UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[ü] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2017

[ ] 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:

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 ü No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).

Yes ü No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 (check one).



Large accelerated filer ü	Accelerated filer	Non-accelerated filer (do not check if a smaller reporting company)	Smaller reporting company

Emerging growth company

Yes No ü

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.

Yes No

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).

Yes No ü

On July 28, 2017, there were 9,850,580,344 shares of Bank of America Corporation Common Stock outstanding.

Bank of America Corporation and Subsidiaries

June 30, 2017

Form 10-Q

INDEX

Part I. Financial Information



Item 1. Financial Statements		Page
Consolidated Statement of Income		69
Consolidated Statement of Comprehensive Income		70
Consolidated Balance Sheet		71
Consolidated Statement of Changes in Shareholders' Equity		73
Consolidated Statement of Cash Flows		74
Notes to Consolidated Financial Statements		75
Note 1 – Summary of Significant Accounting Principles		75
Note 2 – Derivatives		76
Note 3 – Securities		84
Note 4 – Outstanding Loans and Leases		89
Note 5 – Allowance for Credit Losses		102
Note 6 – Securitizations and Other Variable Interest Entities		104
Note 7 – Representations and Warranties Obligations and Corporate Guarantees		108
Note 8 – Goodwill and Intangible Assets		110
Note 9 – Federal Funds Sold or Purchased, Securities Financing Agreements and Short-term Borrowings		111
Note 10 – Commitments and Contingencies		113
Note 11 – Shareholders’ Equity		116
Note 12 – Accumulated Other Comprehensive Income (Loss)		117
Note 13 – Earnings Per Common Share		118
Note 14 – Fair Value Measurements		118
Note 15 – Fair Value Option		129
Note 16 – Fair Value of Financial Instruments		130
Note 17 – Business Segment Information		131
Glossary		133



Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary		3
Recent Events		3
Financial Highlights		4
Supplemental Financial Data		11
Business Segment Operations		14
Consumer Banking		14
Global Wealth & Investment Management		18
Global Banking		21
Global Markets		24
All Other		26
Off-Balance Sheet Arrangements and Contractual Obligations		27
Managing Risk		28
Capital Management		28
Liquidity Risk		35
Credit Risk Management		39
Consumer Portfolio Credit Risk Management		39
Commercial Portfolio Credit Risk Management		48
Non-U.S. Portfolio		56
Provision for Credit Losses		57
Allowance for Credit Losses		57
Market Risk Management		60
Trading Risk Management		60
Interest Rate Risk Management for the Banking Book		63
Mortgage Banking Risk Management		66
Complex Accounting Estimates		66
Non-GAAP Reconciliations		67

Item 3. Quantitative and Qualitative Disclosures about Market Risk		68
Item 4. Controls and Procedures		68

1 Bank of America

Part II. Other Information



Item 1. Legal Proceedings		136
Item 1A. Risk Factors		136
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		136
Item 6. Exhibits		137
Signature		138
Index to Exhibits		138

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, expenses, efficiency ratio, capital measures, 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 our 2016 Annual Report on Form 10-K and in any of the Corporation’s subsequent Securities and Exchange Commission filings: potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings, or enforcement actions, including inquiries into our retail sales practices, and the possibility that amounts may be in excess of the Corporation’s recorded liability and estimated range of possible loss for litigation exposures; the possibility that the Corporation could face increased servicing, securities, fraud, indemnity, contribution or other claims from one or more counterparties, including trustees, purchasers of loans, underwriters, issuers, other parties involved in securitizations, monolines or private-label and other investors; the possibility that future representations and warranties losses may occur in excess of the Corporation’s recorded liability and estimated range of possible loss for its representations and warranties exposures; the Corporation’s ability to resolve representations and warranties repurchase and related claims, including claims brought by investors or trustees seeking to avoid the statute of limitations for repurchase claims; 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, currency exchange rates

and economic conditions; the impact on the Corporation's business, financial condition and results of operations of a potential higher interest rate environment; 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; the impact on the Corporation’s business, financial condition and results of operations from a protracted period of lower oil prices or ongoing volatility with respect to oil prices; the Corporation's ability to achieve its expense targets or net interest income expectations or other projections or expectations; adverse changes to the Corporation’s credit ratings from the major credit rating agencies; estimates of the fair value of certain of the Corporation’s assets and liabilities; uncertainty regarding the content, timing and impact of regulatory capital and liquidity requirements, including the approval of our internal models methodology for calculating counterparty credit risk for derivatives; the potential impact of total loss-absorbing capacity requirements; potential adverse changes to our global systemically important bank (G-SIB) surcharge; the potential impact of Federal Reserve actions on the Corporation’s capital plans; the possible impact of the Corporation's failure to remediate shortcomings identified by banking regulators in the Corporation's Resolution Plan; 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 (FDIC) assessments, the Volcker Rule, fiduciary standards and derivatives regulations; a failure in or breach of the Corporation’s operational or security systems or infrastructure, or those of third parties, including as a result of cyberattacks; the impact on the Corporation's business, financial condition and results of operations from the planned exit of the United Kingdom (U.K.) from the European Union (EU); and other similar 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 the 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.



		Bank of America 2

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, “the Corporation” 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 banking and various 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, 2017, the Corporation had approximately $2.3 trillion in assets and a headcount of approximately 211,000 employees. Headcount remained relatively unchanged since December 31, 2016. Beginning in the second quarter of 2017, we changed from reporting full-time equivalent employees to reporting headcount. Prior-period amounts have been reclassified.

As of June 30, 2017, we operated in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and more than 35 countries. Our retail banking footprint covers approximately 83 percent of the U.S. population, and we serve approximately 47 million consumer and small business relationships with approximately 4,500 retail financial centers, approximately 16,000 ATMs, and leading digital banking platforms (www.bankofamerica.com) with approximately 34 million active users, including 23 million mobile active users. We offer industry-leading support to approximately three million small business owners. Our wealth management businesses, with client balances of approximately $2.6 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.

Second Quarter 2017 Economic and Business Environment

Macroeconomic trends in the U.S. in the second quarter were characterized by continued economic growth and low inflation, after GDP growth decelerated in the first quarter. Consumer and business attitudes on the economy have remained broadly unchanged from the high historical levels reached in the first quarter. The labor market remained healthy, with sustained strong non-farm payroll gains in the second quarter. Contrary to the Federal Open Market Committee projections, inflation fell during the quarter as year-over-year growth in headline CPI decreased by approximately half a percentage point. In June, the Federal Reserve raised its target federal funds rate corridor, in line with market

expectations. Financial markets also responded to several ongoing developments: first, in response to the June rate hike and the potential for additional hikes over 2017, the Treasury yield curve continued to flatten. Second, the equity markets continued to rally, albeit with weaker momentum, with the S&P 500 index gaining over 2.5 percent. The U.S. Dollar weakened, erasing all the gains that followed the November presidential election.

Abroad, after eurozone GDP grew in the first quarter at the fastest pace in two years, the recovery continued to gain momentum; although, political uncertainty remained elevated ahead of the French elections. The more robust economic momentum has failed to translate into stronger inflationary pressures, which remained depressed over the quarter. As a result, the European Central Bank remained cautious about the outlook for monetary policy and its quantitative easing program despite the improved growth outlook.

The U.K. gained center-stage on both the economic and political front. The impact of Brexit has started to materialize in the economy with the first quarter GDP growth coming close to stagnation and many indicators weakening further over the second quarter, albeit still pointing to positive growth. At the same time, inflation continued in an upward trend and reached the highest level since 2012, well above the Bank of England target, driven by the pass-through from the Sterling depreciation that followed the Brexit referendum.

In Japan, economic momentum remained intact in the second quarter, though business investment had slowed early in the year. The monetary policy stance remained unchanged while underlying inflation strengthened slightly over the quarter. In China, the service sector remained a key driver of economic growth. The Yuan had a volatile quarter reaching a seven-month high in June which contributed to a softening of supply chain inflationary pressures over the quarter.

Recent Events

Capital Management

On June 28, 2017, following the Federal Reserve's non-objection to our 2017 Comprehensive Capital Analysis and Review (CCAR) capital plan, the Board of Directors (the Board) authorized the repurchase of $12.9 billion in common stock from July 1, 2017 through June 30, 2018, including approximately $900 million to offset the effect of equity-based compensation plans during the same period. The common stock repurchase authorization includes both common stock and warrants. Also in connection with the non-objection to our CCAR plan, on July 26, 2017, the Board declared a quarterly common stock dividend of $0.12 per share, payable on September 29, 2017 to shareholders of record as of September 1, 2017. For additional information, see the Corporation's Current Report on Form 8-K filed on June 28, 2017.

During the second quarter of 2017, we repurchased approximately $2.2 billion of common stock pursuant to the Board's repurchase authorizations announced on June 29, 2016 and January 13, 2017. These repurchase authorizations expired on June 30, 2017. For additional information, see Capital Management on page 28.

Sale of Non-U.S. Consumer Credit Card Business

On June 1, 2017, the Corporation completed the previously-announced sale of its non-U.S. consumer credit card business to a third party and recorded an after-tax gain of $103 million. As previously disclosed, the sale improved our transitional Basel 3 Common equity tier 1 capital ratio by 11 basis points (bps) under the Advanced approaches and 15 bps under the Standardized approach. This sale completes the transformation of our consumer credit card business from a multi-country, multi-brand business to a single-brand business serving core retail customers in the United States. For more information, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.

3 Bank of America

Series T Preferred Stock

In connection with an investment in the Corporation’s Series T preferred stock in 2011, the holder of the Series T 6% Non-cumulative Preferred Stock (Series T preferred stock) received warrants to purchase up to 700 million shares of the Corporation’s common stock at an exercise price of $7.142857 per share. The holder of the Series T preferred stock publicly announced on June 30, 2017, consistent with similar statements made in its 2016 Annual Report to Shareholders, that it intends to exercise the warrants and acquire all 700 million shares of our common stock using the Series T preferred stock to satisfy the exercise price

given its expectation of an increase in our common stock dividend. Upon exercise of the warrants, common shares outstanding will increase; however, there will be no effect on diluted earnings per share as this conversion has been previously included in the Corporation's diluted earnings per share calculation.

Selected Financial Data

Table 1 provides selected consolidated financial data for the three and six months ended June 30, 2017 and 2016, and at June 30, 2017 and December 31, 2016.




Table 1	Selected Financial Data
		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions, except per share information)		2017			2016			2017			2016
Income statement
Revenue, net of interest expense		$	22,829		$	21,286		$	45,077		$	42,076
Net income		5,269			4,783			10,125			8,255
Diluted earnings per common share		0.46			0.41			0.87			0.68
Dividends paid per common share		0.075			0.05			0.15			0.10
Performance ratios
Return on average assets		0.93		%	0.88		%	0.91		%	0.76		%
Return on average common shareholders' equity		8.00			7.40			7.64			6.26
Return on average tangible common shareholders’ equity ⁽¹⁾		11.23			10.54			10.76			8.95
Efficiency ratio		60.13			63.38			63.39			67.28

								June 30 2017			December 31 2016
Balance sheet
Total loans and leases								$	916,666		$	906,683
Total assets								2,254,529			2,187,702
Total deposits								1,262,980			1,260,934
Total common shareholders’ equity								245,767			241,620
Total shareholders’ equity								270,987			266,840


⁽¹⁾	Return on average tangible common shareholders' equity is a non-GAAP financial measure. For additional information and a corresponding reconciliation to accounting principles generally accepted in the United States of America (GAAP) financial measures, see Non-GAAP Reconciliations on page 67.

Financial Highlights

Net income was $5.3 billion and $10.1 billion, or $0.46 and $0.87 per diluted share for the three and six months ended June 30, 2017 compared to $4.8 billion and $8.3 billion, or $0.41 and $0.68 per diluted share for the same periods in 2016. The results for the three and six months ended June 30, 2017 compared to the same periods in 2016 were driven by higher revenue and lower provision for credit losses and an increase in noninterest expense.

Total assets increased $66.8 billion from December 31, 2016 to $2.3 trillion at June 30, 2017 due to higher trading account assets primarily driven by increased client financing activities in equities, growth in securities borrowed or purchased under agreements to resell primarily due to increased matched-book

activity, as well as higher cash and cash equivalents and loans and leases. These increases were partially offset by the impact of the sale of the non-U.S. consumer credit card business. Total liabilities increased $62.7 billion from December 31, 2016 to $2.0 trillion at June 30, 2017 primarily driven by higher securities loaned or sold under agreements to repurchase due to increased matched-book activity, an increase in trading account liabilities as well as an increase in short-term borrowings. Shareholders' equity increased $4.1 billion from December 31, 2016 primarily due to net income, partially offset by returns of capital to shareholders of $7.3 billion through common stock repurchases and common and preferred stock dividends.



		Bank of America 4




Table 2	Summary Income Statement

		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)		2017		2016		2017		2016
Net interest income		$	10,986	$	10,118	$	22,044	$	20,603
Noninterest income		11,843		11,168		23,033		21,473
Total revenue, net of interest expense		22,829		21,286		45,077		42,076
Provision for credit losses		726		976		1,561		1,973
Noninterest expense		13,726		13,493		28,574		28,309
Income before income taxes		8,377		6,817		14,942		11,794
Income tax expense		3,108		2,034		4,817		3,539
Net income		5,269		4,783		10,125		8,255
Preferred stock dividends		361		361		863		818
Net income applicable to common shareholders		$	4,908	$	4,422	$	9,262	$	7,437

Per common share information
Earnings		$	0.49	$	0.43	$	0.92	$	0.72
Diluted earnings		0.46		0.41		0.87		0.68

Net Interest Income

Net interest income increased $868 million to $11.0 billion, and $1.4 billion to $22.0 billion for the three and six months ended June 30, 2017 compared to the same periods in 2016. The net interest yield increased 11 bps to 2.29 percent, and nine bps to 2.32 percent. These increases were primarily driven by a higher interest rate environment and loan growth. For more information regarding interest rate risk management, see Interest Rate Risk Management for the Banking Book on page 63.

Noninterest Income




Table 3	Noninterest Income

		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)		2017		2016		2017		2016
Card income		$	1,469	$	1,464	$	2,918	$	2,894
Service charges		1,977		1,871		3,895		3,708
Investment and brokerage services		3,317		3,201		6,579		6,383
Investment banking income		1,532		1,408		3,116		2,561
Trading account profits		1,956		2,018		4,287		3,680
Mortgage banking income		230		312		352		745
Gains on sales of debt securities		101		249		153		439
Other income		1,261		645		1,733		1,063
Total noninterest income		$	11,843	$	11,168	$	23,033	$	21,473

Noninterest income increased $675 million to $11.8 billion, and $1.6 billion to $23.0 billion for the three and six months ended June 30, 2017 compared to the same periods in 2016. The following highlights the more significant changes.


●	Service charges increased $106 million and $187 million primarily driven by the impact of pricing strategies and higher treasury services-related revenue.


●	Investment and brokerage services income increased $116 million and $196 million primarily driven by higher assets under management (AUM) flows and market valuations, partially offset by lower transactional revenue.


●	Investment banking income increased $124 million and $555 million primarily due to higher advisory fees, and for the six month period, higher debt and equity issuance fees.


●	Trading account profits decreased $62 million for the three-month period primarily due to weaker performance across fixed-income products, and increased $607 million for the six-month period primarily due to stronger performance across credit products led by mortgages, and increased client financing activity in equities.


●	Mortgage banking income decreased $82 million and $393 million primarily due to lower production income driven by lower volumes and net servicing income due to a smaller servicing portfolio.


●	Gains on sales of debt securities decreased $148 million and $286 million primarily driven by lower sales volume.


●	Other income increased $616 million and $670 million primarily due to the $793 million pre-tax gain recognized in connection with the sale of the non-U.S. consumer credit card business.

Provision for Credit Losses

The provision for credit losses decreased $250 million to $726 million, and $412 million to $1.6 billion for the three and six months ended June 30, 2017 compared to the same periods in 2016 primarily due to credit quality improvements in the consumer real estate portfolio and reductions in energy exposures in the commercial portfolio, partially offset by portfolio seasoning and loan growth in the U.S. credit card portfolio. For more information on the provision for credit losses, see Provision for Credit Losses on page 57.

5 Bank of America

Noninterest Expense




Table 4	Noninterest Expense

		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)		2017		2016		2017		2016
Personnel		$	7,712	$	7,722	$	16,870	$	16,574
Occupancy		1,001		1,036		2,001		2,064
Equipment		427		451		865		914
Marketing		442		414		774		833
Professional fees		485		472		941		897
Amortization of intangibles		160		186		322		373
Data processing		773		717		1,567		1,555
Telecommunications		177		189		368		362
Other general operating		2,549		2,306		4,866		4,737
Total noninterest expense		$	13,726	$	13,493	$	28,574	$	28,309

Noninterest expense increased $233 million to $13.7 billion, and $265 million to $28.6 billion for the three and six months ended June 30, 2017 compared to the same periods in 2016. The increases were primarily due to higher other general operating expense which included a $295 million impairment charge related

to certain data centers in the process of being sold and higher FDIC expense, partially offset by lower litigation expense. The increase in the six-months period was also driven by an increase in personnel expense due in part to higher revenue-related incentive costs.

Income Tax Expense




Table 5	Income Tax Expense

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)		2017			2016			2017			2016
Income before income taxes		$	8,377		$	6,817		$	14,942		$	11,794
Income tax expense		3,108			2,034			4,817			3,539
Effective tax rate		37.1		%	29.8		%	32.2		%	30.0		%

The effective tax rates for both the three and six months ended June 30, 2017 were driven by the impact of our recurring tax preference benefits, offset by $690 million of tax expense recognized in connection with the sale of the non-U.S. consumer credit card business, which related to gains on derivatives used

to hedge the currency risk of the net investment. The six-month effective tax rate also included a tax benefit related to a new accounting standard on share-based compensation. The effective tax rates for the three and six months ended June 30, 2016 were driven by our recurring tax preference items.



		Bank of America 6




Table 6	Selected Quarterly Financial Data

		2017 Quarters						2016 Quarters
(Dollars in millions, except per share information)		Second			First			Fourth			Third			Second
Income statement
Net interest income		$	10,986		$	11,058		$	10,292		$	10,201		$	10,118
Noninterest income		11,843			11,190			9,698			11,434			11,168
Total revenue, net of interest expense		22,829			22,248			19,990			21,635			21,286
Provision for credit losses		726			835			774			850			976
Noninterest expense		13,726			14,848			13,161			13,481			13,493
Income before income taxes		8,377			6,565			6,055			7,304			6,817
Income tax expense		3,108			1,709			1,359			2,349			2,034
Net income		5,269			4,856			4,696			4,955			4,783
Net income applicable to common shareholders		4,908			4,354			4,335			4,452			4,422
Average common shares issued and outstanding		10,014			10,100			10,170			10,250			10,328
Average diluted common shares issued and outstanding		10,822			10,915			10,959			11,000			11,059
Performance ratios
Return on average assets		0.93		%	0.88		%	0.85		%	0.90		%	0.88		%
Four quarter trailing return on average assets ⁽¹⁾		0.89			0.88			0.82			0.76			0.74
Return on average common shareholders’ equity		8.00			7.27			7.04			7.27			7.40
Return on average tangible common shareholders’ equity ⁽²⁾		11.23			10.28			9.92			10.28			10.54
Return on average shareholders' equity		7.79			7.35			6.91			7.33			7.25
Return on average tangible shareholders’ equity ⁽²⁾		10.54			10.00			9.38			9.98			9.93
Total ending equity to total ending assets		12.02			11.93			12.20			12.30			12.23
Total average equity to total average assets		11.95			12.01			12.24			12.28			12.13
Dividend payout		15.25			17.37			17.68			17.32			11.73
Per common share data
Earnings		$	0.49		$	0.43		$	0.43		$	0.43		$	0.43
Diluted earnings		0.46			0.41			0.40			0.41			0.41
Dividends paid		0.075			0.075			0.075			0.075			0.05
Book value		24.88			24.36			24.04			24.19			23.71
Tangible book value ⁽²⁾		17.78			17.23			16.95			17.14			16.71
Market price per share of common stock
Closing		$	24.26		$	23.59		$	22.10		$	15.65		$	13.27
High closing		24.32			25.50			23.16			16.19			15.11
Low closing		22.23			22.05			15.63			12.74			12.18
Market capitalization		$	239,643		$	235,291		$	222,163		$	158,438		$	135,577


⁽¹⁾	Calculated as total net income for four consecutive quarters divided by annualized average assets for four consecutive quarters.


⁽²⁾	Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. For more information on these ratios and for corresponding reconciliations to GAAP financial measures, see Non-GAAP Reconciliations on page 67.


⁽³⁾	For more information on the impact of the purchased credit-impaired (PCI) loan portfolio on asset quality, see Consumer Portfolio Credit Risk Management on page 39.


⁽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 47 and corresponding Table 33, and Commercial Portfolio Credit Risk Management – Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page 52 and corresponding Table 40.

⁽⁶⁾

Asset quality metrics include $242 million and $243 million of non-U.S. credit card allowance for loan and lease losses and $9.5 billion and $9.2 billion of non-U.S. credit card loans in the first quarter of 2017 and in the fourth quarter of 2016, which were included in assets of business held for sale on the Consolidated Balance Sheet at December 31, 2016. On June 1, 2017, the Corporation completed the sale of its non-U.S. consumer credit card business.


⁽⁷⁾	Primarily includes amounts allocated to the U.S. credit card and unsecured consumer lending portfolios in Consumer Banking, PCI loans and the non-U.S. credit card portfolio in All Other.


⁽⁸⁾	Net charge-offs exclude $55 million, $33 million, $70 million, $83 million, and $82 million of write-offs in the PCI loan portfolio in the second and first quarters of 2017, and in the fourth, third and second quarters of 2016, respectively. For more information on PCI write-offs, see Consumer Portfolio Credit Risk Management – Purchased Credit-impaired Loan Portfolio on page 45.


⁽⁹⁾	Includes net charge-offs of $44 million and $41 million on non-U.S. credit card loans in the first quarter of 2017 and in the fourth quarter of 2016, which were included in assets of business held for sale on the Consolidated Balance Sheet at March 31, 2017 and December 31, 2016.


⁽¹⁰⁾	Risk-based capital ratios are reported under Basel 3 Advanced - Transition. For additional information, see Capital Management on page 28.

7 Bank of America




Table 6	Selected Quarterly Financial Data (continued)

		2017 Quarters						2016 Quarters
(Dollars in millions)		Second			First			Fourth			Third			Second
Average balance sheet
Total loans and leases		$	914,717		$	914,144		$	908,396		$	900,594		$	899,670
Total assets		2,269,153			2,231,420			2,208,039			2,189,490			2,188,241
Total deposits		1,256,838			1,256,632			1,250,948			1,227,186			1,213,291
Long-term debt		224,019			221,468			220,587			227,269			233,061
Common shareholders’ equity		246,003			242,883			245,139			243,679			240,376
Total shareholders’ equity		271,223			268,103			270,360			268,899			265,354
Asset quality ⁽³⁾
Allowance for credit losses ⁽⁴⁾		$	11,632		$	11,869		$	11,999		$	12,459		$	12,587
Nonperforming loans, leases and foreclosed properties ⁽⁵⁾		7,127			7,637			8,084			8,737			8,799
Allowance for loan and lease losses as a percentage of total loans and leases outstanding ^{(5, 6)}		1.20		%	1.25		%	1.26		%	1.30		%	1.32		%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases ^{(5, 6)}		160			156			149			140			142
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the PCI loan portfolio ^{(5, 6)}		154			150			144			135			135
Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases ⁽⁷⁾		$	3,782		$	4,047		$	3,951		$	4,068		$	4,087
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 ^{(5, 7)}		104		%	100		%	98		%	91		%	93		%
Net charge-offs ^{(8, 9)}		$	908		$	934		$	880		$	888		$	985
Annualized net charge-offs as a percentage of average loans and leases outstanding ^{(5, 8)}		0.40		%	0.42		%	0.39		%	0.40		%	0.44		%
Annualized net charge-offs as a percentage of average loans and leases outstanding, excluding the PCI loan portfolio ⁽⁵⁾		0.41			0.42			0.39			0.40			0.45
Annualized net charge-offs and PCI write-offs as a percentage of average loans and leases outstanding ⁽⁵⁾		0.43			0.43			0.42			0.43			0.48
Nonperforming loans and leases as a percentage of total loans and leases outstanding ^{(5, 6)}		0.75			0.80			0.85			0.93			0.94
Nonperforming loans, leases and foreclosed properties as a percentage of total loans, leases and foreclosed properties ^{(5, 6)}		0.78			0.84			0.89			0.97			0.98
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs ^{(6, 8)}		2.99			3.00			3.28			3.31			2.99
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs, excluding the PCI loan portfolio ⁽⁶⁾		2.88			2.88			3.16			3.18			2.85
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs and PCI write-offs ⁽⁶⁾		2.82			2.90			3.04			3.03			2.76
Capital ratios at period end ⁽¹⁰⁾
Risk-based capital:
Common equity tier 1 capital		11.6		%	11.0		%	11.0		%	11.0		%	10.6		%
Tier 1 capital		13.2			12.5			12.4			12.4			12.0
Total capital		15.1			14.4			14.3			14.2			13.9
Tier 1 leverage		8.9			8.8			8.9			9.1			8.9
Tangible equity ⁽²⁾		9.2			9.1			9.2			9.4			9.3
Tangible common equity ⁽²⁾		8.0			7.9			8.1			8.2			8.1

For footnotes see page 7.



		Bank of America 8




Table 7	Selected Year-to-Date Financial Data
		Six Months Ended June 30
(In millions, except per share information)		2017			2016
Income statement
Net interest income		$	22,044		$	20,603
Noninterest income		23,033			21,473
Total revenue, net of interest expense		45,077			42,076
Provision for credit losses		1,561			1,973
Noninterest expense		28,574			28,309
Income before income taxes		14,942			11,794
Income tax expense		4,817			3,539
Net income		10,125			8,255
Net income applicable to common shareholders		9,262			7,437
Average common shares issued and outstanding		10,056			10,308
Average diluted common shares issued and outstanding		10,868			11,080
Performance ratios
Return on average assets		0.91		%	0.76		%
Return on average common shareholders’ equity		7.64			6.26
Return on average tangible common shareholders’ equity ⁽¹⁾		10.76			8.95
Return on average shareholder's equity		7.57			6.31
Return on average tangible shareholders’ equity ⁽¹⁾		10.27			8.68
Total ending equity to total ending assets		12.02			12.23
Total average equity to total average assets		11.98			12.05
Dividend payout		16.25			13.92
Per common share data
Earnings		$	0.92		$	0.72
Diluted earnings		0.87			0.68
Dividends paid		0.15			0.10
Book value		24.88			23.71
Tangible book value ⁽¹⁾		17.78			16.71
Market price per share of common stock
Closing		$	24.26		$	13.27
High closing		25.50			16.43
Low closing		22.05			11.16
Market capitalization		$	239,643		$	135,577


⁽¹⁾	Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. For more information on these ratios and for corresponding reconciliations to GAAP financial measures, see Non-GAAP Reconciliations on page 67.


⁽²⁾	For more information on the impact of the PCI loan portfolio on asset quality, see Consumer Portfolio Credit Risk Management on page 39.


⁽³⁾	Includes the allowance for loan and lease losses and the reserve for unfunded lending commitments.

⁽⁴⁾


⁽⁵⁾	Primarily includes amounts allocated to the U.S. credit card and unsecured consumer lending portfolios in Consumer Banking, PCI loans and the non-U.S. credit card portfolio in All Other.


⁽⁶⁾	Net charge-offs exclude $88 million and $187 million of write-offs in the PCI loan portfolio for the six months ended June 30, 2017 and 2016. For more information on PCI write-offs, see Consumer Portfolio Credit Risk Management – Purchased Credit-impaired Loan Portfolio on page 45.

9 Bank of America




Table 7	Selected Year-to-Date Financial Data (continued)
		Six Months Ended June 30
(Dollars in millions)		2017			2016
Average balance sheet
Total loans and leases		$	914,432		$	896,327
Total assets		2,250,391			2,181,082
Total deposits		1,256,735			1,205,873
Long-term debt		222,751			233,358
Common shareholders’ equity		244,452			238,803
Total shareholders’ equity		269,672			262,889
Asset quality ⁽²⁾
Allowance for credit losses ⁽³⁾		$	11,632		$	12,587
Nonperforming loans, leases and foreclosed properties ⁽⁴⁾		7,127			8,799
Allowance for loan and lease losses as a percentage of total loans and leases outstanding ⁽⁴⁾		1.20		%	1.32		%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases ⁽⁴⁾		160			142
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the PCI loan portfolio ⁽⁴⁾		154			135
Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases ⁽⁵⁾		$	3,782		$	4,087
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 ^{(4, 5)}		104		%	93		%
Net charge-offs ⁽⁶⁾		$	1,842		$	2,053
Annualized net charge-offs as a percentage of average loans and leases outstanding ^{(4, 6)}		0.41		%	0.46		%
Annualized net charge-offs as a percentage of average loans and leases outstanding, excluding the PCI loan portfolio ⁽⁴⁾		0.42			0.47
Annualized net charge-offs and PCI write-offs as a percentage of average loans and leases outstanding ⁽⁴⁾		0.43			0.51
Nonperforming loans and leases as a percentage of total loans and leases outstanding ⁽⁴⁾		0.75			0.94
Nonperforming loans, leases and foreclosed properties as a percentage of total loans, leases and foreclosed properties ⁽⁴⁾		0.78			0.98
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs ⁽⁶⁾		2.99			2.99
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs, excluding the PCI loan portfolio		2.88			2.85
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs and PCI write-offs		2.82			2.76

For footnotes see page 9.



		Bank of America 10

Supplemental Financial Data

In this 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.

We view net interest income and related ratios and analyses on an fully taxable-equivalent (FTE) basis, which when presented on a consolidated basis, are non-GAAP financial measures. 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 35 percent and a representative state tax rate. In addition, certain performance measures including the efficiency ratio and net interest yield utilize net interest income (and thus total revenue) on an FTE basis. The efficiency ratio measures the costs expended to generate a dollar of revenue, and net interest yield measures the bps we earn over the cost of funds. 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)) which result in non-GAAP financial measures. We believe that the presentation of measures that exclude these items are useful because they 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 an adjusted shareholders’ equity or common shareholders’ equity amount which has been reduced by goodwill and certain acquired intangible assets (excluding mortgage servicing rights (MSRs)), net of related deferred tax liabilities. 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 goals. These ratios are as follows:


●	Return on average tangible common shareholders’ equity measures our earnings contribution as a percentage of adjusted common shareholders’ equity. The tangible common equity ratio represents adjusted ending common shareholders’ equity divided by total assets less goodwill and certain acquired intangible assets (excluding MSRs), net of related deferred tax liabilities.


●	Return on average tangible shareholders’ equity measures our earnings contribution as a percentage of adjusted average total shareholders’ equity. The tangible equity ratio represents adjusted ending shareholders’ equity divided by total assets less goodwill and certain acquired intangible assets (excluding MSRs), net of related deferred tax liabilities.


●	Tangible book value per common share represents adjusted ending common shareholders’ equity divided by ending common shares outstanding.

We believe that the use of ratios that utilize tangible equity provides additional useful information because they present measures of those assets that can generate income. Tangible book value per 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 Tables 6 and 7. Table 8 presents certain non-GAAP financial measures and performance measurements on an FTE basis.




Table 8	Supplemental Financial Data

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)		2017			2016			2017			2016
Fully taxable-equivalent basis data
Net interest income		$	11,223		$	10,341		$	22,478		$	21,041
Total revenue, net of interest expense		23,066			21,509			45,511			42,514
Net interest yield		2.34		%	2.23		%	2.37		%	2.28		%
Efficiency ratio		59.51			62.73			62.78			66.59

11 Bank of America




Table 9	Quarterly Average Balances and Interest Rates – FTE Basis

		Second Quarter 2017						Second Quarter 2016
(Dollars in millions)		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Earning assets
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		$	129,201	$	261	0.81	%	$	135,312	$	157	0.47	%
Time deposits placed and other short-term investments		11,448		58		2.03		7,855		35		1.79
Federal funds sold and securities borrowed or purchased under agreements to resell		226,700		560		0.99		223,005		260		0.47
Trading account assets		135,931		1,199		3.54		127,189		1,109		3.50
Debt securities ⁽¹⁾		431,132		2,632		2.44		419,085		2,284		2.20
Loans and leases ⁽²⁾:
Residential mortgage		195,935		1,697		3.46		186,752		1,626		3.48
Home equity		63,332		664		4.20		73,141		703		3.86
U.S. credit card		89,464		2,128		9.54		86,705		1,983		9.20
Non-U.S. credit card ⁽¹⁾		6,494		147		9.08		9,988		250		10.06
Direct/Indirect consumer ⁽³⁾		93,146		643		2.77		91,643		563		2.47
Other consumer ⁽⁴⁾		2,629		26		4.07		2,220		16		3.00
Total consumer		451,000		5,305		4.71		450,449		5,141		4.58
U.S. commercial		291,162		2,403		3.31		276,640		2,006		2.92
Commercial real estate ⁽⁵⁾		58,198		514		3.54		57,772		434		3.02
Commercial lease financing		21,649		156		2.89		20,874		147		2.81
Non-U.S. commercial		92,708		615		2.66		93,935		564		2.42
Total commercial		463,717		3,688		3.19		449,221		3,151		2.82
Total loans and leases		914,717		8,993		3.94		899,670		8,292		3.70
Other earning assets		73,618		680		3.70		55,957		660		4.74
Total earning assets ⁽⁶⁾		1,922,747		14,383		3.00		1,868,073		12,797		2.75
Cash and due from banks ⁽¹⁾		27,659						27,924
Other assets, less allowance for loan and lease losses ⁽¹⁾		318,747						292,244
Total assets		$	2,269,153					$	2,188,241
Interest-bearing liabilities
U.S. interest-bearing deposits:
Savings		$	54,494	$	2	0.01	%	$	50,105	$	1	0.01	%
NOW and money market deposit accounts		619,593		105		0.07		583,913		72		0.05
Consumer CDs and IRAs		45,682		30		0.27		48,450		33		0.28
Negotiable CDs, public funds and other deposits		36,041		68		0.75		32,879		35		0.42
Total U.S. interest-bearing deposits		755,810		205		0.11		715,347		141		0.08
Non-U.S. interest-bearing deposits:
Banks located in non-U.S. countries		3,058		6		0.77		4,235		10		0.98
Governments and official institutions		981		2		0.90		1,542		2		0.66
Time, savings and other		60,047		133		0.89		60,311		92		0.61
Total non-U.S. interest-bearing deposits		64,086		141		0.89		66,088		104		0.63
Total interest-bearing deposits		819,896		346		0.17		781,435		245		0.13
Federal funds purchased, securities loaned or sold under agreements to repurchase and short-term borrowings		251,641		917		1.46		215,852		626		1.17
Trading account liabilities		45,156		307		2.73		36,652		242		2.66
Long-term debt		224,019		1,590		2.84		233,061		1,343		2.31
Total interest-bearing liabilities ⁽⁶⁾		1,340,712		3,160		0.94		1,267,000		2,456		0.78
Noninterest-bearing sources:
Noninterest-bearing deposits		436,942						431,856
Other liabilities		220,276						224,031
Shareholders’ equity		271,223						265,354
Total liabilities and shareholders’ equity		$	2,269,153					$	2,188,241
Net interest spread						2.06	%					1.97	%
Impact of noninterest-bearing sources						0.28						0.26
Net interest income/yield on earning assets				$	11,223	2.34	%			$	10,341	2.23	%


⁽¹⁾	Includes assets of the Corporation's non-U.S. consumer credit card business, which were previously included in assets of business held for sale on the Consolidated Balance Sheet. On June 1, 2017, the Corporation completed the sale of its non-U.S. consumer credit card business.


⁽²⁾	Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis. PCI loans were recorded at fair value upon acquisition and accrete interest income over the estimated life of the loan.


⁽³⁾	Includes non-U.S. consumer loans of $2.9 billion and $3.4 billion in the second quarter of 2017 and 2016.


⁽⁴⁾	Includes consumer finance loans of $431 million and $526 million; consumer leases of $2.0 billion and $1.5 billion, and consumer overdrafts of $167 million and $166 million in the second quarter of 2017 and 2016, respectively.


⁽⁵⁾	Includes U.S. commercial real estate loans of $55.0 billion and $54.3 billion, and non-U.S. commercial real estate loans of $3.2 billion and $3.5 billion in the second quarter of 2017 and 2016, respectively.

⁽⁶⁾

Interest income includes the impact of interest rate risk management contracts, which decreased interest income on the underlying assets by $24 million and $56 million in the second quarter of 2017 and 2016. Interest expense includes the impact of interest rate risk management contracts, which decreased interest expense on the underlying liabilities by $326 million and $610 million in the second quarter of 2017 and 2016. For additional information, see Interest Rate Risk Management for the Banking Book on page 63.



		Bank of America 12




Table 10	Year-to-Date Average Balances and Interest Rates – FTE Basis

		Six Months Ended June 30
		2017						2016
(Dollars in millions)		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
Earning assets
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		$	126,576	$	463	0.74	%	$	136,943	$	312	0.46	%
Time deposits placed and other short-term investments		11,472		105		1.84		8,506		67		1.59
Federal funds sold and securities borrowed or purchased under agreements to resell		221,579		999		0.91		216,094		536		0.50
Trading account assets		130,824		2,310		3.56		131,748		2,321		3.54
Debt securities⁽¹⁾		430,685		5,205		2.41		409,531		4,821		2.38
Loans and leases ⁽²⁾:
Residential mortgage		194,787		3,358		3.45		186,866		3,255		3.48
Home equity		64,414		1,303		4.07		74,235		1,414		3.82
U.S. credit card		89,545		4,239		9.55		86,934		4,004		9.26
Non-U.S. credit card ⁽¹⁾		7,923		358		9.12		9,905		503		10.21
Direct/Indirect consumer ⁽³⁾		93,218		1,251		2.71		90,493		1,113		2.47
Other consumer ⁽⁴⁾		2,589		53		4.07		2,178		32		3.01
Total consumer		452,476		10,562		4.69		450,611		10,321		4.60
U.S. commercial		289,325		4,625		3.22		273,576		3,942		2.90
Commercial real estate ⁽⁵⁾		57,982		993		3.45		57,521		868		3.03
Commercial lease financing		21,885		387		3.54		20,975		329		3.14
Non-U.S. commercial		92,764		1,210		2.63		93,644		1,149		2.47
Total commercial		461,956		7,215		3.15		445,716		6,288		2.84
Total loans and leases		914,432		17,777		3.91		896,327		16,609		3.72
Other earning assets		73,568		1,431		3.92		57,298		1,354		4.75
Total earning assets ⁽⁶⁾		1,909,136		28,290		2.98		1,856,447		26,020		2.81
Cash and due from banks ⁽¹⁾		27,429						28,384
Other assets, less allowance for loan and lease losses ⁽¹⁾		313,826						296,251
Total assets		$	2,250,391					$	2,181,082
Interest-bearing liabilities
U.S. interest-bearing deposits:
Savings		$	53,350	$	3	0.01	%	$	48,975	$	2	0.01	%
NOW and money market deposit accounts		618,676		179		0.06		580,846		143		0.05
Consumer CDs and IRAs		46,194		61		0.27		49,034		68		0.28
Negotiable CDs, public funds and other deposits		34,874		120		0.69		32,308		64		0.40
Total U.S. interest-bearing deposits		753,094		363		0.10		711,163		277		0.08
Non-U.S. interest-bearing deposits:
Banks located in non-U.S. countries		2,838		11		0.76		4,179		19		0.91
Governments and official institutions		997		4		0.85		1,507		4		0.60
Time, savings and other		59,237		250		0.85		58,627		170		0.58
Total non-U.S. interest-bearing deposits		63,072		265		0.85		64,313		193		0.60
Total interest-bearing deposits		816,166		628		0.16		775,476		470		0.12
Federal funds purchased, securities loaned or sold under agreements to repurchase and short-term borrowings		241,733		1,564		1.30		218,921		1,239		1.14
Trading account liabilities		41,962		571		2.74		38,027		534		2.83
Long-term debt		222,751		3,049		2.75		233,358		2,736		2.35
Total interest-bearing liabilities ⁽⁶⁾		1,322,612		5,812		0.88		1,265,782		4,979		0.79
Noninterest-bearing sources:
Noninterest-bearing deposits		440,569						430,397
Other liabilities		217,538						222,014
Shareholders’ equity		269,672						262,889
Total liabilities and shareholders’ equity		$	2,250,391					$	2,181,082
Net interest spread						2.10	%					2.02	%
Impact of noninterest-bearing sources						0.27						0.26
Net interest income/yield on earning assets				$	22,478	2.37	%			$	21,041	2.28	%


⁽¹⁾	Includes assets of the Corporation's non-U.S. consumer credit card business, which were previously included in assets of business held for sale on the Consolidated Balance Sheet. On June 1, 2017, the Corporation completed the sale of its non-U.S. consumer credit card business.


⁽²⁾	Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis. PCI loans were recorded at fair value upon acquisition and accrete interest income over the estimated life of the loan.


⁽³⁾	Includes non-U.S. consumer loans of $2.9 billion and $3.6 billion for the six months ended June 30, 2017 and 2016.


⁽⁴⁾	Includes consumer finance loans of $442 million and $538 million; consumer leases of $2.0 billion and $1.5 billion, and consumer overdrafts of $168 million and $163 million for the six months ended June 30, 2017 and 2016, respectively.


⁽⁵⁾	Includes U.S. commercial real estate loans of $54.8 billion and $54.1 billion, and non-U.S. commercial real estate loans of $3.2 billion and $3.5 billion for the six months ended June 30, 2017 and 2016, respectively.

⁽⁶⁾

Interest income includes the impact of interest rate risk management contracts, which decreased interest income on the underlying assets by $41 million and $91 million for the six months ended June 30, 2017 and 2016. Interest expense includes the impact of interest rate risk management contracts, which decreased interest expense on the underlying liabilities by $750 million and $1.2 billion for the six months ended June 30, 2017 and 2016. For additional information, see Interest Rate Risk Management for the Banking Book on page 63.

13 Bank of America

Business Segment Operations

Segment Description and Basis of Presentation

We report our results of operations through the following four business segments: Consumer Banking, GWIM, Global Banking and Global Markets, with the remaining operations recorded in All Other. 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. Our internal risk-based capital models use a risk-adjusted methodology incorporating each segment’s credit, market, interest rate, business and operational risk components. For more information on the nature of these risks, see Managing Risk on page 28. For more information on the basis of presentation for business segments and reconciliations to consolidated total revenue, net income and period-end total assets, see Note 17 – Business Segment Information to the Consolidated Financial Statements.

Consumer Banking




	Three Months Ended June 30
	Deposits						Consumer Lending						Total Consumer Banking
(Dollars in millions)	2017			2016			2017			2016			2017			2016			% Change
Net interest income (FTE basis)	$	3,302		$	2,618		$	2,658		$	2,589		$	5,960		$	5,207		14	%
Noninterest income:
Card income	2			2			1,247			1,214			1,249			1,216			3
Service charges	1,061			1,011			1			—			1,062			1,011			5
Mortgage banking income ⁽¹⁾	—			—			140			267			140			267			(48	)
All other income (loss)	93			99			4			(5		)	97			94			3
Total noninterest income	1,156			1,112			1,392			1,476			2,548			2,588			(2	)
Total revenue, net of interest expense (FTE basis)	4,458			3,730			4,050			4,065			8,508			7,795			9

Provision for credit losses	45			41			789			685			834			726			15
Noninterest expense	2,558			2,380			1,851			2,038			4,409			4,418			<1
Income before income taxes (FTE basis)	1,855			1,309			1,410			1,342			3,265			2,651			23
Income tax expense (FTE basis)	700			482			533			495			1,233			977			26
Net income	$	1,155		$	827		$	877		$	847		$	2,032		$	1,674		21

Net interest yield (FTE basis)	2.03		%	1.77		%	4.15		%	4.34		%	3.48		%	3.34		%
Return on average allocated capital	39			28			14			15			22			20
Efficiency ratio (FTE basis)	57.38			63.77			45.72			50.16			51.83			56.67

Balance Sheet
	Three Months Ended June 30
Average	2017			2016			2017			2016			2017			2016			% Change
Total loans and leases	$	5,016		$	4,792		$	256,521		$	238,129		$	261,537		$	242,921		8	%
Total earning assets⁽²⁾	651,677			594,748			257,130			239,645			686,064			627,225			9
Total assets ⁽²⁾	678,816			621,445			268,680			250,819			724,753			665,096			9
Total deposits	646,474			589,294			6,313			7,177			652,787			596,471			9
Allocated capital	12,000			12,000			25,000			22,000			37,000			34,000			9


⁽¹⁾	Total consolidated mortgage banking income of $230 million and $352 million for the three and six months ended June 30, 2017 was recorded primarily in Consumer Lending and All Other, compared to $312 million and $745 million for the same periods in 2016.


⁽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 14




	Six Months Ended June 30
	Deposits						Consumer Lending						Total Consumer Banking
(Dollars in millions)	2017			2016			2017			2016			2017			2016			% Change
Net interest income (FTE basis)	$	6,365		$	5,310		$	5,376		$	5,225		$	11,741		$	10,535		11	%
Noninterest income:
Card income	4			5			2,469			2,422			2,473			2,427			2
Service charges	2,111			2,008			1			—			2,112			2,008			5
Mortgage banking income ⁽¹⁾	—			—			259			457			259			457			(43	)
All other income	195			214			12			11			207			225			(8	)
Total noninterest income	2,310			2,227			2,741			2,890			5,051			5,117			(1	)
Total revenue, net of interest expense (FTE basis)	8,675			7,537			8,117			8,115			16,792			15,652			7

Provision for credit losses	100			89			1,572			1,168			1,672			1,257			33
Noninterest expense	5,084			4,837			3,734			4,122			8,818			8,959			(2	)
Income before income taxes (FTE basis)	3,491			2,611			2,811			2,825			6,302			5,436			16
Income tax expense (FTE basis)	1,317			961			1,061			1,039			2,378			2,000			19
Net income	$	2,174		$	1,650		$	1,750		$	1,786		$	3,924		$	3,436		14

Net interest yield (FTE basis)	2.00		%	1.82		%	4.24		%	4.43		%	3.49		%	3.43		%
Return on average allocated capital	37			28			14			16			21			20
Efficiency ratio (FTE basis)	58.62			64.18			46.00			50.79			52.52			57.24

Balance Sheet
	Six Months Ended June 30
Average	2017			2016			2017			2016			2017			2016			% Change
Total loans and leases	$	4,998		$	4,761		$	254,753		$	235,653		$	259,751		$	240,414		8	%
Total earning assets⁽²⁾	643,237			585,691			255,607			237,003			677,512			617,263			10
Total assets ⁽²⁾	670,340			612,437			267,239			248,800			716,247			655,806			9
Total deposits	637,953			580,378			6,285			6,954			644,238			587,332			10
Allocated capital	12,000			12,000			25,000			22,000			37,000			34,000			9

Period end	June 30 2017			December 31 2016			June 30 2017			December 31 2016			June 30 2017			December 31 2016			% Change
Total loans and leases	$	5,039		$	4,938		$	260,899		$	254,053		$	265,938		$	258,991		3	%
Total earning assets ⁽²⁾	661,576			631,172			261,696			255,511			696,350			662,698			5
Total assets⁽²⁾	688,800			658,316			273,298			268,002			735,176			702,333			5
Total deposits	656,374			625,727			6,304			7,059			662,678			632,786			5

See page 14 for footnotes.

Consumer Banking, which is comprised of Deposits and Consumer Lending, offers a diversified range of credit, banking and investment products and services to consumers and small businesses. Our customers and clients have access to a coast to coast network including financial centers in 33 states and the District of Columbia. Our network includes approximately 4,500 financial centers, 16,000 ATMs, nationwide call centers, and online and mobile platforms.

Consumer Banking Results

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Net income for Consumer Banking increased $358 million to $2.0 billion primarily driven by higher net interest income, partially offset by higher provision for credit losses. Net interest income increased $753 million to $6.0 billion primarily due to the beneficial impact of an increase in investable assets as a result of higher deposits and pricing discipline. Noninterest income decreased $40 million to $2.5 billion primarily driven by lower mortgage banking income, partially offset by higher service charges and card income.

The provision for credit losses increased $108 million to $834 million due to portfolio seasoning and loan growth in the U.S. credit

card portfolio. Noninterest expense of $4.4 billion remained relatively unchanged.

The return on average allocated capital was 22 percent, up from 20 percent, as higher net income was partially offset by an increased capital allocation. For more information on capital allocations, see Business Segment Operations on page 14.

Six Months Ended June 30, 2017 compared to Six Months Ended June 30, 2016

Net income for Consumer Banking increased $488 million to $3.9 billion primarily driven by higher net interest income and lower noninterest expense, partially offset by higher provision for credit losses. Net interest income increased $1.2 billion to $11.7 billion primarily due to the beneficial impact of an increase in investable assets as a result of higher deposits and pricing discipline. Noninterest income decreased $66 million to $5.1 billion driven by the same factors as described in the three-month discussion.

The provision for credit losses increased $415 million to $1.7 billion due to portfolio seasoning and loan growth in the U.S. credit card portfolio. Noninterest expense decreased $141 million to $8.8 billion driven by improved operating efficiencies, partially offset by higher FDIC expense.

The return on average allocated capital was 21 percent, up from 20 percent, as higher net income was partially offset by an increased capital allocation. For more information on capital allocations, see Business Segment Operations on page 14.

15 Bank of America

Deposits

Deposits includes the results of consumer deposit activities which consist of a comprehensive range of products provided to consumers and small businesses. Our deposit products include traditional savings accounts, money market savings accounts, CDs and IRAs, noninterest- and interest-bearing checking accounts, as well as investment accounts and products. Net interest income is allocated to the deposit products using our funds transfer pricing process that matches assets and liabilities with similar interest rate sensitivity and maturity characteristics. Deposits generates fees such as account service fees, non-sufficient funds fees, overdraft charges and ATM fees, as well as investment and brokerage fees from Merrill Edge accounts. Merrill Edge is an integrated investing and banking service targeted at customers with less than $250,000 in investable assets. Merrill Edge provides investment advice and guidance, client brokerage asset services, a self-directed online investing platform and key banking capabilities including access to the Corporation’s network of financial centers and ATMs.

Deposits includes the net impact of migrating customers and their related deposit and brokerage asset balances between Deposits and GWIM as well as other client-managed businesses. For more information on the migration of customer balances to or from GWIM, see GWIM – Net Migration Summary on page 20.

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Net income for Deposits increased $328 million to $1.2 billion driven by higher revenue, partially offset by higher noninterest expense. Net interest income increased $684 million to $3.3

billion primarily due to the beneficial impact of an increase in investable assets as a result of higher deposits and pricing discipline. Noninterest income increased $44 million to $1.2 billion primarily due to higher service charges.

The provision for credit losses increased $4 million to $45 million. Noninterest expense increased $178 million to $2.6 billion primarily driven by investments in initiatives such as financial center renovations and builds, higher FDIC expense and increased personnel expense from higher levels of primary sales professionals.

Average deposits increased $57.2 billion to $646.5 billion driven by strong organic growth. Growth in checking, traditional savings and money market savings of $60.3 billion was partially offset by a decline in time deposits of $3.2 billion.

Six Months Ended June 30, 2017 compared to Six Months Ended June 30, 2016

Net income for Deposits increased $524 million to $2.2 billion. Net interest income increased $1.1 billion to $6.4 billion and noninterest income increased $83 million to $2.3 billion, both of which were primarily driven by the same factors as described in the three-month discussion. The prior-year period also included gains on certain divestitures.

The provision for credit losses increased $11 million to $100 million. Noninterest expense increased $247 million to $5.1 billion primarily driven by the same factors as described in the three-month discussion.

Average deposits increased $57.6 billion to $638.0 billion primarily driven by the same factor as described in the three-month discussion.




Key Statistics – Deposits

	Three Months Ended June 30				Six Months Ended June 30
	2017		2016		2017			2016
Total deposit spreads (excludes noninterest costs) ⁽¹⁾	1.89	%	1.66	%	1.78		%	1.65		%

Period end
Client brokerage assets (in millions)					$	159,131		$	131,698
Digital banking active users (units in thousands) ⁽²⁾					33,971			32,187
Mobile banking active users (units in thousands)					22,898			20,227
Financial centers					4,542			4,681
ATMs					15,972			15,998


⁽¹⁾	Includes deposits held in Consumer Lending.


⁽²⁾	Digital users represents mobile and/or online users across consumer businesses; historical information has been reclassified primarily due to the sale of the Corporation's non-U.S. consumer credit card business.

Client brokerage assets increased $27.4 billion driven by strong client flows and market performance. Mobile banking active users increased 3 million reflecting continuing changes in our customers’ banking preferences. The number of financial centers

declined 139 driven by changes in customer preferences to self-service options as we continue to optimize our consumer banking network and improve our cost-to-serve.

Consumer Lending

Consumer Lending offers products to consumers and small businesses across the U.S. The products offered include credit and debit cards, residential mortgages and home equity loans, and direct and indirect loans such as automotive, recreational vehicle and consumer personal loans. In addition to earning net interest spread revenue on its lending activities, Consumer Lending generates interchange revenue from credit and debit card transactions, late fees, cash advance fees, annual credit card fees,

mortgage banking fee income and other miscellaneous fees. Consumer Lending products are available to our customers through our retail network, direct telephone, and online and mobile channels. Consumer Lending results also include the impact of servicing residential mortgages and home equity loans in the core portfolio, including loans held on the balance sheet of Consumer Lending and loans serviced for others.

We classify consumer real estate loans as core or non-core based on loan and customer characteristics such as origination date, product type, loan-to-value (LTV), Fair Isaac Corporation (FICO) score and delinquency status. For more information on the core and non-core portfolios, see Consumer Portfolio Credit Risk Management on page 39. At June 30, 2017, total owned loans in the core portfolio held in Consumer Lending were $108.2 billion, an increase of $12.8 billion from June 30, 2016, primarily driven



		Bank of America 16

by higher residential mortgage balances, partially offset by a decline in home equity balances.

Consumer Lending includes the net impact of migrating customers and their related loan balances between Consumer Lending and GWIM. For more information on the migration of customer balances to or from GWIM, see GWIM – Net Migration Summary on page 20.

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Net income for Consumer Lending increased $30 million to $877 million driven by lower noninterest expense and higher net interest income, partially offset by higher provision for credit losses and lower noninterest income. Net interest income increased $69 million to $2.7 billion primarily driven by the impact of an increase in loan balances. Noninterest income decreased $84 million to $1.4 billion driven by lower mortgage banking income, partially offset by higher card income.

The provision for credit losses increased $104 million to $789 million due to portfolio seasoning and loan growth in the U.S. credit card portfolio. Noninterest expense decreased $187 million to $1.9 billion primarily driven by improved operating efficiencies.

Average loans increased $18.4 billion to $256.5 billion primarily driven by increases in residential mortgages, as well as consumer vehicle and U.S. credit card loans, partially offset by lower home equity loan balances.

Six Months Ended June 30, 2017 compared to Six Months Ended June 30, 2016

Net income for Consumer Lending decreased $36 million to $1.8 billion driven by higher provision for credit losses and lower noninterest income, partially offset by lower noninterest expense and higher net interest income. Net interest income increased $151 million to $5.4 billion. Noninterest income decreased $149 million to $2.7 billion. Fluctuations were driven by the same factors as described in the three-month discussion.

The provision for credit losses increased $404 million to $1.6 billion due to portfolio seasoning and loan growth in the U.S. credit card portfolio. Noninterest expense decreased $388 million to $3.7 billion primarily driven by the same factor as described in the three-month discussion.

Average loans increased $19.1 billion to $254.8 billion driven by the same factors as described in the three-month discussion.




Key Statistics – Consumer Lending

	Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)	2017			2016			2017			2016
Total U.S. credit card ⁽¹⁾
Gross interest yield	9.54		%	9.20		%	9.55		%	9.26		%
Risk-adjusted margin	8.40			8.79			8.65			8.92
New accounts (in thousands)	1,302			1,313			2,486			2,521
Purchase volumes	$	61,665		$	56,667		$	116,986		$	107,821
Debit card purchase volumes	$	75,349		$	72,120		$	145,960		$	141,267


⁽¹⁾	In addition to the U.S. credit card portfolio in Consumer Banking, the remaining U.S. credit card portfolio is in GWIM.

During the three and six months ended June 30, 2017, the total U.S. credit card risk-adjusted margin decreased 39 bps and 27 bps compared to the same periods in 2016, primarily driven by increased net charge-offs and higher credit card rewards costs.

Total U.S. credit card purchase volumes increased $5.0 billion to $61.7 billion, and $9.2 billion to $117.0 billion, and debit card purchase volumes increased $3.2 billion to $75.3 billion, and $4.7 billion to $146.0 billion, reflecting higher levels of consumer spending.

Mortgage Banking Income

Mortgage banking income in Consumer Banking includes production income and net servicing income. Production income is comprised primarily of revenue from the fair value gains and losses recognized on our interest rate lock commitments (IRLCs) and loans held-for-sale (LHFS), the related secondary market execution, and costs related to representations and warranties made in the sales transactions along with other obligations incurred in the sales of mortgage loans. Production income for the three and six months ended June 30, 2017 decreased $115 million to $67 million, and $199 million to $121 million compared

to the same periods in 2016 due to a decision to retain a higher percentage of residential mortgage production in Consumer Banking, as well as the impact of a higher interest rate environment driving lower refinances.

Net servicing income within Consumer Banking includes income earned in connection with servicing activities and MSR valuation adjustments for the core portfolio, net of results from risk management activities used to hedge certain market risks of the MSRs. Net servicing income for the three and six months ended June 30, 2017 decreased $12 million to $73 million, and remained relatively unchanged at $138 million compared to the same periods in 2016.

Mortgage Servicing Rights

At June 30, 2017, the core MSR portfolio, held within Consumer Lending, was $1.8 billion compared to $1.5 billion at June 30, 2016. The increase was primarily driven by changes in fair value, partially offset by the amortization of expected cash flows, which exceeded additions to the MSR portfolio. For more information on MSRs, see Note 14 – Fair Value Measurements to the Consolidated Financial Statements.

17 Bank of America




Key Statistics

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2017		2016		2017		2016
Loan production ⁽¹⁾:
Total ⁽²⁾:
First mortgage	$	13,251	$	16,314	$	24,693	$	28,937
Home equity	4,685		4,303		8,738		8,108
Consumer Banking:
First mortgage	$	9,006	$	11,541	$	16,635	$	20,619
Home equity	4,215		3,881		7,882		7,396


⁽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 in Consumer Banking and for the total Corporation decreased $2.5 billion and $3.1 billion in the three months ended June 30, 2017 compared to the same period in 2016 primarily driven by a higher interest rate environment driving lower first-lien mortgage refinances. First mortgage loan originations in Consumer Banking and for the total Corporation decreased $4.0 billion and $4.2 billion in the six months ended June 30, 2017 primarily driven by the same factor as described in the three-month discussion.

Home equity production in Consumer Banking and for the total Corporation increased $334 million and $382 million for the three months ended June 30, 2017 compared to the same period in 2016 due to a higher demand in the market based on improving housing trends. Home equity production in Consumer Banking and for the total Corporation increased $486 million and $630 million for the six months ended June 30, 2017 primarily driven by the same factor as described in the three-month discussion.

Global Wealth & Investment Management




	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2017			2016			% Change		2017			2016			% Change
Net interest income (FTE basis)	$	1,597		$	1,403		14	%	$	3,157		$	2,916		8	%
Noninterest income:
Investment and brokerage services	2,697			2,598			4		5,345			5,134			4
All other income	401			424			(5	)	785			844			(7	)
Total noninterest income	3,098			3,022			3		6,130			5,978			3
Total revenue, net of interest expense (FTE basis)	4,695			4,425			6		9,287			8,894			4

Provision for credit losses	11			14			(21	)	34			39			(13	)
Noninterest expense	3,392			3,285			3		6,722			6,555			3
Income before income taxes (FTE basis)	1,292			1,126			15		2,531			2,300			10
Income tax expense (FTE basis)	488			421			16		955			853			12
Net income	$	804		$	705		14		$	1,576		$	1,447		9

Net interest yield (FTE basis)	2.41		%	2.06		%			2.34		%	2.12		%
Return on average allocated capital	23			22					23			22
Efficiency ratio (FTE basis)	72.24			74.23					72.38			73.70

Balance Sheet
	Three Months Ended June 30								Six Months Ended June 30
Average	2017			2016			% Change		2017			2016			% Change
Total loans and leases	$	150,812		$	141,180		7	%	$	149,615		$	140,139		7	%
Total earning assets	265,845			273,873			(3	)	271,884			276,739			(2	)
Total assets	281,167			289,645			(3	)	287,266			292,678			(2	)
Total deposits	245,329			254,804			(4	)	251,324			257,643			(2	)
Allocated capital	14,000			13,000			8		14,000			13,000			8

Period end									June 30 2017			December 31 2016			% Change
Total loans and leases									$	153,468		$	148,179		4	%
Total earning assets									258,744			283,151			(9	)
Total assets									274,746			298,931			(8	)
Total deposits									237,131			262,530			(10	)



		Bank of America 18

GWIM consists of two primary businesses: Merrill Lynch Global Wealth Management (MLGWM) and U.S. Trust, Bank of America Private Wealth Management (U.S. Trust).

MLGWM’s advisory business provides a high-touch client experience through a network of financial advisors focused on clients with over $250,000 in total investable assets. MLGWM provides tailored solutions to meet our clients’ needs through a full set of investment management, brokerage, banking and retirement products.

U.S. Trust, together with MLGWM’s Private Banking & Investments Group, provides comprehensive wealth management solutions targeted to high net worth and ultra high net worth clients, as well as customized solutions to meet clients’ wealth structuring, investment management, trust and banking needs, including specialty asset management services.

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Net income for GWIM increased $99 million to $804 million due to higher revenue, partially offset by an increase in revenue-related expense. The operating margin was 28 percent compared to 25 percent a year ago.

Net interest income increased $194 million to $1.6 billion driven by the impact of higher short-term rates and growth in loan balances. Noninterest income, which primarily includes investment and brokerage services income, increased $76 million to $3.1 billion. This increase was driven by higher asset management fees primarily due to higher market valuations and AUM flows, partially offset by lower transactional revenue. Also, the prior-year period included a gain of approximately $60 million related to the sale of BofA Global Capital Management's AUM. Noninterest expense increased $107 million to $3.4 billion

primarily driven by higher revenue-related incentive costs and increased FDIC expense.

The return on average allocated capital was 23 percent, up from 22 percent, as higher net income was partially offset by an increased capital allocation.

MLGWM revenue of $3.9 billion increased eight percent due to higher net interest income and asset management fees driven by higher market valuations and AUM flows, partially offset by lower transactional revenue. U.S. Trust revenue of $819 million increased seven percent reflecting higher net interest income and asset management fees driven by higher market valuations.

Six Months Ended June 30, 2017 Compared to Six Months Ended June 30, 2016

Net income for GWIM increased $129 million to $1.6 billion due to higher revenue, partially offset by an increase in noninterest expense. The operating margin was 27 percent compared to 26 percent a year ago.

Net interest income increased $241 million to $3.2 billion. Noninterest income, which primarily includes investment and brokerage services income, increased $152 million to $6.1 billion. Noninterest expense increased $167 million to $6.7 billion. These increases were driven by the same factors as described in the three-month discussion.

The return on average allocated capital was 23 percent, up from 22 percent, as higher net income was partially offset by an increased capital allocation.

Revenue from MLGWM of $7.7 billion increased five percent, and U.S. Trust revenue of $1.6 billion increased six percent. These increases were due to the same factors as described in the three-month discussion.

19 Bank of America




Key Indicators and Metrics
	Three Months Ended June 30					Six Months Ended June 30
(Dollars in millions, except as noted)	2017		2016			2017		2016
Revenue by Business
Merrill Lynch Global Wealth Management	$	3,874	$	3,602		$	7,656	$	7,269
U.S. Trust	819		762			1,628		1,539
Other ⁽¹⁾	2		61			3		86
Total revenue, net of interest expense (FTE basis)	$	4,695	$	4,425		$	9,287	$	8,894

Client Balances by Business, at period end
Merrill Lynch Global Wealth Management						$	2,196,238	$	2,026,392
U.S. Trust						421,180		393,089
Total client balances						$	2,617,418	$	2,419,481

Client Balances by Type, at period end
Assets under management						$	990,709	$	832,394
Brokerage assets						1,104,775		1,070,014
Assets in custody						128,538		120,505
Deposits						237,131		250,976
Loans and leases ⁽²⁾						156,265		145,592
Total client balances						$	2,617,418	$	2,419,481

Assets Under Management Rollforward
Assets under management, beginning of period	$	946,778	$	890,663		$	886,148	$	900,863
Net client flows ⁽³⁾	27,516		5,885			56,730		1,466
Market valuation/other⁽¹⁾	16,415		(64,154		)	47,831		(69,935		)
Total assets under management, end of period	$	990,709	$	832,394		$	990,709	$	832,394

Associates, at period end ^{(4, 5)}
Number of financial advisors						17,017		16,824
Total wealth advisors, including financial advisors						18,881		18,668
Total primary sales professionals, including financial advisors and wealth advisors						19,863		19,506

Merrill Lynch Global Wealth Management Metric ⁽⁵⁾
Financial advisor productivity ⁽⁶⁾ (in thousands)	$	1,040	$	978		$	1,016	$	978

U.S. Trust Metric, at period end ⁽⁵⁾
Primary sales professionals						1,665		1,648


⁽¹⁾	Includes the results of BofA Global Capital Management, the cash management division of Bank of America, and certain administrative items. Also reflects the sale to a third party of approximately $80 billion of BofA Global Capital Management's AUM during the three months ended June 30, 2016.


⁽²⁾	Includes margin receivables which are classified in customer and other receivables on the Consolidated Balance Sheet.


⁽³⁾	For the three and six months ended June 30, 2016, net AUM flows includes $4.2 billion and $8.0 billion of net outflows related to BofA Global Capital Management's AUM that were sold during the three months ended June 30, 2016.


⁽⁴⁾	Includes financial advisors in the Consumer Banking segment of 2,206 and 2,244 at June 30, 2017 and 2016.


⁽⁵⁾	Associate computation is based on headcount.


⁽⁶⁾	Financial advisor productivity is defined as annualized MLGWM total revenue, excluding the allocation of certain asset and liability management (ALM) activities, divided by the total average number of financial advisors (excluding financial advisors in the Consumer Banking segment).

Client Balances

Client balances managed under advisory and/or discretion of GWIM are AUM and are typically held in diversified portfolios. Fees earned on AUM are calculated as a percentage of clients' AUM balances. The asset management fees charged to clients per year depend on various factors, but are commonly driven by the breadth of the client’s relationship and generally range from 50 to 150 bps on their total AUM. The net client AUM flows represent the net change in clients’ AUM balances over a specified period of time, excluding market appreciation/depreciation and other adjustments.

Client balances increased $197.9 billion, or eight percent, to $2.6 trillion at June 30, 2017 compared to June 30, 2016. The increase in client balances was primarily due to AUM growth which increased $158.3 billion, or 19 percent, due to higher market valuations and positive net flows.

Net Migration Summary

GWIM results are impacted by the net migration of clients and their corresponding deposit, loan and brokerage balances primarily to or from Consumer Banking, as presented in the table below. Migrations result from the movement of clients between business segments to better align with client needs.




Net Migration Summary ⁽¹⁾
	Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)	2017			2016			2017			2016
Total deposits, net – from GWIM	$	(187	)	$	(666	)	$	(284	)	$	(1,057	)
Total loans, net – to (from) GWIM	(4		)	5			(130		)	15
Total brokerage, net – to (from) GWIM	(70		)	(326		)	24			(566		)


⁽¹⁾	Migration occurs primarily between GWIM and Consumer Banking.



		Bank of America 20

Global Banking




	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2017			2016			% Change		2017			2016			% Change
Net interest income (FTE basis)	$	2,711		$	2,425		12	%	$	5,486		$	4,969		10	%
Noninterest income:
Service charges	810			759			7		1,575			1,504			5
Investment banking fees	930			799			16		1,855			1,435			29
All other income	588			713			(18	)	1,078			1,242			(13	)
Total noninterest income	2,328			2,271			3		4,508			4,181			8
Total revenue, net of interest expense (FTE basis)	5,039			4,696			7		9,994			9,150			9

Provision for credit losses	15			199			(92	)	32			752			(96	)
Noninterest expense	2,154			2,125			1		4,317			4,299			<1
Income before income taxes (FTE basis)	2,870			2,372			21		5,645			4,099			38
Income tax expense (FTE basis)	1,084			874			24		2,130			1,509			41
Net income	$	1,786		$	1,498		19		$	3,515		$	2,590		36

Net interest yield (FTE basis)	2.99		%	2.81		%			3.03		%	2.90		%
Return on average allocated capital	18			16					18			14
Efficiency ratio (FTE basis)	42.72			45.24					43.19			46.98

Balance Sheet
	Three Months Ended June 30								Six Months Ended June 30
Average	2017			2016			% Change		2017			2016			% Change
Total loans and leases	$	345,063		$	334,396		3	%	$	343,966		$	331,519		4	%
Total earning assets	363,844			347,347			5		364,804			344,367			6
Total assets	413,950			396,008			5		414,924			393,891			5
Total deposits	300,483			299,037			<1		302,827			298,086			2
Allocated capital	40,000			37,000			8		40,000			37,000			8

Period end									June 30 2017			December 31 2016			% Change
Total loans and leases									$	344,457		$	339,271		2	%
Total earning assets									360,108			356,241			1
Total assets									410,580			408,330			1
Total deposits									303,205			307,630			(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 offices and client relationship teams. Our lending products and services include commercial loans, leases, commitment facilities, trade finance, real estate lending and asset-based lending. Our treasury solutions business includes treasury management, foreign exchange and short-term investing options. We also provide investment banking products to our clients such as debt and equity underwriting and distribution, and merger-related and other advisory services. Underwriting debt and equity issuances, fixed-income and equity research, and certain market-based activities are executed through our global broker-dealer affiliates which are our primary dealers in several countries. Within Global Banking, Global Commercial Banking clients generally include middle-market companies, commercial real estate firms and not-for-profit companies. Global Corporate Banking clients generally include large global corporations, financial institutions and leasing clients. Business Banking clients include mid-sized U.S.-based businesses requiring customized and integrated financial advice and solutions.

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Net income for Global Banking increased $288 million to $1.8 billion driven by higher revenue and lower provision for credit losses.

Revenue increased $343 million to $5.0 billion driven by higher net interest income and noninterest income. Net interest income increased $286 million to $2.7 billion primarily driven by a stable deposit base and the impact of higher short-term rates, as well as loans and leasing-related growth, partially offset by modest margin compression. Noninterest income increased $57 million to $2.3 billion largely due to higher investment banking fees, partially offset by results from loans and related hedging activity in the fair value option portfolio.

The provision for credit losses decreased $184 million to $15 million driven by improvement across most of the portfolio, particularly energy. Noninterest expense increased $29 million to $2.2 billion driven by additional investments in technology and higher FDIC expense, partially offset by lower operating costs.

The return on average allocated capital was 18 percent, up from 16 percent, as higher net income was partially offset by an increased capital allocation. For more information on capital allocated to the business segments, see Business Segment Operations on page 14.

21 Bank of America

Six Months Ended June 30, 2017 compared to Six Months Ended June 30, 2016

Net income for Global Banking increased $925 million to $3.5 billion driven by higher revenue and lower provision for credit losses.

Revenue increased $844 million to $10.0 billion driven by higher net interest income and noninterest income. Net interest income increased $517 million to $5.5 billion driven by loans and leasing-related growth, an increased deposit base driven by higher short-term rates and the impact of the allocation of ALM activities, partially offset by margin compression. Noninterest income increased $327 million to $4.5 billion largely due to higher investment banking fees and treasury fees, partially offset by lower revenues related to leasing activity.

The provision for credit losses decreased $720 million to $32 million primarily driven by the same factors as described in the three-month discussion. Noninterest expense increased $18 million to $4.3 billion primarily driven by higher revenue-related incentives and FDIC expense, partially offset by lower personnel and operating expense.

The return on average allocated capital was 18 percent, up from 14 percent, as higher net income was partially offset by an increased capital allocation. For more information on capital allocated to the business segments, see Business Segment Operations on page 14.

Global Corporate, Global Commercial and Business Banking

Global Corporate, Global Commercial and Business Banking each include Business Lending and Global Transaction Services activities. Business Lending includes various lending-related products and services, and related hedging activities, including commercial loans, leases, commitment facilities, trade finance, real estate lending and asset-based lending. Global Transaction Services includes deposits, treasury management, credit card, foreign exchange and short-term investment products.

The table below and following discussion presents a summary of the results, which exclude certain investment banking activities in Global Banking.




Global Corporate, Global Commercial and Business Banking
	Three Months Ended June 30
	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
(Dollars in millions)	2017		2016		2017		2016		2017		2016		2017		2016
Revenue
Business Lending	$	1,093	$	1,102	$	1,052	$	1,051	$	99	$	92	$	2,244	$	2,245
Global Transaction Services	833		717		752		663		211		180		1,796		1,560
Total revenue, net of interest expense	$	1,926	$	1,819	$	1,804	$	1,714	$	310	$	272	$	4,040	$	3,805

Balance Sheet
Average
Total loans and leases	$	156,614	$	154,141	$	170,589	$	162,683	$	17,844	$	17,523	$	345,047	$	334,347
Total deposits	143,844		140,076		120,921		124,529		35,720		34,433		300,485		299,038

	Six Months Ended June 30
	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
	2017		2016		2017		2016		2017		2016		2017		2016
Revenue
Business Lending	$	2,195	$	2,155	$	2,096	$	2,059	$	200	$	190	$	4,491	$	4,404
Global Transaction Services	1,630		1,433		1,459		1,365		408		367		3,497		3,165
Total revenue, net of interest expense	$	3,825	$	3,588	$	3,555	$	3,424	$	608	$	557	$	7,988	$	7,569

Balance Sheet
Average
Total loans and leases	$	155,989	$	152,531	$	170,161	$	161,580	$	17,815	$	17,370	$	343,965	$	331,481
Total deposits	145,134		138,856		121,907		124,925		35,790		34,307		302,831		298,088

Period end
Total loans and leases	$	155,513	$	153,603	$	171,204	$	163,623	$	17,737	$	17,580	$	344,454	$	334,806
Total deposits	145,707		142,357		121,644		127,996		35,853		34,787		303,204		305,140

Business Lending revenue remained flat for the three months ended June 30, 2017 and increased $87 million for the six months ended June 30, 2017 compared to the same periods in 2016. The increase in the six months ended period was driven by the impact of growth in loans and leases, partially offset by credit spread compression.

Global Transaction Services revenue increased $236 million and $332 million for the three and six months ended June 30, 2017 compared to the same periods in 2016 driven by an

increased deposit base driven by higher short-term rates, as well as higher treasury-related revenue.

Average loans and leases increased three percent and four percent for the three and six months ended June 30, 2017 compared to the same periods in 2016 driven by growth in the commercial and industrial, and leasing portfolios. Average deposits remained relatively unchanged for the three months ended June 30, 2017 and increased two percent for the six months ended June 30, 2017 compared to the same periods in 2016. The



		Bank of America 22

increase in the six months ended period was due to growth with new and existing clients.

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. To provide a complete discussion of our consolidated investment banking fees, the following table presents total Corporation investment banking fees and the portion attributable to Global Banking.




Investment Banking Fees
	Three Months Ended June 30												Six Months Ended June 30
	Global Banking						Total Corporation						Global Banking						Total Corporation
(Dollars in millions)	2017			2016			2017			2016			2017			2016			2017			2016
Products
Advisory	$	465		$	313		$	483		$	333		$	855		$	618		$	888		$	679
Debt issuance	362			390			901			889			774			655			1,827			1,558
Equity issuance	103			96			231			232			226			162			543			420
Gross investment banking fees	930			799			1,615			1,454			1,855			1,435			3,258			2,657
Self-led deals	(47		)	(14		)	(83		)	(46		)	(71		)	(25		)	(142		)	(96		)
Total investment banking fees	$	883		$	785		$	1,532		$	1,408		$	1,784		$	1,410		$	3,116		$	2,561

Total Corporation investment banking fees of $1.5 billion and $3.1 billion, excluding self-led deals, included primarily within Global Banking and Global Markets, increased nine percent and 22 percent for the three and six months ended June 30, 2017 compared to the same periods in 2016.

The increase was driven by higher advisory fees and higher debt and equity issuance fees driven by an increase in overall client activity and market fee pools.

23 Bank of America

Global Markets




	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2017			2016			% Change		2017			2016			% Change
Net interest income (FTE basis)	$	864		$	1,088		(21	)%	$	1,913		$	2,272		(16	)%
Noninterest income:
Investment and brokerage services	521			525			(1	)	1,052			1,093			(4	)
Investment banking fees	589			603			(2	)	1,255			1,097			14
Trading account profits	1,743			1,872			(7	)	3,920			3,467			13
All other income	229			221			4		514			330			56
Total noninterest income	3,082			3,221			(4	)	6,741			5,987			13
Total revenue, net of interest expense (FTE basis)	3,946			4,309			(8	)	8,654			8,259			5

Provision for credit losses	25			(5		)	n/m		8			4			100
Noninterest expense	2,649			2,583			3		5,406			5,032			7
Income before income taxes (FTE basis)	1,272			1,731			(27	)	3,240			3,223			1
Income tax expense (FTE basis)	442			618			(28	)	1,113			1,138			(2	)
Net income	$	830		$	1,113		(25	)	$	2,127		$	2,085		2

Return on average allocated capital	10		%	12		%			12		%	11		%
Efficiency ratio (FTE basis)	67.12			59.95					62.46			60.93

Balance Sheet
	Three Months Ended June 30								Six Months Ended June 30
Average	2017			2016			% Change		2017			2016			% Change
Trading-related assets:
Trading account securities	$	221,569		$	178,047		24	%	$	212,767		$	182,989		16	%
Reverse repurchases	101,551			92,805			9		99,206			89,108			11
Securities borrowed	88,041			89,779			(2	)	84,695			85,293			(1	)
Derivative assets	41,402			50,654			(18	)	40,877			52,083			(22	)
Total trading-related assets ⁽¹⁾	452,563			411,285			10		437,545			409,473			7
Total loans and leases	69,638			69,620			<1		69,850			69,452			1
Total earning assets ⁽¹⁾	456,589			422,815			8		443,321			420,506			5
Total assets	645,228			580,701			11		626,225			580,963			8
Total deposits	31,919			34,518			(8	)	32,535			35,202			(8	)
Allocated capital	35,000			37,000			(5	)	35,000			37,000			(5	)

Period end									June 30 2017			December 31 2016			% Change
Total trading-related assets ⁽¹⁾									$	436,193		$	380,562		15	%
Total loans and leases									73,973			72,743			2
Total earning assets ⁽¹⁾									448,613			397,023			13
Total assets									633,193			566,060			12
Total deposits									33,363			34,927			(4	)


⁽¹⁾	Trading-related assets include derivative assets, which are considered non-earning assets.

n/m = not meaningful

Global Markets offers sales and trading services, including research, 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. Global Markets provides market-making, financing, securities clearing, settlement and custody services globally to our institutional investor clients in support of their investing and trading activities. We also work with our commercial and corporate clients to provide risk management products using interest rate, equity, credit, currency and commodity derivatives, foreign exchange, fixed-income and mortgage-related products. As a result of our market-making activities in these products, we may be required to manage risk in a broad range of financial products including government securities, equity and equity-linked securities, high-grade and high-yield corporate debt securities, syndicated loans, mortgage-backed securities (MBS), commodities and asset-backed securities (ABS). The economics of certain investment banking and underwriting activities are shared primarily between Global Markets and Global Banking 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. For more information on investment banking fees on a consolidated basis, see page 23.

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

Net income for Global Markets decreased $283 million to $830 million driven by lower sales and trading revenue, investment banking fees and increased noninterest expense. Net DVA losses were $159 million compared to losses of $164 million. Sales and trading revenue, excluding net DVA, decreased $332 million primarily due to weaker performance in fixed-income, currencies and commodities (FICC) macro products and emerging markets. Noninterest expense increased $66 million to $2.6 billion as additional investments in technology were partially offset by lower operating costs.

Average earning assets increased $33.8 billion to $456.6 billion primarily driven by targeted growth in client financing activities in the global equities business.

The return on average allocated capital was 10 percent, down from 12 percent as lower net income was partially offset by a decreased capital allocation.



		Bank of America 24

Six Months Ended June 30, 2017 compared to Six Months Ended June 30, 2016

Net income for Global Markets increased $42 million to $2.1 billion. Net DVA losses were $289 million compared to losses of $10 million. Excluding net DVA, net income increased $215 million to $2.3 billion primarily driven by higher sales and trading revenue and investment banking fees, partially offset by higher noninterest expense. Sales and trading revenue, excluding net DVA, increased $409 million primarily due to a stronger performance across credit and mortgage products. Noninterest expense increased $374 million to $5.4 billion primarily due to litigation expense in the six months ended June 30, 2017 compared to a litigation recovery in the same period in 2016 and higher revenue-related expenses.

Average earning assets increased $22.8 billion to $443.3 billion and period-end trading-related assets increased $55.6 billion to $436.2 billion both primarily driven by targeted growth in client financing activities in the global equities business.

The return on average allocated capital was 12 percent, up from 11 percent, reflecting higher net income and a decreased capital allocation.

Sales and Trading Revenue

Sales and trading revenue includes unrealized and realized gains and losses on trading and other assets, net interest income, and fees primarily from commissions on equity securities. Sales and trading revenue is segregated into fixed-income (government debt obligations, investment and non-investment grade corporate debt obligations, commercial MBS, residential mortgage-backed securities (RMBS), collateralized loan obligations (CLOs), interest rate and credit derivative contracts), currencies (interest rate and foreign exchange contracts), commodities (primarily futures, forwards, swaps and options) and equities (equity-linked derivatives and cash equity activity). 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 present sales and trading revenue excluding the impact of net DVA, which is a non-GAAP financial measure. We believe the use of this non-GAAP financial measure provides additional useful information to assess the underlying performance of these businesses and to allow better comparison of period-to-period operating performance.




Sales and Trading Revenue ^{(1, 2)}

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2017		2016		2017		2016
Sales and trading revenue
Fixed-income, currencies and commodities	$	2,106	$	2,456	$	4,916	$	4,861
Equities	1,104		1,081		2,193		2,118
Total sales and trading revenue	$	3,210	$	3,537	$	7,109	$	6,979

Sales and trading revenue, excluding net DVA ⁽³⁾
Fixed-income, currencies and commodities	$	2,254	$	2,615	$	5,184	$	4,880
Equities	1,115		1,086		2,214		2,109
Total sales and trading revenue, excluding net DVA	$	3,369	$	3,701	$	7,398	$	6,989


⁽¹⁾	Includes FTE adjustments of $52 million and $99 million for the three and six months ended June 30, 2017 compared to $44 million and $87 million for the same periods in 2016. For more information on sales and trading revenue, see Note 2 – Derivatives to the Consolidated Financial Statements.


⁽²⁾	Includes Global Banking sales and trading revenue of $56 million and $114 million for the three and six months ended June 30, 2017 compared to $120 million and $280 million for the same periods in 2016.

⁽³⁾

FICC and Equities sales and trading revenue, excluding net DVA, is a non-GAAP financial measure. FICC net DVA losses were $148 million and $268 million for the three and six months ended June 30, 2017 compared to net DVA losses of $159 million and $19 million for the same periods in 2016. Equities net DVA losses were $11 million and $21 million for the three and six months ended June 30, 2017 compared to net DVA losses of $5 million and gains of $9 million for the same periods in 2016.

The explanations for period-over-period changes in sales and trading, FICC and Equities revenue, as set forth below, would be the same if net DVA was included.

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

FICC revenue, excluding net DVA, decreased $361 million due to weaker performance in rates and emerging markets relative to an especially strong quarter in the prior year. Equities revenue,

excluding net DVA, increased $29 million primarily due to growth in client financing activities offset by slower secondary markets.

Six Months Ended June 30, 2017 compared to Six Months Ended June 30, 2016

FICC revenue, excluding net DVA, increased $304 million due to strength in credit and mortgage products. Equities revenue, excluding net DVA, increased $105 million primarily due to growth in client financing activities.

25 Bank of America

All Other




	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2017			2016			% Change		2017			2016			% Change
Net interest income (FTE basis)	$	91		$	218		(58	)%	$	181		$	349		(48	)%
Noninterest income:
Card income	28			54			(48	)	70			99			(29	)
Mortgage banking income	89			44			102		91			286			(68	)
Gains on sales of debt securities	101			249			(59	)	153			439			(65	)
All other income (loss)	569			(281		)	n/m		289			(614		)	(147	)
Total noninterest income	787			66			n/m		603			210			n/m
Total revenue, net of interest expense (FTE basis)	878			284			n/m		784			559			40

Provision for credit losses	(159		)	42			n/m		(185		)	(79		)	134
Noninterest expense	1,122			1,082			4		3,311			3,464			(4	)
Loss before income taxes (FTE basis)	(85		)	(840		)	(90	)	(2,342		)	(2,826		)	(17	)
Income tax expense (benefit) (FTE basis)	98			(633		)	(115	)	(1,325		)	(1,523		)	(13	)
Net loss	$	(183	)	$	(207	)	(12	)	$	(1,017	)	$	(1,303	)	(22	)

Balance Sheet ⁽¹⁾
	Three Months Ended June 30								Six Months Ended June 30
Average	2017			2016			% Change		2017			2016			% Change
Total loans and leases	$	87,667		$	111,553		(21	)%	$	91,250		$	114,803		(21	)%
Total deposits	26,320			28,461			(8	)	25,811			27,610			(7	)

Period end									June 30 2017			December 31 2016			% Change
Total loans and leases⁽²⁾									$	78,830		$	96,713		(18	)%
Total deposits									26,603			23,061			15

⁽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. Such allocated assets were $521.8 billion and $521.9 billion for the three and six months ended June 30, 2017 compared to $499.5 billion and $496.5 billion for the same periods in 2016, and $517.7 billion and $518.7 billion at June 30, 2017 and December 31, 2016.


⁽²⁾	Included $9.2 billion of non-U.S. credit card loans, which were included in assets of business held for sale on the Consolidated Balance Sheet at December 31, 2016. On June 1, 2017, the Corporation completed the sale of its non-U.S. consumer credit card business.

n/m = not meaningful

All Other consists of ALM activities, equity investments, non-core mortgage loans and servicing activities, the net impact of periodic revisions to the MSR valuation model for both core and non-core MSRs and the related economic hedge results and ineffectiveness, other liquidating businesses, residual expense allocations and other. ALM activities encompass certain residential mortgages, debt securities, interest rate and foreign currency risk management activities, the impact of certain allocation methodologies and accounting hedge ineffectiveness. The results of certain ALM activities are allocated to our business segments. For more information on our ALM activities, see Note 17 – Business Segment Information to the Consolidated Financial Statements. Equity investments include our merchant services joint venture as well as Global Principal Investments (GPI) which is comprised of a portfolio of equity, real estate and other alternative investments. For more information on our merchant services joint venture, see Note 10 – Commitments and Contingencies to the Consolidated Financial Statements.

On June 1, 2017, we completed the sale of our non-U.S. consumer credit card business, resulting in a $103 million after-tax gain associated with the sale. For more information on the sale of our non-U.S. consumer credit card business, see Recent Events on page 3 and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.

The Corporation classifies consumer real estate loans as core or non-core based on loan and customer characteristics such as origination date, product type, LTV, FICO score and delinquency status. For more information on the core and non-core portfolios, see Consumer Portfolio Credit Risk Management on page 39. Residential mortgage loans that are held for ALM purposes,

including interest rate or liquidity risk management, are classified as core and are presented on the balance sheet of All Other. For more information on our interest rate and liquidity risk management activities, see Liquidity Risk on page 35 and Interest Rate Risk Management for the Banking Book on page 63. During the six months ended June 30, 2017, residential mortgage loans held for ALM activities decreased $3.3 billion to $31.4 billion at June 30, 2017 primarily as a result of payoffs and paydowns outpacing new originations. Non-core residential mortgage and home equity loans, which are principally run-off portfolios, including certain loans accounted for under the fair value option and MSRs pertaining to non-core loans serviced for others, are also held in All Other. During the six months ended June 30, 2017, total non-core loans decreased $5.9 billion to $47.2 billion at June 30, 2017 due primarily to payoffs and paydowns, as well as loan sales.

Three Months Ended June 30, 2017 Compared to Three Months Ended June 30, 2016

The net loss for All Other decreased $24 million to $183 million due to a $793 million pre-tax gain recognized in connection with the sale of the non-U.S. consumer credit card business, a benefit in the provision for credit losses and higher mortgage banking income, offset by higher income tax expense, lower gains on sales of debt securities, lower net interest income and higher noninterest expense.

The provision for credit losses improved $201 million to a benefit of $159 million driven by reserve releases associated with the continued improvement in non-core consumer real estate loans as well as continued run-off of the portfolio. Noninterest expense increased $40 million to $1.1 billion driven by a $295 million



		Bank of America 26

impairment charge related to certain data centers in the process of being sold and an increase in severance costs, offset by lower operating and non-core mortgage costs.

Income tax expense was $98 million compared to a benefit of $633 million driven by tax expense of $690 million recognized in connection with the sale of the non-U.S. consumer credit card business, which related to gains on derivatives used to hedge the currency risk of the net investment. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking.

Six Months Ended June 30, 2017 compared to Six Months Ended June 30, 2016

The net loss for All Other decreased $286 million to $1.0 billion due to a $793 million pre-tax gain related to the sale of the non-U.S. consumer credit card business, a decrease in noninterest expense and a benefit in the provision for credit losses, offset by lower gains on sales of debt securities, a decrease in the income tax benefit, lower net interest income and lower mortgage banking income.

Mortgage banking income in All Other decreased $195 million primarily driven by lower MSR results, net of the related hedge performance, and lower servicing fees driven by a smaller servicing portfolio. Gains on sales of loans, including nonperforming and other delinquent loans, and re-performing loans were $44 million compared to gains of $178 million in the same period in 2016.

The benefit in the provision for credit losses increased $106 million to a benefit of $185 million driven by the same factors as described in the three-month discussion. Noninterest expense decreased $153 million to $3.3 billion driven by lower litigation expense and a decline in non-core mortgage servicing costs, partially offset by the factors as described in the three-month discussion.

The income tax benefit was $1.3 billion compared to a benefit of $1.5 billion. The decrease was driven by a $690 million tax expense as described in the three-month discussion, partially offset by a tax benefit related to a new accounting standard on share-based compensation. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking.

Off-Balance Sheet Arrangements and Contractual Obligations

We have contractual obligations to make future payments on debt and lease agreements. Additionally, in the normal course of business, we enter into contractual arrangements whereby we commit to future purchases of products or services from unaffiliated parties. For more information on obligations and commitments, see Note 10 – Commitments and Contingencies to the Consolidated Financial Statements, Off-Balance Sheet Arrangements and Contractual Obligations in the MD&A of the Corporation's 2016 Annual Report on Form 10-K, as well as Note 11 – Long-term Debt and Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K.

Representations and Warranties

For more information on representations and warranties, the liability for representations and warranties exposures and the corresponding estimated range of possible loss, see Note 7 – Representations and Warranties Obligations and Corporate Guarantees to the Consolidated Financial Statements of the

Corporation's 2016 Annual Report on Form 10-K and, for more information related to the sensitivity of the assumptions used to estimate our liability for representations and warranties, see Complex Accounting Estimates – Representations and Warranties Liability in the MD&A of the Corporation's 2016 Annual Report on Form 10-K.

At June 30, 2017 and December 31, 2016, we had $17.6 billion and $18.3 billion of unresolved repurchase claims, predominately related to subprime and pay option first-lien loans and home equity loans. Outstanding repurchase claims remain unresolved primarily due to (1) the level of detail, support and analysis accompanying such claims, which impact overall claim quality and, therefore, claim resolution and (2) the lack of an established process to resolve disputes related to these claims.

In addition to unresolved repurchase claims, we have received notifications from sponsors of third-party securitizations with whom we engaged in whole-loan transactions indicating that we may have indemnity obligations with respect to loans for which we have not received a repurchase request. These outstanding notifications totaled $1.3 billion at both June 30, 2017 and December 31, 2016. There were no new notifications received during the six months ended June 30, 2017.

The liability for representations and warranties and corporate guarantees is included in accrued expenses and other liabilities on the Consolidated Balance Sheet and the related provision is included in mortgage banking income. At June 30, 2017 and December 31, 2016, the liability for representations and warranties was $2.2 billion and $2.3 billion. For the three and six months ended June 30, 2017, the representations and warranties provision was a benefit of $2 million and $5 million compared to a provision of $17 million and $59 million for the same periods in 2016.

In addition, we currently estimate that the range of possible loss for representations and warranties exposures could be up to $2 billion over existing accruals at June 30, 2017. The estimated range of possible loss represents a reasonably possible loss, but does not represent a probable loss, and is based on currently available information, significant judgment and a number of assumptions that are subject to change.

Future provisions and/or ranges of possible loss associated with obligations under representations and warranties may be significantly impacted if future experiences are different from historical experience or our understandings, interpretations or assumptions. Adverse developments, with respect to one or more of the assumptions underlying the liability for representations and warranties and the corresponding estimated range of possible loss, such as counterparties successfully challenging or avoiding the application of the relevant statute of limitations, could result in significant increases to future provisions and/or the estimated range of possible loss.

Other Mortgage-related Matters

We continue to be subject to additional mortgage-related litigation and disputes, as well as governmental and regulatory scrutiny and investigations, related to our past and current origination, servicing, transfer of servicing and servicing rights, servicing compliance obligations, foreclosure activities, indemnification obligations, and mortgage insurance and captive reinsurance practices with mortgage insurers. The ongoing environment of additional regulation, increased regulatory compliance obligations, and enhanced regulatory enforcement, combined with ongoing uncertainty related to the continuing evolution of the regulatory

27 Bank of America

environment, has resulted in increased operational and compliance costs and may limit our ability to continue providing certain products and services. For more information on management’s estimate of the aggregate range of possible loss for certain litigation matters and on regulatory investigations, see Note 10 – Commitments and Contingencies to the Consolidated Financial Statements.

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 risks. Sound risk management enables us to serve our customers and deliver for our shareholders. If not managed well, risks 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. The Corporation takes 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 (ERC) and the Board.

Our Risk Framework is the foundation for comprehensive management of the risks facing the Corporation. The Risk Framework sets forth clear roles, responsibilities and accountability 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 Statement is intended to ensure that the Corporation maintains an acceptable risk profile by providing a common framework and a comparable set of measures for senior management and the Board to clearly indicate the level of risk the Corporation is willing to accept. Risk appetite is set at least annually and is aligned with the Corporation's strategic, capital and financial operating plans. Our line of business strategies and risk appetite are also similarly aligned.

For more information on our risk management activities, including our Risk Framework, and the key types of risk faced by the Corporation, see Managing Risk through Reputational Risk sections in the MD&A of the Corporation's 2016 Annual Report on Form 10-K.

Capital Management

The Corporation manages its capital position so its capital is more than adequate to support its business activities and to maintain

capital, risk and risk appetite commensurate with one another. Additionally, we seek to maintain safety and soundness at all times, even under adverse scenarios, take advantage of organic growth opportunities, meet obligations to creditors and counterparties, maintain ready access to financial markets, continue to serve as a credit intermediary, remain a source of strength for our subsidiaries, and satisfy current and future regulatory capital requirements. Capital management is integrated into our risk and governance processes, as capital is a key consideration in the development of our strategic plan, risk appetite and risk limits.

We periodically review capital allocated to our businesses and allocate capital annually during the strategic and capital planning processes. For additional information, see Business Segment Operations on page 14.

CCAR and Capital Planning

The Federal Reserve requires BHCs to submit a capital plan and requests for capital actions on an annual basis, consistent with the rules governing the CCAR capital plan.

On June 28, 2017, following the Federal Reserve's non-objection to our 2017 CCAR capital plan, the Board authorized the repurchase of $12.9 billion in common stock from July 1, 2017 through June 30, 2018, including approximately $900 million to offset the effect of equity-based compensation plans during the same period. The common stock repurchase authorization includes both common stock and warrants.

The timing and amount of common stock repurchases will be subject to various factors, including the Corporation’s capital position, liquidity, financial performance and alternative uses of capital, stock trading price, and general market conditions, and may be suspended at any time. The common stock 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 a “well-capitalized” BHC, we may notify the Federal Reserve of our intention to make additional capital distributions not to exceed 0.25 percent of Tier 1 capital, and which were not contemplated in our capital plan, subject to the Federal Reserve's non-objection.

During the 12 months ended June 30, 2017, we had repurchased $7.7 billion of common stock, pursuant to the Board's repurchase authorizations announced on June 29, 2016 and January 13, 2017. These repurchase authorizations expired on June 30, 2017.



		Bank of America 28

Regulatory Capital

As a financial services holding company, we are subject to regulatory capital rules issued by U.S. banking regulators including Basel 3, which includes certain transition provisions through January 1, 2019. The Corporation and its primary affiliated banking entity, BANA, are Basel 3 Advanced approaches institutions.

Basel 3 Overview

Basel 3 updated the composition of capital and established a Common equity tier 1 capital ratio. Common equity tier 1 capital primarily includes common stock, retained earnings and accumulated other comprehensive income (OCI), net of deductions and adjustments primarily related to goodwill, deferred tax assets, intangibles, MSRs and defined benefit pension assets. Under the Basel 3 regulatory capital transition provisions, certain deductions and adjustments to Common equity tier 1 capital are phased in through January 1, 2018. As of January 1, 2017, under the transition provisions, 80 percent of these deductions and adjustments was recognized. Basel 3 also revised minimum capital ratios and buffer requirements, added a supplementary leverage ratio (SLR), and addressed the adequately capitalized minimum requirements under the Prompt Corrective Action (PCA) framework. Finally, Basel 3 established two methods of calculating risk-weighted assets, the Standardized approach and the Advanced approaches. The Standardized approach relies primarily on supervisory risk weights based on exposure type, and the Advanced approaches determine risk weights based on internal models.

As an Advanced approaches institution, we are required to report regulatory risk-based capital ratios and risk-weighted assets under both the Standardized and Advanced approaches. The approach that yields the lower ratio is used to assess capital adequacy including under the PCA framework.

Minimum Capital Requirements

Minimum capital requirements and related buffers are being phased in from January 1, 2014 through January 1, 2019. The PCA framework establishes categories of capitalization including “well capitalized,” based on the Basel 3 regulatory ratio requirements. U.S. banking regulators are required to take certain mandatory actions depending on the category of capitalization, with no mandatory actions required for “well-capitalized” banking organizations, which included BANA at June 30, 2017.

We are subject to a capital conservation buffer, a countercyclical capital buffer and a global systemically important

bank (G-SIB) surcharge that are being phased in over a three-year period ending January 1, 2019. Once fully phased in, the Corporation’s risk-based capital ratio requirements will include a capital conservation buffer greater than 2.5 percent, plus any applicable countercyclical capital buffer and a G-SIB surcharge in order to avoid restrictions on capital distributions and discretionary bonus payments. The buffers and surcharge must be comprised solely of Common equity tier 1 capital. Under the phase-in provisions, we were required to maintain a capital conservation buffer greater than 1.25 percent plus a G-SIB surcharge of 1.5 percent at June 30, 2017. The countercyclical capital buffer is currently set at zero. We estimate that our fully phased-in G-SIB surcharge will be 2.5 percent. The G-SIB surcharge may differ from this estimate over time. For more information on the Corporation's transition and fully phased-in capital ratios and regulatory requirements, see Table 11.

Supplementary Leverage Ratio

Basel 3 requires Advanced approaches institutions to disclose an SLR. The numerator of the SLR is quarter-end Basel 3 Tier 1 capital. The denominator is total leverage exposure based on the daily average of the sum of on-balance sheet exposures less permitted Tier 1 deductions, as well as the simple average of certain off-balance sheet exposures, as of the end of each month in a quarter. Effective January 1, 2018, the Corporation will be required to maintain a minimum 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. Insured depository institution subsidiaries of BHCs will be required to maintain a minimum 6.0 percent SLR to be considered "well capitalized" under the PCA framework.

Capital Composition and Ratios

Table 11 presents Bank of America Corporation’s transition and fully phased-in capital ratios and related information in accordance with Basel 3 Standardized and Advanced approaches as measured at June 30, 2017 and December 31, 2016. Fully phased-in estimates are non-GAAP financial measures that the Corporation considers to be useful measures in evaluating compliance with new regulatory capital requirements that are not yet effective. For reconciliations to GAAP financial measures, see Table 14. As of June 30, 2017 and December 31, 2016, the Corporation met the definition of “well capitalized” under current regulatory requirements.

29 Bank of America




Table 11	Bank of America Corporation Regulatory Capital under Basel 3 ⁽¹⁾

		June 30, 2017
		Transition								Fully Phased-in
(Dollars in millions)		Standardized Approach			Advanced Approaches			Regulatory Minimum⁽²⁾		Standardized Approach			Advanced Approaches ⁽³⁾			Regulatory Minimum ⁽⁴⁾
Risk-based capital metrics:
Common equity tier 1 capital		$	171,431		$	171,431				$	168,704		$	168,704
Tier 1 capital		194,822			194,822					193,576			193,576
Total capital ⁽⁵⁾		231,696			222,671					228,536			219,511
Risk-weighted assets (in billions)		1,390			1,478					1,405			1,464
Common equity tier 1 capital ratio		12.3		%	11.6		%	7.25	%	12.0		%	11.5		%	9.5	%
Tier 1 capital ratio		14.0			13.2			8.75		13.8			13.2			11.0
Total capital ratio		16.7			15.1			10.75		16.3			15.0			13.0

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽⁶⁾		$	2,192		$	2,192				$	2,192		$	2,192
Tier 1 leverage ratio		8.9		%	8.9		%	4.0		8.8		%	8.8		%	4.0

SLR leverage exposure (in billions)													$	2,755
SLR													7.0		%	5.0

		December 31, 2016
Risk-based capital metrics:
Common equity tier 1 capital		$	168,866		$	168,866				$	162,729		$	162,729
Tier 1 capital		190,315			190,315					187,559			187,559
Total capital ⁽⁵⁾		228,187			218,981					223,130			213,924
Risk-weighted assets (in billions)		1,399			1,530					1,417			1,512
Common equity tier 1 capital ratio		12.1		%	11.0		%	5.875	%	11.5		%	10.8		%	9.5	%
Tier 1 capital ratio		13.6			12.4			7.375		13.2			12.4			11.0
Total capital ratio		16.3			14.3			9.375		15.8			14.2			13.0

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽⁶⁾		$	2,131		$	2,131				$	2,131		$	2,131
Tier 1 leverage ratio		8.9		%	8.9		%	4.0		8.8		%	8.8		%	4.0

SLR leverage exposure (in billions)													$	2,702
SLR													6.9		%	5.0


⁽¹⁾	As an Advanced approaches institution, we are required to report regulatory capital risk-weighted assets and ratios under both the Standardized and Advanced approaches. The approach that yields the lower ratio is to be used to assess capital adequacy and was the Advanced approaches method at June 30, 2017 and December 31, 2016.


⁽²⁾	The June 30, 2017 and December 31, 2016 amounts include a transition capital conservation buffer of 1.25 percent and 0.625 percent, and a transition G-SIB surcharge of 1.5 percent and 0.75 percent. The countercyclical capital buffer for both periods is zero.

⁽³⁾

Basel 3 fully phased-in Advanced approaches estimates assume approval by U.S. banking regulators of our internal models methodology (IMM) for calculating counterparty credit risk regulatory capital for derivatives. As of June 30, 2017, we did not have regulatory approval of the IMM model. Basel 3 fully phased-in Common equity tier 1 capital ratio would be reduced by approximately 25 bps if IMM is not used.

⁽⁴⁾

Fully phased-in regulatory minimums assume a capital conservation buffer of 2.5 percent and estimated G-SIB surcharge of 2.5 percent. The estimated fully phased-in countercyclical capital buffer is currently set at zero. We will be subject to fully phased-in regulatory minimums on January 1, 2019. The fully phased-in SLR minimum assumes a leverage buffer of 2.0 percent and is applicable on January 1, 2018.


⁽⁵⁾	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.


⁽⁶⁾	Reflects adjusted average total assets for the three months ended June 30, 2017 and December 31, 2016.

Common equity tier 1 capital under Basel 3 Advanced – Transition was $171.4 billion at June 30, 2017, an increase of $2.6 billion compared to December 31, 2016 driven by earnings, partially offset by common stock repurchases, dividends and the phase-in under Basel 3 transition provisions of deductions, primarily related to deferred tax assets. During the six months ended June 30, 2017, Total capital increased $3.7 billion primarily

driven by the same factors as the increase in Common equity tier 1 capital.

Risk-weighted assets decreased $52 billion during the six months ended June 30, 2017 to $1,478 billion primarily due to model improvements, the sale of the non-U.S. consumer credit card business, improved credit quality and lower market risk.



		Bank of America 30

Table 12 presents the capital composition as measured under Basel 3 – Transition at June 30, 2017 and December 31, 2016.




Table 12	Capital Composition under Basel 3 – Transition ^{(1, 2)}

(Dollars in millions)		June 30 2017			December 31 2016
Total common shareholders’ equity		$	245,767		$	241,620
Goodwill		(68,416		)	(69,191		)
Deferred tax assets arising from net operating loss and tax credit carryforwards		(5,826		)	(4,976		)
Adjustments for amounts recorded in accumulated OCI attributed to defined benefit postretirement plans		685			1,392
Net unrealized (gains) losses on debt and equity securities and net (gains) losses on derivatives recorded in accumulated OCI, net-of-tax		923			1,402
Intangibles, other than mortgage servicing rights and goodwill		(1,354		)	(1,198		)
Defined benefit pension fund assets		(723		)	(512		)
DVA related to liabilities and derivatives		623			413
Other		(248		)	(84		)
Common equity tier 1 capital		171,431			168,866
Qualifying preferred stock, net of issuance cost		25,220			25,220
Deferred tax assets arising from net operating loss and tax credit carryforwards		(1,457		)	(3,318		)
Defined benefit pension fund assets		(181		)	(341		)
DVA related to liabilities and derivatives under transition		156			276
Other		(347		)	(388		)
Total Tier 1 capital		194,822			190,315
Long-term debt qualifying as Tier 2 capital		23,370			23,365
Eligible credit reserves included in Tier 2 capital		2,607			3,035
Nonqualifying capital instruments subject to phase out from Tier 2 capital		1,893			2,271
Other		(21		)	(5		)
Total Basel 3 Capital		$	222,671		$	218,981


⁽¹⁾	See Table 11, footnote 1.


⁽²⁾	Deductions from and adjustments to regulatory capital subject to transition provisions under Basel 3 are generally recognized in 20 percent annual increments, and will be fully recognized as of January 1, 2018. Any assets that are a direct deduction from the computation of capital are excluded from risk-weighted assets and adjusted average total assets.

Table 13 presents the components of our risk-weighted assets as measured under Basel 3 – Transition at June 30, 2017 and December 31, 2016.




Table 13	Risk-weighted assets under Basel 3 – Transition

		June 30, 2017				December 31, 2016
(Dollars in billions)		Standardized Approach		Advanced Approaches		Standardized Approach		Advanced Approaches
Credit risk		$	1,331	$	864	$	1,334	$	903
Market risk		59		57		65		63
Operational risk		n/a		500		n/a		500
Risks related to CVA		n/a		57		n/a		64
Total risk-weighted assets		$	1,390	$	1,478	$	1,399	$	1,530

n/a = not applicable

31 Bank of America

Table 14 presents a reconciliation of regulatory capital in accordance with Basel 3 Standardized – Transition to the Basel 3 Standardized approach fully phased-in estimates and Basel 3 Advanced approaches fully phased-in estimates at June 30, 2017 and December 31, 2016.




Table 14	Regulatory Capital Reconciliations between Basel 3 Transition to Fully Phased-in ⁽¹⁾

(Dollars in millions)		June 30 2017			December 31 2016
Common equity tier 1 capital (transition)		$	171,431		$	168,866
Deferred tax assets arising from net operating loss and tax credit carryforwards phased in during transition		(1,457		)	(3,318		)
Accumulated OCI phased in during transition		(845		)	(1,899		)
Intangibles phased in during transition		(338		)	(798		)
Defined benefit pension fund assets phased in during transition		(181		)	(341		)
DVA related to liabilities and derivatives phased in during transition		156			276
Other adjustments and deductions phased in during transition		(62		)	(57		)
Common equity tier 1 capital (fully phased-in)		168,704			162,729
Additional Tier 1 capital (transition)		23,391			21,449
Deferred tax assets arising from net operating loss and tax credit carryforwards phased out during transition		1,457			3,318
Defined benefit pension fund assets phased out during transition		181			341
DVA related to liabilities and derivatives phased out during transition		(156		)	(276		)
Other transition adjustments to additional Tier 1 capital		(1		)	(2		)
Additional Tier 1 capital (fully phased-in)		24,872			24,830
Tier 1 capital (fully phased-in)		193,576			187,559
Tier 2 capital (transition)		27,849			28,666
Nonqualifying capital instruments phased out during transition		(1,893		)	(2,271		)
Other adjustments to Tier 2 capital		9,004			9,176
Tier 2 capital (fully phased-in)		34,960			35,571
Basel 3 Standardized approach Total capital (fully phased-in)		228,536			223,130
Change in Tier 2 qualifying allowance for credit losses		(9,025		)	(9,206		)
Basel 3 Advanced approaches Total capital (fully phased-in)		$	219,511		$	213,924

Risk-weighted assets – As reported to Basel 3 (fully phased-in)
Basel 3 Standardized approach risk-weighted assets as reported		$	1,389,696		$	1,399,477
Changes in risk-weighted assets from reported to fully phased-in		15,413			17,638
Basel 3 Standardized approach risk-weighted assets (fully phased-in)		$	1,405,109		$	1,417,115

Basel 3 Advanced approaches risk-weighted assets as reported		$	1,477,633		$	1,529,903
Changes in risk-weighted assets from reported to fully phased-in		(13,545		)	(18,113		)
Basel 3 Advanced approaches risk-weighted assets (fully phased-in) ⁽²⁾		$	1,464,088		$	1,511,790


⁽¹⁾	See Table 11, footnote 1.


⁽²⁾	Basel 3 fully phased-in Advanced approaches estimates assume approval by U.S. banking regulators of our IMM for calculating counterparty credit risk regulatory capital for derivatives. As of June 30, 2017, we did not have regulatory approval of the IMM model. Basel 3 fully phased-in Common equity tier 1 capital ratio would be reduced by approximately 25 bps if IMM is not used.

Bank of America, N.A. Regulatory Capital

Table 15 presents transition regulatory capital information for BANA in accordance with Basel 3 Standardized and Advanced approaches as measured at June 30, 2017 and December 31, 2016. As of June 30, 2017, BANA met the definition of “well capitalized” under the PCA framework.




Table 15	Bank of America, N.A. Regulatory Capital under Basel 3

		June 30, 2017
		Standardized Approach						Advanced Approaches
(Dollars in millions)		Ratio		Amount		Minimum Required⁽¹⁾		Ratio		Amount		Minimum Required ⁽¹⁾
Common equity tier 1 capital		12.8	%	$	149,759	6.5	%	14.7	%	$	149,759	6.5	%
Tier 1 capital		12.8		149,759		8.0		14.7		149,759		8.0
Total capital		14.0		162,892		10.0		15.2		154,233		10.0
Tier 1 leverage		9.2		149,759		5.0		9.2		149,759		5.0

		December 31, 2016
Common equity tier 1 capital		12.7	%	$	149,755	6.5	%	14.3	%	$	149,755	6.5	%
Tier 1 capital		12.7		149,755		8.0		14.3		149,755		8.0
Total capital		13.9		163,471		10.0		14.8		154,697		10.0
Tier 1 leverage		9.3		149,755		5.0		9.3		149,755		5.0


⁽¹⁾	Percent required to meet guidelines to be considered “well capitalized” under the PCA framework.



		Bank of America 32

Regulatory Developments

Minimum Total Loss-Absorbing Capacity

The Federal Reserve has established a final rule effective January 1, 2019, which includes minimum external total loss-absorbing capacity (TLAC) requirements to improve the resolvability and resiliency of large, interconnected BHCs. We estimate our minimum required external TLAC would be the greater of 22.5 percent of risk-weighted assets or 9.5 percent of SLR leverage exposure. In addition, U.S. G-SIBs must meet a minimum long-term debt requirement. Our minimum required long-term debt is estimated to be the greater of 8.5 percent of risk-weighted assets or 4.5 percent of SLR leverage exposure. The impact of the TLAC rule is not expected to be material to our results of operations.

Revisions to Approaches for Measuring Risk-weighted Assets

The Basel Committee has several open proposals to revise key methodologies for measuring risk-weighted assets. The proposals include a standardized approach for credit risk, standardized approach for operational risk, revisions to the credit valuation adjustment (CVA) risk framework and constraints on the use of internal models. The Basel Committee has also finalized a revised standardized model for counterparty credit risk, revisions to the securitization framework and its fundamental review of the trading book, which updates both modeled and standardized approaches for market risk measurement. These revisions are to be coupled with a proposed capital floor framework to limit the extent to which banks can reduce risk-weighted asset levels through the use of internal models, both at the input parameter and aggregate risk-weighted asset level. After the outstanding proposals are finalized by the Basel Committee, U.S. banking regulators may update the U.S. Basel 3 rules to incorporate the Basel Committee revisions.

Revisions to the G-SIB Assessment Framework

On March 30, 2017, the Basel Committee issued a consultative document with proposed revisions to the G-SIB surcharge assessment framework. The proposed revisions would include removing the cap on the substitutability category, expanding the scope of consolidation to include insurance subsidiaries in three categories (size, interconnectedness and complexity) and modifying the substitutability category weights with the

introduction of a new trading volume indicator. The Basel Committee has also requested feedback on a new short-term wholesale funding indicator, which would be included in the interconnectedness category. The U.S. banking regulators may update the U.S. G-SIB surcharge rule to incorporate the Basel Committee revisions.

For more information on our Regulatory Developments see Capital Management – Regulatory Developments in the MD&A of the Corporation's 2016 Annual Report on Form 10-K.

Broker-dealer Regulatory Capital and Securities Regulation

The Corporation’s principal U.S. broker-dealer subsidiaries are Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S) and Merrill Lynch Professional Clearing Corp (MLPCC). MLPCC is a fully-guaranteed subsidiary of MLPF&S and provides clearing and settlement services. Both entities are subject to the net capital requirements of Securities and Exchange Commission (SEC) Rule 15c3-1. Both entities are also registered as futures commission merchants and are subject to the Commodity Futures Trading Commission Regulation 1.17.

MLPF&S has elected to compute the minimum capital requirement in accordance with the Alternative Net Capital Requirement as permitted by SEC Rule 15c3-1. At June 30, 2017, MLPF&S’s regulatory net capital as defined by Rule 15c3-1 was $12.3 billion and exceeded the minimum requirement of $1.7 billion by $10.6 billion. MLPCC’s net capital of $3.5 billion exceeded the minimum requirement of $640 million by $2.9 billion.

In accordance with the Alternative Net Capital Requirements, MLPF&S is required to maintain tentative net capital in excess of $1.0 billion, net capital in excess of $500 million and notify the SEC in the event its tentative net capital is less than $5.0 billion. At June 30, 2017, MLPF&S had tentative net capital and net capital in excess of the minimum and notification requirements.

Merrill Lynch International (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, 2017, MLI’s capital resources were $35.4 billion which exceeded the minimum requirement of $14.6 billion.

33 Bank of America

Common and Preferred Stock Dividends

Table 16 is a summary of our cash dividend declarations on preferred stock during the second quarter of 2017 and through July 31, 2017. During the second quarter of 2017, we declared

$361 million of cash dividends on preferred stock. For more information on preferred stock and a summary of our declared quarterly cash dividends on common stock, see Note 11 – Shareholders’ Equity to the Consolidated Financial Statements.




Table 16	Preferred Stock Cash Dividend Summary

		June 30, 2017
Preferred Stock			Outstanding Notional Amount (in millions)		Declaration Date	Record Date	Payment Date	Per Annum Dividend Rate		Dividend Per Share
Series B ⁽¹⁾			$	1	July 26, 2017	October 11, 2017	October 25, 2017	7.00	%	$	1.75
					April 26, 2017	July 11, 2017	July 25, 2017	7.00		1.75
Series D ⁽²⁾			$	654	July 5, 2017	August 31, 2017	September 14, 2017	6.204	%	$	0.38775
					April 14, 2017	May 31, 2017	June 14, 2017	6.204		0.38775
Series E ⁽²⁾			$	317	July 5, 2017	July 31, 2017	August 15, 2017	Floating		$	0.25556
					April 14, 2017	April 28, 2017	May 15, 2017	Floating		0.24722
Series F			$	141	July 5, 2017	August 31, 2017	September 15, 2017	Floating		$	1,022.22222
					April 14, 2017	May 31, 2017	June 15, 2017	Floating		1,022.22222
Series G			$	493	July 5, 2017	August 31, 2017	September 15, 2017	Adjustable		$	1,022.22222
					April 14, 2017	May 31, 2017	June 15, 2017	Adjustable		1,022.22222
Series I ⁽²⁾			$	365	July 5, 2017	September 15, 2017	October 2, 2017	6.625	%	$	0.4140625
					April 14, 2017	June 15, 2017	July 3, 2017	6.625		0.4140625
Series K ^{(3, 4)}			$	1,544	July 5, 2017	July 15, 2017	July 31, 2017	Fixed-to-floating		$	40.00
Series L			$	3,080	June 16, 2017	July 1, 2017	July 31, 2017	7.25	%	$	18.125
Series M ^{(3, 4)}			$	1,310	April 14, 2017	April 30, 2017	May 15, 2017	Fixed-to-floating		$	40.625
Series T			$	5,000	July 26, 2017	September 25, 2017	October 10, 2017	6.00	%	$	1,500.00
					April 26, 2017	June 25, 2017	July 10, 2017	6.00		1,500.00
Series U ^{(3, 4)}			$	1,000	April 14, 2017	May 15, 2017	June 1, 2017	Fixed-to-floating		$	26.00
Series V ^{(3, 4)}			$	1,500	April 14, 2017	June 1, 2017	June 19, 2017	Fixed-to-floating		$	25.625
Series W ⁽²⁾			$	1,100	July 5, 2017	August 15, 2017	September 11, 2017	6.625	%	$	0.4140625
					April 14, 2017	May 15, 2017	June 9, 2017	6.625		0.4140625
Series X ^{(3, 4)}			$	2,000	July 5, 2017	August 15, 2017	September 5, 2017	Fixed-to-floating		$	31.25
Series Y ⁽²⁾			$	1,100	June 16, 2017	July 1, 2017	July 27, 2017	6.50	%	$	0.40625
Series AA ^{(3, 4)}			$	1,900	July 5, 2017	September 1, 2017	September 18, 2017	Fixed-to-floating		$	30.50
Series CC⁽²⁾			$	1,100	June 16, 2017	July 1, 2017	July 31, 2017	6.20	%	$	0.3875
Series DD ^(3,4)			$	1,000	July 5, 2017	August 15, 2017	September 11, 2017	Fixed-to-floating		$	31.50
Series EE ⁽²⁾			$	900	June 16, 2017	July 1, 2017	July 25, 2017	6.00	%	$	0.375
Series 1 ⁽⁵⁾			$	98	July 5, 2017	August 15, 2017	August 29, 2017	Floating		$	0.18750
					April 14, 2017	May 15, 2017	May 30, 2017	Floating		0.18750
Series 2 ⁽⁵⁾			$	299	July 5, 2017	August 15, 2017	August 29, 2017	Floating		$	0.19167
					April 14, 2017	May 15, 2017	May 30, 2017	Floating		0.18542
Series 3 ⁽⁵⁾			$	653	July 5, 2017	August 15, 2017	August 28, 2017	6.375	%	$	0.3984375
					April 14, 2017	May 15, 2017	May 30, 2017	6.375		0.3984375
Series 4 ⁽⁵⁾			$	210	July 5, 2017	August 15, 2017	August 29, 2017	Floating		$	0.25556
					April 14, 2017	May 15, 2017	May 30, 2017	Floating		0.24722
Series 5 ⁽⁵⁾			$	422	July 5, 2017	August 1, 2017	August 21, 2017	Floating		$	0.25556
					April 14, 2017	May 1, 2017	May 22, 2017	Floating		0.24722


⁽¹⁾	Dividends are cumulative.


⁽²⁾	Dividends per depositary share, each representing a 1/1,000^th interest in a share of preferred stock.


⁽³⁾	Initially pays dividends semi-annually.


⁽⁴⁾	Dividends per depositary share, each representing a 1/25^th interest in a share of preferred stock.


⁽⁵⁾	Dividends per depositary share, each representing a 1/1,200^th interest in a share of preferred stock.



		Bank of America 34

Liquidity Risk

Funding and Liquidity Risk Management

Our primary liquidity risk management objective is to meet expected or unexpected cash flow and collateral needs 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.

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 those obligations 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, minimizes borrowing costs and facilitates timely responses to liquidity events. For more information regarding global funding and liquidity risk management, see Liquidity Risk – Time-to-required Funding and Stress Modeling in the MD&A of the Corporation's 2016 Annual Report on Form 10-K.

NB Holdings, Inc.

In the third quarter of 2016, we entered into intercompany arrangements with certain key subsidiaries under which we transferred certain of our parent company assets, and agreed to transfer certain additional parent company assets not needed to satisfy anticipated near-term expenditures, to NB Holdings, Inc., a wholly-owned holding company subsidiary (NB Holdings). The parent company 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 if it had not entered into these arrangements and transferred any assets.

In consideration for the transfer of assets, NB Holdings issued a subordinated note to the parent company in a principal amount equal to the value of the transferred assets. The aggregate principal amount of the note will increase by the amount of any future asset transfers. NB Holdings also provided the parent company with a committed line of credit that allows the parent company to draw funds necessary to service near-term cash needs. These arrangements support our preferred single point of entry resolution strategy, under which only the parent company would be resolved under the U.S Bankruptcy Code. These arrangements include provisions to terminate the line of credit, forgive the subordinated note and require the parent company to transfer its remaining financial assets to NB Holdings if our projected liquidity resources deteriorate so severely that resolution of the parent company becomes imminent.

Global Liquidity Sources and Other Unencumbered Assets

We maintain liquidity available to the Corporation, including the parent company 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 company 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 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 MBS and a select group of non-U.S. government securities. We can quickly 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.

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 which incorporates regulatory deductions and the exclusion of excess liquidity held at certain subsidiaries. Our average consolidated HQLA, on a net basis, was $425 billion for the three months ended June 30, 2017. For more information on the final LCR rules, see Liquidity Risk – Basel 3 Liquidity Standards on page 36.

Our GLS were $514 billion and $499 billion at June 30, 2017 and December 31, 2016 and were as shown in Table 17.




Table 17	Global Liquidity Sources

						Average Three Months Ended June 30 2017
(Dollars in billions)		June 30 2017		December 31 2016		Average Three Months Ended June 30 2017
Parent company and NB Holdings		$	86	$	76	$	80
Bank subsidiaries		376		372		383
Other regulated entities		52		51		50
Total Global Liquidity Sources		$	514	$	499	$	513

As shown in Table 17, parent company and NB Holdings liquidity totaled $86 billion and $76 billion at June 30, 2017 and December 31, 2016. The increase in parent company and NB Holdings liquidity was primarily due to debt issuance outpacing maturities. Typically, parent company and NB Holdings liquidity is in the form of cash deposited with BANA.

Liquidity held at our bank subsidiaries totaled $376 billion and $372 billion at June 30, 2017 and December 31, 2016. The increase in bank subsidiaries’ liquidity was primarily due to net debt issuances. Liquidity at bank subsidiaries excludes the cash deposited by the parent company and NB Holdings. Our 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 $290 billion and $310 billion at June 30, 2017 and December 31, 2016 with the decrease due to FHLB borrowings, which reduced available borrowing capacity, and adjustments to our valuation model. 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

35 Bank of America

generated by the bank subsidiaries can generally be used only to fund obligations within the bank subsidiaries and transfers to the parent company or nonbank subsidiaries may be subject to prior regulatory approval.

Liquidity held at our other regulated entities, comprised primarily of broker-dealer subsidiaries, totaled $52 billion and $51 billion at June 30, 2017 and December 31, 2016. Our other regulated entities also held unencumbered investment-grade securities and equities that we believe could be used to generate additional liquidity. Liquidity held in an other regulated entity is primarily available to meet the obligations of that entity and transfers to the parent company or to any other subsidiary may be subject to prior regulatory approval due to regulatory restrictions and minimum requirements.

Table 18 presents the composition of GLS at June 30, 2017 and December 31, 2016.




Table 18	Global Liquidity Sources Composition

(Dollars in billions)		June 30 2017		December 31 2016
Cash on deposit		$	116	$	106
U.S. Treasury securities		63		58
U.S. agency securities and mortgage-backed securities		324		318
Non-U.S. government securities		11		17
Total Global Liquidity Sources		$	514	$	499

Time-to-required Funding and Liquidity Stress Analysis

We use a variety of metrics to determine the appropriate amounts of liquidity to maintain at the parent company and our subsidiaries. One metric we use to evaluate the appropriate level of liquidity at the parent company and NB Holdings is “time-to-required funding (TTF).” This debt coverage measure indicates the number of months the parent company can continue to meet its unsecured contractual obligations as they come due using only the parent company and NB Holdings' liquidity sources without issuing any new debt or accessing any additional liquidity sources. We define unsecured contractual obligations for purposes of this metric as maturities of senior or subordinated debt issued or guaranteed by Bank of America Corporation. These include certain unsecured debt instruments, primarily structured liabilities, which we may be required to settle for cash prior to maturity. TTF was 49 months at June 30, 2017 compared to 35 months at December 31, 2016. The increase in TTF was driven by debt issuances outpacing maturities.

We also utilize liquidity stress analysis to assist us in determining the appropriate amounts of liquidity to maintain at the parent company and our subsidiaries. The liquidity stress testing process is an integral part of analyzing our potential contractual and contingent cash outflows. We evaluate the liquidity requirements under a range of scenarios with varying levels of severity and time horizons. The scenarios we consider and utilize incorporate market-wide and Corporation-specific events, including potential credit rating downgrades for the parent company and our subsidiaries, and more severe events including potential resolution scenarios. The scenarios are based on our historical experience, experience of distressed and failed financial institutions, regulatory guidance, and both expected and unexpected future events.

The types of potential contractual and contingent cash outflows we consider in our scenarios may include, but are not limited to,

upcoming contractual maturities of unsecured debt and reductions in new debt issuance; diminished access to secured financing markets; potential deposit withdrawals; increased draws on loan commitments, liquidity facilities and letters of credit; additional collateral that counterparties could call if our credit ratings were downgraded; collateral and margin requirements arising from market value changes; and potential liquidity required to maintain businesses and finance customer activities. Changes in certain market factors, including, but not limited to, credit rating downgrades, could negatively impact potential contractual and contingent outflows and the related financial instruments, and in some cases these impacts could be material to our financial results.

We consider all sources of funds that we could access during each stress scenario and focus particularly on matching available sources with corresponding liquidity requirements by legal entity. We also use the stress modeling results to manage our asset and liability profile and establish limits and guidelines on certain funding sources and businesses.

Basel 3 Liquidity Standards

Basel 3 has two liquidity risk-related standards: the LCR and the Net Stable Funding Ratio (NSFR).

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. As of June 30, 2017, the consolidated Corporation and its insured depository institutions were above the 2017 LCR requirements. Our LCR may fluctuate from period to period due to normal business flows from customer activity. Beginning with the second quarter 2017 results, we are required to disclose publicly, on a quarterly basis, quantitative information about our LCR calculation and a discussion of the factors that have a significant effect on our LCR. This information will be available on our Investor Relations website on a quarterly basis beginning in August 2017.

U.S. banking regulators have issued a proposal for an NSFR requirement applicable to U.S. financial institutions following the Basel Committee's final standard. The U.S. NSFR would apply to the Corporation on a consolidated basis and to our insured depository institutions beginning on January 1, 2018, if finalized as proposed. We expect to meet the NSFR requirement within the regulatory timeline. The standard is intended to reduce funding risk over a longer time horizon. The NSFR is designed to ensure an appropriate amount of stable funding, generally capital and liabilities maturing beyond one year, given the mix of assets and off-balance sheet items.

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.

The primary benefits of our centralized funding approach include greater control, reduced funding costs, wider name recognition by investors and greater flexibility to meet the variable funding requirements of subsidiaries. Where regulations, time zone differences or other business considerations make parent company funding impractical, certain other subsidiaries may issue their own debt.

We fund a substantial portion of our lending activities through our deposits, which were $1.26 trillion at both June 30, 2017 and



		Bank of America 36

December 31, 2016. Deposits are primarily generated by our Consumer Banking, GWIM and Global Banking segments. These deposits are diversified by clients, product type and geography, and the majority of our U.S. deposits are insured by the FDIC. We consider a substantial portion of our deposits to be a stable, low-cost and consistent source of funding. We believe this deposit funding is generally less sensitive to interest rate changes, market volatility or changes in our credit ratings than wholesale funding sources. Our lending activities may also be financed through secured borrowings, including credit card securitizations and securitizations with GSEs, the FHA and private-label investors, as well as FHLB loans.

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. We believe funding these activities in the secured financing markets is more cost-efficient and less sensitive to changes in our credit ratings than unsecured financing. Repurchase agreements are generally short-term and often overnight. Disruptions in secured financing markets for financial institutions have occurred in prior market cycles which resulted in adverse changes in terms or significant reductions in the availability of such financing. We manage the liquidity risks arising from secured funding by sourcing funding globally from a diverse group of counterparties, providing a range of securities

collateral and pursuing longer durations, when appropriate. For more information on secured financing agreements, see Note 9 – Federal Funds Sold or Purchased, Securities Financing Agreements and Short-term Borrowings to the Consolidated Financial Statements.

We issue long-term unsecured debt in a variety of maturities and currencies to achieve cost-efficient funding and to maintain an appropriate maturity profile. While the cost and availability of unsecured funding may be negatively impacted by general market conditions or by matters specific to the financial services industry or the Corporation, we seek to mitigate refinancing risk by actively managing the amount of our borrowings that we anticipate will mature within any month or quarter.

During the three and six months ended June 30, 2017, we issued $16.0 billion and $33.4 billion of long-term debt consisting of $10.6 billion and $23.5 billion for Bank of America Corporation, substantially all of which was TLAC compliant, $3.0 billion and $5.1 billion for Bank of America, N.A. and $2.4 billion and $4.8 billion of other debt.

Table 19 presents the carrying value of aggregate annual contractual maturities of long-term debt as of June 30, 2017. During the six months ended June 30, 2017, we had total long-term debt maturities and purchases of $29.4 billion consisting of $12.3 billion for Bank of America Corporation, $11.8 billion for Bank of America, N.A. and $5.3 billion of other debt.




Table 19	Long-term Debt by Maturity

(Dollars in millions)		Remainder of 2017		2018		2019		2020		2021		Thereafter		Total
Bank of America Corporation
Senior notes		$	13,253	$	19,690	$	18,098	$	12,359	$	10,617	$	67,183	$	141,200
Senior structured notes		1,878		3,011		1,422		995		423		8,498		16,227
Subordinated notes		—		2,803		1,502		—		362		21,353		26,020
Junior subordinated notes		—		—		—		—		—		3,834		3,834
Total Bank of America Corporation		15,131		25,504		21,022		13,354		11,402		100,868		187,281
Bank of America, N.A.
Senior notes		—		5,717		—		—		—		20		5,737
Subordinated notes		—		—		1		—		—		1,694		1,695
Advances from Federal Home Loan Banks		8		1,509		1,513		11		2		114		3,157
Securitizations and other Bank VIEs ⁽¹⁾		1,500		2,300		3,199		1,998		—		43		9,040
Other		9		126		113		10		—		150		408
Total Bank of America, N.A.		1,517		9,652		4,826		2,019		2		2,021		20,037
Other debt
Senior notes		1		—		—		—		—		—		1
Structured liabilities		699		3,618		1,761		1,321		846		7,603		15,848
Nonbank VIEs ⁽¹⁾		13		22		4		—		—		686		725
Other		—		—		—		—		—		31		31
Total other debt		713		3,640		1,765		1,321		846		8,320		16,605
Total long-term debt		$	17,361	$	38,796	$	27,613	$	16,694	$	12,250	$	111,209	$	223,923


⁽¹⁾	Represents the total long-term debt included in the liabilities of consolidated variable interest entities (VIEs) on the Consolidated Balance Sheet.

37 Bank of America

Table 20 presents our long-term debt by major currency at June 30, 2017 and December 31, 2016.




Table 20	Long-term Debt by Major Currency

		June 30 2017		December 31 2016
(Dollars in millions)
U.S. Dollar		$	173,017	$	172,082
Euro		34,959		28,236
British Pound		6,797		6,588
Australian Dollar		2,942		2,900
Japanese Yen		2,911		3,919
Canadian Dollar		1,548		1,049
Other		1,749		2,049
Total long-term debt		$	223,923	$	216,823

Total long-term debt increased $7.1 billion, or three percent, in the six months ended June 30, 2017, primarily due to issuances outpacing maturities. We may, from time to time, purchase outstanding debt instruments in various transactions, depending on prevailing market conditions, liquidity and other factors. In addition, our other regulated entities may make markets in our debt instruments to provide liquidity for investors. For information on long-term debt funding, see Note 11 – Long-term Debt to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K and for information regarding funding and liquidity risk management, see Liquidity Risk – Time-to-required Funding and Stress Modeling in the MD&A of the Corporation's 2016 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 63.

We may also issue unsecured debt in the form of structured notes for client purposes, certain of which qualify as TLAC eligible debt. During the three and six months ended June 30, 2017, we issued $1.3 billion and $2.3 billion of structured notes, which are debt obligations that pay investors returns linked to other debt or equity securities, indices, currencies or commodities. We typically hedge the returns we are obligated to pay on these liabilities with derivatives and/or investments in the underlying 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.

Contingency Planning

We maintain contingency funding plans that outline our potential responses to liquidity stress events at various levels of severity. These policies and plans are based on stress scenarios and include potential funding strategies and communication and notification procedures that we would implement in the event we experienced stressed liquidity conditions. We periodically review and test the contingency funding plans to validate efficacy and assess readiness.

Our U.S. bank subsidiaries can access contingency funding through the Federal Reserve Discount Window. Certain non-U.S. subsidiaries have access to central bank facilities in the jurisdictions in which they operate. While we do not rely on these sources in our liquidity modeling, we maintain the policies, procedures and governance processes that would enable us to access these sources if necessary.

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 21 presents the Corporation's current long-term/short-term senior debt ratings and outlooks expressed by the rating agencies. These ratings have not changed from those disclosed in the Corporation's 2016 Annual Report on Form 10-K. For more information on credit ratings, see Liquidity Risk – Credit Ratings in the MD&A of the Corporation's 2016 Annual Report on Form 10-K.

For more information on the additional collateral and termination payments that could be required in connection with certain over-the-counter (OTC) derivative contracts and other trading agreements as a result of such a credit rating downgrade, see Note 2 – Derivatives to the Consolidated Financial Statements herein and Item 1A. Risk factors of the Corporation's 2016 Annual Report on Form 10-K.

Table 21

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

Baa1

P-2

Positive

BBB+

A-2

Stable

Bank of America, N.A.

P-1

Positive

A+

A-1

Stable

A+

Stable

Merrill Lynch, Pierce, Fenner & Smith Incorporated

A+

A-1

Stable

A+

Stable

Merrill Lynch International

A+

A-1

Stable

NR = not rated



		Bank of America 38

Credit Risk Management

For more information on our credit risk management activities, see Consumer Portfolio Credit Risk Management below, Commercial Portfolio Credit Risk Management on page 48, Non-U.S. Portfolio on page 56, Provision for Credit Losses on page 57, Allowance for Credit Losses on page 57, and Note 4 – Outstanding Loans and Leases and Note 5 – Allowance for Credit Losses to the Consolidated Financial Statements.

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. These models are a component of our consumer credit risk management process and 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

Improvement in the U.S. unemployment rate and home prices continued during the three and six months ended June 30, 2017

resulting in improved credit quality and lower credit losses in the consumer real estate portfolio compared to the same periods in 2016. The 30 and 90 days or more past due balances declined across most consumer loan portfolios during the six months ended June 30, 2017 as a result of improved delinquency trends.

The sale of the non-U.S. consumer credit card business, improved credit quality, continued loan balance run-off and sales in the consumer real estate portfolio drove a $527 million decrease in the consumer allowance for loan and lease losses during the six months ended June 30, 2017 to $5.7 billion at June 30, 2017. For additional information, see Allowance for Credit Losses on page 57.

For more information on our accounting policies regarding delinquencies, nonperforming status, charge-offs and troubled debt restructurings (TDRs) for the consumer portfolio, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K.

Table 22 presents our outstanding consumer loans and leases, and the PCI loan portfolio. In addition to being included in the “Outstandings” columns in Table 22, PCI loans are also shown separately in the “Purchased Credit-impaired Loan Portfolio” columns. The impact of the PCI loan portfolio on certain credit statistics is reported where appropriate. For more information on PCI loans, see Consumer Portfolio Credit Risk Management – Purchased Credit-impaired Loan Portfolio on page 45 and Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements.




Table 22	Consumer Loans and Leases

		Outstandings				Purchased Credit-impaired Loan Portfolio
(Dollars in millions)		June 30 2017		December 31 2016		June 30 2017		December 31 2016
Residential mortgage ⁽¹⁾		$	197,446	$	191,797	$	9,274	$	10,127
Home equity		61,942		66,443		3,170		3,611
U.S. credit card		90,776		92,278		n/a		n/a
Non-U.S. credit card		—		9,214		n/a		n/a
Direct/Indirect consumer ⁽²⁾		93,493		94,089		n/a		n/a
Other consumer ⁽³⁾		2,658		2,499		n/a		n/a
Consumer loans excluding loans accounted for under the fair value option		446,315		456,320		12,444		13,738
Loans accounted for under the fair value option ⁽⁴⁾		1,035		1,051		n/a		n/a
Total consumer loans and leases ⁽⁵⁾		$	447,350	$	457,371	$	12,444	$	13,738


⁽¹⁾	Outstandings includes pay option loans of $1.6 billion and $1.8 billion at June 30, 2017 and December 31, 2016. We no longer originate pay option loans.

⁽²⁾

Outstandings include auto and specialty lending loans of $49.1 billion and $48.9 billion, unsecured consumer lending loans of $509 million and $585 million, U.S. securities-based lending loans of $39.8 billion and $40.1 billion, non-U.S. consumer loans of $2.9 billion and $3.0 billion, student loans of $463 million and $497 million and other consumer loans of $657 million and $1.1 billion at June 30, 2017 and December 31, 2016.


⁽³⁾	Outstandings include consumer finance loans of $420 million and $465 million, consumer leases of $2.1 billion and $1.9 billion and consumer overdrafts of $155 million and $157 million at June 30, 2017 and December 31, 2016.


⁽⁴⁾	Consumer loans accounted for under the fair value option include residential mortgage loans of $666 million and $710 million and home equity loans of $369 million and $341 million at June 30, 2017 and December 31, 2016. For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.


⁽⁵⁾	Includes $9.2 billion of non-U.S. credit card loans, which were included in assets of business held for sale on the Consolidated Balance Sheet at December 31, 2016. On June 1, 2017, the Corporation completed the sale of its non-U.S. consumer credit card business.

n/a = not applicable

39 Bank of America

Table 23 presents consumer nonperforming loans and accruing consumer loans past due 90 days or more. Nonperforming loans do not include past due consumer credit card loans, other unsecured loans and in general, consumer loans not secured by real estate (loans discharged in Chapter 7 bankruptcy are included) as these loans are typically charged off no later than the end of the month in which the loan becomes 180 days past due. Real estate-secured past due consumer loans that are insured by the FHA or individually insured under long-term standby agreements

with FNMA and FHLMC (collectively, the fully-insured loan portfolio) are reported as accruing as opposed to nonperforming since the principal repayment is insured. Fully-insured loans included in accruing past due 90 days or more are primarily from our repurchases of delinquent FHA loans pursuant to our servicing agreements with GNMA. Additionally, nonperforming loans and accruing balances past due 90 days or more do not include the PCI loan portfolio or loans accounted for under the fair value option even though the customer may be contractually past due.




Table 23	Consumer Credit Quality

		Nonperforming						Accruing Past Due 90 Days or More
(Dollars in millions)		June 30 2017			December 31 2016			June 30 2017			December 31 2016
Residential mortgage ⁽¹⁾		$	2,579		$	3,056		$	3,699		$	4,793
Home equity		2,681			2,918			—			—
U.S. credit card		n/a			n/a			772			782
Non-U.S. credit card		n/a			n/a			—			66
Direct/Indirect consumer		19			28			32			34
Other consumer		3			2			3			4
Total ⁽²⁾		$	5,282		$	6,004		$	4,506		$	5,679
Consumer loans and leases as a percentage of outstanding consumer loans and leases ⁽²⁾		1.18		%	1.32		%	1.01		%	1.24		%
Consumer loans and leases as a percentage of outstanding loans and leases, excluding PCI and fully-insured loan portfolios ⁽²⁾		1.30			1.45			0.20			0.21

⁽¹⁾

Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At June 30, 2017 and December 31, 2016, residential mortgage included $2.4 billion and $3.0 billion of loans on which interest has been curtailed by the FHA, and therefore are no longer accruing interest, although principal is still insured, and $1.3 billion and $1.8 billion of loans on which interest was still accruing.


⁽²⁾	Balances exclude consumer loans accounted for under the fair value option. At June 30, 2017 and December 31, 2016, $44 million and $48 million of loans accounted for under the fair value option were past due 90 days or more and not accruing interest.

n/a = not applicable

Table 24 presents net charge-offs and related ratios for consumer loans and leases.




Table 24	Consumer Net Charge-offs and Related Ratios

		Net Charge-offs ⁽¹⁾										Net Charge-off Ratios ^{(1, 2)}
		Three Months Ended June 30					Six Months Ended June 30					Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)		2017			2016		2017			2016		2017		2016		2017		2016
Residential mortgage		$	(19	)	$	34	$	(2	)	$	125	(0.04	)%	0.07	%	0.00	%	0.14	%
Home equity		50			126		114			238		0.32		0.70		0.36		0.65
U.S. credit card		640			573		1,246			1,160		2.87		2.66		2.81		2.68
Non-U.S. credit card		31			46		75			91		1.89		1.85		1.90		1.85
Direct/Indirect consumer		32			23		80			57		0.14		0.10		0.17		0.13
Other consumer		17			47		65			95		2.64		8.40		5.08		8.73
Total		$	751		$	849	$	1,578		$	1,766	0.67		0.76		0.71		0.79


⁽¹⁾	Net charge-offs exclude write-offs in the PCI loan portfolio. For more information on PCI write-offs, see Consumer Portfolio Credit Risk Management – Purchased Credit-impaired Loan Portfolio on page 45.


⁽²⁾	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.

Net charge-offs, as shown in Tables 24 and 25, exclude write-offs in the PCI loan portfolio of $41 million and $50 million in residential mortgage for the three and six months ended June 30, 2017 compared to $37 million and $76 million for the same periods in 2016. Net charge-offs, as shown in Tables 24 and 25, exclude write-offs in the PCI loan portfolio of $14 million and $38 million in home equity for the three and six months ended June 30, 2017 compared to $45 million and $111 million for the same periods in 2016. Net charge-off ratios including the PCI write-offs

were 0.04 percent and 0.05 percent for residential mortgage for the three and six months ended June 30, 2017 compared to 0.15 percent and 0.22 percent for the same periods in 2016. Net charge-off ratios including the PCI write-offs were 0.41 percent and 0.48 percent for home equity for the three and six months ended June 30, 2017 compared to 0.95 percent for both periods in 2016. For more information on PCI write-offs, see Consumer Portfolio Credit Risk Management – Purchased Credit-impaired Loan Portfolio on page 45.



		Bank of America 40

Table 25 presents outstandings, nonperforming balances, net charge-offs, allowance for loan and lease losses and provision for loan and lease losses for the core and non-core portfolios within the consumer real estate portfolio. We categorize consumer real estate loans as core and non-core based on loan and customer characteristics such as origination date, product type, LTV, FICO score and delinquency status consistent with our current consumer and mortgage servicing strategy. Generally, loans that were originated after January 1, 2010, qualified under government-sponsored enterprise underwriting guidelines, or otherwise met our underwriting guidelines in place in 2015 are characterized as core loans. Loans held in legacy private-label securitizations, government-insured loans originated prior to 2010, loan products no longer originated, and loans originated prior to 2010 and classified as nonperforming or modified in a TDR prior to 2016

are generally characterized as non-core loans, and are principally run-off portfolios. Core loans as reported in Table 25 include loans held in the Consumer Banking and GWIM segments, as well as loans held for ALM activities in All Other. For more information on core and non-core loans, see Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements.

As shown in Table 25, outstanding core consumer real estate loans increased $7.0 billion during the six months ended June 30, 2017 driven by an increase of $9.7 billion in residential mortgage, partially offset by a $2.7 billion decrease in home equity. The increase in residential mortgage was due to a decision to retain a higher percentage of residential mortgage production in Consumer Banking and GWIM. The decrease in home equity was driven by paydowns outpacing new originations and draws on existing lines.




Table 25	Consumer Real Estate Portfolio ⁽¹⁾

		Outstandings				Nonperforming				Net Charge-offs ⁽²⁾
		June 30 2017		December 31 2016		June 30 2017		December 31 2016		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)										2017			2016			2017			2016
Core portfolio
Residential mortgage		$	166,209	$	156,497	$	1,051	$	1,274	$	(2	)	$	7		$	2		$	(11	)
Home equity		46,642		49,373		970		969		28			28			59			46
Total core portfolio		212,851		205,870		2,021		2,243		26			35			61			35
Non-core portfolio
Residential mortgage		31,237		35,300		1,528		1,782		(17		)	27			(4		)	136
Home equity		15,300		17,070		1,711		1,949		22			98			55			192
Total non-core portfolio		46,537		52,370		3,239		3,731		5			125			51			328
Consumer real estate portfolio
Residential mortgage		197,446		191,797		2,579		3,056		(19		)	34			(2		)	125
Home equity		61,942		66,443		2,681		2,918		50			126			114			238
Total consumer real estate portfolio		$	259,388	$	258,240	$	5,260	$	5,974	$	31		$	160		$	112		$	363

						Allowance for Loan and Lease Losses				Provision for Loan and Lease Losses
						June 30 2017		December 31 2016		Three Months Ended June 30						Six Months Ended June 30
										2017			2016			2017			2016
Core portfolio
Residential mortgage						$	239	$	252	$	(10	)	$	—		$	(11	)	$	(53	)
Home equity						491		560		2			8			(9		)	8
Total core portfolio						730		812		(8		)	8			(20		)	(45		)
Non-core portfolio
Residential mortgage						662		760		(85		)	(50		)	(52		)	(54		)
Home equity						917		1,178		(77		)	37			(169		)	(56		)
Total non-core portfolio						1,579		1,938		(162		)	(13		)	(221		)	(110		)
Consumer real estate portfolio
Residential mortgage						901		1,012		(95		)	(50		)	(63		)	(107		)
Home equity						1,408		1,738		(75		)	45			(178		)	(48		)
Total consumer real estate portfolio						$	2,309	$	2,750	$	(170	)	$	(5	)	$	(241	)	$	(155	)

⁽¹⁾

Outstandings and nonperforming loans exclude loans accounted for under the fair value option. Consumer loans accounted for under the fair value option include residential mortgage loans of $666 million and $710 million and home equity loans of $369 million and $341 million at June 30, 2017 and December 31, 2016. For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.


⁽²⁾	Net charge-offs exclude write-offs in the PCI loan portfolio. For more information on PCI write-offs, see Consumer Portfolio Credit Risk Management – Purchased Credit-impaired Loan Portfolio on page 45.

We believe that the presentation of information adjusted to exclude the impact of the PCI loan portfolio, 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 discussions of the

residential mortgage and home equity portfolios, we provide information that excludes the impact of the PCI loan portfolio, the fully-insured loan portfolio and loans accounted for under the fair value option in certain credit quality statistics. We separately disclose information on the PCI loan portfolio on page 45.

41 Bank of America

Residential Mortgage

The residential mortgage portfolio makes up the largest percentage of our consumer loan portfolio at 44 percent of consumer loans and leases at June 30, 2017. Approximately 35 percent of the residential mortgage portfolio is in GWIM and represents residential mortgages originated for the home purchase and refinancing needs of our wealth management clients. Approximately 32 percent of the residential mortgage portfolio is in All Other and is comprised of originated loans, purchased loans used in our overall ALM activities, delinquent FHA loans repurchased pursuant to our servicing agreements with GNMA as well as loans repurchased related to our representations and warranties. The remaining portion of the portfolio is primarily in Consumer Banking.

Outstanding balances in the residential mortgage portfolio, excluding loans accounted for under the fair value option, increased $5.6 billion during the six months ended June 30, 2017 as retention of new originations was partially offset by loan sales of $1.7 billion, and run-off.

At June 30, 2017 and December 31, 2016, the residential mortgage portfolio included $26.1 billion and $28.7 billion of outstanding fully-insured loans. On this portion of the residential

mortgage portfolio, we are protected against principal loss as a result of either FHA insurance or long-term standby agreements that provide for the transfer of credit risk to FNMA and FHLMC. At June 30, 2017 and December 31, 2016, $19.5 billion and $22.3 billion had FHA insurance with the remainder protected by long-term standby agreements. At June 30, 2017 and December 31, 2016, $6.0 billion and $7.4 billion of the FHA-insured loan population were repurchases of delinquent FHA loans pursuant to our servicing agreements with GNMA.

Table 26 presents certain residential mortgage key credit statistics on both a reported basis excluding loans accounted for under the fair value option, and excluding the PCI loan portfolio, our fully-insured loan portfolio and loans accounted for under the fair value option. Additionally, in the “Reported Basis” columns in the table below, accruing balances past due and nonperforming loans do not include the PCI loan portfolio, in accordance with our accounting policies, even though the customer may be contractually past due. As such, the following discussion presents the residential mortgage portfolio excluding the PCI loan portfolio, the fully-insured loan portfolio and loans accounted for under the fair value option. For more information on the PCI loan portfolio, see page 45.




Table 26	Residential Mortgage – Key Credit Statistics

										Reported Basis ⁽¹⁾						Excluding Purchased Credit-impaired and Fully-insured Loans
(Dollars in millions)										June 30 2017			December 31 2016			June 30 2017			December 31 2016
Outstandings										$	197,446		$	191,797		$	162,107		$	152,941
Accruing past due 30 days or more										6,237			8,232			1,267			1,835
Accruing past due 90 days or more										3,699			4,793			—			—
Nonperforming loans										2,579			3,056			2,579			3,056
Percent of portfolio
Refreshed LTV greater than 90 but less than or equal to 100										4		%	5		%	3		%	3		%
Refreshed LTV greater than 100										3			4			2			3
Refreshed FICO below 620										7			9			3			4
2006 and 2007 vintages ⁽²⁾										12			13			10			12

		Reported Basis								Excluding Purchased Credit-impaired and Fully-Insured Loans
		Three Months Ended June 30				Six Months Ended June 30				Three Months Ended June 30						Six Months Ended June 30
		2017		2016		2017		2016		2017			2016			2017			2016
Net charge-off ratio ⁽³⁾		(0.04	)%	0.07	%	0.00	%	0.14	%	(0.05		)%	0.10		%	0.00		%	0.18		%


⁽¹⁾	Outstandings, accruing past due, nonperforming loans and percentages of portfolio exclude loans accounted for under the fair value option.


⁽²⁾	These vintages of loans account for $855 million, or 33 percent, and $931 million, or 31 percent, of nonperforming residential mortgage loans at June 30, 2017 and December 31, 2016.


⁽³⁾	Net charge-off ratios are calculated as annualized net charge-offs divided by average outstanding loans excluding loans accounted for under the fair value option.

Nonperforming residential mortgage loans decreased $477 million during the six months ended June 30, 2017 as outflows, including sales of $242 million, outpaced new inflows. Of the nonperforming residential mortgage loans at June 30, 2017, $857 million, or 33 percent, were current on contractual payments. Loans accruing past due 30 days or more decreased $568 million primarily due to an improvement in collections associated with the consumer real estate servicer conversion that occurred during the fourth quarter of 2016.

Net charge-offs decreased $53 million to a $19 million net recovery and decreased $127 million to a $2 million net recovery for the three and six months ended June 30, 2017, compared to the same periods in 2016. These decreases in net charge-offs were primarily driven by favorable portfolio trends and decreased write-downs on loans greater than 180 days past due driven by improvement in home prices and the U.S. economy. Additionally,

net charge-offs declined due to net recoveries of $14 million related to nonperforming loan sales during the six months ended June 30, 2017, compared to nonperforming loan sale-related charge-offs of $42 million for the same period in 2016.

Loans with a refreshed LTV greater than 100 percent represented two percent and three percent of the residential mortgage loan portfolio at June 30, 2017 and December 31, 2016. Of the loans with a refreshed LTV greater than 100 percent, 99 percent and 98 percent were performing at June 30, 2017 and December 31, 2016. Loans with a refreshed LTV greater than 100 percent reflect loans where the outstanding carrying value of the loan is greater than the most recent valuation of the property securing the loan. The majority of these loans have a refreshed LTV greater than 100 percent primarily due to home price deterioration since 2006, partially offset by subsequent appreciation.



		Bank of America 42

Of the $162.1 billion in total residential mortgage loans outstanding at June 30, 2017, as shown in Table 27, 35 percent were originated as interest-only loans. The outstanding balance of interest-only residential mortgage loans that have entered the amortization period was $10.9 billion, or 19 percent, at June 30, 2017. Residential mortgage loans that have entered the amortization period generally have experienced a higher rate of early stage delinquencies and nonperforming status compared to the residential mortgage portfolio as a whole. At June 30, 2017, $234 million, or two percent of outstanding interest-only residential mortgages that had entered the amortization period were accruing past due 30 days or more compared to $1.3 billion, or one percent for the entire residential mortgage portfolio. In addition, at June 30, 2017, $459 million, or four percent of outstanding interest-only residential mortgage loans that had entered the amortization period were nonperforming, of which $242 million were contractually current, compared to $2.6 billion,

or two percent for the entire residential mortgage portfolio, of which $857 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 to ten years. More than 80 percent of these loans that have yet to enter the amortization period will not be required to make a fully-amortizing payment until 2020 or later.

Table 27 presents outstandings, nonperforming loans and net charge-offs by certain state concentrations for the residential mortgage portfolio. The Los Angeles-Long Beach-Santa Ana Metropolitan Statistical Area (MSA) within California represented 16 percent and 15 percent of outstandings at June 30, 2017 and December 31, 2016. In the New York area, the New York-Northern New Jersey-Long Island MSA made up 12 percent of outstandings at both June 30, 2017 and December 31, 2016.




Table 27	Residential Mortgage State Concentrations

		Outstandings ⁽¹⁾				Nonperforming ⁽¹⁾				Net Charge-offs ⁽²⁾
		June 30 2017		December 31 2016		June 30 2017		December 31 2016		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)										2017			2016			2017			2016
California		$	63,046	$	58,295	$	458	$	554	$	(21	)	$	(7	)	$	(25	)	$	(30	)
New York ⁽³⁾		16,064		14,476		250		290		1			4			(1		)	18
Florida ⁽³⁾		10,545		10,213		280		322		(3		)	2			(2		)	17
Texas		6,953		6,607		116		132		—			2			1			8
Massachusetts		5,574		5,344		66		77		—			1			—			4
Other U.S./Non-U.S.		59,925		58,006		1,409		1,681		4			32			25			108
Residential mortgage loans ⁽⁴⁾		$	162,107	$	152,941	$	2,579	$	3,056	$	(19	)	$	34		$	(2	)	$	125
Fully-insured loan portfolio		26,065		28,729
Purchased credit-impaired residential mortgage loan portfolio ⁽⁵⁾		9,274		10,127
Total residential mortgage loan portfolio		$	197,446	$	191,797


⁽¹⁾	Outstandings and nonperforming loans exclude loans accounted for under the fair value option.


⁽²⁾	Net charge-offs exclude $41 million and $50 million of write-offs in the residential mortgage PCI loan portfolio for the three and six months ended June 30, 2017 compared to $37 million and $76 million for the same periods in 2016. For more information on PCI write-offs, see Consumer Portfolio Credit Risk Management – Purchased Credit-impaired Loan Portfolio on page 45.


⁽³⁾	In these states, foreclosure requires a court order following a legal proceeding (judicial states).


⁽⁴⁾	Amounts exclude the PCI residential mortgage and fully-insured loan portfolios.


⁽⁵⁾	At June 30, 2017 and December 31, 2016, 47 percent and 48 percent of PCI residential mortgage loans were in California. There were no other significant single state concentrations.

Home Equity

At June 30, 2017, the home equity portfolio made up 14 percent of the consumer portfolio and is comprised of home equity lines of credit (HELOCs), home equity loans and reverse mortgages.

At June 30, 2017, our HELOC portfolio had an outstanding balance of $54.7 billion, or 88 percent of the total home equity portfolio compared to $58.6 billion, also 88 percent, at December 31, 2016. HELOCs generally have an initial draw period of 10 years and the borrowers typically are only required to pay the interest due on the loans on a monthly basis. After the initial draw period ends, the loans generally convert to 15-year amortizing loans.

At June 30, 2017, our home equity loan portfolio had an outstanding balance of $5.1 billion, or eight percent of the total home equity portfolio compared to $5.9 billion, or nine percent, at December 31, 2016. Home equity loans are almost all fixed-rate loans with amortizing payment terms of 10 to 30 years and of the $5.1 billion at June 30, 2017, 57 percent have 25- to 30-year terms. At June 30, 2017, our reverse mortgage portfolio had an outstanding balance, excluding loans accounted for under the fair value option, of $2.1 billion, or four percent of the total home equity portfolio compared to $1.9 billion, or three percent, at December 31, 2016. We no longer originate reverse mortgages.

At June 30, 2017, approximately 68 percent of the home equity portfolio was in Consumer Banking, 25 percent was in All Other and the remainder of the portfolio was primarily in GWIM. Outstanding balances in the home equity portfolio, excluding loans accounted for under the fair value option, decreased $4.5 billion during the six months ended June 30, 2017 primarily due to paydowns and charge-offs outpacing new originations and draws on existing lines. Of the total home equity portfolio at June 30, 2017 and December 31, 2016, $19.2 billion and $19.6 billion, or 31 percent and 29 percent, were in first-lien positions (33 percent and 31 percent excluding the PCI home equity portfolio). At June 30, 2017, 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 $10.2 billion, or 17 percent of our total home equity portfolio excluding the PCI loan portfolio.

Unused HELOCs totaled $45.8 billion at June 30, 2017 compared to $47.2 billion at December 31, 2016. The decrease was primarily due to accounts reaching the end of their draw period, which automatically eliminates open line exposure, and customers choosing to close accounts. Both of these more than offset the impact of new production. The HELOC utilization rate was 54

43 Bank of America

percent at June 30, 2017 compared to 55 percent at December 31, 2016.

Table 28 presents certain home equity portfolio key credit statistics on both a reported basis excluding loans accounted for under the fair value option, and excluding the PCI loan portfolio and loans accounted for under the fair value option. Additionally, in the “Reported Basis” columns in the table below, accruing

balances past due 30 days or more and nonperforming loans do not include the PCI loan portfolio, in accordance with our accounting policies, even though the customer may be contractually past due. As such, the following discussion presents the home equity portfolio excluding the PCI loan portfolio and loans accounted for under the fair value option. For more information on the PCI loan portfolio, see page 45.




Table 28	Home Equity – Key Credit Statistics

										Reported Basis ⁽¹⁾						Excluding Purchased Credit-impaired Loans
(Dollars in millions)										June 30 2017			December 31 2016			June 30 2017			December 31 2016
Outstandings										$	61,942		$	66,443		$	58,772		$	62,832
Accruing past due 30 days or more ⁽²⁾										496			566			496			566
Nonperforming loans ⁽²⁾										2,681			2,918			2,681			2,918
Percent of portfolio
Refreshed CLTV greater than 90 but less than or equal to 100										4		%	5		%	4		%	4		%
Refreshed CLTV greater than 100										7			8			6			7
Refreshed FICO below 620										7			7			6			6
2006 and 2007 vintages ⁽³⁾										33			37			30			34

		Reported Basis								Excluding Purchased Credit-impaired
		Three Months Ended June 30				Six Months Ended June 30				Three Months Ended June 30						Six Months Ended June 30
		2017		2016		2017		2016		2017			2016			2017			2016
Net charge-off ratio ⁽⁴⁾		0.32	%	0.70	%	0.36	%	0.65	%	0.34		%	0.74		%	0.38		%	0.69		%


⁽¹⁾	Outstandings, accruing past due, nonperforming loans and percentages of the portfolio exclude loans accounted for under the fair value option.


⁽²⁾	Accruing past due 30 days or more includes $65 million and $81 million and nonperforming loans include $324 million and $340 million of loans where we serviced the underlying first-lien at June 30, 2017 and December 31, 2016.


⁽³⁾	These vintages of loans have higher refreshed combined LTV ratios and accounted for 52 percent and 50 percent of nonperforming home equity loans at June 30, 2017 and December 31, 2016, and 92 percent and 90 percent of net charge-offs for the three and six months ended June 30, 2017 and 44 percent and 42 percent for the same periods in 2016.


⁽⁴⁾	Net charge-off ratios are calculated as annualized net charge-offs divided by average outstanding loans excluding loans accounted for under the fair value option.

Nonperforming outstanding balances in the home equity portfolio decreased $237 million during the six months ended June 30, 2017 as outflows, including $66 million of net transfers to held-for-sale and $20 million of sales outpaced new inflows. Of the nonperforming home equity portfolio at June 30, 2017, $1.4 billion, or 53 percent, were current on contractual payments. Nonperforming loans that are contractually current primarily consist of collateral-dependent TDRs, including those that have been discharged in Chapter 7 bankruptcy, junior-lien loans where the underlying first-lien is 90 days or more past due, as well as loans that have not yet demonstrated a sustained period of payment performance following a TDR. In addition, $771 million, or 29 percent of nonperforming home equity loans, 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 decreased $70 million during the six months ended June 30, 2017, primarily due to continued portfolio improvement and a consumer real estate servicer conversion that occurred during the fourth quarter of 2016.

In some cases, the junior-lien home equity outstanding balance that we hold is performing, but the underlying first-lien is not. For outstanding balances in the home equity portfolio on which we service the first-lien loan, we are able to track whether the first-lien loan is in default. For loans where the first-lien is serviced by a third party, we utilize credit bureau data to estimate the delinquency status of the first-lien. Given that the credit bureau database we use does not include a property address for the mortgages, we are unable to identify with certainty whether a reported delinquent first-lien mortgage pertains to the same property for which we hold a junior-lien loan. For certain loans, we

utilize a third-party vendor to combine credit bureau and public record data to better link a junior-lien loan with the underlying first-lien mortgage. At June 30, 2017, we estimate that $870 million of current and $139 million of 30 to 89 days past due junior-lien loans were behind a delinquent first-lien loan. We service the first-lien loans on $147 million of these combined amounts, with the remaining $862 million serviced by third parties. Of the $1.0 billion of current to 89 days past due junior-lien loans, based on available credit bureau data and our own internal servicing data, we estimate that approximately $374 million had first-lien loans that were 90 days or more past due.

Net charge-offs decreased $76 million to $50 million and decreased $124 million to $114 million for the three and six months ended June 30, 2017 compared to same periods in 2016. These decreases in net charge-offs were driven by favorable portfolio trends due in part to improvement in home prices and the U.S. economy.

Outstanding balances with refreshed combined loan-to-value (CLTV) greater than 100 percent comprised six percent and seven percent of the home equity portfolio at June 30, 2017 and December 31, 2016. Outstanding balances in the home equity portfolio with a refreshed CLTV greater than 100 percent reflect loans where our loan and available line of credit combined with any outstanding senior liens against the property are equal to or greater than the most recent valuation of the property securing the loan. Depending on the value of the property, there may be collateral in excess of the first-lien that is available to reduce the severity of loss on the second-lien. Of those outstanding balances with a refreshed CLTV greater than 100 percent, 95 percent of the customers were current on their home equity loan and 91 percent



		Bank of America 44

of second-lien loans with a refreshed CLTV greater than 100 percent were current on both their second-lien and underlying first-lien loans at June 30, 2017.

Of the $58.8 billion in total home equity portfolio outstandings at June 30, 2017, as shown in Table 29, 40 percent require interest-only payments. The outstanding balance of HELOCs that have entered the amortization period was $16.9 billion at June 30, 2017. 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, 2017, $309 million, or two percent of outstanding HELOCs that had entered the amortization period were accruing past due 30 days or more. In addition, at June 30, 2017, $1.9 billion, or 11 percent of outstanding HELOCs that had entered the amortization period were nonperforming, of which $998 million were contractually current. Loans in our HELOC portfolio generally have an initial draw period of 10 years and 10 percent of these loans will enter the amortization period in the remainder of 2017 and will be required to make fully-amortizing payments. We communicate to contractually current customers more than a year prior to the end of their draw period to inform them of the potential change to the payment structure before entering the amortization period, and provide payment options to customers prior to the end of the draw period.

Although 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, we can infer some of this information through a review of our HELOC portfolio that we service and that is still in its revolving period (i.e., customers may draw on and repay their line of credit, but are generally only required to pay interest on a monthly basis). During the three months ended June 30, 2017, approximately 37 percent of these customers with an outstanding balance did not pay any principal on their HELOCs.

Table 29 presents outstandings, nonperforming balances and net charge-offs 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 13 percent of the outstanding home equity portfolio at both June 30, 2017 and December 31, 2016. For the three and six months ended June 30, 2017, loans within this MSA contributed 29 percent and 24 percent of net charge-offs within the home equity portfolio compared to 18 percent and 16 percent of net charge-offs for the same periods in 2016. The Los Angeles-Long Beach-Santa Ana MSA within California made up 11 percent of the outstanding home equity portfolio at both June 30, 2017 and December 31, 2016. For the three and six months ended June 30, 2017, loans within this MSA contributed net recoveries of $5 million and $8 million within the home equity portfolio compared to a net recovery of $1 million and a net charge-off of $1 million for the same periods in 2016.




Table 29	Home Equity State Concentrations

		Outstandings ⁽¹⁾				Nonperforming ⁽¹⁾				Net Charge-offs ⁽²⁾
		June 30 2017		December 31 2016		June 30 2017		December 31 2016		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)		June 30 2017		December 31 2016		June 30 2017		December 31 2016		2017			2016			2017			2016
California		$	16,314	$	17,563	$	769	$	829	$	(8	)	$	(1	)	$	(15	)	$	9
Florida ⁽³⁾		6,745		7,319		399		442		10			24			21			41
New Jersey ⁽³⁾		4,830		5,102		196		201		11			14			21			25
New York ⁽³⁾		4,473		4,720		257		271		9			16			17			26
Massachusetts		2,936		3,078		94		100		1			5			2			8
Other U.S./Non-U.S.		23,474		25,050		966		1,075		27			68			68			129
Home equity loans ⁽⁴⁾		$	58,772	$	62,832	$	2,681	$	2,918	$	50		$	126		$	114		$	238
Purchased credit-impaired home equity portfolio ⁽⁵⁾		3,170		3,611
Total home equity loan portfolio		$	61,942	$	66,443


⁽¹⁾	Outstandings and nonperforming loans exclude loans accounted for under the fair value option.


⁽²⁾	Net charge-offs exclude $14 million and $38 million of write-offs in the home equity PCI loan portfolio for the three and six months ended June 30, 2017 compared to $45 million and $111 million for the same periods in 2016. For more information on PCI write-offs, see Consumer Portfolio Credit Risk Management – Purchased Credit-impaired Loan Portfolio on page 45.


⁽³⁾	In these states, foreclosure requires a court order following a legal proceeding (judicial states).


⁽⁴⁾	Amount excludes the PCI home equity portfolio.


⁽⁵⁾	At June 30, 2017 and December 31, 2016, 28 percent and 29 percent of PCI home equity loans were in California. There were no other significant single state concentrations.

Purchased Credit-impaired Loan Portfolio

Loans acquired with evidence of credit quality deterioration since origination and for which it is probable at purchase that we will be unable to collect all contractually required payments are accounted for under the accounting standards for PCI loans. For more information on PCI loans, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of

the Corporation's 2016 Annual Report on Form 10-K and Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements.

Table 30 presents the unpaid principal balance, carrying value, related valuation allowance and the net carrying value as a percentage of the unpaid principal balance for the PCI loan portfolio.

45 Bank of America




Table 30	Purchased Credit-impaired Loan Portfolio

		June 30, 2017
(Dollars in millions)		Unpaid Principal Balance		Gross Carrying Value		Related Valuation Allowance		Carrying Value Net of Valuation Allowance		Percent of Unpaid Principal Balance
Residential mortgage ⁽¹⁾		$	9,442	$	9,274	$	165	$	9,109	96.47	%
Home equity		3,239		3,170		210		2,960		91.39
Total purchased credit-impaired loan portfolio		$	12,681	$	12,444	$	375	$	12,069	95.17

		December 31, 2016
Residential mortgage ⁽¹⁾		$	10,330	$	10,127	$	169	$	9,958	96.40	%
Home equity		3,689		3,611		250		3,361		91.11
Total purchased credit-impaired loan portfolio		$	14,019	$	13,738	$	419	$	13,319	95.01

⁽¹⁾

At June 30, 2017 and December 31, 2016, pay option loans had an unpaid principal balance of $1.7 billion and $1.9 billion and a carrying value of $1.6 billion and $1.8 billion. This includes $1.4 billion and $1.6 billion of loans that were credit-impaired upon acquisition and $161 million and $226 million of loans that are 90 days or more past due at June 30, 2017 and December 31, 2016. The total unpaid principal balance of pay option loans with accumulated negative amortization was $229 million and $303 million, including $12 million and $16 million of negative amortization at June 30, 2017 and December 31, 2016.

The total PCI unpaid principal balance decreased $1.3 billion, or 10 percent, during the six months ended June 30, 2017 primarily driven by payoffs, paydowns and write-offs. During the six months ended June 30, 2017, we sold PCI loans with a carrying value of $204 million compared to sales of $324 million for the same period in 2016.

Of the unpaid principal balance of $12.7 billion at June 30, 2017, $11.4 billion, or 90 percent, was current based on the contractual terms, $739 million, or six percent, was in early stage delinquency, and $432 million was 180 days or more past due, including $367 million of first-lien mortgages and $65 million of home equity loans.

The PCI residential mortgage loan portfolio represented 75 percent of the total PCI loan portfolio at June 30, 2017. Those loans to borrowers with a refreshed FICO score below 620 represented 25 percent of the PCI residential mortgage loan portfolio at June 30, 2017. Loans with a refreshed LTV greater than 90 percent, after consideration of purchase accounting adjustments and the related valuation allowance, represented 20

percent of the PCI residential mortgage loan portfolio and 23 percent based on the unpaid principal balance at June 30, 2017.

The PCI home equity portfolio represented 25 percent of the total PCI loan portfolio at June 30, 2017. Those loans with a refreshed FICO score below 620 represented 16 percent of the PCI home equity portfolio at June 30, 2017. Loans with a refreshed

CLTV greater than 90 percent, after consideration of purchase accounting adjustments and the related valuation allowance, represented 43 percent of the PCI home equity portfolio and 46 percent based on the unpaid principal balance at June 30, 2017.

U.S. Credit Card

At June 30, 2017, 97 percent of the U.S. credit card portfolio was managed in Consumer Banking with the remainder in GWIM. Outstandings in the U.S. credit card portfolio decreased $1.5 billion during the six months ended June 30, 2017 due to paydowns and a seasonal decline in purchase volume. Net charge-offs increased $67 million to $640 million and $86 million to $1.2 billion for the three and six months ended June 30, 2017 compared to the same periods in 2016 due to portfolio seasoning and loan growth. U.S. credit card loans 30 days or more past due and still accruing interest decreased $45 million and loans 90 days or more past due and still accruing interest decreased $10 million during the six months ended June 30, 2017, driven by seasonal declines.

Unused lines of credit for U.S. credit card totaled $328.9 billion and $321.6 billion at June 30, 2017 and December 31, 2016. The increase was driven by a seasonal decrease in line utilization due to a decrease in transaction volume as well as account growth and lines of credit increases.

Table 31 presents certain state concentrations for the U.S. credit card portfolio.




Table 31	U.S. Credit Card State Concentrations

		Outstandings				Accruing Past Due 90 Days or More				Net Charge-offs
		June 30 2017		December 31 2016		June 30 2017		December 31 2016		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)		June 30 2017		December 31 2016		June 30 2017		December 31 2016		2017		2016		2017		2016
California		$	14,214	$	14,251	$	120	$	115	$	103	$	91	$	199	$	183
Florida		7,771		7,864		81		85		70		60		137		124
Texas		7,037		7,037		65		65		50		41		97		82
New York		5,607		5,683		73		60		51		41		96		81
Washington		4,104		4,128		16		18		14		15		28		29
Other U.S.		52,043		53,315		417		439		352		325		689		661
Total U.S. credit card portfolio		$	90,776	$	92,278	$	772	$	782	$	640	$	573	$	1,246	$	1,160

Non-U.S. Credit Card

On June 1, 2017, the Corporation completed the sale of its non-U.S. consumer credit card business. For more information on the sale, see Recent Events on page 3 and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.



		Bank of America 46

Direct/Indirect Consumer

At June 30, 2017, approximately 54 percent of the direct/indirect portfolio was included in Consumer Banking (consumer auto and specialty lending – automotive, marine, aircraft, recreational vehicle loans and consumer personal loans) and 46 percent was included in GWIM (principally securities-based lending loans).

Outstandings in the direct/indirect portfolio decreased $596 million during the six months ended June 30, 2017 primarily driven by lower draws and utilization in the securities-based lending portfolio.

Table 32 presents certain state concentrations for the direct/indirect consumer loan portfolio.




Table 32	Direct/Indirect State Concentrations

		Outstandings				Accruing Past Due 90 Days or More				Net Charge-offs
		June 30 2017		December 31 2016		June 30 2017		December 31 2016		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)		June 30 2017		December 31 2016		June 30 2017		December 31 2016		2017		2016		2017		2016
California		$	11,131	$	11,300	$	2	$	3	$	2	$	1	$	7	$	5
Florida		9,347		9,418		3		3		7		6		16		13
Texas		9,507		9,406		3		5		6		4		16		8
New York		5,143		5,253		1		1		—		—		1		1
Georgia		3,254		3,255		4		4		4		1		7		3
Other U.S./Non-U.S.		55,111		55,457		19		18		13		11		33		27
Total direct/indirect loan portfolio		$	93,493	$	94,089	$	32	$	34	$	32	$	23	$	80	$	57

Other Consumer

At June 30, 2017, approximately 78 percent of the $2.7 billion other consumer portfolio was consumer auto leases included in Consumer Banking. The remainder is primarily associated with certain consumer finance businesses that we previously exited.

Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity

Table 33 presents nonperforming consumer loans, leases and foreclosed properties activity for the three and six months ended June 30, 2017 and 2016. For more information on nonperforming loans, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K and Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements. During the six months ended June 30, 2017, nonperforming consumer loans declined $722 million to $5.3 billion driven in part by loan sales of $261 million and net transfers of loans to held-for-sale of $198 million. Additionally, nonperforming loans declined as outflows outpaced new inflows.

The outstanding balance of a real estate-secured loan that is in excess of the estimated property value less costs to sell is charged off no later than the end of the month in which the loan becomes 180 days past due unless repayment of the loan is fully insured. At June 30, 2017, $2.1 billion, or 39 percent of nonperforming consumer real estate loans and foreclosed properties had been written down to their estimated property value less costs to sell, including $1.9 billion of nonperforming loans 180 days or more past due and $285 million of foreclosed properties. In addition, at June 30, 2017, $2.3 billion, or 43 percent of nonperforming consumer loans were modified and are

now current after successful trial periods, or are current loans classified as nonperforming loans in accordance with applicable policies.

Foreclosed properties decreased $78 million during the six months ended June 30, 2017 as liquidations outpaced additions. PCI loans are excluded from nonperforming loans as these loans were written down to fair value at the acquisition date; however, once we acquire the underlying real estate upon foreclosure of the delinquent PCI loan, it is included in foreclosed properties. Not included in foreclosed properties at June 30, 2017 was $1.0 billion of real estate that was acquired upon foreclosure of certain delinquent government-guaranteed loans (principally FHA-insured loans). We exclude these amounts from our nonperforming loans and foreclosed properties activity as we expect we will be reimbursed once the property is conveyed to the guarantor for principal and, up to certain limits, costs incurred during the foreclosure process and interest incurred during the holding period.

Nonperforming loans also include certain loans that have been modified in TDRs where economic concessions have been granted to borrowers experiencing financial difficulties. These concessions typically result from our loss mitigation activities and could include reductions in the interest rate, payment extensions, forgiveness of principal, forbearance or other actions. Certain TDRs are classified as nonperforming at the time of restructuring and may only be returned to performing status after considering the borrower’s sustained repayment performance for a reasonable period, generally six months. Nonperforming TDRs, excluding those modified loans in the PCI loan portfolio, are included in Table 33.

47 Bank of America




Table 33	Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity ⁽¹⁾

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)		2017			2016			2017			2016
Nonperforming loans and leases, beginning of period		$	5,546		$	7,247		$	6,004		$	8,165
Additions		682			799			1,500			1,750
Reductions:
Paydowns and payoffs		(170		)	(252		)	(400		)	(385		)
Sales		(119		)	(271		)	(261		)	(1,094		)
Returns to performing status ⁽²⁾		(368		)	(396		)	(754		)	(837		)
Charge-offs		(259		)	(334		)	(499		)	(729		)
Transfers to foreclosed properties		(53		)	(88		)	(110		)	(165		)
Transfers (to) / from loans held-for-sale		23			—			(198		)	—
Total net reductions to nonperforming loans and leases		(264		)	(542		)	(722		)	(1,460		)
Total nonperforming loans and leases, June 30 ⁽³⁾		5,282			6,705			5,282			6,705
Total foreclosed properties, June 30 ⁽⁴⁾		285			416			285			416
Nonperforming consumer loans, leases and foreclosed properties, June 30		$	5,567		$	7,121		$	5,567		$	7,121
Nonperforming consumer loans and leases as a percentage of outstanding consumer loans and leases ⁽⁵⁾		1.18		%	1.49		%
Nonperforming consumer loans, leases and foreclosed properties as a percentage of outstanding consumer loans, leases and foreclosed properties ⁽⁵⁾		1.24			1.58


⁽¹⁾	Balances do not include nonperforming LHFS of $4 million and $20 million and nonaccruing TDRs removed from the PCI loan portfolio prior to January 1, 2010 of $22 million and $38 million at June 30, 2017 and 2016 as well as loans accruing past due 90 days or more as presented in Table 23 and Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements.


⁽²⁾	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.


⁽³⁾	At June 30, 2017, 35 percent of nonperforming loans were 180 days or more past due.


⁽⁴⁾	Foreclosed property balances do not include properties insured by certain government-guaranteed loans, principally FHA-insured loans, of $1.0 billion and $1.3 billion at June 30, 2017 and 2016.


⁽⁵⁾	Outstanding consumer loans and leases exclude loans accounted for under the fair value option.

We classify junior-lien home equity loans as nonperforming when the first-lien loan becomes 90 days past due even if the junior-lien loan is performing. At June 30, 2017 and December 31, 2016, $374 million and $428 million of such junior-lien home

equity loans were included in nonperforming loans and leases.

Table 34 presents TDRs for the consumer real estate portfolio. Performing TDR balances are excluded from nonperforming loans and leases in Table 33.




Table 34	Consumer Real Estate Troubled Debt Restructurings

		June 30, 2017						December 31, 2016
(Dollars in millions)		Total		Nonperforming		Performing		Total		Nonperforming		Performing
Residential mortgage ^{(1, 2)}		$	11,120	$	1,686	$	9,434	$	12,631	$	1,992	$	10,639
Home equity ⁽³⁾		2,873		1,536		1,337		2,777		1,566		1,211
Total consumer real estate troubled debt restructurings		$	13,993	$	3,222	$	10,771	$	15,408	$	3,558	$	11,850


⁽¹⁾	At June 30, 2017 and December 31, 2016, residential mortgage TDRs deemed collateral dependent totaled $3.1 billion and $3.5 billion, and included $1.3 billion and $1.6 billion of loans classified as nonperforming and $1.8 billion and $1.9 billion of loans classified as performing.


⁽²⁾	Residential mortgage performing TDRs included $4.4 billion and $5.3 billion of loans that were fully-insured at June 30, 2017 and December 31, 2016.


⁽³⁾	Home equity TDRs deemed collateral dependent totaled $1.7 billion and $1.6 billion, and included $1.3 billion of loans classified as nonperforming for both periods, and $353 million and $301 million of loans classified as performing at June 30, 2017 and December 31, 2016, respectively.

In addition to modifying consumer real estate loans, we work with customers who are experiencing financial difficulty by modifying credit card and other consumer loans. Credit card and other consumer loan modifications generally involve a reduction in the customer’s interest rate on the account and placing the customer on a fixed payment plan not exceeding 60 months, all of which are considered TDRs (the renegotiated TDR portfolio).

Modifications of credit card and other consumer loans are made through renegotiation programs utilizing direct customer contact, but may also utilize external renegotiation programs. The renegotiated TDR portfolio is excluded in large part from Table 33 as substantially all of the loans remain on accrual status until either charged off or paid in full. At June 30, 2017 and December 31, 2016, our renegotiated TDR portfolio was $478 million and $610 million, of which $427 million and $493 million were current or less than 30 days past due under the modified terms. The decline in the renegotiated TDR portfolio was primarily driven by paydowns and charge-offs as well as lower program enrollments. For more information on the renegotiated TDR portfolio, see Note

4 – Outstanding Loans and Leases to the Consolidated Financial Statements.

Commercial Portfolio Credit Risk Management

Commercial credit risk is evaluated and managed with the goal that concentrations of credit exposure do not result in undesirable levels of risk. 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 39, 42 and 47 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, including our utilized exposure to the energy sector, which was three percent of total commercial utilized exposure at both June 30, 2017 and December 31, 2016, see



		Bank of America 48

Commercial Portfolio Credit Risk Management – Industry Concentrations on page 53 and Table 42.

For more information on our accounting policies regarding delinquencies, nonperforming status and net charge-offs for the commercial portfolio, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K.

Commercial Credit Portfolio

During the six months ended June 30, 2017, other than in the higher risk energy sub-sectors, credit quality among large corporate borrowers was strong. We saw further improvement in the energy sector in the six months ended June 30, 2017. Credit quality of commercial real estate borrowers continued to be strong with

conservative LTV ratios, stable market rents in most sectors and vacancy rates remaining low.

Outstanding commercial loans and leases increased $10.8 billion during the six months ended June 30, 2017 primarily in U.S. commercial. Nonperforming commercial loans and leases decreased $232 million to $1.6 billion and reservable criticized balances decreased $680 million to $15.6 billion during the six months ended June 30, 2017 driven by improvements in the energy sector. The allowance for loan and lease losses for the commercial portfolio decreased $78 million to $5.2 billion at June 30, 2017 compared to December 31, 2016. For additional information, see Allowance for Credit Losses on page 57.

Table 35 presents our commercial loans and leases portfolio and related credit quality information at June 30, 2017 and December 31, 2016.




Table 35	Commercial Loans and Leases

		Outstandings				Nonperforming				Accruing Past Due 90 Days or More
(Dollars in millions)		June 30 2017		December 31 2016		June 30 2017		December 31 2016		June 30 2017		December 31 2016
U.S. commercial		$	277,675	$	270,372	$	1,039	$	1,256	$	74	$	106
Commercial real estate ⁽¹⁾		59,177		57,355		123		72		—		7
Commercial lease financing		21,828		22,375		28		36		22		19
Non-U.S. commercial		90,786		89,397		269		279		—		5
		449,466		439,499		1,459		1,643		96		137
U.S. small business commercial ⁽²⁾		13,560		12,993		61		60		68		71
Commercial loans excluding loans accounted for under the fair value option		463,026		452,492		1,520		1,703		164		208
Loans accounted for under the fair value option ⁽³⁾		6,290		6,034		35		84		—		—
Total commercial loans and leases		$	469,316	$	458,526	$	1,555	$	1,787	$	164	$	208


⁽¹⁾	Includes U.S. commercial real estate loans of $55.6 billion and $54.3 billion and non-U.S. commercial real estate loans of $3.6 billion and $3.1 billion at June 30, 2017 and December 31, 2016.


⁽²⁾	Includes card-related products.


⁽³⁾	Commercial loans accounted for under the fair value option include U.S. commercial loans of $3.2 billion and $2.9 billion at June 30, 2017 and December 31, 2016 and includes $3.1 billion of non-U.S. commercial loans for both periods. For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.

Table 36 presents net charge-offs and related ratios for our commercial loans and leases for the three and six months ended June 30, 2017 and 2016. The decrease in net charge-offs of $23 million for the six months ended June 30, 2017 compared to the same period in 2016 was primarily due to lower energy sector related losses.




Table 36	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)		2017		2016			2017		2016			2017		2016		2017		2016
U.S. commercial		$	52	$	28		$	96	$	93		0.08	%	0.04	%	0.07	%	0.07	%
Commercial real estate		5		(2		)	1		(8		)	0.03		(0.01	)	—		(0.03	)
Commercial lease financing		1		15			1		13			0.01		0.30		0.01		0.13
Non-U.S. commercial		46		45			61		87			0.21		0.20		0.14		0.19
		104		86			159		185			0.09		0.08		0.07		0.09
U.S. small business commercial		53		50			105		102			1.60		1.55		1.60		1.59
Total commercial		$	157	$	136		$	264	$	287		0.14		0.12		0.12		0.13


⁽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 37 presents commercial credit exposure by type for utilized, unfunded and total binding committed credit exposure. Commercial utilized credit exposure includes standby letters of credit (SBLCs) and financial guarantees, bankers’ acceptances 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.

49 Bank of America

Total commercial utilized credit exposure increased $8.5 billion during the six months ended June 30, 2017 primarily driven by increases in loans and leases. The utilization rate for loans and

leases, SBLCs and financial guarantees, commercial letters of credit and bankers acceptances, in the aggregate, was 59 percent and 58 percent at June 30, 2017 and December 31, 2016.




Table 37	Commercial Credit Exposure by Type

		Commercial Utilized ⁽¹⁾				Commercial Unfunded ^{(2, 3, 4)}				Total Commercial Committed
(Dollars in millions)		June 30 2017		December 31 2016		June 30 2017		December 31 2016		June 30 2017		December 31 2016
Loans and leases ⁽⁵⁾		$	475,266	$	464,260	$	358,009	$	366,106	$	833,275	$	830,366
Derivative assets ⁽⁶⁾		39,190		42,512		—		—		39,190		42,512
Standby letters of credit and financial guarantees		34,810		33,135		686		660		35,496		33,795
Debt securities and other investments		27,217		26,244		4,395		5,474		31,612		31,718
Loans held-for-sale		4,602		6,510		1,343		3,824		5,945		10,334
Commercial letters of credit		1,553		1,464		95		112		1,648		1,576
Bankers’ acceptances		335		395		—		13		335		408
Other		391		372		—		—		391		372
Total		$	583,364	$	574,892	$	364,528	$	376,189	$	947,892	$	951,081


⁽¹⁾	Commercial utilized exposure includes loans of $6.3 billion and $6.0 billion and issued letters of credit with a notional amount of $262 million and $284 million accounted for under the fair value option at June 30, 2017 and December 31, 2016.


⁽²⁾	Commercial unfunded exposure includes commitments accounted for under the fair value option with a notional amount of $4.2 billion and $6.7 billion at June 30, 2017 and December 31, 2016.


⁽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 (e.g., syndicated or participated) to other financial institutions. The distributed amounts were $11.6 billion and $12.1 billion at June 30, 2017 and December 31, 2016.


⁽⁵⁾	Includes credit risk exposure associated with assets under operating lease arrangements of $5.9 billion and $5.7 billion at June 30, 2017 and December 31, 2016.

⁽⁶⁾

Derivative assets are carried at fair value, reflect the effects of legally enforceable master netting agreements and have been reduced by cash collateral of $34.6 billion and $43.3 billion at June 30, 2017 and December 31, 2016. Not reflected in utilized and committed exposure is additional non-cash derivative collateral held of $25.5 billion and $25.3 billion at June 30, 2017 and December 31, 2016, which consists primarily of other marketable securities.

Table 38 presents commercial utilized reservable criticized exposure by loan type. Criticized exposure corresponds to the Special Mention, Substandard and Doubtful asset categories as defined by regulatory authorities. Total commercial utilized reservable criticized exposure decreased $680 million, or four

percent, during the six months ended June 30, 2017 primarily driven by paydowns and net upgrades in the energy portfolio. Approximately 77 percent and 76 percent of commercial utilized reservable criticized exposure was secured at June 30, 2017 and December 31, 2016.




Table 38	Commercial Utilized Reservable Criticized Exposure

		June 30, 2017				December 31, 2016
(Dollars in millions)		Amount ⁽¹⁾		Percent ⁽²⁾		Amount ⁽¹⁾		Percent ⁽²⁾
U.S. commercial		$	10,029	3.28	%	$	10,311	3.46	%
Commercial real estate		642		1.06		399		0.68
Commercial lease financing		725		3.32		810		3.62
Non-U.S. commercial		3,381		3.47		3,974		4.17
		14,777		3.04		15,494		3.27
U.S. small business commercial		863		6.36		826		6.36
Total commercial utilized reservable criticized exposure		$	15,640	3.13		$	16,320	3.35


⁽¹⁾	Total commercial utilized reservable criticized exposure includes loans and leases of $14.3 billion and $14.9 billion at June 30, 2017 and December 31, 2016 and includes $1.4 billion of commercial letters of credit for both periods.


⁽²⁾	Percentages are calculated as commercial utilized reservable criticized exposure divided by total commercial utilized reservable exposure for each exposure category.

U.S. Commercial

At June 30, 2017, 71 percent of the U.S. commercial loan portfolio, excluding small business, was managed in Global Banking, 17 percent in Global Markets, 11 percent in GWIM (generally business-purpose loans for high net worth clients) and the remainder primarily in Consumer Banking. U.S. commercial loans, excluding loans accounted for under the fair value option, increased $7.3 billion, or three percent, during the six months ended June 30, 2017 due to growth across most of the commercial businesses. Reservable criticized balances decreased $282 million, or three percent, and nonperforming loans and leases decreased $217 million, or 17 percent, in the six months ended June 30, 2017 driven by improvements in the energy sector. Net charge-offs increased $24 million and $3 million for the three and six months ended June 30, 2017 compared to the same periods in 2016. The three month increase was primarily driven by a single energy client loss.

Commercial Real Estate

Commercial real estate primarily includes commercial loans and leases 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. The portfolio remains diversified across property types and geographic regions. California represented the largest state concentration at 24 percent and 23 percent of the commercial real estate loans and leases portfolio at June 30, 2017 and December 31, 2016. The commercial real estate portfolio is predominantly managed in Global Banking and consists of loans made primarily to public and private developers, and commercial real estate firms. Outstanding loans increased $1.8 billion, or three percent, during the six months ended June 30, 2017 due to new originations outpacing paydowns.

For the three and six months ended June 30, 2017, we continued to see low default rates and solid credit quality in both the residential and non-residential portfolios. We use a number of



		Bank of America 50

proactive risk mitigation initiatives to reduce adversely rated exposure in the commercial real estate portfolio, including transfers of deteriorating exposures to 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.

Nonperforming commercial real estate loans and foreclosed properties increased $77 million, or 90 percent, driven by a small number of clients across property types. Reservable criticized

balances increased $243 million, or 61 percent, during the six months ended June 30, 2017 primarily due to loan downgrades. Net charge-offs were $5 million and $1 million for the three and six months ended June 30, 2017 compared to net recoveries of $2 million and $8 million for the same periods in 2016. Table 39 presents outstanding commercial real estate loans by geographic region, based on the geographic location of the collateral, and by property type.




Table 39	Outstanding Commercial Real Estate Loans

(Dollars in millions)		June 30 2017		December 31 2016
By Geographic Region
California		$	13,983	$	13,450
Northeast		9,835		10,329
Southwest		7,755		7,567
Southeast		5,650		5,630
Midwest		4,169		4,380
Florida		3,405		3,213
Midsouth		2,957		2,346
Northwest		2,723		2,430
Illinois		2,463		2,408
Non-U.S.		3,573		3,103
Other ⁽¹⁾		2,664		2,499
Total outstanding commercial real estate loans		$	59,177	$	57,355
By Property Type
Non-residential
Office		$	17,893	$	16,643
Shopping centers/retail		8,985		8,794
Multi-family rental		8,730		8,817
Hotels / Motels		5,810		5,550
Industrial / Warehouse		5,500		5,357
Multi-Use		2,806		2,822
Unsecured		2,094		1,730
Land and land development		257		357
Other		5,651		5,595
Total non-residential		57,726		55,665
Residential		1,451		1,690
Total outstanding commercial real estate loans		$	59,177	$	57,355


⁽¹⁾	Includes unsecured loans to real estate investment trusts and national home builders whose portfolios of properties span multiple geographic regions and properties in the states of Colorado, Utah, Hawaii, Wyoming and Montana.

At June 30, 2017, total committed non-residential exposure was $78.3 billion compared to $76.9 billion at December 31, 2016, of which $57.7 billion and $55.7 billion were funded loans. Non-residential nonperforming loans and foreclosed properties increased $77 million, or 95 percent, to $158 million at June 30, 2017 compared to December 31, 2016 driven by a small number of clients across property types. The non-residential nonperforming loans and foreclosed properties represented 0.27 percent and 0.14 percent of total non-residential loans and foreclosed properties at June 30, 2017 and December 31, 2016. Non-residential utilized reservable criticized exposure increased $229 million, or 58 percent, to $626 million at June 30, 2017 compared to $397 million at December 31, 2016, which represented 1.06 percent and 0.70 percent of non-residential utilized reservable exposure. For the non-residential portfolio, net charge-offs increased $6 million to $5 million and increased $8 million to $1 million for the three and six months ended June 30, 2017 compared to the same periods in 2016.

At June 30, 2017, total committed residential exposure was $3.3 billion compared to $3.7 billion at December 31, 2016, of which $1.5 billion and $1.7 billion were funded secured loans.

The nonperforming loans, leases and foreclosed properties and the utilized reservable criticized ratios for the residential portfolio were 0.32 percent and 1.09 percent at June 30, 2017 compared to 0.35 percent and 0.16 percent at December 31, 2016.

At June 30, 2017 and December 31, 2016, the commercial real estate loan portfolio included $7.1 billion and $6.8 billion of funded construction and land development loans that were originated to fund the construction and/or rehabilitation of commercial properties. Reservable criticized construction and land development loans totaled $262 million and $107 million, and nonperforming construction and land development loans and foreclosed properties totaled $55 million and $44 million at June 30, 2017 and December 31, 2016. During a property’s construction phase, interest income is typically paid from interest reserves that are established at the inception of the loan. As construction is completed and the property is put into service, these interest reserves are depleted and interest payments from operating cash flows begin. We do not recognize interest income on nonperforming loans regardless of the existence of an interest reserve.

51 Bank of America

Non-U.S. Commercial

At June 30, 2017, 78 percent of the non-U.S. commercial loan portfolio was managed in Global Banking and 22 percent in Global Markets. Outstanding loans, excluding loans accounted for under the fair value option, increased $1.4 billion during the six months ended June 30, 2017. Net charge-offs increased $1 million to $46 million and decreased $26 million to $61 million for the three and six months ended June 30, 2017 compared to the same periods in 2016. The six month decrease was primarily due to a decline in energy sector related losses. For more information on the non-U.S. commercial portfolio, see Non-U.S. Portfolio on page 56.

U.S. Small Business Commercial

The U.S. small business commercial loan portfolio is comprised of small business card loans and small business loans managed in Consumer Banking. Credit card-related products were 50 percent and 48 percent of the U.S. small business commercial portfolio at June 30, 2017 and December 31, 2016. Net charge-offs increased $3 million to $53 million and increased $3 million to $105 million and for the three and six months ended June 30, 2017 compared to the same periods in 2016. Of the U.S. small

business commercial net charge-offs, 89 percent and 88 percent were credit card-related products for the three and six months ended June 30, 2017 compared to 87 percent and 88 percent for the same periods in 2016.

Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity

Table 40 presents the nonperforming commercial loans, leases and foreclosed properties activity during the three and six months ended June 30, 2017 and 2016. Nonperforming loans do not include loans accounted for under the fair value option. During the three and six months ended June 30, 2017, nonperforming commercial loans and leases decreased $208 million and $183 million to $1.5 billion. Approximately 76 percent of commercial nonperforming loans, leases and foreclosed properties were secured and approximately 63 percent were contractually current. Commercial nonperforming loans were carried at approximately 86 percent of their unpaid principal balance before consideration of the allowance for loan and lease losses as the carrying value of these loans has been reduced to the estimated property value less costs to sell.




Table 40	Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity ^{(1, 2)}

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)		2017			2016			2017			2016
Nonperforming loans and leases, beginning of period		$	1,728		$	1,603		$	1,703		$	1,212
Additions		288			491			760			1,197
Reductions to nonperforming loans and leases:
Paydowns		(266		)	(211		)	(533		)	(331		)
Sales		(33		)	(87		)	(55		)	(93		)
Returns to performing status ⁽³⁾		(86		)	(29		)	(140		)	(76		)
Charge-offs		(85		)	(106		)	(167		)	(248		)
Transfers to foreclosed properties ⁽⁴⁾		(5		)	(2		)	(27		)	(2		)
Transfers to loans held-for-sale		(21		)	—			(21		)	—
Total net additions/(reductions) to nonperforming loans and leases		(208		)	56			(183		)	447
Total nonperforming loans and leases, June 30		1,520			1,659			1,520			1,659
Total foreclosed properties, June 30 ⁽⁴⁾		40			19			40			19
Nonperforming commercial loans, leases and foreclosed properties, June 30		$	1,560		$	1,678		$	1,560		$	1,678
Nonperforming commercial loans and leases as a percentage of outstanding commercial loans and leases ⁽⁵⁾		0.33		%	0.37		%
Nonperforming commercial loans, leases and foreclosed properties as a percentage of outstanding commercial loans, leases and foreclosed properties ⁽⁵⁾		0.34			0.38


⁽¹⁾	Balances do not include nonperforming LHFS of $264 million and $203 million at June 30, 2017 and 2016.


⁽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, or when the loan otherwise becomes well-secured and is in the process of collection. TDRs are generally classified as performing after a sustained period of demonstrated payment performance.


⁽⁴⁾	New foreclosed properties represents transfers of nonperforming loans to foreclosed properties net of charge-offs recorded during the first 90 days after transfer of a loan to foreclosed properties.


⁽⁵⁾	Outstanding commercial loans exclude loans accounted for under the fair value option.



		Bank of America 52

Table 41 presents our commercial TDRs by product type and performing status. U.S. small business commercial TDRs are comprised of renegotiated small business card loans and small business loans. The renegotiated small business card loans are not classified as nonperforming as they are charged off no later than the end of the month in which the loan becomes 180 days past due. For more information on TDRs, see Note 4 – Outstanding Loans and Leases to the Consolidated Financial Statements.




Table 41	Commercial Troubled Debt Restructurings

		June 30, 2017						December 31, 2016
(Dollars in millions)		Total		Nonperforming		Performing		Total		Nonperforming		Performing
U.S. commercial		$	1,502	$	549	$	953	$	1,860	$	720	$	1,140
Commercial real estate		116		77		39		140		45		95
Commercial lease financing		7		5		2		4		2		2
Non-U.S. commercial		219		12		207		308		25		283
		1,844		643		1,201		2,312		792		1,520
U.S. small business commercial		18		4		14		15		2		13
Total commercial troubled debt restructurings		$	1,862	$	647	$	1,215	$	2,327	$	794	$	1,533

Industry Concentrations

Table 42 presents commercial committed and utilized credit exposure by industry and the total net credit default protection purchased to cover the funded and unfunded portions of certain credit exposures. Our commercial credit exposure is diversified across a broad range of industries. Total commercial committed exposure decreased $3.2 billion, or less than one percent, during the six months ended June 30, 2017 to $947.9 billion. The decrease in commercial committed exposure was concentrated in the Healthcare Equipment and Services sector and the Banking sector. Decreases were partially offset by higher exposure to the Retailing sector and the Food, Beverage and Tobacco sector.

Industry limits are used internally to manage industry concentrations and are based on committed exposure that is allocated on an industry-by-industry basis. A risk management framework is in place to set and approve industry limits as well as to provide ongoing monitoring. The Management Risk Committee oversees industry limit governance.

Diversified Financials, our largest industry concentration, with committed exposure of $126.3 billion, increased $1.7 billion, or one percent, during the six months ended June 30, 2017. The

increase primarily reflected an increase in exposure to several counterparties.

Real estate, our second largest industry concentration with committed exposure of $85.1 billion, increased $1.5 billion, or two percent, during the six months ended June 30, 2017. For more information on the commercial real estate and related portfolios, see Commercial Portfolio Credit Risk Management – Commercial Real Estate on page 50.

Retailing committed exposure increased $5.9 billion, or nine percent, to $74.4 billion during the six months ended June 30, 2017. The increase in committed exposure occurred primarily in the Internet and Catalog retail sector.

Our energy-related committed exposure decreased $2.4 billion, or six percent, to $36.9 billion during the six months ended June 30, 2017. Energy sector net charge-offs were $26 million during the six months ended June 30, 2017 compared to $181 million for the same period in 2016. Energy sector reservable criticized exposure decreased $1.2 billion to $4.4 billion during the six months ended June 30, 2017 due to improvement in credit quality of some borrowers coupled with exposure reductions and fewer new criticized exposures. The energy allowance for credit losses decreased $115 million to $810 million during the six months ended June 30, 2017.

53 Bank of America




Table 42	Commercial Credit Exposure by Industry ⁽¹⁾

		Commercial Utilized				Total Commercial Committed ⁽²⁾
(Dollars in millions)		June 30 2017		December 31 2016		June 30 2017			December 31 2016
Diversified financials		$	80,979	$	81,156	$	126,267		$	124,535
Real estate ⁽³⁾		63,480		61,203		85,115			83,658
Retailing		42,841		41,630		74,396			68,507
Capital goods		34,373		34,278		66,302			64,202
Healthcare equipment and services		36,749		37,656		56,365			64,663
Government and public education		46,057		45,694		54,695			54,626
Materials		22,964		22,578		45,851			44,357
Banking		38,117		39,877		42,675			47,799
Food, beverage and tobacco		22,211		19,669		42,421			37,145
Consumer services		27,061		27,413		42,383			42,523
Energy		17,044		19,686		36,878			39,231
Commercial services and supplies		21,336		21,241		34,137			35,360
Transportation		20,917		19,805		28,886			27,483
Utilities		12,176		11,349		27,273			27,140
Media		13,195		13,419		24,911			27,116
Individuals and trusts		17,619		16,364		22,971			21,764
Pharmaceuticals and biotechnology		5,670		5,539		18,936			18,910
Software and services		9,164		7,991		18,361			19,790
Technology hardware and equipment		7,846		7,793		18,092			18,429
Telecommunication services		6,237		6,317		14,535			16,925
Consumer durables and apparel		6,400		6,042		12,161			11,460
Insurance, including monolines		6,049		7,406		11,938			13,936
Automobiles and components		5,391		5,459		11,546			12,969
Food and staples retailing		4,771		4,795		9,265			8,869
Religious and social organizations		4,259		4,423		6,071			6,252
Other		10,458		6,109		15,461			13,432
Total commercial credit exposure by industry		$	583,364	$	574,892	$	947,892		$	951,081
Net credit default protection purchased on total commitments ⁽⁴⁾						$	(1,875	)	$	(3,477	)


⁽¹⁾	Includes U.S. small business commercial exposure.


⁽²⁾	Includes the notional amount of unfunded legally binding lending commitments net of amounts distributed (e.g., syndicated or participated) to other financial institutions. The distributed amounts were $11.6 billion and $12.1 billion at June 30, 2017 and December 31, 2016.


⁽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 borrowers’ or counterparties’ primary business activity using operating cash flows and primary source of repayment as key factors.


⁽⁴⁾	Represents net notional credit protection purchased. For additional information, see Commercial Portfolio Credit Risk Management – Risk Mitigation below.

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, 2017 and December 31, 2016, 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 $1.9 billion and $3.5 billion. We recorded net losses of $16 million and $47 million for the three and six months ended June 30, 2017 compared to net losses of $125 million and $328 million for the same periods in 2016 on these positions. The gains and losses on these instruments were 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 50. For additional information, see Trading Risk Management on page 60.

Tables 43 and 44 present the maturity profiles and the credit exposure debt ratings of the net credit default protection portfolio at June 30, 2017 and December 31, 2016.




Table 43	Net Credit Default Protection by Maturity

		June 30 2017		December 31 2016
Less than or equal to one year		38	%	56	%
Greater than one year and less than or equal to five years		60		41
Greater than five years		2		3
Total net credit default protection		100	%	100	%



		Bank of America 54




Table 44	Net Credit Default Protection by Credit Exposure Debt Rating

		June 30, 2017					December 31, 2016
(Dollars in millions)		Net Notional ⁽¹⁾			Percent of Total		Net Notional ⁽¹⁾			Percent of Total
Ratings ^{(2, 3)}
A		$	(115	)	6.1	%	$	(135	)	3.9	%
BBB		(585		)	31.2		(1,884		)	54.2
BB		(644		)	34.3		(871		)	25.1
B		(465		)	24.8		(477		)	13.7
CCC and below		(52		)	2.8		(81		)	2.3
NR ⁽⁴⁾		(14		)	0.8		(29		)	0.8
Total net credit default protection		$	(1,875	)	100.0	%	$	(3,477	)	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.

In addition to our net notional credit default protection purchased to cover the funded and unfunded portion of certain credit exposures, credit derivatives are used for market-making activities for clients and establishing positions intended to profit from directional or relative value changes. We execute the majority of our credit derivative trades in the OTC market with large, multinational financial institutions, including broker-dealers and, to a lesser degree, with a variety of other investors. Because these

transactions are executed in the OTC market, we are subject to settlement risk. We are also subject to credit risk in the event that these counterparties fail to perform under the terms of these contracts. In most cases, credit derivative transactions are executed on a daily margin basis. Therefore, events such as a credit downgrade, depending on the ultimate rating level, or a breach of credit covenants would typically require an increase in the amount of collateral required by the counterparty, where applicable, and/or allow us to take additional protective measures such as early termination of all trades.

Table 45 presents the total contract/notional amount of credit derivatives outstanding and includes both purchased and written credit derivatives. The credit risk amounts are measured as net asset exposure by counterparty, taking into consideration all contracts with the counterparty. For more information on our written credit derivatives, see Note 2 – Derivatives to the Consolidated Financial Statements.

The credit risk amounts discussed above and presented in Table 45 take into consideration the effects of legally enforceable master netting agreements while amounts disclosed in Note 2 – Derivatives to the Consolidated Financial Statements are shown on a gross basis. Credit risk reflects the potential benefit from offsetting exposure to non-credit derivative products with the same counterparties that may be netted upon the occurrence of certain events, thereby reducing our overall exposure.




Table 45	Credit Derivatives


		June 30, 2017				December 31, 2016
(Dollars in millions)		Contract/ Notional		Credit Risk		Contract/ Notional		Credit Risk
Purchased credit derivatives:
Credit default swaps		$	531,117	$	2,528	$	603,979	$	2,732
Total return swaps/other		33,670		226		21,165		433
Total purchased credit derivatives		$	564,787	$	2,754	$	625,144	$	3,165
Written credit derivatives:
Credit default swaps		$	521,589	n/a		$	614,355	n/a
Total return swaps/other		37,761		n/a		25,354		n/a
Total written credit derivatives		$	559,350	n/a		$	639,709	n/a

n/a = not applicable

Counterparty Credit Risk Valuation Adjustments

We record counterparty credit risk valuation adjustments on certain derivative assets, including our credit default protection purchased, in order to properly reflect the credit risk of the counterparty, as presented in Table 46. We calculate CVA based on a modeled expected exposure that incorporates current market risk factors including changes in market spreads and non-credit related market factors that affect the value of a derivative. The exposure also takes into consideration credit mitigants such as legally enforceable master netting agreements and collateral. For additional information, see Note 2 – Derivatives to the Consolidated Financial Statements.

We enter into risk management activities to offset market driven exposures. We often hedge the counterparty spread risk in CVA with credit default swaps (CDS). We hedge other market risks in CVA primarily with currency and interest rate swaps. In certain instances, the net-of-hedge amounts in the following table move

in the same direction as the gross amount or may move in the opposite direction. This movement is a consequence of the complex interaction of the risks being hedged, resulting in limitations in the ability to perfectly hedge all of the market exposures at all times.




Table 46	Credit Valuation Gains and Losses

		Three Months Ended June 30
Gains (Losses)		2017							2016
(Dollars in millions)		Gross		Hedge			Net		Gross			Hedge		Net
Credit valuation		$	97	$	(45	)	$	52	$	(26	)	$	59	$	33

		Six Months Ended June 30
		2017							2016
		Gross		Hedge			Net		Gross			Hedge		Net
Credit valuation		$	258	$	(180	)	$	78	$	(235	)	$	320	$	85

55 Bank of America

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.

Table 47 presents our 20 largest non-U.S. country exposures as of June 30, 2017. These exposures accounted for 88 percent of our total non-U.S. exposure at both June 30, 2017 and December 31, 2016. Net country exposure for these 20 countries decreased $4.2 billion in the six months ended June 30, 2017 primarily driven by decreases in the U.K., Switzerland, Japan, Italy and Brazil, partially offset by increases in the Netherlands, South Korea and Australia. On a product basis, the decrease was driven by the sale of the non-U.S. consumer credit card business, lower unfunded commitments in Switzerland, and lower funded commitments in Japan, Italy and Brazil. These reductions were

partially offset by higher funded commitments in the Netherlands and Australia, and increased securities exposure in South Korea.

Non-U.S. exposure is presented on an internal risk management basis and includes sovereign and non-sovereign credit exposure, securities and other investments issued by or domiciled in countries other than the U.S.

Funded loans and loan equivalents include loans, leases, and other extensions of credit and funds, including letters of credit and due from placements, which have not been reduced by collateral, hedges or credit default protection. Unfunded commitments are the undrawn portion of legally binding commitments related to loans and loan equivalents.

Net counterparty exposure includes the fair value of derivatives, including the counterparty risk associated with CDS, and secured financing transactions.

Securities and other investments are carried at fair value and long securities exposures are netted against short exposures with the same underlying issuer to, but not below, zero (i.e., negative issuer exposures are reported as zero).

Net country exposure represents country exposure less hedges and credit default protection purchased, net of credit default protection sold. 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 2016 Annual Report on Form 10-K.




Table 47	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 2017		Hedges and Credit Default Protection			Net Country Exposure at June 30 2017		Increase (Decrease) from December 31 2016
United Kingdom		$	20,535	$	15,186	$	5,966	$	1,410	$	43,097	$	(4,527	)	$	38,570	$	(9,163	)
Germany		13,077		7,930		1,877		3,709		26,593		(3,360		)	23,233		855
Canada		7,685		7,637		2,485		1,990		19,797		(817		)	18,980		206
Japan		9,599		558		2,030		3,207		15,394		(1,751		)	13,643		(1,368		)
Brazil		8,217		363		1,254		2,924		12,758		(324		)	12,434		(1,232		)
France		4,516		5,603		2,230		4,618		16,967		(4,842		)	12,125		1,431
China		10,153		833		490		949		12,425		(387		)	12,038		1,153
Australia		5,664		2,922		453		1,782		10,821		(388		)	10,433		1,510
India		5,915		211		374		3,840		10,340		(856		)	9,484		256
Netherlands		4,591		3,600		718		2,322		11,231		(1,802		)	9,429		2,031
Hong Kong		7,136		144		605		765		8,650		(53		)	8,597		1,118
South Korea		4,861		496		1,052		2,159		8,568		(553		)	8,015		1,909
Singapore		2,885		352		1,112		2,264		6,613		(74		)	6,539		1,121
Mexico		3,716		1,364		230		896		6,206		(432		)	5,774		1,290
Switzerland		3,168		3,422		277		154		7,021		(1,532		)	5,489		(4,157		)
Italy		1,289		1,317		515		886		4,007		(1,176		)	2,831		(1,256		)
Spain		1,650		996		290		863		3,799		(1,026		)	2,773		227
Turkey		2,621		50		32		73		2,776		(207		)	2,569		(121		)
Belgium		1,031		688		119		796		2,634		(242		)	2,392		466
United Arab Emirates		1,968		111		284		2		2,365		(93		)	2,272		(471		)
Total top 20 non-U.S. countries exposure		$	120,277	$	53,783	$	22,393	$	35,609	$	232,062	$	(24,442	)	$	207,620	$	(4,195	)

A number of economic conditions and geopolitical events have given rise to risk aversion in certain emerging markets. Our two largest emerging market country exposures at June 30, 2017 were Brazil and China. At June 30, 2017, net exposure to Brazil was $12.4 billion, concentrated in sovereign securities, oil and gas companies and commercial banks. At June 30, 2017, net exposure to China was $12.0 billion, concentrated in large state-owned companies, subsidiaries of multinational corporations and commercial banks.

The outlook for policy direction and therefore economic performance in the EU remains uncertain as a consequence of reduced political cohesion among EU countries. In addition, the results of the accelerated elections in the U.K. in June 2017 have increased uncertainty on the U.K.'s ability to negotiate its exit from the EU in a favorable manner. Our largest EU country exposure at June 30, 2017 was the U.K. At June 30, 2017, net exposure to the U.K. was $38.6 billion, concentrated in multinational corporations and sovereign clients. For additional information, see



		Bank of America 56

Executive Summary – Second Quarter 2017 Economic and Business Environment on page 3.

Provision for Credit Losses

The provision for credit losses decreased $250 million to $726 million, and $412 million to $1.6 billion for the three and six months ended June 30, 2017 compared to the same periods in 2016. The provision for credit losses was $182 million and $281 million lower than net charge-offs for the three and six months ended June 30, 2017, resulting in a reduction in the allowance for credit losses. This compared to a reduction of $9 million and $80 million in the allowance for credit losses for the three and six months ended June 30, 2016.

The provision for credit losses for the consumer portfolio decreased $127 million to $606 million, and increased $243 million to $1.4 billion for the three and six months ended June 30, 2017 compared to the same periods in 2016. The decrease for the three-month period was primarily driven by improvement in the home equity and residential mortgage portfolios due to increased home prices and lower nonperforming loans. The increase for the six-month period was primarily due to portfolio seasoning and loan growth in the U.S. credit card portfolio. Included in the provision is a benefit of $24 million and an expense of $44 million related to the PCI loan portfolio for the three and six months ended June 30, 2017 compared to a benefit of $12 million and $89 million for the same periods in 2016.

The provision for credit losses for the commercial portfolio, including unfunded lending commitments, decreased $123 million to $120 million, and $655 million to $183 million for the three and six months ended June 30, 2017 compared to the same periods in 2016 driven by reductions in energy exposures.

Allowance for Credit Losses

Allowance for Loan and Lease Losses

The allowance for loan and lease losses is comprised of two components. The first component covers nonperforming commercial loans and TDRs. The second component covers loans and leases on which there are incurred losses that are not yet individually identifiable, as well as incurred losses that may not be represented in the loss forecast models. We evaluate the adequacy of the allowance for loan and lease losses based on the total of these two components. The allowance for loan and lease losses excludes LHFS and loans accounted for under the fair value option as the fair value reflects a credit risk component. For more information on the allowance for loan and lease losses, see Allowance for Credit Losses in the MD&A of the Corporation's 2016 Annual Report on Form 10-K.

During the three and six months ended June 30, 2017, the factors that impacted the allowance for loan and lease losses included improvements in the credit quality of the consumer real estate portfolios driven by continuing improvements in the U.S. economy and labor markets, proactive credit risk management initiatives and the impact of high credit quality originations. Evidencing the improvements in the U.S. economy and labor markets are downward unemployment trends and increases in home prices. In addition to these improvements, in the consumer

portfolio, nonperforming consumer loans decreased $722 million in the six months ended June 30, 2017 as returns to performing status, charge-offs, paydowns and loan sales continued to outpace new nonaccrual loans. During the six months ended June 30, 2017, the allowance for loan and lease losses in the commercial portfolio reflected decreased energy reserves primarily driven by reductions in energy exposures.

The allowance for loan and lease losses for the consumer portfolio, as presented in Table 49, was $5.7 billion at June 30, 2017, a decrease of $527 million from December 31, 2016. The decrease was primarily in the home equity portfolio and the non-U.S. card portfolio which was sold on June 1, 2017, partially offset by an increase in the U.S. credit card portfolio. The reductions in the home equity portfolio were due to improved home prices, lower nonperforming loans and a decrease in loan balances. The increase in the U.S. credit card portfolio was driven by portfolio seasoning and loan growth.

The allowance for loan and lease losses for the commercial portfolio, as presented in Table 49, was $5.2 billion at June 30, 2017, a decrease of $78 million from December 31, 2016 driven by decreased energy reserves due to reductions in the higher risk energy sub-sectors. Commercial utilized reservable criticized exposure decreased to $15.6 billion at June 30, 2017 from $16.3 billion (to 3.13 percent from 3.35 percent of total commercial utilized reservable exposure) at December 31, 2016, largely due to net upgrades and paydowns in the energy portfolio. Nonperforming commercial loans decreased to $1.5 billion at June 30, 2017 from $1.7 billion (to 0.33 percent from 0.38 percent of outstanding commercial loans excluding loans accounted for under the fair value option) at December 31, 2016. See Tables 35, 36 and 38 for additional details on key commercial credit statistics.

The allowance for loan and lease losses as a percentage of total loans and leases outstanding was 1.20 percent at June 30, 2017 compared to 1.26 percent at December 31, 2016. The June 30, 2017 and December 31, 2016 ratios above include the PCI loan portfolio. Excluding the PCI loan portfolio, the allowance for loan and lease losses as a percentage of total loans and leases outstanding was 1.17 percent and 1.24 percent at June 30, 2017 and December 31, 2016.

Reserve for Unfunded Lending Commitments

In addition to the allowance for loan and lease losses, we also estimate probable losses related to unfunded lending commitments such as letters of credit, financial guarantees, unfunded bankers’ acceptances and binding loan commitments, excluding commitments accounted for under the fair value option. For more information on the reserve for unfunded lending commitments, see Allowance for Credit Losses in the MD&A of the Corporation's 2016 Annual Report on Form 10-K.

The reserve for unfunded lending commitments was $757 million at June 30, 2017, a decrease of $5 million from December 31, 2016.

Table 48 presents a rollforward of the allowance for credit losses, which includes the allowance for loan and lease losses and the reserve for unfunded lending commitments, for the three and six months ended June 30, 2017 and 2016.

57 Bank of America




Table 48	Allowance for Credit Losses

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)		2017			2016			2017			2016
Allowance for loan and lease losses, beginning of period		$	11,112		$	12,069		$	11,237		$	12,234
Loans and leases charged off
Residential mortgage		(45		)	(88		)	(106		)	(273		)
Home equity		(153		)	(216		)	(296		)	(409		)
U.S. credit card		(753		)	(680		)	(1,471		)	(1,373		)
Non-U.S. credit card⁽¹⁾		(44		)	(63		)	(103		)	(124		)
Direct/Indirect consumer		(107		)	(88		)	(221		)	(189		)
Other consumer		(50		)	(53		)	(105		)	(110		)
Total consumer charge-offs		(1,152		)	(1,188		)	(2,302		)	(2,478		)
U.S. commercial ⁽²⁾		(141		)	(124		)	(278		)	(282		)
Commercial real estate		(8		)	(3		)	(8		)	(8		)
Commercial lease financing		(3		)	(17		)	(6		)	(17		)
Non-U.S. commercial		(46		)	(46		)	(66