 | ||||||||||||||||||||||||||||||||||
(1)For more information on non-GAAP financial measures and ratios we use in assessing the results of the Corporation, see Supplemental Financial Data on page 6.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
See Market Risk Management on page 42 in the MD&A and the sections referenced therein for Quantitative and Qualitative Disclosures about Market Risk.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
As of the end of the period covered by this report, the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness and design of the Corporation’s disclosure controls and procedures (as that term is defined in Rule 13a-15(e) of the Exchange Act). Based upon that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective, as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Corporation’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the three months ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
Bank of America 48 | ||||||||
Part I. Financial Information
Item 1. Financial Statements
Bank of America Corporation and Subsidiaries
Consolidated Statement of Income | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (In millions, except per share information) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net interest income | |||||||||||||||||||||||
| Interest income | $ | 36,854 | $ | 32,354 | $ | 73,139 | $ | 61,009 | |||||||||||||||
| Interest expense | 23,152 | 18,196 | 45,405 | 32,403 | |||||||||||||||||||
| Net interest income | 13,702 | 14,158 | 27,734 | 28,606 | |||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||
| Fees and commissions | 8,969 | 7,961 | 17,629 | 15,855 | |||||||||||||||||||
| Market making and similar activities | 3,298 | 3,697 | 7,186 | 8,409 | |||||||||||||||||||
| Other income (loss) | (592) | (619) | (1,354) | (1,415) | |||||||||||||||||||
| Total noninterest income | 11,675 | 11,039 | 23,461 | 22,849 | |||||||||||||||||||
| Total revenue, net of interest expense | 25,377 | 25,197 | 51,195 | 51,455 | |||||||||||||||||||
| Provision for credit losses | 1,508 | 1,125 | 2,827 | 2,056 | |||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||
| Compensation and benefits | 9,826 | 9,401 | 20,021 | 19,319 | |||||||||||||||||||
| Occupancy and equipment | 1,818 | 1,776 | 3,629 | 3,575 | |||||||||||||||||||
| Information processing and communications | 1,763 | 1,644 | 3,563 | 3,341 | |||||||||||||||||||
| Product delivery and transaction related | 891 | 956 | 1,742 | 1,846 | |||||||||||||||||||
| Professional fees | 654 | 527 | 1,202 | 1,064 | |||||||||||||||||||
| Marketing | 487 | 513 | 942 | 971 | |||||||||||||||||||
| Other general operating | 870 | 1,221 | 2,447 | 2,160 | |||||||||||||||||||
| Total noninterest expense | 16,309 | 16,038 | 33,546 | 32,276 | |||||||||||||||||||
| Income before income taxes | 7,560 | 8,034 | 14,822 | 17,123 | |||||||||||||||||||
| Income tax expense | 663 | 626 | 1,251 | 1,554 | |||||||||||||||||||
| Net income | $ | 6,897 | $ | 7,408 | $ | 13,571 | $ | 15,569 | |||||||||||||||
| Preferred stock dividends | 315 | 306 | 847 | 811 | |||||||||||||||||||
| Net income applicable to common shareholders | $ | 6,582 | $ | 7,102 | $ | 12,724 | $ | 14,758 | |||||||||||||||
| Per common share information | |||||||||||||||||||||||
| Earnings | $ | 0.83 | $ | 0.88 | $ | 1.60 | $ | 1.83 | |||||||||||||||
| Diluted earnings | 0.83 | 0.88 | 1.59 | 1.82 | |||||||||||||||||||
| Average common shares issued and outstanding | 7,897.9 | 8,040.9 | 7,933.3 | 8,053.5 | |||||||||||||||||||
| Average diluted common shares issued and outstanding | 7,960.9 | 8,080.7 | 7,996.2 | 8,162.6 | |||||||||||||||||||
Consolidated Statement of Comprehensive Income | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net income | $ | 6,897 | $ | 7,408 | $ | 13,571 | $ | 15,569 | |||||||||||||||
| Other comprehensive income (loss), net-of-tax: | |||||||||||||||||||||||
| Net change in debt securities | (305) | 168 | 27 | 723 | |||||||||||||||||||
| Net change in debit valuation adjustments | 53 | (404) | (135) | (394) | |||||||||||||||||||
| Net change in derivatives | 686 | (1,993) | 270 | 49 | |||||||||||||||||||
| Employee benefit plan adjustments | 25 | 9 | 48 | 19 | |||||||||||||||||||
| Net change in foreign currency translation adjustments | (31) | 5 | (51) | 17 | |||||||||||||||||||
| Other comprehensive income (loss) | 428 | (2,215) | 159 | 414 | |||||||||||||||||||
| Comprehensive income (loss) | $ | 7,325 | $ | 5,193 | $ | 13,730 | $ | 15,983 | |||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
49 Bank of America | ||||||||
Bank of America Corporation and Subsidiaries
Consolidated Balance Sheet | ||||||||||||||
| June 30 2024 | December 31 2023 | |||||||||||||
| (Dollars in millions) | ||||||||||||||
| Assets | ||||||||||||||
| Cash and due from banks | $ | 25,849 | $ | 27,892 | ||||||||||
| Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks | 294,783 | 305,181 | ||||||||||||
| Cash and cash equivalents | 320,632 | 333,073 | ||||||||||||
| Time deposits placed and other short-term investments | 8,369 | 8,346 | ||||||||||||
Federal funds sold and securities borrowed or purchased under agreements to resell (includes $167,835 and $133,053 measured at fair value) | 337,752 | 280,624 | ||||||||||||
Trading account assets (includes $151,737 and $130,815 pledged as collateral) | 306,466 | 277,354 | ||||||||||||
| Derivative assets | 35,956 | 39,323 | ||||||||||||
| Debt securities: | ||||||||||||||
| Carried at fair value | 301,051 | 276,852 | ||||||||||||
Held-to-maturity, at cost (fair value $466,636 and $496,597) | 577,366 | 594,555 | ||||||||||||
| Total debt securities | 878,417 | 871,407 | ||||||||||||
Loans and leases (includes $3,197 and $3,569 measured at fair value) | 1,056,785 | 1,053,732 | ||||||||||||
| Allowance for loan and lease losses | (13,238) | (13,342) | ||||||||||||
| Loans and leases, net of allowance | 1,043,547 | 1,040,390 | ||||||||||||
| Premises and equipment, net | 11,917 | 11,855 | ||||||||||||
| Goodwill | 69,021 | 69,021 | ||||||||||||
Loans held-for-sale (includes $1,572 and $2,059 measured at fair value) | 7,043 | 6,002 | ||||||||||||
| Customer and other receivables | 80,978 | 81,881 | ||||||||||||
Other assets (includes $15,314 and $11,861 measured at fair value) | 157,898 | 160,875 | ||||||||||||
| Total assets | $ | 3,257,996 | $ | 3,180,151 | ||||||||||
| Liabilities | ||||||||||||||
| Deposits in U.S. offices: | ||||||||||||||
| Noninterest-bearing | $ | 503,037 | $ | 530,619 | ||||||||||
Interest-bearing (includes $370 and $284 measured at fair value) | 1,291,853 | 1,273,904 | ||||||||||||
| Deposits in non-U.S. offices: | ||||||||||||||
| Noninterest-bearing | 14,573 | 16,427 | ||||||||||||
| Interest-bearing | 101,028 | 102,877 | ||||||||||||
| Total deposits | 1,910,491 | 1,923,827 | ||||||||||||
Federal funds purchased and securities loaned or sold under agreements to repurchase (includes $214,719 and $178,609 measured at fair value) | 368,106 | 283,887 | ||||||||||||
| Trading account liabilities | 100,345 | 95,530 | ||||||||||||
| Derivative liabilities | 40,508 | 43,432 | ||||||||||||
Short-term borrowings (includes $7,200 and $4,690 measured at fair value) | 40,429 | 32,098 | ||||||||||||
Accrued expenses and other liabilities (includes $15,064 and $11,473 measured at fair value and $1,104 and $1,209 of reserve for unfunded lending commitments) | 213,751 | 207,527 | ||||||||||||
Long-term debt (includes $46,875 and $42,809 measured at fair value) | 290,474 | 302,204 | ||||||||||||
| Total liabilities | 2,964,104 | 2,888,505 | ||||||||||||
Commitments and contingencies (Note 6 – Securitizations and Other Variable Interest Entities and Note 10 – Commitments and Contingencies) | ||||||||||||||
| Shareholders’ equity | ||||||||||||||
Preferred stock, $0.01 par value; authorized – 100,000,000 shares; issued and outstanding – 4,013,928 and 4,088,099 Shares | 26,548 | 28,397 | ||||||||||||
Common stock and additional paid-in capital, $0.01 par value; authorized – 12,800,000,000 shares; issued and outstanding – 7,774,753,442 and 7,895,457,665 shares | 51,376 | 56,365 | ||||||||||||
| Retained earnings | 233,597 | 224,672 | ||||||||||||
| Accumulated other comprehensive income (loss) | (17,629) | (17,788) | ||||||||||||
| Total shareholders’ equity | 293,892 | 291,646 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 3,257,996 | $ | 3,180,151 | ||||||||||
| Assets of consolidated variable interest entities included in total assets above (isolated to settle the liabilities of the variable interest entities) | ||||||||||||||
| Trading account assets | $ | 5,647 | $ | 6,054 | ||||||||||
| Loans and leases | 19,827 | 18,276 | ||||||||||||
| Allowance for loan and lease losses | (917) | (826) | ||||||||||||
| Loans and leases, net of allowance | 18,910 | 17,450 | ||||||||||||
| All other assets | 281 | 269 | ||||||||||||
| Total assets of consolidated variable interest entities | $ | 24,838 | $ | 23,773 | ||||||||||
| Liabilities of consolidated variable interest entities included in total liabilities above | ||||||||||||||
Short-term borrowings (includes $0 and $23 of non-recourse short-term borrowings) | $ | 3,343 | $ | 2,957 | ||||||||||
Long-term debt (includes $9,137 and $8,456 of non-recourse debt) | 9,137 | 8,456 | ||||||||||||
All other liabilities (includes $22 and $19 of non-recourse liabilities) | 22 | 19 | ||||||||||||
| Total liabilities of consolidated variable interest entities | $ | 12,502 | $ | 11,432 | ||||||||||
See accompanying Notes to Consolidated Financial Statements.
Bank of America 50 | ||||||||
Bank of America Corporation and Subsidiaries
| Consolidated Statement of Changes in Shareholders’ Equity | |||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock and Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||
| (In millions) | Shares | Amount | |||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | 28,397 | 7,866.9 | $ | 54,310 | $ | 228,902 | $ | (18,057) | $ | 293,552 | ||||||||||||||||||||||||
| Net income | 6,897 | 6,897 | |||||||||||||||||||||||||||||||||
| Net change in debt securities | (305) | (305) | |||||||||||||||||||||||||||||||||
| Net change in debit valuation adjustments | 53 | 53 | |||||||||||||||||||||||||||||||||
| Net change in derivatives | 686 | 686 | |||||||||||||||||||||||||||||||||
| Employee benefit plan adjustments | 25 | 25 | |||||||||||||||||||||||||||||||||
| Net change in foreign currency translation adjustments | (31) | (31) | |||||||||||||||||||||||||||||||||
| Dividends declared: | |||||||||||||||||||||||||||||||||||
| Common | (1,887) | (1,887) | |||||||||||||||||||||||||||||||||
| Preferred | (310) | (310) | |||||||||||||||||||||||||||||||||
| Redemption of preferred stock | (1,849) | (5) | (1,854) | ||||||||||||||||||||||||||||||||
| Common stock issued under employee plans, net, and other | 0.4 | 601 | 601 | ||||||||||||||||||||||||||||||||
| Common stock repurchased | (92.5) | (3,535) | (3,535) | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | 26,548 | 7,774.8 | $ | 51,376 | $ | 233,597 | $ | (17,629) | $ | 293,892 | ||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | 28,397 | 7,895.5 | $ | 56,365 | $ | 224,672 | $ | (17,788) | $ | 291,646 | ||||||||||||||||||||||||
| Net income | 13,571 | 13,571 | |||||||||||||||||||||||||||||||||
| Net change in debt securities | 27 | 27 | |||||||||||||||||||||||||||||||||
| Net change in debit valuation adjustments | (135) | (135) | |||||||||||||||||||||||||||||||||
| Net change in derivatives | 270 | 270 | |||||||||||||||||||||||||||||||||
| Employee benefit plan adjustments | 48 | 48 | |||||||||||||||||||||||||||||||||
| Net change in foreign currency translation adjustments | (51) | (51) | |||||||||||||||||||||||||||||||||
| Dividends declared: | |||||||||||||||||||||||||||||||||||
| Common | (3,797) | (3,797) | |||||||||||||||||||||||||||||||||
| Preferred | (842) | (842) | |||||||||||||||||||||||||||||||||
| Redemption of preferred stock | (1,849) | (5) | (1,854) | ||||||||||||||||||||||||||||||||
| Common stock issued under employee plans, net, and other | 44.4 | 1,046 | (2) | 1,044 | |||||||||||||||||||||||||||||||
| Common stock repurchased | (165.1) | (6,035) | (6,035) | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | 26,548 | 7,774.8 | $ | 51,376 | $ | 233,597 | $ | (17,629) | $ | 293,892 | ||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | 28,397 | 7,972.4 | $ | 57,264 | $ | 213,062 | $ | (18,527) | $ | 280,196 | ||||||||||||||||||||||||
| Net income | 7,408 | 7,408 | |||||||||||||||||||||||||||||||||
| Net change in debt securities | 168 | 168 | |||||||||||||||||||||||||||||||||
| Net change in debit valuation adjustments | (404) | (404) | |||||||||||||||||||||||||||||||||
| Net change in derivatives | (1,993) | (1,993) | |||||||||||||||||||||||||||||||||
| Employee benefit plan adjustments | 9 | 9 | |||||||||||||||||||||||||||||||||
| Net change in foreign currency translation adjustments | 5 | 5 | |||||||||||||||||||||||||||||||||
| Dividends declared: | |||||||||||||||||||||||||||||||||||
| Common | (1,767) | (1,767) | |||||||||||||||||||||||||||||||||
| Preferred | (306) | (306) | |||||||||||||||||||||||||||||||||
| Common stock issued under employee plans, net, and other | 0.4 | 553 | 553 | ||||||||||||||||||||||||||||||||
| Common stock repurchased | (19.2) | (550) | (550) | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | 28,397 | 7,953.6 | $ | 57,267 | $ | 218,397 | $ | (20,742) | $ | 283,319 | ||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | 28,397 | 7,996.8 | $ | 58,953 | $ | 207,003 | $ | (21,156) | $ | 273,197 | ||||||||||||||||||||||||
| Cumulative adjustment for adoption of credit loss accounting standard | 184 | 184 | |||||||||||||||||||||||||||||||||
| Net income | 15,569 | 15,569 | |||||||||||||||||||||||||||||||||
| Net change in debt securities | 723 | 723 | |||||||||||||||||||||||||||||||||
| Net change in debit valuation adjustments | (394) | (394) | |||||||||||||||||||||||||||||||||
| Net change in derivatives | 49 | 49 | |||||||||||||||||||||||||||||||||
| Employee benefit plan adjustments | 19 | 19 | |||||||||||||||||||||||||||||||||
| Net change in foreign currency translation adjustments | 17 | 17 | |||||||||||||||||||||||||||||||||
| Dividends declared: | |||||||||||||||||||||||||||||||||||
| Common | (3,541) | (3,541) | |||||||||||||||||||||||||||||||||
| Preferred | (811) | (811) | |||||||||||||||||||||||||||||||||
| Common stock issued under employee plans, net, and other | 42.8 | 1,079 | (7) | 1,072 | |||||||||||||||||||||||||||||||
| Common stock repurchased | (86.0) | (2,765) | (2,765) | ||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | 28,397 | 7,953.6 | $ | 57,267 | $ | 218,397 | $ | (20,742) | $ | 283,319 | ||||||||||||||||||||||||
See accompanying Notes to Consolidated Financial Statements.
51 Bank of America | ||||||||
Bank of America Corporation and Subsidiaries
Consolidated Statement of Cash Flows | |||||||||||
| Six Months Ended June 30 | |||||||||||
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Operating activities | |||||||||||
| Net income | $ | 13,571 | $ | 15,569 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Provision for credit losses | 2,827 | 2,056 | |||||||||
| (Gains) losses on sales of debt securities | (14) | 404 | |||||||||
| Depreciation and amortization | 1,081 | 1,013 | |||||||||
| Net (accretion) amortization of discount/premium on debt securities | (394) | 64 | |||||||||
| Deferred income taxes | (883) | (612) | |||||||||
| Stock-based compensation | 1,710 | 1,626 | |||||||||
| Loans held-for-sale: | |||||||||||
| Originations and purchases | (16,956) | (7,345) | |||||||||
Proceeds from sales and paydowns of loans originally classified as held for sale and instruments from related securitization activities | 15,663 | 7,349 | |||||||||
| Net change in: | |||||||||||
| Trading and derivative assets/liabilities | (25,246) | 1,289 | |||||||||
| Other assets | 1,335 | (6,618) | |||||||||
| Accrued expenses and other liabilities | 6,183 | (18,449) | |||||||||
| Other operating activities, net | 3,680 | 4,140 | |||||||||
| Net cash provided by operating activities | 2,557 | 486 | |||||||||
| Investing activities | |||||||||||
| Net change in: | |||||||||||
| Time deposits placed and other short-term investments | (23) | (722) | |||||||||
| Federal funds sold and securities borrowed or purchased under agreements to resell | (54,628) | (8,707) | |||||||||
| Debt securities carried at fair value: | |||||||||||
| Proceeds from sales | 24,454 | 93,947 | |||||||||
| Proceeds from paydowns and maturities | 188,518 | 35,177 | |||||||||
| Purchases | (239,755) | (39,260) | |||||||||
| Held-to-maturity debt securities: | |||||||||||
| Proceeds from paydowns and maturities | 16,568 | 18,078 | |||||||||
| Purchases | — | (77) | |||||||||
| Loans and leases: | |||||||||||
Proceeds from sales of loans originally classified as held for investment and instruments from related securitization activities | 4,199 | 5,129 | |||||||||
| Purchases | (2,736) | (2,590) | |||||||||
| Other changes in loans and leases, net | (7,610) | (9,731) | |||||||||
| Other investing activities, net | (1,832) | (2,514) | |||||||||
| Net cash provided by (used in) investing activities | (72,845) | 88,730 | |||||||||
| Financing activities | |||||||||||
| Net change in: | |||||||||||
| Deposits | (13,336) | (53,132) | |||||||||
| Federal funds purchased and securities loaned or sold under agreements to repurchase | 84,219 | 92,992 | |||||||||
| Short-term borrowings | 8,331 | 14,085 | |||||||||
| Long-term debt: | |||||||||||
| Proceeds from issuance | 30,373 | 30,709 | |||||||||
| Retirement | (36,142) | (22,268) | |||||||||
Preferred stock redemption | (1,854) | — | |||||||||
| Common stock repurchased | (6,035) | (2,765) | |||||||||
| Cash dividends paid | (4,735) | (4,443) | |||||||||
| Other financing activities, net | (463) | (752) | |||||||||
| Net cash provided by financing activities | 60,358 | 54,426 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (2,511) | (292) | |||||||||
| Net increase (decrease) in cash and cash equivalents | (12,441) | 143,350 | |||||||||
| Cash and cash equivalents at January 1 | 333,073 | 230,203 | |||||||||
| Cash and cash equivalents at June 30 | $ | 320,632 | $ | 373,553 | |||||||
See accompanying Notes to Consolidated Financial Statements.
Bank of America 52 | ||||||||
Bank of America Corporation and Subsidiaries
Notes to Consolidated Financial Statements
NOTE 1 Summary of Significant Accounting Principles
Bank of America Corporation, a bank holding company and a financial holding company, provides a diverse range of financial services and products throughout the U.S. and in certain international markets. The term “the Corporation” as used herein may refer to Bank of America Corporation, individually, Bank of America Corporation and its subsidiaries, or certain of Bank of America Corporation’s subsidiaries or affiliates.
Principles of Consolidation and Basis of Presentation
The Consolidated Financial Statements include the accounts of the Corporation and its majority-owned subsidiaries and those variable interest entities (VIEs) where the Corporation is the primary beneficiary. Intercompany accounts and transactions have been eliminated. Results of operations of acquired companies are included from the dates of acquisition, and for VIEs, from the dates that the Corporation became the primary beneficiary. Assets held in an agency or fiduciary capacity are not included in the Consolidated Financial Statements. The Corporation accounts for investments in companies for which it owns a voting interest and for which it has the ability to exercise
significant influence over operating and financing decisions using the equity method of accounting. These investments, which include the Corporation’s interests in affordable housing and renewable energy partnerships, are recorded in other assets. Equity method investments are subject to impairment testing, and the Corporation’s proportionate share of income or loss is included in other income.
The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could materially differ from those estimates and assumptions.
These unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements, and related notes thereto, of the Corporation’s 2023 Annual Report on Form 10-K.
The nature of the Corporation’s business is such that the results of any interim period are not necessarily indicative of results for a full year. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim period results, have been made. The Corporation evaluates subsequent events through the date of filing with the Securities and Exchange Commission (SEC).
53 Bank of America | ||||||||
NOTE 2 Net Interest Income and Noninterest Income
The table below presents the Corporation’s net interest income and noninterest income disaggregated by revenue source for the three and six months ended June 30, 2024 and 2023. For more information, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. For a disaggregation of noninterest income by business segment and All Other, see Note 17 – Business Segment Information.
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net interest income | |||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Loans and leases | $ | 15,338 | $ | 13,970 | $ | 30,578 | $ | 27,067 | |||||||||||||||
| Debt securities | 6,325 | 4,691 | 12,462 | 10,151 | |||||||||||||||||||
| Federal funds sold and securities borrowed or purchased under agreements to resell | 5,159 | 4,955 | 10,334 | 8,667 | |||||||||||||||||||
| Trading account assets | 2,516 | 2,076 | 4,971 | 4,104 | |||||||||||||||||||
Other interest income (1) | 7,516 | 6,662 | 14,794 | 11,020 | |||||||||||||||||||
| Total interest income | 36,854 | 32,354 | 73,139 | 61,009 | |||||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Deposits | 9,655 | 5,785 | 18,793 | 10,099 | |||||||||||||||||||
| Short-term borrowings | 9,070 | 8,355 | 17,605 | 14,535 | |||||||||||||||||||
| Trading account liabilities | 540 | 472 | 1,086 | 976 | |||||||||||||||||||
| Long-term debt | 3,887 | 3,584 | 7,921 | 6,793 | |||||||||||||||||||
| Total interest expense | 23,152 | 18,196 | 45,405 | 32,403 | |||||||||||||||||||
| Net interest income | $ | 13,702 | $ | 14,158 | $ | 27,734 | $ | 28,606 | |||||||||||||||
| Noninterest income | |||||||||||||||||||||||
| Fees and commissions | |||||||||||||||||||||||
| Card income | |||||||||||||||||||||||
Interchange fees (2) | $ | 1,023 | $ | 1,023 | $ | 1,954 | $ | 1,979 | |||||||||||||||
| Other card income | 558 | 523 | 1,090 | 1,036 | |||||||||||||||||||
| Total card income | 1,581 | 1,546 | 3,044 | 3,015 | |||||||||||||||||||
| Service charges | |||||||||||||||||||||||
| Deposit-related fees | 1,172 | 1,045 | 2,294 | 2,142 | |||||||||||||||||||
| Lending-related fees | 335 | 319 | 655 | 632 | |||||||||||||||||||
| Total service charges | 1,507 | 1,364 | 2,949 | 2,774 | |||||||||||||||||||
| Investment and brokerage services | |||||||||||||||||||||||
| Asset management fees | 3,370 | 2,969 | 6,640 | 5,887 | |||||||||||||||||||
| Brokerage fees | 950 | 870 | 1,867 | 1,804 | |||||||||||||||||||
| Total investment and brokerage services | 4,320 | 3,839 | 8,507 | 7,691 | |||||||||||||||||||
| Investment banking fees | |||||||||||||||||||||||
| Underwriting income | 869 | 657 | 1,770 | 1,226 | |||||||||||||||||||
| Syndication fees | 318 | 180 | 612 | 411 | |||||||||||||||||||
| Financial advisory services | 374 | 375 | 747 | 738 | |||||||||||||||||||
| Total investment banking fees | 1,561 | 1,212 | 3,129 | 2,375 | |||||||||||||||||||
| Total fees and commissions | 8,969 | 7,961 | 17,629 | 15,855 | |||||||||||||||||||
| Market making and similar activities | 3,298 | 3,697 | 7,186 | 8,409 | |||||||||||||||||||
| Other income (loss) | (592) | (619) | (1,354) | (1,415) | |||||||||||||||||||
| Total noninterest income | $ | 11,675 | $ | 11,039 | $ | 23,461 | $ | 22,849 | |||||||||||||||
(1)Includes interest income on interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks of $4.5 billion and $4.3 billion for the three months ended June 30, 2024 and 2023, and $9.0 billion and $6.3 billion for the six months ended June 30, 2024 and 2023.
(2)Gross interchange fees and merchant income are $3.5 billion and $3.4 billion for the three months ended June 30, 2024 and 2023 and both are presented net of $2.4 billion of expenses for rewards and partner payments as well as certain other card costs for the same periods. Gross interchange fees and merchant income were $6.7 billion and $6.6 billion for the six months ended June 30, 2024 and 2023 and are presented net of $4.7 billion and $4.6 billion of expenses for rewards and partner payments as well as certain other card costs for the same periods.
Bank of America 54 | ||||||||
NOTE 3 Derivatives
Derivative Balances
Derivatives are entered into on behalf of customers, for trading or to support risk management activities. Derivatives used in risk management activities include derivatives that may or may not be designated in qualifying hedge accounting relationships. Derivatives that are not designated in qualifying hedge accounting relationships are referred to as other risk management derivatives. For more information on the Corporation’s derivatives and hedging activities, see Note 1 – Summary of Significant Accounting Principles and Note 3 –
Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. The following tables present derivative instruments included on the Consolidated Balance Sheet in derivative assets and liabilities at June 30, 2024 and December 31, 2023. Balances are presented on a gross basis, prior to the application of counterparty and cash collateral netting. Total derivative assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of legally enforceable master netting agreements and have been reduced by cash collateral received or paid.
| June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||
| Gross Derivative Assets | Gross Derivative Liabilities | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | Contract/ Notional (1) | Trading and Other Risk Management Derivatives | Qualifying Accounting Hedges | Total | Trading and Other Risk Management Derivatives | Qualifying Accounting Hedges | Total | ||||||||||||||||||||||||||||||||||
| Interest rate contracts | |||||||||||||||||||||||||||||||||||||||||
| Swaps | $ | 19,803.9 | $ | 74.8 | $ | 8.4 | $ | 83.2 | $ | 61.9 | $ | 19.3 | $ | 81.2 | |||||||||||||||||||||||||||
| Futures and forwards | 3,795.0 | 2.3 | — | 2.3 | 2.5 | — | 2.5 | ||||||||||||||||||||||||||||||||||
Written options (2) | 1,876.4 | — | — | — | 31.1 | — | 31.1 | ||||||||||||||||||||||||||||||||||
Purchased options (3) | 1,822.8 | 32.6 | — | 32.6 | — | — | — | ||||||||||||||||||||||||||||||||||
| Foreign exchange contracts | |||||||||||||||||||||||||||||||||||||||||
| Swaps | 1,964.6 | 36.2 | 0.1 | 36.3 | 33.8 | 0.1 | 33.9 | ||||||||||||||||||||||||||||||||||
| Spot, futures and forwards | 4,893.9 | 33.9 | 0.7 | 34.6 | 33.9 | 0.2 | 34.1 | ||||||||||||||||||||||||||||||||||
Written options (2) | 552.5 | — | — | — | 7.6 | — | 7.6 | ||||||||||||||||||||||||||||||||||
Purchased options (3) | 512.7 | 7.5 | — | 7.5 | — | — | — | ||||||||||||||||||||||||||||||||||
| Equity contracts | |||||||||||||||||||||||||||||||||||||||||
| Swaps | 483.9 | 11.8 | — | 11.8 | 17.0 | — | 17.0 | ||||||||||||||||||||||||||||||||||
| Futures and forwards | 139.3 | 2.0 | — | 2.0 | 1.6 | — | 1.6 | ||||||||||||||||||||||||||||||||||
Written options (2) | 966.1 | — | — | — | 66.8 | — | 66.8 | ||||||||||||||||||||||||||||||||||
Purchased options (3) | 874.7 | 56.5 | — | 56.5 | — | — | — | ||||||||||||||||||||||||||||||||||
| Commodity contracts | |||||||||||||||||||||||||||||||||||||||||
| Swaps | 66.0 | 2.8 | — | 2.8 | 3.8 | — | 3.8 | ||||||||||||||||||||||||||||||||||
| Futures and forwards | 184.3 | 5.1 | — | 5.1 | 4.6 | 0.1 | 4.7 | ||||||||||||||||||||||||||||||||||
Written options (2) | 74.8 | — | — | — | 3.1 | — | 3.1 | ||||||||||||||||||||||||||||||||||
Purchased options (3) | 80.8 | 2.9 | — | 2.9 | — | — | — | ||||||||||||||||||||||||||||||||||
Credit derivatives (4) | |||||||||||||||||||||||||||||||||||||||||
| Purchased credit derivatives: | |||||||||||||||||||||||||||||||||||||||||
| Credit default swaps | 433.2 | 1.9 | — | 1.9 | 2.6 | — | 2.6 | ||||||||||||||||||||||||||||||||||
| Total return swaps/options | 113.8 | 0.7 | — | 0.7 | 0.8 | — | 0.8 | ||||||||||||||||||||||||||||||||||
| Written credit derivatives: | |||||||||||||||||||||||||||||||||||||||||
| Credit default swaps | 412.7 | 2.1 | — | 2.1 | 1.7 | — | 1.7 | ||||||||||||||||||||||||||||||||||
| Total return swaps/options | 104.6 | 1.0 | — | 1.0 | 0.4 | — | 0.4 | ||||||||||||||||||||||||||||||||||
| Gross derivative assets/liabilities | $ | 274.1 | $ | 9.2 | $ | 283.3 | $ | 273.2 | $ | 19.7 | $ | 292.9 | |||||||||||||||||||||||||||||
| Less: Legally enforceable master netting agreements | (219.9) | (219.9) | |||||||||||||||||||||||||||||||||||||||
| Less: Cash collateral received/paid | (27.4) | (32.5) | |||||||||||||||||||||||||||||||||||||||
| Total derivative assets/liabilities | $ | 36.0 | $ | 40.5 | |||||||||||||||||||||||||||||||||||||
(1)Represents the total contract/notional amount of derivative assets and liabilities outstanding.
(2)Includes certain out-of-the-money purchased options that have a liability amount primarily due to the deferral of option premiums to the end of the contract.
(3)Includes certain out-of-the-money written options that have an asset amount primarily due to the deferral of option premiums to the end of the contract.
(4)The net derivative asset (liability) and notional amount of written credit derivatives for which the Corporation held purchased credit derivatives with identical underlying referenced names were $280 million and $382.4 billion at June 30, 2024.
55 Bank of America | ||||||||
| December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||
| Gross Derivative Assets | Gross Derivative Liabilities | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in billions) | Contract/ Notional (1) | Trading and Other Risk Management Derivatives | Qualifying Accounting Hedges | Total | Trading and Other Risk Management Derivatives | Qualifying Accounting Hedges | Total | ||||||||||||||||||||||||||||||||||
| Interest rate contracts | |||||||||||||||||||||||||||||||||||||||||
| Swaps | $ | 15,715.2 | $ | 78.4 | $ | 7.9 | $ | 86.3 | $ | 66.6 | $ | 18.5 | $ | 85.1 | |||||||||||||||||||||||||||
| Futures and forwards | 2,803.8 | 5.1 | — | 5.1 | 7.0 | — | 7.0 | ||||||||||||||||||||||||||||||||||
Written options (2) | 1,807.7 | — | — | — | 31.7 | — | 31.7 | ||||||||||||||||||||||||||||||||||
Purchased options (3) | 1,714.9 | 32.9 | — | 32.9 | — | — | — | ||||||||||||||||||||||||||||||||||
| Foreign exchange contracts | |||||||||||||||||||||||||||||||||||||||||
| Swaps | 1,814.7 | 41.1 | 0.2 | 41.3 | 38.2 | 0.5 | 38.7 | ||||||||||||||||||||||||||||||||||
| Spot, futures and forwards | 3,561.7 | 37.2 | 6.1 | 43.3 | 40.3 | 6.2 | 46.5 | ||||||||||||||||||||||||||||||||||
Written options (2) | 462.8 | — | — | — | 6.8 | — | 6.8 | ||||||||||||||||||||||||||||||||||
Purchased options (3) | 405.3 | 6.2 | — | 6.2 | — | — | — | ||||||||||||||||||||||||||||||||||
| Equity contracts | |||||||||||||||||||||||||||||||||||||||||
| Swaps | 427.0 | 13.3 | — | 13.3 | 16.7 | — | 16.7 | ||||||||||||||||||||||||||||||||||
| Futures and forwards | 136.9 | 2.1 | — | 2.1 | 1.6 | — | 1.6 | ||||||||||||||||||||||||||||||||||
Written options (2) | 854.9 | — | — | — | 50.1 | — | 50.1 | ||||||||||||||||||||||||||||||||||
Purchased options (3) | 716.2 | 44.1 | — | 44.1 | — | — | — | ||||||||||||||||||||||||||||||||||
| Commodity contracts | |||||||||||||||||||||||||||||||||||||||||
| Swaps | 59.0 | 3.1 | — | 3.1 | 4.5 | — | 4.5 | ||||||||||||||||||||||||||||||||||
| Futures and forwards | 187.8 | 3.8 | — | 3.8 | 3.1 | 0.4 | 3.5 | ||||||||||||||||||||||||||||||||||
Written options (2) | 67.1 | — | — | — | 3.3 | — | 3.3 | ||||||||||||||||||||||||||||||||||
Purchased options (3) | 70.9 | 3.0 | — | 3.0 | — | — | — | ||||||||||||||||||||||||||||||||||
Credit derivatives (4) | |||||||||||||||||||||||||||||||||||||||||
| Purchased credit derivatives: | |||||||||||||||||||||||||||||||||||||||||
| Credit default swaps | 312.8 | 1.7 | — | 1.7 | 2.5 | — | 2.5 | ||||||||||||||||||||||||||||||||||
| Total return swaps/options | 69.4 | 0.8 | — | 0.8 | 1.3 | — | 1.3 | ||||||||||||||||||||||||||||||||||
| Written credit derivatives: | |||||||||||||||||||||||||||||||||||||||||
| Credit default swaps | 289.1 | 2.2 | — | 2.2 | 1.6 | — | 1.6 | ||||||||||||||||||||||||||||||||||
| Total return swaps/options | 68.6 | 1.1 | — | 1.1 | 0.3 | — | 0.3 | ||||||||||||||||||||||||||||||||||
| Gross derivative assets/liabilities | $ | 276.1 | $ | 14.2 | $ | 290.3 | $ | 275.6 | $ | 25.6 | $ | 301.2 | |||||||||||||||||||||||||||||
| Less: Legally enforceable master netting agreements | (221.6) | (221.6) | |||||||||||||||||||||||||||||||||||||||
| Less: Cash collateral received/paid | (29.4) | (36.2) | |||||||||||||||||||||||||||||||||||||||
| Total derivative assets/liabilities | $ | 39.3 | $ | 43.4 | |||||||||||||||||||||||||||||||||||||
(1)Represents the total contract/notional amount of derivative assets and liabilities outstanding.
(2)Includes certain out-of-the-money purchased options that have a liability amount primarily due to the deferral of option premiums to the end of the contract.
(3)Includes certain out-of-the-money written options that have an asset amount primarily due to the deferral of option premiums to the end of the contract.
(4)The net derivative asset (liability) and notional amount of written credit derivatives for which the Corporation held purchased credit derivatives with identical underlying referenced names were $520 million and $266.5 billion at December 31, 2023.
Offsetting of Derivatives
The Corporation enters into International Swaps and Derivatives Association, Inc. (ISDA) master netting agreements or similar agreements with substantially all of the Corporation’s derivative counterparties. For more information, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
The following table presents derivative instruments included in derivative assets and liabilities on the Consolidated Balance Sheet at June 30, 2024 and December 31, 2023 by primary risk (e.g., interest rate risk) and the platform, where applicable,
on which these derivatives are transacted. Balances are presented on a gross basis, prior to the application of counterparty and cash collateral netting. Total gross derivative assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of legally enforceable master netting agreements, which include reducing the balance for counterparty netting and cash collateral received or paid.
For more information on offsetting of securities financing agreements, see Note 9 – Securities Financing Agreements, Collateral and Restricted Cash.
Bank of America 56 | ||||||||
Offsetting of Derivatives (1) | |||||||||||||||||||||||
| Derivative Assets | Derivative Liabilities | Derivative Assets | Derivative Liabilities | ||||||||||||||||||||
| (Dollars in billions) | June 30, 2024 | December 31, 2023 | |||||||||||||||||||||
| Interest rate contracts | |||||||||||||||||||||||
| Over-the-counter | $ | 115.2 | $ | 110.1 | $ | 119.2 | $ | 117.7 | |||||||||||||||
| Exchange-traded | 0.1 | 0.1 | 0.2 | 0.2 | |||||||||||||||||||
| Over-the-counter cleared | 2.3 | 2.5 | 4.4 | 3.3 | |||||||||||||||||||
| Foreign exchange contracts | |||||||||||||||||||||||
| Over-the-counter | 77.1 | 74.6 | 89.7 | 90.4 | |||||||||||||||||||
| Over-the-counter cleared | 0.2 | 0.2 | 0.2 | 0.2 | |||||||||||||||||||
| Equity contracts | |||||||||||||||||||||||
| Over-the-counter | 24.3 | 36.1 | 24.7 | 32.2 | |||||||||||||||||||
| Exchange-traded | 44.7 | 46.8 | 34.4 | 33.9 | |||||||||||||||||||
| Commodity contracts | |||||||||||||||||||||||
| Over-the-counter | 7.6 | 8.6 | 6.6 | 8.4 | |||||||||||||||||||
| Exchange-traded | 2.1 | 2.1 | 2.3 | 2.1 | |||||||||||||||||||
| Over-the-counter cleared | 0.6 | 0.7 | 0.4 | 0.5 | |||||||||||||||||||
| Credit derivatives | |||||||||||||||||||||||
| Over-the-counter | 5.6 | 5.3 | 5.7 | 5.6 | |||||||||||||||||||
| Total gross derivative assets/liabilities, before netting | |||||||||||||||||||||||
| Over-the-counter | 229.8 | 234.7 | 245.9 | 254.3 | |||||||||||||||||||
| Exchange-traded | 46.9 | 49.0 | 36.9 | 36.2 | |||||||||||||||||||
| Over-the-counter cleared | 3.1 | 3.4 | 5.0 | 4.0 | |||||||||||||||||||
| Less: Legally enforceable master netting agreements and cash collateral received/paid | |||||||||||||||||||||||
| Over-the-counter | (198.5) | (203.7) | (212.1) | (218.9) | |||||||||||||||||||
| Exchange-traded | (45.8) | (45.8) | (35.4) | (35.4) | |||||||||||||||||||
| Over-the-counter cleared | (3.0) | (2.9) | (3.5) | (3.5) | |||||||||||||||||||
| Derivative assets/liabilities, after netting | 32.5 | 34.7 | 36.8 | 36.7 | |||||||||||||||||||
Other gross derivative assets/liabilities (2) | 3.5 | 5.8 | 2.5 | 6.7 | |||||||||||||||||||
| Total derivative assets/liabilities | 36.0 | 40.5 | 39.3 | 43.4 | |||||||||||||||||||
Less: Financial instruments collateral (3) | (16.5) | (14.6) | (15.5) | (13.0) | |||||||||||||||||||
| Total net derivative assets/liabilities | $ | 19.5 | $ | 25.9 | $ | 23.8 | $ | 30.4 | |||||||||||||||
(1)Over-the-counter derivatives include bilateral transactions between the Corporation and a particular counterparty. Over-the-counter cleared derivatives include bilateral transactions between the Corporation and a counterparty where the transaction is cleared through a clearinghouse. Exchange-traded derivatives include listed options transacted on an exchange.
(2)Consists of derivatives entered into under master netting agreements where the enforceability of these agreements is uncertain under bankruptcy laws in some countries or industries.
(3)Amounts are limited to the derivative asset/liability balance and, accordingly, do not include excess collateral received/pledged. Financial instruments collateral includes securities collateral received or pledged and cash securities held and posted at third-party custodians that are not offset on the Consolidated Balance Sheet but shown as a reduction to derive net derivative assets and liabilities.
Derivatives Designated as Accounting Hedges
The Corporation uses various types of interest rate and foreign exchange derivative contracts to protect against changes in the fair value of its assets and liabilities due to fluctuations in interest rates and foreign exchange rates (fair value hedges). The Corporation also uses these types of contracts to protect against changes in the cash flows of its assets and liabilities, and other forecasted transactions (cash flow hedges). The Corporation hedges its net investment in consolidated non-U.S.
operations determined to have functional currencies other than the U.S. dollar using forward exchange contracts and cross-currency basis swaps, and by issuing foreign currency- denominated debt (net investment hedges).
Fair Value Hedges
The following table summarizes information related to fair value hedges for the three and six months ended June 30, 2024 and 2023.
57 Bank of America | ||||||||
Gains and Losses on Derivatives and Hedged Items Designated in Fair Value Hedges | |||||||||||||||||||||||
| Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | ||||||||||||||||||||||
| (Dollars in millions) | Derivative | Hedged Item | Derivative | Hedged Item | |||||||||||||||||||
Interest rate risk on long-term debt (1) | $ | (486) | $ | 481 | $ | (3,550) | $ | 3,516 | |||||||||||||||
Interest rate and foreign currency risk (2) | 279 | (285) | 107 | (104) | |||||||||||||||||||
Interest rate risk on available-for-sale securities (3) | 315 | (324) | 1,880 | (1,884) | |||||||||||||||||||
Price risk on commodity inventory (4) | (166) | 166 | 691 | (691) | |||||||||||||||||||
| Total | $ | (58) | $ | 38 | $ | (872) | $ | 837 | |||||||||||||||
| ` | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | |||||||||||||||||||||
| Derivative | Hedged Item | Derivative | Hedged Item | ||||||||||||||||||||
Interest rate risk on long-term debt (1) | $ | (3,590) | $ | 3,571 | $ | (242) | $ | 211 | |||||||||||||||
Interest rate and foreign currency risk (2) | 623 | (614) | 115 | (112) | |||||||||||||||||||
Interest rate risk on available-for-sale securities (3) | 2,805 | (2,826) | (1,147) | 1,132 | |||||||||||||||||||
Price risk on commodity inventory (4) | (386) | 386 | 172 | (172) | |||||||||||||||||||
| Total | $ | (548) | $ | 517 | $ | (1,102) | $ | 1,059 | |||||||||||||||
(1)Amounts are recorded in interest expense in the Consolidated Statement of Income.
(2)Represents cross-currency interest rate swaps related to available-for-sale debt securities and long-term debt. For the three and six months ended June 30, 2024, the derivative amount includes gains (losses) of $8 million and $17 million in interest income, $273 million and $597 million in market making and similar activities, and $(2) million and $9 million in accumulated other comprehensive income (OCI). For the same periods in 2023, the derivative amount includes gains (losses) of $1 million and $1 million in interest income, $(1) million and $7 million in interest expense, $103 million and $105 million in market making and similar activities, and $4 million and $2 million in accumulated OCI. Line item totals are in the Consolidated Statement of Income and on the Consolidated Balance Sheet.
(3)Amounts are recorded in interest income in the Consolidated Statement of Income.
(4)Amounts are recorded in market making and similar activities in the Consolidated Statement of Income.
The table below summarizes the carrying value of hedged assets and liabilities that are designated in fair value hedging relationships, along with the cumulative amount of gains and losses on the hedged assets and liabilities that are included in their carrying value. There is no impact to earnings for the cumulative amount of these fair value hedging adjustments as long as the hedging relationships remain open through the
hedged period. Instead, the open hedges have the effect of synthetically converting the hedged assets and liabilities into variable-rate instruments. If an open hedge is de-designated prior to the derivative’s maturity, any cumulative fair value adjustments at the de-designation date are then amortized or accreted into earnings over the remaining life of the hedged assets or liabilities.
Designated Fair Value Hedged Assets and Liabilities | |||||||||||||||||||||||
| June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
| (Dollars in millions) | Carrying Value | Cumulative Fair Value Adjustments (1) | Carrying Value | Cumulative Fair Value Adjustments (1) | |||||||||||||||||||
| $ | 188,684 | $ | (9,086) | $ | 203,986 | $ | (5,767) | ||||||||||||||||
Available-for-sale debt securities (2, 3) | 208,693 | (4,972) | 134,077 | (1,793) | |||||||||||||||||||
Trading account assets (4) | 3,257 | 167 | 7,475 | 414 | |||||||||||||||||||
(1)Increase (decrease) to carrying value.
(2)These amounts include the amortized cost of the financial assets in closed portfolios used to designate hedging relationships in which the hedged item is a stated layer that is expected to be remaining at the end of the hedging relationship (i.e. portfolio layer hedging relationship). At June 30, 2024 and December 31, 2023, the amortized cost of the closed portfolios used in these hedging relationships was $37.8 billion and $39.1 billion, of which $24.4 billion and $22.5 billion were designated in a portfolio layer hedging relationship. At June 30, 2024 and December 31, 2023, the cumulative adjustment associated with these hedging relationships was a decrease of $341 million and an increase of $48 million.
(3)Carrying value represents amortized cost.
(4)Represents hedging activities related to certain commodities inventory.
At June 30, 2024 and December 31, 2023, the fair value adjustments from de-designated long-term debt hedges decreased the long-term debt carrying value by $10.2 billion and $10.5 billion. The fair value adjustments from de-designated AFS debt securities hedges decreased the AFS debt securities carrying value by $5.0 billion and $5.6 billion. The fair value adjustments are being amortized or accreted into interest over the contractual lives of the assets or liabilities, along with any premiums or discounts.
Cash Flow and Net Investment Hedges
The following table summarizes certain information related to cash flow hedges and net investment hedges for the three and six months ended June 30, 2024 and 2023. Of the $7.7 billion
after-tax net loss ($10.3 billion pretax) on derivatives in accumulated OCI at June 30, 2024, losses of $3.7 billion after-tax ($4.9 billion pretax) related to both open and closed cash flow hedges are expected to be reclassified into earnings in the next 12 months. These net losses reclassified into earnings are expected to primarily decrease net interest income related to the respective hedged items. For open cash flow hedges, the maximum length of time over which forecasted transactions are hedged is approximately nine years. For terminated cash flow hedges, the time period over which the forecasted transactions will be recognized in interest income is approximately five years, with the aggregated amount beyond this time period being insignificant.
Bank of America 58 | ||||||||
| Gains and Losses on Derivatives Designated as Cash Flow and Net Investment Hedges | |||||||||||||||||||||||
| Gains (Losses) Recognized in Accumulated OCI on Derivatives | Gains (Losses) in Income Reclassified from Accumulated OCI | Gains (Losses) Recognized in Accumulated OCI on Derivatives | Gains (Losses) in Income Reclassified from Accumulated OCI | ||||||||||||||||||||
| (Dollars in millions, amounts pretax) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | |||||||||||||||||||||
| Cash flow hedges | |||||||||||||||||||||||
Interest rate risk on variable-rate portfolios (1) | $ | 35 | $ | (882) | $ | (1,055) | $ | (1,396) | |||||||||||||||
Price risk on forecasted MBS purchases (1) | — | (2) | — | (4) | |||||||||||||||||||
Price risk on certain compensation plans (2) | 5 | 8 | 19 | 17 | |||||||||||||||||||
| Total | $ | 40 | $ | (876) | $ | (1,036) | $ | (1,383) | |||||||||||||||
| Net investment hedges | |||||||||||||||||||||||
Foreign exchange risk (3) | $ | 595 | $ | — | $ | 1,392 | $ | — | |||||||||||||||
| Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | ||||||||||||||||||||||
| Cash flow hedges | |||||||||||||||||||||||
Interest rate risk on variable-rate portfolios (1) | $ | (2,878) | $ | (189) | $ | (328) | $ | (349) | |||||||||||||||
Price risk on forecasted MBS purchases (1) | 2 | — | 4 | — | |||||||||||||||||||
Price risk on certain compensation plans (2) | 19 | 6 | 36 | 11 | |||||||||||||||||||
| Total | $ | (2,857) | $ | (183) | $ | (288) | $ | (338) | |||||||||||||||
| Net investment hedges | |||||||||||||||||||||||
Foreign exchange risk (3) | $ | (91) | $ | 3 | $ | (468) | $ | 3 | |||||||||||||||
(1)Amounts reclassified from accumulated OCI are recorded in interest income in the Consolidated Statement of Income.
(2)Amounts reclassified from accumulated OCI are recorded in compensation and benefits expense in the Consolidated Statement of Income.
(3)Amounts reclassified from accumulated OCI are recorded in other income in the Consolidated Statement of Income. For the three and six months ended June 30, 2024, amounts excluded from effectiveness testing and recognized in market making and similar activities were gains of $40 million and $106 million. For the same periods in 2023, amounts excluded from effectiveness testing and recognized in market making and similar activities were gains of $76 million and $109 million.
Other Risk Management Derivatives
Other risk management derivatives are used by the Corporation to reduce certain risk exposures by economically hedging various assets and liabilities. The table below presents gains (losses) on these derivatives for the three and six months ended June 30, 2024 and 2023. These gains (losses) are largely offset by the income or expense recorded on the hedged item.
| Gains and Losses on Other Risk Management Derivatives | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
Interest rate risk on mortgage activities (1, 2) | $ | (10) | $ | (23) | $ | (40) | $ | 3 | |||||||||||||||
Credit risk on loans (2) | 4 | (12) | (15) | (40) | |||||||||||||||||||
Interest rate and foreign currency risk on asset and liability management activities (3) | 82 | 781 | 173 | 659 | |||||||||||||||||||
Price risk on certain compensation plans (4) | 53 | 188 | 295 | 383 | |||||||||||||||||||
(1)Includes hedges of interest rate risk on mortgage servicing rights (MSRs) and interest rate lock commitments (IRLCs) to originate mortgage loans that will be held for sale.
(2)Gains (losses) on these derivatives are recorded in other income.
(3)Gains (losses) on these derivatives are recorded in market making and similar activities.
(4)Gains (losses) on these derivatives are recorded in compensation and benefits expense.
Transfers of Financial Assets with Risk Retained through Derivatives
The Corporation enters into certain transactions involving the transfer of financial assets that are accounted for as sales where substantially all of the economic exposure to the transferred financial assets is retained through derivatives (e.g., interest rate and/or credit), but the Corporation does not retain control over the assets transferred. At June 30, 2024 and December 31, 2023, the Corporation had transferred $4.0 billion and $4.1 billion of non-U.S. government-guaranteed mortgage-backed securities to a third-party trust and retained economic exposure to the transferred assets through derivative contracts. In connection with these transfers, the Corporation received gross cash proceeds of $4.1 billion and $4.2 billion at the transfer dates. At June 30, 2024 and December 31, 2023, the fair value of the transferred securities was $3.9 billion and $4.1 billion.
Sales and Trading Revenue
The Corporation enters into trading derivatives to facilitate client transactions and to manage risk exposures arising from trading
account assets and liabilities. It is the Corporation’s policy to include these derivative instruments in its trading activities, which include derivatives and non-derivative cash instruments. The resulting risk from these derivatives is managed on a portfolio basis as part of the Corporation’s Global Markets business segment. For more information on sales and trading revenue, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
The following table, which includes both derivatives and non-derivative cash instruments, identifies the amounts in the respective income statement line items attributable to the Corporation’s sales and trading revenue in Global Markets, categorized by primary risk, for the three and six months ended June 30, 2024 and 2023. This table includes debit valuation adjustment (DVA) and funding valuation adjustment (FVA) gains (losses). Global Markets results in Note 17 – Business Segment Information are presented on a fully taxable-equivalent (FTE) basis. The following table is not presented on an FTE basis.
59 Bank of America | ||||||||
| Sales and Trading Revenue | |||||||||||||||||||||||||||||||||||||||||||||||
| Market making and similar activities | Net Interest Income | Other (1) | Total | Market making and similar activities | Net Interest Income | Other (1) | Total | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||
| Interest rate risk | $ | 559 | $ | 245 | $ | 108 | $ | 912 | $ | 1,412 | $ | 475 | $ | 185 | $ | 2,072 | |||||||||||||||||||||||||||||||
| Foreign exchange risk | 449 | 29 | 16 | 494 | 886 | 63 | 39 | 988 | |||||||||||||||||||||||||||||||||||||||
| Equity risk | 1,837 | (339) | 450 | 1,948 | 3,701 | (768) | 877 | 3,810 | |||||||||||||||||||||||||||||||||||||||
| Credit risk | 271 | 600 | 198 | 1,069 | 822 | 1,204 | 329 | 2,355 | |||||||||||||||||||||||||||||||||||||||
Other risk (2) | 101 | 31 | (18) | 114 | 226 | 60 | (31) | 255 | |||||||||||||||||||||||||||||||||||||||
Total sales and trading revenue | $ | 3,217 | $ | 566 | $ | 754 | $ | 4,537 | $ | 7,047 | $ | 1,034 | $ | 1,399 | $ | 9,480 | |||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Interest rate risk | $ | 807 | $ | 39 | $ | 125 | $ | 971 | $ | 2,052 | $ | 138 | $ | 211 | $ | 2,401 | |||||||||||||||||||||||||||||||
| Foreign exchange risk | 506 | 31 | 15 | 552 | 908 | 80 | 39 | 1,027 | |||||||||||||||||||||||||||||||||||||||
| Equity risk | 1,659 | (511) | 459 | 1,607 | 3,659 | (1,348) | 918 | 3,229 | |||||||||||||||||||||||||||||||||||||||
| Credit risk | 311 | 610 | 94 | 1,015 | 791 | 1,276 | 209 | 2,276 | |||||||||||||||||||||||||||||||||||||||
Other risk (2) | 125 | (63) | (7) | 55 | 395 | (143) | (8) | 244 | |||||||||||||||||||||||||||||||||||||||
Total sales and trading revenue | $ | 3,408 | $ | 106 | $ | 686 | $ | 4,200 | $ | 7,805 | $ | 3 | $ | 1,369 | $ | 9,177 | |||||||||||||||||||||||||||||||
(1)Represents amounts in investment and brokerage services and other income that are recorded in Global Markets and included in the definition of sales and trading revenue. Includes investment and brokerage services revenue of $516 million and $1.0 billion for the three and six months ended June 30, 2024 compared to $492 million and $1.0 billion for the same periods in 2023.
(2)Includes commodity risk.
Credit Derivatives
The Corporation enters into credit derivatives primarily to facilitate client transactions and to manage credit risk exposures. Credit derivatives are classified as investment and non-investment grade based on the credit quality of the underlying referenced obligation. The Corporation considers ratings of BBB- or higher as investment grade. Non-investment grade includes non-rated credit derivative instruments. The Corporation discloses internal categorizations of investment
grade and non-investment grade consistent with how risk is managed for these instruments. For more information on credit derivatives, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Credit derivative instruments where the Corporation is the seller of credit protection and their expiration at June 30, 2024 and December 31, 2023 are summarized in the following table.
Bank of America 60 | ||||||||
| Credit Derivative Instruments | |||||||||||||||||||||||||||||
| Less than One Year | One to Three Years | Three to Five Years | Over Five Years | Total | |||||||||||||||||||||||||
| June 30, 2024 | |||||||||||||||||||||||||||||
| (Dollars in millions) | Carrying Value | ||||||||||||||||||||||||||||
| Credit default swaps: | |||||||||||||||||||||||||||||
| Investment grade | $ | — | $ | 11 | $ | 26 | $ | 20 | $ | 57 | |||||||||||||||||||
| Non-investment grade | 18 | 257 | 893 | 487 | 1,655 | ||||||||||||||||||||||||
| Total | 18 | 268 | 919 | 507 | 1,712 | ||||||||||||||||||||||||
| Total return swaps/options: | |||||||||||||||||||||||||||||
| Investment grade | 71 | — | — | — | 71 | ||||||||||||||||||||||||
| Non-investment grade | 115 | 78 | 90 | 10 | 293 | ||||||||||||||||||||||||
| Total | 186 | 78 | 90 | 10 | 364 | ||||||||||||||||||||||||
| Total credit derivatives | $ | 204 | $ | 346 | $ | 1,009 | $ | 517 | $ | 2,076 | |||||||||||||||||||
| Credit-related notes: | |||||||||||||||||||||||||||||
| Investment grade | $ | — | $ | — | $ | 2 | $ | 720 | $ | 722 | |||||||||||||||||||
| Non-investment grade | — | 5 | 15 | 1,142 | 1,162 | ||||||||||||||||||||||||
| Total credit-related notes | $ | — | $ | 5 | $ | 17 | $ | 1,862 | $ | 1,884 | |||||||||||||||||||
| Maximum Payout/Notional | |||||||||||||||||||||||||||||
| Credit default swaps: | |||||||||||||||||||||||||||||
| Investment grade | $ | 37,894 | $ | 77,291 | $ | 169,415 | $ | 20,257 | $ | 304,857 | |||||||||||||||||||
| Non-investment grade | 16,062 | 35,059 | 51,907 | 4,826 | 107,854 | ||||||||||||||||||||||||
| Total | 53,956 | 112,350 | 221,322 | 25,083 | 412,711 | ||||||||||||||||||||||||
| Total return swaps/options: | |||||||||||||||||||||||||||||
| Investment grade | 71,915 | 1,457 | 1,369 | 177 | 74,918 | ||||||||||||||||||||||||
| Non-investment grade | 24,337 | 2,522 | 2,423 | 391 | 29,673 | ||||||||||||||||||||||||
| Total | 96,252 | 3,979 | 3,792 | 568 | 104,591 | ||||||||||||||||||||||||
| Total credit derivatives | $ | 150,208 | $ | 116,329 | $ | 225,114 | $ | 25,651 | $ | 517,302 | |||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||||||||
| Carrying Value | |||||||||||||||||||||||||||||
| Credit default swaps: | |||||||||||||||||||||||||||||
| Investment grade | $ | — | $ | 11 | $ | 26 | $ | 20 | $ | 57 | |||||||||||||||||||
| Non-investment grade | 38 | 277 | 601 | 595 | 1,511 | ||||||||||||||||||||||||
| Total | 38 | 288 | 627 | 615 | 1,568 | ||||||||||||||||||||||||
| Total return swaps/options: | |||||||||||||||||||||||||||||
| Investment grade | 59 | — | — | — | 59 | ||||||||||||||||||||||||
| Non-investment grade | 149 | 69 | 56 | 5 | 279 | ||||||||||||||||||||||||
| Total | 208 | 69 | 56 | 5 | 338 | ||||||||||||||||||||||||
| Total credit derivatives | $ | 246 | $ | 357 | $ | 683 | $ | 620 | $ | 1,906 | |||||||||||||||||||
| Credit-related notes: | |||||||||||||||||||||||||||||
| Investment grade | $ | — | $ | — | $ | — | $ | 859 | $ | 859 | |||||||||||||||||||
| Non-investment grade | — | 5 | 16 | 1,103 | 1,124 | ||||||||||||||||||||||||
| Total credit-related notes | $ | — | $ | 5 | $ | 16 | $ | 1,962 | $ | 1,983 | |||||||||||||||||||
| Maximum Payout/Notional | |||||||||||||||||||||||||||||
| Credit default swaps: | |||||||||||||||||||||||||||||
| Investment grade | $ | 33,750 | $ | 65,015 | $ | 83,313 | $ | 17,023 | $ | 199,101 | |||||||||||||||||||
| Non-investment grade | 18,061 | 32,155 | 33,934 | 5,827 | 89,977 | ||||||||||||||||||||||||
| Total | 51,811 | 97,170 | 117,247 | 22,850 | 289,078 | ||||||||||||||||||||||||
| Total return swaps/options: | |||||||||||||||||||||||||||||
| Investment grade | 40,515 | 1,503 | 1,561 | 23 | 43,602 | ||||||||||||||||||||||||
| Non-investment grade | 20,694 | 1,414 | 1,907 | 988 | 25,003 | ||||||||||||||||||||||||
| Total | 61,209 | 2,917 | 3,468 | 1,011 | 68,605 | ||||||||||||||||||||||||
| Total credit derivatives | $ | 113,020 | $ | 100,087 | $ | 120,715 | $ | 23,861 | $ | 357,683 | |||||||||||||||||||
The notional amount represents the maximum amount payable by the Corporation for most credit derivatives. However, the Corporation does not monitor its exposure to credit derivatives based solely on the notional amount because this measure does not take into consideration the probability of occurrence. As such, the notional amount is not a reliable indicator of the Corporation’s exposure to these contracts. Instead, a risk framework is used to define risk tolerances and establish limits so that certain credit risk-related losses occur within acceptable, predefined limits.
Credit-related notes in the table above include investments in securities issued by collateralized debt obligation (CDO), collateralized loan obligation (CLO) and credit-linked note
vehicles. These instruments are primarily classified as trading securities. The carrying value of these instruments equals the Corporation’s maximum exposure to loss. The Corporation is not obligated to make any payments to the entities under the terms of the securities owned.
Credit-related Contingent Features and Collateral
Certain of the Corporation’s derivative contracts contain credit risk-related contingent features, primarily in the form of ISDA master netting agreements and credit support documentation that enhance the creditworthiness of these instruments compared to other obligations of the respective counterparty with whom the Corporation has transacted. These contingent features may be for the benefit of the Corporation as well as its
61 Bank of America | ||||||||
counterparties with respect to changes in the Corporation’s creditworthiness and the mark-to-market exposure under the derivative transactions. At June 30, 2024 and December 31, 2023, the Corporation held cash and securities collateral of $102.5 billion and $104.1 billion and posted cash and securities collateral of $89.8 billion and $93.4 billion in the normal course of business under derivative agreements, excluding cross-product margining agreements where clients are permitted to margin on a net basis for both derivative and secured financing arrangements.
In connection with certain OTC derivative contracts and other trading agreements, the Corporation can be required to provide additional collateral or to terminate transactions with certain counterparties in the event of a downgrade of the senior debt ratings of the Corporation or certain subsidiaries. The amount of additional collateral required depends on the contract and is usually a fixed incremental amount and/or the market value of the exposure. For more information on credit-related contingent features and collateral, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
At June 30, 2024, the amount of collateral, calculated based on the terms of the contracts, that the Corporation and certain subsidiaries could be required to post to counterparties but had not yet posted to counterparties was $2.4 billion, including $1.2 billion for Bank of America, National Association.
Some counterparties are currently able to unilaterally terminate certain contracts, or the Corporation or certain subsidiaries may be required to take other action such as find a suitable replacement or obtain a guarantee. At June 30, 2024 and December 31, 2023, the liability recorded for these derivative contracts was not significant.
The following table presents the amount of additional collateral that would have been contractually required by derivative contracts and other trading agreements at June 30, 2024 if the rating agencies had downgraded their long-term senior debt ratings for the Corporation or certain subsidiaries by one incremental notch and by an additional second incremental notch. The table also presents derivative liabilities that would be subject to unilateral termination by counterparties upon downgrade of the Corporation's or certain subsidiaries’ long-term senior debt ratings.
(1)Included in Bank of America Corporation collateral requirements in this table.
Valuation Adjustments on Derivatives
The table below presents credit valuation adjustment (CVA), DVA and FVA gains (losses) on derivatives (excluding the effect of any related hedge activities), which are recorded in market making and similar activities, for the three and six months ended June 30, 2024 and 2023. For more information on the valuation adjustments on derivatives, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Valuation Adjustments Gains (Losses) on Derivatives (1) | |||||||||||
| Three Months Ended June 30 | |||||||||||
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Derivative assets (CVA) | $ | (31) | $ | 109 | |||||||
Derivative assets/liabilities (FVA) | (29) | 26 | |||||||||
| Derivative liabilities (DVA) | 27 | (86) | |||||||||
| Six Months Ended June 30 | |||||||||||
| (Dollars in millions) | 2024 | 2023 | |||||||||
| Derivative assets (CVA) | $ | 31 | $ | 121 | |||||||
Derivative assets/liabilities (FVA) | (15) | (17) | |||||||||
| Derivative liabilities (DVA) | (42) | (84) | |||||||||
(1)At June 30, 2024 and December 31, 2023, cumulative CVA reduced the derivative assets balance by $328 million and $359 million, cumulative FVA reduced the net derivative balance by $102 million and $87 million, and cumulative DVA reduced the derivative liabilities balance by $257 million and $299 million.
Bank of America 62 | ||||||||
NOTE 4 Securities
The table below presents the amortized cost, gross unrealized gains and losses, and fair value of available-for-sale (AFS) debt securities, other debt securities carried at fair value and held-to-maturity (HTM) debt securities at June 30, 2024 and December 31, 2023.
| Debt Securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||
| Available-for-sale debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Agency | $ | 37,022 | $ | 4 | $ | (1,664) | $ | 35,362 | $ | 39,195 | $ | 37 | $ | (1,420) | $ | 37,812 | |||||||||||||||||||||||||||||||
| Agency-collateralized mortgage obligations | 9,652 | 17 | (225) | 9,444 | 2,739 | 6 | (201) | 2,544 | |||||||||||||||||||||||||||||||||||||||
| Commercial | 12,421 | 69 | (469) | 12,021 | 10,909 | 40 | (514) | 10,435 | |||||||||||||||||||||||||||||||||||||||
Non-agency residential (1) | 303 | 46 | (64) | 285 | 449 | 3 | (70) | 382 | |||||||||||||||||||||||||||||||||||||||
| Total mortgage-backed securities | 59,398 | 136 | (2,422) | 57,112 | 53,292 | 86 | (2,205) | 51,173 | |||||||||||||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 201,441 | 22 | (1,183) | 200,280 | 179,108 | 19 | (1,461) | 177,666 | |||||||||||||||||||||||||||||||||||||||
| Non-U.S. securities | 21,396 | 12 | (23) | 21,385 | 22,868 | 27 | (20) | 22,875 | |||||||||||||||||||||||||||||||||||||||
| Other taxable securities | 2,246 | 2 | (54) | 2,194 | 4,910 | 1 | (76) | 4,835 | |||||||||||||||||||||||||||||||||||||||
| Tax-exempt securities | 10,542 | 11 | (229) | 10,324 | 10,304 | 17 | (221) | 10,100 | |||||||||||||||||||||||||||||||||||||||
| Total available-for-sale debt securities | 295,023 | 183 | (3,911) | 291,295 | 270,482 | 150 | (3,983) | 266,649 | |||||||||||||||||||||||||||||||||||||||
Other debt securities carried at fair value (2) | 9,789 | 62 | (95) | 9,756 | 10,202 | 56 | (55) | 10,203 | |||||||||||||||||||||||||||||||||||||||
| Total debt securities carried at fair value | 304,812 | 245 | (4,006) | 301,051 | 280,684 | 206 | (4,038) | 276,852 | |||||||||||||||||||||||||||||||||||||||
| Held-to-maturity debt securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Agency mortgage-backed securities | 448,483 | — | (89,989) | 358,494 | 465,456 | — | (78,930) | 386,526 | |||||||||||||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 121,670 | — | (19,651) | 102,019 | 121,645 | — | (17,963) | 103,682 | |||||||||||||||||||||||||||||||||||||||
| Other taxable securities | 7,249 | — | (1,126) | 6,123 | 7,490 | — | (1,101) | 6,389 | |||||||||||||||||||||||||||||||||||||||
| Total held-to-maturity debt securities | 577,402 | — | (110,766) | 466,636 | 594,591 | — | (97,994) | 496,597 | |||||||||||||||||||||||||||||||||||||||
Total debt securities (3,4) | $ | 882,214 | $ | 245 | $ | (114,772) | $ | 767,687 | $ | 875,275 | $ | 206 | $ | (102,032) | $ | 773,449 | |||||||||||||||||||||||||||||||
(1)At June 30, 2024 and December 31, 2023, the underlying collateral type included approximately 24 percent and 17 percent prime and 76 percent and 83 percent subprime.
(2)Primarily includes non-U.S. securities used to satisfy certain international regulatory requirements. Any changes in value are reported in market making and similar activities. For detail on the components, see Note 14 – Fair Value Measurements.
(3)Includes securities pledged as collateral of $219.1 billion and $204.9 billion at June 30, 2024 and December 31, 2023.
(4)The Corporation held debt securities from Fannie Mae (FNMA) and Freddie Mac (FHLMC) that each exceeded 10 percent of shareholders’ equity, with an amortized cost of $263.6 billion and $166.4 billion, and a fair value of $211.3 billion and $133.5 billion at June 30, 2024, and an amortized cost of $272.5 billion and $171.5 billion, and a fair value of $226.4 billion and $142.3 billion at December 31, 2023.
At June 30, 2024, the accumulated net unrealized loss on AFS debt securities, excluding the amount related to debt securities previously transferred to held to maturity, included in accumulated OCI was $2.8 billion, net of the related income tax benefit of $931 million. At June 30, 2024 and December 31, 2023, nonperforming AFS debt securities held by the Corporation were not significant.
At June 30, 2024 and December 31, 2023, $836.3 billion and $824.9 billion of AFS and HTM debt securities, which were predominantly U.S. agency and U.S. Treasury securities, have a zero credit loss assumption. For the same periods, the expected credit losses on the remaining $36.1 billion and $40.2 billion of AFS and HTM debt securities were insignificant. For more information on the zero credit loss assumption, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
At June 30, 2024 and December 31, 2023, the Corporation held equity securities at an aggregate fair value of $250 million and $251 million and other equity securities, as valued under the measurement alternative, at a carrying value of $406 million and $377 million, both of which are included in other assets. At
both June 30, 2024 and December 31, 2023, the Corporation also held money market investments at a fair value of $1.2 billion, which are included in time deposits placed and other short-term investments.
The gross realized gains and losses on sales of AFS debt securities for the three and six months ended June 30, 2024 and 2023 are presented in the table below.
| Gains and Losses on Sales of AFS Debt Securities | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Gross gains | $ | 4 | $ | 8 | $ | 15 | $ | 104 | |||||||||||||||
| Gross losses | (1) | (202) | (1) | (508) | |||||||||||||||||||
| Net gains (losses) on sales of AFS debt securities | $ | 3 | $ | (194) | $ | 14 | $ | (404) | |||||||||||||||
| Income tax expense (benefit) attributable to realized net gains (losses) on sales of AFS debt securities | $ | 1 | $ | (48) | $ | 4 | $ | (101) | |||||||||||||||
63 Bank of America | ||||||||
The table below presents the fair value and the associated gross unrealized losses on AFS debt securities and whether these securities have had gross unrealized losses for less than 12 months or for 12 months or longer at June 30, 2024 and December 31, 2023.
| Total AFS Debt Securities in a Continuous Unrealized Loss Position | |||||||||||||||||||||||||||||||||||
| Less than Twelve Months | Twelve Months or Longer | Total | |||||||||||||||||||||||||||||||||
| Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | ||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | ||||||||||||||||||||||||||||||||||
| Continuously unrealized loss-positioned AFS debt securities | |||||||||||||||||||||||||||||||||||
| Mortgage-backed securities: | |||||||||||||||||||||||||||||||||||
| Agency | $ | 14,403 | $ | (79) | $ | 19,359 | $ | (1,585) | $ | 33,762 | $ | (1,664) | |||||||||||||||||||||||
| Agency-collateralized mortgage obligations | 2,903 | (9) | 1,578 | (216) | 4,481 | (225) | |||||||||||||||||||||||||||||
| Commercial | 1,554 | (12) | 4,731 | (457) | 6,285 | (469) | |||||||||||||||||||||||||||||
| Non-agency residential | — | — | 155 | (64) | 155 | (64) | |||||||||||||||||||||||||||||
| Total mortgage-backed securities | 18,860 | (100) | 25,823 | (2,322) | 44,683 | (2,422) | |||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 91,552 | (73) | 68,083 | (1,110) | 159,635 | (1,183) | |||||||||||||||||||||||||||||
| Non-U.S. securities | 8,346 | (12) | 2,593 | (11) | 10,939 | (23) | |||||||||||||||||||||||||||||
| Other taxable securities | 672 | (4) | 1,394 | (50) | 2,066 | (54) | |||||||||||||||||||||||||||||
| Tax-exempt securities | 813 | (7) | 2,685 | (222) | 3,498 | (229) | |||||||||||||||||||||||||||||
Total AFS debt securities in a continuous unrealized loss position | $ | 120,243 | $ | (196) | $ | 100,578 | $ | (3,715) | $ | 220,821 | $ | (3,911) | |||||||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||||||||||||||
| Continuously unrealized loss-positioned AFS debt securities | |||||||||||||||||||||||||||||||||||
| Mortgage-backed securities: | |||||||||||||||||||||||||||||||||||
| Agency | $ | 8,624 | $ | (21) | $ | 20,776 | $ | (1,399) | $ | 29,400 | $ | (1,420) | |||||||||||||||||||||||
| Agency-collateralized mortgage obligations | — | — | 1,701 | (201) | 1,701 | (201) | |||||||||||||||||||||||||||||
| Commercial | 2,363 | (27) | 4,588 | (487) | 6,951 | (514) | |||||||||||||||||||||||||||||
| Non-agency residential | — | — | 370 | (70) | 370 | (70) | |||||||||||||||||||||||||||||
| Total mortgage-backed securities | 10,987 | (48) | 27,435 | (2,157) | 38,422 | (2,205) | |||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 14,907 | (12) | 69,669 | (1,449) | 84,576 | (1,461) | |||||||||||||||||||||||||||||
| Non-U.S. securities | 7,702 | (8) | 1,524 | (12) | 9,226 | (20) | |||||||||||||||||||||||||||||
| Other taxable securities | 3,269 | (19) | 1,437 | (57) | 4,706 | (76) | |||||||||||||||||||||||||||||
| Tax-exempt securities | 466 | (5) | 2,106 | (216) | 2,572 | (221) | |||||||||||||||||||||||||||||
Total AFS debt securities in a continuous unrealized loss position | $ | 37,331 | $ | (92) | $ | 102,171 | $ | (3,891) | $ | 139,502 | $ | (3,983) | |||||||||||||||||||||||
Bank of America 64 | ||||||||
The remaining contractual maturity distribution and yields of the Corporation’s debt securities carried at fair value and HTM debt securities at June 30, 2024 are summarized in the table below. Actual duration and yields may differ as prepayments on the loans underlying the mortgage-backed securities (MBS) or other asset-backed securities (ABS) are passed through to the Corporation.
| Maturities of Debt Securities Carried at Fair Value and Held-to-maturity Debt Securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Due in One Year or Less | Due after One Year through Five Years | Due after Five Years through Ten Years | Due after Ten Years | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Amount | Yield (1) | Amount | Yield (1) | Amount | Yield (1) | Amount | Yield (1) | Amount | Yield (1) | |||||||||||||||||||||||||||||||||||||||||||||||||
| Amortized cost of debt securities carried at fair value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency | $ | — | — | % | $ | 23 | 4.43 | % | $ | 6 | 3.50 | % | $ | 36,993 | 4.69 | % | $ | 37,022 | 4.69 | % | |||||||||||||||||||||||||||||||||||||||
| Agency-collateralized mortgage obligations | — | — | — | — | 2 | 0.50 | 9,650 | 5.55 | 9,652 | 5.55 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | 87 | 3.93 | 2,205 | 3.32 | 8,373 | 3.86 | 1,769 | 3.24 | 12,434 | 3.68 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Non-agency residential | — | — | — | — | — | — | 569 | 10.97 | 569 | 10.97 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total mortgage-backed securities | 87 | 3.93 | 2,228 | 3.33 | 8,381 | 3.86 | 48,981 | 4.88 | 59,677 | 4.67 | |||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 14,582 | 5.20 | 173,163 | 3.94 | 15,502 | 2.95 | 37 | 3.85 | 203,284 | 3.96 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Non-U.S. securities | 18,334 | 3.82 | 5,351 | 1.72 | 3,723 | 5.18 | 1,655 | 4.75 | 29,063 | 3.66 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other taxable securities | 467 | 6.66 | 1,467 | 6.02 | 237 | 4.30 | 75 | 2.77 | 2,246 | 5.86 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Tax-exempt securities | 1,220 | 3.62 | 3,751 | 4.01 | 704 | 2.91 | 4,867 | 4.40 | 10,542 | 4.07 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total amortized cost of debt securities carried at fair value | $ | 34,690 | 4.43 | $ | 185,960 | 3.89 | $ | 28,547 | 3.52 | $ | 55,615 | 4.83 | $ | 304,812 | 4.09 | ||||||||||||||||||||||||||||||||||||||||||||
| Amortized cost of HTM debt securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency mortgage-backed securities | $ | — | — | % | $ | — | — | % | $ | 10 | 2.90 | % | $ | 448,473 | 2.12 | % | $ | 448,483 | 2.12 | % | |||||||||||||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 244 | 2.66 | 13,337 | 1.91 | 108,089 | 1.33 | — | — | 121,670 | 1.40 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other taxable securities | 80 | 1.59 | 1,146 | 2.55 | 143 | 3.28 | 5,880 | 2.53 | 7,249 | 2.54 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total amortized cost of HTM debt securities | $ | 324 | 2.40 | $ | 14,483 | 1.96 | $ | 108,242 | 1.33 | $ | 454,353 | 2.12 | $ | 577,402 | 1.97 | ||||||||||||||||||||||||||||||||||||||||||||
| Debt securities carried at fair value | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency | $ | — | $ | 22 | $ | 6 | $ | 35,334 | $ | 35,362 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Agency-collateralized mortgage obligations | — | — | 2 | 9,442 | 9,444 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | 86 | 2,156 | 8,233 | 1,557 | 12,032 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-agency residential | — | 2 | — | 539 | 541 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total mortgage-backed securities | 86 | 2,180 | 8,241 | 46,872 | 57,379 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 14,575 | 172,384 | 15,130 | 34 | 202,123 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-U.S. securities | 18,306 | 5,345 | 3,723 | 1,654 | 29,028 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other taxable securities | 465 | 1,450 | 216 | 66 | 2,197 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tax-exempt securities | 1,213 | 3,719 | 681 | 4,711 | 10,324 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total debt securities carried at fair value | $ | 34,645 | $ | 185,078 | $ | 27,991 | $ | 53,337 | $ | 301,051 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of HTM debt securities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Agency mortgage-backed securities | $ | — | $ | — | $ | 10 | $ | 358,484 | $ | 358,494 | |||||||||||||||||||||||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 238 | 11,931 | 89,850 | — | 102,019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other taxable securities | 25 | 1,089 | 115 | 4,894 | 6,123 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total fair value of HTM debt securities | $ | 263 | $ | 13,020 | $ | 89,975 | $ | 363,378 | $ | 466,636 | |||||||||||||||||||||||||||||||||||||||||||||||||
(1)The weighted-average yield is computed based on a constant effective yield over the contractual life of each security. The yield considers the contractual coupon and the amortization of premiums and accretion of discounts, excluding the effect of related open hedging derivatives.
65 Bank of America | ||||||||
NOTE 5 Outstanding Loans and Leases and Allowance for Credit Losses
The following tables present total outstanding loans and leases and an aging analysis for the Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments, by class of financing receivables, at June 30, 2024 and December 31, 2023.
30-59 Days Past Due (1) | 60-89 Days Past Due (1) | 90 Days or More Past Due (1) | Total Past Due 30 Days or More | Total Current or Less Than 30 Days Past Due (1) | Loans Accounted for Under the Fair Value Option | Total Outstandings | |||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||
| Consumer real estate | |||||||||||||||||||||||||||||||||||||||||
| Residential mortgage | $ | 1,258 | $ | 229 | $ | 742 | $ | 2,229 | $ | 225,641 | $ | 227,870 | |||||||||||||||||||||||||||||
| Home equity | 88 | 34 | 134 | 256 | 25,186 | 25,442 | |||||||||||||||||||||||||||||||||||
| Credit card and other consumer | |||||||||||||||||||||||||||||||||||||||||
| Credit card | 674 | 484 | 1,257 | 2,415 | 97,035 | 99,450 | |||||||||||||||||||||||||||||||||||
Direct/Indirect consumer (2) | 310 | 100 | 86 | 496 | 103,338 | 103,834 | |||||||||||||||||||||||||||||||||||
| Other consumer | — | — | — | — | 117 | 117 | |||||||||||||||||||||||||||||||||||
| Total consumer | 2,330 | 847 | 2,219 | 5,396 | 451,317 | 456,713 | |||||||||||||||||||||||||||||||||||
Consumer loans accounted for under the fair value option (3) | $ | 231 | 231 | ||||||||||||||||||||||||||||||||||||||
| Total consumer loans and leases | 2,330 | 847 | 2,219 | 5,396 | 451,317 | 231 | 456,944 | ||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||
| U.S. commercial | 434 | 127 | 215 | 776 | 368,363 | 369,139 | |||||||||||||||||||||||||||||||||||
| Non-U.S. commercial | 91 | 5 | 4 | 100 | 122,083 | 122,183 | |||||||||||||||||||||||||||||||||||
Commercial real estate (4) | 286 | 158 | 758 | 1,202 | 69,082 | 70,284 | |||||||||||||||||||||||||||||||||||
| Commercial lease financing | 19 | 11 | 23 | 53 | 14,821 | 14,874 | |||||||||||||||||||||||||||||||||||
| U.S. small business commercial | 173 | 78 | 190 | 441 | 19,954 | 20,395 | |||||||||||||||||||||||||||||||||||
| Total commercial | 1,003 | 379 | 1,190 | 2,572 | 594,303 | 596,875 | |||||||||||||||||||||||||||||||||||
Commercial loans accounted for under the fair value option (3) | 2,966 | 2,966 | |||||||||||||||||||||||||||||||||||||||
| Total commercial loans and leases | 1,003 | 379 | 1,190 | 2,572 | 594,303 | 2,966 | 599,841 | ||||||||||||||||||||||||||||||||||
Total loans and leases (5) | $ | 3,333 | $ | 1,226 | $ | 3,409 | $ | 7,968 | $ | 1,045,620 | $ | 3,197 | $ | 1,056,785 | |||||||||||||||||||||||||||
| Percentage of outstandings | 0.32 | % | 0.12 | % | 0.32 | % | 0.76 | % | 98.94 | % | 0.30 | % | 100.00 | % | |||||||||||||||||||||||||||
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $191 million and nonperforming loans of $192 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $63 million and nonperforming loans of $89 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $211 million and nonperforming loans of $665 million. Consumer real estate loans current or less than 30 days past due includes $1.6 billion, and direct/indirect consumer includes $47 million of nonperforming loans.
(2)Total outstandings primarily includes auto and specialty lending loans and leases of $53.6 billion, U.S. securities-based lending loans of $46.7 billion and non-U.S. consumer loans of $2.8 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $63 million and home equity loans of $168 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $2.0 billion and non-U.S. commercial loans of $945 million. For more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.
(4)Total outstandings includes U.S. commercial real estate loans of $64.4 billion and non-U.S. commercial real estate loans of $5.9 billion.
(5)Total outstandings includes loans and leases pledged as collateral of $33.9 billion. The Corporation also pledged $316.6 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.
Bank of America 66 | ||||||||
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $198 million and nonperforming loans of $150 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $77 million and nonperforming loans of $102 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $252 million and nonperforming loans of $738 million. Consumer real estate loans current or less than 30 days past due includes $1.6 billion, and direct/indirect consumer includes $39 million of nonperforming loans.
(2)Total outstandings primarily includes auto and specialty lending loans and leases of $53.9 billion, U.S. securities-based lending loans of $46.0 billion and non-U.S. consumer loans of $2.8 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $66 million and home equity loans of $177 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $2.2 billion and non-U.S. commercial loans of $1.2 billion. For more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.
(4)Total outstandings includes U.S. commercial real estate loans of $66.8 billion and non-U.S. commercial real estate loans of $6.1 billion.
(5)Total outstandings includes loans and leases pledged as collateral of $33.7 billion. The Corporation also pledged $246.0 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.
The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $8.4 billion and $8.7 billion at June 30, 2024 and December 31, 2023, providing full credit protection on residential mortgage loans that become severely delinquent. All of these loans are individually insured, and therefore the Corporation does not record an allowance for credit losses related to these loans.
Nonperforming Loans and Leases
Nonperforming loans were $5.5 billion at both June 30, 2024 and December 31, 2023. Commercial nonperforming loans were $2.8 billion at both June 30, 2024 and December 31, 2023 primarily driven by the commercial real estate office property
type. Consumer nonperforming loans were $2.7 billion at both June 30, 2024 and December 31, 2023, driven primarily by residential mortgage.
The following table presents the Corporation’s nonperforming loans and leases and loans accruing past due 90 days or more at June 30, 2024 and December 31, 2023. Nonperforming loans held-for-sale (LHFS) are excluded from nonperforming loans and leases as they are recorded at either fair value or the lower of cost or fair value. For more information on the criteria for classification as nonperforming, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
67 Bank of America | ||||||||
| Credit Quality | |||||||||||||||||||||||
| Nonperforming Loans and Leases | Accruing Past Due 90 Days or More | ||||||||||||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | |||||||||||||||||||
Residential mortgage (1) | $ | 2,097 | $ | 2,114 | $ | 211 | $ | 252 | |||||||||||||||
With no related allowance (2) | 1,952 | 1,974 | — | — | |||||||||||||||||||
Home equity (1) | 422 | 450 | — | — | |||||||||||||||||||
With no related allowance (2) | 352 | 375 | — | — | |||||||||||||||||||
| Credit Card | n/a | n/a | 1,257 | 1,224 | |||||||||||||||||||
| Direct/indirect consumer | 152 | 148 | 6 | 2 | |||||||||||||||||||
| Total consumer | 2,671 | 2,712 | 1,474 | 1,478 | |||||||||||||||||||
| U.S. commercial | 700 | 636 | 68 | 51 | |||||||||||||||||||
| Non-U.S. commercial | 90 | 175 | 3 | 4 | |||||||||||||||||||
| Commercial real estate | 1,971 | 1,927 | 59 | 32 | |||||||||||||||||||
| Commercial lease financing | 19 | 19 | 7 | 7 | |||||||||||||||||||
| U.S. small business commercial | 22 | 16 | 189 | 184 | |||||||||||||||||||
| Total commercial | 2,802 | 2,773 | 326 | 278 | |||||||||||||||||||
| Total nonperforming loans | $ | 5,473 | $ | 5,485 | $ | 1,800 | $ | 1,756 | |||||||||||||||
Percentage of outstanding loans and leases | 0.52 | % | 0.52 | % | 0.17 | % | 0.17 | % | |||||||||||||||
(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At June 30, 2024 and December 31, 2023 residential mortgage included $125 million and $156 million of loans on which interest had been curtailed by the Federal Housing Administration (FHA), and therefore were no longer accruing interest, although principal was still insured, and $86 million and $96 million of loans on which interest was still accruing.
(2)Primarily relates to loans for which the estimated fair value of the underlying collateral less any costs to sell is greater than the amortized cost of the loans as of the reporting date.
n/a = not applicable
Credit Quality Indicators
The Corporation monitors credit quality within its Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments based on primary credit quality indicators. For more information on the portfolio segments, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. Within the Consumer Real Estate portfolio segment, the primary credit quality indicators are refreshed loan-to-value (LTV) and refreshed Fair Isaac Corporation (FICO) score. Refreshed LTV measures the carrying value of the loan as a percentage of the value of the property securing the loan, refreshed quarterly. Home equity loans are evaluated using combined loan-to-value (CLTV), which measures the carrying value of the Corporation’s loan and available line of credit combined with any outstanding senior liens against the property as a percentage of the value of the property securing the loan, refreshed quarterly. FICO score measures the creditworthiness of the borrower based on the financial obligations of the borrower and the borrower’s credit history. FICO scores are typically refreshed quarterly or more frequently. Certain borrowers (e.g., borrowers that have had debts discharged in a
bankruptcy proceeding) may not have their FICO scores updated. FICO scores are also a primary credit quality indicator for the Credit Card and Other Consumer portfolio segment and the business card portfolio within U.S. small business commercial. Within the Commercial portfolio segment, loans are evaluated using the internal classifications of pass rated or reservable criticized as the primary credit quality indicators. The term reservable criticized refers to those commercial loans that are internally classified or listed by the Corporation as Special Mention, Substandard or Doubtful, which are asset quality categories defined by regulatory authorities. These assets have an elevated level of risk and may have a high probability of default or total loss. Pass rated refers to all loans not considered reservable criticized. In addition to these primary credit quality indicators, the Corporation uses other credit quality indicators for certain types of loans.
The following tables present certain credit quality indicators and gross charge-offs for the Corporation's Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments by year of origination, except for revolving loans and revolving loans that were modified into term loans, which are shown on an aggregate basis at June 30, 2024.
Bank of America 68 | ||||||||
Residential Mortgage – Credit Quality Indicators By Vintage | |||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Total as of June 30, 2024 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | ||||||||||||||||||||||||||||||||||
| Residential Mortgage | |||||||||||||||||||||||||||||||||||||||||
Refreshed LTV | |||||||||||||||||||||||||||||||||||||||||
| Less than or equal to 90 percent | $ | 214,338 | $ | 8,287 | $ | 14,200 | $ | 37,386 | $ | 74,005 | $ | 33,814 | $ | 46,646 | |||||||||||||||||||||||||||
Greater than 90 percent but less than or equal to 100 percent | 2,118 | 337 | 620 | 786 | 258 | 45 | 72 | ||||||||||||||||||||||||||||||||||
Greater than 100 percent | 920 | 200 | 272 | 302 | 82 | 23 | 41 | ||||||||||||||||||||||||||||||||||
Fully-insured loans | 10,494 | 335 | 240 | 320 | 3,287 | 2,703 | 3,609 | ||||||||||||||||||||||||||||||||||
| Total Residential Mortgage | $ | 227,870 | $ | 9,159 | $ | 15,332 | $ | 38,794 | $ | 77,632 | $ | 36,585 | $ | 50,368 | |||||||||||||||||||||||||||
| Residential Mortgage | |||||||||||||||||||||||||||||||||||||||||
| Refreshed FICO score | |||||||||||||||||||||||||||||||||||||||||
| Less than 620 | $ | 2,449 | $ | 75 | $ | 139 | $ | 479 | $ | 626 | $ | 406 | $ | 724 | |||||||||||||||||||||||||||
Greater than or equal to 620 and less than 680 | 4,588 | 127 | 359 | 888 | 1,181 | 716 | 1,317 | ||||||||||||||||||||||||||||||||||
Greater than or equal to 680 and less than 740 | 22,503 | 847 | 1,827 | 4,165 | 6,511 | 3,541 | 5,612 | ||||||||||||||||||||||||||||||||||
Greater than or equal to 740 | 187,836 | 7,775 | 12,767 | 32,942 | 66,027 | 29,219 | 39,106 | ||||||||||||||||||||||||||||||||||
Fully-insured loans | 10,494 | 335 | 240 | 320 | 3,287 | 2,703 | 3,609 | ||||||||||||||||||||||||||||||||||
| Total Residential Mortgage | $ | 227,870 | $ | 9,159 | $ | 15,332 | $ | 38,794 | $ | 77,632 | $ | 36,585 | $ | 50,368 | |||||||||||||||||||||||||||
| Gross charge-offs for the six months ended June 30, 2024 | $ | 13 | $ | — | $ | 1 | $ | 2 | $ | 2 | $ | 1 | $ | 7 | |||||||||||||||||||||||||||
| Home Equity - Credit Quality Indicators | |||||||||||||||||||||||
| Total | Home Equity Loans and Reverse Mortgages (1) | Revolving Loans | Revolving Loans Converted to Term Loans | ||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | ||||||||||||||||||||||
| Home Equity | |||||||||||||||||||||||
Refreshed LTV | |||||||||||||||||||||||
| Less than or equal to 90 percent | $ | 25,290 | $ | 959 | $ | 20,708 | $ | 3,623 | |||||||||||||||
Greater than 90 percent but less than or equal to 100 percent | 78 | 20 | 51 | 7 | |||||||||||||||||||
Greater than 100 percent | 74 | 27 | 34 | 13 | |||||||||||||||||||
| Total Home Equity | $ | 25,442 | $ | 1,006 | $ | 20,793 | $ | 3,643 | |||||||||||||||
| Home Equity | |||||||||||||||||||||||
| Refreshed FICO score | |||||||||||||||||||||||
| Less than 620 | $ | 645 | $ | 97 | $ | 282 | $ | 266 | |||||||||||||||
Greater than or equal to 620 and less than 680 | 1,087 | 111 | 620 | 356 | |||||||||||||||||||
Greater than or equal to 680 and less than 740 | 4,293 | 211 | 3,226 | 856 | |||||||||||||||||||
Greater than or equal to 740 | 19,417 | 587 | 16,665 | 2,165 | |||||||||||||||||||
| Total Home Equity | $ | 25,442 | $ | 1,006 | $ | 20,793 | $ | 3,643 | |||||||||||||||
| Gross charge-offs for the six months ended June 30, 2024 | $ | 6 | $ | — | $ | 3 | $ | 3 | |||||||||||||||
(1)Includes reverse mortgages of $694 million and home equity loans of $312 million, which are no longer originated.
| Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct/Indirect | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | Credit Card | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Total Direct/ Indirect as of June 30, 2024 | Revolving Loans | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Total Credit Card as of June 30, 2024 | Revolving Loans | Revolving Loans Converted to Term Loans (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Refreshed FICO score | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less than 620 | $ | 1,354 | $ | 11 | $ | 93 | $ | 394 | $ | 441 | $ | 287 | $ | 66 | $ | 62 | $ | 5,450 | $ | 5,102 | $ | 348 | |||||||||||||||||||||||||||||||||||||||||||
| Greater than or equal to 620 and less than 680 | 2,382 | 10 | 346 | 829 | 645 | 371 | 91 | 90 | 11,260 | 10,947 | 313 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Greater than or equal to 680 and less than 740 | 8,022 | 43 | 1,465 | 2,719 | 2,028 | 1,160 | 326 | 281 | 33,696 | 33,424 | 272 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Greater than or equal to 740 | 42,000 | 68 | 9,183 | 13,722 | 9,753 | 5,576 | 1,948 | 1,750 | 49,044 | 48,984 | 60 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other internal credit metrics (2,3) | 50,076 | 49,487 | 70 | 55 | 159 | 68 | 37 | 200 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total credit card and other consumer | $ | 103,834 | $ | 49,619 | $ | 11,157 | $ | 17,719 | $ | 13,026 | $ | 7,462 | $ | 2,468 | $ | 2,383 | $ | 99,450 | $ | 98,457 | $ | 993 | |||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs for the six months ended June 30, 2024 | $ | 191 | $ | 3 | $ | 5 | $ | 70 | $ | 59 | $ | 29 | $ | 7 | $ | 18 | $ | 2,151 | $ | 2,063 | $ | 88 | |||||||||||||||||||||||||||||||||||||||||||
(1)Represents loans that were modified into term loans.
(2)Other internal credit metrics may include delinquency status, geography or other factors.
(3)Direct/indirect consumer includes $49.5 billion of securities-based lending, which is typically supported by highly liquid collateral with market value greater than or equal to the outstanding loan balance and therefore has minimal credit risk at June 30, 2024.
69 Bank of America | ||||||||
(1)Excludes $3.0 billion of loans accounted for under the fair value option at June 30, 2024.
(2)Excludes U.S. Small Business Card loans of $10.6 billion. Refreshed FICO scores for this portfolio are $619 million for less than 620; $1.1 billion for greater than or equal to 620 and less than 680; $2.9 billion for greater than or equal to 680 and less than 740; and $5.9 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $234 million.
Bank of America 70 | ||||||||
The following tables present certain credit quality indicators for the Corporation's Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments by year of origination, except for revolving loans and revolving loans that were modified into term loans, which are shown on an aggregate basis at December 31, 2023.
Residential Mortgage – Credit Quality Indicators By Vintage | |||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | |||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Total as of December 31, 2023 | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | ||||||||||||||||||||||||||||||||||
| Residential Mortgage | |||||||||||||||||||||||||||||||||||||||||
Refreshed LTV | |||||||||||||||||||||||||||||||||||||||||
| Less than or equal to 90 percent | $ | 214,661 | $ | 15,224 | $ | 38,225 | $ | 76,229 | $ | 35,072 | $ | 17,432 | $ | 32,479 | |||||||||||||||||||||||||||
Greater than 90 percent but less than or equal to 100 percent | 1,994 | 698 | 911 | 286 | 53 | 25 | 21 | ||||||||||||||||||||||||||||||||||
Greater than 100 percent | 785 | 264 | 342 | 100 | 31 | 14 | 34 | ||||||||||||||||||||||||||||||||||
Fully-insured loans | 10,963 | 540 | 350 | 3,415 | 2,834 | 847 | 2,977 | ||||||||||||||||||||||||||||||||||
| Total Residential Mortgage | $ | 228,403 | $ | 16,726 | $ | 39,828 | $ | 80,030 | $ | 37,990 | $ | 18,318 | $ | 35,511 | |||||||||||||||||||||||||||
| Residential Mortgage | |||||||||||||||||||||||||||||||||||||||||
| Refreshed FICO score | |||||||||||||||||||||||||||||||||||||||||
| Less than 620 | $ | 2,335 | $ | 115 | $ | 471 | $ | 589 | $ | 402 | $ | 136 | $ | 622 | |||||||||||||||||||||||||||
Greater than or equal to 620 and less than 680 | 4,671 | 359 | 919 | 1,235 | 777 | 296 | 1,085 | ||||||||||||||||||||||||||||||||||
Greater than or equal to 680 and less than 740 | 23,357 | 1,934 | 4,652 | 6,988 | 3,742 | 1,836 | 4,205 | ||||||||||||||||||||||||||||||||||
| Greater than or equal to 740 | 187,077 | 13,778 | 33,436 | 67,803 | 30,235 | 15,203 | 26,622 | ||||||||||||||||||||||||||||||||||
Fully-insured loans | 10,963 | 540 | 350 | 3,415 | 2,834 | 847 | 2,977 | ||||||||||||||||||||||||||||||||||
| Total Residential Mortgage | $ | 228,403 | $ | 16,726 | $ | 39,828 | $ | 80,030 | $ | 37,990 | $ | 18,318 | $ | 35,511 | |||||||||||||||||||||||||||
| Gross charge-offs for the year ended December 31, 2023 | $ | 67 | $ | — | $ | 7 | $ | 12 | $ | 6 | $ | 2 | $ | 40 | |||||||||||||||||||||||||||
| Home Equity - Credit Quality Indicators | |||||||||||||||||||||||
| Total | Home Equity Loans and Reverse Mortgages (1) | Revolving Loans | Revolving Loans Converted to Term Loans | ||||||||||||||||||||
| (Dollars in millions) | December 31, 2023 | ||||||||||||||||||||||
| Home Equity | |||||||||||||||||||||||
Refreshed LTV | |||||||||||||||||||||||
| Less than or equal to 90 percent | $ | 25,378 | $ | 1,051 | $ | 20,380 | $ | 3,947 | |||||||||||||||
Greater than 90 percent but less than or equal to 100 percent | 61 | 17 | 35 | 9 | |||||||||||||||||||
Greater than 100 percent | 88 | 35 | 36 | 17 | |||||||||||||||||||
| Total Home Equity | $ | 25,527 | $ | 1,103 | $ | 20,451 | $ | 3,973 | |||||||||||||||
| Home Equity | |||||||||||||||||||||||
| Refreshed FICO score | |||||||||||||||||||||||
| Less than 620 | $ | 654 | $ | 123 | $ | 253 | $ | 278 | |||||||||||||||
Greater than or equal to 620 and less than 680 | 1,107 | 118 | 589 | 400 | |||||||||||||||||||
Greater than or equal to 680 and less than 740 | 4,340 | 240 | 3,156 | 944 | |||||||||||||||||||
Greater than or equal to 740 | 19,426 | 622 | 16,453 | 2,351 | |||||||||||||||||||
| Total Home Equity | $ | 25,527 | $ | 1,103 | $ | 20,451 | $ | 3,973 | |||||||||||||||
| Gross charge-offs for the year ended December 31, 2023 | $ | 36 | $ | 4 | $ | 21 | $ | 11 | |||||||||||||||
(1)Includes reverse mortgages of $763 million and home equity loans of $340 million, which are no longer originated.
71 Bank of America | ||||||||
| Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct/Indirect | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | Credit Card | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Total Direct/Indirect as of December 31, 2023 | Revolving Loans | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Total Credit Card as of December 31, 2023 | Revolving Loans | Revolving Loans Converted to Term Loans (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Refreshed FICO score | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Less than 620 | $ | 1,246 | $ | 11 | $ | 292 | $ | 428 | $ | 336 | $ | 85 | $ | 55 | $ | 39 | $ | 5,338 | $ | 5,030 | $ | 308 | |||||||||||||||||||||||||||||||||||||||||||
Greater than or equal to 620 and less than 680 | 2,506 | 11 | 937 | 799 | 501 | 121 | 73 | 64 | 11,623 | 11,345 | 278 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Greater than or equal to 680 and less than 740 | 8,629 | 48 | 3,451 | 2,582 | 1,641 | 462 | 244 | 201 | 34,777 | 34,538 | 239 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Greater than or equal to 740 | 41,656 | 74 | 16,761 | 11,802 | 7,643 | 2,707 | 1,417 | 1,252 | 50,462 | 50,410 | 52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other internal credit metrics (2, 3) | 49,431 | 48,764 | 106 | 183 | 110 | 53 | 57 | 158 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total credit card and other consumer | $ | 103,468 | $ | 48,908 | $ | 21,547 | $ | 15,794 | $ | 10,231 | $ | 3,428 | $ | 1,846 | $ | 1,714 | $ | 102,200 | $ | 101,323 | $ | 877 | |||||||||||||||||||||||||||||||||||||||||||
| Gross charge-offs for the year ended December 31, 2023 | $ | 233 | $ | 5 | $ | 32 | $ | 95 | $ | 53 | $ | 15 | $ | 10 | $ | 23 | $ | 3,133 | $ | 3,013 | $ | 120 | |||||||||||||||||||||||||||||||||||||||||||
(1)Represents loans that were modified into term loans.
(2)Other internal credit metrics may include delinquency status, geography or other factors.
(3)Direct/indirect consumer includes $48.8 billion of securities-based lending, which is typically supported by highly liquid collateral with market value greater than or equal to the outstanding loan balance and therefore has minimal credit risk at December 31, 2023.
Commercial – Credit Quality Indicators By Vintage (1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans | |||||||||||||||||||||||||||||||||||||||||||||||
| Amortized Cost Basis by Origination Year | |||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | Total as of December 31, 2023 | 2023 | 2022 | 2021 | 2020 | 2019 | Prior | Revolving Loans | |||||||||||||||||||||||||||||||||||||||
| U.S. Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Risk ratings | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass rated | $ | 347,563 | $ | 41,842 | $ | 43,290 | $ | 27,738 | $ | 13,495 | $ | 11,772 | $ | 29,923 | $ | 179,503 | |||||||||||||||||||||||||||||||
| Reservable criticized | 11,368 | 278 | 1,316 | 708 | 363 | 537 | 1,342 | 6,824 | |||||||||||||||||||||||||||||||||||||||
Total U.S. Commercial | $ | 358,931 | $ | 42,120 | $ | 44,606 | $ | 28,446 | $ | 13,858 | $ | 12,309 | $ | 31,265 | $ | 186,327 | |||||||||||||||||||||||||||||||
| Gross charge-offs for the year ended December 31, 2023 | $ | 191 | $ | 5 | $ | 38 | $ | 29 | $ | 4 | $ | 2 | $ | 27 | $ | 86 | |||||||||||||||||||||||||||||||
| Non-U.S. Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Risk ratings | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass rated | $ | 122,931 | $ | 17,053 | $ | 15,810 | $ | 15,256 | $ | 2,405 | $ | 2,950 | $ | 5,485 | $ | 63,972 | |||||||||||||||||||||||||||||||
| Reservable criticized | 1,650 | 50 | 184 | 294 | 90 | 158 | 74 | 800 | |||||||||||||||||||||||||||||||||||||||
Total Non-U.S. Commercial | $ | 124,581 | $ | 17,103 | $ | 15,994 | $ | 15,550 | $ | 2,495 | $ | 3,108 | $ | 5,559 | $ | 64,772 | |||||||||||||||||||||||||||||||
| Gross charge-offs for the year ended December 31, 2023 | $ | 37 | $ | — | $ | — | $ | 8 | $ | 7 | $ | 1 | $ | — | $ | 21 | |||||||||||||||||||||||||||||||
| Commercial Real Estate | |||||||||||||||||||||||||||||||||||||||||||||||
| Risk ratings | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass rated | $ | 64,150 | $ | 4,877 | $ | 16,147 | $ | 11,810 | $ | 4,026 | $ | 7,286 | $ | 10,127 | $ | 9,877 | |||||||||||||||||||||||||||||||
| Reservable criticized | 8,728 | 134 | 749 | 1,728 | 782 | 2,132 | 2,794 | 409 | |||||||||||||||||||||||||||||||||||||||
Total Commercial Real Estate | $ | 72,878 | $ | 5,011 | $ | 16,896 | $ | 13,538 | $ | 4,808 | $ | 9,418 | $ | 12,921 | $ | 10,286 | |||||||||||||||||||||||||||||||
| Gross charge-offs for the year ended December 31, 2023 | $ | 254 | $ | 2 | $ | — | $ | 4 | $ | — | $ | 59 | $ | 189 | $ | — | |||||||||||||||||||||||||||||||
| Commercial Lease Financing | |||||||||||||||||||||||||||||||||||||||||||||||
| Risk ratings | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass rated | $ | 14,688 | $ | 4,188 | $ | 3,077 | $ | 2,373 | $ | 1,349 | $ | 1,174 | $ | 2,527 | $ | — | |||||||||||||||||||||||||||||||
| Reservable criticized | 166 | 9 | 22 | 46 | 16 | 32 | 41 | — | |||||||||||||||||||||||||||||||||||||||
Total Commercial Lease Financing | $ | 14,854 | $ | 4,197 | $ | 3,099 | $ | 2,419 | $ | 1,365 | $ | 1,206 | $ | 2,568 | $ | — | |||||||||||||||||||||||||||||||
| Gross charge-offs for the year ended December 31, 2023 | $ | 2 | $ | — | $ | — | $ | 1 | $ | 1 | $ | — | $ | — | $ | — | |||||||||||||||||||||||||||||||
U.S. Small Business Commercial (2) | |||||||||||||||||||||||||||||||||||||||||||||||
| Risk ratings | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass rated | $ | 9,031 | $ | 1,886 | $ | 1,830 | $ | 1,550 | $ | 836 | $ | 721 | $ | 1,780 | $ | 428 | |||||||||||||||||||||||||||||||
| Reservable criticized | 384 | 6 | 64 | 95 | 40 | 63 | 113 | 3 | |||||||||||||||||||||||||||||||||||||||
Total U.S. Small Business Commercial | $ | 9,415 | $ | 1,892 | $ | 1,894 | $ | 1,645 | $ | 876 | $ | 784 | $ | 1,893 | $ | 431 | |||||||||||||||||||||||||||||||
| Gross charge-offs for the year ended December 31, 2023 | $ | 43 | $ | 1 | $ | 2 | $ | 2 | $ | 19 | $ | 3 | $ | 4 | $ | 12 | |||||||||||||||||||||||||||||||
| Total | $ | 580,659 | $ | 70,323 | $ | 82,489 | $ | 61,598 | $ | 23,402 | $ | 26,825 | $ | 54,206 | $ | 261,816 | |||||||||||||||||||||||||||||||
| Gross charge-offs for the year ended December 31, 2023 | $ | 527 | $ | 8 | $ | 40 | $ | 44 | $ | 31 | $ | 65 | $ | 220 | $ | 119 | |||||||||||||||||||||||||||||||
(1) Excludes $3.3 billion of loans accounted for under the fair value option at December 31, 2023.
(2) Excludes U.S. Small Business Card loans of $9.8 billion. Refreshed FICO scores for this portfolio are $530 million for less than 620; $1.1 billion for greater than or equal to 620 and less than 680; $2.7 billion for greater than or equal to 680 and less than 740; and $5.5 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $317 million.
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During the six months ended June 30, 2024, commercial reservable criticized utilized exposure increased to $24.8 billion at June 30, 2024 from $23.3 billion (to 3.94 percent from 3.74 percent of total commercial reservable utilized exposure) at December 31, 2023, primarily driven by U.S. commercial.
Loan Modifications to Borrowers in Financial Difficulty
As part of its credit risk management, the Corporation may modify a loan agreement with a borrower experiencing financial difficulties through a refinancing or restructuring of the borrower’s loan agreement (modification programs). Effective January 1, 2023, the Corporation adopted the new accounting standard on loan modifications. Accordingly, June 30, 2024 balances presented in payment status tables represent loans that were modified over the last 12 months, and June 30, 2023 balances presented in payment status tables represent loans that were modified during the first half of 2023.
Consumer Real Estate
The following modification programs are offered for consumer real estate loans to borrowers experiencing financial difficulties. Residential mortgage modifications represented 0.04 percent and 0.07 percent of outstanding residential mortgage loans for the three and six months ended June 30, 2024 compared to 0.14 percent and 0.19 percent for the same periods in 2023. Home equity modifications represented 0.04 percent and 0.07 percent of outstanding home equity loans for the three and six months ended June 30, 2024 compared to 0.19 percent and 0.28 percent for the same periods in 2023.
Forbearance and Other Payment Plans: Forbearance plans generally consist of the Corporation suspending the borrower’s
payments for a defined period with those payments then due over a defined period of time or at the conclusion of the forbearance period. The aging status of a loan is generally frozen when it enters into a forbearance plan. If a borrower is unable to fulfill their obligations under the forbearance plans, they may be offered a trial offer or permanent modification.
Trial Offer and Permanent Modifications: Trial offer for modification plans generally consist of the Corporation offering a borrower modified loan terms that reduce their contractual payments temporarily over a -to-four-month trial period. If the customer successfully makes the modified payments during the trial period and formally accepts the modified terms, the modified loan terms become permanent. Some borrowers may enter into permanent modifications without a trial period. In a permanent modification, the borrower’s payment terms are typically modified in more than one manner but generally include a term extension and an interest rate reduction. At times, the permanent modification may also include principal forgiveness and/or a deferral of past due principal and interest amounts to the end of the loan term. The combinations utilized are based on modifying the terms that give the borrower an improved ability to meet the contractual obligations. The term extensions granted for residential mortgage and home equity permanent modifications vary widely and can be up to 30 years, but are mostly in the range of 1 to 20 years. Principal forgiveness and payment deferrals were insignificant during the three and six months ended June 30, 2024 and 2023.
The table below provides the ending amortized cost of the Corporation’s modified consumer real estate loans for the three and six months ended June 30, 2024 and 2023.
Consumer Real Estate - Modifications to Borrowers in Financial Difficulty | |||||||||||||||||||||||||||||||||||
| Forbearance and Other Payment Plans | Permanent Modification | Total | Forbearance and Other Payment Plans | Permanent Modification | Total | ||||||||||||||||||||||||||||||
(Dollars in millions) | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||
| Residential Loans | $ | 22 | $ | 73 | $ | 95 | $ | 38 | $ | 126 | $ | 164 | |||||||||||||||||||||||
| Home Equity | — | 10 | 10 | — | 18 | 18 | |||||||||||||||||||||||||||||
| Total | $ | 22 | $ | 83 | $ | 105 | $ | 38 | $ | 144 | $ | 182 | |||||||||||||||||||||||
| Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | ||||||||||||||||||||||||||||||||||
| Residential Loans | $ | 276 | $ | 44 | $ | 320 | $ | 348 | $ | 88 | $ | 436 | |||||||||||||||||||||||
| Home Equity | 41 | 9 | 50 | 53 | 18 | 71 | |||||||||||||||||||||||||||||
| Total | $ | 317 | $ | 53 | $ | 370 | $ | 401 | $ | 106 | $ | 507 | |||||||||||||||||||||||
73 Bank of America | ||||||||
The table below presents the financial effect of modified consumer real estate loans.
| Financial Effect of Modified Consumer Real Estate Loans | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| Forbearance and Other Payment Plans | |||||||||||||||||||||||
| Weighted-average duration | |||||||||||||||||||||||
| Residential Mortgage | 5 months | 6 months | 7 months | 8 months | |||||||||||||||||||
| Home Equity | n/a | 6 months | n/a | 9 months | |||||||||||||||||||
| Permanent Modifications | |||||||||||||||||||||||
| Weighted-average Term Extension | |||||||||||||||||||||||
| Residential Mortgage | 9.2 years | 10.2 years | 9.1 years | 8.6 years | |||||||||||||||||||
| Home Equity | 18.4 years | 16.9 years | 17.4 years | 15.2 years | |||||||||||||||||||
| Weighted-average Interest Rate Reduction | |||||||||||||||||||||||
| Residential Mortgage | 1.34 | % | 1.62 | % | 1.32 | % | 1.57 | % | |||||||||||||||
| Home Equity | 2.42 | % | 2.96 | % | 2.60 | % | 2.69 | % | |||||||||||||||
n/a = not applicable
For consumer real estate borrowers in financial difficulty that received a forbearance, trial or permanent modification, there were no commitments to lend additional funds at June 30, 2024 and 2023.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. During the three and six months ended June 30, 2024 and 2023, modified
residential and home equity loans that defaulted were insignificant. The table below provides aging information as of June 30, 2024 for consumer real estate loans that were modified over the last 12 months and as of June 30, 2023 for consumer real estate loans that were modified during the first half of 2023.
Consumer Real Estate - Payment Status of Modifications to Borrowers in Financial Difficulty | |||||||||||||||||||||||
| Current | 30–89 Days Past Due | 90+ Days Past Due | Total | ||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | ||||||||||||||||||||||
| Residential mortgage | $ | 251 | $ | 71 | $ | 66 | $ | 388 | |||||||||||||||
| Home equity | 45 | 3 | 9 | 57 | |||||||||||||||||||
| Total | $ | 296 | $ | 74 | $ | 75 | $ | 445 | |||||||||||||||
| June 30, 2023 | |||||||||||||||||||||||
| Residential mortgage | $ | 248 | $ | 105 | $ | 83 | $ | 436 | |||||||||||||||
| Home equity | 42 | 12 | 17 | 71 | |||||||||||||||||||
| Total | $ | 290 | $ | 117 | $ | 100 | $ | 507 | |||||||||||||||
Consumer real estate foreclosed properties totaled $92 million and $83 million at June 30, 2024 and December 31, 2023. The carrying value of consumer real estate loans, including fully-insured loans, for which formal foreclosure proceedings were in process at June 30, 2024 and December 31, 2023, was $588 million and $633 million. During the six months ended June 30, 2024 and 2023, the Corporation reclassified $56 million and $68 million of consumer real estate loans to foreclosed properties or, for properties acquired upon foreclosure of certain government-guaranteed loans (principally FHA-insured loans), to other assets. The reclassifications represent non-cash investing activities and, accordingly, are not reflected in the Consolidated Statement of Cash Flows.
Credit Card and Other Consumer
Credit card and other consumer loans are primarily modified by placing the customer on a fixed payment plan with a significantly reduced fixed interest rate, with terms ranging from 6 months to 72 months, most of which had a 60-month term at June 30, 2024. In certain circumstances, the Corporation will forgive a portion of the outstanding balance if the borrower makes payments up to a set amount. The Corporation makes modifications directly with borrowers for loans held by the Corporation (internal programs) as well as through third-party renegotiation agencies that provide solutions to customers’
entire unsecured debt structures (external programs). The June 30, 2024 amortized cost of credit card and other consumer loans that were modified through these programs during the three and six months ended June 30, 2024 was $200 million and $401 million compared to $168 million and $303 million for the same periods in 2023. These modifications represented 0.10 percent and 0.20 percent of outstanding credit card and other consumer loans for the three and six months ended June 30, 2024 compared to 0.08 percent and 0.15 percent for the same periods in 2023. During the three and six months ended June 30, 2024, the financial effect of modifications resulted in a weighted-average interest rate reduction of 19.59 percent and 19.66 percent compared to 19.02 percent and 18.82 percent for the same periods in 2023, and principal forgiveness of $29 million and $57 million, compared to $14 million and $25 million for the same periods in 2023.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. As of June 30, 2024, defaults of modified credit card and other consumer loans over the last 12 months were insignificant. Defaults of modified credit card and other consumer loans since January 1, 2023 were insignificant during the first half of 2023. At June 30, 2024, modified credit card and other consumer loans to borrowers experiencing financial difficulty over the last 12 months totaled $674 million, of which $566 million were
Bank of America 74 | ||||||||
current, $58 million were 30-89 days past due, and $50 million were greater than 90 days past due. At June 30, 2023, modified credit card and other consumer loans to borrowers experiencing financial difficulty totaled $303 million, of which $237 million were current, $35 million were 30-89 days past due, and $31 million were greater than 90 days past due.
Commercial Loans
Modifications of loans to commercial borrowers experiencing financial difficulty are designed to reduce the Corporation’s loss exposure while providing borrowers with an opportunity to work through financial difficulties, often to avoid foreclosure or bankruptcy. Each modification is unique, reflects the borrower’s
individual circumstances and is designed to benefit the borrower while mitigating the Corporation’s risk exposure. Commercial modifications are primarily term extensions and payment forbearances. Payment forbearances involve the Bank forbearing its contractual right to collect certain payments or payment in full (maturity forbearance) for a defined period of time. Reductions in interest rates and principal forgiveness occur infrequently for commercial borrowers. Principal forgiveness may occur in connection with foreclosure, short sales or other settlement agreements, leading to termination or sale of the loan. The table below provides the ending amortized cost of commercial loans modified during the three and six months ended June 30, 2024 and 2023.
Term extensions granted increased the weighted-average life of the impacted loans by 1.3 years for the three and six months ended June 30, 2024 compared to 1.6 years for the same periods in 2023. The weighted-average duration of loan payments deferred under the Corporation’s commercial loan forbearance program was 8 months and 12 months for the three and six months ended June 30, 2024 compared to 11 months for the same periods in 2023. The deferral period for loan payments can vary, but are mostly in the range of 8 months to 24 months. Modifications of loans to troubled borrowers for Commercial Lease Financing and U.S. Small Business Commercial were not significant during the three and six months ended June 30, 2024 and 2023.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. As of June 30, 2024, defaults of commercial loans modified during the last 12 months were insignificant. As of June 30, 2023, defaults of commercial loans modified during the six months ended June 30, 2023 were insignificant. The table below provides aging information as of June 30, 2024 for commercial loans that were modified over the last 12 months and as of June 30, 2023 for commercial loans that were modified during the six months ended June 30, 2023.
For the six months ended June 30, 2024 and 2023, the Corporation had commitments to lend $916 million and
$687 million to commercial borrowers experiencing financial difficulty whose loans were modified during the period.
75 Bank of America | ||||||||
Loans Held-for-sale
The Corporation had LHFS of $7.0 billion and $6.0 billion at June 30, 2024 and December 31, 2023. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $15.7 billion and $7.4 billion for the six months ended June 30, 2024 and 2023. Cash used for originations and purchases of LHFS totaled $17.0 billion and $7.3 billion for the six months ended June 30, 2024 and 2023. Also included were non-cash net transfers into LHFS of $0 and $457 million during the six months ended June 30, 2024 and 2023.
Accrued Interest Receivable
Accrued interest receivable for loans and leases and loans held-for-sale was $4.5 billion at both June 30, 2024 and December 31, 2023 and is reported in customer and other receivables on the Consolidated Balance Sheet.
Outstanding credit card loan balances include unpaid principal, interest and fees. Credit card loans are not classified as nonperforming but are charged off no later than the end of the month in which the account becomes 180 days past due, within 60 days after receipt of notification of death or bankruptcy, or upon confirmation of fraud. During the three and six months ended June 30, 2024, the Corporation reversed $215 million and $420 million of interest and fee income against the income statement line item in which it was originally recorded upon charge-off of the principal balance of the loan compared to $138 million and $256 million for the same periods in 2023.
For the outstanding residential mortgage, home equity, direct/indirect consumer and commercial loan balances classified as nonperforming during the three and six months ended June 30, 2024 and 2023, interest and fee income reversed at the time the loans were classified as nonperforming was not significant. For more information on the Corporation's nonperforming loan policies, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Allowance for Credit Losses
The allowance for credit losses is estimated using quantitative and qualitative methods that consider a variety of factors, such as historical loss experience, the current credit quality of the portfolio and an economic outlook over the life of the loan. Qualitative reserves cover losses that are expected but, in the Corporation's assessment, may not be adequately reflected in the quantitative methods or the economic assumptions. The Corporation incorporates forward-looking information through the use of several macroeconomic scenarios in determining the weighted economic outlook over the forecasted life of the assets. These scenarios include key macroeconomic variables such as gross domestic product, unemployment rate, real estate prices and corporate bond spreads. The scenarios that are chosen each quarter and the weighting given to each scenario depend on a variety of factors including recent
economic events, leading economic indicators, internal and third-party economist views, and industry trends. For more information on the Corporation's credit loss accounting policies including the allowance for credit losses, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
The June 30, 2024 estimate for allowance for credit losses was based on various economic scenarios, including a baseline scenario derived from consensus estimates, an adverse scenario reflecting an extended moderate recession, a downside scenario reflecting continued inflation and interest rates with minimal rate cuts, a tail risk scenario similar to the severely adverse scenario used in stress testing and an upside scenario that considers the potential for improvement above the baseline scenario. The overall weighted economic outlook of the above scenarios has improved compared to the weighted economic outlook estimated as of December 31, 2023. The weighted economic outlook assumes that the U.S. average unemployment rate will be four and a half percent by the fourth quarter of 2024 and will increase to just below five percent by the fourth quarter of 2025. The weighted economic outlook assumes sluggish growth with U.S. real gross domestic product forecasted to grow at 1.0 percent and 1.5 percent year-over-year in the fourth quarters of 2024 and 2025.
The allowance for credit losses decreased $209 million from December 31, 2023 to $14.3 billion at June 30, 2024, which included a $33 million reserve decrease related to the consumer portfolio and a $176 million reserve decrease related to the commercial portfolio. The reserve decrease was primarily driven by commercial due to an improved macroeconomic outlook. The change in the allowance for credit losses was comprised of a net decrease of $104 million in the allowance for loan and lease losses and a decrease of $105 million in the reserve for unfunded lending commitments. The decline in the allowance for credit losses was attributed to decreases in the commercial portfolio of $176 million and the consumer real estate portfolio of $66 million, partially offset by an increase in the credit card and other consumer portfolios of $33 million. The provision for credit losses increased $383 million to $1.5 billion, and $771 million to $2.8 billion for the three and six months ended June 30, 2024 compared to the same periods in 2023. The provision for credit losses for the current-year periods was primarily driven by credit card loans and the commercial real estate office portfolio.
Outstanding loans and leases excluding loans accounted for under the fair value option increased $3.4 billion during the six months ended June 30, 2024 primarily driven by commercial, which increased $6.4 billion due to broad-based growth. Consumer loans decreased $3.0 billion driven by credit card loans.
The changes in the allowance for credit losses, including net charge-offs and provision for loan and lease losses, are detailed in the following table.
Bank of America 76 | ||||||||
| Consumer Real Estate | Credit Card and Other Consumer | Commercial | Total | ||||||||||||||||||||
| (Dollars in millions) | Three Months Ended June 30, 2024 | ||||||||||||||||||||||
| Allowance for loan and lease losses, April 1 | $ | 355 | $ | 8,121 | $ | 4,737 | $ | 13,213 | |||||||||||||||
| Loans and leases charged off | (8) | (1,267) | (504) | (1,779) | |||||||||||||||||||
| Recoveries of loans and leases previously charged off | 22 | 194 | 30 | 246 | |||||||||||||||||||
| Net charge-offs | 14 | (1,073) | (474) | (1,533) | |||||||||||||||||||
| Provision for loan and lease losses | (22) | 1,118 | 466 | 1,562 | |||||||||||||||||||
| Other | — | 1 | (5) | (4) | |||||||||||||||||||
Allowance for loan and lease losses, June 30 | 347 | 8,167 | 4,724 | 13,238 | |||||||||||||||||||
| Reserve for unfunded lending commitments, April 1 | 57 | — | 1,101 | 1,158 | |||||||||||||||||||
| Provision for unfunded lending commitments | (2) | — | (52) | (54) | |||||||||||||||||||
Reserve for unfunded lending commitments, June 30 | 55 | — | 1,049 | 1,104 | |||||||||||||||||||
Allowance for credit losses, June 30 | $ | 402 | $ | 8,167 | $ | 5,773 | $ | 14,342 | |||||||||||||||
| Three Months Ended June 30, 2023 | |||||||||||||||||||||||
| Allowance for loan and lease losses, April 1 | 403 | 6,958 | 5,153 | 12,514 | |||||||||||||||||||
| Loans and leases charged off | (15) | (924) | (186) | (1,125) | |||||||||||||||||||
| Recoveries of loans and leases previously charged off | 29 | 190 | 37 | 256 | |||||||||||||||||||
| Net charge-offs | 14 | (734) | (149) | (869) | |||||||||||||||||||
| Provision for loan and lease losses | 8 | 1,099 | 202 | 1,309 | |||||||||||||||||||
| Other | 2 | — | (6) | (4) | |||||||||||||||||||
Allowance for loan and lease losses, June 30 | 427 | 7,323 | 5,200 | 12,950 | |||||||||||||||||||
| Reserve for unfunded lending commitments, April 1 | 93 | — | 1,344 | 1,437 | |||||||||||||||||||
| Provision for unfunded lending commitments | (7) | — | (43) | (50) | |||||||||||||||||||
| Other | — | — | 1 | 1 | |||||||||||||||||||
Reserve for unfunded lending commitments, June 30 | 86 | — | 1,302 | 1,388 | |||||||||||||||||||
Allowance for credit losses, June 30 | $ | 513 | $ | 7,323 | $ | 6,502 | $ | 14,338 | |||||||||||||||
| (Dollars in millions) | Six Months Ended June 30, 2024 | ||||||||||||||||||||||
| Allowance for loan and lease losses, January 1 | $ | 386 | $ | 8,134 | $ | 4,822 | $ | 13,342 | |||||||||||||||
| Loans and leases charged off | (19) | (2,492) | (1,006) | (3,517) | |||||||||||||||||||
| Recoveries of loans and leases previously charged off | 43 | 381 | 62 | 486 | |||||||||||||||||||
| Net charge-offs | 24 | (2,111) | (944) | (3,031) | |||||||||||||||||||
| Provision for loan and lease losses | (64) | 2,144 | 852 | 2,932 | |||||||||||||||||||
| Other | 1 | — | (6) | (5) | |||||||||||||||||||
Allowance for loan and lease losses, June 30 | 347 | 8,167 | 4,724 | 13,238 | |||||||||||||||||||
| Reserve for unfunded lending commitments, January 1 | 82 | — | 1,127 | 1,209 | |||||||||||||||||||
| Provision for unfunded lending commitments | (27) | — | (78) | (105) | |||||||||||||||||||
Reserve for unfunded lending commitments, June 30 | 55 | — | 1,049 | 1,104 | |||||||||||||||||||
Allowance for credit losses, June 30 | $ | 402 | $ | 8,167 | $ | 5,773 | $ | 14,342 | |||||||||||||||
| Six Months Ended June 30, 2023 | |||||||||||||||||||||||
| Allowance for loan and lease losses, December 31 | $ | 420 | $ | 6,817 | $ | 5,445 | $ | 12,682 | |||||||||||||||
| January 1, 2023 adoption of credit loss standard | (67) | (109) | (67) | (243) | |||||||||||||||||||
| Allowance for loan and lease losses, January 1 | 353 | 6,708 | 5,378 | 12,439 | |||||||||||||||||||
| Loans and leases charged off | (29) | (1,785) | (366) | (2,180) | |||||||||||||||||||
| Recoveries of loans and leases previously charged off | 54 | 387 | 63 | 504 | |||||||||||||||||||
| Net charge-offs | 25 | (1,398) | (303) | (1,676) | |||||||||||||||||||
| Provision for loan and lease losses | 42 | 2,012 | 155 | 2,209 | |||||||||||||||||||
| Other | 7 | 1 | (30) | (22) | |||||||||||||||||||
Allowance for loan and lease losses, June 30 | 427 | 7,323 | 5,200 | 12,950 | |||||||||||||||||||
| Reserve for unfunded lending commitments, January 1 | 94 | — | 1,446 | 1,540 | |||||||||||||||||||
| Provision for unfunded lending commitments | (8) | — | (145) | (153) | |||||||||||||||||||
| Other | — | — | 1 | 1 | |||||||||||||||||||
Reserve for unfunded lending commitments, June 30 | 86 | — | 1,302 | 1,388 | |||||||||||||||||||
Allowance for credit losses, June 30 | $ | 513 | $ | 7,323 | $ | 6,502 | $ | 14,338 | |||||||||||||||
NOTE 6 Securitizations and Other Variable Interest Entities
The Corporation utilizes VIEs in the ordinary course of business to support its own and its customers’ financing and investing needs. The Corporation routinely securitizes loans and debt securities using VIEs as a source of funding for the Corporation and as a means of transferring the economic risk of the loans or debt securities to third parties. The assets are transferred into a trust or other securitization vehicle such that the assets are legally isolated from the creditors of the Corporation and are not available to satisfy its obligations. These assets can only be
used to settle obligations of the trust or other securitization vehicle. The Corporation also administers, structures or invests in other VIEs including CDOs, investment vehicles and other entities. For more information on the Corporation’s use of VIEs, see Note 1 – Summary of Significant Accounting Principles and Note 6 – Securitizations and Other Variable Interest Entities to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
The tables in this Note present the assets and liabilities of consolidated and unconsolidated VIEs at June 30, 2024 and December 31, 2023 in situations where the Corporation has a loan or security interest and involvement with transferred assets
77 Bank of America | ||||||||
or if the Corporation otherwise has an additional interest in the VIE. The tables also present the Corporation’s maximum loss exposure at June 30, 2024 and December 31, 2023 resulting from its involvement with consolidated VIEs and unconsolidated VIEs. The Corporation’s maximum loss exposure is based on the unlikely event that all of the assets in the VIEs become worthless and incorporates not only potential losses associated with assets recorded on the Consolidated Balance Sheet but also potential losses associated with off-balance sheet commitments, such as unfunded liquidity commitments and other contractual arrangements. The Corporation’s maximum loss exposure does not include losses previously recognized through write-downs of assets.
The Corporation invests in ABS, CLOs and other similar investments issued by third-party VIEs with which it has no other form of involvement other than a loan or debt security issued by the VIE. In addition, the Corporation also enters into certain commercial lending arrangements that may utilize VIEs for activities secondary to the lending arrangement, for example to hold collateral. The Corporation’s maximum loss exposure to these VIEs is the investment balances. These securities and loans are included in Note 4 – Securities or Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses and are not included in the following tables.
The Corporation did not provide financial support to consolidated or unconsolidated VIEs during the three and six months ended June 30, 2024 or the year ended December 31, 2023 that it was not previously contractually required to provide, nor does it intend to do so.
The Corporation had liquidity commitments, including written put options and collateral value guarantees, with certain unconsolidated VIEs of $957 million and $989 million at June 30, 2024 and December 31, 2023.
First-lien Mortgage Securitizations
As part of its mortgage banking activities, the Corporation securitizes a portion of the first-lien residential mortgage loans it originates or purchases from third parties, generally in the form of residential mortgage-backed securities (RMBS) guaranteed by government-sponsored enterprises, FNMA and FHLMC (collectively the GSEs), or the Government National Mortgage Association (GNMA) primarily in the case of FHA-insured and U.S. Department of Veterans Affairs (VA)-guaranteed mortgage loans. Securitization usually occurs in conjunction with or shortly after origination or purchase, and the Corporation may also securitize loans held in its residential mortgage portfolio. In addition, the Corporation may, from time to time, securitize commercial mortgages it originates or purchases from other entities. The Corporation typically services the loans it securitizes. Further, the Corporation may retain beneficial interests in the securitization trusts including senior and subordinate securities and equity tranches issued by the trusts. Except as described in Note 10 – Commitments and Contingencies, the Corporation does not provide guarantees or recourse to the securitization trusts other than standard representations and warranties.
The table below summarizes select information related to first-lien mortgage securitizations for the three and six months ended June 30, 2024 and 2023.
| First-lien Mortgage Securitizations | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential Mortgage - Agency | Commercial Mortgage | ||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||
Proceeds from loan sales (1) | $ | 964 | $ | 908 | $ | 2,173 | $ | 2,255 | $ | 5,723 | $ | 455 | $ | 7,032 | $ | 597 | |||||||||||||||||||||||||||||||
Gains (losses) on securitizations (2) | (2) | 1 | (2) | (4) | 69 | (1) | 88 | 2 | |||||||||||||||||||||||||||||||||||||||
Repurchases from securitization trusts (3) | 8 | 5 | 16 | 14 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
(1)The Corporation transfers residential mortgage loans to securitizations sponsored primarily by the GSEs or GNMA in the normal course of business and primarily receives residential mortgage-backed securities in exchange. Substantially all of these securities are classified as Level 2 within the fair value hierarchy and are typically sold shortly after receipt.
(2)A majority of the first-lien residential mortgage loans securitized are initially classified as LHFS and accounted for under the fair value option. Gains recognized on these LHFS prior to securitization, which totaled $8 million and $13 million, net of hedges, during the three and six months ended June 30, 2024 compared to $7 million and $17 million for the same periods in 2023, are not included in the table above.
(3)The Corporation may have the option to repurchase delinquent loans out of securitization trusts, which reduces the amount of servicing advances it is required to make. The Corporation may also repurchase loans from securitization trusts to perform modifications. Repurchased loans include FHA-insured mortgages collateralizing GNMA securities.
The Corporation recognizes consumer MSRs from the sale or securitization of consumer real estate loans. The unpaid principal balance of loans serviced for investors, including residential mortgage and home equity loans, totaled $88.2 billion and $95.9 billion at June 30, 2024 and 2023. Servicing fee and ancillary fee income on serviced loans was $58 million and $120 million during the three and six months ended June 30, 2024 compared to $63 million and $132 million for the same periods in 2023. Servicing advances on serviced loans, including loans serviced for others and loans held for investment, were $1.1 billion and $1.3 billion at June 30, 2024 and December 31, 2023. For more information on MSRs, see Note 14 – Fair Value Measurements.
Home Equity Loans
The Corporation retains interests, primarily senior securities, in home equity securitization trusts to which it transferred home equity loans. In addition, the Corporation may be obligated to
provide subordinate funding to the trusts during a rapid amortization event. This obligation is included in the maximum loss exposure in the preceding table. The charges that will ultimately be recorded as a result of the rapid amortization events depend on the undrawn portion of the home equity lines of credit, performance of the loans, the amount of subsequent draws and the timing of related cash flows.
Mortgage and Home Equity Securitizations
During the three and six months ended June 30, 2024, the Corporation deconsolidated agency residential mortgage securitization trusts with total assets of $32 million and $825 million compared to $296 million and $624 million for the same periods in 2023.
The following table summarizes select information related to mortgage and home equity securitization trusts in which the Corporation held a variable interest and had continuing involvement at June 30, 2024 and December 31, 2023.
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| Mortgage and Home Equity Securitizations | ||||||||||||||||||||||||||||||||||||||||||||
| Residential Mortgage | ||||||||||||||||||||||||||||||||||||||||||||
| Non-agency | ||||||||||||||||||||||||||||||||||||||||||||
| Agency | Prime and Alt-A | Subprime | Home Equity (3) | Commercial Mortgage | ||||||||||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | ||||||||||||||||||||||||||||||||||
| Unconsolidated VIEs | ||||||||||||||||||||||||||||||||||||||||||||
Maximum loss exposure (1) | $ | 7,836 | $ | 8,190 | $ | 86 | $ | 92 | $ | 602 | $ | 657 | $ | — | $ | — | $ | 1,622 | $ | 1,558 | ||||||||||||||||||||||||
On-balance sheet assets | ||||||||||||||||||||||||||||||||||||||||||||
Senior securities: | ||||||||||||||||||||||||||||||||||||||||||||
Trading account assets | $ | 275 | $ | 235 | $ | 10 | $ | 13 | $ | 20 | $ | 20 | $ | — | $ | — | $ | 238 | $ | 70 | ||||||||||||||||||||||||
Debt securities carried at fair value | 2,345 | 2,541 | — | — | 290 | 341 | — | — | — | — | ||||||||||||||||||||||||||||||||||
Held-to-maturity securities | 5,216 | 5,414 | — | — | — | — | — | — | 1,262 | 1,287 | ||||||||||||||||||||||||||||||||||
| All other assets | — | — | 2 | 4 | 22 | 23 | — | — | 32 | 79 | ||||||||||||||||||||||||||||||||||
Total retained positions | $ | 7,836 | $ | 8,190 | $ | 12 | $ | 17 | $ | 332 | $ | 384 | $ | — | $ | — | $ | 1,532 | $ | 1,436 | ||||||||||||||||||||||||
Principal balance outstanding (2) | $ | 72,470 | $ | 76,134 | $ | 13,336 | $ | 13,963 | $ | 4,454 | $ | 4,508 | $ | 208 | $ | 252 | $ | 88,813 | $ | 80,078 | ||||||||||||||||||||||||
| Consolidated VIEs | ||||||||||||||||||||||||||||||||||||||||||||
Maximum loss exposure (1) | $ | 1,115 | $ | 1,164 | $ | — | $ | — | $ | — | $ | — | $ | 11 | $ | 12 | $ | — | $ | — | ||||||||||||||||||||||||
On-balance sheet assets | ||||||||||||||||||||||||||||||||||||||||||||
Trading account assets | $ | 1,115 | $ | 1,171 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||||
| Loans and leases | — | — | — | — | — | — | 27 | 31 | — | — | ||||||||||||||||||||||||||||||||||
| Allowance for loan and lease losses | — | — | — | — | — | — | 6 | 7 | — | — | ||||||||||||||||||||||||||||||||||
| All other assets | — | — | — | — | — | — | 1 | 1 | — | — | ||||||||||||||||||||||||||||||||||
| Total assets | $ | 1,115 | $ | 1,171 | $ | — | $ | — | $ | — | $ | — | $ | 34 | $ | 39 | $ | — | $ | — | ||||||||||||||||||||||||
| Total liabilities | $ | — | $ | 7 | $ | — | $ | — | $ | — | $ | — | $ | 23 | $ | 27 | $ | — | $ | — | ||||||||||||||||||||||||
(1)Maximum loss exposure includes obligations under loss-sharing reinsurance and other arrangements for non-agency residential mortgage and commercial mortgage securitizations, but excludes the reserve for representations and warranties obligations and corporate guarantees and also excludes servicing advances and other servicing rights and obligations. For more information, see Note 10 – Commitments and Contingencies and Note 14 – Fair Value Measurements.
(2)Principal balance outstanding includes loans where the Corporation was the transferor to securitization VIEs with which it has continuing involvement, which may include servicing the loans.
(3)For unconsolidated home equity loan VIEs, the maximum loss exposure includes outstanding trust certificates issued by trusts in rapid amortization, net of recorded reserves. For both consolidated and unconsolidated home equity loan VIEs, the maximum loss exposure excludes the reserve for representations and warranties obligations and corporate guarantees. For more information, see Note 10 – Commitments and Contingencies.
Other Asset-backed Securitizations
The following paragraphs summarize select information related to other asset-backed VIEs in which the Corporation had a variable interest at June 30, 2024 and December 31, 2023.
Credit Card and Automobile Loan Securitizations
The Corporation securitizes originated and purchased credit card and automobile loans as a source of financing. The loans are sold on a non-recourse basis to consolidated trusts. The securitizations are ongoing, whereas additional receivables will be funded into the trusts by either loan repayments or proceeds from securities issued to third parties, depending on the securitization structure. The Corporation’s continuing involvement with the securitization trusts includes servicing the receivables and holding various subordinated interests, including an undivided seller’s interest in the credit card receivables and owning certain retained interests.
At June 30, 2024 and December 31, 2023, the carrying values of the receivables in the trusts totaled $18.7 billion and $16.6 billion, which are included in loans and leases, and the carrying values of senior debt securities that were issued to third-party investors from the trusts totaled $8.6 billion and $7.8 billion, which are included in long-term debt.
Resecuritization Trusts
The Corporation transfers securities, typically MBS, into resecuritization VIEs generally at the request of customers seeking securities with specific characteristics. Generally, there are no significant ongoing activities performed in a resecuritization trust, and no single investor has the unilateral ability to liquidate the trust.
The Corporation resecuritized $3.8 billion and $6.6 billion of securities during the three and six months ended June 30, 2024 compared to $4.1 billion and $5.8 billion for the same
periods in 2023. Securities transferred into resecuritization VIEs were measured at fair value with changes in fair value recorded in market making and similar activities prior to the resecuritization and, accordingly, no gain or loss on sale was recorded. During the three and six months ended June 30, 2024, resecuritization proceeds included securities with an initial fair value of $795 million and $883 million, compared to $478 million and $1.1 billion for the same periods in 2023, of which substantially all of the securities were classified as trading account assets for both periods. Substantially all of the trading account securities carried at fair value were categorized as Level 2 within the fair value hierarchy.
Customer VIEs
Customer VIEs include credit-linked, equity-linked and commodity-linked note VIEs, repackaging VIEs and asset acquisition VIEs, which are typically created on behalf of customers who wish to obtain market or credit exposure to a specific company, index, commodity or financial instrument.
The Corporation’s involvement in the VIE is limited to its loss exposure. The Corporation’s maximum loss exposure to consolidated and unconsolidated customer VIEs totaled $1.0 billion and $952 million at June 30, 2024 and December 31, 2023, including the notional amount of derivatives to which the Corporation is a counterparty, net of losses previously recorded, and the Corporation’s investment, if any, in securities issued by the VIEs.
Municipal Bond Trusts
The Corporation administers municipal bond trusts that hold highly-rated, long-term, fixed-rate municipal bonds. The trusts obtain financing by issuing floating-rate trust certificates that reprice on a weekly or other short-term basis to third-party investors.
79 Bank of America | ||||||||
The Corporation’s liquidity commitments to unconsolidated municipal bond trusts, including those for which the Corporation was transferor, totaled $1.8 billion and $1.7 billion at June 30, 2024 and December 31, 2023. The weighted-average remaining life of bonds held in the trusts at June 30, 2024 was 11.8 years. There were no significant write-downs or downgrades of assets or issuers during the six months ended June 30, 2024 and 2023.
Collateralized Debt Obligation VIEs
The Corporation receives fees for structuring CDO VIEs, which hold diversified pools of fixed-income securities, typically corporate debt or ABS, which the CDO VIEs fund by issuing multiple tranches of debt and equity securities. CDOs are generally managed by third-party portfolio managers. The Corporation typically transfers assets to these CDOs, holds securities issued by the CDOs and may be a derivative counterparty to the CDOs. The Corporation’s maximum loss exposure to consolidated and unconsolidated CDOs totaled $80 million at both June 30, 2024 and December 31, 2023.
Investment VIEs
The Corporation sponsors, invests in or provides financing, which may be in connection with the sale of assets, to a variety of investment VIEs that hold loans, real estate, debt securities or other financial instruments and are designed to provide the
desired investment profile to investors or the Corporation. At June 30, 2024 and December 31, 2023, the Corporation’s consolidated investment VIEs had total assets of $3 million and $472 million. The Corporation also held investments in unconsolidated VIEs with total assets of $20.7 billion and $18.4 billion at June 30, 2024 and December 31, 2023. The Corporation’s maximum loss exposure associated with both consolidated and unconsolidated investment VIEs totaled $2.2 billion and $2.6 billion at June 30, 2024 and December 31, 2023 comprised primarily of on-balance sheet assets less non-recourse liabilities.
Leveraged Lease Trusts
The Corporation’s net investment in consolidated leveraged lease trusts totaled $1.1 billion at both June 30, 2024 and December 31, 2023. The trusts hold long-lived equipment such as rail cars, power generation and distribution equipment, and commercial aircraft. The Corporation structures the trusts and holds a significant residual interest. The net investment represents the Corporation’s maximum loss exposure to the trusts in the unlikely event that the leveraged lease investments become worthless. Debt issued by the leveraged lease trusts is non-recourse to the Corporation.
The table below summarizes the maximum loss exposure and assets held by the Corporation that related to other asset-backed VIEs at June 30, 2024 and December 31, 2023.
| Other Asset-backed VIEs | |||||||||||||||||||||||||||||||||||
Credit Card and Automobile (1) | Resecuritization Trusts and Customer VIEs | Municipal Bond Trusts and CDOs | Investment VIEs and Leveraged Lease Trusts | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | June 30 2024 | December 31 2023 | |||||||||||||||||||||||||||
| Unconsolidated VIEs | |||||||||||||||||||||||||||||||||||
| Maximum loss exposure | $ | — | $ | — | $ | 5,037 | $ | 4,494 | $ | 1,874 | $ | 1,787 | $ | 2,160 | $ | 2,197 | |||||||||||||||||||
| On-balance sheet assets | |||||||||||||||||||||||||||||||||||
Securities (2): | |||||||||||||||||||||||||||||||||||
| Trading account assets | $ | — | $ | — | $ | 1,301 | $ | 626 | $ | 25 | $ | 23 | $ | 298 | $ | 469 | |||||||||||||||||||
Debt securities carried at fair value | — | — | 852 | 920 | — | — | 4 | 4 | |||||||||||||||||||||||||||
| Held-to-maturity securities | — | — | 2,110 | 2,237 | — | — | — | — | |||||||||||||||||||||||||||
| Loans and leases | — | — | — | — | — | — | 68 | 90 | |||||||||||||||||||||||||||
| Allowance for loan and lease losses | — | — | — | — | — | — | (4) | (12) | |||||||||||||||||||||||||||
| All other assets | — | — | 774 | 711 | 6 | 7 | 1,299 | 1,168 | |||||||||||||||||||||||||||
| Total retained positions | $ | — | $ | — | $ | 5,037 | $ | 4,494 | $ | 31 | $ | 30 | $ | 1,665 | $ | 1,719 | |||||||||||||||||||
| Total assets of VIEs | $ | — | $ | — | $ | 16,727 | $ | 15,862 | $ | 7,531 | $ | 9,279 | $ | 20,708 | $ | 18,398 | |||||||||||||||||||
| Consolidated VIEs | |||||||||||||||||||||||||||||||||||
| Maximum loss exposure | $ | 9,433 | $ | 8,127 | $ | 497 | $ | 1,240 | $ | 3,539 | $ | 3,136 | $ | 1,084 | $ | 1,596 | |||||||||||||||||||
| On-balance sheet assets | |||||||||||||||||||||||||||||||||||
| Trading account assets | $ | — | $ | — | $ | 1,018 | $ | 1,798 | $ | 3,512 | $ | 3,084 | $ | 2 | $ | 1 | |||||||||||||||||||
| Debt securities carried at fair value | — | — | — | — | 27 | 52 | — | — | |||||||||||||||||||||||||||
| Loans and leases | 18,729 | 16,640 | — | — | — | — | 1,071 | 1,605 | |||||||||||||||||||||||||||
Allowance for loan and lease losses | (922) | (832) | — | — | — | — | (1) | (1) | |||||||||||||||||||||||||||
| All other assets | 200 | 163 | 39 | 38 | — | — | 14 | 15 | |||||||||||||||||||||||||||
| Total assets | $ | 18,007 | $ | 15,971 | $ | 1,057 | $ | 1,836 | $ | 3,539 | $ | 3,136 | $ | 1,086 | $ | 1,620 | |||||||||||||||||||
| On-balance sheet liabilities | |||||||||||||||||||||||||||||||||||
Short-term borrowings | $ | — | $ | — | $ | — | $ | — | $ | 3,343 | $ | 2,934 | $ | — | $ | 23 | |||||||||||||||||||
| Long-term debt | 8,552 | 7,825 | 560 | 596 | — | — | 2 | 1 | |||||||||||||||||||||||||||
| All other liabilities | 22 | 19 | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Total liabilities | $ | 8,574 | $ | 7,844 | $ | 560 | $ | 596 | $ | 3,343 | $ | 2,934 | $ | 2 | $ | 24 | |||||||||||||||||||
(1)At June 30, 2024 and December 31, 2023 loans and leases in the consolidated credit card trust included $4.4 billion and $3.2 billion of seller’s interest.
(2)The retained senior securities were valued using quoted market prices or observable market inputs (Level 2 of the fair value hierarchy).
Tax Credit VIEs
The Corporation holds equity investments in unconsolidated limited partnerships and similar entities that construct, own and operate affordable housing, renewable energy and certain other projects. The total assets of these unconsolidated tax credit VIEs were $83.3 billion and $84.1 billion as of June 30, 2024 and December 31, 2023. An unrelated third party is typically the general partner or managing member and has control over the significant activities of the VIE. As an investor, tax credits
associated with the investments in these entities are allocated to the Corporation, as provided by the U.S. Internal Revenue Code and related regulations, and are recognized as income tax benefits in the Corporation’s Consolidated Statement of Income in the year they are earned, which varies based on the type of investments. Tax credits from investments in affordable housing are recognized ratably over a term of up to 10 years, and tax credits from renewable energy investments are recognized either at inception for transactions electing Investment Tax Credits
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(ITCs) or as energy is produced for transactions electing Production Tax Credits (PTCs), which is generally up to a 10-year time period. The volume and types of investments held by the Corporation will influence the amount of tax credits recognized each period.
The Corporation’s equity investments in affordable housing and other projects totaled $16.2 billion and $15.8 billion at June 30, 2024 and December 31, 2023, which included unfunded capital contributions of $7.4 billion and $7.2 billion that are probable to be paid over the next five years. The Corporation may be asked to invest additional amounts to support a troubled affordable housing project. Such additional investments have not been and are not expected to be significant. During the three and six months ended June 30, 2024, the Corporation recognized tax credits and other tax benefits related to affordable housing equity investments of $562 million and $1.1 billion compared to $517 million and $1.0 billion for the same periods in 2023, and reported pretax losses in other income of $409 million and $822 million compared to $383 million and $756 million for the same periods in 2023. The Corporation’s equity investments in renewable energy totaled $13.4 billion and $14.2 billion at June 30, 2024 and December 31, 2023. In addition, the Corporation had unfunded capital contributions for renewable energy investments of $5.5 billion and $6.2 billion at June 30, 2024 and December 31, 2023, which are contingent on various conditions precedent to funding over the next two years. The Corporation’s risk of loss is generally mitigated by policies requiring the project to qualify for the expected tax credits prior to making its investment. During the three and six months ended June 30, 2024, the Corporation recognized tax credits and other tax benefits related to renewable energy equity investments of $894 million and $1.9 billion compared to $1.1 billion and $2.1 billion for the same periods in 2023 and reported pretax losses in other income of $591 million and $1.3 billion compared to $567 million and $1.1 billion for the same periods in 2023. The Corporation may also enter into power purchase agreements with renewable energy tax credit entities.
The following table summarizes select information related to unconsolidated tax credit VIEs in which the Corporation held a variable interest at June 30, 2024 and December 31, 2023.
| Unconsolidated Tax Credit VIEs | |||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | |||||||||
| Maximum loss exposure | $ | 29,594 | $ | 30,040 | |||||||
| On-balance sheet assets | |||||||||||
| All other assets | $ | 29,594 | $ | 30,040 | |||||||
| Total | $ | 29,594 | $ | 30,040 | |||||||
| On-balance sheet liabilities | |||||||||||
| All other liabilities | $ | 7,396 | $ | 7,254 | |||||||
| Total | $ | 7,396 | $ | 7,254 | |||||||
| Total assets of VIEs | $ | 83,334 | $ | 84,148 | |||||||
NOTE 7 Goodwill and Intangible Assets
Goodwill
The table below presents goodwill balances by business segment at June 30, 2024 and December 31, 2023. The reporting units utilized for goodwill impairment testing are the operating segments or one level below. The Corporation completed its annual goodwill impairment test as of June 30, 2024 by using a qualitative assessment. Based on the assessment, the Corporation has concluded that none of its reporting units are at risk of impairment, as each of the reporting units’ fair values are substantially in excess of their carrying values. For more information regarding the nature of and accounting for the Corporation’s annual goodwill impairment testing, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
| Goodwill | |||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | |||||||||
| Consumer Banking | $ | 30,137 | $ | 30,137 | |||||||
| Global Wealth & Investment Management | 9,677 | 9,677 | |||||||||
| Global Banking | 24,026 | 24,026 | |||||||||
| Global Markets | 5,181 | 5,181 | |||||||||
| Total goodwill | $ | 69,021 | $ | 69,021 | |||||||
Intangible Assets
At both June 30, 2024 and December 31, 2023, the net carrying value of intangible assets was $2.0 billion. At both June 30, 2024 and December 31, 2023, intangible assets included $1.6 billion of intangible assets associated with trade names, substantially all of which had an indefinite life and, accordingly, are not being amortized. Amortization of intangibles expense was $20 million for both the three months ended June 30, 2024 and 2023, and $39 million for both the six months ended June 30, 2024 and 2023.
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NOTE 8 Leases
The Corporation enters into both lessor and lessee arrangements. For more information on lease accounting, see Note 1 – Summary of Significant Accounting Principles and Note 8 – Leases to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. For more information on lease financing receivables, see Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses.
Lessor Arrangements
The Corporation’s lessor arrangements primarily consist of operating, sales-type and direct financing leases for equipment. Lease agreements may include options to renew and for the lessee to purchase the leased equipment at the end of the lease term.
The table below presents the net investment in sales-type and direct financing leases at June 30, 2024 and December 31, 2023.
Net Investment (1) | |||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | |||||||||
| Lease receivables | $ | 17,068 | $ | 16,565 | |||||||
| Unguaranteed residuals | 2,430 | 2,485 | |||||||||
| Total net investment in sales-type and direct financing leases | $ | 19,498 | $ | 19,050 | |||||||
(1)In certain cases, the Corporation obtains third-party residual value insurance to reduce its residual asset risk. The carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $7.3 billion and $6.8 billion at June 30, 2024 and December 31, 2023.
The table below presents lease income for the three and six months ended June 30, 2024 and 2023.
| Lease Income | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Sales-type and direct financing leases | $ | 262 | $ | 181 | $ | 512 | $ | 353 | |||||||||||||||
| Operating leases | 227 | 234 | 454 | 472 | |||||||||||||||||||
| Total lease income | $ | 489 | $ | 415 | $ | 966 | $ | 825 | |||||||||||||||
Lessee Arrangements
The Corporation's lessee arrangements predominantly consist of operating leases for premises and equipment; the Corporation's financing leases are not significant.
The table below provides information on the right-of-use assets and lease liabilities at June 30, 2024 and December 31, 2023.
| Lessee Arrangements | |||||||||||
| (Dollars in millions) | June 30 2024 | December 31 2023 | |||||||||
| Right-of-use assets | $ | 8,707 | $ | 9,150 | |||||||
| Lease liabilities | 9,310 | 9,782 | |||||||||
NOTE 9 Securities Financing Agreements, Collateral and Restricted Cash
The Corporation enters into securities financing agreements which include securities borrowed or purchased under agreements to resell and securities loaned or sold under agreements to repurchase. These financing agreements (also referred to as “matched-book transactions”) are to accommodate customers, obtain securities to cover short positions and finance inventory positions. The Corporation elects to account for certain securities financing agreements under the fair value option. For more information on the fair value option, see Note 15 – Fair Value Option.
Offsetting of Securities Financing Agreements
The Securities Financing Agreements table presents securities financing agreements included on the Consolidated Balance Sheet in federal funds sold and securities borrowed or purchased under agreements to resell, and in federal funds purchased and securities loaned or sold under agreements to repurchase at June 30, 2024 and December 31, 2023. Balances are presented on a gross basis, prior to the application of counterparty netting. Gross assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of legally enforceable master netting agreements. For more information on the offsetting of derivatives, see Note 3 – Derivatives. For more information on the securities financing agreements and the offsetting of securities financing transactions, see Note 10 – Securities Financing Agreements, Short-term Borrowings, Collateral and Restricted Cash to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
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| Securities Financing Agreements | |||||||||||||||||||||||||||||
Gross Assets/Liabilities (1) | Amounts Offset | Net Balance Sheet Amount | Financial Instruments (2) | Net Assets/Liabilities | |||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | ||||||||||||||||||||||||||||
Securities borrowed or purchased under agreements to resell (3) | $ | 755,382 | $ | (417,630) | $ | 337,752 | $ | (309,130) | $ | 28,622 | |||||||||||||||||||
| Securities loaned or sold under agreements to repurchase | $ | 785,736 | $ | (417,630) | $ | 368,106 | $ | (346,566) | $ | 21,540 | |||||||||||||||||||
Other (4) | 12,773 | — | 12,773 | (12,773) | — | ||||||||||||||||||||||||
| Total | $ | 798,509 | $ | (417,630) | $ | 380,879 | $ | (359,339) | $ | 21,540 | |||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||||||||
Securities borrowed or purchased under agreements to resell (3) | $ | 703,641 | $ | (423,017) | $ | 280,624 | $ | (257,541) | $ | 23,083 | |||||||||||||||||||
| Securities loaned or sold under agreements to repurchase | $ | 706,904 | $ | (423,017) | $ | 283,887 | $ | (272,285) | $ | 11,602 | |||||||||||||||||||
Other (4) | 10,066 | — | 10,066 | (10,066) | — | ||||||||||||||||||||||||
| Total | $ | 716,970 | $ | (423,017) | $ | 293,953 | $ | (282,351) | $ | 11,602 | |||||||||||||||||||
(1)Includes activity where uncertainty exists as to the enforceability of certain master netting agreements under bankruptcy laws in some countries or industries.
(2)Includes securities collateral received or pledged under repurchase or securities lending agreements where there is a legally enforceable master netting agreement. These amounts are not offset on the Consolidated Balance Sheet, but are shown as a reduction to derive a net asset or liability. Securities collateral received or pledged where the legal enforceability of the master netting agreements is uncertain is excluded from the table.
(3)Excludes repurchase activity of $12.6 billion and $8.7 billion reported in loans and leases on the Consolidated Balance Sheet for June 30, 2024 and December 31, 2023.
(4)Balance is reported in accrued expenses and other liabilities on the Consolidated Balance Sheet and relates to transactions where the Corporation acts as the lender in a securities lending agreement and receives securities that can be pledged as collateral or sold. In these transactions, the Corporation recognizes an asset at fair value, representing the securities received, and a liability, representing the obligation to return those securities.
Repurchase Agreements and Securities Loaned Transactions Accounted for as Secured Borrowings
The following tables present securities sold under agreements to repurchase and securities loaned by remaining contractual term to maturity and class of collateral pledged. Included in “Other” are transactions where the Corporation acts as the lender in a securities lending agreement and receives securities that can be pledged as collateral or sold. Certain agreements contain a right to substitute collateral and/or terminate the
agreement prior to maturity at the option of the Corporation or the counterparty. Such agreements are included in the table below based on the remaining contractual term to maturity. For more information on collateral requirements, see Note 10 – Securities Financing Agreements, Short-term Borrowings, Collateral and Restricted Cash to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
| Remaining Contractual Maturity | |||||||||||||||||||||||||||||
| Overnight and Continuous | 30 Days or Less | After 30 Days Through 90 Days | Greater than 90 Days (1) | Total | |||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | ||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | $ | 259,817 | $ | 232,017 | $ | 95,737 | $ | 109,075 | $ | 696,646 | |||||||||||||||||||
| Securities loaned | 79,861 | 284 | 1,005 | 7,940 | 89,090 | ||||||||||||||||||||||||
| Other | 12,773 | — | — | — | 12,773 | ||||||||||||||||||||||||
| Total | $ | 352,451 | $ | 232,301 | $ | 96,742 | $ | 117,015 | $ | 798,509 | |||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||||||||
| Securities sold under agreements to repurchase | $ | 234,974 | $ | 228,627 | $ | 85,176 | $ | 75,020 | $ | 623,797 | |||||||||||||||||||
| Securities loaned | 76,580 | 139 | 618 | 5,770 | 83,107 | ||||||||||||||||||||||||
| Other | 10,066 | — | — | — | 10,066 | ||||||||||||||||||||||||
| Total | $ | 321,620 | $ | 228,766 | $ | 85,794 | $ | 80,790 | $ | 716,970 | |||||||||||||||||||
(1)No agreements have maturities greater than four years.
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| Class of Collateral Pledged | |||||||||||||||||||||||
| Securities Sold Under Agreements to Repurchase | Securities Loaned | Other | Total | ||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | ||||||||||||||||||||||
| U.S. government and agency securities | $ | 380,642 | $ | 138 | $ | 23 | $ | 380,803 | |||||||||||||||
| Corporate securities, trading loans and other | 32,720 | 1,889 | 865 | 35,474 | |||||||||||||||||||
| Equity securities | 25,946 | 87,031 | 11,885 | 124,862 | |||||||||||||||||||
| Non-U.S. sovereign debt | 251,899 | 32 | — | 251,931 | |||||||||||||||||||
| Mortgage trading loans and ABS | 5,439 | — | — | 5,439 | |||||||||||||||||||
| Total | $ | 696,646 | $ | 89,090 | $ | 12,773 | $ | 798,509 | |||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| U.S. government and agency securities | $ | 352,950 | $ | 34 | $ | 38 | $ | 353,022 | |||||||||||||||
| Corporate securities, trading loans and other | 23,242 | 1,805 | 661 | 25,708 | |||||||||||||||||||
| Equity securities | 11,517 | 81,266 | 9,367 | 102,150 | |||||||||||||||||||
| Non-U.S. sovereign debt | 231,140 | 2 | — | 231,142 | |||||||||||||||||||
| Mortgage trading loans and ABS | 4,948 | — | — | 4,948 | |||||||||||||||||||
| Total | $ | 623,797 | $ | 83,107 | $ | 10,066 | $ | 716,970 | |||||||||||||||
Collateral
The Corporation accepts securities and loans as collateral that it is permitted by contract or practice to sell or repledge. At June 30, 2024 and December 31, 2023, the fair value of this collateral was $975.8 billion and $911.3 billion, of which $934.1 billion and $870.9 billion were sold or repledged. The primary source of this collateral is securities borrowed or purchased under agreements to resell. For more information on collateral, see Note 10 – Securities Financing Agreements, Short-term Borrowings, Collateral and Restricted Cash to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Restricted Cash
At June 30, 2024 and December 31, 2023, the Corporation held restricted cash included within cash and cash equivalents on the Consolidated Balance Sheet of $5.4 billion and $5.6 billion, predominantly related to cash segregated in compliance with securities regulations and cash held on deposit with central banks to meet reserve requirements.
NOTE 10 Commitments and Contingencies
In the normal course of business, the Corporation enters into a number of off-balance sheet commitments. These commitments expose the Corporation to varying degrees of credit and market risk and are subject to the same credit and market risk limitation reviews as those instruments recorded on the Consolidated Balance Sheet. For more information on commitments and contingencies, see Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Credit Extension Commitments
The Corporation enters into commitments to extend credit such as loan commitments, standby letters of credit (SBLCs) and commercial letters of credit to meet the financing needs of its customers. The following table includes the notional amount of unfunded legally binding lending commitments net of amounts distributed (i.e., syndicated or participated) to other financial institutions. The distributed amounts were $10.3 billion at both June 30, 2024 and December 31, 2023. The carrying value of the Corporation’s credit extension commitments at June 30, 2024 and December 31, 2023, excluding commitments accounted for under the fair value option, was $1.1 billion and $1.2 billion, which predominantly related to the reserve for unfunded lending commitments. The carrying value of these commitments is classified in accrued expenses and other liabilities on the Consolidated Balance Sheet.
Legally binding commitments to extend credit generally have specified rates and maturities. Certain of these commitments have adverse change clauses that help to protect the Corporation against deterioration in the borrower’s ability to pay.
The following table includes the notional amount of commitments of $3.2 billion and $2.6 billion at June 30, 2024 and December 31, 2023 that are accounted for under the fair value option. However, the table excludes the cumulative net fair value for these commitments of $73 million and $67 million at June 30, 2024 and December 31, 2023, which is classified in accrued expenses and other liabilities. For more information regarding the Corporation’s loan commitments accounted for under the fair value option, see Note 15 – Fair Value Option.
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| Credit Extension Commitments | |||||||||||||||||||||||||||||
| Expire in One Year or Less | Expire After One Year Through Three Years | Expire After Three Years Through Five Years | Expire After Five Years | Total | |||||||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | ||||||||||||||||||||||||||||
| Notional amount of credit extension commitments | |||||||||||||||||||||||||||||
Loan commitments (1) | $ | 122,111 | $ | 214,908 | $ | 184,093 | $ | 17,930 | $ | 539,042 | |||||||||||||||||||
| Home equity lines of credit | 3,407 | 10,109 | 9,910 | 21,849 | 45,275 | ||||||||||||||||||||||||
Standby letters of credit and financial guarantees (2) | 21,830 | 8,871 | 2,779 | 586 | 34,066 | ||||||||||||||||||||||||
| Letters of credit | 776 | 141 | 63 | 59 | 1,039 | ||||||||||||||||||||||||
Other commitments (3) | 13 | 33 | 103 | 1,036 | 1,185 | ||||||||||||||||||||||||
| Legally binding commitments | 148,137 | 234,062 | 196,948 | 41,460 | 620,607 | ||||||||||||||||||||||||
Credit card lines (4) | 452,638 | — | — | — | 452,638 | ||||||||||||||||||||||||
| Total credit extension commitments | $ | 600,775 | $ | 234,062 | $ | 196,948 | $ | 41,460 | $ | 1,073,245 | |||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||||||||
| Notional amount of credit extension commitments | |||||||||||||||||||||||||||||
Loan commitments (1) | $ | 124,298 | $ | 198,818 | $ | 193,878 | $ | 15,386 | $ | 532,380 | |||||||||||||||||||
| Home equity lines of credit | 2,775 | 9,182 | 11,195 | 21,975 | 45,127 | ||||||||||||||||||||||||
Standby letters of credit and financial guarantees (2) | 21,067 | 9,633 | 2,693 | 652 | 34,045 | ||||||||||||||||||||||||
| Letters of credit | 873 | 207 | 66 | 29 | 1,175 | ||||||||||||||||||||||||
Other commitments (3) | 17 | 50 | 108 | 1,035 | 1,210 | ||||||||||||||||||||||||
| Legally binding commitments | 149,030 | 217,890 | 207,940 | 39,077 | 613,937 | ||||||||||||||||||||||||
Credit card lines (4) | 440,328 | — | — | — | 440,328 | ||||||||||||||||||||||||
| Total credit extension commitments | $ | 589,358 | $ | 217,890 | $ | 207,940 | $ | 39,077 | $ | 1,054,265 | |||||||||||||||||||
(1) At June 30, 2024 and December 31, 2023, $4.6 billion and $3.1 billion of these loan commitments were held in the form of a security.
(2) The notional amounts of SBLCs and financial guarantees classified as investment grade and non-investment grade based on the credit quality of the underlying reference name within the instrument were $23.4 billion and $9.8 billion at June 30, 2024, and $23.6 billion and $9.7 billion at December 31, 2023. Amounts in the table include consumer SBLCs of $864 million and $744 million at June 30, 2024 and December 31, 2023.
(3) Primarily includes second-loss positions on lease-end residual value guarantees.
(4) Includes business card unused lines of credit.
Other Commitments
At June 30, 2024 and December 31, 2023, the Corporation had commitments to purchase loans (e.g., residential mortgage and commercial real estate) of $540 million and $822 million, which upon settlement will be included in trading account assets, loans or LHFS, and commitments to purchase commercial loans of $1.3 billion and $420 million, which upon settlement will be included in trading account assets.
At June 30, 2024 and December 31, 2023, the Corporation had commitments to enter into resale and forward-dated resale and securities borrowing agreements of $126.3 billion and $117.0 billion, and commitments to enter into forward-dated repurchase and securities lending agreements of $94.3 billion and $63.0 billion. A significant portion of these commitments will expire within the next 12 months.
At both June 30, 2024 and December 31, 2023, the Corporation had a commitment to originate or purchase up to $4.0 billion on a rolling 12-month basis, of auto loans and leases from a strategic partner. This commitment extends through November 2026 and can be terminated with 12 months prior notice.
At June 30, 2024 and December 31, 2023, the Corporation had unfunded equity investment commitments of $478 million and $477 million.
As a Federal Reserve member bank, the Corporation is required to subscribe to a certain amount of shares issued by its Federal Reserve district bank, which pays cumulative dividends at a prescribed rate. At both June 30, 2024 and December 31, 2023, the Corporation had paid $5.4 billion for half of its subscribed shares, with the remaining half subject to call by the Federal Reserve district bank board, which the Corporation believes is remote.
Other Guarantees
Bank-owned Life Insurance Book Value Protection
The Corporation sells products that offer book value protection to insurance carriers who offer group life insurance policies to corporations, primarily banks. At June 30, 2024 and December 31, 2023, the notional amount of these guarantees totaled $3.3 billion and $3.8 billion. At June 30, 2024 and December 31, 2023, the Corporation’s maximum exposure related to these guarantees totaled $508 million and $577 million, with estimated maturity dates between 2034 and 2037.
Merchant Services
The Corporation in its role as merchant acquirer or as a sponsor of other merchant acquirers may be held liable for any reversed charges that cannot be collected from the merchants due to, among other things, merchant fraud or insolvency. If charges are properly reversed after a purchase and cannot be collected from either the merchants or merchant acquirers, the Corporation may be held liable for these reversed charges. The ability to reverse a charge is primarily governed by the applicable payment network rules and regulations, which include, but are not limited to, the type of charge, type of payment used and time limits. The total amount of transactions subject to reversal under payment network rules and regulations processed for the preceding six-month period, which was approximately $225 billion, is an estimate of the Corporation’s maximum potential exposure as of June 30, 2024. The Corporation’s risk in this area primarily relates to circumstances where a cardholder has purchased goods or services for future delivery. The Corporation mitigates this risk by requiring cash deposits, guarantees, letters of credit or other types of collateral from certain merchants. The Corporation’s reserves for contingent losses, and the losses incurred related to the merchant processing activity were not significant.
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Representations and Warranties Obligations and Corporate Guarantees
For more information on representations and warranties obligations and corporate guarantees, see Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
The reserve for representations and warranties obligations and corporate guarantees was $265 million and $604 million at June 30, 2024 and December 31, 2023 and is included in accrued expenses and other liabilities on the Consolidated Balance Sheet, and the related provision is included in other income in the Consolidated Statement of Income. The representations and warranties reserve represents the Corporation’s best estimate of incurred losses, is based on its experience in previous negotiations, and is subject to judgment, a variety of assumptions and known or unknown uncertainties. Future representations and warranties losses may occur in excess of the amounts recorded for these exposures; however, the Corporation does not expect such amounts to be material to the Corporation's financial condition and liquidity. See Litigation and Regulatory Matters below for the Corporation's combined range of possible loss in excess of the reserve for representations and warranties and the accrued liability for litigation.
Fixed Income Clearing Corporation Sponsored Member Repo Program
The Corporation acts as a sponsoring member in a repo program whereby the Corporation clears certain eligible resale and repurchase agreements through the Government Securities Division of the Fixed Income Clearing Corporation on behalf of clients that are sponsored members in accordance with the Fixed Income Clearing Corporation’s rules. As part of this program, the Corporation guarantees the payment and performance of its sponsored members to the Fixed Income Clearing Corporation. The Corporation’s guarantee obligation is secured by a security interest in cash or high-quality securities collateral placed by clients with the clearinghouse and therefore, the potential for the Corporation to incur significant losses under this arrangement is remote. The Corporation’s maximum potential exposure, without taking into consideration the related collateral, was $131.7 billion and $132.5 billion at June 30, 2024 and December 31, 2023.
Other Guarantees
In the normal course of business, the Corporation periodically guarantees the obligations of its affiliates in a variety of transactions including ISDA-related transactions and non-ISDA related transactions such as commodities trading, repurchase agreements, prime brokerage agreements and other transactions.
Guarantees of Certain Long-term Debt
The Corporation, as the parent company, fully and unconditionally guarantees the securities issued by BofA Finance LLC, a consolidated finance subsidiary of the Corporation, and effectively provides for the full and unconditional guarantee of trust securities and capital securities issued by certain statutory trust companies that are 100 percent owned finance subsidiaries of the Corporation.
Other Contingencies
In 2023, the Federal Deposit Insurance Corporation (FDIC) issued a final rule to impose a special assessment to recover
certain estimated losses to the Deposit Insurance Fund (DIF) arising from the closures of Silicon Valley Bank and Signature Bank. The estimated losses will be recovered through quarterly special assessments collected from certain insured depository institutions, including the Corporation, and collection began during the three months ended June 30, 2024. As of June 30, 2024 and December 31, 2023, the Corporation’s accrual for its estimated share of the FDIC special assessment was $2.5 billion and $2.1 billion. The Corporation continues to monitor the FDIC’s estimated loss to the DIF, which could affect the amount of its accrued liability.
Litigation and Regulatory Matters
The following disclosures supplement the disclosure in Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K (the prior commitments and contingencies disclosure).
In the ordinary course of business, the Corporation and its subsidiaries are routinely defendants in or parties to many pending and threatened legal, regulatory and governmental actions and proceedings. In view of the inherent difficulty of predicting the outcome of such matters, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, the Corporation generally cannot predict the eventual outcome of the pending matters, timing of the ultimate resolution of these matters, or eventual loss, fines or penalties related to each pending matter.
As a matter develops, the Corporation, in conjunction with any outside counsel handling the matter, evaluates whether such matter presents a loss contingency that is probable and estimable, and, for the matters disclosed in the prior commitments and contingencies disclosure and updated below, whether a loss in excess of any accrued liability is reasonably possible in future periods. Once the loss contingency is deemed to be both probable and estimable, the Corporation will establish an accrued liability and record a corresponding amount of litigation-related expense. The Corporation continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established. Excluding expenses of internal and external legal service providers, litigation and regulatory investigation-related expense of $53 million and $151 million was recognized for the three and six months ended June 30, 2024 compared to $276 million and $365 million for the same periods in 2023.
For any matter disclosed in the prior commitments and contingencies disclosure for which a loss in future periods is reasonably possible and estimable (whether in excess of an accrued liability or where there is no accrued liability) and for representations and warranties exposures, the Corporation’s estimated range of possible loss is $0 to $0.8 billion in excess of the accrued liability, if any, as of June 30, 2024.
The accrued liability and estimated range of possible loss are based upon currently available information and subject to significant judgment, a variety of assumptions and known and unknown uncertainties. The matters underlying the accrued liability and estimated range of possible loss are unpredictable and may change from time to time, and actual losses may vary significantly from the current estimate and accrual. The estimated range of possible loss does not represent the Corporation’s maximum loss exposure.
Information is provided below and in the prior commitments and contingencies disclosure regarding the nature of the litigation and, where specified, associated claimed damages. Based on current knowledge, and taking into account accrued
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liabilities, management does not believe that loss contingencies arising from pending matters, including the matters described in the prior commitments and contingencies disclosure and updated below, will have a material adverse effect on the consolidated financial condition or liquidity of the Corporation. However, in light of the significant judgment, variety of assumptions and uncertainties involved in those matters, some of which are beyond the Corporation’s control, and the very large or indeterminate damages sought in some of those matters, an adverse outcome in one or more of those matters could be material to the Corporation’s business or results of operations for any particular reporting period, or cause significant reputational harm.
Deposit Insurance Assessment
On July 1, 2024, the district court judge vacated the magistrate judge’s April 2023 report and recommendation for resolving the parties’ cross-motions for summary judgment, and asked the parties to file new motions, in light of a recent Supreme Court decision, by the end of October 2024.
NOTE 11 Shareholders’ Equity
Common Stock
(1) In 2024, and through July 30, 2024.
Declared Quarterly Cash Dividends on Common Stock (1) | ||||||||||||||||||||
| Declaration Date | Record Date | Payment Date | Dividend Per Share | |||||||||||||||||
| July 24, 2024 | September 6, 2024 | September 27, 2024 | $ | 0.26 | ||||||||||||||||
| April 25, 2024 | June 7, 2024 | June 28, 2024 | 0.24 | |||||||||||||||||
| January 31, 2024 | March 1, 2024 | March 29, 2024 | 0.24 | |||||||||||||||||
During the three and six months ended June 30, 2024, the Corporation repurchased and retired 93 million and 165 million shares of common stock, which reduced shareholders’ equity by $3.5 billion and $6.0 billion, including excise taxes.
During the six months ended June 30, 2024, in connection with employee stock plans, the Corporation issued 71 million shares of its common stock and, to satisfy tax withholding obligations, repurchased 26 million shares of common stock. At June 30, 2024, the Corporation had reserved 555 million unissued shares of common stock for future issuances under employee stock plans, convertible notes and preferred stock.
On July 24, 2024, the Board of Directors declared a quarterly common stock dividend of $0.26 per share.
Preferred Stock
During the three months ended June 30, 2024 and March 31, 2024, the Corporation declared $310 million and $532 million of cash dividends on preferred stock, or a total of $842 million for the six months ended June 30, 2024. During the three months ended June 30, 2024, the Corporation fully redeemed Series U for $1.0 billion and Series JJ for $854 million. For more information on the Corporation’s preferred stock, including liquidation preference, dividend requirements and redemption period, see Note 13 – Shareholders’ Equity to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
NOTE 12 Accumulated Other Comprehensive Income (Loss)
The table below presents the changes in accumulated OCI after-tax for the six months ended June 30, 2024 and 2023.
| (Dollars in millions) | Debt Securities | Debit Valuation Adjustments | Derivatives | Employee Benefit Plans | Foreign Currency | Total | |||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | (2,983) | $ | (881) | $ | (11,935) | $ | (4,309) | $ | (1,048) | $ | (21,156) | |||||||||||||||||||||||
| Net change | 723 | (394) | 49 | 19 | 17 | 414 | |||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | (2,260) | $ | (1,275) | $ | (11,886) | $ | (4,290) | $ | (1,031) | $ | (20,742) | |||||||||||||||||||||||
| Balance, December 31, 2023 | $ | (2,410) | $ | (1,567) | $ | (8,016) | $ | (4,748) | $ | (1,047) | $ | (17,788) | |||||||||||||||||||||||
| Net change | 27 | (135) | 270 | 48 | (51) | 159 | |||||||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | (2,383) | $ | (1,702) | $ | (7,746) | $ | (4,700) | $ | (1,098) | $ | (17,629) | |||||||||||||||||||||||
The following table presents the net change in fair value recorded in accumulated OCI, net realized gains and losses reclassified into earnings and other changes for each component of OCI pre- and after-tax for the six months ended June 30, 2024 and 2023.
87 Bank of America | ||||||||
| Pretax | Tax effect | After- tax | Pretax | Tax effect | After- tax | ||||||||||||||||||||||||||||||
| Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Debt securities: | |||||||||||||||||||||||||||||||||||
| Net increase (decrease) in fair value | $ | 54 | $ | (17) | $ | 37 | $ | 557 | $ | (137) | $ | 420 | |||||||||||||||||||||||
Net realized (gains) losses reclassified into earnings (1) | (14) | 4 | (10) | 404 | (101) | 303 | |||||||||||||||||||||||||||||
| Net change | 40 | (13) | 27 | 961 | (238) | 723 | |||||||||||||||||||||||||||||
| Debit valuation adjustments: | |||||||||||||||||||||||||||||||||||
| Net increase (decrease) in fair value | (188) | 47 | (141) | (526) | 129 | (397) | |||||||||||||||||||||||||||||
Net realized (gains) losses reclassified into earnings (1) | 9 | (3) | 6 | 4 | (1) | 3 | |||||||||||||||||||||||||||||
| Net change | (179) | 44 | (135) | (522) | 128 | (394) | |||||||||||||||||||||||||||||
| Derivatives: | |||||||||||||||||||||||||||||||||||
| Net increase (decrease) in fair value | (1,027) | 259 | (768) | (280) | 73 | (207) | |||||||||||||||||||||||||||||
Reclassifications into earnings: | |||||||||||||||||||||||||||||||||||
| Net interest income | 1,342 | (336) | 1,006 | 352 | (88) | 264 | |||||||||||||||||||||||||||||
| Market making and similar activities | 59 | (14) | 45 | — | — | — | |||||||||||||||||||||||||||||
| Compensation and benefits expense | (17) | 4 | (13) | (11) | 3 | (8) | |||||||||||||||||||||||||||||
| Net realized (gains) losses reclassified into earnings | 1,384 | (346) | 1,038 | 341 | (85) | 256 | |||||||||||||||||||||||||||||
| Net change | 357 | (87) | 270 | 61 | (12) | 49 | |||||||||||||||||||||||||||||
| Employee benefit plans: | |||||||||||||||||||||||||||||||||||
Net actuarial losses and other reclassified into earnings (2) | 61 | (13) | 48 | 27 | (8) | 19 | |||||||||||||||||||||||||||||
| Net change | 61 | (13) | 48 | 27 | (8) | 19 | |||||||||||||||||||||||||||||
| Foreign currency: | |||||||||||||||||||||||||||||||||||
| Net increase (decrease) in fair value | 276 | (327) | (51) | (97) | 114 | 17 | |||||||||||||||||||||||||||||
Net realized (gains) losses reclassified into earnings (1) | — | — | — | (1) | 1 | — | |||||||||||||||||||||||||||||
| Net change | 276 | (327) | (51) | (98) | 115 | 17 | |||||||||||||||||||||||||||||
| Total other comprehensive income (loss) | $ | 555 | $ | (396) | $ | 159 | $ | 429 | $ | (15) | $ | 414 | |||||||||||||||||||||||
(1) Reclassifications of pretax debt securities, DVA and foreign currency (gains) losses are recorded in other income in the Consolidated Statement of Income.
(2) Reclassifications of pretax employee benefit plan costs are recorded in other general operating expense in the Consolidated Statement of Income.
NOTE 13 Earnings Per Common Share
The calculation of earnings per common share (EPS) and diluted EPS for the three and six months ended June 30, 2024 and 2023 is presented below. For more information on the calculation of EPS, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (In millions, except per share information) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Earnings per common share | |||||||||||||||||||||||
| Net income | $ | 6,897 | $ | 7,408 | $ | 13,571 | $ | 15,569 | |||||||||||||||
| Preferred stock dividends | (315) | (306) | (847) | (811) | |||||||||||||||||||
| Net income applicable to common shareholders | $ | 6,582 | $ | 7,102 | $ | 12,724 | $ | 14,758 | |||||||||||||||
| Average common shares issued and outstanding | 7,897.9 | 8,040.9 | 7,933.3 | 8,053.5 | |||||||||||||||||||
| Earnings per common share | $ | 0.83 | $ | 0.88 | $ | 1.60 | $ | 1.83 | |||||||||||||||
| Diluted earnings per common share | |||||||||||||||||||||||
| Net income applicable to common shareholders | $ | 6,582 | $ | 7,102 | $ | 12,724 | $ | 14,758 | |||||||||||||||
| Add preferred stock dividends due to assumed conversions | — | — | — | 111 | |||||||||||||||||||
| Net income allocated to common shareholders | $ | 6,582 | $ | 7,102 | $ | 12,724 | $ | 14,869 | |||||||||||||||
| Average common shares issued and outstanding | 7,897.9 | 8,040.9 | 7,933.3 | 8,053.5 | |||||||||||||||||||
Dilutive potential common shares (1) | 63.0 | 39.8 | 62.9 | 109.1 | |||||||||||||||||||
| Total diluted average common shares issued and outstanding | 7,960.9 | 8,080.7 | 7,996.2 | 8,162.6 | |||||||||||||||||||
| Diluted earnings per common share | $ | 0.83 | $ | 0.88 | $ | 1.59 | $ | 1.82 | |||||||||||||||
(1)Includes incremental dilutive shares from preferred stock, restricted stock units, restricted stock and warrants.
For the three and six months ended June 30, 2024 and the three months ended June 30, 2023, 62 million average dilutive potential common shares associated with the Series L preferred stock were antidilutive, whereas they were included in the diluted share count under the “if-converted” method for the six months ended June 30, 2023.
NOTE 14 Fair Value Measurements
Under applicable accounting standards, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Corporation determines the fair values of its financial
instruments under applicable accounting standards and conducts a review of fair value hierarchy classifications on a quarterly basis. Transfers into or out of fair value hierarchy classifications are made if the significant inputs used in the financial models measuring the fair values of the assets and liabilities become unobservable or observable in the current marketplace. During the six months ended June 30, 2024, there were no changes to valuation approaches or techniques that had, or are expected to have, a material impact on the Corporation’s consolidated financial position or results of operations.
For more information regarding the fair value hierarchy, how the Corporation measures fair value and valuation techniques, see Note 1 – Summary of Significant Accounting Principles and
Bank of America 88 | ||||||||
Note 20 – Fair Value Measurements to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. The Corporation accounts for certain financial instruments under the fair value option. For more information, see Note 15 – Fair Value Option.
Recurring Fair Value
Assets and liabilities carried at fair value on a recurring basis at June 30, 2024 and December 31, 2023, including financial instruments that the Corporation accounts for under the fair value option, are summarized in the following tables.
| June 30, 2024 | |||||||||||||||||||||||||||||
| Fair Value Measurements | |||||||||||||||||||||||||||||
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Netting Adjustments (1) | Assets/Liabilities at Fair Value | ||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
Time deposits placed and other short-term investments | $ | 1,204 | $ | — | $ | — | $ | — | $ | 1,204 | |||||||||||||||||||
Federal funds sold and securities borrowed or purchased under agreements to resell | — | 474,966 | — | (307,131) | 167,835 | ||||||||||||||||||||||||
| Trading account assets: | |||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 53,509 | 456 | — | — | 53,965 | ||||||||||||||||||||||||
| Corporate securities, trading loans and other | — | 47,917 | 1,816 | — | 49,733 | ||||||||||||||||||||||||
| Equity securities | 65,030 | 33,433 | 231 | — | 98,694 | ||||||||||||||||||||||||
| Non-U.S. sovereign debt | 14,892 | 33,788 | 323 | — | 49,003 | ||||||||||||||||||||||||
| Mortgage trading loans, MBS and ABS: | |||||||||||||||||||||||||||||
| U.S. government-sponsored agency guaranteed | — | 45,030 | 9 | — | 45,039 | ||||||||||||||||||||||||
| Mortgage trading loans, ABS and other MBS | — | 9,068 | 964 | — | 10,032 | ||||||||||||||||||||||||
Total trading account assets (2) | 133,431 | 169,692 | 3,343 | — | 306,466 | ||||||||||||||||||||||||
| Derivative assets | 17,747 | 261,640 | 3,916 | (247,347) | 35,956 | ||||||||||||||||||||||||
| AFS debt securities: | |||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 199,372 | 908 | — | — | 200,280 | ||||||||||||||||||||||||
| Mortgage-backed securities: | |||||||||||||||||||||||||||||
| Agency | — | 35,362 | — | — | 35,362 | ||||||||||||||||||||||||
| Agency-collateralized mortgage obligations | — | 9,444 | — | — | 9,444 | ||||||||||||||||||||||||
| Non-agency residential | — | 152 | 133 | — | 285 | ||||||||||||||||||||||||
| Commercial | — | 11,851 | 170 | — | 12,021 | ||||||||||||||||||||||||
| Non-U.S. securities | 661 | 20,646 | 78 | — | 21,385 | ||||||||||||||||||||||||
| Other taxable securities | — | 2,194 | — | — | 2,194 | ||||||||||||||||||||||||
| Tax-exempt securities | — | 10,324 | — | — | 10,324 | ||||||||||||||||||||||||
| Total AFS debt securities | 200,033 | 90,881 | 381 | — | 291,295 | ||||||||||||||||||||||||
| Other debt securities carried at fair value: | |||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 1,843 | — | — | — | 1,843 | ||||||||||||||||||||||||
| Non-agency residential MBS | — | 203 | 53 | — | 256 | ||||||||||||||||||||||||
Non-U.S. and other securities | 905 | 6,752 | — | — | 7,657 | ||||||||||||||||||||||||
| Total other debt securities carried at fair value | 2,748 | 6,955 | 53 | — | 9,756 | ||||||||||||||||||||||||
| Loans and leases | — | 3,108 | 89 | — | 3,197 | ||||||||||||||||||||||||
| Loans held-for-sale | — | 1,439 | 133 | — | 1,572 | ||||||||||||||||||||||||
Other assets (3) | 10,309 | 3,305 | 1,700 | — | 15,314 | ||||||||||||||||||||||||
Total assets (4) | $ | 365,472 | $ | 1,011,986 | $ | 9,615 | $ | (554,478) | $ | 832,595 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Interest-bearing deposits in U.S. offices | $ | — | $ | 370 | $ | — | $ | — | $ | 370 | |||||||||||||||||||
Federal funds purchased and securities loaned or sold under agreements to repurchase | — | 521,850 | — | (307,131) | 214,719 | ||||||||||||||||||||||||
| Trading account liabilities: | |||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 12,477 | — | — | — | 12,477 | ||||||||||||||||||||||||
| Equity securities | 43,110 | 6,193 | 11 | — | 49,314 | ||||||||||||||||||||||||
| Non-U.S. sovereign debt | 17,213 | 9,414 | — | — | 26,627 | ||||||||||||||||||||||||
| Corporate securities and other | — | 11,851 | 72 | — | 11,923 | ||||||||||||||||||||||||
| Mortgage trading loans and ABS | — | 4 | — | — | 4 | ||||||||||||||||||||||||
| Total trading account liabilities | 72,800 | 27,462 | 83 | — | 100,345 | ||||||||||||||||||||||||
| Derivative liabilities | 21,969 | 264,696 | 6,282 | (252,439) | 40,508 | ||||||||||||||||||||||||
| Short-term borrowings | — | 7,192 | 8 | — | 7,200 | ||||||||||||||||||||||||
| Accrued expenses and other liabilities | 11,515 | 3,541 | 8 | — | 15,064 | ||||||||||||||||||||||||
| Long-term debt | — | 46,287 | 588 | — | 46,875 | ||||||||||||||||||||||||
Total liabilities (4) | $ | 106,284 | $ | 871,398 | $ | 6,969 | $ | (559,570) | $ | 425,081 | |||||||||||||||||||
(1)Amounts represent the impact of legally enforceable master netting agreements and also cash collateral held or placed with the same counterparties.
(2)Includes securities with a fair value of $12.8 billion that were segregated in compliance with securities regulations or deposited with clearing organizations. This amount is included in the parenthetical disclosure on the Consolidated Balance Sheet. Trading account assets also includes certain commodities inventory of $313 million that is accounted for at the lower of cost or net realizable value, which is the current selling price less any costs to sell.
(3)Includes MSRs, which are classified as Level 3 assets, of $989 million.
(4)Total recurring Level 3 assets were 0.30 percent of total consolidated assets, and total recurring Level 3 liabilities were 0.24 percent of total consolidated liabilities.
89 Bank of America | ||||||||
| December 31, 2023 | |||||||||||||||||||||||||||||
| Fair Value Measurements | |||||||||||||||||||||||||||||
| (Dollars in millions) | Level 1 | Level 2 | Level 3 | Netting Adjustments (1) | Assets/Liabilities at Fair Value | ||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
Time deposits placed and other short-term investments | $ | 1,181 | $ | — | $ | — | $ | — | $ | 1,181 | |||||||||||||||||||
| Federal funds sold and securities borrowed or purchased under agreements to resell | — | 436,340 | — | (303,287) | 133,053 | ||||||||||||||||||||||||
| Trading account assets: | |||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 65,160 | 1,963 | — | — | 67,123 | ||||||||||||||||||||||||
| Corporate securities, trading loans and other | — | 41,462 | 1,689 | — | 43,151 | ||||||||||||||||||||||||
| Equity securities | 47,431 | 41,380 | 187 | — | 88,998 | ||||||||||||||||||||||||
| Non-U.S. sovereign debt | 5,517 | 21,195 | 396 | — | 27,108 | ||||||||||||||||||||||||
| Mortgage trading loans, MBS and ABS: | |||||||||||||||||||||||||||||
| U.S. government-sponsored agency guaranteed | — | 38,802 | 2 | — | 38,804 | ||||||||||||||||||||||||
| Mortgage trading loans, ABS and other MBS | — | 10,955 | 1,215 | — | 12,170 | ||||||||||||||||||||||||
Total trading account assets (2) | 118,108 | 155,757 | 3,489 | — | 277,354 | ||||||||||||||||||||||||
| Derivative assets | 14,676 | 272,244 | 3,422 | (251,019) | 39,323 | ||||||||||||||||||||||||
| AFS debt securities: | |||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 176,764 | 902 | — | — | 177,666 | ||||||||||||||||||||||||
| Mortgage-backed securities: | |||||||||||||||||||||||||||||
| Agency | — | 37,812 | — | — | 37,812 | ||||||||||||||||||||||||
| Agency-collateralized mortgage obligations | — | 2,544 | — | — | 2,544 | ||||||||||||||||||||||||
| Non-agency residential | — | 109 | 273 | — | 382 | ||||||||||||||||||||||||
| Commercial | — | 10,435 | — | — | 10,435 | ||||||||||||||||||||||||
| Non-U.S. securities | 1,093 | 21,679 | 103 | — | 22,875 | ||||||||||||||||||||||||
| Other taxable securities | — | 4,835 | — | — | 4,835 | ||||||||||||||||||||||||
| Tax-exempt securities | — | 10,100 | — | — | 10,100 | ||||||||||||||||||||||||
| Total AFS debt securities | 177,857 | 88,416 | 376 | — | 266,649 | ||||||||||||||||||||||||
| Other debt securities carried at fair value: | |||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 1,690 | — | — | — | 1,690 | ||||||||||||||||||||||||
| Non-agency residential MBS | — | 211 | 69 | — | 280 | ||||||||||||||||||||||||
| Non-U.S. and other securities | 1,786 | 6,447 | — | — | 8,233 | ||||||||||||||||||||||||
| Total other debt securities carried at fair value | 3,476 | 6,658 | 69 | — | 10,203 | ||||||||||||||||||||||||
| Loans and leases | — | 3,476 | 93 | — | 3,569 | ||||||||||||||||||||||||
| Loans held-for-sale | — | 1,895 | 164 | — | 2,059 | ||||||||||||||||||||||||
Other assets (3) | 8,052 | 2,152 | 1,657 | — | 11,861 | ||||||||||||||||||||||||
Total assets (4) | $ | 323,350 | $ | 966,938 | $ | 9,270 | $ | (554,306) | $ | 745,252 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Interest-bearing deposits in U.S. offices | $ | — | $ | 284 | $ | — | $ | — | $ | 284 | |||||||||||||||||||
| Federal funds purchased and securities loaned or sold under agreements to repurchase | — | 481,896 | — | (303,287) | 178,609 | ||||||||||||||||||||||||
| Trading account liabilities: | |||||||||||||||||||||||||||||
| U.S. Treasury and government agencies | 14,908 | 65 | — | — | 14,973 | ||||||||||||||||||||||||
| Equity securities | 51,772 | 4,710 | 12 | — | 56,494 | ||||||||||||||||||||||||
| Non-U.S. sovereign debt | 9,390 | 6,997 | — | — | 16,387 | ||||||||||||||||||||||||
| Corporate securities and other | — | 7,637 | 39 | — | 7,676 | ||||||||||||||||||||||||
| Total trading account liabilities | 76,070 | 19,409 | 51 | — | 95,530 | ||||||||||||||||||||||||
| Derivative liabilities | 14,375 | 280,908 | 5,916 | (257,767) | 43,432 | ||||||||||||||||||||||||
| Short-term borrowings | — | 4,680 | 10 | — | 4,690 | ||||||||||||||||||||||||
| Accrued expenses and other liabilities | 8,969 | 2,483 | 21 | — | 11,473 | ||||||||||||||||||||||||
| Long-term debt | — | 42,195 | 614 | — | 42,809 | ||||||||||||||||||||||||
Total liabilities (4) | $ | 99,414 | $ | 831,855 | $ | 6,612 | $ | (561,054) | $ | 376,827 | |||||||||||||||||||
(1)Amounts represent the impact of legally enforceable master netting agreements and also cash collateral held or placed with the same counterparties.
(2)Includes securities with a fair value of $18.0 billion that were segregated in compliance with securities regulations or deposited with clearing organizations. This amount is included in the parenthetical disclosure on the Consolidated Balance Sheet. Trading account assets also includes certain commodities inventory of $42 million that is accounted for at the lower of cost or net realizable value, which is the current selling price less any costs to sell.
(3)Includes MSRs, which are classified as Level 3 assets, of $970 million.
(4)Total recurring Level 3 assets were 0.29 percent of total consolidated assets, and total recurring Level 3 liabilities were 0.23 percent of total consolidated liabilities.
The following tables present a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and six months ended June 30, 2024 and 2023, including net realized and unrealized gains (losses) included in earnings and accumulated OCI. Transfers into Level 3 occur primarily due to
decreased price observability, and transfers out of Level 3 occur primarily due to increased price observability. Transfers occur on a regular basis for long-term debt instruments due to changes in the impact of unobservable inputs on the value of the embedded derivative in relation to the instrument as a whole.
Bank of America 90 | ||||||||
Level 3 – Fair Value Measurements (1) | |||||||||||||||||||||||||||||||||||
| Balance April 1 | Total Realized/Unrealized Gains (Losses) in Net Income (2) | Gains (Losses) in OCI (3) | Gross | Gross Transfers into Level 3 | Gross Transfers out of Level 3 | Balance June 30 | Change in Unrealized Gains (Losses) in Net Income Related to Financial Instruments Still Held (2) | ||||||||||||||||||||||||||||
| (Dollars in millions) | Purchases | Sales | Issuances | Settlements | |||||||||||||||||||||||||||||||
| Three Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| Trading account assets: | |||||||||||||||||||||||||||||||||||
Corporate securities, trading loans and other | $ | 1,582 | $ | 17 | $ | (2) | $ | 185 | $ | (71) | $ | 20 | $ | (142) | $ | 317 | $ | (90) | $ | 1,816 | $ | (18) | |||||||||||||
| Equity securities | 214 | 2 | — | 48 | (15) | — | (1) | — | (17) | 231 | 7 | ||||||||||||||||||||||||
| Non-U.S. sovereign debt | 394 | (9) | (25) | 15 | (4) | — | (48) | — | — | 323 | (9) | ||||||||||||||||||||||||
| Mortgage trading loans, MBS and ABS | 1,058 | (23) | — | 101 | (187) | — | (16) | 92 | (52) | 973 | (20) | ||||||||||||||||||||||||
| Total trading account assets | 3,248 | (13) | (27) | 349 | (277) | 20 | (207) | 409 | (159) | 3,343 | (40) | ||||||||||||||||||||||||
Net derivative assets (liabilities) (4) | (2,668) | 477 | — | 309 | (243) | — | (287) | (158) | 204 | (2,366) | 460 | ||||||||||||||||||||||||
| AFS debt securities: | |||||||||||||||||||||||||||||||||||
| Non-agency residential MBS | 251 | 1 | — | — | — | — | (2) | — | (117) | 133 | 1 | ||||||||||||||||||||||||
Commercial MBS | — | (6) | 1 | 175 | — | — | — | — | — | 170 | (6) | ||||||||||||||||||||||||
| Non-U.S. and other taxable securities | 91 | (8) | — | — | — | — | (2) | 1 | (4) | 78 | (2) | ||||||||||||||||||||||||
| Total AFS debt securities | 342 | (13) | 1 | 175 | — | — | (4) | 1 | (121) | 381 | (7) | ||||||||||||||||||||||||
Other debt securities carried at fair value – Non-agency residential MBS | 71 | (2) | — | — | — | — | — | — | (16) | 53 | (2) | ||||||||||||||||||||||||
Loans and leases (5,6) | 90 | 1 | — | — | — | — | (2) | — | — | 89 | — | ||||||||||||||||||||||||
Loans held-for-sale (5) | 149 | — | (3) | — | — | — | (13) | — | — | 133 | (3) | ||||||||||||||||||||||||
Other assets (6,7) | 1,668 | 85 | (15) | 18 | — | 27 | (83) | — | — | 1,700 | 57 | ||||||||||||||||||||||||
Trading account liabilities – Equity securities | (28) | 2 | — | — | — | — | 6 | — | 9 | (11) | — | ||||||||||||||||||||||||
Trading account liabilities – Corporate securities and other | (43) | (15) | — | (1) | (13) | (1) | 1 | — | — | (72) | (16) | ||||||||||||||||||||||||
Short-term borrowings (5) | (9) | 1 | — | — | — | (9) | 9 | — | — | (8) | 1 | ||||||||||||||||||||||||
Accrued expenses and other liabilities (5) | (19) | (11) | — | 22 | — | — | — | — | — | (8) | (11) | ||||||||||||||||||||||||
Long-term debt (5) | (611) | 18 | (2) | — | — | — | 7 | — | — | (588) | 18 | ||||||||||||||||||||||||
| Three Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||
| Federal funds sold and securities borrowed or purchased under agreements to resell | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 7 | $ | — | $ | 7 | $ | — | |||||||||||||
| Trading account assets: | |||||||||||||||||||||||||||||||||||
Corporate securities, trading loans and other | 2,322 | 34 | 1 | 98 | (35) | — | (308) | 46 | (58) | 2,100 | 13 | ||||||||||||||||||||||||
| Equity securities | 212 | (2) | — | 10 | (32) | — | (12) | 6 | (23) | 159 | (17) | ||||||||||||||||||||||||
| Non-U.S. sovereign debt | 541 | 12 | 20 | 33 | — | — | (38) | — | — | 568 | 12 | ||||||||||||||||||||||||
| Mortgage trading loans, MBS and ABS | 1,300 | (19) | — | 30 | (52) | — | (105) | 155 | (76) | 1,233 | (28) | ||||||||||||||||||||||||
| Total trading account assets | 4,375 | 25 | 21 | 171 | (119) | — | (463) | 207 | (157) | 4,060 | (20) | ||||||||||||||||||||||||
Net derivative assets (liabilities) (4) | (2,779) | (1,630) | (140) | 280 | (331) | — | (480) | (160) | 243 | (4,997) | (1,690) | ||||||||||||||||||||||||
| AFS debt securities: | |||||||||||||||||||||||||||||||||||
| Non-agency residential MBS | 293 | — | (2) | — | — | — | (3) | — | — | 288 | — | ||||||||||||||||||||||||
| Non-U.S. and other taxable securities | 187 | 4 | 4 | — | — | — | (7) | — | (4) | 184 | 2 | ||||||||||||||||||||||||
| Tax-exempt securities | 51 | — | — | — | — | — | — | — | — | 51 | — | ||||||||||||||||||||||||
| Total AFS debt securities | 531 | 4 | 2 | — | — | — | (10) | — | (4) | 523 | 2 | ||||||||||||||||||||||||
Other debt securities carried at fair value – Non-agency residential MBS | 94 | 1 | — | — | — | — | (2) | — | (5) | 88 | 2 | ||||||||||||||||||||||||
Loans and leases (5,6) | 243 | (13) | — | — | (50) | — | (33) | — | — | 147 | (17) | ||||||||||||||||||||||||
Loans held-for-sale (5) | 206 | 10 | 2 | — | (5) | — | (25) | — | — | 188 | 2 | ||||||||||||||||||||||||
Other assets (6,7) | 1,769 | 98 | 6 | — | 1 | 17 | (82) | — | — | 1,809 | 65 | ||||||||||||||||||||||||
Trading account liabilities – Corporate securities and other | (64) | (4) | — | (1) | — | — | 2 | (2) | 20 | (49) | — | ||||||||||||||||||||||||
Short-term borrowings (5) | (9) | 3 | — | — | (10) | (1) | 6 | — | — | (11) | 3 | ||||||||||||||||||||||||
Accrued expenses and other liabilities (5) | (20) | 6 | — | — | — | — | — | — | — | (14) | 6 | ||||||||||||||||||||||||
Long-term debt (5) | (772) | 64 | (15) | — | 53 | — | 6 | — | — | (664) | 69 | ||||||||||||||||||||||||
(1)Assets (liabilities). For assets, increase (decrease) to Level 3 and for liabilities, (increase) decrease to Level 3.
(2)Includes gains (losses) reported in earnings in the following income statement line items: Trading account assets/liabilities - market making and similar activities and other income; Net derivative assets (liabilities) - market making and similar activities and other income; AFS debt securities - other income; Other debt securities carried at fair value - other income; Loans and leases - other income; Loans held-for-sale - other income; Other assets - market making and similar activities and other income related to MSRs; Short-term borrowings - market making and similar activities; Accrued expenses and other liabilities - other income; Long-term debt - market making and similar activities.
(3)Includes unrealized gains (losses) in OCI on AFS debt securities, foreign currency translation adjustments, derivatives designated in cash flow hedges and the impact of changes in the Corporation’s credit spreads on long-term debt accounted for under the fair value option. Amounts include net unrealized losses of $44 million and $124 million related to financial instruments still held at June 30, 2024 and 2023.
(4)Net derivative assets (liabilities) include derivative assets of $3.9 billion and $4.4 billion and derivative liabilities of $6.3 billion and $9.4 billion at June 30, 2024 and 2023.
(5)Amounts represent instruments that are accounted for under the fair value option.
(6)Issuances represent loan originations and MSRs recognized following securitizations or whole-loan sales.
(7)Settlements primarily represent the net change in fair value of the MSR asset due to the recognition of modeled cash flows and the passage of time.
91 Bank of America | ||||||||
Level 3 – Fair Value Measurements (1) | |||||||||||||||||||||||||||||||||||
| Balance January 1 | Total Realized/Unrealized Gains (Losses) in Net Income (2) | Gains (Losses) in OCI (3) | Gross | Gross Transfers into Level 3 | Gross Transfers out of Level 3 | Balance June 30 | Change in Unrealized Gains (Losses) in Net Income Related to Financial Instruments Still Held (2) | ||||||||||||||||||||||||||||
(Dollars in millions) | Purchases | Sales | Issuances | Settlements | |||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||||||||||
| Trading account assets: | |||||||||||||||||||||||||||||||||||
Corporate securities, trading loans and other | $ | 1,689 | $ | 24 | $ | (3) | $ | 291 | $ | (128) | $ | 23 | $ | (466) | $ | 515 | $ | (129) | $ | 1,816 | $ | (40) | |||||||||||||
Equity securities | 187 | 6 | — | 86 | (37) | — | (4) | 11 | (18) | 231 | 9 | ||||||||||||||||||||||||
Non-U.S. sovereign debt | 396 | 5 | (34) | 26 | (5) | — | (65) | — | — | 323 | 5 | ||||||||||||||||||||||||
| Mortgage trading loans, MBS and ABS | 1,217 | (23) | — | 237 | (471) | — | (43) | 164 | (108) | 973 | (43) | ||||||||||||||||||||||||
| Total trading account assets | 3,489 | 12 | (37) | 640 | (641) | 23 | (578) | 690 | (255) | 3,343 | (69) | ||||||||||||||||||||||||
Net derivative assets (liabilities) (4) | (2,494) | 506 | — | 494 | (579) | — | (535) | (299) | 541 | (2,366) | (616) | ||||||||||||||||||||||||
| AFS debt securities: | |||||||||||||||||||||||||||||||||||
| Non-agency residential MBS | 273 | 9 | 47 | — | — | — | (141) | 62 | (117) | 133 | 10 | ||||||||||||||||||||||||
Commercial MBS | — | (6) | 1 | 175 | — | — | — | — | — | 170 | (6) | ||||||||||||||||||||||||
| Non-U.S. and other taxable securities | 103 | (7) | — | — | — | — | (14) | 1 | (5) | 78 | (2) | ||||||||||||||||||||||||
| Total AFS debt securities | 376 | (4) | 48 | 175 | — | — | (155) | 63 | (122) | 381 | 2 | ||||||||||||||||||||||||
Other debt securities carried at fair value – Non-agency residential MBS | 69 | 3 | — | — | — | — | (20) | 17 | (16) | 53 | 3 | ||||||||||||||||||||||||
Loans and leases (5,6) | 93 | 1 | — | — | — | 1 | (6) | — | — | 89 | 1 | ||||||||||||||||||||||||
Loans held-for-sale (5,6) | 164 | (2) | (4) | — | — | — | (25) | — | — | 133 | (6) | ||||||||||||||||||||||||
Other assets (6,7) | 1,657 | 140 | (26) | 20 | — | 73 | (165) | 1 | — | 1,700 | 93 | ||||||||||||||||||||||||
Trading account liabilities – Equity securities | (12) | 2 | — | — | (4) | — | 6 | (14) | 11 | (11) | — | ||||||||||||||||||||||||
Trading account liabilities – Corporate securities and other | (39) | (18) | — | (3) | (13) | (2) | 9 | (6) | — | (72) | (20) | ||||||||||||||||||||||||
Short-term borrowings (5) | (10) | — | — | — | — | (9) | 11 | — | — | (8) | — | ||||||||||||||||||||||||
Accrued expenses and other liabilities (5) | (21) | (9) | — | 22 | — | — | — | — | — | (8) | (8) | ||||||||||||||||||||||||
Long-term debt (5) | (614) | 31 | (17) | — | — | — | 13 | (1) | — | (588) | 32 | ||||||||||||||||||||||||
| Six Months Ended June 30, 2023 | |||||||||||||||||||||||||||||||||||
| Federal funds sold and securities borrowed or purchased under agreements to resell | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 7 | $ | — | $ | 7 | $ | — | |||||||||||||
| Trading account assets: | |||||||||||||||||||||||||||||||||||
Corporate securities, trading loans and other | 2,384 | 61 | 2 | 224 | (155) | 14 | (452) | 194 | (172) | 2,100 | 29 | ||||||||||||||||||||||||
| Equity securities | 145 | (6) | — | 16 | (44) | — | (12) | 83 | (23) | 159 | (17) | ||||||||||||||||||||||||
| Non-U.S. sovereign debt | 518 | 38 | 36 | 36 | (6) | — | (54) | — | — | 568 | 96 | ||||||||||||||||||||||||
| Mortgage trading loans, MBS and ABS | 1,552 | (28) | — | 104 | (202) | — | (221) | 242 | (214) | 1,233 | (39) | ||||||||||||||||||||||||
| Total trading account assets | 4,599 | 65 | 38 | 380 | (407) | 14 | (739) | 519 | (409) | 4,060 | 69 | ||||||||||||||||||||||||
Net derivative assets (liabilities) (4) | (2,893) | (1,561) | (140) | 529 | (599) | — | (795) | 161 | 301 | (4,997) | (2,077) | ||||||||||||||||||||||||
| AFS debt securities: | |||||||||||||||||||||||||||||||||||
| Non-agency residential MBS | 258 | 3 | 32 | — | — | — | (5) | — | — | 288 | 4 | ||||||||||||||||||||||||
| Non-U.S. and other taxable securities | 195 | 4 | 7 | — | — | — | (15) | — | (7) | 184 | (1) | ||||||||||||||||||||||||
| Tax-exempt securities | 51 | — | — | — | — | — | — | — | — | 51 | — | ||||||||||||||||||||||||
| Total AFS debt securities | 504 | 7 | 39 | — | — | — | (20) | — | (7) | 523 | 3 | ||||||||||||||||||||||||
Other debt securities carried at fair value – Non-agency residential MBS | 119 | (1) | — | — | (19) | — | (4) | — | (7) | 88 | 1 | ||||||||||||||||||||||||
Loans and leases (5,6) | 253 | (11) | — | 9 | (50) | — | (70) | 16 | — | 147 | (17) | ||||||||||||||||||||||||
Loans held-for-sale (5,6) | 232 | 22 | 4 | — | (21) | — | (49) | — | — | 188 | 20 | ||||||||||||||||||||||||
Other assets (6,7) | 1,799 | 108 | 7 | 6 | 1 | 44 | (158) | 2 | — | 1,809 | 48 | ||||||||||||||||||||||||
Trading account liabilities – Corporate securities and other | (58) | (4) | — | (1) | (2) | (1) | 2 | (6) | 21 | (49) | (1) | ||||||||||||||||||||||||
Short-term borrowings (5) | (14) | 3 | — | — | (13) | (2) | 15 | — | — | (11) | 2 | ||||||||||||||||||||||||
Accrued expenses and other liabilities (5) | (32) | 30 | — | (12) | — | — | — | — | — | (14) | 11 | ||||||||||||||||||||||||
Long-term debt (5) | (862) | 151 | (21) | (9) | 53 | — | 17 | — | 7 | (664) | 139 | ||||||||||||||||||||||||
(1)Assets (liabilities). For assets, increase (decrease) to Level 3 and for liabilities, (increase) decrease to Level 3.
(2)Includes gains (losses) reported in earnings in the following income statement line items: Trading account assets/liabilities - market making and similar activities and other income; Net derivative assets (liabilities) - market making and similar activities and other income; AFS debt securities - other income; Other debt securities carried at fair value - other income; Loans and leases - market making and similar activities and other income; Loans held-for-sale - market making and similar activities and other income; Other assets - market making and similar activities and other income primarily related to MSRs; Short-term borrowings - market making and similar activities; Accrued expenses and other liabilities - other income; Long-term debt - market making and similar activities.
(3)Includes unrealized gains (losses) in OCI on AFS debt securities, foreign currency translation adjustments, derivatives designated in cash flow hedges and the impact of changes in the Corporation’s credit spreads on long-term debt accounted for under the fair value option. Amounts include net unrealized losses of $33 million and $74 million related to financial instruments still held at June 30, 2024 and 2023.
(4)Net derivative assets (liabilities) include derivative assets of $3.9 billion and $4.4 billion and derivative liabilities of $6.3 billion and $9.4 billion at June 30, 2024 and 2023.
(5)Amounts represent instruments that are accounted for under the fair value option.
(6)Issuances represent loan originations and MSRs recognized following securitizations or whole-loan sales.
(7)Settlements primarily represent the net change in fair value of the MSR asset due to the recognition of modeled cash flows and the passage of time.
Bank of America 92 | ||||||||
The following tables present information about significant unobservable inputs related to the Corporation’s material categories of Level 3 financial assets and liabilities at June 30, 2024 and December 31, 2023.
| Quantitative Information about Level 3 Fair Value Measurements at June 30, 2024 | |||||||||||||||||
| (Dollars in millions) | Inputs | ||||||||||||||||
| Financial Instrument | Fair Value | Valuation Technique | Significant Unobservable Inputs | Ranges of Inputs | Weighted Average (1) | ||||||||||||
Loans and Securities (2) | |||||||||||||||||
| Instruments backed by residential real estate assets | $ | 418 | Discounted cash flow, Market comparables | Yield | 0% to 18% | 9 | % | ||||||||||
| Trading account assets – Mortgage trading loans, MBS and ABS | 149 | Prepayment speed | 0% to 45% CPR | 9% CPR | |||||||||||||
| Loans and leases | 83 | Default rate | 0% to 5% CDR | 5% CDR | |||||||||||||
| AFS debt securities – Non-agency residential | 133 | Price | $0 to $115 | $63 | |||||||||||||
| Other debt securities carried at fair value – Non-agency residential | 53 | Loss severity | 0% to 74% | 26 | % | ||||||||||||
| Instruments backed by commercial real estate assets | $ | 507 | Discounted cash flow | Yield | 0% to 25% | 11 | % | ||||||||||
| Trading account assets – Corporate securities, trading loans and other | 281 | Price | $0 to $101 | $81 | |||||||||||||
| Trading account assets – Mortgage trading loans, MBS and ABS | 56 | ||||||||||||||||
AFS debt securities – Commercial | 170 | ||||||||||||||||
| Commercial loans, debt securities and other | $ | 2,843 | Discounted cash flow, Market comparables | Yield | 5% to 41% | 16 | % | ||||||||||
Trading account assets – Corporate securities, trading loans and other | 1,535 | Prepayment speed | 10% to 20% | 15 | % | ||||||||||||
| Trading account assets – Non-U.S. sovereign debt | 323 | Default rate | 3% to 4% | 4 | % | ||||||||||||
| Trading account assets – Mortgage trading loans, MBS and ABS | 768 | Loss severity | 35% to 40% | 37 | % | ||||||||||||
| AFS debt securities – Non-U.S. and other taxable securities | 78 | Price | $0 to $157 | $70 | |||||||||||||
| Loans and leases | 6 | ||||||||||||||||
| Loans held-for-sale | 133 | ||||||||||||||||
| Other assets, primarily auction rate securities | $ | 711 | Discounted cash flow, Market comparables | Price | $10 to $95 | $86 | |||||||||||
| Discount rate | 11 | % | n/a | ||||||||||||||
| MSRs | $ | 989 | Discounted cash flow | Weighted-average life, fixed rate (5) | 0 to 12 years | 6 years | |||||||||||
Weighted-average life, variable rate (5) | 0 to 11 years | 3 years | |||||||||||||||
| Option-adjusted spread, fixed rate | 7% to 14% | 9 | % | ||||||||||||||
| Option-adjusted spread, variable rate | 9% to 15% | 11 | % | ||||||||||||||
| Structured liabilities | |||||||||||||||||
| Long-term debt | $ | (588) | Discounted cash flow, Market comparables, Industry standard derivative pricing (3) | Yield | 18% to 30% | 22 | % | ||||||||||
| Price | $33 to $100 | $90 | |||||||||||||||
| Natural gas forward price | $1/MMBtu to $8/MMBtu | $4 /MMBtu | |||||||||||||||
| Net derivative assets (liabilities) | |||||||||||||||||
| Credit derivatives | $ | 26 | Discounted cash flow, Stochastic recovery correlation model | Credit spreads | 8 to 76 bps | 53 bps | |||||||||||
| Prepayment speed | 15% CPR | n/a | |||||||||||||||
| Default rate | 2% CDR | n/a | |||||||||||||||
| Credit correlation | 23% to 64% | 58 | % | ||||||||||||||
| Price | $0 to $94 | $87 | |||||||||||||||
| Equity derivatives | $ | (1,278) | Industry standard derivative pricing (3) | Equity correlation | 0% to 100% | 60 | % | ||||||||||
| Long-dated equity volatilities | 1% to 101% | 32 | % | ||||||||||||||
| Commodity derivatives | $ | (691) | Discounted cash flow, Industry standard derivative pricing (3) | Natural gas forward price | $1/MMBtu to $8/MMBtu | $4 /MMBtu | |||||||||||
| Power forward price | $22 to $119 | $49 | |||||||||||||||
| Interest rate derivatives | $ | (423) | Industry standard derivative pricing (4) | Correlation (IR/IR) | (35)% to 70% | 50 | % | ||||||||||
| Correlation (FX/IR) | (25)% to 58% | 28 | % | ||||||||||||||
| Long-dated inflation rates | (1)% to 12% | 0 | % | ||||||||||||||
| Long-dated inflation volatilities | 0% to 5% | 2 | % | ||||||||||||||
| Interest rate volatilities | (1)% to 2% | 0 | % | ||||||||||||||
| Total net derivative assets (liabilities) | $ | (2,366) | |||||||||||||||
(1)For loans and securities, structured liabilities and net derivative assets (liabilities), the weighted average is calculated based upon the absolute fair value of the instruments.
(2)The categories are aggregated based upon product type, which differs from financial statement classification. The following is a reconciliation to the line items in the table on page 89: Trading account assets – Corporate securities, trading loans and other of $1.8 billion, Trading account assets – Non-U.S. sovereign debt of $323 million, Trading account assets – Mortgage trading loans, MBS and ABS of $973 million, AFS debt securities of $381 million, Other debt securities carried at fair value - Non-agency residential of $53 million, Other assets, including MSRs, of $1.7 billion, Loans and leases of $89 million and LHFS of $133 million.
(3)Includes models such as Monte Carlo simulation and Black-Scholes.
(4)Includes models such as Monte Carlo simulation, Black-Scholes and other methods that model the joint dynamics of interest, inflation and foreign exchange rates.
(5)The weighted-average life is a product of changes in market rates of interest, prepayment rates and other model and cash flow assumptions.
CPR = Constant Prepayment Rate
CDR = Constant Default Rate
MMBtu = Million British thermal units
IR = Interest Rate
FX = Foreign Exchange
n/a = not applicable
93 Bank of America | ||||||||
| Quantitative Information about Level 3 Fair Value Measurements at December 31, 2023 | |||||||||||||||||
| (Dollars in millions) | Inputs | ||||||||||||||||
| Financial Instrument | Fair Value | Valuation Technique | Significant Unobservable Inputs | Ranges of Inputs | Weighted Average (1) | ||||||||||||
Loans and Securities (2) | |||||||||||||||||
| Instruments backed by residential real estate assets | $ | 538 | Discounted cash flow, Market comparables | Yield | 0% to 22% | 9 | % | ||||||||||
| Trading account assets – Mortgage trading loans, MBS and ABS | 109 | Prepayment speed | 1% to 42% CPR | 10% CPR | |||||||||||||
| Loans and leases | 87 | Default rate | 0% to 3% CDR | 1% CDR | |||||||||||||
| AFS debt securities - Non-agency residential | 273 | Price | $0 to $115 | $70 | |||||||||||||
| Other debt securities carried at fair value - Non-agency residential | 69 | Loss severity | 0% to 100% | 27 | % | ||||||||||||
| Instruments backed by commercial real estate assets | $ | 363 | Discounted cash flow | Yield | 0% to 25% | 12 | % | ||||||||||
| Trading account assets – Corporate securities, trading loans and other | 301 | Price | $0 to $100 | $75 | |||||||||||||
| Trading account assets – Mortgage trading loans, MBS and ABS | 62 | ||||||||||||||||
| Commercial loans, debt securities and other | $ | 3,103 | Discounted cash flow, Market comparables | Yield | 5% to 59% | 13 | % | ||||||||||
Trading account assets – Corporate securities, trading loans and other | 1,388 | Prepayment speed | 10% to 20% | 16 | % | ||||||||||||
| Trading account assets – Non-U.S. sovereign debt | 396 | Default rate | 3% to 4% | 4 | % | ||||||||||||
| Trading account assets – Mortgage trading loans, MBS and ABS | 1,046 | Loss severity | 35% to 40% | 37 | % | ||||||||||||
| AFS debt securities – Non-U.S. and other taxable securities | 103 | Price | $0 to $157 | $70 | |||||||||||||
| Loans and leases | 6 | ||||||||||||||||
| Loans held-for-sale | 164 | ||||||||||||||||
| Other assets, primarily auction rate securities | $ | 687 | Discounted cash flow, Market comparables | Price | $10 to $95 | $85 | |||||||||||
| Discount rate | 10% | n/a | |||||||||||||||
| MSRs | $ | 970 | Discounted cash flow | Weighted-average life, fixed rate (5) | 0 to 14 years | 6 years | |||||||||||
Weighted-average life, variable rate (5) | 0 to 11 years | 3 years | |||||||||||||||
| Option-adjusted spread, fixed rate | 7% to 14% | 9 | % | ||||||||||||||
| Option-adjusted spread, variable rate | 9% to 15% | 12 | % | ||||||||||||||
| Structured liabilities | |||||||||||||||||
| Long-term debt | $ | (614) | Discounted cash flow, Market comparables, Industry standard derivative pricing (3) | Yield | 58% | n/a | |||||||||||
| Equity correlation | 5% to 97% | 25 | % | ||||||||||||||
| Price | $0 to $100 | $90 | |||||||||||||||
| Natural gas forward price | $1/MMBtu to $7/MMBtu | $4/MMBtu | |||||||||||||||
| Net derivative assets (liabilities) | |||||||||||||||||
Credit derivatives | $ | 9 | Discounted cash flow, Stochastic recovery correlation model | Credit spreads | 2 to 79 bps | 59 bps | |||||||||||
Prepayment speed | 15% CPR | n/a | |||||||||||||||
Default rate | 2% CDR | n/a | |||||||||||||||
| Credit correlation | 22% to 62% | 58 | % | ||||||||||||||
Price | $0 to $94 | $87 | |||||||||||||||
Equity derivatives | $ | (1,386) | Industry standard derivative pricing (3) | Equity correlation | 0% to 99% | 67 | % | ||||||||||
Long-dated equity volatilities | 4% to 102% | 34 | % | ||||||||||||||
Commodity derivatives | $ | (633) | Discounted cash flow, Industry standard derivative pricing (3) | Natural gas forward price | $1/MMBtu to $7/MMBtu | $4/MMBtu | |||||||||||
| Power forward price | $21 to $91 | $42 | |||||||||||||||
Interest rate derivatives | $ | (484) | Industry standard derivative pricing (4) | Correlation (IR/IR) | (35)% to 89% | 65 | % | ||||||||||
Correlation (FX/IR) | (25)% to 58% | 35 | % | ||||||||||||||
Long-dated inflation rates | G(1)% to 11% | 0 | % | ||||||||||||||
Long-dated inflation volatilities | 0% to 5% | 2 | % | ||||||||||||||
| Interest rates volatilities | 0% to 2% | 1 | % | ||||||||||||||
| Total net derivative assets (liabilities) | $ | (2,494) | |||||||||||||||
(1)For loans and securities, structured liabilities and net derivative assets (liabilities), the weighted average is calculated based upon the absolute fair value of the instruments.
(2)The categories are aggregated based upon product type, which differs from financial statement classification. The following is a reconciliation to the line items in the table on page 90: Trading account assets – Corporate securities, trading loans and other of $1.7 billion, Trading account assets – Non-U.S. sovereign debt of $396 million, Trading account assets – Mortgage trading loans, MBS and ABS of $1.2 billion, AFS debt securities of $376 million, Other debt securities carried at fair value - Non-agency residential of $69 million, Other assets, including MSRs, of $1.7 billion, Loans and leases of $93 million and LHFS of $164 million.
(3)Includes models such as Monte Carlo simulation and Black-Scholes.
(4)Includes models such as Monte Carlo simulation, Black-Scholes and other methods that model the joint dynamics of interest, inflation and foreign exchange rates.
(5)The weighted-average life is a product of changes in market rates of interest, prepayment rates and other model and cash flow assumptions.
CPR = Constant Prepayment Rate
CDR = Constant Default Rate
MMBtu = Million British thermal units
IR = Interest Rate
FX = Foreign Exchange
n/a = not applicable
Bank of America 94 | ||||||||
Uncertainty of Fair Value Measurements from Unobservable Inputs
For information on the types of instruments, valuation approaches and the impact of changes in unobservable inputs used in Level 3 measurements, see Note 20 – Fair Value Measurements to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Nonrecurring Fair Value
The Corporation holds certain assets that are measured at fair value only in certain situations (e.g., the impairment of an asset), and these measurements are referred to herein as nonrecurring. The amounts below represent assets still held as of the reporting date for which a nonrecurring fair value adjustment was recorded during the three and six months ended June 30, 2024 and 2023.
Assets Measured at Fair Value on a Nonrecurring Basis | |||||||||||||||||||||||
| June 30, 2024 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2024 | |||||||||||||||||||||
| (Dollars in millions) | Level 2 | Level 3 | Gains (Losses) | ||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Loans held-for-sale | $ | 14 | $ | 2,686 | $ | (49) | $ | (105) | |||||||||||||||
Loans and leases (1) | — | 71 | (10) | (17) | |||||||||||||||||||
Foreclosed properties (2, 3) | — | 46 | (2) | (1) | |||||||||||||||||||
Other assets (4) | 1 | 296 | (27) | (40) | |||||||||||||||||||
| June 30, 2023 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | |||||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Loans held-for-sale | $ | 109 | $ | 3,671 | $ | (18) | $ | (67) | |||||||||||||||
Loans and leases (1) | — | 95 | (13) | (23) | |||||||||||||||||||
Foreclosed properties (2, 3) | — | 6 | (4) | (4) | |||||||||||||||||||
| Other assets | 4 | 30 | (1) | (7) | |||||||||||||||||||
(1)Includes $2 million and $4 million of losses on loans that were written down to a collateral value of zero during the three and six months ended June 30, 2024 compared to losses of $3 million and $5 million for the same periods in 2023.
(2)Amounts are included in other assets on the Consolidated Balance Sheet and represent the carrying value of foreclosed properties that were written down subsequent to their initial classification as foreclosed properties. Losses on foreclosed properties include losses recorded during the first 90 days after transfer of a loan to foreclosed properties.
(3)Excludes $21 million and $46 million of properties acquired upon foreclosure of certain government-guaranteed loans (principally FHA-insured loans) at June 30, 2024 and 2023.
(4)Represents the fair value of certain impaired renewable energy investments.
The table below presents information about significant unobservable inputs utilized in the Corporation's nonrecurring Level 3 fair value measurements during the six months ended June 30, 2024 and the year ended December 31, 2023.
(1)The weighted average is calculated based upon the fair value of the loans.
(2)Represents residential mortgages where the loan has been written down to the fair value of the underlying collateral.
(3)Represents the fair value of certain impaired renewable energy investments.
n/a = not applicable
NOTE 15 Fair Value Option
The Corporation elects to account for certain financial instruments under the fair value option. For more information on the primary financial instruments for which the fair value option elections have been made, see Note 21 – Fair Value Option to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. The following tables provide information about the fair value carrying amount and the
contractual principal outstanding of assets and liabilities accounted for under the fair value option at June 30, 2024 and December 31, 2023, and information about where changes in the fair value of assets and liabilities accounted for under the fair value option are included in the Consolidated Statement of Income for the three and six months ended June 30, 2024 and 2023.
95 Bank of America | ||||||||
Fair Value Option Elections | |||||||||||||||||||||||||||||||||||
| June 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | Fair Value Carrying Amount | Contractual Principal Outstanding | Fair Value Carrying Amount Less Unpaid Principal | Fair Value Carrying Amount | Contractual Principal Outstanding | Fair Value Carrying Amount Less Unpaid Principal | |||||||||||||||||||||||||||||
Federal funds sold and securities borrowed or purchased under agreements to resell | $ | 167,835 | $ | 167,788 | $ | 47 | $ | 133,053 | $ | 133,001 | $ | 52 | |||||||||||||||||||||||
Loans reported as trading account assets (1) | 9,448 | 16,828 | (7,380) | 8,377 | 15,580 | (7,203) | |||||||||||||||||||||||||||||
| Trading inventory – other | 17,572 | n/a | n/a | 25,282 | n/a | n/a | |||||||||||||||||||||||||||||
| Consumer and commercial loans | 3,197 | 3,238 | (41) | 3,569 | 3,618 | (49) | |||||||||||||||||||||||||||||
Loans held-for-sale (1) | 1,572 | 2,201 | (629) | 2,059 | 2,873 | (814) | |||||||||||||||||||||||||||||
| Other assets | 2,957 | n/a | n/a | 1,986 | n/a | n/a | |||||||||||||||||||||||||||||
| Long-term deposits | 370 | 441 | (71) | 284 | 267 | 17 | |||||||||||||||||||||||||||||
Federal funds purchased and securities loaned or sold under agreements to repurchase | 214,719 | 214,761 | (42) | 178,609 | 178,634 | (25) | |||||||||||||||||||||||||||||
| Short-term borrowings | 7,200 | 7,206 | (6) | 4,690 | 4,694 | (4) | |||||||||||||||||||||||||||||
| Unfunded loan commitments | 73 | n/a | n/a | 67 | n/a | n/a | |||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 2,219 | 2,175 | 44 | 1,341 | 1,347 | (6) | |||||||||||||||||||||||||||||
| Long-term debt | 46,875 | 49,332 | (2,457) | 42,809 | 46,707 | (3,898) | |||||||||||||||||||||||||||||
(1)A significant portion of the loans reported as trading account assets and LHFS are distressed loans that were purchased at a deep discount to par, and the remainder are loans with a fair value near contractual principal outstanding.
n/a = not applicable
| Gains (Losses) Related to Assets and Liabilities Accounted for Under the Fair Value Option | |||||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||
(Dollars in millions) | Market making and similar activities | Other Income | Total | Market making and similar activities | Other Income | Total | |||||||||||||||||||||||||||||
| Federal funds sold and securities borrowed or purchased under agreements to resell | $ | 78 | $ | (1) | $ | 77 | $ | (52) | $ | (6) | $ | (58) | |||||||||||||||||||||||
Trading inventory – other (1) | (1,130) | — | (1,130) | 1,237 | — | 1,237 | |||||||||||||||||||||||||||||
| Consumer and commercial loans | 36 | 14 | 50 | (16) | 11 | (5) | |||||||||||||||||||||||||||||
Loans held-for-sale (2) | — | (7) | (7) | — | (4) | (4) | |||||||||||||||||||||||||||||
| Short-term borrowings | 75 | — | 75 | 6 | — | 6 | |||||||||||||||||||||||||||||
| Unfunded loan commitments | — | (6) | (6) | — | 44 | 44 | |||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 237 | — | 237 | 61 | — | 61 | |||||||||||||||||||||||||||||
Long-term debt (3) | 58 | (7) | 51 | 416 | (7) | 409 | |||||||||||||||||||||||||||||
Other (4) | (56) | (3) | (59) | 139 | 4 | 143 | |||||||||||||||||||||||||||||
| Total | $ | (702) | $ | (10) | $ | (712) | $ | 1,791 | $ | 42 | $ | 1,833 | |||||||||||||||||||||||
| Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||
| Federal funds sold and securities borrowed or purchased under agreements to resell | $ | 108 | $ | (4) | $ | 104 | $ | (18) | $ | (8) | $ | (26) | |||||||||||||||||||||||
Trading inventory – other (1) | 781 | — | 781 | 2,965 | — | 2,965 | |||||||||||||||||||||||||||||
| Consumer and commercial loans | 56 | 19 | 75 | (139) | 41 | (98) | |||||||||||||||||||||||||||||
Loans held-for-sale (2) | — | (17) | (17) | — | 16 | 16 | |||||||||||||||||||||||||||||
| Short-term borrowings | 73 | — | 73 | 11 | — | 11 | |||||||||||||||||||||||||||||
| Unfunded loan commitments | — | (20) | (20) | — | 20 | 20 | |||||||||||||||||||||||||||||
| Accrued expenses and other liabilities | 398 | — | 398 | 49 | — | 49 | |||||||||||||||||||||||||||||
Long-term debt (3) | 267 | (20) | 247 | (502) | (23) | (525) | |||||||||||||||||||||||||||||
Other (4) | (79) | (7) | (86) | 203 | (3) | 200 | |||||||||||||||||||||||||||||
| Total | $ | 1,604 | $ | (49) | $ | 1,555 | $ | 2,569 | $ | 43 | $ | 2,612 | |||||||||||||||||||||||
(1) The gains (losses) in market making and similar activities are primarily offset by (losses) gains on trading liabilities that hedge these assets.
(2) Includes the value of IRLCs on funded loans, including those sold during the period.
(3) The net gains (losses) in market making and similar activities relate to the embedded derivatives in structured liabilities and are typically offset by (losses) gains on derivatives and securities that hedge these liabilities. For the cumulative impact of changes in the Corporation’s own credit spreads and the amount recognized in accumulated OCI, see Note 12 – Accumulated Other Comprehensive Income (Loss). For more information on how the Corporation’s own credit spread is determined, see Note 20 – Fair Value Measurements to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
(4) Includes gains (losses) on loans reported as trading account assets, other assets, long-term deposits, federal funds purchased and securities loaned or sold under agreements to repurchase, and asset-backed secured financings.
Bank of America 96 | ||||||||
Gains (Losses) Related to Borrower-specific Credit Risk for Assets and Liabilities Accounted for Under the Fair Value Option | |||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | ||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Loans reported as trading account assets | $ | (32) | $ | (4) | $ | (64) | $ | 36 | |||||||||||||||
| Consumer and commercial loans | 13 | 12 | 16 | 36 | |||||||||||||||||||
| Loans held-for-sale | (2) | (2) | (1) | — | |||||||||||||||||||
| Unfunded loan commitments | (6) | 44 | (20) | 20 | |||||||||||||||||||
| Long-term debt | — | — | (3) | — | |||||||||||||||||||
NOTE 16 Fair Value of Financial Instruments
The following disclosures include financial instruments that are not carried at fair value or only a portion of the ending balance is carried at fair value on the Consolidated Balance Sheet. Certain loans, deposits, long-term debt, unfunded lending commitments and other financial instruments are accounted for under the fair value option. For more information, see Note 21 – Fair Value Option to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Fair Value of Financial Instruments
The carrying values and fair values by fair value hierarchy of certain financial instruments where only a portion of the ending balance was carried at fair value at June 30, 2024 and December 31, 2023 are presented in the table below.
Fair Value of Financial Instruments | |||||||||||||||||||||||
| Fair Value | |||||||||||||||||||||||
| Carrying Value | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (Dollars in millions) | June 30, 2024 | ||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||
Loans | $ | 1,023,049 | $ | 47,914 | $ | 955,706 | $ | 1,003,620 | |||||||||||||||
| Loans held-for-sale | 7,043 | 4,179 | 2,864 | 7,043 | |||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||
Deposits (1) | 1,910,491 | 1,911,738 | — | 1,911,738 | |||||||||||||||||||
| Long-term debt | 290,474 | 291,004 | 885 | 291,889 | |||||||||||||||||||
Commercial unfunded lending commitments (2) | 1,178 | 65 | 3,489 | 3,554 | |||||||||||||||||||
| December 31, 2023 | |||||||||||||||||||||||
| Financial assets | |||||||||||||||||||||||
Loans | $ | 1,020,281 | $ | 49,311 | $ | 949,977 | $ | 999,288 | |||||||||||||||
| Loans held-for-sale | 6,002 | 3,024 | 2,979 | 6,003 | |||||||||||||||||||
| Financial liabilities | |||||||||||||||||||||||
Deposits (1) | 1,923,827 | 1,925,015 | — | 1,925,015 | |||||||||||||||||||
| Long-term debt | 302,204 | 303,070 | 913 | 303,983 | |||||||||||||||||||
Commercial unfunded lending commitments (2) | 1,275 | 44 | 3,927 | 3,971 | |||||||||||||||||||
(1) Includes demand deposits of $859.7 billion and $897.3 billion with no stated maturities at June 30, 2024 and December 31, 2023.
(2) The carrying value of commercial unfunded lending commitments is included in accrued expenses and other liabilities on the Consolidated Balance Sheet. The Corporation does not estimate the fair value of consumer unfunded lending commitments because, in many instances, the Corporation can reduce or cancel these commitments by providing notice to the borrower. For more information on commitments, see Note 10 – Commitments and Contingencies.
NOTE 17 Business Segment Information
The Corporation reports its results of operations through the following four business segments: Consumer Banking, Global Wealth & Investment Management, Global Banking and Global Markets, with the remaining operations recorded in All Other. For more information, see Note 23 – Business Segment Information to the Consolidated Financial Statements of the Corporation’s
2023 Annual Report on Form 10-K. The following tables present net income (loss) and the components thereto (with net interest income on an FTE basis for the business segments, All Other and the total Corporation) for the three and six months ended June 30, 2024 and 2023, and total assets at June 30, 2024 and 2023 for each business segment, as well as All Other.
97 Bank of America | ||||||||
| Results of Business Segments and All Other | |||||||||||||||||||||||||||||||||||
At and for the three months ended June 30 | Total Corporation (1) | Consumer Banking | Global Wealth & Investment Management | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Net interest income | $ | 13,862 | $ | 14,293 | $ | 8,118 | $ | 8,437 | $ | 1,693 | $ | 1,805 | |||||||||||||||||||||||
| Noninterest income | 11,675 | 11,039 | 2,088 | 2,087 | 3,881 | 3,437 | |||||||||||||||||||||||||||||
| Total revenue, net of interest expense | 25,537 | 25,332 | 10,206 | 10,524 | 5,574 | 5,242 | |||||||||||||||||||||||||||||
| Provision for credit losses | 1,508 | 1,125 | 1,281 | 1,267 | 7 | 13 | |||||||||||||||||||||||||||||
| Noninterest expense | 16,309 | 16,038 | 5,464 | 5,453 | 4,199 | 3,925 | |||||||||||||||||||||||||||||
| Income before income taxes | 7,720 | 8,169 | 3,461 | 3,804 | 1,368 | 1,304 | |||||||||||||||||||||||||||||
| Income tax expense | 823 | 761 | 866 | 951 | 342 | 326 | |||||||||||||||||||||||||||||
| Net income | $ | 6,897 | $ | 7,408 | $ | 2,595 | $ | 2,853 | $ | 1,026 | $ | 978 | |||||||||||||||||||||||
| Period-end total assets | $ | 3,257,996 | $ | 3,123,198 | $ | 1,033,960 | $ | 1,084,512 | $ | 324,476 | $ | 338,184 | |||||||||||||||||||||||
| Global Banking | Global Markets | All Other | |||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| Net interest income | $ | 3,275 | $ | 3,690 | $ | 770 | $ | 297 | $ | 6 | $ | 64 | |||||||||||||||||||||||
| Noninterest income | 2,778 | 2,772 | 4,689 | 4,574 | (1,761) | (1,831) | |||||||||||||||||||||||||||||
| Total revenue, net of interest expense | 6,053 | 6,462 | 5,459 | 4,871 | (1,755) | (1,767) | |||||||||||||||||||||||||||||
| Provision for credit losses | 235 | 9 | (13) | (4) | (2) | (160) | |||||||||||||||||||||||||||||
| Noninterest expense | 2,899 | 2,819 | 3,486 | 3,349 | 261 | 492 | |||||||||||||||||||||||||||||
| Income (loss) before income taxes | 2,919 | 3,634 | 1,986 | 1,526 | (2,014) | (2,099) | |||||||||||||||||||||||||||||
| Income tax expense (benefit) | 803 | 981 | 576 | 420 | (1,764) | (1,917) | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 2,116 | $ | 2,653 | $ | 1,410 | $ | 1,106 | $ | (250) | $ | (182) | |||||||||||||||||||||||
| Period-end total assets | $ | 620,217 | $ | 586,397 | $ | 887,162 | $ | 851,771 | $ | 392,181 | $ | 262,334 | |||||||||||||||||||||||
(1)There were no material intersegment revenues.
| Results of Business Segments and All Other | |||||||||||||||||||||||||||||||||||
At and for the six months ended June 30 | Total Corporation (1) | Consumer Banking | Global Wealth & Investment Management | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Net interest income | $ | 28,052 | $ | 28,875 | $ | 16,315 | $ | 17,030 | $ | 3,507 | $ | 3,681 | |||||||||||||||||||||||
| Noninterest income | 23,461 | 22,849 | 4,057 | 4,200 | 7,658 | 6,876 | |||||||||||||||||||||||||||||
| Total revenue, net of interest expense | 51,513 | 51,724 | 20,372 | 21,230 | 11,165 | 10,557 | |||||||||||||||||||||||||||||
| Provision for credit losses | 2,827 | 2,056 | 2,431 | 2,356 | (6) | 38 | |||||||||||||||||||||||||||||
| Noninterest expense | 33,546 | 32,276 | 10,939 | 10,926 | 8,463 | 7,992 | |||||||||||||||||||||||||||||
| Income before income taxes | 15,140 | 17,392 | 7,002 | 7,948 | 2,708 | 2,527 | |||||||||||||||||||||||||||||
| Income tax expense | 1,569 | 1,823 | 1,751 | 1,987 | 677 | 632 | |||||||||||||||||||||||||||||
| Net income | $ | 13,571 | $ | 15,569 | $ | 5,251 | $ | 5,961 | $ | 2,031 | $ | 1,895 | |||||||||||||||||||||||
| Period-end total assets | $ | 3,257,996 | $ | 3,123,198 | $ | 1,033,960 | $ | 1,084,512 | $ | 324,476 | $ | 338,184 | |||||||||||||||||||||||
| Global Banking | Global Markets | All Other | |||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| Net interest income | $ | 6,735 | $ | 7,597 | $ | 1,451 | $ | 406 | $ | 44 | $ | 161 | |||||||||||||||||||||||
| Noninterest income | 5,298 | 5,068 | 9,891 | 10,091 | (3,443) | (3,386) | |||||||||||||||||||||||||||||
| Total revenue, net of interest expense | 12,033 | 12,665 | 11,342 | 10,497 | (3,399) | (3,225) | |||||||||||||||||||||||||||||
| Provision for credit losses | 464 | (228) | (49) | (57) | (13) | (53) | |||||||||||||||||||||||||||||
| Noninterest expense | 5,911 | 5,759 | 6,978 | 6,700 | 1,255 | 899 | |||||||||||||||||||||||||||||
| Income before income taxes | 5,658 | 7,134 | 4,413 | 3,854 | (4,641) | (4,071) | |||||||||||||||||||||||||||||
| Income tax expense | 1,556 | 1,926 | 1,280 | 1,060 | (3,695) | (3,782) | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 4,102 | $ | 5,208 | $ | 3,133 | $ | 2,794 | $ | (946) | $ | (289) | |||||||||||||||||||||||
| Period-end total assets | $ | 620,217 | $ | 586,397 | $ | 887,162 | $ | 851,771 | $ | 392,181 | $ | 262,334 | |||||||||||||||||||||||
(1) There were no material intersegment revenues.
Bank of America 98 | ||||||||
The table below presents noninterest income and the associated components for the three and six months ended June 30, 2024 and 2023 for each business segment, All Other and the total Corporation. For more information, see Note 2 – Net Interest Income and Noninterest Income.
| Noninterest Income by Business Segment and All Other | |||||||||||||||||||||||||||||||||||
| Total Corporation | Consumer Banking | Global Wealth & Investment Management | |||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Fees and commissions: | |||||||||||||||||||||||||||||||||||
| Card income | |||||||||||||||||||||||||||||||||||
| Interchange fees | $ | 1,023 | $ | 1,023 | $ | 815 | $ | 808 | $ | (7) | $ | (3) | |||||||||||||||||||||||
| Other card income | 558 | 523 | 546 | 533 | 16 | 15 | |||||||||||||||||||||||||||||
| Total card income | 1,581 | 1,546 | 1,361 | 1,341 | 9 | 12 | |||||||||||||||||||||||||||||
| Service charges | |||||||||||||||||||||||||||||||||||
| Deposit-related fees | 1,172 | 1,045 | 614 | 525 | 10 | 10 | |||||||||||||||||||||||||||||
| Lending-related fees | 335 | 319 | — | — | 14 | 8 | |||||||||||||||||||||||||||||
| Total service charges | 1,507 | 1,364 | 614 | 525 | 24 | 18 | |||||||||||||||||||||||||||||
| Investment and brokerage services | |||||||||||||||||||||||||||||||||||
| Asset management fees | 3,370 | 2,969 | 45 | 49 | 3,327 | 2,921 | |||||||||||||||||||||||||||||
| Brokerage fees | 950 | 870 | 33 | 27 | 380 | 330 | |||||||||||||||||||||||||||||
Total investment and brokerage services | 4,320 | 3,839 | 78 | 76 | 3,707 | 3,251 | |||||||||||||||||||||||||||||
| Investment banking fees | |||||||||||||||||||||||||||||||||||
| Underwriting income | 869 | 657 | — | — | 57 | 40 | |||||||||||||||||||||||||||||
| Syndication fees | 318 | 180 | — | — | — | — | |||||||||||||||||||||||||||||
| Financial advisory services | 374 | 375 | — | — | — | — | |||||||||||||||||||||||||||||
| Total investment banking fees | 1,561 | 1,212 | — | — | 57 | 40 | |||||||||||||||||||||||||||||
| Total fees and commissions | 8,969 | 7,961 | 2,053 | 1,942 | 3,797 | 3,321 | |||||||||||||||||||||||||||||
| Market making and similar activities | 3,298 | 3,697 | 6 | 5 | 38 | 32 | |||||||||||||||||||||||||||||
| Other income (loss) | (592) | (619) | 29 | 140 | 46 | 84 | |||||||||||||||||||||||||||||
| Total noninterest income | $ | 11,675 | $ | 11,039 | $ | 2,088 | $ | 2,087 | $ | 3,881 | $ | 3,437 | |||||||||||||||||||||||
| Global Banking | Global Markets | All Other (1) | |||||||||||||||||||||||||||||||||
| Three Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| Fees and commissions: | |||||||||||||||||||||||||||||||||||
| Card income | |||||||||||||||||||||||||||||||||||
| Interchange fees | $ | 195 | $ | 199 | $ | 20 | $ | 19 | $ | — | $ | — | |||||||||||||||||||||||
| Other card income | 3 | 1 | — | — | (7) | (26) | |||||||||||||||||||||||||||||
| Total card income | 198 | 200 | 20 | 19 | (7) | (26) | |||||||||||||||||||||||||||||
| Service charges | |||||||||||||||||||||||||||||||||||
| Deposit-related fees | 525 | 489 | 22 | 20 | 1 | 1 | |||||||||||||||||||||||||||||
| Lending-related fees | 250 | 246 | 71 | 65 | — | — | |||||||||||||||||||||||||||||
| Total service charges | 775 | 735 | 93 | 85 | 1 | 1 | |||||||||||||||||||||||||||||
| Investment and brokerage services | |||||||||||||||||||||||||||||||||||
| Asset management fees | — | — | — | — | (2) | (1) | |||||||||||||||||||||||||||||
| Brokerage fees | 21 | 14 | 516 | 499 | — | — | |||||||||||||||||||||||||||||
Total investment and brokerage services | 21 | 14 | 516 | 499 | (2) | (1) | |||||||||||||||||||||||||||||
| Investment banking fees | |||||||||||||||||||||||||||||||||||
| Underwriting income | 345 | 283 | 517 | 384 | (50) | (50) | |||||||||||||||||||||||||||||
| Syndication fees | 168 | 102 | 150 | 78 | — | — | |||||||||||||||||||||||||||||
| Financial advisory services | 322 | 333 | 52 | 41 | — | 1 | |||||||||||||||||||||||||||||
| Total investment banking fees | 835 | 718 | 719 | 503 | (50) | (49) | |||||||||||||||||||||||||||||
| Total fees and commissions | 1,829 | 1,667 | 1,348 | 1,106 | (58) | (75) | |||||||||||||||||||||||||||||
| Market making and similar activities | 78 | 69 | 3,218 | 3,409 | (42) | 182 | |||||||||||||||||||||||||||||
| Other income (loss) | 871 | 1,036 | 123 | 59 | (1,661) | (1,938) | |||||||||||||||||||||||||||||
| Total noninterest income | $ | 2,778 | $ | 2,772 | $ | 4,689 | $ | 4,574 | $ | (1,761) | $ | (1,831) | |||||||||||||||||||||||
(1)All Other includes eliminations of intercompany transactions.
99 Bank of America | ||||||||
| Noninterest Income by Business Segment and All Other | |||||||||||||||||||||||||||||||||||
| Total Corporation | Consumer Banking | Global Wealth & Investment Management | |||||||||||||||||||||||||||||||||
| Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||
| Fees and commissions: | |||||||||||||||||||||||||||||||||||
| Card income | |||||||||||||||||||||||||||||||||||
| Interchange fees | $ | 1,954 | $ | 1,979 | $ | 1,547 | $ | 1,561 | $ | (11) | $ | (3) | |||||||||||||||||||||||
| Other card income | 1,090 | 1,036 | 1,086 | 1,054 | 30 | 27 | |||||||||||||||||||||||||||||
| Total card income | 3,044 | 3,015 | 2,633 | 2,615 | 19 | 24 | |||||||||||||||||||||||||||||
| Service charges | |||||||||||||||||||||||||||||||||||
| Deposit-related fees | 2,294 | 2,142 | 1,192 | 1,124 | 21 | 21 | |||||||||||||||||||||||||||||
| Lending-related fees | 655 | 632 | — | — | 26 | 16 | |||||||||||||||||||||||||||||
| Total service charges | 2,949 | 2,774 | 1,192 | 1,124 | 47 | 37 | |||||||||||||||||||||||||||||
| Investment and brokerage services | |||||||||||||||||||||||||||||||||||
| Asset management fees | 6,640 | 5,887 | 100 | 96 | 6,546 | 5,794 | |||||||||||||||||||||||||||||
| Brokerage fees | 1,867 | 1,804 | 56 | 54 | 761 | 695 | |||||||||||||||||||||||||||||
Total investment and brokerage services | 8,507 | 7,691 | 156 | 150 | 7,307 | 6,489 | |||||||||||||||||||||||||||||
| Investment banking fees | |||||||||||||||||||||||||||||||||||
| Underwriting income | 1,770 | 1,226 | — | — | 120 | 79 | |||||||||||||||||||||||||||||
| Syndication fees | 612 | 411 | — | — | — | — | |||||||||||||||||||||||||||||
| Financial advisory services | 747 | 738 | — | — | — | — | |||||||||||||||||||||||||||||
| Total investment banking fees | 3,129 | 2,375 | — | — | 120 | 79 | |||||||||||||||||||||||||||||
| Total fees and commissions | 17,629 | 15,855 | 3,981 | 3,889 | 7,493 | 6,629 | |||||||||||||||||||||||||||||
| Market making and similar activities | 7,186 | 8,409 | 11 | 10 | 72 | 66 | |||||||||||||||||||||||||||||
| Other income (loss) | (1,354) | (1,415) | 65 | 301 | 93 | 181 | |||||||||||||||||||||||||||||
| Total noninterest income | $ | 23,461 | $ | 22,849 | $ | 4,057 | $ | 4,200 | $ | 7,658 | $ | 6,876 | |||||||||||||||||||||||
| Global Banking | Global Markets | All Other (1) | |||||||||||||||||||||||||||||||||
| Six Months Ended June 30 | |||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| Fees and commissions: | |||||||||||||||||||||||||||||||||||
| Card income | |||||||||||||||||||||||||||||||||||
| Interchange fees | $ | 381 | $ | 386 | $ | 37 | $ | 35 | $ | — | $ | — | |||||||||||||||||||||||
| Other card income | 5 | 4 | — | — | (31) | (49) | |||||||||||||||||||||||||||||
| Total card income | 386 | 390 | 37 | 35 | (31) | (49) | |||||||||||||||||||||||||||||
| Service charges | |||||||||||||||||||||||||||||||||||
| Deposit-related fees | 1,034 | 956 | 45 | 40 | 2 | 1 | |||||||||||||||||||||||||||||
| Lending-related fees | 491 | 493 | 138 | 123 | — | — | |||||||||||||||||||||||||||||
| Total service charges | 1,525 | 1,449 | 183 | 163 | 2 | 1 | |||||||||||||||||||||||||||||
| Investment and brokerage services | |||||||||||||||||||||||||||||||||||
| Asset management fees | — | — | — | — | (6) | (3) | |||||||||||||||||||||||||||||
| Brokerage fees | 39 | 23 | 1,011 | 1,032 | — | — | |||||||||||||||||||||||||||||
Total investment and brokerage services | 39 | 23 | 1,011 | 1,032 | (6) | (3) | |||||||||||||||||||||||||||||
| Investment banking fees | |||||||||||||||||||||||||||||||||||
| Underwriting income | 726 | 512 | 1,027 | 698 | (103) | (63) | |||||||||||||||||||||||||||||
| Syndication fees | 320 | 228 | 292 | 183 | — | — | |||||||||||||||||||||||||||||
| Financial advisory services | 639 | 646 | 108 | 91 | — | 1 | |||||||||||||||||||||||||||||
| Total investment banking fees | 1,685 | 1,386 | 1,427 | 972 | (103) | (62) | |||||||||||||||||||||||||||||
| Total fees and commissions | 3,635 | 3,248 | 2,658 | 2,202 | (138) | (113) | |||||||||||||||||||||||||||||
| Market making and similar activities | 146 | 114 | 7,048 | 7,807 | (91) | 412 | |||||||||||||||||||||||||||||
| Other income (loss) | 1,517 | 1,706 | 185 | 82 | (3,214) | (3,685) | |||||||||||||||||||||||||||||
| Total noninterest income | $ | 5,298 | $ | 5,068 | $ | 9,891 | $ | 10,091 | $ | (3,443) | $ | (3,386) | |||||||||||||||||||||||
(1) All other includes eliminations of intercompany transactions.
Bank of America 100 | ||||||||
The table below presents a reconciliation of the four business segments’ total revenue, net of interest expense, on an FTE basis, and net income to the Consolidated Statement of Income, and total assets to the Consolidated Balance Sheet.
| Business Segment Reconciliations | ||||||||||||||||||||||||||
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||||||||||||||||
| (Dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Segments’ total revenue, net of interest expense | $ | 27,292 | $ | 27,099 | $ | 54,912 | $ | 54,949 | ||||||||||||||||||
Adjustments (1): | ||||||||||||||||||||||||||
| Asset and liability management activities | (68) | (207) | (140) | (432) | ||||||||||||||||||||||
| Liquidating businesses, eliminations and other | (1,687) | (1,560) | (3,259) | (2,793) | ||||||||||||||||||||||
| FTE basis adjustment | (160) | (135) | (318) | (269) | ||||||||||||||||||||||
| Consolidated revenue, net of interest expense | $ | 25,377 | $ | 25,197 | $ | 51,195 | $ | 51,455 | ||||||||||||||||||
| Segments’ total net income | 7,147 | 7,590 | 14,517 | 15,858 | ||||||||||||||||||||||
Adjustments, net-of-tax (1): | ||||||||||||||||||||||||||
| Asset and liability management activities | (53) | (151) | (108) | (325) | ||||||||||||||||||||||
| Liquidating businesses, eliminations and other | (197) | (31) | (838) | 36 | ||||||||||||||||||||||
| Consolidated net income | $ | 6,897 | $ | 7,408 | $ | 13,571 | $ | 15,569 | ||||||||||||||||||
| June 30 | ||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||
| Segments’ total assets | $ | 2,865,815 | $ | 2,860,864 | ||||||||||||||||||||||
Adjustments (1): | ||||||||||||||||||||||||||
| Asset and liability management activities, including securities portfolio | 1,261,291 | 1,162,755 | ||||||||||||||||||||||||
| Elimination of segment asset allocations to match liabilities | (931,120) | (963,574) | ||||||||||||||||||||||||
| Other | 62,010 | 63,153 | ||||||||||||||||||||||||
| Consolidated total assets | $ | 3,257,996 | $ | 3,123,198 | ||||||||||||||||||||||
(1)Adjustments include consolidated income, expense and asset amounts not specifically allocated to individual business segments.
101 Bank of America | ||||||||
Glossary
Alt-A Mortgage – A type of U.S. mortgage that is considered riskier than A-paper, or “prime,” and less risky than “subprime,” the riskiest category. Typically, Alt-A mortgages are characterized by borrowers with less than full documentation, lower credit scores and higher LTVs.
Assets Under Management (AUM) – The total market value of assets under the investment advisory and/or discretion of GWIM which generate asset management fees based on a percentage of the assets’ market values. AUM reflects assets that are generally managed for institutional, high net worth and retail clients, and are distributed through various investment products including mutual funds, other commingled vehicles and separate accounts.
Banking Book – All on- and off-balance sheet financial instruments of the Corporation except for those positions that are held for trading purposes.
Brokerage and Other Assets – Non-discretionary client assets which are held in brokerage accounts or held for safekeeping.
Committed Credit Exposure – Any funded portion of a facility plus the unfunded portion of a facility on which the lender is legally bound to advance funds during a specified period under prescribed conditions.
Credit Derivatives – Contractual agreements that provide protection against a specified credit event on one or more referenced obligations.
Credit Valuation Adjustment (CVA) – A portfolio adjustment required to properly reflect the counterparty credit risk exposure as part of the fair value of derivative instruments.
Debit Valuation Adjustment (DVA) – A portfolio adjustment required to properly reflect the Corporation’s own credit risk exposure as part of the fair value of derivative instruments and/or structured liabilities.
Funding Valuation Adjustment (FVA) – A portfolio adjustment required to include funding costs on uncollateralized derivatives and derivatives where the Corporation is not permitted to use the collateral it receives.
Interest Rate Lock Commitment (IRLC) – Commitment with a loan applicant in which the loan terms are guaranteed for a designated period of time subject to credit approval.
Letter of Credit – A document issued on behalf of a customer to a third party promising to pay the third party upon presentation of specified documents. A letter of credit effectively substitutes the issuer’s credit for that of the customer.
Loan-to-value (LTV) – A commonly used credit quality metric. LTV is calculated as the outstanding carrying value of the loan divided by the estimated value of the property securing the loan.
Macro Products – Include currencies, interest rates and commodities products.
Margin Receivable – An extension of credit secured by eligible securities in certain brokerage accounts.
Matched Book – Repurchase and resale agreements or securities borrowed and loaned transactions where the overall asset and liability position is similar in size and/or maturity. Generally, these are entered into to accommodate customers where the Corporation earns the interest rate spread.
Mortgage Servicing Right (MSR) – The right to service a mortgage loan when the underlying loan is sold or securitized. Servicing includes collections for principal, interest and escrow payments from borrowers and accounting for and remitting principal and interest payments to investors.
Nonperforming Loans and Leases – Includes loans and leases that have been placed on nonaccrual status, including nonaccruing loans whose contractual terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties.
Prompt Corrective Action (PCA) – A framework established by the U.S. banking regulators requiring banks to maintain certain levels of regulatory capital ratios, comprised of five categories of capitalization: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” Insured depository institutions that fail to meet certain of these capital levels are subject to increasingly strict limits on their activities, including their ability to make capital distributions, pay management compensation, grow assets and take other actions.
Subprime Loans – Although a standard industry definition for subprime loans (including subprime mortgage loans) does not exist, the Corporation defines subprime loans as specific product offerings for higher risk borrowers.
Value-at-Risk (VaR) – VaR is a model that simulates the value of a portfolio under a range of hypothetical scenarios in order to generate a distribution of potential gains and losses. VaR represents the loss the portfolio is expected to experience with a given confidence level based on historical data. A VaR model is an effective tool in estimating ranges of potential gains and losses on our trading portfolios.
Bank of America 102 | ||||||||
Key Metrics
Active Digital Banking Users – Mobile and/or online active users over the past 90 days.
Active Mobile Banking Users – Mobile active users over the past 90 days.
Book Value – Ending common shareholders’ equity divided by ending common shares outstanding.
Common Equity Ratio - Ending common shareholders’ equity divided by ending total assets.
Deposit Spread – Annualized net interest income divided by average deposits.
Dividend Payout Ratio – Common dividends declared divided by net income applicable to common shareholders.
Efficiency Ratio – Noninterest expense divided by total revenue, net of interest expense.
Gross Interest Yield – Effective annual percentage rate divided by average loans.
Net Interest Yield – Net interest income divided by average total interest-earning assets.
Operating Margin – Income before income taxes divided by total revenue, net of interest expense.
Return on Average Allocated Capital – Adjusted net income divided by allocated capital.
Return on Average Assets – Net income divided by total average assets.
Return on Average Common Shareholders’ Equity – Net income applicable to common shareholders divided by average common shareholders’ equity.
Return on Average Shareholders’ Equity – Net income divided by average shareholders’ equity.
Risk-adjusted Margin – Difference between total revenue, net of interest expense, and net credit losses divided by average loans.
103 Bank of America | ||||||||
Acronyms
| ABS | Asset-backed securities | ||||
| AFS | Available-for-sale | ||||
| ALM | Asset and liability management | ||||
| AUM | Assets under management | ||||
| BANA | Bank of America, National Association | ||||
| BHC | Bank holding company | ||||
| BofAS | BofA Securities, Inc. | ||||
| BofASE | BofA Securities Europe SA | ||||
| bps | Basis points | ||||
| CCAR | Comprehensive Capital Analysis and Review | ||||
| CDO | Collateralized debt obligation | ||||
| CECL | Current expected credit losses | ||||
| CET1 | Common equity tier 1 | ||||
| CFTC | Commodity Futures Trading Commission | ||||
| CLO | Collateralized loan obligation | ||||
| CLTV | Combined loan-to-value | ||||
| CVA | Credit valuation adjustment | ||||
| DIF | Deposit Insurance Fund | ||||
| DVA | Debit valuation adjustment | ||||
| EPS | Earnings per common share | ||||
| ESG | Environmental, social and governance | ||||
| FDIC | Federal Deposit Insurance Corporation | ||||
| FHA | Federal Housing Administration | ||||
| FHLB | Federal Home Loan Bank | ||||
| FHLMC | Freddie Mac | ||||
| FICC | Fixed income, currencies and commodities | ||||
| FICO | Fair Isaac Corporation (credit score) | ||||
| FNMA | Fannie Mae | ||||
| FTE | Fully taxable-equivalent | ||||
| FVA | Funding valuation adjustment | ||||
| GAAP | Accounting principles generally accepted in the United States of America | ||||
| GLS | Global Liquidity Sources | ||||
| GNMA | Government National Mortgage Association | ||||
| G-SIB | Global systemically important bank | ||||
| GWIM | Global Wealth & Investment Management | ||||
| HELOC | Home equity line of credit | ||||
| HQLA | High Quality Liquid Assets | ||||
| HTM | Held-to-maturity | ||||
| IRLC | Interest rate lock commitment | ||||
| ISDA | International Swaps and Derivatives Association, Inc. | ||||
| LCR | Liquidity Coverage Ratio | ||||
| LHFS | Loans held-for-sale | ||||
| LTV | Loan-to-value | ||||
| MBS | Mortgage-backed securities | ||||
| MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||
| MLI | Merrill Lynch International | ||||
| MLPF&S | Merrill Lynch, Pierce, Fenner & Smith Incorporated | ||||
| MSA | Metropolitan Statistical Area | ||||
| MSR | Mortgage servicing right | ||||
| NSFR | Net Stable Funding Ratio | ||||
| OCI | Other comprehensive income | ||||
| OREO | Other real estate owned | ||||
| PCA | Prompt Corrective Action | ||||
| RWA | Risk-weighted assets | ||||
| SBLC | Standby letter of credit | ||||
| SCB | Stress capital buffer | ||||
| SEC | Securities and Exchange Commission | ||||
| SLR | Supplementary leverage ratio | ||||
| SOFR | Secured Overnight Financing Rate | ||||
| TLAC | Total loss-absorbing capacity | ||||
| VA | U.S. Department of Veterans Affairs | ||||
| VaR | Value-at-Risk | ||||
| VIE | Variable interest entity | ||||
Bank of America 104 | ||||||||
Part II. Other Information
Bank of America Corporation and Subsidiaries
Item 1. Legal Proceedings
See Litigation and Regulatory Matters in Note 10 – Commitments and Contingencies to the Consolidated Financial Statements, which is incorporated by reference in this Item 1, for litigation and regulatory disclosure that supplements the disclosure in Note 12 – Commitments and Contingencies to the
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The table below presents share repurchase activity for the three months ended June 30, 2024. The primary source of funds for cash distributions by the Corporation to its shareholders is dividends received from its banking subsidiaries. Each of the banking subsidiaries is subject to various regulatory policies and requirements relating to the payment of dividends, including requirements to maintain capital above regulatory minimums. All of the Corporation’s preferred stock outstanding has preference over the Corporation’s common stock with respect to payment of dividends.
| (Dollars in millions, except per share information; shares in thousands) | Total Common Shares Repurchased (1,2) | Weighted-Average Per Share Price | Total Shares Purchased as Part of Publicly Announced Programs (2) | Remaining Buyback Authority Amounts (3) | |||||||||||||||||||
| April 1 - 30, 2024 | 46,602 | $ | 36.50 | 46,579 | $ | 8,542 | |||||||||||||||||
| May 1 - 31, 2024 | 21,949 | 38.75 | 21,804 | 7,697 | |||||||||||||||||||
| June 1 - 30, 2024 | 24,188 | 39.54 | 24,155 | 6,742 | |||||||||||||||||||
| Three months ended June 30, 2024 | 92,739 | 37.82 | 92,538 | ||||||||||||||||||||
(1)Includes 201 thousand shares of the Corporation’s common stock acquired by the Corporation in connection with satisfaction of tax withholding obligations on vested restricted stock or restricted stock units and certain forfeitures and terminations of employment-related awards and for potential re-issuance to certain employees under equity incentive plans.
(2)In October 2021, the Corporation’s Board of Directors (Board) authorized the repurchase of up to $25 billion of common stock over time. Additionally, the Board authorized repurchases to offset shares awarded under equity-based compensation plans. In September 2023, the Board modified the October 2021 authorization, effective October 1, 2023, to include repurchases to offset shares awarded under equity-based compensation plans when determining the remaining repurchase authority. During the three months ended June 30, 2024, pursuant to the Board’s authorizations, the Corporation repurchased approximately 93 million shares, or $3.5 billion, of its common stock, including repurchases to offset shares awarded under equity-based compensation plans. For more information, see Capital Management – CCAR and Capital Planning in the MD&A on page 21 and Note 11 – Shareholders’ Equity to the Consolidated Financial Statements.
(3)On July 24, 2024, the Board authorized a $25 billion common stock repurchase program, effective August 1, 2024, to replace the Corporation’s existing program adopted by the Board in October 2021 and subsequently modified in September 2023. The existing repurchase program will expire on August 1, 2024.
The Corporation did not have any unregistered sales of equity securities during the three months ended June 30, 2024.
Item 5. Other Information
Trading Arrangements
During the fiscal quarter ended June 30, 2024, none of the Corporation’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (in each case, as defined in Item 408 of Regulation S-K) for the purchase or sale of the Corporation’s securities.
Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934
Pursuant to Section 13(r) of the Exchange Act, an issuer is required to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant to certain Executive Orders. Disclosure may be required even where the
activities, transactions or dealings were conducted in compliance with applicable law. Except as set forth below, as of the date of this Quarterly Report on Form 10-Q, the Corporation is not aware of any other activity, transaction or dealing by any of its affiliates during the quarter ended June 30, 2024 that requires disclosure under Section 13(r) of the Exchange Act.
During the second quarter of 2024, Bank of America, National Association (BANA), a U.S. subsidiary of Bank of America Corporation, processed 30 authorized wire payments totaling $8,094,375 pursuant to a general license issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control regarding Afghanistan or governing institutions in Afghanistan. These payments for three BANA clients were processed to Afghan state-owned banks which are subject to Executive Order 13224. There was no measurable gross revenue or net profit to the Corporation relating to these transactions, except nominal fees received by BANA for processing payments. The Corporation may in the future engage in similar transactions for its clients to the extent permitted by U.S. law.
105 Bank of America | ||||||||
Item 6. Exhibits
| Incorporated by Reference | ||||||||||||||||||||
| Exhibit No. | Description | Notes | Form | Exhibit | Filing Date | File No. | ||||||||||||||
| 3.1 | 10-Q | 3.1 | 4/29/22 | 1-6523 | ||||||||||||||||
| 3.2 | 1 | |||||||||||||||||||
10.1 | 2 | 8-K | 10.1 | 4/26/24 | 1-6523 | |||||||||||||||
| 22 | 10-K | 22 | 2/22/23 | 1-6523 | ||||||||||||||||
| 31.1 | 1 | |||||||||||||||||||
| 31.2 | 1 | |||||||||||||||||||
| 32.1 | 3 | |||||||||||||||||||
| 32.2 | 3 | |||||||||||||||||||
| 101.INS | Inline XBRL Instance Document | 4 | ||||||||||||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | 1 | ||||||||||||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | 1 | ||||||||||||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | 1 | ||||||||||||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | 1 | ||||||||||||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definitions Linkbase Document | 1 | ||||||||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | |||||||||||||||||||
(1)Filed herewith.
(2)Exhibit is a management contract or compensatory plan or arrangement.
(3)Furnished herewith. This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
(4)The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Bank of America Corporation Registrant | |||||||||||||||||
| Date: | July 30, 2024 | /s/ Rudolf A. Bless | |||||||||||||||
| Rudolf A. Bless Chief Accounting Officer | |||||||||||||||||
Bank of America 106 | ||||||||