Bank of America Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Federal Funds Sold or Purchased, Securities Financing Agreements, Short-term Borrowings and Restricted Cash

Federal Funds Sold or Purchased, Securities Financing Agreements, Short-term Borrowings and Restricted Cash

12 Months Ended

Dec. 31, 2018

Federal Funds Sold, Securities Borrowed or Purchased Under Agreements to Resell and Short-term Borrowings [Abstract]

Federal Funds Sold or Purchased, Securities Financing Agreements, Short-term Borrowings and Restricted Cash

The table below presents federal funds sold or purchased, securities financing agreements (which include securities borrowed or purchased under agreements to resell and securities loaned or sold under agreements to repurchase) and short-term borrowings. The Corporation elects to account for certain securities financing agreements and short-term borrowings under the fair value option. For more information on the fair value option, see Note 21 – Fair Value Option.




	Amount		Rate		Amount		Rate
(Dollars in millions)	2018				2017
Federal funds sold and securities borrowed or purchased under agreements to resell
Average during year	$	251,328	1.26	%	$	222,818	0.81	%
Maximum month-end balance during year	279,350		n/a		237,064		n/a
Federal funds purchased and securities loaned or sold under agreements to repurchase
Average during year	$	193,681	1.80	%	$	199,501	1.30	%
Maximum month-end balance during year	201,089		n/a		218,017		n/a
Short-term borrowings
Average during year	36,021		2.69		37,337		2.48
Maximum month-end balance during year	52,480		n/a		46,202		n/a

n/a = not applicable

Bank of America, N.A. maintains a global program to offer up to a maximum of $75 billion outstanding at any one time, of bank notes with fixed or floating rates and maturities of at least seven days from the date of issue. Short-term bank notes outstanding under this program totaled $12.1 billion and $14.2 billion at December 31, 2018 and 2017. These short-term bank notes, along with FHLB advances, U.S. Treasury tax and loan notes, and term federal funds purchased, are included in short-term borrowings on the Consolidated Balance Sheet.

Offsetting of Securities Financing Agreements

The Corporation enters into securities financing agreements to accommodate customers (also referred to as “matched-book transactions”), obtain securities to cover short positions, and to finance inventory positions. Substantially all of the Corporation’s securities financing activities are transacted under legally enforceable master repurchase agreements or legally enforceable master securities lending agreements that give the Corporation,

in the event of default by the counterparty, the right to liquidate securities held and to offset receivables and payables with the same counterparty. The Corporation offsets securities financing transactions with the same counterparty on the Consolidated Balance Sheet where it has such a legally enforceable master netting agreement and the transactions have the same maturity date.

The Securities Financing Agreements table presents securities financing agreements included on the Consolidated Balance Sheet in federal funds sold and securities borrowed or purchased under agreements to resell, and in federal funds purchased and securities loaned or sold under agreements to repurchase at December 31, 2018 and 2017. Balances are presented on a gross basis, prior to the application of counterparty netting. Gross assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of legally enforceable master netting agreements. For more information on the offsetting of derivatives, see Note 3 – Derivatives.




Securities Financing Agreements

	Gross Assets/Liabilities ⁽¹⁾		Amounts Offset			Net Balance Sheet Amount		Financial Instruments ⁽²⁾			Net Assets/Liabilities
(Dollars in millions)	December 31, 2018
Securities borrowed or purchased under agreements to resell ⁽³⁾	$	366,274	$	(106,865	)	$	259,409	$	(240,790	)	$	18,619
Securities loaned or sold under agreements to repurchase	$	293,853	$	(106,865	)	$	186,988	$	(176,740	)	$	10,248
Other ⁽⁴⁾	19,906		—			19,906		(19,906		)	—
Total	$	313,759	$	(106,865	)	$	206,894	$	(196,646	)	$	10,248

	December 31, 2017
Securities borrowed or purchased under agreements to resell ⁽³⁾	$	348,472	$	(135,725	)	$	212,747	$	(165,720	)	$	47,027
Securities loaned or sold under agreements to repurchase	$	312,582	$	(135,725	)	$	176,857	$	(146,205	)	$	30,652
Other ⁽⁴⁾	22,711		—			22,711		(22,711		)	—
Total	$	335,293	$	(135,725	)	$	199,568	$	(168,916	)	$	30,652


⁽¹⁾	Includes activity where uncertainty exists as to the enforceability of certain master netting agreements under bankruptcy laws in some countries or industries.

⁽²⁾

Includes securities collateral received or pledged under repurchase or securities lending agreements where there is a legally enforceable master netting agreement. These amounts are not offset on the Consolidated Balance Sheet, but are shown as a reduction to derive a net asset or liability. Securities collateral received or pledged where the legal enforceability of the master netting agreements is uncertain is excluded from the table.


⁽³⁾	Excludes repurchase activity of $11.5 billion and $10.2 billion reported in loans and leases on the Consolidated Balance Sheet at December 31, 2018 and 2017.

⁽⁴⁾

Balance is reported in accrued expenses and other liabilities on the Consolidated Balance Sheet and relates to transactions where the Corporation acts as the lender in a securities lending agreement and receives securities that can be pledged as collateral or sold. In these transactions, the Corporation recognizes an asset at fair value, representing the securities received, and a liability, representing the obligation to return those securities.

Repurchase Agreements and Securities Loaned Transactions Accounted for as Secured Borrowings

The following tables present securities sold under agreements to repurchase and securities loaned by remaining contractual term to maturity and class of collateral pledged. Included in “Other” are transactions where the Corporation acts as the lender

in a securities lending agreement and receives securities that can be pledged as collateral or sold. Certain agreements contain a right to substitute collateral and/or terminate the agreement prior to maturity at the option of the Corporation or the counterparty. Such agreements are included in the table below based on the remaining contractual term to maturity.




Remaining Contractual Maturity

	Overnight and Continuous		30 Days or Less		After 30 Days Through 90 Days		Greater than 90 Days ⁽¹⁾		Total
(Dollars in millions)	December 31, 2018
Securities sold under agreements to repurchase	$	139,017	$	81,917	$	34,204	$	21,476	$	276,614
Securities loaned	7,753		4,197		1,783		3,506		17,239
Other	19,906		—		—		—		19,906
Total	$	166,676	$	86,114	$	35,987	$	24,982	$	313,759

	December 31, 2017
Securities sold under agreements to repurchase	$	125,956	$	79,913	$	46,091	$	38,935	$	290,895
Securities loaned	9,853		5,658		2,043		4,133		21,687
Other	22,711		—		—		—		22,711
Total	$	158,520	$	85,571	$	48,134	$	43,068	$	335,293


⁽¹⁾	No agreements have maturities greater than three years.




Class of Collateral Pledged

	Securities Sold Under Agreements to Repurchase		Securities Loaned		Other		Total
(Dollars in millions)	December 31, 2018
U.S. government and agency securities	$	164,664	$	—	$	—	$	164,664
Corporate securities, trading loans and other	11,400		2,163		287		13,850
Equity securities	14,090		10,869		19,572		44,531
Non-U.S. sovereign debt	81,329		4,207		47		85,583
Mortgage trading loans and ABS	5,131		—		—		5,131
Total	$	276,614	$	17,239	$	19,906	$	313,759

	December 31, 2017
U.S. government and agency securities	$	158,299	$	—	$	409	$	158,708
Corporate securities, trading loans and other	12,787		2,669		624		16,080
Equity securities	23,975		13,523		21,628		59,126
Non-U.S. sovereign debt	90,857		5,495		50		96,402
Mortgage trading loans and ABS	4,977		—		—		4,977
Total	$	290,895	$	21,687	$	22,711	$	335,293

Under repurchase agreements, the Corporation is required to post collateral with a market value equal to or in excess of the principal amount borrowed. For securities loaned transactions, the Corporation receives collateral in the form of cash, letters of credit or other securities. To determine whether the market value of the underlying collateral remains sufficient, collateral is generally valued daily, and the Corporation may be required to deposit additional collateral or may receive or return collateral pledged when appropriate. Repurchase agreements and securities loaned transactions are generally either overnight, continuous (i.e., no stated term) or short-term. The Corporation manages liquidity risks related to these agreements by sourcing funding from a diverse

group of counterparties, providing a range of securities collateral and pursuing longer durations, when appropriate.

Restricted Cash

At December 31, 2018 and 2017, the Corporation held restricted cash included within cash and cash equivalents on the Consolidated Balance Sheet of $22.6 billion and $18.8 billion, predominantly related to cash held on deposit with the Federal Reserve Bank and non-U.S. central banks to meet reserve requirements and cash segregated in compliance with securities regulations.