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 September 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 October 27, 2017, there were 10,430,613,675 shares of Bank of America Corporation Common Stock outstanding.

Bank of America Corporation and Subsidiaries

September 30, 2017

Form 10-Q

INDEX

Part I. Financial Information



Item 1. Financial Statements		Page
Consolidated Statement of Income		68
Consolidated Statement of Comprehensive Income		69
Consolidated Balance Sheet		70
Consolidated Statement of Changes in Shareholders' Equity		72
Consolidated Statement of Cash Flows		73
Notes to Consolidated Financial Statements		74
Note 1 – Summary of Significant Accounting Principles		74
Note 2 – Derivatives		75
Note 3 – Securities		83
Note 4 – Outstanding Loans and Leases		87
Note 5 – Allowance for Credit Losses		98
Note 6 – Securitizations and Other Variable Interest Entities		100
Note 7 – Representations and Warranties Obligations and Corporate Guarantees		104
Note 8 – Goodwill and Intangible Assets		106
Note 9 – Federal Funds Sold or Purchased, Securities Financing Agreements and Short-term Borrowings		107
Note 10 – Commitments and Contingencies		109
Note 11 – Shareholders’ Equity		111
Note 12 – Accumulated Other Comprehensive Income (Loss)		112
Note 13 – Earnings Per Common Share		113
Note 14 – Fair Value Measurements		113
Note 15 – Fair Value Option		123
Note 16 – Fair Value of Financial Instruments		125
Note 17 – Business Segment Information		125
Glossary		128



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		38
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		67
Item 4. Controls and Procedures		67

1 Bank of America

Part II. Other Information



Item 1. Legal Proceedings		131
Item 1A. Risk Factors		131
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		131
Item 6. Exhibits		132
Signature		132

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 and 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 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 or failure to take actions identified therein; the impact of implementation and compliance with U.S. and international laws, regulations and regulatory interpretations, including, but not limited to, recovery and resolution planning requirements, Federal Deposit Insurance Corporation assessments, the Volcker Rule, fiduciary standards 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 cyber attacks; the impact on the Corporation's business, financial condition and results of operations from the planned exit of the United Kingdom from the European Union; 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 September 30, 2017, the Corporation had approximately $2.3 trillion in assets and a headcount of approximately 210,000 employees. Headcount remained relatively unchanged since December 31, 2016.

As of September 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 approximately 24 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 $2.7 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.

Third Quarter 2017 Economic and Business Environment

U.S. macroeconomic trends in the third quarter were characterized by a softening in economic growth and low inflation. GDP advanced at a slower pace than the previous quarter. At the same time, inflation remained subdued overall despite some energy-related pressure stemming from the hurricanes that impacted the southern U.S.

Despite sustained growth in the third quarter, the hurricanes added uncertainty to economic forecasts and distorted economic data releases. As a result of the hurricanes, there was an estimated 0.1 to 0.5 percent reduction from annualized GDP growth. Consumer spending slowed in August but recovered, especially vehicle sales, the following month. Business investment in equipment remained buoyant. While nonfarm payroll growth decelerated, the unemployment rate remained low. Despite tight labor market conditions, wage gains were modest.

The Federal Reserve, as expected, kept its target federal funds rate corridor at 1 to 1.25 percent, while announcing that balance

sheet normalization would begin in October. U.S. equities rose in the quarter, in part due to improvement in corporate earnings and despite the realization that domestic fiscal policy changes will likely take longer than previously expected. Despite a late rally, the U.S. dollar index fell primarily on the strength of the euro. Amid a weaker dollar, gold and oil prices both rose. The U.S. yield curve flattened modestly while interest rates increased.

Abroad, eurozone recovery remained robust in the third quarter, maintaining momentum following its best quarter in two years. 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 it has been carefully evaluating how to extend the ongoing quantitative easing program into next year.

Many survey indicators suggest that the subdued momentum from the first half of the year in the United Kingdom (U.K.) economy has extended into the third quarter. 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, business surveys suggest that moderate economic momentum remained intact in the third quarter. In China, the service sector remained a key driver of economic growth. The yuan had a volatile third quarter, reaching a one-year high in September with Chinese foreign exchange reserves rising steadily over the quarter.

Recent Events

Capital Management

During the third quarter of 2017, we repurchased approximately $3.0 billion of common stock pursuant to the Board's 2017 repurchase authorization of $12.9 billion announced on June 28, 2017. For additional information, see Capital Management on page 28. 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.

Series T Preferred Stock

In connection with an investment in the Corporation’s Series T 6% Non-cumulative preferred stock (Series T) in 2011, the Series T holders also received warrants to purchase 700 million shares of the Corporation’s common stock at an exercise price of $7.142857 per share. On August 24, 2017, the Series T holders exercised the warrants and acquired the 700 million shares of our common stock using the Series T preferred stock as consideration for the exercise price, which increased the number of common shares outstanding, but had no effect on diluted earnings per share as this conversion had been included in the Corporation’s diluted earnings per share calculation under the applicable accounting guidance. The carrying amount of the Series T was $2.9 billion and, upon conversion, was recorded as additional paid-in capital, increasing the Common equity tier 1 capital ratio by 20 basis points.

3 Bank of America

Selected Financial Data

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




Table 1	Selected Financial Data
		Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions, except per share information)		2017			2016			2017			2016
Income statement
Revenue, net of interest expense		$	21,839		$	21,635		$	66,916		$	63,711
Net income		5,587			4,955			15,712			13,210
Diluted earnings per common share		0.48			0.41			1.35			1.10
Dividends paid per common share		0.12			0.075			0.27			0.175
Performance ratios
Return on average assets		0.98		%	0.90		%	0.93		%	0.81		%
Return on average common shareholders' equity		8.14			7.27			7.81			6.61
Return on average tangible common shareholders’ equity ⁽¹⁾		11.32			10.28			10.95			9.40
Efficiency ratio		60.16			62.31			62.34			65.59

								September 30 2017			December 31 2016
Balance sheet
Total loans and leases								$	927,117		$	906,683
Total assets								2,283,896			2,187,702
Total deposits								1,284,417			1,260,934
Total common shareholders’ equity								250,136			241,620
Total shareholders’ equity								272,459			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 $5.6 billion and $15.7 billion, or $0.48 and $1.35 per diluted share for the three and nine months ended September 30, 2017 compared to $5.0 billion and $13.2 billion, or $0.41 and $1.10 per diluted share for the same periods in 2016. The results for the three- and nine-month periods compared to the same periods in 2016 were primarily driven by higher revenue, lower provision for credit losses and noninterest expense.

Total assets increased $96.2 billion from December 31, 2016 to $2.3 trillion at September 30, 2017 due to higher trading account assets primarily driven by additional inventory in fixed-income, currencies and commodities (FICC) to meet expected client demand, and increased client financing activities in equities, growth in cash and cash equivalents primarily due to an increase in deposits, as well as higher loans and leases and securities

borrowed or purchased under agreements to resell. These increases were partially offset by the impact of the sale of the non-U.S. consumer credit card business to a third party in the second quarter of 2017. Total liabilities increased $90.6 billion from December 31, 2016 to $2.0 trillion at September 30, 2017 primarily driven by higher deposits due to strong organic growth, an increase in trading account liabilities, higher securities loaned or sold under agreements to repurchase due to increased matched-book activity, as well as increases in long-term debt and accrued expenses and other liabilities. Shareholders' equity increased $5.6 billion from December 31, 2016 primarily due to net income, partially offset by returns of capital to shareholders of $12.0 billion through common stock repurchases and common and preferred stock dividends.



		Bank of America 4




Table 2	Summary Income Statement
		Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)		2017		2016		2017		2016
Net interest income		$	11,161	$	10,201	$	33,205	$	30,804
Noninterest income		10,678		11,434		33,711		32,907
Total revenue, net of interest expense		21,839		21,635		66,916		63,711
Provision for credit losses		834		850		2,395		2,823
Noninterest expense		13,139		13,481		41,713		41,790
Income before income taxes		7,866		7,304		22,808		19,098
Income tax expense		2,279		2,349		7,096		5,888
Net income		5,587		4,955		15,712		13,210
Preferred stock dividends		465		503		1,328		1,321
Net income applicable to common shareholders		$	5,122	$	4,452	$	14,384	$	11,889

Per common share information
Earnings		$	0.50	$	0.43	$	1.42	$	1.15
Diluted earnings		0.48		0.41		1.35		1.10

Net Interest Income

Net interest income increased $960 million to $11.2 billion, and $2.4 billion to $33.2 billion for the three and nine months ended September 30, 2017 compared to the same periods in 2016. The net interest yield increased 13 basis points (bps) to 2.31 percent, and 11 bps to 2.32 percent. These increases were primarily driven by the benefits from higher interest rates and loan and deposit growth, partially offset by the decline resulting from the sale of the non-U.S. consumer credit card business in the second quarter of 2017. 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 September 30					Nine Months Ended September 30
(Dollars in millions)		2017			2016		2017		2016
Card income		$	1,429		$	1,455	$	4,347	$	4,349
Service charges		1,968			1,952		5,863		5,660
Investment and brokerage services		3,303			3,160		9,882		9,543
Investment banking income		1,477			1,458		4,593		4,019
Trading account profits		1,837			2,141		6,124		5,821
Mortgage banking income		(20		)	589		332		1,334
Gains on sales of debt securities		125			51		278		490
Other income		559			628		2,292		1,691
Total noninterest income		$	10,678		$	11,434	$	33,711	$	32,907

Noninterest income decreased $756 million to $10.7 billion, and increased $804 million to $33.7 billion for the three and nine months ended September 30, 2017 compared to the same periods in 2016. The following highlights the more significant changes.


●	Service charges remained relatively unchanged for the three-month period and increased $203 million for the nine-month period with the increase primarily driven by the impact of pricing strategies and higher treasury services-related revenue.


●	Investment and brokerage services income increased $143 million and $339 million primarily driven by the impact of assets under management (AUM) flows and higher market valuations, partially offset by the impact of changing market dynamics on transactional revenue and AUM pricing.


●	Investment banking income remained relatively unchanged for the three-month period and increased $574 million for the nine-month period primarily due to higher debt and equity issuance fees and higher advisory fees.


●	Trading account profits decreased $304 million for the three-month period primarily due to weaker performance in fixed-income products, and increased $303 million for the nine-month period primarily due to increased client financing activity in equities.


●	Mortgage banking income decreased $609 million and $1.0 billion primarily driven by lower net servicing income due to lower mortgage servicing rights (MSR) results, net of the related hedge performance, and lower production income primarily due to lower volume.

5 Bank of America


●	Gains on sales of debt securities increased $74 million for the three-month period and decreased $212 million for the nine-month period primarily driven by sales volume.

●

Other income decreased $69 million for the three-month period due to lower fair value adjustments from economic hedging activities in the fair value option portfolio, partially offset by higher gains on asset sales, and increased $601 million for the nine-month period primarily due to the $793 million pre-tax gain recognized in connection with the sale of the non-U.S. consumer credit card business in the second quarter of 2017.

Provision for Credit Losses

The provision for credit losses decreased $16 million to $834 million, and $428 million to $2.4 billion for the three and nine months ended September 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.

Noninterest Expense




Table 4	Noninterest Expense
		Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)		2017		2016		2017		2016
Personnel		$	7,483	$	7,704	$	24,353	$	24,278
Occupancy		999		1,005		3,000		3,069
Equipment		416		443		1,281		1,357
Marketing		461		410		1,235		1,243
Professional fees		476		536		1,417		1,433
Amortization of intangibles		151		181		473		554
Data processing		777		685		2,344		2,240
Telecommunications		170		189		538		551
Other general operating		2,206		2,328		7,072		7,065
Total noninterest expense		$	13,139	$	13,481	$	41,713	$	41,790

Noninterest expense declined $342 million to $13.1 billion for the three months ended September 30, 2017 compared to the same period in 2016. The decrease was primarily due to lower personnel and other general operating expense, including the reduction related to the sale of the non-U.S. credit card business.

Noninterest expense for the nine-month period remained relatively unchanged as a $295 million impairment charge related to certain data centers in the process of being sold and higher Federal Deposit Insurance Corporation (FDIC) expense were largely offset by lower litigation expense.

Income Tax Expense




Table 5	Income Tax Expense
		Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)		2017			2016			2017			2016
Income before income taxes		$	7,866		$	7,304		$	22,808		$	19,098
Income tax expense		2,279			2,349			7,096			5,888
Effective tax rate		29.0		%	32.2		%	31.1		%	30.8		%

The effective tax rates for both the three and nine months ended September 30, 2017 were driven by the impact of our recurring tax preference benefits. The nine-month 2017 effective tax rate also included tax expense of $690 million recognized in connection with the sale of the non-U.S. consumer credit card business in the second quarter of 2017.

The effective tax rates for the three and nine months ended September 30, 2016 were driven by our recurring tax preference benefits, and the third quarter of 2016 included a $350 million charge for the impact of the U.K. tax law changes enacted in September 2016.



		Bank of America 6




Table 6	Selected Quarterly Financial Data
		2017 Quarters									2016 Quarters
(Dollars in millions, except per share information)		Third			Second			First			Fourth			Third
Income statement
Net interest income		$	11,161		$	10,986		$	11,058		$	10,292		$	10,201
Noninterest income		10,678			11,843			11,190			9,698			11,434
Total revenue, net of interest expense		21,839			22,829			22,248			19,990			21,635
Provision for credit losses		834			726			835			774			850
Noninterest expense		13,139			13,726			14,848			13,161			13,481
Income before income taxes		7,866			8,377			6,565			6,055			7,304
Income tax expense		2,279			3,108			1,709			1,359			2,349
Net income		5,587			5,269			4,856			4,696			4,955
Net income applicable to common shareholders		5,122			4,908			4,354			4,335			4,452
Average common shares issued and outstanding		10,198			10,014			10,100			10,170			10,250
Average diluted common shares issued and outstanding		10,725			10,822			10,915			10,959			11,000
Performance ratios
Return on average assets		0.98		%	0.93		%	0.88		%	0.85		%	0.90		%
Four quarter trailing return on average assets ⁽¹⁾		0.91			0.89			0.88			0.82			0.76
Return on average common shareholders’ equity		8.14			8.00			7.27			7.04			7.27
Return on average tangible common shareholders’ equity ⁽²⁾		11.32			11.23			10.28			9.92			10.28
Return on average shareholders' equity		8.10			7.79			7.35			6.91			7.33
Return on average tangible shareholders’ equity ⁽²⁾		10.89			10.54			10.00			9.38			9.98
Total ending equity to total ending assets		11.93			12.02			11.93			12.20			12.30
Total average equity to total average assets		12.05			11.95			12.01			12.24			12.28
Dividend payout		24.78			15.25			17.37			17.68			17.32
Per common share data
Earnings		$	0.50		$	0.49		$	0.43		$	0.43		$	0.43
Diluted earnings		0.48			0.46			0.41			0.40			0.41
Dividends paid		0.12			0.075			0.075			0.075			0.075
Book value		23.92			24.88			24.36			24.04			24.19
Tangible book value ⁽²⁾		17.23			17.78			17.23			16.95			17.14
Market price per share of common stock
Closing		$	25.34		$	24.26		$	23.59		$	22.10		$	15.65
High closing		25.45			24.32			25.50			23.16			16.19
Low closing		22.89			22.23			22.05			15.63			12.74
Market capitalization		$	264,992		$	239,643		$	235,291		$	222,163		$	158,438


⁽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 48 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 previously included in assets of business held for sale. During the second quarter of 2017, the Corporation sold 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 $73 million, $55 million, $33 million, $70 million, and $83 million of write-offs in the PCI loan portfolio in the third, second and first quarters of 2017, and in the fourth and third 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 $31 million, $44 million and $41 million on non-U.S. credit card loans in the second and first quarters of 2017, and in the fourth quarter of 2016, which were previously 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)		Third			Second			First			Fourth			Third
Average balance sheet
Total loans and leases		$	918,129		$	914,717		$	914,144		$	908,396		$	900,594
Total assets		2,270,872			2,269,153			2,231,420			2,208,039			2,189,490
Total deposits		1,271,711			1,256,838			1,256,632			1,250,948			1,227,186
Long-term debt		227,309			224,019			221,468			220,587			227,269
Common shareholders’ equity		249,624			246,003			242,883			245,139			243,679
Total shareholders’ equity		273,648			271,223			268,103			270,360			268,899
Asset quality ⁽³⁾
Allowance for credit losses ⁽⁴⁾		$	11,455		$	11,632		$	11,869		$	11,999		$	12,459
Nonperforming loans, leases and foreclosed properties ⁽⁵⁾		6,869			7,127			7,637			8,084			8,737
Allowance for loan and lease losses as a percentage of total loans and leases outstanding ^{(5, 6)}		1.16		%	1.20		%	1.25		%	1.26		%	1.30		%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases ^{(5, 6)}		163			160			156			149			140
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the PCI loan portfolio ^{(5, 6)}		158			154			150			144			135
Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases ⁽⁷⁾		$	3,880		$	3,782		$	4,047		$	3,951		$	4,068
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		%	104		%	100		%	98		%	91		%
Net charge-offs ^{(8, 9)}		$	900		$	908		$	934		$	880		$	888
Annualized net charge-offs as a percentage of average loans and leases outstanding ^{(5, 8)}		0.39		%	0.40		%	0.42		%	0.39		%	0.40		%
Annualized net charge-offs as a percentage of average loans and leases outstanding, excluding the PCI loan portfolio ⁽⁵⁾		0.40			0.41			0.42			0.39			0.40
Annualized net charge-offs and PCI write-offs as a percentage of average loans and leases outstanding ⁽⁵⁾		0.42			0.43			0.43			0.42			0.43
Nonperforming loans and leases as a percentage of total loans and leases outstanding ^{(5, 6)}		0.71			0.75			0.80			0.85			0.93
Nonperforming loans, leases and foreclosed properties as a percentage of total loans, leases and foreclosed properties ^{(5, 6)}		0.75			0.78			0.84			0.89			0.97
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs ^{(6, 8)}		3.00			2.99			3.00			3.28			3.31
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs, excluding the PCI loan portfolio ⁽⁶⁾		2.91			2.88			2.88			3.16			3.18
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs and PCI write-offs ⁽⁶⁾		2.77			2.82			2.90			3.04			3.03
Capital ratios at period end ⁽¹⁰⁾
Risk-based capital:
Common equity tier 1 capital		11.9		%	11.6		%	11.0		%	11.0		%	11.0		%
Tier 1 capital		13.3			13.2			12.5			12.4			12.4
Total capital		15.1			15.1			14.4			14.3			14.2
Tier 1 leverage		9.0			8.9			8.8			8.9			9.1
Tangible equity ⁽²⁾		9.1			9.2			9.1			9.2			9.4
Tangible common equity ⁽²⁾		8.1			8.0			7.9			8.1			8.2

For footnotes see page 7.



		Bank of America 8




Table 7	Selected Year-to-Date Financial Data
		Nine Months Ended September 30
(In millions, except per share information)		2017			2016
Income statement
Net interest income		$	33,205		$	30,804
Noninterest income		33,711			32,907
Total revenue, net of interest expense		66,916			63,711
Provision for credit losses		2,395			2,823
Noninterest expense		41,713			41,790
Income before income taxes		22,808			19,098
Income tax expense		7,096			5,888
Net income		15,712			13,210
Net income applicable to common shareholders		14,384			11,889
Average common shares issued and outstanding		10,103			10,313
Average diluted common shares issued and outstanding		10,820			11,047
Performance ratios
Return on average assets		0.93		%	0.81		%
Return on average common shareholders’ equity		7.81			6.61
Return on average tangible common shareholders’ equity ⁽¹⁾		10.95			9.40
Return on average shareholder's equity		7.75			6.66
Return on average tangible shareholders’ equity ⁽¹⁾		10.48			9.13
Total ending equity to total ending assets		11.93			12.30
Total average equity to total average assets		12.01			12.13
Dividend payout		19.28			15.19
Per common share data
Earnings		$	1.42		$	1.15
Diluted earnings		1.35			1.10
Dividends paid		0.27			0.175
Book value		23.92			24.19
Tangible book value ⁽¹⁾		17.23			17.14
Market price per share of common stock
Closing		$	25.34		$	15.65
High closing		25.50			16.43
Low closing		22.05			11.16
Market capitalization		$	264,992		$	158,438


⁽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. During the second quarter of 2017, the Corporation sold its non-U.S. consumer credit card business.


⁽⁶⁾	Net charge-offs exclude $161 million and $270 million of write-offs in the PCI loan portfolio for the nine months ended September 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)
		Nine Months Ended September 30
(Dollars in millions)		2017			2016
Average balance sheet
Total loans and leases		$	915,678		$	897,760
Total assets		2,257,293			2,183,905
Total deposits		1,261,782			1,213,029
Long-term debt		224,287			231,313
Common shareholders’ equity		246,195			240,440
Total shareholders’ equity		271,012			264,907
Asset quality ⁽²⁾
Allowance for credit losses ⁽³⁾		$	11,455		$	12,459
Nonperforming loans, leases and foreclosed properties ⁽⁴⁾		6,869			8,737
Allowance for loan and lease losses as a percentage of total loans and leases outstanding ⁽⁴⁾		1.16		%	1.30		%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases ⁽⁴⁾		163			140
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the PCI loan portfolio ⁽⁴⁾		158			135
Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases ⁽⁵⁾		$	3,880		$	4,068
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		%	91		%
Net charge-offs ⁽⁶⁾		$	2,742		$	2,941
Annualized net charge-offs as a percentage of average loans and leases outstanding ^{(4, 6)}		0.40		%	0.44		%
Annualized net charge-offs as a percentage of average loans and leases outstanding, excluding the PCI loan portfolio ⁽⁴⁾		0.41			0.45
Annualized net charge-offs and PCI write-offs as a percentage of average loans and leases outstanding ⁽⁴⁾		0.43			0.48
Nonperforming loans and leases as a percentage of total loans and leases outstanding ⁽⁴⁾		0.71			0.93
Nonperforming loans, leases and foreclosed properties as a percentage of total loans, leases and foreclosed properties ⁽⁴⁾		0.75			0.97
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs ⁽⁶⁾		2.92			2.98
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs, excluding the PCI loan portfolio		2.83			2.86
Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs and PCI write-offs		2.76			2.73

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 a 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 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 September 30						Nine Months Ended September 30
(Dollars in millions)		2017			2016			2017			2016
Fully taxable-equivalent basis data
Net interest income		$	11,401		$	10,429		$	33,879		$	31,470
Total revenue, net of interest expense		22,079			21,863			67,590			64,377
Net interest yield		2.36		%	2.23		%	2.36		%	2.26		%
Efficiency ratio		59.51			61.66			61.71			64.91

11 Bank of America




Table 9	Quarterly Average Balances and Interest Rates – FTE Basis

		Third Quarter 2017						Third 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		$	127,835	$	323	1.00	%	$	133,866	$	148	0.44	%
Time deposits placed and other short-term investments		12,503		68		2.17		9,336		34		1.45
Federal funds sold and securities borrowed or purchased under agreements to resell		223,585		659		1.17		214,254		267		0.50
Trading account assets		124,068		1,125		3.60		128,879		1,111		3.43
Debt securities ⁽¹⁾		436,886		2,670		2.44		423,182		2,169		2.07
Loans and leases ⁽²⁾:
Residential mortgage		199,240		1,724		3.46		188,234		1,612		3.42
Home equity		61,225		664		4.31		70,603		681		3.84
U.S. credit card		91,602		2,253		9.76		88,210		2,061		9.30
Non-U.S. credit card ⁽¹⁾		—		—		—		9,256		231		9.94
Direct/Indirect consumer ⁽³⁾		93,510		678		2.88		92,870		585		2.51
Other consumer ⁽⁴⁾		2,762		28		4.07		2,358		18		2.94
Total consumer		448,339		5,347		4.74		451,531		5,188		4.58
U.S. commercial		293,203		2,542		3.44		276,833		2,040		2.93
Commercial real estate ⁽⁵⁾		59,044		552		3.71		57,606		452		3.12
Commercial lease financing		21,818		160		2.92		21,194		153		2.88
Non-U.S. commercial		95,725		676		2.80		93,430		599		2.55
Total commercial		469,790		3,930		3.32		449,063		3,244		2.87
Total loans and leases		918,129		9,277		4.02		900,594		8,432		3.73
Other earning assets		76,496		775		4.02		59,951		677		4.50
Total earning assets ⁽⁶⁾		1,919,502		14,897		3.09		1,870,062		12,838		2.74
Cash and due from banks ⁽¹⁾		28,990						27,361
Other assets, less allowance for loan and lease losses ⁽¹⁾		322,380						292,067
Total assets		$	2,270,872					$	2,189,490
Interest-bearing liabilities
U.S. interest-bearing deposits:
Savings		$	54,328	$	1	0.01	%	$	49,885	$	2	0.01	%
NOW and money market deposit accounts		631,270		333		0.21		592,907		73		0.05
Consumer CDs and IRAs		44,239		31		0.27		48,695		33		0.27
Negotiable CDs, public funds and other deposits		38,119		101		1.05		32,023		43		0.54
Total U.S. interest-bearing deposits		767,956		466		0.24		723,510		151		0.08
Non-U.S. interest-bearing deposits:
Banks located in non-U.S. countries		2,259		5		0.97		4,294		9		0.87
Governments and official institutions		1,012		3		1.04		1,391		3		0.61
Time, savings and other		63,716		150		0.93		59,340		103		0.70
Total non-U.S. interest-bearing deposits		66,987		158		0.93		65,025		115		0.71
Total interest-bearing deposits		834,943		624		0.30		788,535		266		0.13
Federal funds purchased, securities loaned or sold under agreements to repurchase, short-term borrowings and other interest-bearing liabilities		230,230		944		1.63		207,634		569		1.09
Trading account liabilities		48,390		319		2.62		37,229		244		2.61
Long-term debt		227,309		1,609		2.82		227,269		1,330		2.33
Total interest-bearing liabilities ⁽⁶⁾		1,340,872		3,496		1.04		1,260,667		2,409		0.76
Noninterest-bearing sources:
Noninterest-bearing deposits		436,768						438,651
Other liabilities		219,584						221,273
Shareholders’ equity		273,648						268,899
Total liabilities and shareholders’ equity		$	2,270,872					$	2,189,490
Net interest spread						2.05	%					1.98	%
Impact of noninterest-bearing sources						0.31						0.25
Net interest income/yield on earning assets				$	11,401	2.36	%			$	10,429	2.23	%


⁽¹⁾	Includes assets of the Corporation's non-U.S. consumer credit card business, which was sold during the second quarter of 2017.


⁽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 $3.2 billion in the third quarter of 2017 and 2016.


⁽⁴⁾	Includes consumer finance loans of $406 million and $501 million; consumer leases of $2.2 billion and $1.7 billion, and consumer overdrafts of $193 million and $187 million in the third quarter of 2017 and 2016, respectively.


⁽⁵⁾	Includes U.S. commercial real estate loans of $55.2 billion and $54.3 billion, and non-U.S. commercial real estate loans of $3.8 billion and $3.3 billion in the third 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 $7 million and $64 million in the third 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 $346 million and $560 million in the third 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

		Nine Months Ended September 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		$	127,000	$	786	0.83	%	$	135,910	$	460	0.45	%
Time deposits placed and other short-term investments		11,820		173		1.96		8,784		101		1.54
Federal funds sold and securities borrowed or purchased under agreements to resell		222,255		1,658		1.00		215,476		803		0.50
Trading account assets		128,547		3,435		3.57		130,785		3,432		3.50
Debt securities⁽¹⁾		432,775		7,875		2.42		414,115		6,990		2.27
Loans and leases ⁽²⁾:
Residential mortgage		196,288		5,082		3.45		187,325		4,867		3.46
Home equity		63,339		1,967		4.15		73,015		2,095		3.83
U.S. credit card		90,238		6,492		9.62		87,362		6,065		9.27
Non-U.S. credit card ⁽¹⁾		5,253		358		9.12		9,687		734		10.12
Direct/Indirect consumer ⁽³⁾		93,316		1,929		2.76		91,291		1,698		2.48
Other consumer ⁽⁴⁾		2,648		81		4.07		2,240		50		2.99
Total consumer		451,082		15,909		4.71		450,920		15,509		4.59
U.S. commercial		290,632		7,167		3.30		274,669		5,982		2.91
Commercial real estate ⁽⁵⁾		58,340		1,545		3.54		57,550		1,320		3.06
Commercial lease financing		21,862		547		3.33		21,049		482		3.05
Non-U.S. commercial		93,762		1,886		2.69		93,572		1,748		2.50
Total commercial		464,596		11,145		3.21		446,840		9,532		2.85
Total loans and leases		915,678		27,054		3.95		897,760		25,041		3.72
Other earning assets		74,554		2,206		3.95		58,189		2,031		4.66
Total earning assets ⁽⁶⁾		1,912,629		43,187		3.02		1,861,019		38,858		2.79
Cash and due from banks ⁽¹⁾		27,955						28,041
Other assets, less allowance for loan and lease losses ⁽¹⁾		316,709						294,845
Total assets		$	2,257,293					$	2,183,905
Interest-bearing liabilities
U.S. interest-bearing deposits:
Savings		$	53,679	$	4	0.01	%	$	49,281	$	4	0.01	%
NOW and money market deposit accounts		622,920		512		0.11		584,896		216		0.05
Consumer CDs and IRAs		45,535		92		0.27		48,920		101		0.28
Negotiable CDs, public funds and other deposits		35,968		221		0.82		32,212		107		0.45
Total U.S. interest-bearing deposits		758,102		829		0.15		715,309		428		0.08
Non-U.S. interest-bearing deposits:
Banks located in non-U.S. countries		2,643		16		0.82		4,218		28		0.90
Governments and official institutions		1,002		7		0.92		1,468		7		0.60
Time, savings and other		60,747		400		0.88		58,866		273		0.62
Total non-U.S. interest-bearing deposits		64,392		423		0.88		64,552		308		0.64
Total interest-bearing deposits		822,494		1,252		0.20		779,861		736		0.13
Federal funds purchased, securities loaned or sold under agreements to repurchase, short-term borrowings and other interest-bearing liabilities		237,857		2,508		1.41		215,131		1,808		1.12
Trading account liabilities		44,128		890		2.70		37,760		778		2.76
Long-term debt		224,287		4,658		2.77		231,313		4,066		2.35
Total interest-bearing liabilities ⁽⁶⁾		1,328,766		9,308		0.94		1,264,065		7,388		0.78
Noninterest-bearing sources:
Noninterest-bearing deposits		439,288						433,168
Other liabilities		218,227						221,765
Shareholders’ equity		271,012						264,907
Total liabilities and shareholders’ equity		$	2,257,293					$	2,183,905
Net interest spread						2.08	%					2.01	%
Impact of noninterest-bearing sources						0.28						0.25
Net interest income/yield on earning assets				$	33,879	2.36	%			$	31,470	2.26	%


⁽¹⁾	Includes assets of the Corporation's non-U.S. consumer credit card business, which was sold during the second quarter of 2017.


⁽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 $3.5 billion for the nine months ended September 30, 2017 and 2016.


⁽⁴⁾	Includes consumer finance loans of $430 million and $526 million; consumer leases of $2.0 billion and $1.5 billion, and consumer overdrafts of $177 million and $171 million for the nine months ended September 30, 2017 and 2016, respectively.


⁽⁵⁾	Includes U.S. commercial real estate loans of $55.0 billion and $54.1 billion, and non-U.S. commercial real estate loans of $3.4 billion and $3.4 billion for the nine months ended September 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 $48 million and $155 million for the nine months ended September 30, 2017 and 2016. Interest expense includes the impact of interest rate risk management contracts, which decreased interest expense on the underlying liabilities by $1.1 billion and $1.7 billion for the nine months ended September 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 September 30
	Deposits						Consumer Lending						Total Consumer Banking
(Dollars in millions)	2017			2016			2017			2016			2017			2016			% Change
Net interest income (FTE basis)	$	3,439		$	2,629		$	2,772		$	2,660		$	6,211		$	5,289		17	%
Noninterest income:
Card income	3			2			1,241			1,216			1,244			1,218			2
Service charges	1,082			1,072			1			—			1,083			1,072			1
Mortgage banking income ⁽¹⁾	—			—			142			297			142			297			(52	)
All other income (loss)	96			98			(2		)	(6		)	94			92			2
Total noninterest income	1,181			1,172			1,382			1,507			2,563			2,679			(4	)
Total revenue, net of interest expense (FTE basis)	4,620			3,801			4,154			4,167			8,774			7,968			10

Provision for credit losses	47			43			920			655			967			698			39
Noninterest expense	2,615			2,397			1,844			1,974			4,459			4,371			2
Income before income taxes (FTE basis)	1,958			1,361			1,390			1,538			3,348			2,899			15
Income tax expense (FTE basis)	738			510			523			576			1,261			1,086			16
Net income	$	1,220		$	851		$	867		$	962		$	2,087		$	1,813		15

Net interest yield (FTE basis)	2.08		%	1.73		%	4.16		%	4.31		%	3.56		%	3.30		%
Return on average allocated capital	40			28			14			17			22			21
Efficiency ratio (FTE basis)	56.61			63.03			44.40			47.40			50.83			54.86

Balance Sheet
	Three Months Ended September 30
Average	2017			2016			2017			2016			2017			2016			% Change
Total loans and leases	$	5,079		$	4,837		$	263,731		$	243,846		$	268,810		$	248,683		8	%
Total earning assets⁽²⁾	657,036			604,223			264,665			245,540			692,122			636,832			9
Total assets ⁽²⁾	684,642			630,394			276,014			257,167			731,077			674,630			8
Total deposits	652,286			598,117			6,688			7,588			658,974			605,705			9
Allocated capital	12,000			12,000			25,000			22,000			37,000			34,000			9


⁽¹⁾	Total consolidated mortgage banking income (loss) of $(20) million and $332 million for the three and nine months ended September 30, 2017 were recorded primarily in Consumer Lending and All Other, compared to $589 million and $1.3 billion 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




	Nine Months Ended September 30
	Deposits						Consumer Lending						Total Consumer Banking
(Dollars in millions)	2017			2016			2017			2016			2017			2016			% Change
Net interest income (FTE basis)	$	9,804		$	7,940		$	8,149		$	7,885		$	17,953		$	15,825		13	%
Noninterest income:
Card income	6			7			3,710			3,638			3,716			3,645			2
Service charges	3,193			3,079			1			1			3,194			3,080			4
Mortgage banking income ⁽¹⁾	—			—			401			754			401			754			(47	)
All other income	294			312			9			4			303			316			(4	)
Total noninterest income	3,493			3,398			4,121			4,397			7,614			7,795			(2	)
Total revenue, net of interest expense (FTE basis)	13,297			11,338			12,270			12,282			25,567			23,620			8

Provision for credit losses	148			132			2,491			1,823			2,639			1,955			35
Noninterest expense	7,702			7,227			5,578			6,097			13,280			13,324			<(1)
Income before income taxes (FTE basis)	5,447			3,979			4,201			4,362			9,648			8,341			16
Income tax expense (FTE basis)	2,054			1,473			1,584			1,615			3,638			3,088			18
Net income	$	3,393		$	2,506		$	2,617		$	2,747		$	6,010		$	5,253		14

Net interest yield (FTE basis)	2.02		%	1.79		%	4.21		%	4.39		%	3.52		%	3.39		%
Return on average allocated capital	38			28			14			17			22			21
Efficiency ratio (FTE basis)	57.93			63.74			45.46			49.64			51.94			56.41

Balance Sheet
	Nine Months Ended September 30
Average	2017			2016			2017			2016			2017			2016			% Change
Total loans and leases	$	5,025		$	4,787		$	257,779		$	238,404		$	262,804		$	243,191		8	%
Total earning assets⁽²⁾	647,887			591,913			258,659			239,870			682,436			623,834			9
Total assets ⁽²⁾	675,159			618,466			270,196			251,609			721,245			662,126			9
Total deposits	642,783			586,334			6,421			7,167			649,204			593,501			9
Allocated capital	12,000			12,000			25,000			22,000			37,000			34,000			9

Period end	September 30 2017			December 31 2016			September 30 2017			December 31 2016			September 30 2017			December 31 2016			% Change
Total loans and leases	$	5,060		$	4,938		$	267,300		$	254,053		$	272,360		$	258,991		5	%
Total earning assets ⁽²⁾	667,733			631,172			268,354			255,511			703,277			662,698			6
Total assets⁽²⁾	695,403			658,316			279,920			268,002			742,513			702,333			6
Total deposits	662,781			625,727			6,866			7,059			669,647			632,786			6

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 leading digital banking platforms with approximately 34 million active users, including approximately 24 million mobile active users.

Consumer Banking Results

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

Net income for Consumer Banking increased $274 million to $2.1 billion primarily driven by higher net interest income, partially offset by higher provision for credit losses and noninterest expense. Net interest income increased $922 million to $6.2 billion primarily due to the beneficial impact of an increase in investable assets as a result of higher deposits, and loan growth. Noninterest income decreased $116 million to $2.6 billion primarily driven by lower mortgage banking income, partially offset by higher card income and service charges.

The provision for credit losses increased $269 million to $967

million due to portfolio seasoning and loan growth in the U.S. credit

card portfolio. The three months ended September 30, 2017 included a net reserve increase of $167 million compared to a release of $12 million for the three months ended September 30, 2016. Noninterest expense increased $88 million to $4.5 billion primarily driven by investments in digital capabilities and business growth, including increased primary sales professionals combined with investments in new financial centers and renovations, as well as higher litigation expense.

The return on average allocated capital was 22 percent, up from 21 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.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

Net income for Consumer Banking increased $757 million to $6.0 billion primarily driven by higher net interest income, partially offset by higher provision for credit losses. Net interest income increased $2.1 billion to $18.0 billion primarily due to the beneficial impact of an increase in investable assets as a result of higher deposits, as well as pricing discipline and loan growth. Noninterest income decreased $181 million to $7.6 billion driven by lower mortgage banking income, partially offset by higher service charges and card income.

15 Bank of America

The provision for credit losses increased $684 million to $2.6 billion due to portfolio seasoning and loan growth in the U.S. credit card portfolio. Noninterest expense decreased $44 million to $13.3 billion driven by improved operating efficiencies, largely offset by higher FDIC, personnel and litigation expenses.

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

Net income for Deposits increased $369 million to $1.2 billion driven by higher revenue, partially offset by higher noninterest expense. Net interest income increased $810 million to $3.4 billion primarily due to the beneficial impact of an increase in investable assets as a result of higher deposits, and pricing discipline.

Noninterest expense increased $218 million to $2.6 billion primarily driven by investments in digital capabilities and business growth, including increased primary sales professionals, combined with investments in new financial centers and renovations, and higher litigation and FDIC expenses.

Average deposits increased $54.2 billion to $652.3 billion driven by strong organic growth. Growth in checking, money market savings and traditional savings of $57.4 billion was partially offset by a decline in time deposits of $3.4 billion.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

Net income for Deposits increased $887 million to $3.4 billion. Net interest income increased $1.9 billion to $9.8 billion and noninterest income increased $95 million to $3.5 billion, both of which were primarily driven by the same factors as described in the three-month discussion. The prior-year period included gains on certain divestitures.

The provision for credit losses increased $16 million to $148 million. Noninterest expense increased $475 million to $7.7 billion primarily driven by the same factors as described in the three-month discussion.

Average deposits increased $56.4 billion to $642.8 billion primarily driven by the same factor as described in the three-month discussion.




Key Statistics – Deposits
	Three Months Ended September 30				Nine Months Ended September 30
	2017		2016		2017			2016
Total deposit spreads (excludes noninterest costs) ⁽¹⁾	1.88	%	1.64	%	1.82		%	1.65		%

Period end
Client brokerage assets (in millions)					$	167,274		$	137,985
Digital banking active users (units in thousands) ⁽²⁾					34,472			32,814
Mobile banking active users (units in thousands)					23,572			21,305
Financial centers					4,511			4,629
ATMs					15,973			15,959


⁽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 during the second quarter of 2017.

Client brokerage assets increased $29.3 billion driven by strong client flows and market performance. Mobile banking active users increased 2.3 million reflecting continuing changes in our customers’ banking preferences. The number of financial centers

declined 118 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.



		Bank of America 16

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 September 30, 2017, total owned loans in the core portfolio held in Consumer Lending were $111.6 billion, an increase of $13.8 billion from September 30, 2016, primarily driven 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 September 30, 2017 Compared to Three Months Ended September 30, 2016

Net income for Consumer Lending decreased $95 million to $867 million 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 $112 million to $2.8 billion primarily driven by the impact of an increase in loan balances. Noninterest income decreased $125 million to $1.4 billion driven by lower mortgage banking income, partially offset by higher card income.

The provision for credit losses increased $265 million to $920 million due to portfolio seasoning and loan growth in the U.S. credit card portfolio. Noninterest expense decreased $130 million to $1.8 billion primarily driven by improved operating efficiencies.

Average loans increased $19.9 billion to $263.7 billion primarily driven by increases in residential mortgages, as well as U.S. credit card and consumer vehicle loans, partially offset by lower home equity loan balances.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

Net income for Consumer Lending decreased $130 million to $2.6 billion driven by the same factors as described in the three-month discussion. Net interest income increased $264 million to $8.1 billion. Noninterest income decreased $276 million to $4.1 billion. Fluctuations were driven by the same factors as described in the three-month discussion.

The provision for credit losses increased $668 million to $2.5 billion due to portfolio seasoning and loan growth in the U.S. credit card portfolio. Noninterest expense decreased $519 million to $5.6 billion primarily driven by the same factor as described in the three-month discussion.

Average loans increased $19.4 billion to $257.8 billion 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.




Key Statistics – Consumer Lending
	Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)	2017			2016			2017			2016
Total U.S. credit card ⁽¹⁾
Gross interest yield	9.76		%	9.30		%	9.62		%	9.27		%
Risk-adjusted margin	8.63			9.11			8.64			8.99
New accounts (in thousands)	1,315			1,324			3,801			3,845
Purchase volumes	$	62,244		$	57,591		$	179,230		$	165,412
Debit card purchase volumes	$	74,769		$	71,049		$	220,729		$	212,316


⁽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 nine months ended September 30, 2017, the total U.S. credit card risk-adjusted margin decreased 48 bps and 35 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 $4.7 billion to $62.2 billion, and $13.8 billion to $179.2 billion, and debit card purchase volumes increased $3.7 billion to $74.8 billion, and $8.4 billion to $220.7 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 nine months ended September 30, 2017 decreased $148 million to $64 million, and $347 million to $185 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 nine months ended September 30, 2017 decreased $7 million to $78 million, and $6 million to $216 million compared to the same periods in 2016.

Mortgage Servicing Rights

At September 30, 2017, the core MSR portfolio, held within Consumer Lending, was $1.7 billion compared to $1.8 billion at September 30, 2016. The decrease was primarily driven by the amortization of expected cash flows, which exceeded additions to the MSR portfolio, partially offset by changes in fair value from rising interest rates. 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 September 30				Nine Months Ended September 30
(Dollars in millions)	2017		2016		2017		2016
Loan production ⁽¹⁾:
Total ⁽²⁾:
First mortgage	$	13,183	$	16,865	$	37,876	$	45,802
Home equity	4,133		3,541		12,871		11,649
Consumer Banking:
First mortgage	$	9,044	$	11,588	$	25,679	$	32,207
Home equity	3,722		3,139		11,604		10,535


⁽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 $3.7 billion in the three months ended September 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 $6.5 billion and $7.9 billion in the nine months ended September 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 $583 million and $592 million for the three months ended September 30, 2017 compared to the same period in 2016 due to a higher demand based on improving housing trends, and improved engagement with customers. Home equity production in Consumer Banking and for the total Corporation increased $1.1 billion and $1.2 billion for the nine months ended September 30, 2017 primarily driven by the same factors as described in the three-month discussion.

Global Wealth & Investment Management




	Three Months Ended September 30								Nine Months Ended September 30
(Dollars in millions)	2017			2016			% Change		2017			2016			% Change
Net interest income (FTE basis)	$	1,496		$	1,394		7	%	$	4,653		$	4,310		8	%
Noninterest income:
Investment and brokerage services	2,728			2,585			6		8,073			7,718			5
All other income	396			400			(1	)	1,181			1,245			(5	)
Total noninterest income	3,124			2,985			5		9,254			8,963			3
Total revenue, net of interest expense (FTE basis)	4,620			4,379			6		13,907			13,273			5

Provision for credit losses	16			7			129		50			46			9
Noninterest expense	3,370			3,255			4		10,091			9,816			3
Income before income taxes (FTE basis)	1,234			1,117			10		3,766			3,411			10
Income tax expense (FTE basis)	465			419			11		1,420			1,270			12
Net income	$	769		$	698		10		$	2,346		$	2,141		10

Net interest yield (FTE basis)	2.29		%	2.03		%			2.32		%	2.09		%
Return on average allocated capital	22			21					22			22
Efficiency ratio (FTE basis)	72.95			74.32					72.56			73.96

Balance Sheet
	Three Months Ended September 30								Nine Months Ended September 30
Average	2017			2016			% Change		2017			2016			% Change
Total loans and leases	$	154,333		$	143,207		8	%	$	151,205		$	141,169		7	%
Total earning assets	259,564			273,567			(5	)	267,732			275,674			(3	)
Total assets	275,570			288,820			(5	)	283,324			291,382			(3	)
Total deposits	239,647			253,812			(6	)	247,389			256,356			(3	)
Allocated capital	14,000			13,000			8		14,000			13,000			8

Period end									September 30 2017			December 31 2016			% Change
Total loans and leases									$	155,871		$	148,179		5	%
Total earning assets									259,548			283,151			(8	)
Total assets									276,187			298,931			(8	)
Total deposits									237,771			262,530			(9	)



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

Net income for GWIM increased $71 million to $769 million due to higher revenue, partially offset by an increase in revenue-related expense. The operating margin was 27 percent compared to 26 percent a year ago.

Net interest income increased $102 million to $1.5 billion driven by higher short-term interest rates. Noninterest income, which primarily includes investment and brokerage services income, increased $139 million to $3.1 billion. This increase was driven by the impact of AUM flows and higher market valuations, partially offset by the impact of changing market dynamics on transactional revenue and AUM pricing. Noninterest expense increased $115 million to $3.4 billion primarily driven by higher revenue-related expense.

The return on average allocated capital was 22 percent, up from 21 percent, as higher net income was partially offset by an increased capital allocation.

MLGWM revenue of $3.8 billion increased five 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 $822 million increased eight percent reflecting higher net interest income and asset management fees driven by higher market valuations and AUM flows.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

Net income for GWIM increased $205 million to $2.3 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 $343 million to $4.7 billion. Noninterest income, which primarily includes investment and brokerage services income, increased $291 million to $9.3 billion. Noninterest expense increased $275 million to $10.1 billion. These increases were driven by the same factors as described in the three-month discussion.

The return on average allocated capital was 22 percent for both periods.

Revenue from MLGWM of $11.5 billion increased five percent, and U.S. Trust revenue of $2.5 billion increased seven 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 September 30				Nine Months Ended September 30
(Dollars in millions, except as noted)	2017		2016		2017		2016
Revenue by Business
Merrill Lynch Global Wealth Management	$	3,796	$	3,617	$	11,452	$	10,886
U.S. Trust	822		761		2,450		2,300
Other ⁽¹⁾	2		1		5		87
Total revenue, net of interest expense (FTE basis)	$	4,620	$	4,379	$	13,907	$	13,273

Client Balances by Business, at period end
Merrill Lynch Global Wealth Management					$	2,245,499	$	2,089,683
U.S. Trust					430,684		400,538
Total client balances					$	2,676,183	$	2,490,221

Client Balances by Type, at period end
Assets under management					$	1,036,048	$	871,026
Brokerage assets					1,112,178		1,095,635
Assets in custody					131,680		122,804
Deposits					237,771		252,962
Loans and leases ⁽²⁾					158,506		147,794
Total client balances					$	2,676,183	$	2,490,221

Assets Under Management Rollforward
Assets under management, beginning of period	$	990,709	$	832,394	$	886,148	$	900,863
Net client flows ⁽³⁾	20,749		10,182		77,479		11,648
Market valuation/other⁽¹⁾	24,590		28,450		72,421		(41,485		)
Total assets under management, end of period	$	1,036,048	$	871,026	$	1,036,048	$	871,026

Associates, at period end ^{(4, 5)}
Number of financial advisors					17,221		16,834
Total wealth advisors, including financial advisors					19,108		18,714
Total primary sales professionals, including financial advisors and wealth advisors					20,115		19,594

Merrill Lynch Global Wealth Management Metric ⁽⁵⁾
Financial advisor productivity ⁽⁶⁾ (in thousands)	$	994	$	979	$	1,009	$	978

U.S. Trust Metric, at period end ⁽⁵⁾
Primary sales professionals					1,696		1,684


⁽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 in the second quarter of 2016.


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


⁽³⁾	For the nine months ended September 30, 2016, net client flows included $8.0 billion of net outflows related to BofA Global Capital Management's AUM that were sold during the second quarter of 2016.


⁽⁴⁾	Includes financial advisors in the Consumer Banking segment of 2,267 and 2,171 at September 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 $186.0 billion, or seven percent, to nearly $2.7 trillion at September 30, 2017 compared to September 30, 2016. The increase in client balances was primarily due to AUM which increased $165.0 billion, or 19 percent, due to positive net flows and higher market valuations.

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 September 30						Nine Months Ended September 30
(Dollars in millions)	2017			2016			2017			2016
Total deposits, net – to (from) GWIM	$	34		$	17		$	(250	)	$	(1,040	)
Total loans, net – (from) GWIM	(15		)	(15		)	(145		)	—
Total brokerage, net – (from) GWIM	(199		)	(264		)	(175		)	(830		)


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



		Bank of America 20

Global Banking




	Three Months Ended September 30								Nine Months Ended September 30
(Dollars in millions)	2017			2016			% Change		2017			2016			% Change
Net interest income (FTE basis)	$	2,743		$	2,470		11	%	$	8,229		$	7,440		11	%
Noninterest income:
Service charges	777			780			<(1)		2,351			2,284			3
Investment banking fees	807			796			1		2,661			2,230			19
All other income	659			700			(6	)	1,739			1,942			(10	)
Total noninterest income	2,243			2,276			(1	)	6,751			6,456			5
Total revenue, net of interest expense (FTE basis)	4,986			4,746			5		14,980			13,896			8

Provision for credit losses	48			118			(59	)	80			870			(91	)
Noninterest expense	2,118			2,152			(2	)	6,435			6,450			<(1)
Income before income taxes (FTE basis)	2,820			2,476			14		8,465			6,576			29
Income tax expense (FTE basis)	1,062			925			15		3,192			2,435			31
Net income	$	1,758		$	1,551		13		$	5,273		$	4,141		27

Net interest yield (FTE basis)	2.99		%	2.83		%			3.02		%	2.88		%
Return on average allocated capital	17			17					18			15
Efficiency ratio (FTE basis)	42.52			45.34					42.97			46.42

Balance Sheet
	Three Months Ended September 30								Nine Months Ended September 30
Average	2017			2016			% Change		2017			2016			% Change
Total loans and leases	$	346,093		$	334,363		4	%	$	344,683		$	332,474		4	%
Total earning assets	363,560			347,462			5		364,385			345,406			5
Total assets	414,755			395,479			5		414,867			394,425			5
Total deposits	315,692			307,288			3		307,163			301,175			2
Allocated capital	40,000			37,000			8		40,000			37,000			8

Period end									September 30 2017			December 31 2016			% Change
Total loans and leases									$	349,838		$	339,271		3	%
Total earning assets									371,159			356,241			4
Total assets									423,185			408,330			4
Total deposits									319,545			307,630			4

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, commercial 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 September 30, 2017 Compared to Three Months Ended September 30, 2016

Net income for Global Banking increased $207 million to $1.8 billion driven by higher revenue and lower provision for credit losses.

Revenue increased $240 million to $5.0 billion driven by higher net interest income. Net interest income increased $273 million to $2.7 billion primarily driven by the impact of higher short-term rates, as well as loan and deposit growth, partially offset by modest loan spread compression. Noninterest income decreased $33 million to $2.2 billion largely due to the impact of loans and loan-related hedging activity in the fair value option portfolio, partially offset by higher leasing-related revenue.

The provision for credit losses decreased $70 million to $48 million driven by reductions in energy exposures. Noninterest expense decreased $34 million to $2.1 billion driven by lower revenue-related incentives, partially offset by investments in technology and relationship bankers.

The return on average allocated capital remained relatively unchanged at 17 percent as higher net income offset the impact of $3.0 billion in additional allocated capital. For more information on capital allocated to the business segments, see Business Segment Operations on page 14.

21 Bank of America

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

Net income for Global Banking increased $1.1 billion to $5.3 billion driven by higher revenue and lower provision for credit losses.

Revenue increased $1.1 billion to $15.0 billion driven by higher net interest income and noninterest income. Net interest income increased $789 million to $8.2 billion driven by loan-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 $295 million to $6.8 billion largely due to higher investment banking fees.

The provision for credit losses decreased $790 million to $80 million primarily driven by reductions in energy exposures. Noninterest expense decreased $15 million to $6.4 billion primarily driven by lower personnel and operating expense, partially offset by higher FDIC expense and investments in technology.

The return on average allocated capital was 18 percent, up from 15 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 present a summary of the results, which exclude certain investment banking activities in Global Banking.




Global Corporate, Global Commercial and Business Banking
	Three Months Ended September 30
	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
(Dollars in millions)	2017		2016		2017		2016		2017		2016		2017		2016
Revenue
Business Lending	$	1,127	$	1,113	$	1,090	$	1,069	$	101	$	91	$	2,318	$	2,273
Global Transaction Services	840		738		758		671		217		182		1,815		1,591
Total revenue, net of interest expense	$	1,967	$	1,851	$	1,848	$	1,740	$	318	$	273	$	4,133	$	3,864

Balance Sheet
Average
Total loans and leases	$	159,417	$	153,249	$	168,945	$	163,446	$	17,659	$	17,658	$	346,021	$	334,353
Total deposits	149,564		144,694		129,440		127,161		36,687		35,433		315,691		307,288

	Nine Months Ended September 30
	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
	2017		2016		2017		2016		2017		2016		2017		2016
Revenue
Business Lending	$	3,322	$	3,269	$	3,186	$	3,129	$	301	$	280	$	6,809	$	6,678
Global Transaction Services	2,470		2,171		2,217		2,036		625		549		5,312		4,756
Total revenue, net of interest expense	$	5,792	$	5,440	$	5,403	$	5,165	$	926	$	829	$	12,121	$	11,434

Balance Sheet
Average
Total loans and leases	$	157,144	$	152,772	$	169,751	$	162,207	$	17,762	$	17,467	$	344,657	$	332,446
Total deposits	146,627		140,817		124,446		125,676		36,092		34,685		307,165		301,178

Period end
Total loans and leases	$	161,441	$	151,825	$	170,825	$	164,518	$	17,579	$	17,760	$	349,845	$	334,103
Total deposits	147,893		141,754		135,249		124,995		36,402		35,656		319,544		302,405



		Bank of America 22

Business Lending revenue increased $45 million and $131 million for the three and nine months ended September 30, 2017 compared to the same periods in 2016. The increase in the three-month period was driven by the impact of loan growth and lease-related activities and the allocation of ALM activities, partially offset by credit spread compression. The increase in the nine-month period was driven by the impact of the allocation of ALM activities and loans and loan-related hedging activity, partially offset by lower revenues from commercial real estate activity.

Global Transaction Services revenue increased $224 million and $556 million for the three and nine months ended September 30, 2017 compared to the same periods in 2016 driven by the impact of an increase in deposit balances and higher short-term rates, the allocation of ALM activities as well as higher treasury-related revenue.

Average loans and leases increased three percent and four percent for the three and nine months ended September 30, 2017

compared to the same periods in 2016 driven by growth in the commercial and industrial, and leasing portfolios. Average deposits increased three percent and two percent for the three and nine months ended September 30, 2017 compared to the same periods in 2016 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 September 30												Nine Months Ended September 30
	Global Banking						Total Corporation						Global Banking						Total Corporation
(Dollars in millions)	2017			2016			2017			2016			2017			2016			2017			2016
Products
Advisory	$	322		$	295		$	374		$	328		$	1,177		$	913		$	1,262		$	1,007
Debt issuance	397			405			962			908			1,170			1,060			2,789			2,466
Equity issuance	88			96			193			261			314			257			736			681
Gross investment banking fees	807			796			1,529			1,497			2,661			2,230			4,787			4,154
Self-led deals	(18		)	(10		)	(52		)	(39		)	(89		)	(36		)	(194		)	(135		)
Total investment banking fees	$	789		$	786		$	1,477		$	1,458		$	2,572		$	2,194		$	4,593		$	4,019

Total Corporation investment banking fees, excluding self-led deals, of $1.5 billion and $4.6 billion, which are primarily included within Global Banking and Global Markets, increased one percent and 14 percent for the three and nine months ended September

30, 2017 compared to the same periods in 2016. The increase for both periods was driven by higher advisory fees and higher debt issuance fees due to an increase in overall client activity and market fee pools.

23 Bank of America

Global Markets




	Three Months Ended September 30								Nine Months Ended September 30
(Dollars in millions)	2017			2016			% Change		2017			2016			% Change
Net interest income (FTE basis)	$	899		$	1,119		(20	)%	$	2,812		$	3,391		(17	)%
Noninterest income:
Investment and brokerage services	496			490			1		1,548			1,583			(2	)
Investment banking fees	623			645			(3	)	1,879			1,742			8
Trading account profits	1,714			1,934			(11	)	5,634			5,401			4
All other income	168			170			(1	)	682			501			36
Total noninterest income	3,001			3,239			(7	)	9,743			9,227			6
Total revenue, net of interest expense (FTE basis)	3,900			4,358			(11	)	12,555			12,618			<(1)

Provision for credit losses	(6		)	19			(132	)	2			23			(91	)
Noninterest expense	2,710			2,656			2		8,117			7,690			6
Income before income taxes (FTE basis)	1,196			1,683			(29	)	4,436			4,905			(10	)
Income tax expense (FTE basis)	440			609			(28	)	1,553			1,746			(11	)
Net income	$	756		$	1,074		(30	)	$	2,883		$	3,159		(9	)

Return on average allocated capital	9		%	12		%			11		%	11		%
Efficiency ratio (FTE basis)	69.48			60.94					64.64			60.94

Balance Sheet
	Three Months Ended September 30								Nine Months Ended September 30
Average	2017			2016			% Change		2017			2016			% Change
Trading-related assets:
Trading account securities	$	216,988		$	185,785		17	%	$	214,190		$	183,928		16	%
Reverse repurchases	101,556			89,435			14		99,998			89,218			12
Securities borrowed	81,950			87,872			(7	)	83,770			86,159			(3	)
Derivative assets	41,789			52,325			(20	)	41,184			52,164			(21	)
Total trading-related assets ⁽¹⁾	442,283			415,417			6		439,142			411,469			7
Total loans and leases	72,347			69,043			5		70,692			69,315			2
Total earning assets ⁽¹⁾	446,754			422,636			6		444,478			421,221			6
Total assets	642,430			584,069			10		631,686			582,006			9
Total deposits	32,125			32,840			(2	)	32,397			34,409			(6	)
Allocated capital	35,000			37,000			(5	)	35,000			37,000			(5	)

Period end									September 30 2017			December 31 2016			% Change
Total trading-related assets ⁽¹⁾									$	426,371		$	380,562		12	%
Total loans and leases									76,225			72,743			5
Total earning assets ⁽¹⁾									441,656			397,023			11
Total assets									629,270			566,060			11
Total deposits									33,382			34,927			(4	)


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

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. 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 September 30, 2017 Compared to Three Months Ended September 30, 2016

Net income for Global Markets decreased $318 million to $756 million driven by lower sales and trading revenue, as well as a decline in investment banking fees and increased noninterest expense. Net DVA losses were $21 million compared to losses of $127 million. Sales and trading revenue, excluding net DVA, decreased $577 million primarily due to less favorable FICC market conditions across credit products and lower volatility in rates products compared to the prior-year period. Noninterest expense increased $54 million to $2.7 billion as continued investments in technology were partially offset by lower operating costs.



		Bank of America 24

Average trading-related assets increased $26.9 billion to $442.3 billion primarily driven by targeted growth in client financing activities in the global equities business.

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

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

Net income for Global Markets decreased $276 million to $2.9 billion. Net DVA losses were $310 million compared to losses of $137 million. Excluding net DVA, net income decreased $169 million to $3.1 billion primarily driven by higher noninterest expense and lower sales and trading revenue, partially offset by higher investment banking fees. Sales and trading revenue, excluding net DVA, decreased $168 million primarily due to weaker performance in rates products and emerging markets. Noninterest expense increased $427 million to $8.1 billion primarily due to litigation expense in the nine months ended September 30, 2017 compared to a litigation recovery in the same period in 2016 and continued investments in technology.

Average trading-related assets increased $27.7 billion to $439.1 billion primarily driven by targeted growth in client financing activities in the global equities business. Period-end trading-related assets increased $45.8 billion to $426.4 billion driven by additional inventory in FICC to meet expected client demand as

well as targeted growth in client financing activities in the global equities business.

The return on average allocated capital remained at 11 percent, reflecting lower net income offset by a decrease in average allocated capital.

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, 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-over-period operating performance.




Sales and Trading Revenue ^{(1, 2)}
	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2017		2016		2017		2016
Sales and trading revenue
Fixed-income, currencies and commodities	$	2,152	$	2,646	$	7,068	$	7,507
Equities	977		954		3,170		3,072
Total sales and trading revenue	$	3,129	$	3,600	$	10,238	$	10,579

Sales and trading revenue, excluding net DVA ⁽³⁾
Fixed-income, currencies and commodities	$	2,166	$	2,767	$	7,350	$	7,647
Equities	984		960		3,198		3,069
Total sales and trading revenue, excluding net DVA	$	3,150	$	3,727	$	10,548	$	10,716


⁽¹⁾	Includes FTE adjustments of $63 million and $162 million for the three and nine months ended September 30, 2017 compared to $49 million and $136 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 $61 million and $175 million for the three and nine months ended September 30, 2017 compared to $57 million and $336 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 $14 million and $282 million for the three and nine months ended September 30, 2017 compared to net DVA losses of $121 million and $140 million for the same periods in 2016. Equities net DVA losses were $7 million and $28 million for the three and nine months ended September 30, 2017 compared to net DVA losses of $6 million and gains of $3 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 September 30, 2017 Compared to Three Months Ended September 30, 2016

FICC revenue, excluding net DVA, decreased $601 million due to less favorable market conditions across credit-related products and lower volatility in rates products in the current-year quarter. Equities revenue, excluding net DVA, increased $24 million

primarily due to growth in client financing activities, partially offset by slower secondary markets.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

FICC revenue, excluding net DVA, decreased $297 million as weaker performance in rates products and emerging markets were partially offset by strength in credit and G10 currencies. Equities revenue, excluding net DVA, increased $129 million primarily due to growth in client financing activities.

25 Bank of America

All Other




	Three Months Ended September 30								Nine Months Ended September 30
(Dollars in millions)	2017			2016			% Change		2017			2016			% Change
Net interest income (FTE basis)	$	52		$	157		(67	)%	$	232		$	504		(54	)%
Noninterest income:
Card income	—			46			(100	)	71			145			(51	)
Mortgage banking income (loss)	(163		)	292			n/m		(72		)	577			(112	)
Gains on sales of debt securities	125			51			145		278			490			(43	)
All other income (loss)	(215		)	(134		)	60		72			(746		)	(110	)
Total noninterest income (loss)	(253		)	255			n/m		349			466			(25	)
Total revenue, net of interest expense (FTE basis)	(201		)	412			(149	)	581			970			(40	)

Provision for credit losses	(191		)	8			n/m		(376		)	(71		)	n/m
Noninterest expense	482			1,047			(54	)	3,790			4,510			(16	)
Loss before income taxes (FTE basis)	(492		)	(643		)	(23	)	(2,833		)	(3,469		)	(18	)
Income tax expense (benefit) (FTE basis)	(709		)	(462		)	53		(2,033		)	(1,985		)	2
Net income (loss)	$	217		$	(181	)	n/m		$	(800	)	$	(1,484	)	(46	)

Balance Sheet ⁽¹⁾
	Three Months Ended September 30								Nine Months Ended September 30
Average	2017			2016			% Change		2017			2016			% Change
Total loans and leases	$	76,546		$	105,298		(27	)%	$	86,294		$	111,611		(23	)%
Total deposits	25,273			27,541			(8	)	25,629			27,588			(7	)

Period end									September 30 2017			December 31 2016			% Change
Total loans and leases⁽²⁾									$	72,823		$	96,713		(25	)%
Total deposits									24,072			23,061			4

⁽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 $510.1 billion and $517.9 billion for the three and nine months ended September 30, 2017 compared to $500.4 billion and $497.8 billion for the same periods in 2016, and $515.0 billion and $518.7 billion at September 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. During the second quarter of 2017, the Corporation sold 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.

During the second quarter of 2017, the Corporation sold its non-U.S. consumer credit card business. For more information on the sale, see 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 nine months ended September 30, 2017, residential mortgage loans held for ALM activities decreased $4.9 billion to $29.8 billion at September 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 nine months ended September 30, 2017, total non-core loans decreased $9.3 billion to $43.8 billion at September 30, 2017 due primarily to payoffs and paydowns, as well as loan sales.

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

Results for All Other improved $398 million to net income of $217 million from a net loss of $181 million in the prior-year period, reflecting lower noninterest expense and a benefit in the provision for credit losses, partially offset by a decline in revenue. Revenue declined $613 million to a loss of $201 million reflecting lower mortgage banking income and the impact of the sale of the non-U.S. consumer credit card business. Mortgage banking income was negatively impacted by less favorable valuations on mortgage servicing rights, net of related hedges, and an increase in the provision for representations and warranties.

The provision for credit losses improved $199 million to a benefit of $191 million primarily driven by loan sale recoveries, continued runoff of the non-core portfolio and the sale of the non-U.S. consumer credit card business. Noninterest expense decreased $565 million to $482 million driven by lower personnel and operational costs due to the sale of the non-U.S. consumer credit card business and lower litigation expense in the non-core mortgage business.



		Bank of America 26

The income tax benefit increased to $709 million from a benefit of $462 million as the prior-year quarter included a $350 million charge for the impact of the U.K. tax law changes enacted in September 2016. Both periods included income tax benefit adjustments to eliminate the FTE treatment in noninterest income of certain tax credits recorded in Global Banking.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016

The net loss for All Other decreased $684 million to a net loss of $800 million, reflecting lower noninterest expense, the net gain on sale of the non-U.S. consumer credit card business in the second quarter and a larger benefit in the provision for credit losses, offset by a decline in revenue. Revenue declined $389 million primarily due to lower mortgage banking income. Mortgage banking income decreased $649 million driven by the same factors as described in the three-month discussion. Gains on sales of loans included in all other income, including nonperforming and other delinquent loans, were $108 million compared to gains of $214 million in the same period in 2016.

The benefit in the provision for credit losses increased $305 million to a benefit of $376 million driven by the same factors as described in the three-month discussion. Noninterest expense decreased $720 million to $3.8 billion driven by lower litigation expense, lower personnel expense and a decline in non-core mortgage servicing costs, partially offset by a $295 million impairment charge related to certain data centers in the process of being sold.

The income tax benefit increased $48 million to a benefit of $2.0 billion, reflecting tax expense of $690 million recognized in connection with the sale of the non-U.S. consumer credit card business and tax benefits related to a new accounting standard on share-based compensation. The prior-year period included a $350 million charge for the impact of the U.K. tax law changes. Both periods included income tax benefit adjustments to eliminate the FTE treatment in noninterest income 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 reserve 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 reserve 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 September 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 a sponsor of third-party securitizations with whom we engaged in whole-loan transactions indicating that we may have indemnity obligations with respect to specific loans for which we have not received a repurchase request. These notifications were received prior to 2015, and totaled $1.3 billion at both September 30, 2017 and December 31, 2016. During the three months ended September 30, 2017, we reached an agreement with the party requesting indemnity, subject to acceptance of a settlement agreement by a securitization trustee; the impact of this agreement is included in the reserve for representations and warranties.

The reserve 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 September 30, 2017 and December 31, 2016, the reserve for representations and warranties was $2.2 billion and $2.3 billion. For the three and nine months ended September 30, 2017, the representations and warranties provision was $198 million and $193 million compared to $99 million and $158 million for the same periods in 2016. The increase in the provision was the result of advanced negotiations with certain counterparties where we believe we will reach settlements on several outstanding legacy matters.

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 September 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 reserve 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.

27 Bank of America

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 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 the 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.

Comprehensive Capital Analysis and Review 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 Comprehensive Capital Analysis and Review (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.

During the three months ended September 30, 2017, pursuant to the Board's authorization, we repurchased $3.0 billion of common stock, which includes common stock to offset equity-based compensation awards. 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.



		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 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 September 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 September 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 September 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 September 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⁾

		September 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		$	176,094		$	176,094				$	173,568		$	173,568
Tier 1 capital		196,438			196,438					195,291			195,291
Total capital ⁽⁵⁾		232,849			223,814					229,779			220,745
Risk-weighted assets (in billions)		1,407			1,482					1,420			1,460
Common equity tier 1 capital ratio		12.5		%	11.9		%	7.25	%	12.2		%	11.9		%	9.5	%
Tier 1 capital ratio		14.0			13.3			8.75		13.8			13.4			11.0
Total capital ratio		16.5			15.1			10.75		16.2			15.1			13.0

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽⁶⁾		$	2,194		$	2,194				$	2,193		$	2,193
Tier 1 leverage ratio		9.0		%	9.0		%	4.0		8.9		%	8.9		%	4.0

SLR leverage exposure (in billions)													$	2,742
SLR													7.1		%	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 September 30, 2017 and December 31, 2016.


⁽²⁾	The September 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 September 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 September 30, 2017 and December 31, 2016.

Common equity tier 1 capital under Basel 3 Advanced – Transition was $176.1 billion at September 30, 2017, an increase of $7.2 billion compared to December 31, 2016 driven by earnings and the exercise of warrants associated with the Series T preferred stock, 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 nine months ended September 30, 2017, total capital increased $4.8 billion

primarily driven by earnings, partially offset by common stock repurchases, dividends and the phase-in under Basel 3 transition provisions.

Risk-weighted assets decreased $48 billion during the nine months ended September 30, 2017 to $1,482 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 shows the capital composition as measured under Basel 3 – Transition at September 30, 2017 and December 31, 2016.




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

(Dollars in millions)		September 30 2017			December 31 2016
Total common shareholders’ equity		$	250,136		$	241,620
Goodwill		(68,413		)	(69,191		)
Deferred tax assets arising from net operating loss and tax credit carryforwards		(5,428		)	(4,976		)
Adjustments for amounts recorded in accumulated OCI attributed to AFS Securities and defined benefit postretirement plans		747			1,899
Adjustments for amounts recorded in accumulated OCI attributed to certain cash flow hedges		739			895
Intangibles, other than mortgage servicing rights and goodwill		(1,263		)	(1,198		)
Defined benefit pension fund assets		(749		)	(512		)
DVA related to liabilities and derivatives		632			413
Other		(307		)	(84		)
Common equity tier 1 capital		176,094			168,866
Qualifying preferred stock, net of issuance cost		22,323			25,220
Deferred tax assets arising from net operating loss and tax credit carryforwards		(1,357		)	(3,318		)
Defined benefit pension fund assets		(187		)	(341		)
DVA related to liabilities and derivatives under transition		158			276
Other		(593		)	(388		)
Total Tier 1 capital		196,438			190,315
Long-term debt qualifying as Tier 2 capital		23,129			23,365
Eligible credit reserves included in Tier 2 capital		2,420			3,035
Nonqualifying capital instruments subject to phase out from Tier 2 capital		1,893			2,271
Other		(66		)	(5		)
Total Basel 3 Capital		$	223,814		$	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 September 30, 2017 and December 31, 2016.




Table 13	Risk-weighted Assets under Basel 3 – Transition

		September 30, 2017				December 31, 2016
(Dollars in billions)		Standardized Approach		Advanced Approaches		Standardized Approach		Advanced Approaches
Credit risk		$	1,348	$	868	$	1,334	$	903
Market risk		59		58		65		63
Operational risk		n/a		500		n/a		500
Risks related to CVA		n/a		56		n/a		64
Total risk-weighted assets		$	1,407	$	1,482	$	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 September 30, 2017 and December 31, 2016.




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

(Dollars in millions)		September 30 2017			December 31 2016
Common equity tier 1 capital (transition)		$	176,094		$	168,866
Deferred tax assets arising from net operating loss and tax credit carryforwards phased in during transition		(1,357		)	(3,318		)
Accumulated OCI phased in during transition		(747		)	(1,899		)
Intangibles phased in during transition		(316		)	(798		)
Defined benefit pension fund assets phased in during transition		(187		)	(341		)
DVA related to liabilities and derivatives phased in during transition		158			276
Other adjustments and deductions phased in during transition		(77		)	(57		)
Common equity tier 1 capital (fully phased-in)		173,568			162,729
Additional Tier 1 capital (transition)		20,344			21,449
Deferred tax assets arising from net operating loss and tax credit carryforwards phased out during transition		1,357			3,318
Defined benefit pension fund assets phased out during transition		187			341
DVA related to liabilities and derivatives phased out during transition		(158		)	(276		)
Other transition adjustments to additional Tier 1 capital		(7		)	(2		)
Additional Tier 1 capital (fully phased-in)		21,723			24,830
Tier 1 capital (fully phased-in)		195,291			187,559
Tier 2 capital (transition)		27,376			28,666
Nonqualifying capital instruments phased out during transition		(1,893		)	(2,271		)
Other adjustments to Tier 2 capital		9,005			9,176
Tier 2 capital (fully phased-in)		34,488			35,571
Basel 3 Standardized approach Total capital (fully phased-in)		229,779			223,130
Change in Tier 2 qualifying allowance for credit losses		(9,034		)	(9,206		)
Basel 3 Advanced approaches Total capital (fully phased-in)		$	220,745		$	213,924

Risk-weighted assets – As reported to Basel 3 (fully phased-in)
Basel 3 Standardized approach risk-weighted assets as reported		$	1,407,093		$	1,399,477
Changes in risk-weighted assets from reported to fully phased-in		12,710			17,638
Basel 3 Standardized approach risk-weighted assets (fully phased-in)		$	1,419,803		$	1,417,115

Basel 3 Advanced approaches risk-weighted assets as reported		$	1,481,919		$	1,529,903
Changes in risk-weighted assets from reported to fully phased-in		(21,768		)	(18,113		)
Basel 3 Advanced approaches risk-weighted assets (fully phased-in) ⁽²⁾		$	1,460,151		$	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 September 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 September 30, 2017 and December 31, 2016. As of September 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

		September 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	%	$	151,761	6.5	%	14.8	%	$	151,761	6.5	%
Tier 1 capital		12.8		151,761		8.0		14.8		151,761		8.0
Total capital		13.9		164,735		10.0		15.2		156,071		10.0
Tier 1 leverage		9.2		151,761		5.0		9.2		151,761		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. As of September 30, 2017, the Corporation's TLAC and long-term debt exceeded our estimated 2019 minimum requirements.

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 September 30, 2017, MLPF&S’s regulatory net capital as defined by Rule 15c3-1 was $12.9 billion and exceeded the minimum requirement of $1.7 billion by $11.2 billion. MLPCC’s net capital of $3.4 billion exceeded the minimum requirement of $600 million by $2.8 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 September 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 September 30, 2017, MLI’s capital resources were $35.3 billion which exceeded the minimum Pillar 1 requirement of $15.9 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 third quarter of 2017 and through October 30, 2017. During the third quarter of 2017, we recognized $465 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

		September 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	October 25, 2017	January 11, 2018	January 25, 2018	7.00	%	$	1.75
					July 26, 2017	October 11, 2017	October 25, 2017	7.00		1.75
Series D ⁽²⁾			$	654	October 9, 2017	November 30, 2017	December 14, 2017	6.204	%	$	0.38775
					July 5, 2017	August 31, 2017	September 14, 2017	6.204		0.38775
Series E ⁽²⁾			$	317	October 9, 2017	October 31, 2017	November 15, 2017	Floating		$	0.25556
					July 5, 2017	July 31, 2017	August 15, 2017	Floating		0.25556
Series F			$	141	October 9, 2017	November 30, 2017	December 15, 2017	Floating		$	1,011.11111
					July 5, 2017	August 31, 2017	September 15, 2017	Floating		1,022.22222
Series G			$	493	October 9, 2017	November 30, 2017	December 15, 2017	Adjustable		$	1,011.11111
					July 5, 2017	August 31, 2017	September 15, 2017	Adjustable		1,022.22222
Series I ⁽²⁾			$	365	October 9, 2017	December 15, 2017	January 2, 2018	6.625	%	$	0.4140625
					July 5, 2017	September 15, 2017	October 2, 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	September 18, 2017	October 1, 2017	October 30, 2017	7.25	%	$	18.125
Series M ^{(3, 4)}			$	1,310	October 9, 2017	October 31, 2017	November 15, 2017	Fixed-to-floating		$	40.625
Series T⁽⁵⁾			$	35	July 26, 2017	September 25, 2017	October 10, 2017	6.00	%	$	1,500.00
					October 25, 2017	December 26, 2017	January 10, 2018	6.00		1,500.00
Series U^{(3, 4)}			$	1,000	October 9, 2017	November 15, 2017	December 1, 2017	Fixed-to-floating		$	26.00
Series V^{(3, 4)}			$	1,500	October 9, 2017	December 1, 2017	December 18, 2017	Fixed-to-floating		$	25.625
Series W⁽²⁾			$	1,100	October 9, 2017	November 15, 2017	December 11, 2017	6.625	%	$	0.4140625
					July 5, 2017	August 15, 2017	September 11, 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	September 18, 2017	October 1, 2017	October 27, 2017	6.50	%	$	0.40625
Series Z ^(3,4)			$	1,400	September 18, 2017	October 1, 2017	October 23, 2017	FIxed-to-floating		$	32.50
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	September 18, 2017	October 1, 2017	October 30, 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	September 18, 2017	October 1, 2017	October 25, 2017	6.00	%	$	0.375
Series 1 ⁽⁶⁾			$	98	October 9, 2017	November 15, 2017	November 28, 2017	Floating		$	0.18750
					July 5, 2017	August 15, 2017	August 29, 2017	Floating		0.18750
Series 2 ⁽⁶⁾			$	299	October 9, 2017	November 15, 2017	November 28, 2017	Floating		$	0.19167
					July 5, 2017	August 15, 2017	August 29, 2017	Floating		0.19167
Series 3 ⁽⁶⁾			$	653	October 9, 2017	November 15, 2017	November 28, 2017	6.375	%	$	0.3984375
					July 5, 2017	August 15, 2017	August 28, 2017	6.375		0.3984375
Series 4 ⁽⁶⁾			$	210	October 9, 2017	November 15, 2017	November 28, 2017	Floating		$	0.25556
					July 5, 2017	August 15, 2017	August 29, 2017	Floating		0.25556
Series 5⁽⁶⁾			$	422	October 9, 2017	November 1, 2017	November 21, 2017	Floating		$	0.25556
					July 5, 2017	August 1, 2017	August 21, 2017	Floating		0.25556


⁽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⁾	The Series T outstanding notional amount represents Series T shares that were not surrendered in the exercise of the warrants. For additional information, see Recent Events on page 3.


⁽⁶⁾	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 Liquidity Stress Analysis in the MD&A of the Corporation's 2016 Annual Report on Form 10-K.

NB Holdings Corporation

In 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 Corporation, 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.

For the three months ended September 30, 2017 and December 31, 2016, our average GLS were $517 billion and $515 billion, and were as shown in Table 17.




Table 17	Average Global Liquidity Sources

		Three Months Ended
(Dollars in billions)		September 30 2017		December 31 2016
Parent company and NB Holdings		$	85	$	77
Bank subsidiaries		381		389
Other regulated entities		51		49
Total Average Global Liquidity Sources		$	517	$	515

Parent company and NB Holdings average liquidity was $85 billion and $77 billion for the three months ended September 30, 2017 and December 31, 2016. The increase in parent company and NB Holdings liquidity was primarily due to debt issuances outpacing maturities. Typically, parent company and NB Holdings liquidity is in the form of cash deposited with BANA.

Average liquidity held at our bank subsidiaries was $381 billion and $389 billion for the three months ended September 30, 2017 and December 31, 2016. Our bank subsidiaries' liquidity is primarily driven by deposit and lending activity, as well as securities valuation and net debt activity. 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 $304 billion and $310 billion at September 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 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.

Average liquidity held at our other regulated entities, comprised primarily of broker-dealer subsidiaries, was $51 billion and $49 billion for the three months ended September 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

35 Bank of America

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 average GLS at September 30, 2017 and December 31, 2016.




Table 18	Average Global Liquidity Sources Composition

		Three Months Ended
(Dollars in billions)		September 30 2017		December 31 2016
Cash on deposit		$	117	$	118
U.S. Treasury securities		62		58
U.S. agency securities and mortgage-backed securities		324		322
Non-U.S. government securities		14		17
Total Average Global Liquidity Sources		$	517	$	515

Our GLS are substantially the same in composition to what qualifies as High Quality Liquid Assets (HQLA) under the final U.S. Liquidity Coverage Ratio (LCR) rules. However, HQLA for purposes of calculating LCR is not reported at market value, but at a lower value that incorporates regulatory deductions and the exclusion of excess liquidity held at certain subsidiaries. The LCR is calculated as the amount of a financial institution’s unencumbered HQLA relative to the estimated net cash outflows the institution could encounter over a 30-day period of significant liquidity stress, expressed as a percentage. For the three months ended September 30, 2017, our average consolidated HQLA, on a net basis, was $439 billion and the consolidated Corporation's average LCR was 126 percent. Our LCR will fluctuate due to normal business flows from customer activity.

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 52 months at September 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.

Net Stable Funding Ratio

U.S. banking regulators have issued a proposal for a Net Stable Funding Ratio (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 $1.28 trillion and $1.26 trillion at September 30, 2017 and 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 government-sponsored



		Bank of America 36

enterprises, the Federal Housing Administration (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 nine months ended September 30, 2017, we issued $17.1 billion and $50.5 billion of long-term debt consisting of $14.0 billion and $37.5 billion for Bank of America Corporation, substantially all of which was TLAC compliant, $2.1 billion and $7.2 billion for Bank of America, N.A. and $974 million and $5.8 billion of other debt.

Table 19 presents the carrying value of aggregate annual contractual maturities of long-term debt as of September 30, 2017. During the nine months ended September 30, 2017, we had total long-term debt maturities and purchases of $44.1 billion consisting of $24.7 billion for Bank of America Corporation, $13.3 billion for Bank of America, N.A. and $6.1 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		$	3,576	$	19,634	$	18,257	$	12,389	$	17,975	$	72,582	$	144,413
Senior structured notes		518		2,909		1,470		1,001		426		9,368		15,692
Subordinated notes		—		2,922		1,537		—		372		21,311		26,142
Junior subordinated notes		—		—		—		—		—		3,835		3,835
Total Bank of America Corporation		4,094		25,465		21,264		13,390		18,773		107,096		190,082
Bank of America, N.A.
Senior notes		—		5,784		—		—		—		21		5,805
Subordinated notes		—		—		1		—		—		1,691		1,692
Advances from Federal Home Loan Banks		5		2,009		2,013		11		2		113		4,153
Securitizations and other Bank VIEs ⁽¹⁾		—		2,300		3,201		3,097		—		42		8,640
Other		25		82		201		19		—		194		521
Total Bank of America, N.A.		30		10,175		5,416		3,127		2		2,061		20,811
Other debt
Structured liabilities		129		4,667		2,001		1,378		790		7,960		16,925
Nonbank VIEs ⁽¹⁾		12		22		50		—		—		733		817
Other		—		—		—		—		—		31		31
Total other debt		141		4,689		2,051		1,378		790		8,724		17,773
Total long-term debt		$	4,265	$	40,329	$	28,731	$	17,895	$	19,565	$	117,881	$	228,666


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

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




Table 20	Long-term Debt by Major Currency

		September 30 2017		December 31 2016
(Dollars in millions)
U.S. dollar		$	177,505	$	172,082
Euro		34,813		28,236
British pound		6,951		6,588
Australian dollar		3,050		2,900
Japanese yen		2,938		3,919
Canadian dollar		1,958		1,049
Other		1,451		2,049
Total long-term debt		$	228,666	$	216,823

Total long-term debt increased $11.8 billion, or five percent, in the nine months ended September 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 funding and liquidity risk management, see Liquidity Risk – Time-to-required Funding and Liquidity Stress Analysis in the MD&A of the Corporation's 2016 Annual Report on Form 10-K and for information regarding 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.

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.

37 Bank of America

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 nine months ended September 30, 2017, we issued $1.6 billion and $3.9 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.

On September 28, 2017, Fitch Ratings (Fitch) completed its latest review of 12 large, complex securities trading and universal banks, including Bank of America. The agency affirmed the long-term and short-term senior debt ratings of the Corporation and its rated subsidiaries, including BANA, and maintained its stable outlook on those ratings.

On September 12, 2017, Moody’s Investor Service (Moody’s) placed the long-term ratings of the Corporation and its rated subsidiaries, including BANA, on review for upgrade, citing our improved profitability and commitment to a conservative risk profile as drivers of the review. A rating review indicates that those ratings are under consideration for a change in the near term, which typically concludes within 90 days. Moody’s concurrently affirmed the short-term ratings of the Corporation and its rated subsidiaries.

The ratings from Standard & Poor's Global Ratings (S&P) 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

Review for upgrade

BBB+

A-2

Stable

Bank of America, N.A.

P-1

Review for upgrade

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

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.

During the third quarter of 2017, hurricanes impacted the southern United States and the Caribbean, bringing widespread

flooding and wind damage to communities across the region. In the weeks after these storms, we have been supporting our customers and clients in these communities by providing mobile financial centers and ATMs to supplement local financial centers in affected areas. In addition, we are providing support for the recovery efforts including proactive fee refunds in affected areas, as well as home loan and other credit assistance, including payment deferrals, for impacted individuals and businesses. While we are continuing our assessment, we do not believe that these storms will have a material financial impact on the Corporation.



		Bank of America 38

Consumer Portfolio Credit Risk Management

Credit risk management for the consumer portfolio begins with initial underwriting and continues throughout a borrower’s credit cycle. Statistical techniques in conjunction with experiential judgment are used in all aspects of portfolio management including underwriting, product pricing, risk appetite, setting credit limits, and establishing operating processes and metrics to quantify and balance risks and returns. Statistical models are built using detailed behavioral information from external sources such as credit bureaus and/or internal historical experience and are a component of our consumer credit risk management process. These models are used in part to assist in making both new and ongoing credit decisions, as well as portfolio management strategies, including authorizations and line management, collection practices and strategies, and determination of the allowance for loan and lease losses and allocated capital for credit risk.

Consumer Credit Portfolio

Improvement in the U.S. unemployment rate and home prices continued in the three and nine months ended September 30, 2017 resulting in improved credit quality and lower credit losses in the consumer real estate portfolio, partially offset by seasoning and loan growth in the credit card portfolio compared to the same periods in 2016.

Improved credit quality, the sale of the non-U.S. consumer credit card business in the second quarter of 2017, continued loan balance run-off and sales in the consumer real estate portfolio drove a $640 million decrease in the consumer allowance for loan and lease losses during the nine months ended September 30, 2017 to $5.6 billion at September 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)		September 30 2017		December 31 2016		September 30 2017		December 31 2016
Residential mortgage		$	199,446	$	191,797	$	8,399	$	10,127
Home equity		59,752		66,443		2,913		3,611
U.S. credit card		92,602		92,278		n/a		n/a
Non-U.S. credit card		—		9,214		n/a		n/a
Direct/Indirect consumer ⁽¹⁾		93,391		94,089		n/a		n/a
Other consumer ⁽²⁾		2,424		2,499		n/a		n/a
Consumer loans excluding loans accounted for under the fair value option		447,615		456,320		11,312		13,738
Loans accounted for under the fair value option ⁽³⁾		978		1,051		n/a		n/a
Total consumer loans and leases ⁽⁴⁾		$	448,593	$	457,371	$	11,312	$	13,738

⁽¹⁾

Outstandings include auto and specialty lending loans of $50.0 billion and $48.9 billion, unsecured consumer lending loans of $484 million and $585 million, U.S. securities-based lending loans of $39.3 billion and $40.1 billion, non-U.S. consumer loans of $2.9 billion and $3.0 billion, student loans of $0 and $497 million and other consumer loans of $682 million and $1.1 billion at September 30, 2017 and December 31, 2016.


⁽²⁾	Outstandings include consumer leases of $2.3 billion and $1.9 billion, consumer overdrafts of $160 million and $157 million and consumer finance loans of $0 and $465 million at September 30, 2017 and December 31, 2016.


⁽³⁾	Consumer loans accounted for under the fair value option include residential mortgage loans of $615 million and $710 million and home equity loans of $363 million and $341 million at September 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.


⁽⁴⁾	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. During the second quarter of 2017, the Corporation sold its non-U.S. consumer credit card business.

n/a = not applicable

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 Fannie Mae (FNMA) and Freddie Mac (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 the Government National Mortgage Association (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.

39 Bank of America




Table 23	Consumer Credit Quality

		Nonperforming						Accruing Past Due 90 Days or More
(Dollars in millions)		September 30 2017			December 31 2016			September 30 2017			December 31 2016
Residential mortgage ⁽¹⁾		$	2,518		$	3,056		$	3,372		$	4,793
Home equity		2,691			2,918			—			—
U.S. credit card		n/a			n/a			810			782
Non-U.S. credit card		n/a			n/a			—			66
Direct/Indirect consumer		43			28			31			34
Other consumer		—			2			1			4
Total ⁽²⁾		$	5,252		$	6,004		$	4,214		$	5,679
Consumer loans and leases as a percentage of outstanding consumer loans and leases ⁽²⁾		1.17		%	1.32		%	0.94		%	1.24		%
Consumer loans and leases as a percentage of outstanding loans and leases, excluding PCI and fully-insured loan portfolios ⁽²⁾		1.28			1.45			0.20			0.21

⁽¹⁾

Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At September 30, 2017 and December 31, 2016, residential mortgage included $2.3 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 $1.1 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 September 30, 2017 and December 31, 2016, $27 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 September 30					Nine Months Ended September 30					Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)		2017			2016		2017			2016		2017		2016		2017		2016
Residential mortgage		$	(82	)	$	4	$	(84	)	$	129	(0.16	)%	0.01	%	(0.06	)%	0.09	%
Home equity		83			97		197			335		0.54		0.55		0.42		0.61
U.S. credit card		612			543		1,858			1,703		2.65		2.45		2.75		2.60
Non-U.S. credit card		—			43		75			134		—		1.83		1.91		1.84
Direct/Indirect consumer		67			34		147			91		0.28		0.14		0.21		0.13
Other consumer		51			57		116			152		7.23		9.74		5.83		9.09
Total		$	731		$	778	$	2,309		$	2,544	0.65		0.69		0.69		0.76


⁽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 $62 million and $112 million in residential mortgage for the three and nine months ended September 30, 2017 compared to $33 million and $109 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 $11 million and $49 million in home equity for the three and nine months ended September 30, 2017 compared to $50 million and $161 million for the same periods in 2016. Net charge-off (recovery) ratios including the PCI write-offs were (0.04) percent and 0.02 percent for residential mortgage for the three and nine months ended September 30, 2017 compared to 0.08 percent and 0.17 percent for the same periods in 2016. Net charge-off ratios including the PCI write-offs were 0.61 percent and 0.52 percent for home equity for the three and nine months ended September 30, 2017 compared to 0.83 percent and 0.91 percent 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.

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.



		Bank of America 40

As shown in Table 25, outstanding core consumer real estate loans increased $10.2 billion during the nine months ended September 30, 2017 driven by an increase of $14.2 billion in residential mortgage, partially offset by a $4.0 billion decrease in home equity.




Table 25	Consumer Real Estate Portfolio ⁽¹⁾

		Outstandings				Nonperforming				Net Charge-offs ⁽²⁾
		September 30 2017		December 31 2016		September 30 2017		December 31 2016		Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)										2017			2016			2017			2016
Core portfolio
Residential mortgage		$	170,657	$	156,497	$	1,076	$	1,274	$	(42	)	$	(12	)	$	(40	)	$	(23	)
Home equity		45,377		49,373		1,046		969		26			35			85			81
Total core portfolio		216,034		205,870		2,122		2,243		(16		)	23			45			58
Non-core portfolio
Residential mortgage		28,789		35,300		1,442		1,782		(40		)	16			(44		)	152
Home equity		14,375		17,070		1,645		1,949		57			62			112			254
Total non-core portfolio		43,164		52,370		3,087		3,731		17			78			68			406
Consumer real estate portfolio
Residential mortgage		199,446		191,797		2,518		3,056		(82		)	4			(84		)	129
Home equity		59,752		66,443		2,691		2,918		83			97			197			335
Total consumer real estate portfolio		$	259,198	$	258,240	$	5,209	$	5,974	$	1		$	101		$	113		$	464

						Allowance for Loan and Lease Losses				Provision for Loan and Lease Losses
						September 30 2017		December 31 2016		Three Months Ended September 30						Nine Months Ended September 30
										2017			2016			2017			2016
Core portfolio
Residential mortgage						$	231	$	252	$	(49	)	$	(33	)	$	(60	)	$	(86	)
Home equity						456		560		(10		)	2			(19		)	10
Total core portfolio						687		812		(59		)	(31		)	(79		)	(76		)
Non-core portfolio
Residential mortgage						582		760		(59		)	(34		)	(111		)	(88		)
Home equity						763		1,178		(86		)	29			(255		)	(27		)
Total non-core portfolio						1,345		1,938		(145		)	(5		)	(366		)	(115		)
Consumer real estate portfolio
Residential mortgage						813		1,012		(108		)	(67		)	(171		)	(174		)
Home equity						1,219		1,738		(96		)	31			(274		)	(17		)
Total consumer real estate portfolio						$	2,032	$	2,750	$	(204	)	$	(36	)	$	(445	)	$	(191	)

⁽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 $615 million and $710 million and home equity loans of $363 million and $341 million at September 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.

Residential Mortgage

The residential mortgage portfolio makes up the largest percentage of our consumer loan portfolio at 45 percent of consumer loans and leases at September 30, 2017. Approximately 35 percent of the residential mortgage portfolio is in Consumer Banking and approximately 35 percent is in GWIM. The remaining portion 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.

Outstanding balances in the residential mortgage portfolio, excluding loans accounted for under the fair value option, increased $7.6 billion during the nine months ended September 30, 2017 as retention of new originations was partially offset by loan sales of $3.2 billion, and run-off.

At September 30, 2017 and December 31, 2016, the residential mortgage portfolio included $24.8 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 September 30, 2017 and December 31, 2016, $18.3 billion and $22.3 billion had FHA insurance with the remainder protected by long-term standby agreements. At September 30,

41 Bank of America

2017 and December 31, 2016, $5.5 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, the 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)										September 30 2017			December 31 2016			September 30 2017			December 31 2016
Outstandings										$	199,446		$	191,797		$	166,262		$	152,941
Accruing past due 30 days or more										6,613			8,232			1,893			1,835
Accruing past due 90 days or more										3,372			4,793			—			—
Nonperforming loans										2,518			3,056			2,518			3,056
Percent of portfolio
Refreshed LTV greater than 90 but less than or equal to 100										3		%	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⁾										10			13			9			12

		Reported Basis								Excluding Purchased Credit-impaired and Fully-Insured Loans
		Three Months Ended September 30				Nine Months Ended September 30				Three Months Ended September 30						Nine Months Ended September 30
		2017		2016		2017		2016		2017			2016			2017			2016
Net charge-off ratio ⁽³⁾		(0.16	)%	0.01	%	(0.06	)%	0.09	%	(0.20		)%	0.01		%	(0.07		)%	0.12		%


⁽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 $825 million, or 33 percent, and $931 million, or 31 percent of nonperforming residential mortgage loans at September 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 $538 million during the nine months ended September 30, 2017 as outflows, including sales of $386 million, outpaced new inflows which included the addition of $140 million of nonperforming loans as a result of clarifying regulatory guidance related to bankruptcy loans. Of the nonperforming residential mortgage loans at September 30, 2017, $880 million, or 35 percent, were current on contractual payments. Loans accruing past due 30 days or more increased $58 million due in part to the timing impact of a consumer real estate servicer conversion that occurred during the third quarter of 2017.

Net charge-offs decreased $86 million to an $82 million net recovery and decreased $213 million to an $84 million net recovery for the three and nine months ended September 30, 2017, compared to the same periods in 2016. These decreases in net charge-offs were primarily driven by net recoveries of $88 million and $102 million related to loan sales during the three and nine months ended September 30, 2017, compared to loan sale-related net recoveries of $7 million and net charge-offs of $35 million for the same periods in 2016. Additionally, net charge-offs declined due to 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.

Loans with a refreshed LTV greater than 100 percent represented two percent and three percent of the residential mortgage loan portfolio at September 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 September 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.

Of the $166.3 billion in total residential mortgage loans outstanding at September 30, 2017, as shown in Table 27, 34 percent were originated as interest-only loans. The outstanding balance of interest-only residential mortgage loans that have entered the amortization period was $10.5 billion, or 18 percent, at September 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 September 30, 2017, $300 million, or three percent of outstanding interest-only residential mortgages that had entered the amortization period were accruing past due 30 days or more compared to $1.9 billion, or one percent for the entire residential mortgage portfolio. In addition, at September 30, 2017, $475 million, or five percent of outstanding interest-only residential mortgage loans that had entered the amortization period were nonperforming, of which $255 million were contractually current, compared to $2.5 billion, or two percent for the entire residential mortgage portfolio, of which $880 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



		Bank of America 42

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 September 30, 2017 and December 31, 2016. In the New York area, the New York-Northern New Jersey-Long Island MSA made up 13 percent and 12 percent of outstandings at September 30, 2017 and December 31, 2016.




Table 27	Residential Mortgage State Concentrations

		Outstandings ⁽¹⁾				Nonperforming ⁽¹⁾				Net Charge-offs ⁽²⁾
		September 30 2017		December 31 2016		September 30 2017		December 31 2016		Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)										2017			2016			2017			2016
California		$	65,407	$	58,295	$	453	$	554	$	(59	)	$	(21	)	$	(84	)	$	(51	)
New York ⁽³⁾		16,705		14,476		238		290		(1		)	(1		)	(2		)	17
Florida ⁽³⁾		10,613		10,213		264		322		(9		)	2			(11		)	19
Texas		7,046		6,607		120		132		1			—			2			8
Massachusetts		5,691		5,344		63		77		(1		)	—			(1		)	4
Other U.S./Non-U.S.		60,800		58,006		1,380		1,681		(13		)	24			12			132
Residential mortgage loans ⁽⁴⁾		$	166,262	$	152,941	$	2,518	$	3,056	$	(82	)	$	4		$	(84	)	$	129
Fully-insured loan portfolio		24,785		28,729
Purchased credit-impaired residential mortgage loan portfolio ⁽⁵⁾		8,399		10,127
Total residential mortgage loan portfolio		$	199,446	$	191,797


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


⁽²⁾	Net charge-offs exclude $62 million and $112 million of write-offs in the residential mortgage PCI loan portfolio for the three and nine months ended September 30, 2017 compared to $33 million and $109 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 September 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 September 30, 2017, the home equity portfolio made up 13 percent of the consumer portfolio and is comprised of home equity lines of credit (HELOCs), home equity loans and reverse mortgages.

At September 30, 2017, our HELOC portfolio had an outstanding balance of $52.8 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 September 30, 2017, our home equity loan portfolio had an outstanding balance of $4.7 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 $4.7 billion at September 30, 2017, 57 percent have 25- to 30-year terms. At September 30, 2017, our reverse mortgage portfolio had an outstanding balance, excluding loans accounted for under the fair value option, of $2.2 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 September 30, 2017, approximately 69 percent of the home equity portfolio was in Consumer Banking, 24 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 $6.7 billion during the nine months ended September 30, 2017 primarily due to paydowns and charge-offs outpacing new originations and draws on existing lines. Of the total home equity portfolio at September 30, 2017 and December 31, 2016, $19.0 billion and $19.6 billion, or 32 percent and 29 percent, were in first-lien positions (33 percent and 31 percent excluding the PCI home equity portfolio). At September 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 $9.8 billion, or 17 percent of our total home equity portfolio excluding the PCI loan portfolio.

Unused HELOCs totaled $45.4 billion at September 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 percent at September 30, 2017 compared to 55 percent at December 31, 2016.

43 Bank of America

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)										September 30 2017			December 31 2016			September 30 2017			December 31 2016
Outstandings										$	59,752		$	66,443		$	56,839		$	62,832
Accruing past due 30 days or more ⁽²⁾										581			566			581			566
Nonperforming loans ⁽²⁾										2,691			2,918			2,691			2,918
Percent of portfolio
Refreshed CLTV greater than 90 but less than or equal to 100										4		%	5		%	3		%	4		%
Refreshed CLTV greater than 100										6			8			5			7
Refreshed FICO below 620										7			7			6			6
2006 and 2007 vintages ⁽³⁾										31			37			28			34

		Reported Basis								Excluding Purchased Credit-impaired
		Three Months Ended September 30				Nine Months Ended September 30				Three Months Ended September 30						Nine Months Ended September 30
		2017		2016		2017		2016		2017			2016			2017			2016
Net charge-off ratio ⁽⁴⁾		0.54	%	0.55	%	0.42	%	0.61	%	0.56		%	0.58		%	0.44		%	0.65		%


⁽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 $74 million and $81 million and nonperforming loans include $329 million and $340 million of loans where we serviced the underlying first-lien at September 30, 2017 and December 31, 2016.


⁽³⁾	These vintages of loans have higher refreshed combined loan-to-value (CLTV) ratios and accounted for 52 percent and 50 percent of nonperforming home equity loans at September 30, 2017 and December 31, 2016, and 81 percent and 86 percent of net charge-offs for the three and nine months ended September 30, 2017 and 57 percent and 47 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 $227 million during the nine months ended September 30, 2017 as outflows, including $66 million of net transfers to held-for-sale and $38 million of sales, outpaced new inflows, which included the addition of $135 million of nonperforming loans as a result of clarifying regulatory guidance related to bankruptcy loans. Of the nonperforming home equity portfolio at September 30, 2017, $1.5 billion, or 55 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, $713 million, or 26 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 increased $15 million during the nine months ended September 30, 2017.

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 September 30, 2017, we estimate that $856 million of current and $151 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 $191 million of these combined amounts, with the remaining $816 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 $336 million had first-lien loans that were 90 days or more past due.

Net charge-offs decreased $14 million to $83 million and decreased $138 million to $197 million for the three and nine months ended September 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, partially offset by $32 million of charge-offs as a result of clarifying regulatory guidance related to bankruptcy loans.

Outstanding balances with a refreshed CLTV greater than 100 percent comprised five percent and seven percent of the home equity portfolio at September 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



		Bank of America 44

home equity loan and 91 percent 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 September 30, 2017.

Of the $56.8 billion in total home equity portfolio outstandings at September 30, 2017, as shown in Table 29, 35 percent require interest-only payments. The outstanding balance of HELOCs that have entered the amortization period was $17.8 billion at September 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 September 30, 2017, $379 million, or two percent of outstanding HELOCs that had entered the amortization period were accruing past due 30 days or more. In addition, at September 30, 2017, $2.0 billion, or 11 percent of outstanding HELOCs that had entered the amortization period were nonperforming, of which $1.1 billion were contractually current. Loans in our HELOC portfolio generally have an initial draw period of 10 years and 16 percent of these loans will enter the amortization period through 2018 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 September 30, 2017, approximately 35 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 September 30, 2017 and December 31, 2016. For the three and nine months ended September 30, 2017, loans within this MSA contributed 29 percent and 26 percent of net charge-offs within the home equity portfolio compared to 15 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 September 30, 2017 and December 31, 2016. For the three and nine months ended September 30, 2017, loans within this MSA contributed net recoveries of $7 million and $16 million within the home equity portfolio compared to net charge-offs of $0 and $2 million for the same periods in 2016.




Table 29	Home Equity State Concentrations

		Outstandings ⁽¹⁾				Nonperforming ⁽¹⁾				Net Charge-offs ⁽²⁾
		September 30 2017		December 31 2016		September 30 2017		December 31 2016		Three Months Ended September 30					Nine Months Ended September 30
(Dollars in millions)		September 30 2017		December 31 2016		September 30 2017		December 31 2016		2017			2016		2017			2016
California		$	15,699	$	17,563	$	782	$	829	$	(9	)	$	3	$	(24	)	$	12
Florida ⁽³⁾		6,508		7,319		405		442		13			18		34			59
New Jersey ⁽³⁾		4,683		5,102		195		201		16			12		37			37
New York ⁽³⁾		4,330		4,720		254		271		14			11		31			37
Massachusetts		2,846		3,078		94		100		5			2		7			10
Other U.S./Non-U.S.		22,773		25,050		961		1,075		44			51		112			180
Home equity loans ⁽⁴⁾		$	56,839	$	62,832	$	2,691	$	2,918	$	83		$	97	$	197		$	335
Purchased credit-impaired home equity portfolio ⁽⁵⁾		2,913		3,611
Total home equity loan portfolio		$	59,752	$	66,443


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


⁽²⁾	Net charge-offs exclude $11 million and $49 million of write-offs in the home equity PCI loan portfolio for the three and nine months ended September 30, 2017 compared to $50 million and $161 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 September 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

		September 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⁾		$	8,515	$	8,399	$	134	$	8,265	97.06	%
Home equity		2,988		2,913		181		2,732		91.43
Total purchased credit-impaired loan portfolio		$	11,503	$	11,312	$	315	$	10,997	95.60

		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 September 30, 2017 and December 31, 2016, pay option loans had an unpaid principal balance of $1.5 billion and $1.9 billion and a carrying value of $1.5 billion and $1.8 billion. This includes $1.3 billion and $1.6 billion of loans that were credit-impaired upon acquisition and $152 million and $226 million of loans that are 90 days or more past due at September 30, 2017 and December 31, 2016. The total unpaid principal balance of pay option loans with accumulated negative amortization was $177 million and $303 million, including $10 million and $16 million of negative amortization at September 30, 2017 and December 31, 2016.

The total PCI unpaid principal balance decreased $2.5 billion, or 18 percent, during the nine months ended September 30, 2017 primarily driven by payoffs, paydowns and write-offs. During the nine months ended September 30, 2017, we sold PCI loans with a carrying value of $742 million compared to sales of $435 million for the same period in 2016.

Of the unpaid principal balance of $11.5 billion at September 30, 2017, $10.1 billion, or 88 percent, was current based on the contractual terms, $811 million, or seven percent, was in early stage delinquency, and $394 million was 180 days or more past due, including $331 million of first-lien mortgages and $63 million of home equity loans.

The PCI residential mortgage loan portfolio represented 74 percent of the total PCI loan portfolio at September 30, 2017. Those loans to borrowers with a refreshed FICO score below 620 represented 25 percent of the PCI residential mortgage loan portfolio at September 30, 2017. Loans with a refreshed LTV greater than 90 percent, after consideration of purchase accounting adjustments and the related valuation allowance, represented 16 percent of the PCI residential mortgage loan portfolio and 17 percent based on the unpaid principal balance at September 30, 2017.

The PCI home equity portfolio represented 26 percent of the total PCI loan portfolio at September 30, 2017. Those loans with a refreshed FICO score below 620 represented 16 percent of the PCI home equity portfolio at September 30, 2017. Loans with a

refreshed CLTV greater than 90 percent, after consideration of purchase accounting adjustments and the related valuation allowance, represented 35 percent of the PCI home equity portfolio and 38 percent based on the unpaid principal balance at September 30, 2017.

U.S. Credit Card

At September 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 remained relatively unchanged at $92.6 billion at September 30, 2017. Net charge-offs increased $69 million to $612 million, and $155 million to $1.9 billion for the three and nine months ended September 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 increased $62 million and loans 90 days or more past due and still accruing interest increased $28 million during the nine months ended September 30, 2017, driven by portfolio seasoning and loan growth.

Unused lines of credit for U.S. credit card totaled $332.0 billion and $321.6 billion at September 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
		September 30 2017		December 31 2016		September 30 2017		December 31 2016		Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)		September 30 2017		December 31 2016		September 30 2017		December 31 2016		2017		2016		2017		2016
California		$	14,533	$	14,251	$	125	$	115	$	104	$	86	$	303	$	269
Florida		8,030		7,864		74		85		58		60		195		184
Texas		7,211		7,037		67		65		46		40		143		122
New York		5,762		5,683		78		60		59		39		155		120
Washington		4,177		4,128		20		18		13		13		41		42
Other U.S.		52,889		53,315		446		439		332		305		1,021		966
Total U.S. credit card portfolio		$	92,602	$	92,278	$	810	$	782	$	612	$	543	$	1,858	$	1,703



		Bank of America 46

Direct/Indirect Consumer

At September 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 $698 million during the nine months ended September 30, 2017

primarily driven by lower draws and utilization in the securities-based lending portfolio.

Net charge-offs increased $33 million to $67 million, and $56 million to $147 million for the three and nine months ended September 30, 2017 compared to the same periods in 2016 due largely to recent clarifying regulatory guidance related to bankruptcy and repossessed loans.

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
		September 30 2017		December 31 2016		September 30 2017		December 31 2016		Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)		September 30 2017		December 31 2016		September 30 2017		December 31 2016		2017		2016		2017		2016
California		$	11,039	$	11,300	$	3	$	3	$	7	$	4	$	14	$	9
Florida		10,469		9,418		4		3		15		7		31		20
Texas		10,410		9,406		3		5		13		6		29		14
New York		6,085		5,253		2		1		2		—		3		1
Illinois		3,436		2,996		1		1		3		1		5		3
Other U.S./Non-U.S.		51,952		55,716		18		21		27		16		65		44
Total direct/indirect loan portfolio		$	93,391	$	94,089	$	31	$	34	$	67	$	34	$	147	$	91

Other Consumer

At September 30, 2017, approximately 93 percent of the $2.4 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 nine months ended September 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 nine months ended September 30, 2017, nonperforming consumer loans declined $752 million to $5.3 billion driven in part by loan sales of $423 million and net transfers of loans to held-for-sale of $198 million. Additionally, nonperforming loans declined as outflows outpaced new inflows, which included the addition of $295 million of nonperforming loans as a result of clarifying regulatory guidance related to bankruptcy loans.

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 September 30, 2017, $1.9 billion, or 35 percent of nonperforming consumer real estate loans and foreclosed properties had been written down to their estimated property value less costs to sell, including $1.7 billion of nonperforming loans 180 days or more past due and $259 million of foreclosed

properties. In addition, at September 30, 2017, $2.3 billion, or 45 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 $104 million during the nine months ended September 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 September 30, 2017 was $879 million 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 accrued 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 September 30						Nine Months Ended September 30
(Dollars in millions)		2017			2016			2017			2016
Nonperforming loans and leases, beginning of period		$	5,282		$	6,705		$	6,004		$	8,165
Additions		999			831			2,499			2,581
Reductions:
Paydowns and payoffs		(117		)	(220		)	(517		)	(605		)
Sales		(162		)	(237		)	(423		)	(1,331		)
Returns to performing status ⁽²⁾		(347		)	(383		)	(1,101		)	(1,220		)
Charge-offs		(346		)	(279		)	(845		)	(1,008		)
Transfers to foreclosed properties		(57		)	(67		)	(167		)	(232		)
Transfers to loans held-for-sale		—			—			(198		)	—
Total net reductions to nonperforming loans and leases		(30		)	(355		)	(752		)	(1,815		)
Total nonperforming loans and leases, September 30 ⁽³⁾		5,252			6,350			5,252			6,350
Total foreclosed properties, September 30 ⁽⁴⁾		259			372			259			372
Nonperforming consumer loans, leases and foreclosed properties, September 30		$	5,511		$	6,722		$	5,511		$	6,722
Nonperforming consumer loans and leases as a percentage of outstanding consumer loans and leases ⁽⁵⁾		1.17		%	1.41		%
Nonperforming consumer loans, leases and foreclosed properties as a percentage of outstanding consumer loans, leases and foreclosed properties ⁽⁵⁾		1.23			1.49


⁽¹⁾	Balances do not include nonperforming LHFS of $1 million and $12 million and nonaccruing TDRs removed from the PCI loan portfolio prior to January 1, 2010 of $24 million and $27 million at September 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 September 30, 2017, 32 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 $879 million and $1.3 billion at September 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 September 30, 2017 and December 31, 2016, $336 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

		September 30, 2017						December 31, 2016
(Dollars in millions)		Total		Nonperforming		Performing		Total		Nonperforming		Performing
Residential mortgage ^{(1, 2)}		$	10,251	$	1,575	$	8,676	$	12,631	$	1,992	$	10,639
Home equity ⁽³⁾		2,871		1,480		1,391		2,777		1,566		1,211
Total consumer real estate troubled debt restructurings		$	13,122	$	3,055	$	10,067	$	15,408	$	3,558	$	11,850


⁽¹⁾	At September 30, 2017 and December 31, 2016, residential mortgage TDRs deemed collateral dependent totaled $2.9 billion and $3.5 billion, and included $1.3 billion and $1.6 billion of loans classified as nonperforming and $1.6 billion and $1.9 billion of loans classified as performing.


⁽²⁾	Residential mortgage performing TDRs included $4.1 billion and $5.3 billion of loans that were fully-insured at September 30, 2017 and December 31, 2016.


⁽³⁾	Home equity TDRs deemed collateral dependent totaled $1.6 billion and included $1.3 billion of loans classified as nonperforming for both periods, and $382 million and $301 million of loans classified as performing at September 30, 2017 and December 31, 2016.

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 September 30, 2017 and December 31, 2016, our renegotiated TDR portfolio was $485 million and $610 million, of which $428 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 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



		Bank of America 48

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 September 30, 2017 and December 31, 2016, see 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 nine months ended September 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 nine months ended September 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 $20.0 billion during the nine months ended September 30, 2017 primarily in U.S. commercial. Nonperforming commercial loans and leases decreased $433 million to $1.4 billion and reservable criticized balances decreased $1.5 billion to $14.8 billion during the nine months ended September 30, 2017 driven by improvements in the energy sector. The allowance for loan and lease losses for the commercial portfolio decreased $147 million to $5.1 billion at September 30, 2017 compared to December 31, 2016. For more information, see Allowance for Credit Losses on page 57.

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




Table 35	Commercial Loans and Leases

		Outstandings				Nonperforming				Accruing Past Due 90 Days or More
(Dollars in millions)		September 30 2017		December 31 2016		September 30 2017		December 31 2016		September 30 2017		December 31 2016
U.S. commercial		$	282,677	$	270,372	$	863	$	1,256	$	82	$	106
Commercial real estate ⁽¹⁾		59,628		57,355		130		72		—		7
Commercial lease financing		21,413		22,375		26		36		38		19
Non-U.S. commercial		95,896		89,397		244		279		—		5
		459,614		439,499		1,263		1,643		120		137
U.S. small business commercial ⁽²⁾		13,603		12,993		55		60		68		71
Commercial loans excluding loans accounted for under the fair value option		473,217		452,492		1,318		1,703		188		208
Loans accounted for under the fair value option ⁽³⁾		5,307		6,034		36		84		—		—
Total commercial loans and leases		$	478,524	$	458,526	$	1,354	$	1,787	$	188	$	208


⁽¹⁾	Includes U.S. commercial real estate of $55.5 billion and $54.3 billion and non-U.S. commercial real estate of $4.2 billion and $3.1 billion at September 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 of $2.8 billion and $2.9 billion and non-U.S. commercial of $2.5 billion and $3.1 billion at September 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.

Table 36 presents net charge-offs and related ratios for our commercial loans and leases for the three and nine months ended September 30, 2017 and 2016. The increase in net charge-offs of $59 million and $36 million for the three and nine months ended September 30, 2017 compared to the same periods in 2016 was driven by higher energy losses, partially offset by lower charge-offs in commercial lease financing. Also, the prior-year period included commercial real estate recoveries.




Table 36	Commercial Net Charge-offs and Related Ratios

		Net Charge-offs											Net Charge-off Ratios⁽¹⁾
		Three Months Ended September 30						Nine Months Ended September 30					Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)		2017			2016			2017		2016			2017		2016		2017		2016
U.S. commercial		$	80		$	62		$	176	$	155		0.11	%	0.10	%	0.09	%	0.08	%
Commercial real estate		2			(23		)	3		(31		)	0.02		(0.16	)	0.01		(0.07	)
Commercial lease financing		(1		)	6			—		19			(0.02	)	0.11		—		0.12
Non-U.S. commercial		33			10			94		97			0.14		0.04		0.14		0.14
		114			55			273		240			0.10		0.05		0.08		0.08
U.S. small business commercial		55			55			160		157			1.61		1.67		1.60		1.62
Total commercial		$	169		$	110		$	433	$	397		0.14		0.10		0.13		0.12


⁽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.

49 Bank of America

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.

Total commercial utilized credit exposure increased $21.5 billion during the nine months ended September 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 September 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)		September 30 2017		December 31 2016		September 30 2017		December 31 2016		September 30 2017		December 31 2016
Loans and leases ⁽⁵⁾		$	484,565	$	464,260	$	354,927	$	366,106	$	839,492	$	830,366
Derivative assets ⁽⁶⁾		38,384		42,512		—		—		38,384		42,512
Standby letters of credit and financial guarantees		33,967		33,135		723		660		34,690		33,795
Debt securities and other investments		26,190		26,244		5,092		5,474		31,282		31,718
Loans held-for-sale		10,998		6,510		2,246		3,824		13,244		10,334
Commercial letters of credit		1,414		1,464		83		112		1,497		1,576
Bankers’ acceptances		389		395		—		13		389		408
Other		514		372		—		—		514		372
Total		$	596,421	$	574,892	$	363,071	$	376,189	$	959,492	$	951,081


⁽¹⁾	Commercial utilized exposure includes loans of $5.3 billion and $6.0 billion and issued letters of credit with a notional amount of $234 million and $284 million accounted for under the fair value option at September 30, 2017 and December 31, 2016.


⁽²⁾	Commercial unfunded exposure includes commitments accounted for under the fair value option with a notional amount of $4.7 billion and $6.7 billion at September 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 $11.3 billion and $12.1 billion at September 30, 2017 and December 31, 2016.


⁽⁵⁾	Includes credit risk exposure associated with assets under operating lease arrangements of $6.0 billion and $5.7 billion at September 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 $35.6 billion and $43.3 billion at September 30, 2017 and December 31, 2016. Not reflected in utilized and committed exposure is additional non-cash derivative collateral held of $25.6 billion and $25.3 billion at September 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 $1.5 billion, or nine

percent, during the nine months ended September 30, 2017 primarily driven by paydowns and upgrades in the energy portfolio. Approximately 80 percent and 76 percent of commercial utilized reservable criticized exposure was secured at September 30, 2017 and December 31, 2016.




Table 38	Commercial Utilized Reservable Criticized Exposure

		September 30, 2017				December 31, 2016
(Dollars in millions)		Amount ⁽¹⁾		Percent ⁽²⁾		Amount ⁽¹⁾		Percent ⁽²⁾
U.S. commercial		$	10,098	3.24	%	$	10,311	3.46	%
Commercial real estate		628		1.03		399		0.68
Commercial lease financing		650		3.04		810		3.62
Non-U.S. commercial		2,573		2.54		3,974		4.17
		13,949		2.82		15,494		3.27
U.S. small business commercial		875		6.43		826		6.36
Total commercial utilized reservable criticized exposure		$	14,824	2.91		$	16,320	3.35


⁽¹⁾	Total commercial utilized reservable criticized exposure includes loans and leases of $13.6 billion and $14.9 billion and commercial letters of credit of $1.3 billion and $1.4 billion at September 30, 2017 and December 31, 2016.


⁽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 September 30, 2017, 70 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 $12.3 billion, or five percent, during the nine months ended September 30, 2017 due to growth across most of the

commercial businesses. Reservable criticized balances decreased $213 million, or two percent, and nonperforming loans and leases decreased $393 million, or 31 percent, in the nine months ended September 30, 2017 driven by improvements in the energy sector. Net charge-offs increased $18 million and $21 million for the three and nine months ended September 30, 2017 compared to the same periods in 2016. The increase was driven by higher energy losses.



		Bank of America 50

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 September 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 $2.3 billion, or four percent, during the nine months ended September 30, 2017 due to new originations outpacing paydowns.

For the three and nine months ended September 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 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 $83 million, or 95 percent, driven by a small number of clients across property types. Reservable criticized balances increased $229 million, or 57 percent, during the nine months ended September 30, 2017 primarily due to loan downgrades. Net charge-offs were $2 million and $3 million for the three and nine months ended September 30, 2017 compared to net recoveries of $23 million and $31 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)		September 30 2017		December 31 2016
By Geographic Region
California		$	14,274	$	13,450
Northeast		10,173		10,329
Southwest		7,515		7,567
Southeast		5,415		5,630
Midwest		3,901		4,380
Florida		3,253		3,213
Midsouth		3,069		2,346
Northwest		2,706		2,430
Illinois		2,422		2,408
Non-U.S.		4,159		3,103
Other ⁽¹⁾		2,741		2,499
Total outstanding commercial real estate loans		$	59,628	$	57,355
By Property Type
Non-residential
Office		$	17,891	$	16,643
Shopping centers / Retail		9,046		8,794
Multi-family rental		8,427		8,817
Hotels / Motels		6,388		5,550
Industrial / Warehouse		5,429		5,357
Multi-use		2,804		2,822
Unsecured		2,243		1,730
Land and land development		236		357
Other		5,785		5,595
Total non-residential		58,249		55,665
Residential		1,379		1,690
Total outstanding commercial real estate loans		$	59,628	$	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 September 30, 2017, total committed non-residential exposure was $80.1 billion compared to $76.9 billion at December 31, 2016, of which $58.2 billion and $55.7 billion were funded loans. Non-residential nonperforming loans and foreclosed properties increased $84 million, or 104 percent, to $165 million at September 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 0.28 percent and 0.14 percent of total non-residential loans and foreclosed properties at September 30, 2017 and December 31, 2016. Non-residential utilized reservable criticized exposure increased $173 million, or 44 percent, to $570 million

at September 30, 2017 compared to $397 million at December 31, 2016, which represented 0.96 percent and 0.70 percent of non-residential utilized reservable exposure. For the non-residential portfolio, net charge-offs increased $26 million to $3 million and increased $34 million to $4 million for the three and nine months ended September 30, 2017 compared to the same periods in 2016.

At September 30, 2017, total committed residential exposure was $3.1 billion compared to $3.7 billion at December 31, 2016, of which $1.4 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

51 Bank of America

were 0.33 percent and 4.08 percent at September 30, 2017 compared to 0.35 percent and 0.16 percent at December 31, 2016.

At September 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 $213 million and $107 million, and nonperforming construction and land development loans and foreclosed properties totaled $39 million and $44 million at September 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.

Non-U.S. Commercial

At September 30, 2017, 80 percent of the non-U.S. commercial loan portfolio was managed in Global Banking and 20 percent in Global Markets. Outstanding loans, excluding loans accounted for under the fair value option, increased $6.5 billion during the nine months ended September 30, 2017. Net charge-offs increased $23 million to $33 million and decreased $3 million to $94 million for the three and nine months ended September 30, 2017 compared to the same periods in 2016. The three-month increase was driven by higher energy 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 51 percent and 48 percent of the U.S. small business commercial portfolio at September 30, 2017 and December 31, 2016. Net charge-offs remained relatively unchanged at $55 million and $160 million for the three and nine months ended September 30, 2017 compared to the same periods in 2016. Of the U.S. small business commercial net charge-offs, 92 percent and 90 percent were credit card-related products for the three and nine months ended September 30, 2017 compared to 79 percent and 85 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 nine months ended September 30, 2017 and 2016. Nonperforming loans do not include loans accounted for under the fair value option. During the three and nine months ended September 30, 2017, nonperforming commercial loans and leases decreased $202 million and $385 million to $1.3 billion. Approximately 81 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 84 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 September 30						Nine Months Ended September 30
(Dollars in millions)		2017			2016			2017			2016
Nonperforming loans and leases, beginning of period		$	1,520		$	1,659		$	1,703		$	1,212
Additions		412			892			1,172			2,089
Reductions:
Paydowns		(270		)	(267		)	(803		)	(598		)
Sales		(61		)	(73		)	(116		)	(166		)
Returns to performing status ⁽³⁾		(100		)	(101		)	(240		)	(177		)
Charge-offs		(145		)	(102		)	(312		)	(350		)
Transfers to foreclosed properties ⁽⁴⁾		—			—			(27		)	(2		)
Transfers to loans held-for-sale		(38		)	(9		)	(59		)	(9		)
Total net additions/(reductions) to nonperforming loans and leases		(202		)	340			(385		)	787
Total nonperforming loans and leases, September 30		1,318			1,999			1,318			1,999
Total foreclosed properties, September 30 ⁽⁴⁾		40			16			40			16
Nonperforming commercial loans, leases and foreclosed properties, September 30		$	1,358		$	2,015		$	1,358		$	2,015
Nonperforming commercial loans and leases as a percentage of outstanding commercial loans and leases ⁽⁵⁾		0.28		%	0.45		%
Nonperforming commercial loans, leases and foreclosed properties as a percentage of outstanding commercial loans, leases and foreclosed properties ⁽⁵⁾		0.29			0.45


⁽¹⁾	Balances do not include nonperforming LHFS of $322 million and $262 million at September 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

		September 30, 2017						December 31, 2016
(Dollars in millions)		Nonperforming		Performing		Total		Nonperforming		Performing		Total
U.S. commercial		$	377	$	944	$	1,321	$	720	$	1,140	$	1,860
Commercial real estate		40		15		55		45		95		140
Commercial lease financing		—		12		12		2		2		4
Non-U.S. commercial		12		220		232		25		283		308
		429		1,191		1,620		792		1,520		2,312
U.S. small business commercial		4		15		19		2		13		15
Total commercial troubled debt restructurings		$	433	$	1,206	$	1,639	$	794	$	1,533	$	2,327

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 increased $8.4 billion, or one percent, during the nine months ended September 30, 2017 to $959.5 billion. The increase in commercial committed exposure was concentrated in the Food, Beverage and Tobacco, Diversified Financials and Materials sectors. Increases were partially offset by reduced exposure to the Healthcare Equipment and Services, Banking and Telecommunications sectors.

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 $128.9 billion, increased $4.3 billion, or three percent, during the nine months ended September 30, 2017. The increase primarily reflected an increase in exposure to several counterparties.

Real estate, our second largest industry concentration, with committed exposure of $85.4 billion, increased $1.7 billion, or two percent, during the nine months ended September 30, 2017. For more information on the commercial real estate and related portfolios, see Commercial Portfolio Credit Risk Management – Commercial Real Estate on page 51.

Retailing, our third largest industry concentration, with committed exposure of $68.7 billion, increased $158 million, or less than one percent, during the nine months ended September 30, 2017. The modest increase in committed exposure occurred as increases in Diversified Wholesalers and Vehicle Dealers were offset by decreases Multiline and Specialty retailers.

Our energy-related committed exposure decreased $2.6 billion, or seven percent, to $36.6 billion during the nine months ended September 30, 2017. Energy sector net charge-offs were $131 million during the nine months ended September 30, 2017 compared to $226 million for the same period in 2016. Energy sector reservable criticized exposure decreased $2.4 billion to $3.2 billion during the nine months ended September 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 $265 million to $660 million during the nine months ended September 30, 2017.

53 Bank of America




Table 42	Commercial Credit Exposure by Industry ⁽¹⁾

		Commercial Utilized				Total Commercial Committed ⁽²⁾
(Dollars in millions)		September 30 2017		December 31 2016		September 30 2017			December 31 2016
Diversified financials		$	81,120	$	81,156	$	128,879		$	124,535
Real estate ⁽³⁾		64,030		61,203		85,351			83,658
Retailing		43,061		41,630		68,665			68,507
Capital goods		35,919		34,278		67,385			64,202
Healthcare equipment and services		38,201		37,656		57,425			64,663
Government and public education		46,537		45,694		56,494			54,626
Materials		24,463		22,578		47,546			44,357
Banking		38,578		39,877		43,637			47,799
Food, beverage and tobacco		23,471		19,669		42,650			37,145
Consumer services		27,446		27,413		42,410			42,523
Energy		16,251		19,686		36,629			39,231
Commercial services and supplies		22,137		21,241		35,448			35,360
Transportation		21,781		19,805		30,124			27,483
Utilities		12,078		11,349		27,281			27,140
Media		13,400		13,419		25,998			27,116
Individuals and trusts		18,860		16,364		24,728			21,764
Pharmaceuticals and biotechnology		7,568		5,539		20,231			18,910
Software and services		9,256		7,991		18,440			19,790
Technology hardware and equipment		7,972		7,793		17,519			18,429
Insurance, including monolines		6,731		7,406		13,021			13,936
Telecommunication services		5,870		6,317		12,935			16,925
Automobiles and components		5,710		5,459		12,687			12,969
Consumer durables and apparel		6,403		6,042		12,224			11,460
Food and staples retailing		5,006		4,795		9,367			8,869
Religious and social organizations		4,196		4,423		6,133			6,252
Other		10,376		6,109		16,285			13,432
Total commercial credit exposure by industry		$	596,421	$	574,892	$	959,492		$	951,081
Net credit default protection purchased on total commitments ⁽⁴⁾						$	(2,098	)	$	(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 $11.3 billion and $12.1 billion at September 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 September 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 $2.1 billion and $3.5 billion. We recorded net losses of $10 million and $57 million for the three and nine months ended September 30, 2017 compared to net losses of $80 million and $408 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 September 30, 2017 and December 31, 2016.




Table 43	Net Credit Default Protection by Maturity

		September 30 2017		December 31 2016
Less than or equal to one year		42	%	56	%
Greater than one year and less than or equal to five years		55		41
Greater than five years		3		3
Total net credit default protection		100	%	100	%



		Bank of America 54




Table 44	Net Credit Default Protection by Credit Exposure Debt Rating

		September 30, 2017					December 31, 2016
(Dollars in millions)		Net Notional ⁽¹⁾			Percent of Total		Net Notional ⁽¹⁾			Percent of Total
Ratings ^{(2, 3)}
A		$	(280	)	13.3	%	$	(135	)	3.9	%
BBB		(597		)	28.5		(1,884		)	54.2
BB		(570		)	27.2		(871		)	25.1
B		(528		)	25.2		(477		)	13.7
CCC and below		(101		)	4.8		(81		)	2.3
NR ⁽⁴⁾		(22		)	1.0		(29		)	0.8
Total net credit default protection		$	(2,098	)	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


		September 30, 2017				December 31, 2016
(Dollars in millions)		Contract/ Notional		Credit Risk		Contract/ Notional		Credit Risk
Purchased credit derivatives:
Credit default swaps		$	522,839	$	2,397	$	603,979	$	2,732
Total return swaps/other		57,591		263		21,165		433
Total purchased credit derivatives		$	580,430	$	2,660	$	625,144	$	3,165
Written credit derivatives:
Credit default swaps		$	514,479	n/a		$	614,355	n/a
Total return swaps/other		55,313		n/a		25,354		n/a
Total written credit derivatives		$	569,792	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 September 30
(Dollars in millions)		2017							2016
Gains (Losses)		Gross		Hedge			Net		Gross		Hedge			Net
Credit valuation		$	23	$	(8	)	$	15	$	280	$	(214	)	$	66

		Nine Months Ended September 30
		2017							2016
		Gross		Hedge			Net		Gross		Hedge			Net
Credit valuation		$	281	$	(188	)	$	93	$	45	$	106		$	151

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 September 30, 2017. These exposures accounted for 87 percent and 88 percent of our total non-U.S. exposure at September 30, 2017 and December 31, 2016. Net country exposure for these 20 countries increased $10.3 billion in the nine months ended September 30, 2017 primarily driven by increases in China, Mexico, Belgium, South Korea and Japan, partially offset by decreases in Switzerland, Brazil and the U.K. On a product basis, the increase was driven by increased funded commitments in China, the Netherlands, Mexico and Belgium, along with increased sovereign securities in Japan, India and Korea. These increases were partially offset by the sale of the non-

U.S. consumer credit card business in the second quarter of 2017, and lower unfunded commitments in Switzerland and lower funded commitments in Brazil.

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 September 30 2017		Hedges and Credit Default Protection			Net Country Exposure at September 30 2017		Increase (Decrease) from December 31 2016
United Kingdom		$	28,518	$	14,359	$	5,020	$	2,619	$	50,516	$	(4,814	)	$	45,702	$	(2,031	)
Germany		12,374		9,093		1,720		3,603		26,790		(3,607		)	23,183		805
Canada		7,942		7,725		2,012		2,460		20,139		(647		)	19,492		718
Japan		11,234		549		1,720		4,823		18,326		(1,690		)	16,636		1,625
China		11,852		711		509		1,345		14,417		(234		)	14,183		3,298
Brazil		7,665		379		382		3,476		11,902		(315		)	11,587		(2,079		)
France		5,047		5,711		2,141		4,245		17,144		(5,654		)	11,490		796
India		6,792		265		385		3,573		11,015		(953		)	10,062		834
Australia		5,096		2,810		415		1,994		10,315		(515		)	9,800		877
Netherlands		5,137		3,488		763		1,428		10,816		(2,015		)	8,801		1,403
Hong Kong		6,845		200		580		704		8,329		(43		)	8,286		807
South Korea		4,984		610		757		2,048		8,399		(418		)	7,981		1,875
Mexico		3,901		1,616		228		1,650		7,395		(548		)	6,847		2,363
Singapore		2,996		315		790		2,128		6,229		(65		)	6,164		746
Switzerland		3,414		3,093		300		107		6,914		(1,613		)	5,301		(4,345		)
Italy		2,483		1,479		587		566		5,115		(1,114		)	4,001		(86		)
Belgium		2,274		777		114		1,051		4,216		(313		)	3,903		1,977
Turkey		2,741		60		37		272		3,110		(1		)	3,109		419
Spain		1,740		1,156		299		1,023		4,218		(1,172		)	3,046		500
United Arab Emirates		2,186		111		284		78		2,659		(91		)	2,568		(175		)
Total top 20 non-U.S. countries exposure		$	135,221	$	54,507	$	19,043	$	39,193	$	247,964	$	(25,822	)	$	222,142	$	10,327

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 September 30, 2017 were China and Brazil. At September 30, 2017, net exposure to China was $14.2 billion, concentrated in large state-owned

companies, subsidiaries of multinational corporations and commercial banks. At September 30, 2017, net exposure to Brazil was $11.6 billion, concentrated in sovereign securities, oil and gas companies and commercial banks.



		Bank of America 56

The outlook for policy direction and therefore economic performance in the European Union (EU) remains uncertain as a consequence of reduced political cohesion among EU countries. Additionally, we believe that the uncertainty on the U.K.'s ability to negotiate a favorable exit from the EU will further weigh on economic performance. Our largest EU country exposure at September 30, 2017 was the U.K. At September 30, 2017, net exposure to the U.K. was $45.7 billion, concentrated in multinational corporations and sovereign clients. For additional information, see Executive Summary – Third Quarter 2017 Economic and Business Environment on page 3.

Provision for Credit Losses

The provision for credit losses decreased $16 million to $834 million, and $428 million to $2.4 billion for the three and nine months ended September 30, 2017 compared to the same periods in 2016. The provision for credit losses was $66 million and $347 million lower than net charge-offs for the three and nine months ended September 30, 2017, resulting in a reduction in the allowance for credit losses. This compared to a reduction of $38 million and $118 million in the allowance for credit losses for the three and nine months ended September 30, 2016.

The provision for credit losses for the consumer portfolio increased $25 million to $730 million, and $268 million to $2.1 billion for the three and nine months ended September 30, 2017 compared to the same periods in 2016. The increase for both periods was primarily driven by a provision increase of $218 million and $554 million in the U.S. credit card portfolio due to portfolio seasoning and loan growth, largely offset by improvement in the home equity portfolio due to increased home prices and lower nonperforming loans. Included in the provision is an expense of $12 million and $56 million related to the PCI loan portfolio for the three and nine months ended September 30, 2017 compared to an expense of $8 million and a benefit of $81 million for the same periods in 2016.

The provision for credit losses for the commercial portfolio, including unfunded lending commitments, decreased $41 million to $104 million, and $696 million to $287 million for the three and nine months ended September 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 nine months ended September 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 $752 million in the nine months ended September 30, 2017 as returns to performing status, charge-offs, paydowns and loan sales continued to outpace new nonaccrual loans. During the nine months ended September 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 $5.6 billion at September 30, 2017, a decrease of $640 million from December 31, 2016. The decrease was primarily in the home equity portfolio and the non-U.S. card portfolio which was sold during the second quarter of 2017, partially offset by an increase in the U.S. credit card portfolio. The reduction in the home equity portfolio was 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 $5.1 billion at September 30, 2017, a decrease of $147 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 $14.8 billion at September 30, 2017 from $16.3 billion (to 2.91 percent from 3.35 percent of total commercial utilized reservable exposure) at December 31, 2016, largely due to paydowns and net upgrades in the energy portfolio. Nonperforming commercial loans decreased to $1.3 billion at September 30, 2017 from $1.7 billion (to 0.28 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 1.16 percent at September 30, 2017 compared to 1.26 percent at December 31, 2016. The September 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 1.14 percent and 1.24 percent at September 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 $762 million at both September 30, 2017 and 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 nine months ended September 30, 2017 and 2016.

57 Bank of America




Table 48	Allowance for Credit Losses

		Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)		2017			2016			2017			2016
Allowance for loan and lease losses, beginning of period		$	10,875		$	11,837		$	11,237		$	12,234
Loans and leases charged off
Residential mortgage		(51		)	(66		)	(157		)	(339		)
Home equity		(180		)	(180		)	(476		)	(589		)
U.S. credit card		(727		)	(648		)	(2,198		)	(2,021		)
Non-U.S. credit card⁽¹⁾		—			(59		)	(103		)	(183		)
Direct/Indirect consumer		(135		)	(98		)	(356		)	(287		)
Other consumer		(57		)	(63		)	(162		)	(173		)
Total consumer charge-offs		(1,150		)	(1,114		)	(3,452		)	(3,592		)
U.S. commercial ⁽²⁾		(171		)	(141		)	(449		)	(423		)
Commercial real estate		(4		)	(1		)	(12		)	(9		)
Commercial lease financing		(3		)	(9		)	(9		)	(26		)
Non-U.S. commercial		(34		)	(12		)	(100		)	(101		)
Total commercial charge-offs		(212		)	(163		)	(570		)	(559		)
Total loans and leases charged off		(1,362		)	(1,277		)	(4,022		)	(4,151		)
Recoveries of loans and leases previously charged off
Residential mortgage		133			62			241			210
Home equity		97			83			279			254
U.S. credit card		115			105			340			318
Non-U.S. credit card		—			16			28			49
Direct/Indirect consumer		68			64			209			196