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 June 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 PrW	New York Stock Exchange
of 6.625% Non-Cumulative Preferred Stock, Series W
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 1/1,000th interest in a share of	BAC PrM	New York Stock Exchange
5.375% Non-Cumulative Preferred Stock, Series KK

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 July 26, 2019, there were 9,308,300,536 shares of Bank of America Corporation Common Stock outstanding.



		Bank of America 2

Bank of America Corporation and Subsidiaries

June 30, 2019

Form 10-Q

INDEX

Part I. Financial Information



Item 1. Financial Statements		Page
Consolidated Statement of Income		49
Consolidated Statement of Comprehensive Income		49
Consolidated Balance Sheet		50
Consolidated Statement of Changes in Shareholders’ Equity		51
Consolidated Statement of Cash Flows		52
Notes to Consolidated Financial Statements		53
Note 1 – Summary of Significant Accounting Principles		53
Note 2 – Net Interest Income and Noninterest Income		54
Note 3 – Derivatives		55
Note 4 – Securities		62
Note 5 – Outstanding Loans and Leases		65
Note 6 – Allowance for Credit Losses		73
Note 7 – Securitizations and Other Variable Interest Entities		74
Note 8 – Goodwill and Intangible Assets		78
Note 9 – Leases		78
Note 10 – Federal Funds Sold or Purchased, Securities Financing Agreements, Short-term Borrowings and Restricted Cash		79
Note 11 – Commitments and Contingencies		81
Note 12 – Shareholders’ Equity		83
Note 13 – Earnings Per Common Share		84
Note 14 – Accumulated Other Comprehensive Income (Loss)		85
Note 15 – Fair Value Measurements		85
Note 16 – Fair Value Option		93
Note 17 – Fair Value of Financial Instruments		93
Note 18 – Business Segment Information		94
Glossary		98
Acronyms		99



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		11
Consumer Banking		11
Global Wealth & Investment Management		14
Global Banking		17
Global Markets		19
All Other		21
Off-Balance Sheet Arrangements and Contractual Obligations		21
Managing Risk		22
Capital Management		22
Liquidity Risk		25
Credit Risk Management		28
Consumer Portfolio Credit Risk Management		28
Commercial Portfolio Credit Risk Management		35
Non-U.S. Portfolio		40
Provision for Credit Losses		41
Allowance for Credit Losses		41
Market Risk Management		43
Trading Risk Management		43
Interest Rate Risk Management for the Banking Book		45
Mortgage Banking Risk Management		47
Complex Accounting Estimates		48
Non-GAAP Reconciliations		48

Item 3. Quantitative and Qualitative Disclosures about Market Risk		48
Item 4. Controls and Procedures		48



1 Bank of America

Part II. Other Information



Item 1. Legal Proceedings		100
Item 1A. Risk Factors		100
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		100
Item 5. Other Information		100
Item 6. Exhibits		101
Signature		101

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, 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, including the Corporation’s merchant services joint venture; 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 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 a 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 June 30, 2019, the Corporation had $2.4 trillion in assets and a headcount of approximately 209,000 employees.

As of June 30, 2019, we served clients through operations across the U.S., its territories and approximately 35 countries. Our retail banking footprint covers approximately 86 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 more than 37 million active users, including approximately 28 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

Following completion of the Board of Governors of the Federal Reserve System’s (Federal Reserve) 2019 Comprehensive Capital Analysis and Review (CCAR), the Federal Reserve did not object to the Corporation’s capital plan, which is estimated to return $37 billion to common shareholders over the next four quarters through quarterly common stock dividends and common stock repurchases.

As part of the capital plan, on July 25, 2019, the Corporation’s Board of Directors (the Board) declared a quarterly common stock dividend of $0.18 per share, an increase of 20 percent, payable on September 27, 2019 to shareholders of record as of September 6, 2019.

Also, on June 27, 2019, 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 in repurchases to offset shares awarded under equity-based compensation plans during the same period. For additional information, see the Corporation’s Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC) on June 27, 2019.

Merchant Services Joint Venture

As previously disclosed in the Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, a significant portion of the Corporation’s merchant processing activity is

performed by a joint venture, formed in 2009, in which the Corporation owns a 49 percent ownership interest. In June 2019, the joint venture partners agreed to extend the Corporation’s right to terminate the joint venture at the end of its current term, which is June 2020, from one year to four months prior to that date. On July 29, 2019, the Corporation gave notice to the joint venture partner of the termination of the joint venture upon the conclusion of its current term, after which the Corporation expects to pursue its 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, the Corporation expects to incur a non-cash, pretax impairment charge of approximately $1.7 billion to $2.1 billion in the third quarter of 2019, which is estimated to reduce the Common equity tier 1 (CET1) ratio by 9 to 11 basis points (bps). The impairment charge will have no effect on the Corporation’s capital plan as described in Recent Developments – Capital Management above. For additional information, see Note 11 – Commitments and Contingencies to the Consolidated Financial Statements.

U.K. Exit from the EU

In April 2019, the deadline for the U.K.’s withdrawal from the EU was extended to October 31, 2019; however, the U.K.’s withdrawal could occur sooner if a withdrawal agreement is reached prior to the deadline or could be extended beyond that date. Negotiations between the U.K. and the EU regarding the terms and conditions of the withdrawal are ongoing.

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

Following the announcement by the U.K.’s Financial Conduct Authority in July 2017 that it will no longer persuade or require banks to submit rates for the London InterBank Offered Rate (LIBOR) after 2021, central banks and regulators around the world have commissioned working groups to find suitable replacements for Interbank Offered Rates (IBOR) and other benchmark rates and to implement financial benchmark reforms more generally. These actions have resulted in uncertainty regarding the use of alternative reference rates (ARRs) and could cause disruptions in a variety of markets, as well as adversely impact our business, operations and financial results.

To facilitate an orderly transition from IBORs and other benchmark rates to ARRs, the Corporation has established an enterprise-wide initiative led by senior management. The objective of this initiative is to identify, assess and monitor risks associated with the expected discontinuation or unavailability of benchmarks, including LIBOR, achieve operational readiness and engage impacted clients in connection with the transition to ARRs. The Corporation also continues to actively work with global regulators,



3 Bank of America

industry working groups and trade associations to develop strategies for an effective transition to ARRs. As a part of its initiative, the Corporation is modifying systems, procedures and internal infrastructure to transition to ARRs. For example, the Corporation launched capabilities to support issuance and trading in products indexed to the new Secured Overnight Financing Rate, which is the alternative benchmark rate to U.S. dollar LIBOR recommended by the Alternative Reference Rates Committee, a group of private-market participants convened by the Federal

Reserve Board and the Federal Reserve Bank of New York, and a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities. For more information on the expected replacement of LIBOR and other benchmark rates, see 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.

Financial Highlights




Table 1	Summary Income Statement and Selected Financial Data

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions, except per share information)		2019			2018			2019			2018
Income statement
Net interest income		$	12,189		$	11,828		$	24,564		$	23,597
Noninterest income		10,895			10,721			21,524			22,022
Total revenue, net of interest expense		23,084			22,549			46,088			45,619
Provision for credit losses		857			827			1,870			1,661
Noninterest expense		13,268			13,224			26,492			27,066
Income before income taxes		8,959			8,498			17,726			16,892
Income tax expense		1,611			1,714			3,067			3,190
Net income		7,348			6,784			14,659			13,702
Preferred stock dividends		239			318			681			746
Net income applicable to common shareholders		$	7,109		$	6,466		$	13,978		$	12,956

Per common share information
Earnings		$	0.75		$	0.64		$	1.45		$	1.26
Diluted earnings		0.74			0.63			1.45			1.25
Dividends paid		0.15			0.12			0.30			0.24
Performance ratios
Return on average assets		1.23		%	1.17		%	1.24		%	1.19		%
Return on average common shareholders’ equity		11.62			10.75			11.52			10.80
Return on average tangible common shareholders’ equity ⁽¹⁾		16.24			15.15			16.13			15.21
Efficiency ratio		57.48			58.65			57.48			59.33

								June 30 2019			December 31 2018
Balance sheet
Total loans and leases								$	963,800		$	946,895
Total assets								2,395,892			2,354,507
Total deposits								1,375,093			1,381,476
Total liabilities								2,124,484			2,089,182
Total common shareholders’ equity								246,719			242,999
Total shareholders’ equity								271,408			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 48.

Net income was $7.3 billion and $14.7 billion, or $0.74 and $1.45 per diluted share, for the three and six months ended June 30, 2019 compared to $6.8 billion and $13.7 billion, or $0.63 and $1.25 per diluted share, for the same periods in 2018. The improvement in net income for the three months ended June 30, 2019 was driven by an increase in net interest income and noninterest income partially offset by an increase in provision for credit losses and higher noninterest expense. The improvement in net income for the six months ended June 30, 2019 was due to higher net interest income as well as lower noninterest expense, partially offset by higher provision for credit losses and lower noninterest income.

Total assets increased $41.4 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 commercial loan and

residential mortgage growth, and an increase in other assets partially offset by lower federal funds sold and securities borrowed or purchased under agreements to resell and lower customer and other receivables.

Total liabilities increased $35.3 billion from December 31, 2018 to $2.1 trillion driven by higher trading account liabilities in FICC to facilitate expected client demand, an increase in long-term debt due to valuation adjustments, an increase in federal funds purchased and securities loaned or sold under agreements to repurchase driven by funding needs in the Equities businesses within Global Markets and an increase in other short-term borrowings as a result of higher Federal Home Loan Bank (FHLB) advances. Shareholders’ equity increased $6.1 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.



		Bank of America 4

Net Interest Income

Net interest income increased $361 million to $12.2 billion, and $967 million to $24.6 billion for the three and six months ended June 30, 2019 compared to the same periods in 2018. Net interest yield on a fully taxable-equivalent (FTE) basis increased 3 bps to 2.44 percent, and 6 bps to 2.48 percent for the same periods. The increase for the three-month period was primarily driven by higher short-term interest rates, and for both periods, loan and deposit growth. Both long- and short-term interest rates have declined over the first half of 2019. We still expect net interest income for 2019 to grow as compared to 2018. If interest rates

and other economic conditions remain stable with those of July 17, 2019, when we announced our second quarter 2019 results, net interest income is expected to grow approximately two percent. If, instead, short-term interest rates were to be lower as projected by the forward interest rate curve as a result of two implied Fed Funds rate cuts of 25 bps each this year, net interest income would be expected to grow approximately one percent. 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 45.

Noninterest Income




Table 2	Noninterest Income

		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)		2019		2018		2019		2018
Fees and commissions:
Card income		$	1,446	$	1,483	$	2,821	$	2,885
Service charges		1,903		1,954		3,742		3,875
Investment and brokerage services		3,470		3,458		6,830		7,122
Investment banking fees		1,371		1,422		2,635		2,775
Total fees and commissions		8,190		8,317		16,028		16,657
Trading account income		2,345		2,151		4,683		4,704
Other income		360		253		813		661
Total noninterest income		$	10,895	$	10,721	$	21,524	$	22,022

Noninterest income increased $174 million to $10.9 billion, and decreased $498 million to $21.5 billion for the three and six months ended June 30, 2019 compared to the same periods in 2018. The following highlights the significant changes.


●	Service charges decreased $51 million and $133 million primarily driven by lower fees due to policy changes in Consumer, lower treasury fees in Global Banking in both periods, and lower ATM volume in the six-month period.

•

Investment and brokerage services income increased modestly for the three-month period and decreased $292 million for the six-month period. The decline was primarily due to lower average market valuations compared to the same period in 2018 and declines in transactional revenue and assets under management (AUM) pricing, partially offset by the positive impact of AUM flows. The decline in transactional revenue for the six-month period was driven by lower market volatility resulting in lower client activity.


●	Investment banking fees decreased $51 million for the three-month period due to declines in debt underwriting and advisory fees, partially offset by higher equity underwriting fees. The $140 million decrease for the six-month period was due to declines in debt underwriting fees, partially offset by increases in advisory fees and equity underwriting fees.


●	Trading account income increased $194 million for the three-month period primarily driven by lower interest rates, partially offset by weakness in foreign exchange and equity derivatives trading.


●	Other income increased $107 million and $152 million primarily due to an increase in both periods in equity investment income and gains on sales of debt securities. Also, the second quarter of the prior year 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 $30 million to $857 million, and $209 million to $1.9 billion for the three and six months ended June 30, 2019 compared to the same periods in 2018. The increases were primarily driven by energy reserve releases in the prior-year periods and portfolio seasoning in the U.S. credit card portfolio, partially offset by the impact of recoveries recorded in connection with sales of previously charged-off non-core home equity loans. The increase in the six-month period also included a single-name utility client charge-off. For more information on the provision for credit losses, see Provision for Credit Losses on page 41.

Noninterest Expense




Table 3	Noninterest Expense

		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)		2019		2018		2019		2018
Compensation and benefits		$	7,972	$	7,944	$	16,221	$	16,424
Occupancy and equipment		1,640		1,591		3,245		3,198
Information processing and communications		1,157		1,121		2,321		2,286
Product delivery and transaction related		709		706		1,371		1,462
Marketing		528		395		970		740
Professional fees		409		399		769		780
Other general operating		853		1,068		1,595		2,176
Total noninterest expense		$	13,268	$	13,224	$	26,492	$	27,066



5 Bank of America

Noninterest expense increased $44 million to $13.3 billion, and decreased $574 million to $26.5 billion for the three and six months ended June 30, 2019 compared to the same periods in 2018. The decrease in the six-month period was primarily due to efficiency savings, lower Federal Deposit Insurance Corporation (FDIC) expense and lower amortization of intangibles expense, partially offset by increased costs associated with investments in the businesses, including brand-related marketing costs.

Income Tax Expense




Table 4	Income Tax Expense

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)		2019			2018			2019			2018
Income before income taxes		$	8,959		$	8,498		$	17,726		$	16,892
Income tax expense		1,611			1,714			3,067			3,190
Effective tax rate		18.0		%	20.2		%	17.3		%	18.9		%

The effective tax rates for the three and six months ended June 30, 2019 and 2018 reflect the impact of our recurring tax preference benefits and certain discrete tax items, primarily tax benefits related to stock-based compensation in the six-month effective rates.

We expect the effective tax rate for the rest 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 an adjusted shareholders’ equity or common shareholders’ equity amount which has been reduced by goodwill and intangible assets (excluding mortgage servicing rights (MSRs)), net of related deferred tax liabilities. These measures are used to evaluate our use of equity. In addition, profitability, relationship and investment models use both return on average tangible common shareholders’ equity and return on average tangible shareholders’ equity as key measures to support our overall growth goals. These ratios are as follows:


●	Return on average tangible common shareholders’ equity measures our 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 assets less goodwill and intangible assets (excluding MSRs), net of related deferred tax liabilities.


●	Return on average tangible shareholders’ equity measures our net income applicable to common shareholders as a percentage of adjusted average total shareholders’ equity. The tangible equity ratio represents adjusted ending shareholders’ equity divided by total assets less goodwill and intangible assets (excluding MSRs), net of related deferred tax liabilities.


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

We believe that the use of ratios that utilize tangible equity provides additional useful information because they present measures of those assets that can generate income. Tangible book value per 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 and 6.

For more information on the reconciliation of these non-GAAP financial measures to the corresponding GAAP financial measures, see Non-GAAP Reconciliations on page 48.



		Bank of America 6




Table 5	Selected Quarterly Financial Data

		2019 Quarter						2018 Quarters
(In millions, except per share information)		Second			First			Fourth			Third			Second
Income statement
Net interest income		$	12,189		$	12,375		$	12,504		$	12,061		$	11,828
Noninterest income		10,895			10,629			10,173			10,663			10,721
Total revenue, net of interest expense		23,084			23,004			22,677			22,724			22,549
Provision for credit losses		857			1,013			905			716			827
Noninterest expense		13,268			13,224			13,074			13,014			13,224
Income before income taxes		8,959			8,767			8,698			8,994			8,498
Income tax expense		1,611			1,456			1,420			1,827			1,714
Net income		7,348			7,311			7,278			7,167			6,784
Net income applicable to common shareholders		7,109			6,869			7,039			6,701			6,466
Average common shares issued and outstanding		9,523.2			9,725.9			9,855.8			10,031.6			10,181.7
Average diluted common shares issued and outstanding		9,559.6			9,787.3			9,996.0			10,170.8			10,309.4
Performance ratios
Return on average assets		1.23		%	1.26		%	1.24		%	1.23		%	1.17		%
Four-quarter trailing return on average assets⁽¹⁾		1.24			1.22			1.21			1.00			0.93
Return on average common shareholders’ equity		11.62			11.42			11.57			10.99			10.75
Return on average tangible common shareholders’ equity⁽²⁾		16.24			16.01			16.29			15.48			15.15
Return on average shareholders’ equity		11.00			11.14			10.95			10.74			10.26
Return on average tangible shareholders’ equity⁽²⁾		14.88			15.10			14.90			14.61			13.95
Total ending equity to total ending assets		11.33			11.23			11.27			11.21			11.53
Total average equity to total average assets		11.17			11.28			11.30			11.42			11.42
Dividend payout		19.95			21.20			20.90			22.35			18.83
Per common share data
Earnings		$	0.75		$	0.71		$	0.71		$	0.67		$	0.64
Diluted earnings		0.74			0.70			0.70			0.66			0.63
Dividends paid		0.15			0.15			0.15			0.15			0.12
Book value		26.41			25.57			25.13			24.33			24.07
Tangible book value ⁽²⁾		18.92			18.26			17.91			17.23			17.07
Market capitalization		$	270,935		$	263,992		$	238,251		$	290,424		$	282,259
Average balance sheet
Total loans and leases		$	950,525		$	944,020		$	934,721		$	930,736		$	934,818
Total assets		2,399,051			2,360,992			2,334,586			2,317,829			2,322,678
Total deposits		1,375,450			1,359,864			1,344,951			1,316,345			1,300,659
Long-term debt		201,007			196,726			201,056			203,239			199,448
Common shareholders’ equity		245,438			243,891			241,372			241,812			241,313
Total shareholders’ equity		267,975			266,217			263,698			264,653			265,181
Asset quality
Allowance for credit losses ⁽³⁾		$	10,333		$	10,379		$	10,398		$	10,526		$	10,837
Nonperforming loans, leases and foreclosed properties ⁽⁴⁾		4,452			5,145			5,244			5,449			6,181
Allowance for loan and lease losses as a percentage of total loans and leases outstanding ⁽⁴⁾		1.00		%	1.02		%	1.02		%	1.05		%	1.08		%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases ⁽⁴⁾		228			197			194			189			170
Net charge-offs		$	887		$	991		$	924		$	932		$	996
Annualized net charge-offs as a percentage of average loans and leases outstanding ⁽⁴⁾		0.38		%	0.43		%	0.39		%	0.40		%	0.43		%
Capital ratios at period end ⁽⁵⁾
Common equity tier 1 capital		11.7		%	11.6		%	11.6		%	11.4		%	11.4		%
Tier 1 capital		13.3			13.1			13.2			12.9			13.0
Total capital		15.4			15.2			15.1			14.7			14.8
Tier 1 leverage		8.4			8.4			8.4			8.3			8.4
Supplementary leverage ratio		6.8			6.8			6.8			6.7			6.7
Tangible equity⁽²⁾		8.7			8.5			8.6			8.5			8.7
Tangible common equity ⁽²⁾		7.6			7.6			7.6			7.5			7.7
Total loss-absorbing capacity and long-term debt metrics ⁽⁶⁾
Total loss-absorbing capacity to risk-weighted assets		25.5		%	24.8		%
Total loss-absorbing capacity to supplementary leverage exposure		13.0			12.8
Eligible long-term debt to risk-weighted assets		11.8			11.4
Eligible long-term debt to supplementary leverage exposure		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 48.


⁽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 34 and corresponding Table 28 and Commercial Portfolio Credit Risk Management – Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page 38 and corresponding Table 35.


⁽⁵⁾	For additional information, including which approach is used to assess capital adequacy, see Capital Management on page 22.


⁽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 22.



7 Bank of America




Table 6	Selected Year-to-Date Financial Data
		Six Months Ended June 30
(In millions, except per share information)		2019			2018
Income statement
Net interest income		$	24,564		$	23,597
Noninterest income		21,524			22,022
Total revenue, net of interest expense		46,088			45,619
Provision for credit losses		1,870			1,661
Noninterest expense		26,492			27,066
Income before income taxes		17,726			16,892
Income tax expense		3,067			3,190
Net income		14,659			13,702
Net income applicable to common shareholders		13,978			12,956
Average common shares issued and outstanding		9,624.0			10,251.7
Average diluted common shares issued and outstanding		9,672.4			10,389.9
Performance ratios
Return on average assets		1.24		%	1.19		%
Return on average common shareholders’ equity		11.52			10.80
Return on average tangible common shareholders’ equity ⁽¹⁾		16.13			15.21
Return on average shareholder’s equity		11.07			10.41
Return on average tangible shareholders’ equity ⁽¹⁾		14.99			14.16
Total ending equity to total ending assets		11.33			11.53
Total average equity to total average assets		11.22			11.42
Dividend payout		20.57			18.94
Per common share data
Earnings		$	1.45		$	1.26
Diluted earnings		1.45			1.25
Dividends paid		0.30			0.24
Book value		26.41			24.07
Tangible book value ⁽¹⁾		18.92			17.07


⁽¹⁾	Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. For more information on these ratios and for corresponding reconciliations to the most closely related financial measure defined by GAAP, see Non-GAAP Reconciliations on page 48.



		Bank of America 8




Table 7	Quarterly Average Balances and Interest Rates - FTE Basis

(Dollars in millions)		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
		Second Quarter 2019						Second Quarter 2018
Earning assets
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		$	122,395	$	495	1.62	%	$	144,983	$	487	1.35	%
Time deposits placed and other short-term investments		9,798		61		2.51		10,015		48		1.91
Federal funds sold and securities borrowed or purchased under agreements to resell		281,085		1,309		1.87		251,880		709		1.13
Trading account assets		146,865		1,337		3.65		132,799		1,232		3.72
Debt securities		446,447		3,047		2.72		429,191		2,885		2.64
Loans and leases ⁽¹⁾:
Residential mortgage		215,822		1,899		3.52		206,083		1,798		3.49
Home equity		45,944		587		5.12		54,863		640		4.68
U.S. credit card		93,627		2,511		10.76		93,531		2,298		9.86
Direct/Indirect and other consumer ⁽²⁾		90,453		830		3.68		93,620		766		3.28
Total consumer		445,846		5,827		5.24		448,097		5,502		4.92
U.S. commercial		318,243		3,382		4.26		305,372		2,983		3.92
Non-U.S. commercial		103,844		894		3.45		99,255		816		3.30
Commercial real estate ⁽³⁾		61,778		720		4.67		60,653		646		4.27
Commercial lease financing		20,814		172		3.32		21,441		168		3.14
Total commercial		504,679		5,168		4.11		486,721		4,613		3.80
Total loans and leases		950,525		10,995		4.64		934,818		10,115		4.34
Other earning assets		66,607		1,129		6.79		78,244		1,047		5.36
Total earning assets ⁽⁴⁾		2,023,722		18,373		3.64		1,981,930		16,523		3.34
Cash and due from banks		25,951						25,329
Other assets, less allowance for loan and lease losses		349,378						315,419
Total assets		$	2,399,051					$	2,322,678
Interest-bearing liabilities
U.S. interest-bearing deposits:
Savings		$	52,987	$	2	0.01	%	$	55,734	$	2	0.01	%
NOW and money market deposit accounts		737,095		1,228		0.67		664,002		536		0.32
Consumer CDs and IRAs		45,375		105		0.93		39,953		36		0.36
Negotiable CDs, public funds and other deposits		69,966		408		2.35		44,539		197		1.78
Total U.S. interest-bearing deposits		905,423		1,743		0.77		804,228		771		0.38
Non-U.S. interest-bearing deposits:
Banks located in non-U.S. countries		2,033		5		0.96		2,329		11		1.89
Governments and official institutions		179		—		0.05		1,113		—		0.01
Time, savings and other		68,706		217		1.26		65,326		161		0.99
Total non-U.S. interest-bearing deposits		70,918		222		1.25		68,768		172		1.00
Total interest-bearing deposits		976,341		1,965		0.81		872,996		943		0.43
Federal funds purchased, securities loaned or sold under agreements to repurchase, short-term borrowings and other interest-bearing liabilities		278,198		1,997		2.89		272,777		1,462		2.15
Trading account liabilities		47,022		319		2.72		52,228		348		2.67
Long-term debt		201,007		1,754		3.49		199,448		1,788		3.59
Total interest-bearing liabilities ⁽⁴⁾		1,502,568		6,035		1.61		1,397,449		4,541		1.30
Noninterest-bearing sources:
Noninterest-bearing deposits		399,109						427,663
Other liabilities ⁽⁵⁾		229,399						232,385
Shareholders’ equity		267,975						265,181
Total liabilities and shareholders’ equity		$	2,399,051					$	2,322,678
Net interest spread						2.03	%					2.04	%
Impact of noninterest-bearing sources						0.41						0.37
Net interest income/yield on earning assets ⁽⁶⁾				$	12,338	2.44	%			$	11,982	2.41	%


⁽¹⁾	Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis.


⁽²⁾	Includes non-U.S. consumer loans of $2.9 billion for both the second quarter of 2019 and 2018.


⁽³⁾	Includes U.S. commercial real estate loans of $57.0 billion and $56.4 billion, and non-U.S. commercial real estate loans of $4.8 billion and $4.2 billion for the second quarter of 2019 and 2018.

⁽⁴⁾

Interest income includes the impact of interest rate risk management contracts, which decreased interest income on the underlying assets by $53 million and $49 million for the second quarter of 2019 and 2018. Interest expense includes the impact of interest rate risk management contracts, which increased interest expense on the underlying liabilities by $9 million and $33 million for the second quarter of 2019 and 2018. For more information, see Interest Rate Risk Management for the Banking Book on page 45.


⁽⁵⁾	Includes $35.0 billion and $29.7 billion of structured notes and liabilities for the second quarter of 2019 and 2018.


⁽⁶⁾	Net interest income includes FTE adjustments of $149 million and $154 million for the second quarter of 2019 and 2018.



9 Bank of America




Table 8	Year-to-Date Average Balances and Interest Rates - FTE Basis

		Average Balance		Interest Income/ Expense		Yield/ Rate		Average Balance		Interest Income/ Expense		Yield/ Rate
		Six Months Ended June 30
(Dollars in millions)		2019						2018
Earning assets
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		$	128,644	$	1,001	1.57	%	$	142,628	$	909	1.29	%
Time deposits placed and other short-term investments		9,129		120		2.65		10,398		109		2.12
Federal funds sold and securities borrowed or purchased under agreements to resell		277,715		2,504		1.82		250,110		1,331		1.07
Trading account assets		143,565		2,678		3.76		131,966		2,379		3.63
Debt securities		444,077		6,195		2.78		431,133		5,715		2.61
Loans and leases ⁽¹⁾:
Residential mortgage		213,014		3,761		3.53		205,460		3,580		3.49
Home equity		46,812		1,180		5.07		55,902		1,283		4.62
U.S. credit card		94,313		5,041		10.78		93,975		4,611		9.89
Direct/Indirect and other consumer ⁽²⁾		90,442		1,651		3.68		94,451		1,494		3.19
Total consumer		444,581		11,633		5.26		449,788		10,968		4.90
U.S. commercial		317,173		6,731		4.28		302,626		5,700		3.80
Non-U.S. commercial		102,925		1,780		3.49		99,379		1,554		3.15
Commercial real estate ⁽³⁾		61,321		1,422		4.68		59,946		1,233		4.15
Commercial lease financing		21,291		368		3.46		21,636		343		3.17
Total commercial		502,710		10,301		4.13		483,587		8,830		3.68
Total loans and leases		947,291		21,934		4.66		933,375		19,798		4.27
Other earning assets		67,134		2,264		6.79		81,277		2,031		5.03
Total earning assets ⁽⁴⁾		2,017,555		36,696		3.66		1,980,887		32,272		3.28
Cash and due from banks		25,888						25,800
Other assets, less allowance for loan and lease losses		336,684						317,582
Total assets		$	2,380,127					$	2,324,269
Interest-bearing liabilities
U.S. interest-bearing deposits:
Savings		$	53,278	$	3	0.01	%	$	55,243	$	3	0.01	%
NOW and money market deposit accounts		734,077		2,385		0.66		661,531		942		0.29
Consumer CDs and IRAs		43,593		179		0.83		40,629		69		0.34
Negotiable CDs, public funds and other deposits		67,981		775		2.30		42,600		354		1.68
Total U.S. interest-bearing deposits		898,929		3,342		0.75		800,003		1,368		0.34
Non-U.S. interest-bearing deposits:
Banks located in non-U.S. countries		2,209		11		0.99		2,287		20		1.79
Governments and official institutions		178		—		0.08		1,133		—		0.01
Time, savings and other		66,472		407		1.23		66,325		315		0.95
Total non-U.S. interest-bearing deposits		68,859		418		1.22		69,745		335		0.97
Total interest-bearing deposits		967,788		3,760		0.78		869,748		1,703		0.39
Federal funds purchased, securities loaned or sold under agreements to repurchase, short-term borrowings and other interest-bearing liabilities		271,716		3,849		2.86		276,269		2,597		1.90
Trading account liabilities		46,312		664		2.89		53,787		705		2.64
Long-term debt		198,878		3,557		3.59		198,622		3,366		3.40
Total interest-bearing liabilities ⁽⁴⁾		1,484,694		11,830		1.61		1,398,426		8,371		1.21
Noninterest-bearing sources:
Noninterest-bearing deposits		399,912						429,225
Other liabilities ⁽⁵⁾		228,420						231,288
Shareholders’ equity		267,101						265,330
Total liabilities and shareholders’ equity		$	2,380,127					$	2,324,269
Net interest spread						2.05	%					2.07	%
Impact of noninterest-bearing sources						0.43						0.35
Net interest income/yield on earning assets ⁽⁶⁾				$	24,866	2.48	%			$	23,901	2.42	%


⁽¹⁾	Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis.


⁽²⁾	Includes non-U.S. consumer loans of $2.9 billion for both the six months ended June 30, 2019 and 2018.


⁽³⁾	Includes U.S. commercial real estate loans of $56.7 billion and $55.9 billion, and non-U.S. commercial real estate loans of $4.6 billion and $4.1 billion for the six months ended June 30, 2019 and 2018.

⁽⁴⁾

Interest income includes the impact of interest rate risk management contracts, which decreased interest income on the underlying assets by $126 million and $56 million for the six months ended June 30, 2019 and 2018. Interest expense includes the impact of interest rate risk management contracts, which increased (decreased) interest expense on the underlying liabilities by $59 million and $(171) million for the six months ended June 30, 2019 and 2018. For more information, see Interest Rate Risk Management for the Banking Book on page 45.


⁽⁵⁾	Includes $33.2 billion and $30.8 billion of structured notes and liabilities for the six months ended June 30, 2019 and 2018.


⁽⁶⁾	Net interest income includes FTE adjustments of $302 million and $304 million for the six months ended June 30, 2019 and 2018.



		Bank of America 10

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 22. 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 June 30
(Dollars in millions)	2019			2018			2019			2018			2019			2018			% Change
Net interest income	$	4,363		$	3,895		$	2,753		$	2,698		$	7,116		$	6,593		8	%
Noninterest income:
Card income	(6		)	(8		)	1,274			1,300			1,268			1,292			(2	)
Service charges	1,044			1,072			1			—			1,045			1,072			(3	)
All other income	210			188			78			88			288			276			4
Total noninterest income	1,248			1,252			1,353			1,388			2,601			2,640			(1	)
Total revenue, net of interest expense	5,611			5,147			4,106			4,086			9,717			9,233			5

Provision for credit losses	44			46			903			898			947			944			—
Noninterest expense	2,663			2,644			1,744			1,723			4,407			4,367			1
Income before income taxes	2,904			2,457			1,459			1,465			4,363			3,922			11
Income tax expense	712			627			357			373			1,069			1,000			7
Net income	$	2,192		$	1,830		$	1,102		$	1,092		$	3,294		$	2,922		13

Effective tax rate ⁽¹⁾													24.5		%	25.5		%

Net interest yield	2.49		%	2.28		%	3.79		%	3.92		%	3.87			3.67
Return on average allocated capital	73			61			18			18			36			32
Efficiency ratio	47.51			51.40			42.45			42.17			45.37			47.31

Balance Sheet
	Three Months Ended June 30
Average	2019			2018			2019			2018			2019			2018			% Change
Total loans and leases	$	5,333		$	5,191		$	291,055		$	275,498		$	296,388		$	280,689		6	%
Total earning assets⁽²⁾	702,662			686,324			291,492			276,436			737,678			720,871			2
Total assets ⁽²⁾	734,117			714,494			301,743			287,377			779,384			759,982			3
Total deposits	701,790			682,202			5,238			5,610			707,028			687,812			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.



11 Bank of America




	Deposits						Consumer Lending						Total Consumer Banking
	Six Months Ended June 30
(Dollars in millions)	2019			2018			2019			2018			2019			2018			% Change
Net interest income	$	8,670		$	7,607		$	5,552		$	5,463		$	14,222		$	13,070		9	%
Noninterest income:
Card income	(13		)	(15		)	2,478			2,541			2,465			2,526			(2	)
Service charges	2,064			2,115			1			1			2,065			2,116			(2	)
All other income	442			320			155			182			597			502			19
Total noninterest income	2,493			2,420			2,634			2,724			5,127			5,144			—
Total revenue, net of interest expense	11,163			10,027			8,186			8,187			19,349			18,214			6

Provision for credit losses	90			87			1,831			1,792			1,921			1,879			2
Noninterest expense	5,302			5,366			3,461			3,549			8,763			8,915			(2	)
Income before income taxes	5,771			4,574			2,894			2,846			8,665			7,420			17
Income tax expense	1,414			1,167			709			726			2,123			1,893			12
Net income	$	4,357		$	3,407		$	2,185		$	2,120		$	6,542		$	5,527		18

Effective tax rate ⁽¹⁾													24.5		%	25.5		%

Net interest yield	2.51		%	2.26		%	3.87		%	4.00		%	3.92			3.69
Return on average allocated capital	73			57			18			17			36			30
Efficiency ratio	47.51			53.51			42.27			43.36			45.29			48.95

Balance Sheet
	Six Months Ended June 30
Average	2019			2018			2019			2018			2019			2018			% Change
Total loans and leases	$	5,323		$	5,180		$	289,017		$	274,946		$	294,340		$	280,126		5	%
Total earning assets⁽²⁾	697,883			680,013			289,387			275,597			732,543			714,345			3
Total assets ⁽²⁾	729,332			707,992			299,747			286,625			774,351			753,352			3
Total deposits	697,008			675,630			5,003			5,489			702,011			681,119			3
Allocated capital	12,000			12,000			25,000			25,000			37,000			37,000			—

Period end	June 30 2019			December 31 2018			June 30 2019			December 31 2018			June 30 2019			December 31 2018			% Change
Total loans and leases	$	5,340		$	5,470		$	295,072		$	288,865		$	300,412		$	294,335		2	%
Total earning assets ⁽²⁾	708,382			694,672			295,561			289,249			744,219			728,813			2
Total assets⁽²⁾	740,485			724,019			306,202			299,970			786,963			768,881			2
Total deposits	708,162			691,666			6,061			4,480			714,223			696,146			3

See page 11 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 $372 million to $3.3 billion primarily driven by higher net interest income which increased $523 million to $7.1 billion primarily due to growth in deposits and loans as well as the impact of higher short-term interest rates. Noninterest income decreased $39 million to $2.6 billion driven by lower card income, service charges and mortgage banking income, partially offset by the results from asset and liability management (ALM) activities.

Noninterest expense increased $40 million to $4.4 billion primarily driven by continued investments in the business, including marketing, and increases in primary sales professionals combined with investments in new and renovated financial centers, and digital capabilities. These increases were largely offset by lower FDIC expense and operating efficiencies.

The return on average allocated capital was 36 percent, up from 32 percent, driven by higher net income. For additional information on capital allocations, see Business Segment Operations on page 11.

Six-Month Comparison

Net income for Consumer Banking increased $1.0 billion to $6.5 billion primarily driven by an increase in net interest income and lower noninterest expense. Net interest income increased $1.2 billion to $14.2 billion and noninterest income decreased $17 million to $5.1 billion. These were primarily driven by the same factors as described in the three-month discussion.

The provision for credit losses increased $42 million to $1.9 billion due to portfolio seasoning in the U.S. credit card portfolio. Noninterest expense decreased $152 million to $8.8 billion primarily driven by lower FDIC expense and operating efficiencies. These decreases were partially offset by continued investments in the business.

The return on average allocated capital was 36 percent, up from 30 percent, driven by higher net income.

Deposits

Three-Month Comparison

Net income for Deposits increased $362 million to $2.2 billion driven by higher revenue. Net interest income increased $468 million to $4.4 billion primarily due to growth in deposits and loans, and pricing discipline. Noninterest income of $1.2 billion remained relatively unchanged as lower service charges were largely offset by the results from ALM activities.

Noninterest expense increased $19 million to $2.7 billion primarily driven by continued investments in the business, largely offset by lower FDIC expense and operating efficiencies.



		Bank of America 12

Average deposits increased $19.6 billion to $701.8 billion driven by strong organic growth. Growth in checking and time deposits of $24.0 billion was partially offset by a decline in traditional savings and money market savings of $4.2 billion.

Six-Month Comparison

Net income for Deposits increased $950 million to $4.4 billion driven by higher revenue and lower noninterest expense. Net interest income increased $1.1 billion to $8.7 billion primarily driven by the same factors as described in the three-month

discussion. Noninterest income increased $73 million to $2.5 billion primarily driven by the results from ALM activities, partially offset by lower service charges.

Noninterest expense decreased $64 million to $5.3 billion primarily driven by lower FDIC expense and operating efficiencies, partially offset by continued investments in the business.

Average deposits increased $21.4 billion to $697.0 billion driven by strong organic growth. Growth in checking and money market savings of $23.9 billion was partially offset by a decline in traditional savings and time deposits of $2.3 billion.




Key Statistics – Deposits

	Three Months Ended June 30				Six Months Ended June 30
	2019		2018		2019			2018
Total deposit spreads (excludes noninterest costs) ⁽¹⁾	2.40	%	2.10	%	2.39		%	2.05		%

Period end
Consumer investment assets (in millions) ⁽²⁾					$	219,732		$	191,472
Active digital banking users (units in thousands) ⁽³⁾					37,292			35,722
Active mobile banking users (units in thousands)					27,818			25,335
Financial centers					4,349			4,433
ATMs					16,561			16,050


⁽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 $28.3 billion driven by strong client flows and market performance. Active mobile banking users increased 2.5 million reflecting continuing changes in our customers’ banking preferences. The number of financial centers declined by a net 84 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 $10 million to $1.1 billion driven by higher net interest income, largely offset by lower noninterest income. Net interest income increased $55 million to $2.8 billion primarily driven by higher interest rates and the impact of an increase in loan balances. Noninterest income decreased $35 million to $1.4 billion driven by lower card income and mortgage banking income.

Noninterest expense of $1.7 billion remained relatively unchanged.

Average loans increased $15.6 billion to $291.1 billion primarily driven by an increase in residential mortgages, partially offset by lower home equity loans.

Six-Month Comparison

Net income for Consumer Lending increased $65 million to $2.2 billion driven by lower noninterest expense and higher net interest income, partially offset by lower noninterest income. Net interest income increased $89 million to $5.6 billion and noninterest income decreased $90 million to $2.6 billion primarily driven by the same factors as described in the three-month discussion.

The provision for credit losses increased $39 million to $1.8 billion driven by portfolio seasoning in the U.S. credit card portfolio. Noninterest expense decreased $88 million to $3.5 billion primarily driven by operating efficiencies.

Average loans increased $14.1 billion to $289.0 billion primarily driven by increases in residential mortgages and U.S. credit card, partially offset by lower home equity and consumer vehicle loans.




Key Statistics – Consumer Lending

	Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)	2019			2018			2019			2018
Total U.S. credit card ⁽¹⁾
Gross interest yield	10.76		%	9.86		%	10.78		%	9.90		%
Risk-adjusted margin	7.93			7.96			7.98			8.09
New accounts (in thousands)	1,068			1,186			2,102			2,380
Purchase volumes	$	70,288		$	66,821		$	133,039		$	128,168
Debit card purchase volumes	$	84,046		$	80,697		$	162,540		$	156,749


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

During the three and six months ended June 30, 2019, total U.S. credit card risk-adjusted margin decreased 3 bps and 11 bps compared to the same periods in 2018, primarily driven by increased net charge-offs and higher credit card rewards costs. During the three and six months ended June 30, 2019, total U.S.

credit card purchase volumes increased $3.5 billion to $70.3 billion and $4.9 billion to $133.0 billion compared to the same periods in 2018, and debit card purchase volumes increased $3.3 billion to $84.0 billion and $5.8 billion to $162.5 billion, reflecting higher levels of consumer spending.



13 Bank of America




Key Statistics – Loan Production ⁽¹⁾

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2019		2018		2019		2018
Total ⁽²⁾:
First mortgage	$	18,229	$	11,672	$	29,689	$	21,096
Home equity	2,768		4,081		5,593		7,830
Consumer Banking:
First mortgage	$	12,757	$	7,881	$	20,912	$	13,845
Home equity	2,405		3,644		4,890		6,989


⁽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 $4.9 billion and $6.6 billion for the three months ended June 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 $7.1 billion and $8.6 billion for the six months ended June 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 $1.2 billion and $1.3 billion for the three months ended June 30, 2019 and $2.1 billion and $2.2 billion for the six months ended June 30, 2019 primarily driven by lower demand.

Global Wealth & Investment Management




	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2019			2018			% Change		2019			2018			% Change
Net interest income	$	1,624		$	1,538		6	%	$	3,308		$	3,122		6	%
Noninterest income:
Investment and brokerage services	2,963			2,937			1		5,805			5,977			(3	)
All other income	313			267			17		607			498			22
Total noninterest income	3,276			3,204			2		6,412			6,475			(1	)
Total revenue, net of interest expense	4,900			4,742			3		9,720			9,597			1

Provision for credit losses	21			12			75		26			50			(48	)
Noninterest expense	3,458			3,427			1		6,886			7,008			(2	)
Income before income taxes	1,421			1,303			9		2,808			2,539			11
Income tax expense	348			332			5		688			647			6
Net income	$	1,073		$	971		11		$	2,120		$	1,892		12

Effective tax rate	24.5		%	25.5		%			24.5		%	25.5		%

Net interest yield	2.35			2.42					2.37			2.43
Return on average allocated capital	30			27					30			26
Efficiency ratio	70.58			72.25					70.85			73.02

Balance Sheet
	Three Months Ended June 30								Six Months Ended June 30
Average	2019			2018			% Change		2019			2018			% Change
Total loans and leases	$	166,324		$	160,833		3	%	$	165,369		$	159,969		3	%
Total earning assets	277,068			255,146			9		281,028			258,940			9
Total assets	289,819			272,318			6		293,451			275,997			6
Total deposits	253,925			236,214			7		257,856			239,627			8
Allocated capital	14,500			14,500			—		14,500			14,500			—

Period end									June 30 2019			December 31 2018			% Change
Total loans and leases									$	168,993		$	164,854		3	%
Total earning assets									275,456			287,199			(4	)
Total assets									287,878			305,907			(6	)
Total deposits									251,818			268,700			(6	)



		Bank of America 14

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 $102 million to $1.1 billion due to higher revenue, partially offset by higher noninterest expense. The operating margin was 29 percent compared to 27 percent a year ago.

Net interest income increased $86 million to $1.6 billion due to higher deposit spreads and increases in average deposit and loan balances, partially offset by lower loan spreads.

Noninterest income, which primarily includes investment and brokerage services income, increased $72 million to $3.3 billion. The increase was driven by the positive impact of AUM flows and higher average market valuations compared to the same period in 2018, partially offset by lower AUM pricing.

Noninterest expense increased $31 million to $3.5 billion primarily driven by continued investments in the business, including marketing, and revenue-related incentives, largely offset by lower amortization of intangibles and FDIC expense.

The return on average allocated capital was 30 percent, up from 27 percent, due to higher net income. For more information on capital allocated to the business segments, see Business Segment Operations on page 11.

MLGWM revenue of $4.0 billion increased four percent, reflecting higher net interest income and asset management fees. The increase in asset management fees was driven by the impact

of higher AUM flows and higher average market valuations, partially offset by lower AUM pricing.

Bank of America Private Bank revenue of $853 million remained relatively unchanged from the same period in 2018.

Six-Month Comparison

Net income for GWIM increased $228 million to $2.1 billion due to higher revenue and lower noninterest expense. The operating margin was 29 percent compared to 26 percent a year ago.

Net interest income increased $186 million to $3.3 billion due to the same factors as described in the three-month discussion.

Noninterest income, which primarily includes investment and brokerage services income, decreased $63 million to $6.4 billion. The decrease was driven by lower average market valuations compared to the same period in 2018, and declines in transactional revenue and AUM pricing, partially offset by the positive impact of AUM flows.

Noninterest expense decreased $122 million to $6.9 billion primarily driven by lower amortization of intangibles, FDIC expense and revenue-related incentives, partially offset by continued investments in the business.

The return on average allocated capital was 30 percent, up from 26 percent, due to higher net income. For more information on capital allocated to the business segments, see Business Segment Operations on page 11.

MLGWM revenue of $8.0 billion increased two percent due to the same factors as described in the three-month discussion. Bank of America Private Bank revenue of $1.7 billion remained relatively unchanged compared to the same period in 2018.



15 Bank of America




Key Indicators and Metrics

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions, except as noted)	2019		2018		2019			2018
Revenue by Business
Merrill Lynch Global Wealth Management	$	4,047	$	3,888	$	8,012		$	7,883
Bank of America Private Bank	853		854		1,708			1,714
Total revenue, net of interest expense	$	4,900	$	4,742	$	9,720		$	9,597

Client Balances by Business, at period end
Merrill Lynch Global Wealth Management					$	2,440,710		$	2,311,598
Bank of America Private Bank					458,081			442,608
Total client balances					$	2,898,791		$	2,754,206

Client Balances by Type, at period end
Assets under management ⁽¹⁾					$	1,203,783		$	1,138,500
Brokerage and other assets					1,314,457			1,254,135
Deposits					251,818			233,925
Loans and leases ⁽²⁾					172,265			165,145
Less: Managed deposits in AUM ⁽¹⁾					(43,532		)	(37,499		)
Total client balances					$	2,898,791		$	2,754,206

Assets Under Management Rollforward
Assets under management, beginning of period	$	1,169,713	$	1,122,571	$	1,072,234		$	1,121,383
Net client flows	5,274		10,420		11,192			31,878
Market valuation/other	28,796		5,509		120,357			(14,761		)
Total assets under management, end of period	$	1,203,783	$	1,138,500	$	1,203,783		$	1,138,500

Associates, at period end ⁽³⁾
Number of financial advisors					17,508			17,442
Total wealth advisors, including financial advisors					19,512			19,350
Total primary sales professionals, including financial advisors and wealth advisors					20,611			20,451

Merrill Lynch Global Wealth Management Metric
Financial advisor productivity ⁽⁴⁾ (in thousands)	$	1,082	$	1,017	$	1,061		$	1,027

Bank of America Private Bank Metric, at period end
Primary sales professionals					1,808			1,723


⁽¹⁾	AUM includes deposits that are managed within investment accounts. Prior periods have been updated to conform to current-period presentation.


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


⁽³⁾	Includes financial advisors in the Consumer Banking segment of 2,818 and 2,622 at June 30, 2019 and 2018.


⁽⁴⁾	Financial advisor productivity is defined as annualized MLGWM total revenue, excluding the allocation of certain ALM activities, divided by the total average number of financial advisors (excluding financial advisors in the Consumer Banking segment).

Client Balances

Client balances increased $144.6 billion, or five percent, to $2.9 trillion at June 30, 2019 compared to June 30, 2018. The increase in client balances was due to higher market valuations and positive net flows as of June 30, 2019. Positive net client flows in AUM decreased from the same period a year ago primarily due to a smaller shift from brokerage assets to AUM.



		Bank of America 16

Global Banking




	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2019			2018			% Change		2019			2018			% Change
Net interest income	$	2,709		$	2,739		(1	%)	$	5,499		$	5,418		1	%
Noninterest income:
Service charges	749			768			(2	)	1,462			1,532			(5	)
Investment banking fees	717			743			(3	)	1,426			1,487			(4	)
All other income	800			764			5		1,743			1,572			11
Total noninterest income	2,266			2,275			—		4,631			4,591			1
Total revenue, net of interest expense	4,975			5,014			(1	)	10,130			10,009			1

Provision for credit losses	125			(23		)	n/m		236			(7		)	n/m
Noninterest expense	2,212			2,185			1		4,478			4,477			—
Income before income taxes	2,638			2,852			(8	)	5,416			5,539			(2	)
Income tax expense	712			741			(4	)	1,462			1,440			2
Net income	$	1,926		$	2,111		(9	)	$	3,954		$	4,099		(4	)

Effective tax rate	27.0		%	26.0		%			27.0		%	26.0		%

Net interest yield	2.80			3.01					2.91			3.01
Return on average allocated capital	19			21					19			20
Efficiency ratio	44.45			43.57					44.20			44.72

Balance Sheet
	Three Months Ended June 30								Six Months Ended June 30
Average	2019			2018			% Change		2019			2018			% Change
Total loans and leases	$	372,531		$	355,088		5	%	$	371,326		$	353,398		5	%
Total earning assets	387,819			364,587			6		381,111			363,212			5
Total assets	442,591			424,540			4		435,803			423,209			3
Total deposits	362,619			323,215			12		355,866			323,807			10
Allocated capital	41,000			41,000			—		41,000			41,000			—

Period end									June 30 2019			December 31 2018			% Change
Total loans and leases									$	376,948		$	365,717		3	%
Total earning assets									384,884			377,812			2
Total assets									440,352			442,330			—
Total deposits									358,902			360,248			—

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 decreased $185 million to $1.9 billion primarily driven by higher provision for credit losses.

Revenue decreased $39 million to $5.0 billion driven by modest declines in net interest income and noninterest income. Net interest income decreased $30 million to $2.7 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 decreased $9 million to $2.3 billion. The provision for credit losses increased $148 million to $125 million primarily driven by energy reserve releases in the prior-year period.

Noninterest expense increased $27 million to $2.2 billion primarily due to continued investment in the business.

The return on average allocated capital was 19 percent, down from 21 percent, due to lower net income. For more information

on capital allocated to the business segments, see Business Segment Operations on page 11.

Six-Month Comparison

Net income for Global Banking decreased $145 million to $4.0 billion primarily driven by higher provision for credit losses, partially offset by higher revenue.

Revenue increased $121 million to $10.1 billion driven by higher net interest income and noninterest income. Net interest income increased $81 million to $5.5 billion primarily due to the impact of higher deposit and loan balances and increased deposit rates, partially offset by the allocation of ALM activities and loan spread compression. Noninterest income increased $40 million to $4.6 billion primarily due to higher leasing-related revenue and ALM results, partially offset by lower fees and commissions. The provision for credit losses increased $243 million to $236 million primarily driven by energy reserve releases in the prior-year period and a current-period single-name utility client charge-off.

Noninterest expense was relatively unchanged at $4.5 billion, primarily due to lower FDIC expense, largely offset by continued investment in the business.

The return on average allocated capital was 19 percent, down from 20 percent, due to lower net income. For more information on capital allocated to the business segments, see Business Segment Operations on page 11.



17 Bank of America

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 June 30
(Dollars in millions)	2019		2018		2019		2018		2019		2018		2019		2018
Revenue
Business Lending	$	923	$	1,036	$	1,046	$	1,046	$	90	$	110	$	2,059	$	2,192
Global Transaction Services	1,005		956		889		829		267		241		2,161		2,026
Total revenue, net of interest expense	$	1,928	$	1,992	$	1,935	$	1,875	$	357	$	351	$	4,220	$	4,218

Balance Sheet
Average
Total loans and leases	$	175,701	$	163,632	$	181,741	$	174,666	$	15,119	$	16,785	$	372,561	$	355,083
Total deposits	181,591		157,224		141,611		129,480		39,430		36,539		362,632		323,243

	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
	Six Months Ended June 30
	2019		2018		2019		2018		2019		2018		2019		2018
(Dollars in millions)
Revenue
Business Lending	$	1,968	$	2,032	$	2,080	$	2,093	$	184	$	216	$	4,232	$	4,341
Global Transaction Services	2,012		1,877		1,780		1,642		533		473		4,325		3,992
Total revenue, net of interest expense	$	3,980	$	3,909	$	3,860	$	3,735	$	717	$	689	$	8,557	$	8,333

Balance Sheet

Average
Total loans and leases	$	175,993	$	162,857	$	180,105	$	173,520	$	15,230	$	17,021	$	371,328	$	353,398
Total deposits	174,895		156,438		142,070		130,911		38,920		36,475		355,885		323,824

Period end
Total loans and leases	$	179,517	$	163,524	$	182,417	$	175,405	$	15,000	$	16,549	$	376,934	$	355,478
Total deposits	179,656		160,993		139,312		128,079		39,932		36,982		358,900		326,054

Business Lending revenue decreased $133 million and $109 million for the three and six months ended June 30, 2019 compared to the same periods in 2018 primarily driven by ALM results and credit spread compression, partially offset by higher leasing-related revenue.

Global Transaction Services revenue increased $135 million and $333 million for the three and six months ended June 30, 2019 primarily driven by higher deposit balances and rates.

Average loans and leases increased five percent for both the three and six months ended June 30, 2019 compared to the same periods in 2018 driven by growth in the commercial and industrial portfolio. Average deposits increased 12 percent and 10 percent for the three and six months ended June 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.




Investment Banking Fees

	Global Banking						Total Corporation						Global Banking						Total Corporation
	Three Months Ended June 30												Six Months Ended June 30
(Dollars in millions)	2019			2018			2019			2018			2019			2018			2019			2018
Products
Advisory	$	254		$	269		$	288		$	303		$	557		$	545		$	631		$	599
Debt issuance	324			367			746			874			651			723			1,494			1,701
Equity issuance	139			107			395			290			218			219			629			604
Gross investment banking fees	717			743			1,429			1,467			1,426			1,487			2,754			2,904
Self-led deals	(23		)	(15		)	(58		)	(45		)	(44		)	(49		)	(119		)	(129		)
Total investment banking fees	$	694		$	728		$	1,371		$	1,422		$	1,382		$	1,438		$	2,635		$	2,775



		Bank of America 18

Total Corporation investment banking fees, excluding self-led deals, of $1.4 billion and $2.6 billion, which are primarily included within Global Banking and Global Markets, decreased four percent and five percent for the three and six months ended June 30, 2019 compared to the same periods in 2018 primarily due to declines in debt underwriting fees, partially offset by an increase in equity underwriting fees.

Global Markets




	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2019			2018			% Change		2019			2018			% Change
Net interest income	$	811		$	968		(16	)%	$	1,764		$	1,989		(11	)%
Noninterest income:
Investment and brokerage services	433			430			1		877			918			(4	)
Investment banking fees	584			651			(10	)	1,121			1,261			(11	)
Trading account income	1,961			2,020			(3	)	4,043			4,577			(12	)
All other income	356			182			96		521			318			64
Total noninterest income	3,334			3,283			2		6,562			7,074			(7	)
Total revenue, net of interest expense	4,145			4,251			(2	)	8,326			9,063			(8	)

Provision for credit losses	5			(1		)	n/m		(18		)	(4		)	n/m
Noninterest expense	2,677			2,726			(2	)	5,432			5,651			(4	)
Income before income taxes	1,463			1,526			(4	)	2,912			3,416			(15	)
Income tax expense	417			397			5		830			888			(7	)
Net income	$	1,046		$	1,129		(7	)	$	2,082		$	2,528		(18	)

Effective tax rate	28.5		%	26.0		%			28.5		%	26.0		%

Return on average allocated capital	12			13					12			15
Efficiency ratio	64.55			64.15					65.23			62.35

Balance Sheet
	Three Months Ended June 30								Six Months Ended June 30
Average	2019			2018			% Change		2019			2018			% Change
Trading-related assets:
Trading account securities	$	251,401		$	209,271		20	%	$	238,400		$	209,772		14	%
Reverse repurchases	117,730			132,257			(11	)	120,228			128,125			(6	)
Securities borrowed	83,374			83,282			—		83,856			82,831			1
Derivative assets	43,700			48,316			(10	)	42,831			47,447			(10	)
Total trading-related assets	496,205			473,126			5		485,315			468,175			4
Total loans and leases	70,587			75,053			(6	)	70,335			74,412			(5	)
Total earning assets	474,061			490,482			(3	)	473,242			488,307			(3	)
Total assets	685,411			678,501			1		674,790			678,428			(1	)
Total deposits	31,128			30,736			1		31,246			31,524			(1	)
Allocated capital	35,000			35,000			—		35,000			35,000			—

Period end									June 30 2019			December 31 2018			% Change
Total trading-related assets									$	487,094		$	447,998		9	%
Total loans and leases									74,136			73,928			—
Total earning assets									475,836			457,224			4
Total assets									674,985			641,923			5
Total deposits									29,961			37,841			(21	)

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.

Three-Month Comparison

Net income for Global Markets decreased $83 million to $1.0 billion. Net DVA losses were $31 million compared to losses of $179 million, and excluding net DVA, net income decreased $195 million to $1.1 billion. These decreases were primarily driven by a decrease in revenue, partially offset by lower noninterest expense.

Revenue declined $106 million to $4.1 billion due to lower sales and trading revenue and lower investment banking fees, partially offset by a $199 million gain on the sale of an equity investment. Sales and trading revenue decreased $209 million, and excluding net DVA, decreased $357 million due to declines in both FICC and Equities revenue. Noninterest expense decreased $49 million to $2.7 billion primarily driven by lower revenue-related expenses.

Average total assets increased $6.9 billion to $685.4 billion driven by increased levels of inventory in FICC to facilitate expected client demand.

The return on average allocated capital was 12 percent, down from 13 percent, reflecting lower net income.



19 Bank of America

Six-Month Comparison

Net income for Global Markets decreased $446 million to $2.1 billion. Net DVA losses were $121 million compared to losses of $115 million. Excluding net DVA, net income decreased $441 million to $2.2 billion, primarily driven by a decrease in revenue, partially offset by lower noninterest expense.

Revenue declined $737 million to $8.3 billion. Sales and trading revenue decreased $894 million, and excluding net DVA, decreased $888 million, and noninterest expense decreased $219 million to $5.4 billion. These decreases were primarily driven by the same factors as described in the three-month discussion.

Average total assets decreased $3.6 billion to $674.8 billion primarily due to lower client balances in Equities. Period-end total assets increased $33.1 billion from December 31, 2018 to $675.0 billion due to higher client balances in Equities and

increased levels of inventory in FICC to facilitate expected client demand.

The return on average allocated capital was 12 percent, down from 15 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)}

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2019		2018		2019		2018
Sales and trading revenue
Fixed-income, currencies and commodities	$	2,098	$	2,132	$	4,377	$	4,765
Equities	1,144		1,319		2,325		2,831
Total sales and trading revenue	$	3,242	$	3,451	$	6,702	$	7,596

Sales and trading revenue, excluding net DVA ⁽³⁾
Fixed-income, currencies and commodities	$	2,128	$	2,316	$	4,486	$	4,871
Equities	1,145		1,314		2,337		2,840
Total sales and trading revenue, excluding net DVA	$	3,273	$	3,630	$	6,823	$	7,711


⁽¹⁾	Includes FTE adjustments of $31 million and $80 million for the three and six months ended June 30, 2019 compared to $80 million and $146 million for the same periods in 2018. For more information on sales and trading revenue, see Note 3 – Derivatives to the Consolidated Financial Statements.


⁽²⁾	Includes Global Banking sales and trading revenue of $128 million and $243 million for the three and six months ended June 30, 2019 compared to $79 million and $244 million for the same periods in 2018.

⁽³⁾

FICC and Equities sales and trading revenue, excluding net DVA, is a non-GAAP financial measure. FICC net DVA losses were $30 million and $109 million for the three and six months ended June 30, 2019 compared to losses of $184 million and $106 million for the same periods in 2018. Equities net DVA losses were $1 million and $12 million for the three and six months ended June 30, 2019 compared to gains of $5 million and losses of $9 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 decreased $188 million due to a generally weaker trading environment leading to reduced client activity across most products. Equities revenue decreased $169 million driven by under

performance in derivatives compared to a strong prior-year period due to lower levels of client activity and weaker trading performance.

Six-Month Comparison

FICC revenue decreased $385 million and equities revenue decreased $503 million, both primarily driven by the same factors as described in the three-month discussion.



		Bank of America 20

All Other




	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2019			2018			% Change		2019			2018			% Change
Net interest income	$	78		$	144		(46	)%	$	73		$	302		(76	)%
Noninterest income (loss)	(582		)	(681		)	(15	)	(1,208		)	(1,262		)	(4	)
Total revenue, net of interest expense	(504		)	(537		)	(6	)	(1,135		)	(960		)	18

Provision for credit losses	(241		)	(105		)	130		(295		)	(257		)	15
Noninterest expense	514			519			(1	)	933			1,015			(8	)
Loss before income taxes	(777		)	(951		)	(18	)	(1,773		)	(1,718		)	3
Income tax benefit	(786		)	(602		)	31		(1,734		)	(1,374		)	26
Net income (loss)	$	9		$	(349	)	(103	)	$	(39	)	$	(344	)	(89	)

Balance Sheet
	Three Months Ended June 30								Six Months Ended June 30
Average	2019			2018			% Change		2019			2018			% Change
Total loans and leases	$	44,695		$	63,155		(29	)%	$	45,921		$	65,470		(30	)%
Total assets ⁽¹⁾	201,846			187,337			8		201,732			193,283			4
Total deposits	20,750			22,682			(9	)	20,721			22,896			(9	)

Period end									June 30 2019			December 31 2018			% Change
Total loans and leases									$	43,311		$	48,061		(10	)%
Total assets ⁽¹⁾									205,714			195,466			5
Total deposits									20,189			18,541			9

⁽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 $549.5 billion and $543.0 billion for the three and six months ended June 30, 2019 compared to $519.6 billion and $517.1 billion for the same periods in 2018, and period-end allocated assets were $544.0 billion and $540.8 billion at June 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.

For more information on the composition of the core and non-core portfolios, see Consumer Portfolio Credit Risk Management on page 28. 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 six months ended June 30, 2019, residential mortgage loans held for ALM activities decreased $1.1 billion to $23.8 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 six months ended June 30, 2019, total non-core loans decreased $3.9 billion to $19.6 billion due primarily to payoffs and paydowns as well as sales and Federal Housing Administration (FHA) loan conveyances, offset by repurchases.

Three-Month Comparison

Net income for All Other increased $358 million to $9 million driven by improved revenue, an increase in the benefit in provision for credit losses and a higher income tax benefit.

Revenue increased $33 million from the prior period which included a $729 million charge related to the redemption of certain trust preferred securities and a $572 million gain from the sale of non-core mortgage loans.

The benefit in the provision for credit losses increased $136 million to $241 million primarily due to recoveries from the sales of previously charged-off non-core home equity loans.

The income tax benefit increased to $786 million driven by a higher level of tax credits. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking.

Six-Month Comparison

The net loss for All Other improved $305 million to a loss of $39 million driven by an increased income tax benefit, partially offset by a higher pretax loss.

Revenue decreased $175 million to negative $1.1 billion with the same factors as described in the three-month discussion affecting the year-over-year results.

The benefit in the provision for credit losses increased $38 million to $295 million primarily driven by the same factors as described in the three-month discussion, partially offset by a slower pace of portfolio improvement.

Noninterest expense decreased $82 million to $933 million reflecting lower non-core mortgage costs, primarily due to lower volume, a decrease in compensation and benefits, and lower FDIC expense, partially offset by higher marketing expense.

The income tax benefit was $1.7 billion compared to a benefit of $1.4 billion in the same period in 2018, driven by a higher level of tax credits. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking.

Off-Balance Sheet Arrangements and Contractual Obligations

We have contractual obligations to make future payments on debt and lease agreements. Additionally, in the normal course of business, we enter into contractual arrangements whereby we commit to future purchases of products or services from unaffiliated parties. For more information on obligations and commitments, see Note 11 – Commitments and Contingencies to



21 Bank of America

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 Federal Reserve requires BHCs to submit a capital plan and requests for capital actions on an annual basis, consistent with the rules governing the 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. The Board’s common stock repurchase authorization replaces its prior common stock repurchase authorization that expired on June 30, 2019.

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 June 30, 2019, the 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.

Capital Composition and Ratios

Table 9 presents Bank of America Corporation’s capital ratios and related information in accordance with Basel 3 Standardized and Advanced approaches as measured at June 30, 2019 and December 31, 2018. As of the periods presented herein, the Corporation met the definition of well capitalized under current regulatory requirements.



		Bank of America 22




Table 9	Bank of America Corporation Regulatory Capital under Basel 3

		Standardized Approach			Advanced Approaches			Regulatory Minimum ⁽¹⁾
(Dollars in millions, except as noted)		June 30, 2019
Risk-based capital metrics:
Common equity tier 1 capital		$	171,498		$	171,498
Tier 1 capital		195,539			195,539
Total capital ⁽²⁾		228,965			220,904
Risk-weighted assets (in billions)		1,467			1,431
Common equity tier 1 capital ratio		11.7		%	12.0		%	9.5	%
Tier 1 capital ratio		13.3			13.7			11.0
Total capital ratio		15.6			15.4			13.0

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽³⁾		$	2,322		$	2,322
Tier 1 leverage ratio		8.4		%	8.4		%	4.0

SLR leverage exposure (in billions)					$	2,872
SLR					6.8		%	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 June 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 $171.5 billion at June 30, 2019, an increase of $4.2 billion from December 31, 2018, driven by earnings and lower net unrealized losses on available-for-sale (AFS) debt securities included in accumulated other comprehensive income (OCI), partially offset by common stock repurchases and dividends. During the six months ended June 30, 2019, Total capital under the Advanced approaches increased $8.0 billion primarily driven by the same factors as CET1 capital and preferred stock

issuances. Risk-weighted assets under the Standardized approach, which yielded the lower CET1 capital ratio at June 30, 2019, increased $29.3 billion during the six months ended June 30, 2019 to $1,467 billion primarily due to an increase in other assets and client activity in Global Markets and Global Banking.

Table 10 shows the capital composition at June 30, 2019 and December 31, 2018.




Table 10	Capital Composition under Basel 3

(Dollars in millions)		June 30 2019			December 31 2018
Total common shareholders’ equity		$	246,719		$	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		(5,332		)	(5,981		)
Intangibles, other than mortgage servicing rights and goodwill, net of related deferred tax liabilities		(1,342		)	(1,294		)
Other		24			120
Common equity tier 1 capital		171,498			167,272
Qualifying preferred stock, net of issuance cost		24,688			22,326
Other		(647		)	(560		)
Tier 1 capital		195,539			189,038
Tier 2 capital instruments		23,107			21,887
Eligible credit reserves included in Tier 2 capital		2,272			1,972
Other		(14		)	(19		)
Total capital under the Advanced approaches		$	220,904		$	212,878

Table 11 shows the components of risk-weighted assets as measured under Basel 3 at June 30, 2019 and December 31, 2018.



23 Bank of America




Table 11	Risk-weighted Assets under Basel 3

		Standardized Approach		Advanced Approaches		Standardized Approach		Advanced Approaches
(Dollars in billions)		June 30, 2019				December 31, 2018
Credit risk		$	1,416	$	848	$	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		33		n/a		30
Total risk-weighted assets		$	1,467	$	1,431	$	1,437	$	1,409

n/a = not applicable

Bank of America, N.A. Regulatory Capital

Table 12 presents regulatory capital information for BANA in accordance with Basel 3 Standardized and Advanced approaches as measured at June 30, 2019 and December 31, 2018. BANA met the definition of well capitalized under the PCA framework for both periods.




Table 12	Bank of America, N.A. Regulatory Capital under Basel 3

		Standardized Approach			Advanced Approaches			Regulatory Minimum ⁽¹⁾
(Dollars in millions, except as noted)		June 30, 2019
Risk-based capital metrics:
Common equity tier 1 capital		$	154,703		$	154,703
Tier 1 capital		154,703			154,703
Total capital ⁽²⁾		166,719			158,962
Risk-weighted assets (in billions)		1,220			977
Common equity tier 1 capital ratio		12.7		%	15.8		%	7.0	%
Tier 1 capital ratio		12.7			15.8			8.5
Total capital ratio		13.7			16.3			10.5

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽³⁾		1,725			1,725
Tier 1 leverage ratio		9.0		%	9.0		%	5.0

SLR leverage exposure (in billions)					2,120
SLR					7.3		%	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 June 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 13 presents the Corporation's TLAC and long-term debt ratios and related information as of June 30, 2019.



		Bank of America 24




Table 13	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, except ratios)		June 30, 2019
Total eligible balance		$	373,680				$	172,480
Percentage of risk-weighted assets ⁽³⁾		25.5		%	22.0	%	11.8		%	8.5	%
Percentage of SLR leverage exposure		13.0			9.5		6.0			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 June 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.

Security-Based Swap Dealer Capital, Margin and Segregation Requirements

On June 21, 2019, the SEC published a final rule establishing capital, margin and segregation requirements for security-based swap dealers (SBSDs). The final rule increases the minimum net capital requirements for broker-dealers authorized to use internal models to compute alternative net capital (ANC broker-dealers). For ANC broker-dealers, the minimum tentative net capital requirement increased from $1.0 billion to $5.0 billion, and the net capital requirement was raised to the greater of $1.0 billion or the applicable risk-margin amount (initial margin maintained for cleared and non-cleared security-based swaps) plus two percent of certain customer-related assets. For stand-alone SBSDs that use models to calculate haircuts, the minimum tentative net capital requirement is $100 million and the minimum net capital requirement is the greater of $20 million or two percent of the risk-margin amount.

Revisions to Leverage Ratio Framework

On June 26, 2019, the Basel Committee published a revised leverage ratio treatment of client-cleared derivatives, which aligns the leverage ratio measurement of client-cleared derivatives with the measurement determined according to the Standardized approach to measuring counterparty credit risk exposures, as used for risk-based capital requirements. U.S. banking regulators may update the U.S. Basel 3 rules to incorporate the Basel Committee revisions. The impact to the Corporation’s leverage ratio is not expected to be significant if U.S. banking regulators adopt the revisions as written by the Basel Committee.

Broker-dealer Regulatory Capital and Securities Regulation

The Corporation’s principal U.S. broker-dealer subsidiaries are Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), BofA Securities, Inc. (BofAS) and Merrill Lynch Professional Clearing Corp (MLPCC). The Corporation's principal European broker-dealer subsidiaries are Merrill Lynch International (MLI) and BofA Securities Europe SA (BofASE).

As a result of resolution planning, effective May 13, 2019, the business of MLPF&S was reorganized into two affiliated broker-dealers: MLPF&S and BofAS, a newly formed broker-dealer. Under the reorganization, BofAS became the legal entity for the institutional services that were previously provided by MLPF&S, while the retail services remain with MLPF&S. For additional information, see the Corporation's Current Report on Form 8-K filed with the SEC on May 13, 2019. For more information on

resolution planning, see Item 1. Business – Resolution Planning of the Corporation’s 2018 Annual Report on Form 10-K.

The U.S. broker-dealer subsidiaries are subject to the net capital requirements of Rule 15c3-1 under the Exchange Act. BofAS and MLPCC are also registered as futures commission merchants and are subject to U.S. Commodity Futures Trading Commission (CFTC) Regulation 1.17.

MLPF&S computes its minimum capital requirement in accordance with Rule 15c3-1. At June 30, 2019, MLPF&S' regulatory net capital was $3.9 billion which exceeded the minimum requirement of $111 million by $3.8 billion.

BofAS also computes its minimum capital requirement in accordance with Rule 15c3-1. In accordance therewith, BofAS 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 June 30, 2019, BofAS had tentative net capital of $12.7 billion. BofAS also had regulatory net capital of $10.6 billion which exceeded the minimum requirement of $2.1 billion by $8.5 billion.

MLPCC is a fully-guaranteed subsidiary of BofAS and provides clearing and settlement services. At June 30, 2019, MLPCC’s regulatory net capital of $4.3 billion exceeded the minimum requirement of $1.1 billion by $3.2 billion.

Our European broker-dealers are subject to regulation 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 June 30, 2019, MLI’s capital resources were $35.0 billion, which exceeded the minimum Pillar 1 requirement of $13.7 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 June 30, 2019, BofASE's capital resources were $2.8 billion which exceeded the minimum Pillar 1 requirement of $1.0 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



25 Bank of America

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




Table 14	Average Global Liquidity Sources

		Three Months Ended
(Dollars in billions)		June 30 2019		December 31 2018
Parent company and NB Holdings		$	64	$	76
Bank subsidiaries		432		420
Other regulated entities		56		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 June 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 15 presents the composition of average GLS for the three months ended June 30, 2019 and December 31, 2018.




Table 15	Average Global Liquidity Sources Composition

		Three Months Ended
(Dollars in billions)		June 30 2019		December 31 2018
Cash on deposit		$	101	$	113
U.S. Treasury securities		97		81
U.S. agency securities and mortgage-backed securities		341		340
Non-U.S. government securities		13		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 $449 billion and $446 billion for the three months ended June 30, 2019 and December 31, 2018. For the same periods, the average consolidated LCR was 115 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 $1.38 trillion at both June 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 six months ended June 30, 2019, we issued $32.6 billion of long-term debt consisting of $19.4 billion for Bank of



		Bank of America 26

America Corporation, substantially all of which was TLAC eligible, $6.1 billion for Bank of America, N.A. and $7.1 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 six months ended June 30, 2019, we had total long-term debt maturities and redemptions in the aggregate of $33.8 billion consisting of $13.2 billion for Bank of America Corporation, $16.1 billion for Bank of America, N.A. and $4.5 billion of other debt. Table 16 presents the carrying value of aggregate annual contractual maturities of long-term debt at June 30, 2019.




Table 16	Long-term Debt by Maturity

(Dollars in millions)		Remainder of 2019		2020		2021		2022		2023		Thereafter		Total
Bank of America Corporation
Senior notes ⁽¹⁾		$	3,568	$	10,363	$	15,988	$	14,983	$	23,141	$	89,364	$	157,407
Senior structured notes		1,204		848		500		2,030		315		12,131		17,028
Subordinated notes		—		—		347		383		—		21,586		22,316
Junior subordinated notes		—		—		—		—		—		736		736
Total Bank of America Corporation		4,772		11,211		16,835		17,396		23,456		123,817		197,487
Bank of America, N.A.
Senior notes		—		2,750		2,000		—		511		20		5,281
Subordinated notes		—		—		—		—		—		1,732		1,732
Advances from Federal Home Loan Banks		2,004		2,510		2		3		1		100		4,620
Securitizations and other Bank VIEs ⁽²⁾		—		3,099		4,023		—		—		—		7,122
Other		229		92		—		3		127		92		543
Total Bank of America, N.A.		2,233		8,451		6,025		6		639		1,944		19,298
Other debt
Structured liabilities		2,649		3,910		1,341		816		1,018		11,224		20,958
Nonbank VIEs ⁽²⁾		—		—		—		—		1		267		268
Total other debt		2,649		3,910		1,341		816		1,019		11,491		21,226
Total long-term debt		$	9,654	$	23,572	$	24,201	$	18,218	$	25,114	$	137,252	$	238,011

⁽¹⁾

Total includes $101.1 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 $7.4 billion, $11.7 billion, $14.9 billion and $10.7 billion that will do so during each of 2020 through 2023, respectively, and $55.4 billion thereafter.


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

Table 17 presents our long-term debt by major currency at June 30, 2019 and December 31, 2018.




Table 17	Long-term Debt by Major Currency

(Dollars in millions)		June 30 2019		December 31 2018
U.S. dollar		$	186,394	$	180,724
Euro		34,490		34,328
British pound		5,453		5,450
Japanese yen		4,302		3,038
Canadian dollar		3,871		2,936
Australian dollar		1,822		1,722
Other		1,679		1,194
Total long-term debt		$	238,011	$	229,392

Total long-term debt increased $8.6 billion during the six months ended June 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 45.

We may issue unsecured debt in the form of structured notes for client purposes, certain of which qualify as TLAC-eligible debt. During the six months ended June 30, 2019, we issued $4.7 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.

On June 12, 2019, Fitch Ratings (Fitch) completed its periodic review of the 12 large, complex securities trading and universal banks, including Bank of America Corporation. The agency affirmed the long-term and short-term senior debt ratings of the Corporation



27 Bank of America

and all of its rated subsidiaries, except Bank of America Merrill Lynch International Designated Activity Company, which Fitch upgraded by one notch to AA-/F1+. The rating outlook for all long-term ratings is currently stable.

On March 6, 2019, Moody’s Investors Service (Moody’s) upgraded the long-term and short-term ratings of the Corporation by one notch to A2/P-1 from A3/P-2 for senior debt, as well as the long-term ratings of its rated subsidiaries, including BANA, which the agency upgraded to Aa2 from Aa3 for senior debt. Moody’s concurrently affirmed the short-term ratings of the Corporation’s rated subsidiaries, including BANA. Moody’s cited the Corporation’s strengthening profitability, continued adherence to a conservative risk profile and stable capital ratios as rationale for the upgrade. This concluded the review for upgrade that Moody’s initiated on December 5, 2018. The rating outlook for all long-term ratings is currently stable.

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. Table 18 presents the Corporation’s current long-term/short-term senior debt ratings and outlooks expressed by the rating agencies.

BofAS and BofASE, which were initially rated by S&P and Fitch during the first quarter of 2019, are now operational in the U.S. and European Economic Area (excluding the U.K.). The long-term and the short-term debt ratings of both entities were unchanged during the second 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.

Table 18

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 35, Non-U.S. Portfolio on page 40, Provision for Credit Losses on page 41, Allowance for Credit Losses on page 41, 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 six months ended June 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 $113 million decrease in the consumer allowance for loan and lease losses during the six months ended June 30, 2019 to $4.7 billion. For additional information, see Allowance for Credit Losses on page 41.

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 19 presents our outstanding consumer loans and leases, consumer nonperforming loans and accruing consumer loans past due 90 days or more. Nonperforming loans do not include past due consumer credit card loans, other unsecured loans and in general, consumer loans not secured by real estate (bankruptcy loans are included) as these loans are typically charged off no later than the end of the month in which the loan becomes 180 days past due. Real estate-secured past due consumer loans that



		Bank of America 28

are insured by the FHA or individually insured under long-term standby agreements with Fannie Mae and Freddie Mac (collectively, the fully-insured loan portfolio) are reported as accruing as opposed to nonperforming since the principal repayment is insured. Fully-insured loans included in accruing past due 90 days or more are primarily from our repurchases of delinquent FHA loans

pursuant to our servicing agreements with the Government National Mortgage Association (GNMA). Nonperforming loans and accruing balances past due 90 days or more also do not include loans accounted for under the fair value option even though the customer may be contractually past due.




Table 19	Consumer Credit Quality

		Outstandings				Nonperforming						Accruing Past Due 90 Days or More
(Dollars in millions)		June 30 2019		December 31 2018		June 30 2019			December 31 2018			June 30 2019			December 31 2018
Residential mortgage⁽¹⁾		$	219,929	$	208,557	$	1,744		$	1,893		$	1,364		$	1,884
Home equity		44,134		48,286		1,203			1,893			—			—
U.S. credit card		93,989		98,338		n/a			n/a			941			994
Direct/Indirect consumer ⁽²⁾		90,850		91,166		80			56			28			38
Other consumer		174		202		—			—			—			—
Consumer loans excluding loans accounted for under the fair value option		$	449,076	$	446,549	$	3,027		$	3,842		$	2,333		$	2,916
Loans accounted for under the fair value option ⁽³⁾		658		682
Total consumer loans and leases		$	449,734	$	447,231
Percentage of outstanding consumer loans and leases ⁽⁴⁾		n/a		n/a		0.67		%	0.86		%	0.52		%	0.65		%
Percentage of outstanding consumer loans and leases, excluding fully-insured loan portfolios ⁽⁴⁾		n/a		n/a		0.70			0.90			0.23			0.24

⁽¹⁾

Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At June 30, 2019 and December 31, 2018, residential mortgage includes $1.1 billion 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 $344 million and $383 million, U.S. securities-based lending loans of $36.5 billion and $37.0 billion, non-U.S. consumer loans of $2.9 billion and $2.9 billion and other consumer loans of $811 million and $746 million at June 30, 2019 and December 31, 2018.


⁽³⁾	Consumer loans accounted for under the fair value option include residential mortgage loans of $300 million and $336 million and home equity loans of $358 million and $346 million at June 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 June 30, 2019 and December 31, 2018, $10 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 20 presents net charge-offs and related ratios for consumer loans and leases.




Table 20	Consumer Net Charge-offs and Related Ratios

		Net Charge-offs										Net Charge-off Ratios ⁽¹⁾
		Three Months Ended June 30					Six Months Ended June 30					Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)		2019			2018		2019			2018		2019		2018		2019		2018
Residential mortgage		$	3		$	7	$	(13	)	$	1	0.01	%	0.01	%	(0.01	)%	—	%
Home equity		(155		)	—		(144		)	33		(1.36	)	—		(0.62	)	0.12
U.S. credit card		762			739		1,507			1,440		3.26		3.17		3.22		3.09
Direct/Indirect consumer		40			41		94			100		0.18		0.18		0.21		0.21
Other consumer		41			43		82			86		n/m		n/m		n/m		n/m
Total		$	691		$	830	$	1,526		$	1,660	0.62		0.74		0.69		0.75


⁽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 21 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 21 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 21, outstanding core consumer real estate loans increased $11.1 billion during the six months ended June 30, 2019 driven by an increase of $13.5 billion in residential mortgage, partially offset by a $2.4 billion decrease in home equity. During the three and six months ended June 30, 2019, we sold $891 million and $1.8 billion of consumer real estate loans.



29 Bank of America




Table 21	Consumer Real Estate Portfolio ⁽¹⁾

		Outstandings				Nonperforming				Net Charge-offs
		June 30 2019		December 31 2018		June 30 2019		December 31 2018		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)										2019			2018			2019			2018
Core portfolio
Residential mortgage		$	207,257	$	193,695	$	989	$	1,010	$	7		$	4		$	4		$	13
Home equity		37,577		40,010		727		955		10			14			31			37
Total core portfolio		244,834		233,705		1,716		1,965		17			18			35			50
Non-core portfolio
Residential mortgage		12,672		14,862		755		883		(4		)	3			(17		)	(12		)
Home equity		6,557		8,276		476		938		(165		)	(14		)	(175		)	(4		)
Total non-core portfolio		19,229		23,138		1,231		1,821		(169		)	(11		)	(192		)	(16		)
Consumer real estate portfolio
Residential mortgage		219,929		208,557		1,744		1,893		3			7			(13		)	1
Home equity		44,134		48,286		1,203		1,893		(155		)	—			(144		)	33
Total consumer real estate portfolio		$	264,063	$	256,843	$	2,947	$	3,786	$	(152	)	$	7		$	(157	)	$	34

						Allowance for Loan and Lease Losses				Provision for Loan and Lease Losses
						June 30 2019		December 31 2018		Three Months Ended June 30						Six Months Ended June 30
										2019			2018			2019			2018
Core portfolio
Residential mortgage						$	217	$	214	$	11		$	1		$	7		$	9
Home equity						164		228		(11		)	(23		)	(33		)	(24		)
Total core portfolio						381		442		—			(22		)	(26		)	(15		)
Non-core portfolio
Residential mortgage						141		208		(21		)	(39		)	(52		)	(125		)
Home equity						197		278		(218		)	(60		)	(231		)	(109		)
Total non-core portfolio						338		486

Form: 10-Q

Documents

FORM 10-Q

INDEX

Part I. Financial Information

Part II. Other Information

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

Recent Developments

Financial Highlights

Supplemental Financial Data

Business Segment Operations

Consumer Banking

Global Wealth & Investment Management

Global Banking

Global Markets

All Other

Off-Balance Sheet Arrangements and Contractual Obligations

Managing Risk

Capital Management

Liquidity Risk

Credit Risk Management

Consumer Portfolio Credit Risk Management

10-Q: Quarterly report pursuant to Section 13 or 15(d)

FORM 10-Q

INDEX

Part I. Financial Information

Part II. Other Information

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

Recent Developments

Financial Highlights

Supplemental Financial Data

Business Segment Operations

Consumer Banking

Global Wealth & Investment Management

Global Banking

Global Markets

All Other

Off-Balance Sheet Arrangements and Contractual Obligations

Managing Risk

Capital Management

Liquidity Risk

Credit Risk Management

Consumer Portfolio Credit Risk Management