Bank of America Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fair Value of Financial Instruments

Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2017

Financial instruments are classified into three levels based on the established fair value hierarchy. For additional information, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K. The following disclosures include financial instruments that are not carried at fair value or only a portion of the ending balance at September 30, 2017 and December 31, 2016 is carried at fair value on the Consolidated Balance Sheet. For more information on these financial instruments and their valuation methodologies, see Note 20 – Fair Value Measurements and Note 22 – Fair Value of Financial Instruments to the Consolidated Financial Statements of the Corporation's 2016 Annual Report on Form 10-K.

Fair Value of Financial Instruments

The carrying values and fair values by fair value hierarchy of certain financial instruments where only a portion of the ending balance was carried at fair value at September 30, 2017 and December 31, 2016 are presented in the following table.




Fair Value of Financial Instruments

	September 30, 2017
			Fair Value
(Dollars in millions)	Carrying Value		Level 2		Level 3		Total
Financial assets
Loans	$	895,155	$	69,711	$	839,931	$	909,642
Loans held-for-sale	13,243		12,261		1,012		13,273
Financial liabilities
Deposits	1,284,417		1,284,397		—		1,284,397
Long-term debt	228,666		234,878		1,890		236,768

	December 31, 2016
Financial assets
Loans	$	873,209	$	71,793	$	815,329	$	887,122
Loans held-for-sale	9,066		8,082		984		9,066
Financial liabilities
Deposits	1,260,934		1,261,086		—		1,261,086
Long-term debt	216,823		220,071		1,514		221,585

Commercial Unfunded Lending Commitments

Fair values were generally determined using a discounted cash flow valuation approach which is applied using market-based credit default swaps or internally developed benchmark credit curves. The Corporation accounts for certain loan commitments under the fair value option. The carrying values and fair values of the Corporation’s commercial unfunded lending commitments were $863 million and $3.8 billion at September 30, 2017, and $937 million and $4.9 billion at December 31, 2016. Commercial unfunded lending commitments are primarily classified as Level 3. The carrying value of these commitments is classified in accrued expenses and other liabilities.

The Corporation does not estimate the fair values of consumer unfunded lending commitments because, in many instances, the Corporation can reduce or cancel these commitments by providing notice to the borrower. For more information on commitments, see Note 10 – Commitments and Contingencies.