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
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number:
1-6523
Exact name of registrant as specified in its charter:
Bank of America Corporation
State or other jurisdiction of incorporation or organization:
Delaware
IRS Employer Identification No.:
56-0906609
Address of principal executive offices:
Bank of America Corporate Center
100 N. Tryon Street
Charlotte, North Carolina 28255
Registrant's telephone number, including area code:
(704) 386-5681
Former name, former address and former fiscal year, if changed since last report:
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 | ||
Consolidated Statement of Comprehensive Income | ||
Consolidated Balance Sheet | ||
Consolidated Statement of Changes in Shareholders' Equity | ||
Consolidated Statement of Cash Flows | ||
Notes to Consolidated Financial Statements | ||
Note 1 – Summary of Significant Accounting Principles | ||
Note 2 – Derivatives | ||
Note 3 – Securities | ||
Note 4 – Outstanding Loans and Leases | ||
Note 5 – Allowance for Credit Losses | ||
Note 6 – Securitizations and Other Variable Interest Entities | ||
Note 7 – Representations and Warranties Obligations and Corporate Guarantees | ||
Note 8 – Goodwill and Intangible Assets | ||
Note 9 – Federal Funds Sold or Purchased, Securities Financing Agreements and Short-term Borrowings | ||
Note 10 – Commitments and Contingencies | ||
Note 11 – Shareholders’ Equity | ||
Note 12 – Accumulated Other Comprehensive Income (Loss) | ||
Note 13 – Earnings Per Common Share | ||
Note 14 – Fair Value Measurements | ||
Note 15 – Fair Value Option | ||
Note 16 – Fair Value of Financial Instruments | ||
Note 17 – Business Segment Information | ||
Glossary | ||
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | ||
Interest Rate Risk Management for the Banking Book | ||
Non-GAAP Reconciliations | ||
Item 3. Quantitative and Qualitative Disclosures about Market Risk | ||
Item 4. Controls and Procedures | ||
1 Bank of America
Part II. Other Information
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Bank of America Corporation (the "Corporation") and its management may make certain statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipates,” “targets,” “expects,” “hopes,” “estimates,” “intends,” “plans,” “goals,” “believes,” “continue" and other similar expressions or future or conditional verbs such as “will,” “may,” “might,” “should,” “would” and “could.” Forward-looking statements represent the Corporation's current expectations, plans or forecasts of its future results, revenues, 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 | |||||||||||||||
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) | 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. |
(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 | ||||||
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 | |||||||||||||||||