UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2019

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission file number:

1-6523

Exact name of registrant as specified in its charter:

Bank of America Corporation

State or other jurisdiction of incorporation or organization:

Delaware

IRS Employer Identification No.:

56-0906609

Address of principal executive offices:

Bank of America Corporate Center

100 N. Tryon Street

Charlotte, North Carolina 28255

Registrant’s telephone number, including area code:

(704) 386-5681

Former name, former address and former fiscal year, if changed since last report:

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	BAC	New York Stock Exchange
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrE	New York Stock Exchange
of Floating Rate Non-Cumulative Preferred Stock, Series E
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrY	New York Stock Exchange
of 6.500% Non-Cumulative Preferred Stock, Series Y
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrC	New York Stock Exchange
of 6.200% Non-Cumulative Preferred Stock, Series CC
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrA	New York Stock Exchange
of 6.000% Non-Cumulative Preferred Stock, Series EE
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrB	New York Stock Exchange
of 6.000% Non-Cumulative Preferred Stock, Series GG
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrK	New York Stock Exchange
of 5.875% Non-Cumulative Preferred Stock, Series HH
7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series L	BAC PrL	New York Stock Exchange
Depositary Shares, each representing a 1/1,200th interest in a share	BML PrG	New York Stock Exchange
of Bank of America Corporation Floating Rate
Non-Cumulative Preferred Stock, Series 1



1 Bank of America



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Depositary Shares, each representing a 1/1,200th interest in a share	BML PrH	New York Stock Exchange
of Bank of America Corporation Floating Rate
Non-Cumulative Preferred Stock, Series 2
Depositary Shares, each representing a 1/1,200th interest in a share	BML PrJ	New York Stock Exchange
of Bank of America Corporation Floating Rate
Non-Cumulative Preferred Stock, Series 4
Depositary Shares, each representing a 1/1,200th interest in a share	BML PrL	New York Stock Exchange
of Bank of America Corporation Floating Rate
Non-Cumulative Preferred Stock, Series 5
Floating Rate Preferred Hybrid Income Term Securities of BAC Capital	BAC/PF	New York Stock Exchange
Trust XIII (and the guarantee related thereto)
5.63% Fixed to Floating Rate Preferred Hybrid Income Term Securities	BAC/PG	New York Stock Exchange
of BAC Capital Trust XIV (and the guarantee related thereto)
Income Capital Obligation Notes initially due December 15, 2066 of	MER PrK	New York Stock Exchange
Bank of America Corporation
Senior Medium-Term Notes, Series A, Step Up Callable Notes, due	BAC/31B	New York Stock Exchange
November 28, 2031 of BofA Finance LLC (and the guarantee
of the Registrant with respect thereto)
Depositary Shares, each representing a 1/1,000th interest in a share of	BAC PrM	New York Stock Exchange
5.375% Non-Cumulative Preferred Stock, Series KK
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrN	New York Stock Exchange
5.000% Non-Cumulative Preferred Stock, Series LL

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Yes ☐ No ☑

On October 25, 2019, there were 8,995,107,401 shares of Bank of America Corporation Common Stock outstanding.



		Bank of America 2

Bank of America Corporation and Subsidiaries

September 30, 2019

Form 10-Q

INDEX

Part I. Financial Information



Item 1. Financial Statements		Page
Consolidated Statement of Income		46
Consolidated Statement of Comprehensive Income		46
Consolidated Balance Sheet		47
Consolidated Statement of Changes in Shareholders’ Equity		48
Consolidated Statement of Cash Flows		49
Notes to Consolidated Financial Statements		50
Note 1 – Summary of Significant Accounting Principles		50
Note 2 – Net Interest Income and Noninterest Income		51
Note 3 – Derivatives		52
Note 4 – Securities		59
Note 5 – Outstanding Loans and Leases		62
Note 6 – Allowance for Credit Losses		70
Note 7 – Securitizations and Other Variable Interest Entities		71
Note 8 – Goodwill and Intangible Assets		75
Note 9 – Leases		75
Note 10 – Federal Funds Sold or Purchased, Securities Financing Agreements, Short-term Borrowings and Restricted Cash		76
Note 11 – Commitments and Contingencies		77
Note 12 – Shareholders’ Equity		80
Note 13 – Earnings Per Common Share		80
Note 14 – Accumulated Other Comprehensive Income (Loss)		81
Note 15 – Fair Value Measurements		81
Note 16 – Fair Value Option		89
Note 17 – Fair Value of Financial Instruments		89
Note 18 – Business Segment Information		90
Glossary		94
Acronyms		95



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary		3
Recent Developments		3
Financial Highlights		4
Supplemental Financial Data		6
Business Segment Operations		10
Consumer Banking		10
Global Wealth & Investment Management		13
Global Banking		15
Global Markets		17
All Other		19
Off-Balance Sheet Arrangements and Contractual Obligations		20
Managing Risk		20
Capital Management		20
Liquidity Risk		23
Credit Risk Management		26
Consumer Portfolio Credit Risk Management		26
Commercial Portfolio Credit Risk Management		33
Non-U.S. Portfolio		38
Provision for Credit Losses		39
Allowance for Credit Losses		39
Market Risk Management		41
Trading Risk Management		41
Interest Rate Risk Management for the Banking Book		43
Mortgage Banking Risk Management		45
Complex Accounting Estimates		45
Non-GAAP Reconciliations		45

Item 3. Quantitative and Qualitative Disclosures about Market Risk		45
Item 4. Controls and Procedures		45



1 Bank of America

Part II. Other Information



Item 1. Legal Proceedings		96
Item 1A. Risk Factors		96
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		96
Item 6. Exhibits		97
Signature		97

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, strategy, 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 2018 Annual Report on Form 10-K and in any of the Corporation’s subsequent Securities and Exchange Commission filings: the Corporation’s potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation, regulatory proceedings and enforcement actions; the possibility that the Corporation’s future liabilities may be in excess of its recorded liability and estimated range of possible loss for litigation, regulatory, and representations and warranties exposures; the possibility that the Corporation could face increased servicing, fraud, indemnity, contribution or other claims from one or more counterparties, including trustees, purchasers of loans, underwriters, issuers, monolines, private-label and other investors, or other parties involved in securitizations; 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; the risks related to the discontinuation of the London InterBank Offered Rate and other reference rates, including increased expenses and litigation and the effectiveness of hedging strategies; uncertainties about the financial stability and growth rates of non-U.S. jurisdictions, the risk that those jurisdictions may face difficulties servicing their sovereign debt, and related stresses on financial markets, currencies and trade, and the Corporation’s exposures to such risks, including direct, indirect and operational; the impact of U.S. and global interest rates, inflation, currency exchange rates, economic conditions, trade policies and tensions, including tariffs,

and potential geopolitical instability; the impact of the interest rate environment on the Corporation’s business, financial condition and results of operations; 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 Corporation’s ability to achieve its expense targets and expectations regarding net interest income, net charge-offs, effective tax rate, loan growth or other projections; adverse changes to the Corporation’s credit ratings from the major credit rating agencies; an inability to access capital markets or maintain deposits or borrowing costs; estimates of the fair value and other accounting values, subject to impairment assessments, of certain of the Corporation’s assets and liabilities; the estimated or actual impact of changes in accounting standards or assumptions in applying those standards, including the new credit loss accounting standard; uncertainty regarding the content, timing and impact of regulatory capital and liquidity requirements; the impact of adverse changes to total loss-absorbing capacity requirements and/or global systemically important bank surcharges; the potential impact of actions of the Board of Governors of the Federal Reserve System on the Corporation’s capital plans; the effect of regulations, other guidance or additional information on the impact from the Tax Cuts and Jobs Act; 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 or disruption 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; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt limit; and other matters.

Forward-looking statements speak only as of the date they are made, and the Corporation undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made.

Notes to the Consolidated Financial Statements referred to in Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) are incorporated by reference into the MD&A. Certain prior-period amounts have been reclassified to conform to current-period presentation. Throughout the MD&A, the Corporation uses certain acronyms and abbreviations which are defined in the Glossary.



		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, 2019, the Corporation had $2.4 trillion in assets and a headcount of approximately 209,000 employees.

As of September 30, 2019, we served clients through operations across the U.S., its territories and approximately 35 countries. Our retail banking footprint covers approximately 90 percent of the U.S. population, and we serve approximately 66 million consumer and small business clients with approximately 4,300 retail financial centers, approximately 16,600 ATMs, and leading digital banking platforms (www.bankofamerica.com) with nearly 38 million active users, including approximately 29 million active mobile users. We offer industry-leading support to approximately three million small business owners. Our wealth management businesses, with client balances of $2.9 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.

Recent Developments

Capital Management

During the third quarter of 2019, we repurchased $7.6 billion of common stock pursuant to the Board of Directors’ (the Board) 2019 repurchase authorization of approximately $30.9 billion announced on June 27, 2019. For additional information, see Capital Management on page 20. On July 25, 2019, the Board declared a quarterly common stock dividend of $0.18 per share, payable on September 27, 2019 to shareholders of record as of September 6, 2019. Additionally, on October 22, 2019, the Board declared a quarterly common stock dividend of $0.18 per share, payable on December 27, 2019 to shareholders of record as of December 6, 2019.

Merchant Services Joint Venture

As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, a significant portion of our merchant processing activity is performed by a joint venture, formed in 2009, in which we own a 49 percent ownership

interest. The joint venture is accounted for as an equity method investment. On July 29, 2019, we gave notice to the joint venture partner of the termination of the joint venture upon the conclusion of its current term, after which we expect to pursue our own merchant services strategy. In addition, the Corporation and the joint venture partner have an agreement to provide uninterrupted delivery of products and services to the joint venture merchants through at least June 2023. As a result of the above actions, we incurred a non-cash, pretax impairment charge of $2.1 billion included in other general operating expense in the three months ended September 30, 2019. We anticipate accounting for the joint venture as an equity method investment until June 2020. For additional information, see Note 11 – Commitments and Contingencies to the Consolidated Financial Statements.

U.K. Exit from the EU

On October 28, 2019, the EU agreed to extend the deadline for the U.K.’s withdrawal from the EU to January 31, 2020. The final outcome of negotiations between the U.K. and the EU regarding the terms and conditions of the withdrawal of the U.K. from the EU remains uncertain.

We conduct business in Europe, the Middle East and Africa primarily through our subsidiaries in the U.K., Ireland and France. For information on the changes we have implemented to enable us to continue to operate in the region, including establishing a bank and broker-dealer in the EU, see the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019. While we have taken measures to minimize operational disruption and prepare for various potential outcomes of the U.K.’s withdrawal from the EU, the preparedness of our counterparties and the relevant financial markets infrastructure remain outside our control. The global economic impact of the U.K.’s withdrawal from the EU remains uncertain and could result in regional and global financial market disruptions. In preparation for the withdrawal, we will continue to assess potential risks, including operational, regulatory and legal risks.

LIBOR and Other Benchmark Rates

As previously disclosed, to facilitate an orderly transition from Interbank Offered Rates and other benchmark rates to alternative reference rates (ARRs), the Corporation has established an enterprise-wide initiative led by senior management to identify, assess and monitor risks associated with the expected discontinuation or unavailability of benchmarks, including the London InterBank Offered Rate (LIBOR), achieve operational readiness and engage impacted clients in connection with the transition to ARRs. Additionally, the Corporation continues to monitor the development and usage of ARRs, including the Secured Overnight Financing Rate. For more information on the expected replacement of LIBOR and other benchmark rates, see Executive Summary - Recent Developments - LIBOR and Other Benchmark Rates in the MD&A of the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30 2019, and Item 1A. Risk Factors - Other and Executive Summary - Recent Developments - LIBOR and Other Benchmark Rates in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K.



3 Bank of America

Financial Highlights




Table 1	Summary Income Statement and Selected Financial Data

		Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions, except per share information)		2019			2018			2019			2018
Income statement
Net interest income		$	12,187		$	12,061		$	36,751		$	35,658
Noninterest income		10,620			10,663			32,144			32,685
Total revenue, net of interest expense		22,807			22,724			68,895			68,343
Provision for credit losses		779			716			2,649			2,377
Noninterest expense		15,169			13,014			41,661			40,080
Income before income taxes		6,859			8,994			24,585			25,886
Income tax expense		1,082			1,827			4,149			5,017
Net income		5,777			7,167			20,436			20,869
Preferred stock dividends		505			466			1,186			1,212
Net income applicable to common shareholders		$	5,272		$	6,701		$	19,250		$	19,657

Per common share information
Earnings		$	0.57		$	0.67		$	2.02		$	1.93
Diluted earnings		0.56			0.66			2.01			1.91
Dividends paid		0.18			0.15			0.48			0.39
Performance ratios
Return on average assets		0.95		%	1.23		%	1.14		%	1.20		%
Return on average common shareholders’ equity		8.48			10.99			10.49			10.86
Return on average tangible common shareholders’ equity ⁽¹⁾		11.84			15.48			14.67			15.30
Efficiency ratio		66.51			57.27			60.47			58.65

								September 30 2019			December 31 2018
Balance sheet
Total loans and leases								$	972,910		$	946,895
Total assets								2,426,330			2,354,507
Total deposits								1,392,836			1,381,476
Total liabilities								2,157,943			2,089,182
Total common shareholders’ equity								244,781			242,999
Total shareholders’ equity								268,387			265,325


⁽¹⁾	Return on average tangible common shareholders’ equity is a non-GAAP financial measure. For more information and a corresponding reconciliation to the most closely related financial measures defined by accounting principles generally accepted in the United States of America (GAAP), see Non-GAAP Reconciliations on page 45.

Net income was $5.8 billion and $20.4 billion, or $0.56 and $2.01 per diluted share, for the three and nine months ended September 30, 2019 compared to $7.2 billion and $20.9 billion, or $0.66 and $1.91 per diluted share, for the same periods in 2018. The decrease in net income for the three and nine months ended September 30, 2019 was primarily driven by an increase in noninterest expense as a result of a $2.1 billion pretax impairment charge related to the notice of termination of the merchant services joint venture at the conclusion of its current term. Also contributing to the decrease in net income were higher provision for credit losses and lower noninterest income, partially offset by an increase in net interest income.

Total assets increased $71.8 billion from December 31, 2018 to $2.4 trillion primarily driven by higher trading account assets in Global Markets due to increased client balances in Equities and increased levels of inventory in Fixed-Income, Currencies and Commodities (FICC) to facilitate expected client demand, higher loans and leases primarily due to continued residential mortgage and commercial loan growth, and increases in federal funds sold and securities borrowed or purchased under agreements to resell driven by short-term reinvestments of excess cash.

Total liabilities increased $68.8 billion from December 31, 2018 to $2.2 trillion driven by higher federal funds purchased and securities loaned or sold under agreements to repurchase primarily driven by funding needs in the FICC businesses within Global Markets, an increase in long-term debt due to valuation adjustments, higher deposits as a result of continued growth in our Consumer Banking and Global Banking businesses, higher trading account liabilities in FICC to facilitate expected client

demand, and an increase in other short-term borrowings as a result of higher Federal Home Loan Bank (FHLB) advances. Shareholders’ equity increased $3.1 billion from December 31, 2018 primarily due to net income, market value increases on debt securities and issuances of preferred stock, partially offset by returns of capital to shareholders through common stock repurchases and common and preferred stock dividends, and the redemption of preferred stock.

Net Interest Income

Net interest income increased $126 million to $12.2 billion, and $1.1 billion to $36.8 billion for the three and nine months ended September 30, 2019 compared to the same periods in 2018. Net interest yield on a fully taxable-equivalent (FTE) basis decreased 4 basis points (bps) to 2.41 percent, and increased 2 bps to 2.45 percent for the same periods. The increase in net interest income for both periods was primarily driven by loan and deposit growth, and for the three-month period, partially offset by lower interest rates. The increase in the nine-month period was also due to higher short-end interest rates. Both long- and short-term interest rates have declined during 2019. We expect net interest income for 2019 to grow approximately one percent as compared to 2018. This reflects the expectation for another short-end rate cut in the fourth quarter of 2019, that long-end interest rates remain flat compared to September 30, 2019 and economic conditions remain stable. For more information on net interest yield and the FTE basis, see Supplemental Financial Data on page 6, and for more information on interest rate risk management, see Interest Rate Risk Management for the Banking Book on page 43.



		Bank of America 4

Noninterest Income




Table 2	Noninterest Income

		Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)		2019		2018		2019		2018
Fees and commissions:
Card income		$	1,465	$	1,417	$	4,286	$	4,302
Service charges		1,975		1,961		5,717		5,836
Investment and brokerage services		3,494		3,494		10,324		10,616
Investment banking fees		1,533		1,204		4,168		3,979
Total fees and commissions		8,467		8,076		24,495		24,733
Trading account income		1,707		1,717		6,390		6,421
Other income		446		870		1,259		1,531
Total noninterest income		$	10,620	$	10,663	$	32,144	$	32,685

Noninterest income decreased $43 million to $10.6 billion, and decreased $541 million to $32.1 billion for the three and nine months ended September 30, 2019 compared to the same periods in 2018. The following highlights the significant changes.


●	Service charges were relatively unchanged for the three-month period and decreased $119 million for the nine-month period primarily driven by lower treasury fees in Global Banking as well as lower fees due to policy changes and lower ATM volume in Consumer Banking.


•	Investment and brokerage services income was unchanged for the three-month period and decreased $292 million for the nine-month period. The decline was primarily due to lower transactional revenue and a decrease in assets under management (AUM) pricing, partially offset by the positive impact of AUM flows.


●	Investment banking fees increased $329 million for the three-month period due to increases in advisory and debt underwriting fees, and increased $189 million for the nine-month period due to increases in advisory and equity underwriting fees, partially offset by decreases in debt underwriting.

●

Other income decreased $424 million and $272 million for the three- and nine-month periods primarily due to an equity investment gain in the prior-year period and lower gains on sales of debt securities. Also, the prior-year nine-month period included a $729 million charge related to the redemption of certain trust preferred securities, partially offset by a $572 million gain from the sale of certain non-core mortgage loans.

Provision for Credit Losses

The provision for credit losses increased $63 million to $779 million, and $272 million to $2.6 billion for the three and nine months ended September 30, 2019 compared to the same periods in 2018. The increases were driven by commercial, primarily as a result of energy reserve releases in the prior-year periods, partially offset by a decrease in consumer, primarily driven by the impact of recoveries recorded in connection with sales of previously charged-off non-core consumer real estate loans. For more information on the provision for credit losses, see Provision for Credit Losses on page 39.

Noninterest Expense




Table 3	Noninterest Expense

		Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)		2019		2018		2019		2018
Compensation and benefits		$	7,779	$	7,721	$	24,000	$	24,145
Occupancy and equipment		1,663		1,589		4,908		4,787
Information processing and communications		1,163		1,113		3,484		3,399
Product delivery and transaction related		696		687		2,067		2,149
Marketing		440		421		1,410		1,161
Professional fees		386		439		1,155		1,219
Other general operating		3,042		1,044		4,637		3,220
Total noninterest expense		$	15,169	$	13,014	$	41,661	$	40,080

Noninterest expense increased $2.2 billion to $15.2 billion and $1.6 billion to $41.7 billion for the three and nine months ended September 30, 2019 compared to the same periods in 2018. The increase in both periods was primarily due to the aforementioned impairment charge of $2.1 billion, increased costs associated with investment in the businesses, including brand-related marketing costs, and higher litigation expense, partially offset by efficiency savings, lower Federal Deposit Insurance Corporation (FDIC) expense and lower amortization of intangibles expense.



5 Bank of America

Income Tax Expense




Table 4	Income Tax Expense

		Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)		2019			2018			2019			2018
Income before income taxes		$	6,859		$	8,994		$	24,585		$	25,886
Income tax expense		1,082			1,827			4,149			5,017
Effective tax rate		15.8		%	20.3		%	16.9		%	19.4		%

The effective tax rates for the three and nine months ended September 30, 2019 reflect the impact of our recurring tax preference benefits and discrete tax benefits primarily related to the resolution of various tax matters. The nine-month effective rate also included tax benefits related to stock-based compensation.

The effective tax rates for the three and nine months ended September 30, 2018 reflect the impact of our recurring tax preference benefits. The nine-month effective rate also included tax benefits related to stock-based compensation.

We expect the effective tax rate for the fourth quarter of 2019 to be approximately 19 percent, absent unusual items.

Supplemental Financial Data

In this Form 10-Q, we present certain non-GAAP financial measures. Non-GAAP financial measures exclude certain items or otherwise include components that differ from the most directly comparable measures calculated in accordance with GAAP. Non-GAAP financial measures are provided as additional useful information to assess our financial condition, results of operations (including period-to-period operating performance) or compliance with prospective regulatory requirements. These non-GAAP financial measures are not intended as a substitute for GAAP financial measures and may not be defined or calculated the same way as non-GAAP financial measures used by other companies.

We view net interest income and related ratios and analyses on an 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 21 percent and a representative state tax rate. Net interest yield, which measures the basis points we earn over the cost of funds, utilizes net interest income (and thus total revenue) on an FTE basis. We believe that presentation of these items on an FTE basis allows for comparison of amounts from both taxable and tax-exempt sources and is consistent with industry practices.

We may present certain key performance indicators and ratios excluding certain items (e.g., debit valuation adjustment (DVA) gains (losses)) which result in non-GAAP financial measures. We believe that the presentation of measures that exclude these items

is useful because such measures provide additional information to assess the underlying operational performance and trends of our businesses and to allow better comparison of period-to-period operating performance.

We also evaluate our business based on certain ratios that utilize tangible equity, a non-GAAP financial measure. Tangible equity represents shareholders’ equity or common shareholders’ equity reduced by goodwill and intangible assets (excluding mortgage servicing rights (MSRs)), net of related deferred tax liabilities ("adjusted" shareholders' equity or common shareholders' equity). These measures are used to evaluate our use of equity. In addition, profitability, relationship and investment models use both return on average tangible common shareholders’ equity and return on average tangible shareholders’ equity as key measures to support our overall growth goals. These ratios are as follows:


●	Return on average tangible common shareholders’ equity measures our net income applicable to common shareholders as a percentage of adjusted average common shareholders’ equity. The tangible common equity ratio represents adjusted ending common shareholders’ equity divided by total tangible assets.


●	Return on average tangible shareholders' equity measures our net income as a percentage of adjusted average total shareholders’ equity. The tangible equity ratio represents adjusted ending shareholders’ equity divided by total tangible assets.


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

We believe 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 common share provides additional useful information about the level of tangible assets in relation to outstanding shares of common stock.

The aforementioned supplemental data and performance measures are presented in Tables 5.

For more information on the reconciliation of these non-GAAP financial measures to the corresponding GAAP financial measures, see Non-GAAP Reconciliations on page 45.



		Bank of America 6




Table 5	Selected Financial Data

		2019 Quarters									2018 Quarters						Nine-Month Period
(In millions, except per share information)		Third			Second			First			Fourth			Third			2019			2018
Income statement
Net interest income		$	12,187		$	12,189		$	12,375		$	12,504		$	12,061		$	36,751		$	35,658
Noninterest income		10,620			10,895			10,629			10,173			10,663			32,144			32,685
Total revenue, net of interest expense		22,807			23,084			23,004			22,677			22,724			68,895			68,343
Provision for credit losses		779			857			1,013			905			716			2,649			2,377
Noninterest expense		15,169			13,268			13,224			13,074			13,014			41,661			40,080
Income before income taxes		6,859			8,959			8,767			8,698			8,994			24,585			25,886
Income tax expense		1,082			1,611			1,456			1,420			1,827			4,149			5,017
Net income		5,777			7,348			7,311			7,278			7,167			20,436			20,869
Net income applicable to common shareholders		5,272			7,109			6,869			7,039			6,701			19,250			19,657
Average common shares issued and outstanding		9,303.6			9,523.2			9,725.9			9,855.8			10,031.6			9,516.2			10,177.5
Average diluted common shares issued and outstanding		9,353.0			9,559.6			9,787.3			9,996.0			10,170.8			9,565.7			10,317.9
Performance ratios
Return on average assets		0.95		%	1.23		%	1.26		%	1.24		%	1.23		%	1.14		%	1.20		%
Four-quarter trailing return on average assets⁽¹⁾		1.17			1.24			1.22			1.21			1.00			n/a			n/a
Return on average common shareholders’ equity		8.48			11.62			11.42			11.57			10.99			10.49			10.86
Return on average tangible common shareholders’ equity⁽²⁾		11.84			16.24			16.01			16.29			15.48			14.67			15.30
Return on average shareholders’ equity		8.48			11.00			11.14			10.95			10.74			10.19			10.52
Return on average tangible shareholders’ equity ⁽²⁾		11.43			14.88			15.10			14.90			14.61			13.78			14.31
Total ending equity to total ending assets		11.06			11.33			11.23			11.27			11.21			11.06			11.21
Total average equity to total average assets		11.21			11.17			11.28			11.30			11.42			11.22			11.42
Dividend payout		31.48			19.95			21.20			20.90			22.35			23.56			20.10
Per common share data
Earnings		$	0.57		$	0.75		$	0.71		$	0.71		$	0.67		2.02			1.93
Diluted earnings		0.56			0.74			0.70			0.70			0.66			2.01			1.91
Dividends paid		0.18			0.15			0.15			0.15			0.15			0.48			0.39
Book value		26.96			26.41			25.57			25.13			24.33			26.96			24.33
Tangible book value ⁽²⁾		19.26			18.92			18.26			17.91			17.23			19.26			17.23
Market capitalization, at period end		$	264,842		$	270,935		$	263,992		$	238,251		$	290,424		$	264,842		$	290,424
Average balance sheet
Total loans and leases		$	964,733		$	950,525		$	944,020		$	934,721		$	930,736
Total assets		2,412,223			2,399,051			2,360,992			2,334,586			2,317,829
Total deposits		1,375,052			1,375,450			1,359,864			1,344,951			1,316,345
Long-term debt		202,620			201,007			196,726			201,056			203,239
Common shareholders’ equity		246,630			245,438			243,891			241,372			241,812
Total shareholders’ equity		270,430			267,975			266,217			263,698			264,653
Asset quality
Allowance for credit losses ⁽³⁾		$	10,242		$	10,333		$	10,379		$	10,398		$	10,526
Nonperforming loans, leases and foreclosed properties ⁽⁴⁾		3,723			4,452			5,145			5,244			5,449
Allowance for loan and lease losses as a percentage of total loans and leases outstanding ⁽⁴⁾		0.98		%	1.00		%	1.02		%	1.02		%	1.05		%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases ⁽⁴⁾		271			228			197			194			189
Net charge-offs		$	811		$	887		$	991		$	924		$	932
Annualized net charge-offs as a percentage of average loans and leases outstanding ⁽⁴⁾		0.34		%	0.38		%	0.43		%	0.39		%	0.40		%
Capital ratios at period end ⁽⁵⁾
Common equity tier 1 capital		11.4		%	11.7		%	11.6		%	11.6		%	11.4		%
Tier 1 capital		12.9			13.3			13.1			13.2			12.9
Total capital		15.1			15.4			15.2			15.1			14.7
Tier 1 leverage		8.2			8.4			8.4			8.4			8.3
Supplementary leverage ratio		6.6			6.8			6.8			6.8			6.7
Tangible equity⁽²⁾		8.4			8.7			8.5			8.6			8.5
Tangible common equity ⁽²⁾		7.4			7.6			7.6			7.6			7.5
Total loss-absorbing capacity and long-term debt metrics ⁽⁶⁾
Total loss-absorbing capacity to risk-weighted assets		24.8		%	25.5		%	24.8		%
Total loss-absorbing capacity to supplementary leverage exposure		12.7			13.0			12.8
Eligible long-term debt to risk-weighted assets		11.4			11.8			11.4
Eligible long-term debt to supplementary leverage exposure		5.8			6.0			5.9


⁽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, see Supplemental Financial Data on page 6 and for corresponding reconciliations to the most closely related financial measures defined by GAAP, see Non-GAAP Reconciliations on page 45.


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

⁽⁴⁾

Balances and ratios do not include loans accounted for under the fair value option. For additional exclusions from nonperforming loans, leases and foreclosed properties, see Consumer Portfolio Credit Risk Management – Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity on page 32 and corresponding Table 27 and Commercial Portfolio Credit Risk Management – Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page 35 and corresponding Table 34.


⁽⁵⁾	For additional information, including which approach is used to assess capital adequacy, see Capital Management on page 20.


⁽⁶⁾	Effective January 1, 2019, the Corporation became subject to minimum total loss-absorbing capacity and long-term debt requirements. For more information, see Capital Management on page 20.

n/a = not applicable



7 Bank of America




Table 6	Quarterly Average Balances and Interest Rates - FTE Basis

(Dollars in millions)		Average Balance		Interest Income/ Expense ⁽¹⁾		Yield/ Rate		Average Balance		Interest Income/ Expense ⁽¹⁾		Yield/ Rate
		Third Quarter 2019						Third Quarter 2018
Earning assets
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		$	122,033	$	453	1.47	%	$	144,411	$	523	1.44	%
Time deposits placed and other short-term investments		9,863		47		1.87		8,328		48		2.26
Federal funds sold and securities borrowed or purchased under agreements to resell		269,129		1,242		1.83		241,426		799		1.31
Trading account assets		157,818		1,338		3.37		128,896		1,195		3.68
Debt securities		447,126		2,856		2.56		445,813		3,014		2.66
Loans and leases ⁽²⁾:
Residential mortgage		224,084		1,937		3.46		209,460		1,857		3.54
Home equity		43,616		552		5.03		53,050		656		4.91
U.S. credit card		94,370		2,581		10.85		94,710		2,435		10.20
Direct/Indirect and other consumer ⁽³⁾		90,813		824		3.59		91,828		787		3.40
Total consumer		452,883		5,894		5.18		449,048		5,735		5.08
U.S. commercial		324,436		3,279		4.01		303,680		3,034		3.97
Non-U.S. commercial		105,003		905		3.42		96,019		831		3.43
Commercial real estate ⁽⁴⁾		62,185		687		4.38		60,754		682		4.45
Commercial lease financing		20,226		182		3.58		21,235		173		3.25
Total commercial		511,850		5,053		3.92		481,688		4,720		3.89
Total loans and leases		964,733		10,947		4.51		930,736		10,455		4.46
Other earning assets		68,018		1,181		6.90		72,827		1,082		5.91
Total earning assets		2,038,720		18,064		3.52		1,972,437		17,116		3.45
Cash and due from banks		25,588						25,639
Other assets, less allowance for loan and lease losses		347,915						319,753
Total assets		$	2,412,223					$	2,317,829
Interest-bearing liabilities
U.S. interest-bearing deposits:
Savings		$	51,277	$	1	0.01	%	$	53,929	$	1	0.01	%
NOW and money market deposit accounts		741,602		1,172		0.63		680,285		737		0.43
Consumer CDs and IRAs		49,811		136		1.08		39,160		40		0.41
Negotiable CDs, public funds and other deposits		63,936		354		2.19		54,192		275		2.01
Total U.S. interest-bearing deposits		906,626		1,663		0.73		827,566		1,053		0.50
Non-U.S. interest-bearing deposits:
Banks located in non-U.S. countries		1,721		5		1.13		2,353		12		2.06
Governments and official institutions		188		—		0.02		709		—		0.01
Time, savings and other		70,234		212		1.20		63,179		165		1.04
Total non-U.S. interest-bearing deposits		72,143		217		1.19		66,241		177		1.07
Total interest-bearing deposits		978,769		1,880		0.76		893,807		1,230		0.55
Federal funds purchased, securities loaned or sold under agreements to repurchase, short-term borrowings and other interest-bearing liabilities		280,123		1,876		2.66		264,168		1,526		2.30
Trading account liabilities		45,750		303		2.63		50,904		335		2.60
Long-term debt		202,620		1,670		3.28		203,239		1,813		3.55
Total interest-bearing liabilities		1,507,262		5,729		1.51		1,412,118		4,904		1.38
Noninterest-bearing sources:
Noninterest-bearing deposits		396,283						422,538
Other liabilities ⁽⁵⁾		238,248						218,520
Shareholders’ equity		270,430						264,653
Total liabilities and shareholders’ equity		$	2,412,223					$	2,317,829
Net interest spread						2.01	%					2.07	%
Impact of noninterest-bearing sources						0.40						0.38
Net interest income/yield on earning assets ⁽⁶⁾				$	12,335	2.41	%			$	12,212	2.45	%


⁽¹⁾	Includes the impact of interest rate risk management contracts. For additional information, see Interest Rate Risk Management for the Banking Book on page 43.


⁽²⁾	Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis.


⁽³⁾	Includes non-U.S. consumer loans of $2.9 billion and $2.8 billion for the third quarter of 2019 and 2018.


⁽⁴⁾	Includes U.S. commercial real estate loans of $57.6 billion and $56.8 billion, and non-U.S. commercial real estate loans of $4.5 billion and $4.0 billion for the third quarter of 2019 and 2018.


⁽⁵⁾	Includes $38.1 billion and $30.3 billion of structured notes and liabilities for the third quarter of 2019 and 2018.


⁽⁶⁾	Net interest income includes FTE adjustments of $148 million and $151 million for the third quarter of 2019 and 2018.



		Bank of America 8




Table 7	Year-to-Date Average Balances and Interest Rates - FTE Basis

		Average Balance		Interest Income/ Expense ⁽¹⁾		Yield/ Rate		Average Balance		Interest Income/ Expense ⁽¹⁾		Yield/ Rate
		Nine Months Ended September 30
(Dollars in millions)		2019						2018
Earning assets
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		$	126,416	$	1,454	1.54	%	$	143,229	$	1,432	1.34	%
Time deposits placed and other short-term investments		9,377		167		2.38		9,700		157		2.16
Federal funds sold and securities borrowed or purchased under agreements to resell		274,822		3,746		1.82		247,183		2,130		1.15
Trading account assets		148,368		4,016		3.62		130,931		3,574		3.65
Debt securities		445,104		9,051		2.71		436,080		8,729		2.62
Loans and leases ⁽²⁾:
Residential mortgage		216,744		5,698		3.51		206,808		5,437		3.51
Home equity		45,735		1,732		5.06		54,941		1,939		4.72
U.S. credit card		94,333		7,622		10.80		94,222		7,046		10.00
Direct/Indirect and other consumer ⁽³⁾		90,567		2,475		3.65		93,568		2,281		3.26
Total consumer		447,379		17,527		5.23		449,539		16,703		4.96
U.S. commercial		319,621		10,010		4.19		302,981		8,734		3.85
Non-U.S. commercial		103,625		2,685		3.46		98,246		2,385		3.25
Commercial real estate ⁽⁴⁾		61,612		2,109		4.58		60,218		1,915		4.25
Commercial lease financing		20,932		550		3.50		21,501		516		3.20
Total commercial		505,790		15,354		4.06		482,946		13,550		3.75
Total loans and leases		953,169		32,881		4.61		932,485		30,253		4.34
Other earning assets		67,431		3,445		6.83		78,431		3,113		5.31
Total earning assets		2,024,687		54,760		3.61		1,978,039		49,388		3.34
Cash and due from banks		25,787						25,746
Other assets, less allowance for loan and lease losses		340,469						318,314
Total assets		$	2,390,943					$	2,322,099
Interest-bearing liabilities
U.S. interest-bearing deposits:
Savings		$	52,604	$	4	0.01	%	$	54,800	$	4	0.01	%
NOW and money market deposit accounts		736,613		3,557		0.65		667,851		1,679		0.34
Consumer CDs and IRAs		45,688		315		0.92		40,134		109		0.36
Negotiable CDs, public funds and other deposits		66,618		1,129		2.27		46,507		629		1.81
Total U.S. interest-bearing deposits		901,523		5,005		0.74		809,292		2,421		0.40
Non-U.S. interest-bearing deposits:
Banks located in non-U.S. countries		2,044		16		1.03		2,309		32		1.88
Governments and official institutions		182		—		0.06		990		—		0.01
Time, savings and other		67,740		619		1.22		65,264		480		0.98
Total non-U.S. interest-bearing deposits		69,966		635		1.21		68,563		512		1.00
Total interest-bearing deposits		971,489		5,640		0.78		877,855		2,933		0.45
Federal funds purchased, securities loaned or sold under agreements to repurchase, short-term borrowings and other interest-bearing liabilities		274,550		5,725		2.79		272,192		4,123		2.03
Trading account liabilities		46,122		967		2.80		52,815		1,040		2.63
Long-term debt		200,139		5,227		3.49		200,178		5,179		3.45
Total interest-bearing liabilities		1,492,300		17,559		1.57		1,403,040		13,275		1.26
Noninterest-bearing sources:
Noninterest-bearing deposits		398,689						426,972
Other liabilities ⁽⁵⁾		231,731						226,985
Shareholders’ equity		268,223						265,102
Total liabilities and shareholders’ equity		$	2,390,943					$	2,322,099
Net interest spread						2.04	%					2.08	%
Impact of noninterest-bearing sources						0.41						0.35
Net interest income/yield on earning assets ⁽⁶⁾				$	37,201	2.45	%			$	36,113	2.43	%


⁽¹⁾	Includes the impact of interest rate risk management contracts. For additional information, see Interest Rate Risk Management for the Banking Book on page 43.


⁽²⁾	Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis.


⁽³⁾	Includes non-U.S. consumer loans of $2.9 billion for both the nine months ended September 30, 2019 and 2018.


⁽⁴⁾	Includes U.S. commercial real estate loans of $57.0 billion and $56.2 billion, and non-U.S. commercial real estate loans of $4.6 billion and $4.0 billion for the nine months ended September 30, 2019 and 2018.


⁽⁵⁾	Includes $34.9 billion and $30.6 billion of structured notes and liabilities for the nine months ended September 30, 2019 and 2018.


⁽⁶⁾	Net interest income includes FTE adjustments of $450 million and $455 million for the nine months ended September 30, 2019 and 2018.



9 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 manage our segments and report their results on an FTE basis. 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 20. The capital allocated to the business segments is referred to as allocated capital. Allocated equity in the reporting units is comprised of allocated capital plus capital for the portion of goodwill and intangibles specifically assigned to the reporting unit. For more information, see Note 8 – Goodwill and Intangible Assets to the Consolidated Financial Statements.

For more information on our presentation of financial information on an FTE basis, see Supplemental Financial Data on page 6, and for reconciliations to consolidated total revenue, net income and period-end total assets, see Note 18 – Business Segment Information to the Consolidated Financial Statements.

Consumer Banking




	Deposits						Consumer Lending						Total Consumer Banking
	Three Months Ended September 30
(Dollars in millions)	2019			2018			2019			2018			2019			2018			% Change
Net interest income	$	4,197		$	4,052		$	2,834		$	2,792		$	7,031		$	6,844		3	%
Noninterest income:
Card income	(11		)	(10		)	1,300			1,247			1,289			1,237			4
Service charges	1,096			1,098			1			—			1,097			1,098			—
All other income	233			189			74			74			307			263			17
Total noninterest income	1,318			1,277			1,375			1,321			2,693			2,598			4
Total revenue, net of interest expense	5,515			5,329			4,209			4,113			9,724			9,442			3

Provision for credit losses	84			48			833			822			917			870			5
Noninterest expense	2,651			2,620			1,742			1,705			4,393			4,325			2
Income before income taxes	2,780			2,661			1,634			1,586			4,414			4,247			4
Income tax expense	681			678			400			404			1,081			1,082			—
Net income	$	2,099		$	1,983		$	1,234		$	1,182		$	3,333		$	3,165		5

Effective tax rate ⁽¹⁾													24.5		%	25.5		%

Net interest yield	2.37		%	2.34		%	3.76		%	3.95		%	3.77			3.77
Return on average allocated capital	69			66			20			19			36			34
Efficiency ratio	48.08			49.17			41.38			41.45			45.18			45.81

Balance Sheet
	Three Months Ended September 30
Average	2019			2018			2019			2018			2019			2018			% Change
Total loans and leases	$	5,405		$	5,269		$	298,428		$	279,725		$	303,833		$	284,994		7	%
Total earning assets⁽²⁾	703,889			685,653			299,041			280,637			739,765			720,643			3
Total assets ⁽²⁾	735,844			713,942			308,991			291,370			781,670			759,665			3
Total deposits	703,562			681,726			5,711			5,804			709,273			687,530			3
Allocated capital	12,000			12,000			25,000			25,000			37,000			37,000			—


⁽¹⁾	Estimated at the segment level only.


⁽²⁾	In segments and businesses where the total of liabilities and equity exceeds assets, we allocate assets from All Other to match the segments’ and businesses’ liabilities and allocated shareholders’ equity. As a result, total earning assets and total assets of the businesses may not equal total Consumer Banking.



		Bank of America 10




	Deposits						Consumer Lending						Total Consumer Banking
	Nine Months Ended September 30
(Dollars in millions)	2019			2018			2019			2018			2019			2018			% Change
Net interest income	$	12,867		$	11,658		$	8,386		$	8,256		$	21,253		$	19,914		7	%
Noninterest income:
Card income	(24		)	(25		)	3,778			3,788			3,754			3,763			—
Service charges	3,162			3,213			1			1			3,163			3,214			(2	)
All other income	673			510			230			255			903			765			18
Total noninterest income	3,811			3,698			4,009			4,044			7,820			7,742			1
Total revenue, net of interest expense	16,678			15,356			12,395			12,300			29,073			27,656			5

Provision for credit losses	173			135			2,665			2,614			2,838			2,749			3
Noninterest expense	7,956			7,986			5,201			5,255			13,157			13,241			(1	)
Income before income taxes	8,549			7,235			4,529			4,431			13,078			11,666			12
Income tax expense	2,094			1,845			1,110			1,130			3,204			2,975			8
Net income	$	6,455		$	5,390		$	3,419		$	3,301		$	9,874		$	8,691		14

Effective tax rate ⁽¹⁾													24.5		%	25.5		%

Net interest yield	2.46		%	2.29		%	3.83		%	3.98		%	3.87			3.72
Return on average allocated capital	72			60			18			18			36			31
Efficiency ratio	47.70			52.01			41.97			42.72			45.26			47.88

Balance Sheet
	Nine Months Ended September 30
Average	2019			2018			2019			2018			2019			2018			% Change
Total loans and leases	$	5,351		$	5,211		$	292,188		$	276,556		$	297,539		$	281,767		6	%
Total earning assets⁽²⁾	699,907			681,914			292,641			277,295			734,976			716,467			3
Total assets ⁽²⁾	731,528			709,997			302,862			288,224			776,818			755,479			3
Total deposits	699,217			677,684			5,242			5,595			704,459			683,279			3
Allocated capital	12,000			12,000			25,000			25,000			37,000			37,000			—

Period end	September 30 2019			December 31 2018			September 30 2019			December 31 2018			September 30 2019			December 31 2018			% Change
Total loans and leases	$	5,447		$	5,470		$	302,478		$	288,865		$	307,925		$	294,335		5	%
Total earning assets ⁽²⁾	711,024			694,672			303,195			289,249			747,251			728,813			3
Total assets⁽²⁾	742,583			724,019			313,128			299,970			788,743			768,881			3
Total deposits	710,149			691,666			5,566			4,480			715,715			696,146			3

See page 10 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. For more information about Consumer Banking, including our Deposits and Consumer Lending businesses, see Business Segment Operations in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K.

Consumer Banking Results

Three-Month Comparison

Net income for Consumer Banking increased $168 million to $3.3 billion primarily driven by higher revenue, partially offset by higher noninterest expense. Net interest income increased $187 million to $7.0 billion primarily due to growth in deposits and loans. Noninterest income increased $95 million to $2.7 billion driven by higher results from asset and liability management (ALM) activities and higher card income.

The provision for credit losses increased $47 million to $917 million. Noninterest expense increased $68 million to $4.4 billion primarily driven by continued investment in the business, including increases in primary sales professionals, combined with investments in new and renovated financial centers and digital capabilities. These increases were largely offset by operating efficiencies and lower FDIC expense.

The return on average allocated capital was 36 percent, up from 34 percent, driven by higher net income. For additional information on capital allocations, see Business Segment Operations on page 10.

Nine-Month Comparison

Net income for Consumer Banking increased $1.2 billion to $9.9 billion primarily driven by higher revenue and lower noninterest expense. Net interest income increased $1.3 billion to $21.3 billion primarily due to growth in deposits and loans. Noninterest income increased $78 million to $7.8 billion driven by higher results from ALM activities, largely offset by lower mortgage banking income and lower service charges.

The provision for credit losses increased $89 million to $2.8 billion due primarily to portfolio seasoning in the U.S. credit card portfolio. Noninterest expense decreased $84 million to $13.2 billion primarily driven by lower FDIC expense and operating efficiencies, largely offset by continued investment in the business.

The return on average allocated capital was 36 percent, up from 31 percent, driven by higher net income.

Deposits

Three-Month Comparison

Net income for Deposits increased $116 million to $2.1 billion driven by higher revenue. Net interest income increased $145 million to $4.2 billion primarily due to growth in deposits and pricing discipline. Noninterest income of $1.3 billion increased $41 million driven by higher results from ALM activities.

The provision for credit losses increased $36 million to $84 million. Noninterest expense increased $31 million to $2.7 billion primarily driven by continued investment in the business largely offset by lower FDIC expense and operating efficiencies.



11 Bank of America

Average deposits increased $21.8 billion to $703.6 billion driven by strong organic growth. Growth in checking and time deposits of $27.4 billion was partially offset by a decline in money market savings and traditional savings of $5.4 billion.

Nine-Month Comparison

Net income for Deposits increased $1.1 billion to $6.5 billion driven by higher revenue. Net interest income increased $1.2 billion to $12.9 billion primarily driven by the same factors as described in the three-month discussion. Noninterest income increased $113 million to $3.8 billion primarily driven by higher

results from ALM activities, partially offset by lower service charges.

The provision for credit losses increased $38 million to $173 million. Noninterest expense decreased $30 million to $8.0 billion primarily driven by lower FDIC expense and operating efficiencies, partially offset by continued investment in the business.

Average deposits increased $21.5 billion to $699.2 billion driven by strong organic growth. Growth in checking and time deposits of $24.6 billion was partially offset by a decline in traditional savings and money market savings of $2.9 billion.




Key Statistics – Deposits

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019			2018
Total deposit spreads (excludes noninterest costs) ⁽¹⁾	2.35	%	2.19	%	2.38		%	2.10		%

Period end
Consumer investment assets (in millions) ⁽²⁾					$	223,199		$	203,882
Active digital banking users (units in thousands) ⁽³⁾					37,981			36,174
Active mobile banking users (units in thousands)					28,703			25,990
Financial centers					4,302			4,385
ATMs					16,626			16,089


⁽¹⁾	Includes deposits held in Consumer Lending.


⁽²⁾	Includes client brokerage assets, certain deposit sweep balances and AUM in Consumer Banking.


⁽³⁾	Active digital banking users represents mobile and/or online users.

Consumer investment assets increased $19.3 billion driven by strong client flows, partially offset by market declines. Active mobile banking users increased 2.7 million reflecting continuing changes in our customers’ banking preferences. The number of financial centers declined by a net 83 reflecting 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

Three-Month Comparison

Net income for Consumer Lending increased $52 million to $1.2 billion driven by higher revenue, partially offset by higher noninterest expense. Net interest income increased $42 million to $2.8 billion driven by loan growth. Noninterest income increased $54 million to $1.4 billion driven by higher card income.

The provision for credit losses increased $11 million to $833 million. Noninterest expense increased $37 million to $1.7 billion primarily driven by continued investment in the business.

Average loans increased $18.7 billion to $298.4 billion primarily driven by an increase in residential mortgages, partially offset by lower home equity loans.

Nine-Month Comparison

Net income for Consumer Lending increased $118 million to $3.4 billion driven by higher net interest income and lower noninterest expense, partially offset by lower noninterest income. Net interest income increased $130 million to $8.4 billion driven by loan growth. Noninterest income decreased $35 million to $4.0 billion primarily driven by lower mortgage banking income and lower card income.

The provision for credit losses increased $51 million to $2.7 billion primarily driven by portfolio seasoning in the U.S. credit card portfolio. Noninterest expense decreased $54 million to $5.2 billion primarily driven by operating efficiencies.

Average loans increased $15.6 billion to $292.2 billion primarily driven by increases in residential mortgages and U.S. credit card, partially offset by lower home equity loans.




Key Statistics – Consumer Lending

	Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)	2019			2018			2019			2018
Total U.S. credit card ⁽¹⁾
Gross interest yield	10.85		%	10.20		%	10.80		%	10.00		%
Risk-adjusted margin	8.46			8.08			8.14			8.09
New accounts (in thousands)	1,172			1,116			3,274			3,496
Purchase volumes	$	71,096		$	66,490		$	204,135		$	194,658
Debit card purchase volumes ⁽²⁾	$	90,942		$	85,529		$	267,204		$	250,715


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

⁽²⁾ Historical information has been restated for Original Credit Transaction volume.

During the three and nine months ended September 30, 2019, total U.S. credit card risk-adjusted margin increased 38 bps and 5 bps compared to the same periods in 2018, primarily driven by a portfolio shift away from promotional-rate loans. During the three and nine months ended September 30, 2019, total U.S.

credit card purchase volumes increased $4.6 billion to $71.1 billion and $9.5 billion to $204.1 billion compared to the same periods in 2018, and debit card purchase volumes increased $5.4 billion to $90.9 billion and $16.5 billion to $267.2 billion, reflecting higher levels of consumer spending.



		Bank of America 12




Key Statistics – Loan Production ⁽¹⁾

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2019		2018		2019		2018
Total ⁽²⁾:
First mortgage	$	20,664	$	10,682	$	50,353	$	31,778
Home equity	2,539		3,399		8,132		11,229
Consumer Banking:
First mortgage	$	13,622	$	7,208	$	34,534	$	21,053
Home equity	2,219		3,053		7,109		10,042


⁽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 increased $6.4 billion and $10.0 billion for the three months ended September 30, 2019 compared to the same period in 2018 primarily driven by a lower interest rate environment driving higher first-lien mortgage refinances. First mortgage loan originations in Consumer Banking and for the total Corporation increased $13.5 billion and $18.6 billion for the nine months ended September 30, 2019 compared to the same period

in 2018 primarily driven by the same factor as described in the three-month discussion.

Home equity production in Consumer Banking and for the total Corporation decreased $834 million and $860 million for the three months ended September 30, 2019 and $2.9 billion and $3.1 billion for the nine months ended September 30, 2019 primarily driven by lower demand.

Global Wealth & Investment Management




	Three Months Ended September 30								Nine Months Ended September 30
(Dollars in millions)	2019			2018			% Change		2019			2018			% Change
Net interest income	$	1,609		$	1,531		5	%	$	4,917		$	4,653		6	%
Noninterest income:
Investment and brokerage services	3,001			3,004			—		8,805			8,981			(2	)
All other income	294			282			4		902			780			16
Total noninterest income	3,295			3,286			—		9,707			9,761			(1	)
Total revenue, net of interest expense	4,904			4,817			2		14,624			14,414			1

Provision for credit losses	37			13			n/m		63			63			—
Noninterest expense	3,413			3,443			(1	)	10,300			10,451			(1	)
Income before income taxes	1,454			1,361			7		4,261			3,900			9
Income tax expense	356			347			3		1,044			994			5
Net income	$	1,098		$	1,014		8		$	3,217		$	2,906		11

Effective tax rate	24.5		%	25.5		%			24.5		%	25.5		%

Net interest yield	2.30			2.37					2.35			2.41
Return on average allocated capital	30			28					30			27
Efficiency ratio	69.60			71.48					70.43			72.50

Balance Sheet
	Three Months Ended September 30								Nine Months Ended September 30
Average	2019			2018			% Change		2019			2018			% Change
Total loans and leases	$	170,414		$	161,869		5	%	$	167,069		$	160,609		4	%
Total earning assets	277,349			256,286			8		279,790			258,046			8
Total assets	289,447			273,582			6		292,102			275,183			6
Total deposits	254,449			238,291			7		256,708			239,176			7
Allocated capital	14,500			14,500			—		14,500			14,500			—

Period end									September 30 2019			December 31 2018			% Change
Total loans and leases									$	172,677		$	164,854		5	%
Total earning assets									275,884			287,199			(4	)
Total assets									288,317			305,907			(6	)
Total deposits									252,466			268,700			(6	)

n/m = not meaningful



13 Bank of America

GWIM consists of two primary businesses: Merrill Lynch Global Wealth Management (MLGWM) and Bank of America Private Bank. For more information about GWIM, see Business Segment Operations in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K.

Three-Month Comparison

Net income for GWIM increased $84 million to $1.1 billion due to higher revenue and lower noninterest expense. The operating margin was 30 percent compared to 28 percent a year ago.

Net interest income increased $78 million to $1.6 billion due to growth in deposits and loans.

Noninterest income, which primarily includes investment and brokerage services income, increased $9 million to $3.3 billion. The increase was driven by the impact of positive AUM flows and higher average market valuations compared to the same period in 2018, largely offset by lower AUM pricing and transactional revenue.

Noninterest expense decreased $30 million to $3.4 billion, as investments for business growth were more than offset by lower amortization of intangibles and FDIC expense.

The return on average allocated capital was 30 percent, up from 28 percent, due to higher net income. For more information on capital allocated to the business segments, see Business Segment Operations on page 10.

MLGWM revenue of $4.1 billion increased three percent, reflecting higher net interest income and asset management fees.

Bank of America Private Bank revenue of $851 million decreased two percent primarily due to lower net interest income.

Nine-Month Comparison

Net income for GWIM increased $311 million to $3.2 billion due to higher revenue and lower noninterest expense. The operating margin was 29 percent compared to 27 percent a year ago.

Net interest income increased $264 million to $4.9 billion due to the same factors as described in the three-month discussion.

Noninterest income, which primarily includes investment and brokerage services income, decreased $54 million to $9.7 billion. The decrease was primarily driven by declines in AUM pricing and transactional revenue, partially offset by the impact of positive AUM flows.

Noninterest expense decreased $151 million to $10.3 billion due to the same factors as described in the three-month section.

The return on average allocated capital was 30 percent, up from 27 percent, due to higher net income.

MLGWM revenue of $12.1 billion increased two percent primarily driven by higher net interest income and the impact of higher AUM flows, partially offset by lower transactional volumes and AUM pricing.

Bank of America Private Bank revenue of $2.6 billion decreased one percent due to the same factor as described in the three-month section.




Key Indicators and Metrics

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions, except as noted)	2019		2018		2019			2018
Revenue by Business
Merrill Lynch Global Wealth Management	$	4,053	$	3,951	$	12,065		$	11,834
Bank of America Private Bank	851		866		2,559			2,580
Total revenue, net of interest expense	$	4,904	$	4,817	$	14,624		$	14,414

Client Balances by Business, at period end
Merrill Lynch Global Wealth Management					$	2,443,614		$	2,385,479
Bank of America Private Bank					462,347			455,894
Total client balances					$	2,905,961		$	2,841,373

Client Balances by Type, at period end
Assets under management⁽¹⁾					$	1,212,120		$	1,182,504
Brokerage and other assets					1,305,926			1,292,219
Deposits					252,466			239,654
Loans and leases ⁽²⁾					175,579			165,125
Less: Managed deposits in assets under management ⁽¹⁾					(40,130		)	(38,129		)
Total client balances					$	2,905,961		$	2,841,373

Assets Under Management Rollforward ⁽¹⁾
Assets under management, beginning of period	$	1,203,783	$	1,138,500	$	1,072,234		$	1,121,383
Net client flows	5,529		8,202		16,721			40,080
Market valuation/other	2,808		35,802		123,165			21,041
Total assets under management, end of period	$	1,212,120	$	1,182,504	$	1,212,120		$	1,182,504

Associates, at period end
Number of financial advisors					17,657			17,456
Total wealth advisors, including financial advisors					19,672			19,343
Total primary sales professionals, including financial advisors and wealth advisors					20,775			20,466

Merrill Lynch Global Wealth Management Metric
Financial advisor productivity (in thousands)	$	1,096	$	1,035	$	1,073		$	1,030

Bank of America Private Bank Metric, at period end
Primary sales professionals					1,811			1,711


⁽¹⁾	AUM includes deposits that are managed within investment accounts.


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

Client Balances

Client balances increased $64.6 billion, or two percent, to $2.9 trillion at September 30, 2019 compared to September 30, 2018. The increase in client balances was primarily due to positive net flows over the last year and higher market valuations.



		Bank of America 14

Global Banking




	Three Months Ended September 30								Nine Months Ended September 30
(Dollars in millions)	2019			2018			% Change		2019			2018			% Change
Net interest income	$	2,617		$	2,726		(4	%)	$	8,116		$	8,144		—%
Noninterest income:
Service charges	763			753			1		2,225			2,285			(3	)
Investment banking fees	902			644			40		2,328			2,130			9
All other income	930			700			33		2,673			2,273			18
Total noninterest income	2,595			2,097			24		7,226			6,688			8
Total revenue, net of interest expense	5,212			4,823			8		15,342			14,832			3

Provision for credit losses	120			(70		)	n/m		356			(77		)	n/m
Noninterest expense	2,220			2,142			4		6,697			6,618			1
Income before income taxes	2,872			2,751			4		8,289			8,291			—
Income tax expense	775			714			9		2,238			2,154			4
Net income	$	2,097		$	2,037		3		$	6,051		$	6,137		(1	)

Effective tax rate	27.0		%	26.0		%			27.0		%	26.0		%

Net interest yield	2.69			2.99					2.84			3.00
Return on average allocated capital	20			20					20			20
Efficiency ratio	42.58			44.42					43.65			44.62

Balance Sheet
	Three Months Ended September 30								Nine Months Ended September 30
Average	2019			2018			% Change		2019			2018			% Change
Total loans and leases	$	377,109		$	352,712		7	%	$	373,275		$	353,167		6	%
Total earning assets	385,999			362,316			7		382,711			362,910			5
Total assets	441,186			423,643			4		437,570			423,355			3
Total deposits	360,457			337,685			7		357,413			328,484			9
Allocated capital	41,000			41,000			—		41,000			41,000			—

Period end									September 30 2019			December 31 2018			% Change
Total loans and leases									$	377,658		$	365,717		3	%
Total earning assets									397,589			377,812			5
Total assets									452,642			442,330			2
Total deposits									371,887			360,248			3

n/m = not meaningful

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. For more information about Global Banking, see Business Segment Operations in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K.

Three-Month Comparison

Net income for Global Banking increased $60 million to $2.1 billion primarily driven by higher revenue partially offset by higher provision for credit losses and noninterest expense.

Revenue increased $389 million to $5.2 billion driven by higher noninterest income offset in part by a modest decline in net interest income. Net interest income decreased $109 million to $2.6 billion as the impact of deposit and loan growth was more than offset by the allocation of ALM activities and loan spread compression.

Noninterest income increased $498 million to $2.6 billion driven by growth in investment banking fees and leasing-related revenues. The provision for credit losses increased $190 million to $120 million due to reserve releases in the prior-year period, primarily from energy exposures. Noninterest expense increased $78 million to $2.2 billion primarily due to continued investment in the business.

The return on average allocated capital was 20 percent for both periods. For more information on capital allocated to the business segments, see Business Segment Operations on page 10.

Nine-Month Comparison

Net income for Global Banking decreased $86 million to $6.1 billion primarily driven by higher provision for credit losses and noninterest expense partially offset by higher revenue.

Revenue increased $510 million to $15.3 billion driven by higher noninterest income. Net interest income decreased $28 million to $8.1 billion primarily due to the allocation of ALM activities and loan spread compression more than offsetting the benefit from higher loan and deposit balances.



15 Bank of America

Noninterest income increased $538 million to $7.2 billion primarily due to higher leasing-related revenue and investment banking fees. The provision for credit losses increased $433 million to $356 million primarily driven by energy reserve releases in the prior-year period. Noninterest expense increased $79 million

primarily due to continued investment in the business partially offset by lower FDIC expense.

The return on average allocated capital was 20 percent for both periods. For more information on capital allocated to the business segments, see Business Segment Operations on page 10.

Global Corporate, Global Commercial and Business Banking

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

	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
	Three Months Ended September 30
(Dollars in millions)	2019		2018		2019		2018		2019		2018		2019		2018
Revenue
Business Lending	$	1,024	$	908	$	1,020	$	1,095	$	91	$	108	$	2,135	$	2,111
Global Transaction Services	967		951		862		832		267		248		2,096		2,031
Total revenue, net of interest expense	$	1,991	$	1,859	$	1,882	$	1,927	$	358	$	356	$	4,231	$	4,142

Balance Sheet
Average
Total loans and leases	$	179,191	$	162,249	$	183,031	$	174,315	$	14,868	$	16,127	$	377,090	$	352,691
Total deposits	175,914		165,522		143,835		134,486		40,707		37,703		360,456		337,711

	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
	Nine Months Ended September 30
	2019		2018		2019		2018		2019		2018		2019		2018
(Dollars in millions)
Revenue
Business Lending	$	2,992	$	2,940	$	3,100	$	3,188	$	275	$	324	$	6,367	$	6,452
Global Transaction Services	2,979		2,828		2,642		2,474		800		721		6,421		6,023
Total revenue, net of interest expense	$	5,971	$	5,768	$	5,742	$	5,662	$	1,075	$	1,045	$	12,788	$	12,475

Balance Sheet

Average
Total loans and leases	$	177,071	$	162,652	$	181,091	$	173,788	$	15,108	$	16,720	$	373,270	$	353,160
Total deposits	175,239		159,500		142,665		132,115		39,522		36,889		357,426		328,504

Period end
Total loans and leases	$	179,291	$	162,004	$	183,314	$	174,452	$	14,919	$	15,880	$	377,524	$	352,336
Total deposits	183,678		174,709		147,119		138,425		41,089		37,640		371,886		350,774

Business Lending revenue increased $24 million for the three months ended September 30, 2019 compared to the same period in 2018 driven by higher leasing-related revenue partly offset by lower ALM results. For the nine-month period, revenue decreased $85 million as lower ALM results were partly offset by higher leasing-related revenue.

Global Transaction Services revenue increased $65 million and $398 million for the three and nine months ended September 30, 2019 primarily driven by higher deposit balances and rates.

Average loans and leases increased seven percent and six percent for the three and nine months ended September 30, 2019 compared to the same periods in 2018 driven by growth in the commercial and industrial portfolio. Average deposits increased seven percent and nine percent for the three and nine months ended September 30, 2019 due to growth in domestic and international interest-bearing balances.

Global Investment Banking

Client teams and product specialists underwrite and distribute debt, equity and loan products, and provide advisory services and tailored risk management solutions. The economics of certain investment banking and underwriting activities are shared primarily between Global Banking and Global Markets under an internal revenue-sharing arrangement. Global Banking originates certain deal-related transactions with our corporate and commercial clients that are executed and distributed by Global Markets. To provide a complete discussion of our consolidated investment banking fees, the following table presents total Corporation investment banking fees and the portion attributable to Global Banking.



		Bank of America 16




Investment Banking Fees

	Global Banking						Total Corporation						Global Banking						Total Corporation
	Three Months Ended September 30												Nine Months Ended September 30
(Dollars in millions)	2019			2018			2019			2018			2019			2018			2019			2018
Products
Advisory	$	427		$	237		$	452		$	262		$	984		$	782		$	1,083		$	861
Debt issuance	356			295			816			684			1,007			1,017			2,310			2,385
Equity issuance	119			112			308			307			337			331			937			911
Gross investment banking fees	902			644			1,576			1,253			2,328			2,130			4,330			4,157
Self-led deals	(11		)	(15		)	(43		)	(49		)	(54		)	(63		)	(162		)	(178		)
Total investment banking fees	$	891		$	629		$	1,533		$	1,204		$	2,274		$	2,067		$	4,168		$	3,979

Total Corporation investment banking fees, excluding self-led deals, of $1.5 billion and $4.2 billion, which are primarily included within Global Banking and Global Markets, increased 27 percent and five percent for the three and nine months ended September 30, 2019 compared to the same periods in 2018 due to increases in Advisory fees, primarily M&A activity.

Global Markets




	Three Months Ended September 30								Nine Months Ended September 30
(Dollars in millions)	2019			2018			% Change		2019			2018			% Change
Net interest income	$	1,016		$	933		9	%	$	2,780		$	2,922		(5	)%
Noninterest income:
Investment and brokerage services	419			388			8		1,296			1,306			(1	)
Investment banking fees	585			522			12		1,707			1,783			(4	)
Trading account income	1,580			1,551			2		5,623			6,129			(8	)
All other income	264			479			(45	)	783			795			(2	)
Total noninterest income	2,848			2,940			(3	)	9,409			10,013			(6	)
Total revenue, net of interest expense	3,864			3,873			—		12,189			12,935			(6	)

Provision for credit losses	—			(2		)	n/m		(18		)	(6		)	n/m
Noninterest expense	2,679			2,633			2		8,109			8,283			(2	)
Income before income taxes	1,185			1,242			(5	)	4,098			4,658			(12	)
Income tax expense	338			323			5		1,168			1,211			(4	)
Net income	$	847		$	919		(8	)	$	2,930		$	3,447		(15	)

Effective tax rate	28.5		%	26.0		%			28.5		%	26.0		%

Return on average allocated capital	10			10					11			13
Efficiency ratio	69.32			68.00					66.53			64.04

Balance Sheet
	Three Months Ended September 30								Nine Months Ended September 30
Average	2019			2018			% Change		2019			2018			% Change
Trading-related assets:
Trading account securities	$	261,182		$	215,397		21	%	$	246,077		$	211,668		16	%
Reverse repurchases	110,907			124,842			(11	)	117,087			127,019			(8	)
Securities borrowed	80,641			74,648			8		82,772			80,073			3
Derivative assets	46,061			45,392			1		43,920			46,754			(6	)
Total trading-related assets	498,791			460,279			8		489,856			465,514			5
Total loans and leases	71,589			71,231			1		70,757			73,340			(4	)
Total earning assets	476,919			459,073			4		474,481			478,455			(1	)
Total assets	687,393			652,481			5		679,038			669,684			1
Total deposits	30,155			30,721			(2	)	30,878			31,253			(1	)
Allocated capital	35,000			35,000			—		35,000			35,000			—

Period end									September 30 2019			December 31 2018			% Change
Total trading-related assets									$	497,206		$	447,998		11	%
Total loans and leases									74,979			73,928			1
Total earning assets									478,303			457,224			5
Total assets									689,023			641,923			7
Total deposits									30,885			37,841			(18	)

n/m = not meaningful

Global Markets offers sales and trading services and research services to institutional clients across fixed-income, credit, currency, commodity and equity businesses. Global Markets product coverage includes securities and derivative products in

both the primary and secondary markets. For more information about Global Markets, see Business Segment Operations in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K.



17 Bank of America

Three-Month Comparison

Net income for Global Markets decreased $72 million to $847 million. Net DVA losses were $15 million compared to losses of $99 million, and excluding net DVA, net income decreased $136 million to $858 million. These decreases were primarily driven by a decline in revenue and an increase in noninterest expense.

Revenue declined $9 million to $3.9 billion as higher sales and trading revenue and investment banking fees were more than offset by a gain on the sale of an equity investment in the prior-year quarter. Sales and trading revenue increased $217 million, and excluding net DVA, increased $133 million primarily driven by an increase in Equities revenue.

Noninterest expense increased $46 million to $2.7 billion primarily driven by higher revenue-related expenses and continued investment in technology.

Average total assets increased $34.9 billion to $687.4 billion driven by increased levels of inventory in FICC to facilitate expected client demand and higher client balances in Equities.

The return on average allocated capital remained unchanged at 10 percent. For more information on capital allocated to the business segments, see Business Segment Operations on page 10.

Nine-Month Comparison

Net income for Global Markets decreased $517 million to $2.9 billion. Net DVA losses were $136 million compared to losses of $214 million. Excluding net DVA, net income decreased $577 million to $3.0 billion, primarily driven by a decrease in revenue, partially offset by lower noninterest expense.

Revenue declined $746 million to $12.2 billion as sales and trading revenue decreased $677 million, and excluding net DVA, decreased $755 million due to declines in both FICC and Equities revenue.

Noninterest expense decreased $174 million to $8.1 billion primarily driven by lower revenue-related expenses.

Average total assets increased $9.4 billion to $679.0 billion primarily due to increased levels of inventory in FICC to facilitate expected client demand. Period-end total assets increased $47.1 billion from December 31, 2018 to $689.0 billion due to increased levels of inventory in FICC to facilitate expected client demand and higher client balances in Equities.

The return on average allocated capital was 11 percent, down from 13 percent, reflecting lower net income.

Sales and Trading Revenue

For a description of sales and trading revenue, see Business Segment Operations in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K. The following table and related discussion present sales and trading revenue, substantially all of which is in Global Markets, with the remainder in Global Banking. In addition, the following table and related discussion present sales and trading revenue, excluding net DVA, which is a non-GAAP financial measure. For more information on net DVA, see Supplemental Financial Data on page 6.




Sales and Trading Revenue ^{(1, 2, 3)}

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in millions)	2019		2018		2019		2018
Sales and trading revenue ⁽²⁾
Fixed-income, currencies and commodities	$	2,056	$	1,989	$	6,433	$	6,754
Equities	1,148		998		3,473		3,829
Total sales and trading revenue	$	3,204	$	2,987	$	9,906	$	10,583

Sales and trading revenue, excluding net DVA ⁽⁴⁾
Fixed-income, currencies and commodities	$	2,074	$	2,069	$	6,560	$	6,941
Equities	1,145		1,017		3,482		3,856
Total sales and trading revenue, excluding net DVA	$	3,219	$	3,086	$	10,042	$	10,797


⁽¹⁾	For more information on sales and trading revenue, see Note 3 – Derivatives to the Consolidated Financial Statements.


⁽²⁾	Includes FTE adjustments of $52 million and $132 million for the three and nine months ended September 30, 2019 compared to $54 million and $200 million for the same periods in 2018.


⁽³⁾	Includes Global Banking sales and trading revenue of $147 million and $390 million for the three and nine months ended September 30, 2019 compared to $51 million and $297 million for the same periods in 2018.

⁽⁴⁾

FICC and Equities sales and trading revenue, excluding net DVA, is a non-GAAP financial measure. FICC net DVA losses were $18 million and $127 million for the three and nine months ended September 30, 2019 compared to losses of $80 million and $187 million for the same periods in 2018. Equities net DVA gains were $3 million and losses of $9 million for the three and nine months ended September 30, 2019 compared to losses of $19 million and $27 million for the same periods in 2018.

The following explanations for period-over-period changes in sales and trading, FICC and Equities revenue exclude net DVA, but would be the same if net DVA was included.

Three-Month Comparison

FICC revenue increased $5 million primarily driven by an improvement in mortgage and municipal products, largely offset by weaker trading performance in foreign exchange and credit

products. Equities revenue increased $128 million driven by growth in client financing activities.

Nine-Month Comparison

FICC revenue decreased $381 million due to a generally weaker trading environment. Equities revenue decreased $374 million driven by under performance in derivatives compared to a strong prior-year period which benefited from higher client activity and elevated market volatility.



		Bank of America 18

All Other




	Three Months Ended September 30								Nine Months Ended September 30
(Dollars in millions)	2019			2018			% Change		2019			2018			% Change
Net interest income	$	62		$	178		(65	)%	$	135		$	480		(72	)%
Noninterest income (loss)	(811		)	(258		)	n/m		(2,018		)	(1,519		)	33
Total revenue, net of interest expense	(749		)	(80		)	n/m		(1,883		)	(1,039		)	81

Provision for credit losses	(295		)	(95		)	n/m		(590		)	(352		)	68
Noninterest expense	2,464			471			n/m		3,398			1,487			129
Loss before income taxes	(2,918		)	(456		)	n/m		(4,691		)	(2,174		)	116
Income tax benefit	(1,320		)	(488		)	n/m		(3,055		)	(1,862		)	64
Net income (loss)	$	(1,598	)	$	32		n/m		$	(1,636	)	$	(312	)	n/m

Balance Sheet
	Three Months Ended September 30								Nine Months Ended September 30
Average	2019			2018			% Change		2019			2018			% Change
Total loans and leases	$	41,788		$	59,930		(30	)%	$	44,529		$	63,602		(30	)%
Total assets ⁽¹⁾	212,527			208,458			2		205,415			198,398			4
Total deposits	20,718			22,118			(6	)	20,720			22,635			(8	)

Period end									September 30 2019			December 31 2018			% Change
Total loans and leases									$	39,671		$	48,061		(17	)%
Total assets ⁽¹⁾									207,605			195,466			6
Total deposits									21,883			18,541			18

⁽¹⁾

In segments where the total of liabilities and equity exceeds assets, which are generally deposit-taking segments, we allocate assets from All Other to those segments to match liabilities (i.e., deposits) and allocated shareholders’ equity. Average allocated assets were $536.8 billion and $540.9 billion for the three and nine months ended September 30, 2019 compared to $516.3 billion and $516.8 billion for the same periods in 2018, and period-end allocated assets were $546.5 billion and $540.8 billion at September 30, 2019 and December 31, 2018.

n/m = not meaningful

All Other consists of ALM activities, equity investments, non-core mortgage loans and servicing activities, liquidating businesses and certain expenses not otherwise allocated to a business segment. ALM activities encompass certain residential mortgages, debt securities, and interest rate and foreign currency risk management activities. Substantially all of the results of ALM activities are allocated to our business segments. Equity investments include our merchant services joint venture, as well as a portfolio of equity, real estate and other alternative investments. For information on our merchant services joint venture, see Note 11 – Commitments and Contingencies to the Consolidated Financial Statements. For additional information about All Other, see Business Segment Operations in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K.

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. During the nine months ended September 30, 2019, residential mortgage loans held for ALM activities decreased $2.4 billion to $22.5 billion primarily as a result of payoffs and paydowns. Non-core residential mortgage and home equity loans, which are principally runoff portfolios, are also held in All Other. During the nine months ended September 30, 2019, total non-core loans decreased $6.5 billion to $17.0 billion due primarily to sales, payoffs and paydowns as well as Federal Housing Administration (FHA) loan conveyances, offset by repurchases. For more information on the composition of the core and non-core portfolios, see Consumer Portfolio Credit Risk Management on page 26.

Three-Month Comparison

The net loss for All Other was $1.6 billion compared to net income of $32 million for the prior-year period. The current-year period included a $2.1 billion pretax impairment charge related to the notice of termination of the merchant services joint venture at the conclusion of its current term.

Revenue decreased $669 million due to lower net interest income and an increase in the loss in noninterest income. Net

interest income decreased $116 million driven by lower loan balances due to non-core consumer real estate loan sales and portfolio run-off. The loss in noninterest income increased $553 million driven by the results of certain ALM and other treasury activities, an increase in the reserve for payment protection insurance and lower gains on sales of debt securities.

The benefit in the provision for credit losses increased $200 million to $295 million primarily due to recoveries from sales of previously charged-off non-core consumer real estate loans. Noninterest expense increased $2.0 billion to $2.5 billion due to the $2.1 billion impairment charge and higher legacy mortgage-related litigation expense.

The income tax benefit was $1.3 billion compared to an income tax benefit of $488 million in the same period in 2018. The increase in the tax benefit was primarily related to the tax impact of the impairment charge and discrete tax benefits from the resolution of various tax matters. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking.

Nine-Month Comparison

The net loss for All Other increased $1.3 billion to a loss of $1.6 billion due to the same factor as described in the three-month discussion.

Revenue decreased $844 million due to the same factors as described in the three-month discussion.

The benefit in the provision for credit losses increased $238 million to $590 million primarily driven by the same factor as described in the three-month discussion. Noninterest expense increased $1.9 billion to $3.4 billion due to the same factors as described in the three-month discussion.

The income tax benefit was $3.1 billion compared to a benefit of $1.9 billion in the same period in 2018 driven by the same factors as described in the three-month discussion. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking.



19 Bank of America

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 11 – Commitments and Contingencies to the Consolidated Financial Statements herein, as well as Off-Balance Sheet Arrangements and Contractual Obligations in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K, and Note 11 – Long-term Debt and Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2018 Annual Report on Form 10-K.

Representations and Warranties Obligations

For information on representations and warranties obligations in connection with the sale of mortgage loans, see Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2018 Annual Report on Form 10-K. 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 2018 Annual Report on Form 10-K.

Managing Risk

Risk is inherent in all our business activities. The seven key types of risk faced by the Corporation are strategic, credit, market, liquidity, compliance, operational and reputational. Sound risk management enables us to serve our customers and deliver for our shareholders. If not managed well, 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 and the Board.

Our Risk Framework is the foundation for consistent and effective management of 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 Framework, our risk management activities 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 2018 Annual Report on Form 10-K.

Capital Management

The Corporation manages its capital position so that its capital is more than adequate to support its business activities and aligns with risk, risk appetite and strategic planning. For more information

on capital management, including related regulatory requirements, see Capital Management in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K.

CCAR and Capital Planning

The Board of Governors of the Federal Reserve System (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 27, 2019, following the Federal Reserve’s non-objection to our 2019 CCAR capital plan, the Board authorized the repurchase of approximately $30.9 billion in common stock from July 1, 2019 through June 30, 2020, which includes approximately $900 million to offset shares awarded under equity-based compensation plans during the same period. During the third quarter of 2019, we repurchased $7.6 billion of common stock pursuant to the Board's 2019 repurchase authorization.

Our stock repurchases are 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 repurchases may be effected through open market purchases or privately negotiated transactions, including repurchase plans that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (Exchange Act). 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.

Regulatory Capital

As a financial services holding company, we are subject to regulatory capital rules, including Basel 3, issued by U.S. banking regulators. The Corporation's depository institution subsidiaries are also subject to the Prompt Corrective Action (PCA) framework. The Corporation and its primary affiliated banking entity, BANA, are Advanced approaches institutions under Basel 3 and are required to report regulatory risk-based capital ratios and risk-weighted assets 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. As of September 30, 2019, the Common equity tier 1 (CET1) and Tier 1 capital ratios for the Corporation were lower under the Standardized approach whereas the Advanced approaches yielded a lower Total capital ratio.

Minimum Capital Requirements

Minimum capital requirements and related buffers were fully phased in as of January 1, 2019. In order to avoid restrictions on capital distributions and discretionary bonus payments, the Corporation must meet risk-based capital ratio requirements that include a capital conservation buffer greater than 2.5 percent, plus any applicable countercyclical capital buffer and a global systemically important bank (G-SIB) surcharge. The buffers and surcharge must be comprised solely of CET1 capital.

The Corporation is also required to maintain a minimum supplementary leverage ratio (SLR) of 3.0 percent plus a leverage buffer of 2.0 percent in order to avoid certain restrictions on capital distributions and discretionary bonus payments. Our insured depository institution subsidiaries are required to maintain a minimum 6.0 percent SLR to be considered well capitalized under the PCA framework.



		Bank of America 20

Capital Composition and Ratios

Table 8 presents Bank of America Corporation’s capital ratios and related information in accordance with Basel 3 Standardized and Advanced approaches as measured at September 30, 2019 and December 31, 2018. As of the periods presented herein, the Corporation met the definition of well capitalized under current regulatory requirements.




Table 8	Bank of America Corporation Regulatory Capital under Basel 3

		Standardized Approach			Advanced Approaches			Regulatory Minimum ⁽¹⁾
(Dollars in millions, except as noted)		September 30, 2019
Risk-based capital metrics:
Common equity tier 1 capital		$	169,203		$	169,203
Tier 1 capital		192,029			192,029
Total capital ⁽²⁾		225,430			217,247
Risk-weighted assets (in billions)		1,484			1,440
Common equity tier 1 capital ratio		11.4		%	11.7		%	9.5	%
Tier 1 capital ratio		12.9			13.3			11.0
Total capital ratio		15.2			15.1			13.0

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽³⁾		$	2,336		$	2,336
Tier 1 leverage ratio		8.2		%	8.2		%	4.0

SLR leverage exposure (in billions)					$	2,898
SLR					6.6		%	5.0

		December 31, 2018
Risk-based capital metrics:
Common equity tier 1 capital		$	167,272		$	167,272
Tier 1 capital		189,038			189,038
Total capital ⁽²⁾		221,304			212,878
Risk-weighted assets (in billions)		1,437			1,409
Common equity tier 1 capital ratio		11.6		%	11.9		%	8.25	%
Tier 1 capital ratio		13.2			13.4			9.75
Total capital ratio		15.4			15.1			11.75

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽³⁾		$	2,258		$	2,258
Tier 1 leverage ratio		8.4		%	8.4		%	4.0

SLR leverage exposure (in billions)					$	2,791
SLR					6.8		%	5.0


⁽¹⁾	The capital conservation buffer and G-SIB surcharge were both 2.5 percent at September 30, 2019 and 1.875 percent at December 31, 2018. The countercyclical capital buffer for both periods was zero. The SLR minimum includes a leverage buffer of 2.0 percent.


⁽²⁾	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.


⁽³⁾	Reflects total average assets adjusted for certain Tier 1 capital deductions.

CET1 capital was $169.2 billion at September 30, 2019, an increase of $1.9 billion from December 31, 2018, driven by earnings and net unrealized gains on available-for-sale (AFS) debt securities included in accumulated other comprehensive income (OCI), partially offset by common stock repurchases and dividends. During the nine months ended September 30, 2019, Total capital under the Advanced approaches increased $4.4 billion primarily driven by the same factors as CET1 capital and a net increase in

preferred stock. Risk-weighted assets under the Standardized approach, which yielded the lower CET1 capital ratio at September 30, 2019, increased $46.6 billion during the nine months ended September 30, 2019 to $1,484 billion primarily due to increased client activity in Global Markets and Global Banking and an increase in other assets.

Table 9 shows the capital composition at September 30, 2019 and December 31, 2018.




Table 9	Capital Composition under Basel 3

(Dollars in millions)		September 30 2019			December 31 2018
Total common shareholders’ equity		$	244,781		$	242,999
Goodwill, net of related deferred tax liabilities		(68,571		)	(68,572		)
Deferred tax assets arising from net operating loss and tax credit carryforwards		(5,210		)	(5,981		)
Intangibles, other than mortgage servicing rights and goodwill, net of related deferred tax liabilities		(1,335		)	(1,294		)
Other		(462		)	120
Common equity tier 1 capital		169,203			167,272
Qualifying preferred stock, net of issuance cost		23,400			22,326
Other		(574		)	(560		)
Tier 1 capital		192,029			189,038
Tier 2 capital instruments		23,160			21,887
Eligible credit reserves included in Tier 2 capital		2,059			1,972
Other		(1		)	(19		)
Total capital under the Advanced approaches		$	217,247		$	212,878



21 Bank of America

Table 10 shows the components of risk-weighted assets as measured under Basel 3 at September 30, 2019 and December 31, 2018.




Table 10	Risk-weighted Assets under Basel 3

		Standardized Approach		Advanced Approaches		Standardized Approach		Advanced Approaches
(Dollars in billions)		September 30, 2019				December 31, 2018
Credit risk		$	1,433	$	854	$	1,384	$	827
Market risk		51		50		53		52
Operational risk		n/a		500		n/a		500
Risks related to credit valuation adjustments		n/a		36		n/a		30
Total risk-weighted assets		$	1,484	$	1,440	$	1,437	$	1,409

n/a = not applicable

Bank of America, N.A. Regulatory Capital

Table 11 presents regulatory capital information for BANA in accordance with Basel 3 Standardized and Advanced approaches as measured at September 30, 2019 and December 31, 2018. BANA met the definition of well capitalized under the PCA framework for both periods.




Table 11	Bank of America, N.A. Regulatory Capital under Basel 3

		Standardized Approach			Advanced Approaches			Regulatory Minimum ⁽¹⁾
(Dollars in millions, except as noted)		September 30, 2019
Risk-based capital metrics:
Common equity tier 1 capital		$	154,045		$	154,045
Tier 1 capital		154,045			154,045
Total capital ⁽²⁾		166,062			158,158
Risk-weighted assets (in billions)		1,229			982
Common equity tier 1 capital ratio		12.5		%	15.7		%	7.0	%
Tier 1 capital ratio		12.5			15.7			8.5
Total capital ratio		13.5			16.1			10.5

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽³⁾		1,741			1,741
Tier 1 leverage ratio		8.8		%	8.8		%	5.0

SLR leverage exposure (in billions)					2,137
SLR					7.2		%	6.0

		December 31, 2018
Risk-based capital metrics:
Common equity tier 1 capital		$	149,824		$	149,824
Tier 1 capital		149,824			149,824
Total capital ⁽²⁾		161,760			153,627
Risk-weighted assets (in billions)		1,195			959
Common equity tier 1 capital ratio		12.5		%	15.6		%	6.5	%
Tier 1 capital ratio		12.5			15.6			8.0
Total capital ratio		13.5			16.0			10.0

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽³⁾		1,719			1,719
Tier 1 leverage ratio		8.7		%	8.7		%	5.0

SLR leverage exposure (in billions)					2,112
SLR					7.1		%	6.0


⁽¹⁾	Risk-based capital regulatory minimums at September 30, 2019 are the minimum ratios under Basel 3 including a capital conservation buffer of 2.5 percent. The regulatory minimums for the leverage ratios as of both period ends and risk-based capital ratios as of December 31, 2018 are the percent required to be considered well capitalized under the PCA framework.


⁽²⁾	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.


⁽³⁾	Reflects total average assets adjusted for certain Tier 1 capital deductions.

Total Loss-Absorbing Capacity Requirements

Effective January 1, 2019, the Corporation is subject to the Federal Reserve’s final rule requiring G-SIBs to maintain minimum levels of total loss-absorbing capacity (TLAC) and long-term debt. TLAC consists of the Corporation’s Tier 1 capital and eligible long-term debt issued directly by the Corporation. Eligible long-term debt for TLAC ratios is comprised of unsecured debt that has a remaining maturity of at least one year and satisfies additional requirements

as prescribed in the TLAC final rule. As with the risk-based capital ratios and SLR, the Corporation is required to maintain TLAC ratios in excess of minimum requirements plus applicable buffers in order to avoid restrictions on capital distributions and discretionary bonus payments. Table 12 presents the Corporation's TLAC and long-term debt ratios and related information as of September 30, 2019.



		Bank of America 22




Table 12	Bank of America Corporation Total Loss-Absorbing Capacity and Long-Term Debt

		TLAC			Regulatory Minimum ⁽¹⁾		Long-term Debt			Regulatory Minimum ⁽²⁾
(Dollars in millions)		September 30, 2019
Total eligible balance		$	368,490				$	168,864
Percentage of risk-weighted assets ⁽³⁾		24.8		%	22.0	%	11.4		%	8.5	%
Percentage of SLR leverage exposure		12.7			9.5		5.8			4.5

⁽¹⁾

The TLAC risk-weighted assets regulatory minimum consists of 18.0 percent plus a TLAC risk-weighted assets buffer comprised of 2.5 percent plus the method 1 G-SIB surcharge of 1.5 percent. The countercyclical buffer is zero for this period. The TLAC SLR leverage exposure regulatory minimum consists of 7.5 percent plus a 2.0 percent TLAC leverage buffer. The TLAC risk-weighted assets and leverage buffers must be comprised solely of CET1 capital and Tier 1 capital, respectively.


⁽²⁾	The long-term debt risk-weighted assets regulatory minimum is comprised of 6.0 percent plus an additional 2.5 percent requirement based on the Corporation’s method 2 G-SIB surcharge.


⁽³⁾	The approach that yields the higher risk-weighted assets is used to calculate TLAC and long-term debt ratios, which was the Standardized approach as of September 30, 2019.

Regulatory Developments

The following supplements the disclosure in Capital Management – Regulatory Developments in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K and in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

Broker-dealer Regulatory Capital and Securities Regulation

The Corporation’s principal U.S. broker-dealer subsidiaries are BofA Securities, Inc. (BofAS), Merrill Lynch Professional Clearing Corp (MLPCC) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S). As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, BofAS was formed as a result of the reorganization of MLPF&S which was completed in May 2019. The Corporation's principal European broker-dealer subsidiaries are Merrill Lynch International (MLI) and BofA Securities Europe SA (BofASE).

The U.S. broker-dealer subsidiaries are subject to the net capital requirements of Rule 15c3-1 under the Exchange Act. BofAS computes its minimum capital requirements as an alternative net capital broker-dealer under Rule 15c3-1, and MLPCC and MLPF&S compute their minimum capital requirements in accordance with the alternative standard under Rule 15c3-1. BofAS and MLPCC are also registered as futures commission merchants and are subject to U.S. Commodity Futures Trading Commission (CFTC) Regulation 1.17.

BofAS provides institutional services and is required to maintain tentative net capital in excess of $1.0 billion and net capital in excess of the greater of $500 million or a certain percentage of its reserve requirement. BofAS is also required to hold a certain percentage of its risk-based margin in order to meet its CFTC minimum net capital requirement. At September 30, 2019, BofAS had tentative net capital of $13.3 billion. BofAS also had regulatory net capital of $11.1 billion which exceeded the minimum requirement of $2.3 billion by $8.8 billion.

MLPCC is a fully-guaranteed subsidiary of BofAS and provides clearing and settlement services. At September 30, 2019, MLPCC’s regulatory net capital of $4.8 billion exceeded the minimum requirement of $1.2 billion by $3.7 billion.

MLPF&S provides retail services. At September 30, 2019, MLPF&S' regulatory net capital was $3.3 billion which exceeded the minimum requirement of $104 million by $3.2 billion

Our European broker-dealers are regulated by non-U.S. regulators. MLI, a U.K. investment firm, is regulated by the Prudential Regulation Authority and the Financial Conduct Authority, and is subject to certain regulatory capital requirements. At September 30, 2019, MLI’s capital resources were $35.0 billion, which exceeded the minimum Pillar 1 requirement of $14.8 billion by $20.2 billion. BofASE, a French investment firm, is regulated by the Autorité de Contrôle Prudentiel et de Résolution and the Autorité des Marchés Financiers, and is subject to certain regulatory capital requirements. At September 30, 2019, BofASE's

capital resources were $5.0 billion which exceeded the minimum Pillar 1 requirement of $1.3 billion by $3.7 billion.

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, as well as our liquidity sources, liquidity arrangements, contingency planning and credit ratings discussed below, see Liquidity Risk in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K.

NB Holdings Corporation

We have intercompany arrangements with certain key subsidiaries under which we transferred certain assets of Bank of America Corporation, as the parent company, which is a separate and distinct legal entity from our banking and nonbank subsidiaries, 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. 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.

Global Liquidity Sources and Other Unencumbered Assets

Table 13 presents average Global Liquidity Sources (GLS) for the three months ended September 30, 2019 and December 31, 2018.



23 Bank of America




Table 13	Average Global Liquidity Sources

		Three Months Ended
(Dollars in billions)		September 30 2019		December 31 2018
Parent company and NB Holdings		$	65	$	76
Bank subsidiaries		426		420
Other regulated entities		61		48
Total Average Global Liquidity Sources		$	552	$	544

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. Typically, parent company and NB Holdings liquidity is in the form of cash deposited with BANA.

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 FHLBs and the Federal Reserve Discount Window. The cash we could have obtained by borrowing against this pool of specifically-identified eligible assets was $356 billion and $344 billion at September 30, 2019 and December 31, 2018. 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.

Liquidity held in other regulated entities, comprised primarily of broker-dealer subsidiaries, is primarily available to meet the obligations of that entity and transfers to the parent company or to any other subsidiary may be subject to prior regulatory approval due to regulatory restrictions and minimum requirements. Our other regulated entities also hold unencumbered investment-grade securities and equities that we believe could be used to generate additional liquidity.

Table 14 presents the composition of average GLS for the three months ended September 30, 2019 and December 31, 2018.




Table 14	Average Global Liquidity Sources Composition

		Three Months Ended
(Dollars in billions)		September 30 2019		December 31 2018
Cash on deposit		$	103	$	113
U.S. Treasury securities		81		81
U.S. agency securities and mortgage-backed securities		353		340
Non-U.S. government securities		15		10
Total Average Global Liquidity Sources		$	552	$	544

Our GLS are substantially the same in composition to what qualifies as High Quality Liquid Assets (HQLA) under the final U.S. Liquidity Coverage Ratio (LCR) rules. However, HQLA for purposes of calculating LCR is not reported at market value, but at a lower value that incorporates regulatory deductions and the exclusion of excess liquidity held at certain subsidiaries. The LCR is calculated as the amount of a financial institution’s unencumbered HQLA relative to the estimated net cash outflows the institution could encounter over a 30-day period of significant liquidity stress, expressed as a percentage. Our average consolidated HQLA, on

a net basis, was $454 billion and $446 billion for the three months ended September 30, 2019 and December 31, 2018. For the same periods, the average consolidated LCR was 116 percent and 118 percent. Our LCR will fluctuate due to normal business flows from customer activity.

Liquidity Stress Analysis

We utilize liquidity stress analysis to assist us in determining the appropriate amounts of liquidity to maintain at the parent company and our subsidiaries to meet contractual and contingent cash outflows under a range of scenarios. For more information on our liquidity stress analysis, see Liquidity Risk – Liquidity Stress Analysis in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K.

Diversified Funding Sources

We fund our assets primarily with a mix of deposits, and secured and unsecured liabilities through a centralized, globally coordinated funding approach diversified across products, programs, markets, currencies and investor groups. We fund a substantial portion of our lending activities through our deposits, which were $1.39 trillion and $1.38 trillion at September 30, 2019 and December 31, 2018.

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.

Long-term Debt

During the nine months ended September 30, 2019, we issued $45.2 billion of long-term debt consisting of $24.3 billion for Bank of America Corporation, substantially all of which was TLAC eligible, $10.9 billion for Bank of America, N.A. and $10.0 billion of other debt. Substantially all of the long-term, TLAC-eligible senior notes issued by Bank of America Corporation since late 2016 are callable, at our option, at least one year before each stated maturity date. The call features give us the flexibility to retire long-term notes before their final year outstanding, when they are no longer eligible to count toward TLAC requirements, and replace them with new TLAC-eligible debt, should we choose to do so.

During the nine months ended September 30, 2019, we had total long-term debt maturities and redemptions in the aggregate of $42.8 billion consisting of $16.6 billion for Bank of America Corporation, $19.8 billion for Bank of America, N.A. and $6.4 billion of other debt. Table 15 presents the carrying value of aggregate annual contractual maturities of long-term debt at September 30, 2019.



		Bank of America 24




Table 15	Long-term Debt by Maturity

(Dollars in millions)		Remainder of 2019		2020		2021		2022		2023		Thereafter		Total
Bank of America Corporation
Senior notes ⁽¹⁾		$	1,739	$	10,191	$	15,826	$	14,733	$	23,077	$	94,266	$	159,832
Senior structured notes		1,115		814		503		2,045		283		12,628		17,388
Subordinated notes		—		—		336		378		—		22,198		22,912
Junior subordinated notes		—		—		—		—		—		736		736
Total Bank of America Corporation		2,854		11,005		16,665		17,156		23,360		129,828		200,868
Bank of America, N.A.
Senior notes		—		3,000		3,448		—		511		20		6,979
Subordinated notes		—		—		—		—		—		1,812		1,812
Advances from Federal Home Loan Banks		3		2,510		2		3		1		99		2,618
Securitizations and other Bank VIEs ⁽²⁾		—		3,099		3,957		1,249		—		—		8,305
Other		235		40		78		—		134		99		586
Total Bank of America, N.A.		238		8,649		7,485		1,252		646		2,030		20,300
Other debt
Structured liabilities		1,531		4,637		1,662		905		1,337		11,909		21,981
Nonbank VIEs ⁽²⁾		—		—		—		—		1		255		256
Total other debt		1,531		4,637		1,662		905		1,338		12,164		22,237
Total long-term debt		$	4,623	$	24,291	$	25,812	$	19,313	$	25,344	$	144,022	$	243,405

⁽¹⁾

Total includes $106.0 billion of outstanding notes that are both TLAC eligible and callable at least one year before their stated maturities, including $1.0 billion that will be callable and become TLAC ineligible during the remainder of 2019, and $7.3 billion, $11.6 billion, $14.8 billion and $10.7 billion that will do so during each of 2020 through 2023, respectively, and $60.6 billion thereafter.


⁽²⁾	Represents the total long-term debt included in the liabilities of consolidated variable interest entities (VIEs) on the Consolidated Balance Sheet.

Table 16 presents our long-term debt by major currency at September 30, 2019 and December 31, 2018.




Table 16	Long-term Debt by Major Currency

(Dollars in millions)		September 30 2019		December 31 2018
U.S. dollar		$	193,583	$	180,724
Euro		32,866		34,328
British pound		5,345		5,450
Japanese yen		4,325		3,038
Canadian dollar		3,805		2,936
Australian dollar		1,878		1,722
Other		1,603		1,194
Total long-term debt		$	243,405	$	229,392

Total long-term debt increased $14.0 billion during the nine months ended September 30, 2019 primarily due to debt issuances and valuation adjustments, partially offset by maturities and redemptions. We may, from time to time, purchase outstanding debt instruments in various transactions, depending on market conditions, liquidity and other factors. Our other regulated entities may also make markets in our debt instruments to provide liquidity for investors. For more information on long-term debt funding, see Note 11 – Long-term Debt to the Consolidated Financial Statements of the Corporation’s 2018 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 43.

We may issue unsecured debt in the form of structured notes for client purposes, certain of which qualify as TLAC-eligible debt. During the nine months ended September 30, 2019, we issued $7.4 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.

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 17 presents the Corporation’s current long-term/short-term senior debt ratings and outlooks expressed by the rating agencies.

The ratings from Moody’s Investors Service and Fitch Ratings for the Corporation and its subsidiaries have not changed from those disclosed in the Corporation's Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

The ratings from Standard & Poor’s Global Ratings (S&P) for the Corporation and its subsidiaries did not change from those disclosed in the Corporation’s 2018 Annual Report on Form 10-K.

The long-term and short-term debt ratings of BofAS and BofASE, which were initially rated by S&P and Fitch during the first quarter of 2019, also remained unchanged for the third quarter of 2019.

For more information on additional collateral and termination payments that could be required in connection with certain over-the-counter derivative contracts and other trading agreements as a result of a credit rating downgrade, see Note 3 – Derivatives to the Consolidated Financial Statements herein and Item 1A. Risk Factors of the Corporation’s 2018 Annual Report on Form 10-K.



25 Bank of America

Table 17

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

P-1

Stable

A-

A-2

Stable

A+

Stable

Bank of America, N.A.

Aa2

P-1

Stable

A+

A-1

Stable

AA-

F1+

Stable

Bank of America Merrill Lynch International Designated Activity Company

A+

A-1

Stable

AA-

F1+

Stable

Merrill Lynch, Pierce, Fenner & Smith Incorporated

A+

A-1

Stable

AA-

F1+

Stable

BofA Securities, Inc.

A+

A-1

Stable

AA-

F1+

Stable

Merrill Lynch International

A+

A-1

Stable

A+

Stable

BofA Securities Europe SA

A+

A-1

Stable

A+

Stable

NR = not rated

Credit Risk Management

For information on our credit risk management activities, see Consumer Portfolio Credit Risk Management below, Commercial Portfolio Credit Risk Management on page 33, Non-U.S. Portfolio on page 38, Provision for Credit Losses on page 39, Allowance for Credit Losses on page 39, and Note 5 – Outstanding Loans and Leases and Note 6 – Allowance for Credit Losses to the Consolidated Financial Statements. For information on the new accounting standard on credit losses that is effective on January 1, 2020 and the potential impact on our allowance for credit losses, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.

Consumer Portfolio Credit Risk Management

Credit risk management for the consumer portfolio begins with initial underwriting and continues throughout a borrower’s credit cycle. Statistical techniques in conjunction with experiential judgment are used in all aspects of portfolio management including underwriting, product pricing, risk appetite, setting credit limits, and establishing operating processes and metrics to quantify and balance risks and returns. Statistical models are built using detailed behavioral information from external sources such as credit bureaus and/or internal historical experience 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 home prices continued during the nine months ended September 30, 2019 resulting in improved credit quality compared to the same period in 2018. Additionally, lower credit losses in the consumer real estate portfolio due primarily to non-core loan sales were partially offset by seasoning in the U.S. credit card portfolio compared to the same period in 2018.

Improved credit quality and continued loan balance runoff primarily in the non-core consumer real estate portfolio, partially offset by seasoning within the U.S. credit card portfolio, drove a $226 million decrease in the consumer allowance for loan and lease losses during the nine months ended September 30, 2019 to $4.6 billion. For additional information, see Allowance for Credit Losses on page 39.

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 and Note 5 – Outstanding Loans and Leases to the Consolidated Financial Statements of the Corporation’s 2018 Annual Report on Form 10-K.

Table 18 presents our outstanding consumer loans and leases, consumer nonperforming loans and accruing consumer loans past due 90 days or more. For more information regarding nonperforming loans and accruing consumer loans past 90 days or more, see the Consumer Portfolio Credit Risk Management Section in the MD&A of the Corporation’s 2018 Annual Report on Form 10-K.



		Bank of America 26




Table 18	Consumer Credit Quality

		Outstandings				Nonperforming						Accruing Past Due 90 Days or More
(Dollars in millions)		September 30 2019		December 31 2018		September 30 2019			December 31 2018			September 30 2019			December 31 2018
Residential mortgage⁽¹⁾		$	227,472	$	208,557	$	1,551		$	1,893		$	1,203		$	1,884
Home equity		41,574		48,286		585			1,893			—			—
U.S. credit card		94,946		98,338		n/a			n/a			960			994
Direct/Indirect consumer ⁽²⁾		90,836		91,166		53			56			29			38
Other consumer		208		202		—			—			—			—
Consumer loans excluding loans accounted for under the fair value option		$	455,036	$	446,549	$	2,189		$	3,842		$	2,192		$	2,916
Loans accounted for under the fair value option ⁽³⁾		640		682
Total consumer loans and leases		$	455,676	$	447,231
Percentage of outstanding consumer loans and leases ⁽⁴⁾		n/a		n/a		0.48		%	0.86		%	0.48		%	0.65		%
Percentage of outstanding consumer loans and leases, excluding fully-insured loan portfolios ⁽⁴⁾		n/a		n/a		0.50			0.90			0.23			0.24

⁽¹⁾

Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At September 30, 2019 and December 31, 2018, residential mortgage includes $858 million and $1.4 billion of loans on which interest had been curtailed by the FHA, and therefore were no longer accruing interest, although principal was still insured, and $345 million and $498 million of loans on which interest was still accruing.


⁽²⁾	Outstandings include auto and specialty lending loans and leases of $50.3 billion and $50.1 billion, unsecured consumer lending loans of $328 million and $383 million, U.S. securities-based lending loans of $36.5 billion and $37.0 billion, non-U.S. consumer loans of $3.0 billion and $2.9 billion and other consumer loans of $694 million and $746 million at September 30, 2019 and December 31, 2018.


⁽³⁾	Consumer loans accounted for under the fair value option include residential mortgage loans of $275 million and $336 million and home equity loans of $365 million and $346 million at September 30, 2019 and December 31, 2018. For more information on the fair value option, see Note 16 – Fair Value Option to the Consolidated Financial Statements.


⁽⁴⁾	Excludes consumer loans accounted for under the fair value option. At September 30, 2019 and December 31, 2018, $7 million and $12 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 19 presents net charge-offs and related ratios for consumer loans and leases.




Table 19	Consumer 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)		2019			2018			2019			2018		2019		2018		2019		2018
Residential mortgage		$	(38	)	$	12		$	(51	)	$	13	(0.07	)%	0.02	%	(0.03	)%	0.01	%
Home equity		(202		)	(20		)	(346		)	13		(1.85	)	(0.15	)	(1.02	)	0.03
U.S. credit card		717			698			2,224			2,138		3.01		2.92		3.15		3.03
Direct/Indirect consumer		76			42			170			142		0.33		0.18		0.25		0.20
Other consumer		69			44			151			130		n/m		n/m		n/m		n/m
Total		$	622		$	776		$	2,148		$	2,436	0.55		0.69		0.64		0.73


⁽¹⁾	Net charge-off ratios are calculated as annualized net charge-offs divided by average outstanding loans and leases excluding loans accounted for under the fair value option.

n/m = not meaningful

Table 20 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, loan-to-value (LTV), Fair Isaac Corporation (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. All

other loans are generally characterized as non-core loans and represent runoff portfolios. Core loans as reported in Table 20 include loans held in the Consumer Banking and GWIM segments, as well as loans held for ALM activities in All Other.

As shown in Table 20, outstanding core consumer real estate loans increased $18.6 billion during the nine months ended September 30, 2019 driven by an increase of $22.5 billion in residential mortgage, partially offset by a $3.9 billion decrease in home equity.

During the three and nine months ended September 30, 2019, we sold $2.3 billion and $4.2 billion of consumer real estate loans, primarily non-core.



27 Bank of America




Table 20	Consumer Real Estate Portfolio ⁽¹⁾

		Outstandings				Nonperforming				Net Charge-offs
		September 30 2019		December 31 2018		September 30 2019		December 31 2018		Three Months Ended September 30						Nine Months Ended September 30
(Dollars in millions)										2019			2018			2019			2018
Core portfolio
Residential mortgage		$	216,223	$	193,695	$	930	$	1,010	$	(6	)	$	—		$	(2	)	$	13
Home equity		36,116		40,010		380		955		8			15			39			52
Total core portfolio		252,339		233,705		1,310		1,965		2			15			37			65
Non-core portfolio
Residential mortgage		11,249		14,862		621		883		(32		)	12			(49		)	—
Home equity		5,458		8,276		205		938		(210		)	(35		)	(385		)	(39		)
Total non-core portfolio		16,707		23,138		826		1,821		(242		)	(23		)	(434		)	(39		)
Consumer real estate portfolio
Residential mortgage		227,472		208,557		1,551		1,893		(38		)	12			(51		)	13
Home equity		41,574		48,286		585		1,893		(202		)	(20		)	(346		)	13
Total consumer real estate portfolio		$	269,046	$	256,843	$	2,136	$	3,786	$	(240	)	$	(8	)	$	(397	)	$	26

						Allowance for Loan and Lease Losses				Provision for Loan and Lease Losses
						September 30 2019		December 31 2018		Three Months Ended September 30						Nine Months Ended September 30
										2019			2018			2019			2018
Core portfolio
Residential mortgage						$	219	$	214	$	(4	)	$	(2	)	$	3		$	7
Home equity						135		228		(19		)	(27		)	(52		)	(51		)
Total core portfolio						354		442		(23		)	(29		)	(49		)	(44		)
Non-core portfolio