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

Quarterly report pursuant to Section 13 or 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

9 Months Ended

Sep. 30, 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 15 – Fair Value Option.




	Amount		Rate		Amount		Rate		Amount		Rate		Amount		Rate
	Three Months Ended September 30								Nine Months Ended September 30
(Dollars in millions)	2018				2017				2018				2017
Federal funds sold and securities borrowed or purchased under agreements to resell
Average during period	$	241,426	1.31	%	$	223,585	0.86	%	$	247,183	1.15	%	$	222,255	0.77	%
Maximum month-end balance during period	267,989		n/a		224,815		n/a		267,989		n/a		237,064		n/a
Federal funds purchased and securities loaned or sold under agreements to repurchase
Average during period	$	191,693	1.88	%	$	197,794	1.37	%	$	193,854	1.71	%	$	199,433	1.18	%
Maximum month-end balance during period	189,206		n/a		197,604		n/a		199,419		n/a		218,017		n/a
Short-term borrowings
Average during period	33,410		2.89		32,153		2.54		40,048		2.49		38,329		2.43
Maximum month-end balance during period	36,043		n/a		32,679		n/a		52,480		n/a		46,202		n/a

n/a = not applicable

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 September 30, 2018 and December 31, 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)	September 30, 2018
Securities borrowed or purchased under agreements to resell ⁽³⁾	$	373,800	$	(125,563	)	$	248,237	$	(218,291	)	$	29,946
Securities loaned or sold under agreements to repurchase	$	297,163	$	(125,563	)	$	171,600	$	(151,842	)	$	19,758
Other ⁽⁴⁾	24,446		—			24,446		(24,446		)	—
Total	$	321,609	$	(125,563	)	$	196,046	$	(176,288	)	$	19,758

	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 $11.1 billion and $10.2 billion reported in loans and leases on the Consolidated Balance Sheet at September 30, 2018 and December 31, 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

	September 30, 2018
(Dollars in millions)	Overnight and Continuous		30 Days or Less		After 30 Days Through 90 Days		Greater than 90 Days ⁽¹⁾		Total
Securities sold under agreements to repurchase	$	128,222	$	68,852	$	22,920	$	58,089	$	278,083
Securities loaned	13,364		738		896		4,082		19,080
Other	24,446		—		—		—		24,446
Total	$	166,032	$	69,590	$	23,816	$	62,171	$	321,609

	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

	September 30, 2018
(Dollars in millions)	Securities Sold Under Agreements to Repurchase		Securities Loaned		Other		Total
U.S. government and agency securities	$	158,567	$	10	$	2	$	158,579
Corporate securities, trading loans and other	13,448		2,656		363		16,467
Equity securities	17,268		10,953		24,028		52,249
Non-U.S. sovereign debt	84,435		5,461		53		89,949
Mortgage trading loans and ABS	4,365		—		—		4,365
Total	$	278,083	$	19,080	$	24,446	$	321,609

	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 September 30, 2018 and December 31, 2017, the Corporation held restricted cash included within cash and cash equivalents on the Consolidated Balance Sheet of $18.3 billion and $18.8 billion, predominantly related to cash segregated in compliance with securities regulations and cash held on deposit with the Federal Reserve and non-U.S. central banks to meet reserve requirements.