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 March 31, 2020

☐ 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 PrC	New York Stock Exchange
of 6.200% Non-Cumulative Preferred Stock, Series CC
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrA	New York Stock Exchange
of 6.000% Non-Cumulative Preferred Stock, Series EE
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrB	New York Stock Exchange
of 6.000% Non-Cumulative Preferred Stock, Series GG
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrK	New York Stock Exchange
of 5.875% Non-Cumulative Preferred Stock, Series HH
7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series L	BAC PrL	New York Stock Exchange
Depositary Shares, each representing a 1/1,200th interest in a share	BML PrG	New York Stock Exchange
of Bank of America Corporation Floating Rate
Non-Cumulative Preferred Stock, Series 1



1 Bank of America



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

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

Yes ☑ No ☐

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

Yes ☑ No ☐

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



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

Emerging growth company ☐

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

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

Yes ☐ No ☑

On April 30, 2020, there were 8,675,610,948 shares of Bank of America Corporation Common Stock outstanding.



		Bank of America 2

Bank of America Corporation and Subsidiaries

March 31, 2020

Form 10-Q

INDEX

Part I. Financial Information



Item 1. Financial Statements		Page
Consolidated Statement of Income		46
Consolidated Statement of Comprehensive Income		46
Consolidated Balance Sheet		47
Consolidated Statement of Changes in Shareholders’ Equity		48
Consolidated Statement of Cash Flows		49
Notes to Consolidated Financial Statements		50
Note 1 – Summary of Significant Accounting Principles		50
Note 2 – Net Interest Income and Noninterest Income		53
Note 3 – Derivatives		54
Note 4 – Securities		61
Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses		64
Note 6 – Securitizations and Other Variable Interest Entities		72
Note 7 – Goodwill and Intangible Assets		75
Note 8 – Leases		76
Note 9 – Federal Funds Sold or Purchased, Securities Financing Agreements, Short-term Borrowings and Restricted Cash		76
Note 10 – Commitments and Contingencies		78
Note 11 – Shareholders’ Equity		81
Note 12 – Earnings Per Common Share		82
Note 13 – Accumulated Other Comprehensive Income (Loss)		82
Note 14 – Fair Value Measurements		83
Note 15 – Fair Value Option		89
Note 16 – Fair Value of Financial Instruments		90
Note 17 – Business Segment Information		91
Glossary		94
Acronyms		95



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary		3
Recent Developments		3
Financial Highlights		5
Supplemental Financial Data		7
Business Segment Operations		10
Consumer Banking		10
Global Wealth & Investment Management		12
Global Banking		14
Global Markets		16
All Other		17
Off-Balance Sheet Arrangements and Contractual Obligations		18
Managing Risk		18
Capital Management		18
Liquidity Risk		23
Credit Risk Management		25
Consumer Portfolio Credit Risk Management		25
Commercial Portfolio Credit Risk Management		31
Non-U.S. Portfolio		37
Allowance for Credit Losses		37
Market Risk Management		40
Trading Risk Management		40
Interest Rate Risk Management for the Banking Book		41
Mortgage Banking Risk Management		44
Complex Accounting Estimates		44
Non-GAAP Reconciliations		45

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



1 Bank of America

Part II. Other Information



Item 1. Legal Proceedings		96
Item 1A. Risk Factors		96
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		97
Item 6. Exhibits		98
Signature		98

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 2019 Annual Report on Form 10-K and in any of the Corporation’s subsequent Securities and Exchange Commission filings: the Corporation’s potential judgments, claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory and government actions, including as a result of our participation in and execution of government programs related to the COVID-19 pandemic; the possibility that the Corporation’s future liabilities may be in excess of its recorded liability and estimated range of possible loss for litigation, regulatory, and representations and warranties exposures; the possibility that the Corporation could face increased servicing, fraud, indemnity, contribution or other claims from one or more counterparties, including trustees, purchasers of loans, underwriters, issuers, monolines, private-label and other investors, or other parties involved in securitizations; the Corporation’s ability to resolve representations and warranties repurchase and related claims, including claims brought by investors or trustees seeking to avoid the statute of limitations for repurchase claims; the risks related to the discontinuation of the London InterBank Offered Rate and other reference rates, including increased expenses and litigation and the effectiveness of hedging strategies; uncertainties about the financial stability and growth rates of non-U.S. jurisdictions, the risk that those jurisdictions may face difficulties servicing their sovereign debt, and related stresses on financial markets, currencies and trade, and the Corporation’s exposures to such risks, including direct, indirect and operational; the impact of U.S. and global interest rates, inflation, currency exchange rates, economic conditions, trade policies and tensions, including tariffs, and potential geopolitical instability; the impact of the interest rate environment on the Corporation’s business, financial condition and

results of operations; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior, adverse developments with respect to U.S. or global economic conditions and other uncertainties; the Corporation’s ability to achieve its expense targets and expectations regarding net interest income, provision for credit losses, net charge-offs, effective tax rate, loan growth or other projections; adverse changes to the Corporation’s credit ratings from the major credit rating agencies; an inability to access capital markets or maintain deposits or borrowing costs; estimates of the fair value and other accounting values, subject to impairment assessments, of certain of the Corporation’s assets and liabilities; the estimated or actual impact of changes in accounting standards or assumptions in applying those standards; 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, derivatives regulations and the Coronavirus Aid, Relief, and Economic Security Act and any similar or related rules and regulations; a failure or disruption in or breach of the Corporation’s operational or security systems or infrastructure, or those of third parties, including as a result of cyber attacks or campaigns; the impact on the Corporation’s business, financial condition and results of operations from the United Kingdom's exit from the European Union; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt limit; the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic and its impact on the U.S. and/or global economy, financial market conditions and our business, results of operations and financial condition; the impact of natural disasters, military conflict, terrorism or other geopolitical events; 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,” “we,” “us” and “our” 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 March 31, 2020, the Corporation had $2.6 trillion in assets and a headcount of approximately 209,000 employees.

As of March 31, 2020, we served clients through operations across the U.S., its territories and approximately 35 countries. Our retail banking footprint covers approximately 90 percent of the U.S. population, and we serve approximately 66 million consumer and small business clients with approximately 4,300 retail financial centers, approximately 16,900 ATMs, and leading digital banking platforms (www.bankofamerica.com) with more than 39 million active users, including approximately 30 million active mobile users. We offer industry-leading support to approximately three million small business owners. Our wealth management businesses, with client balances of $2.7 trillion, provide tailored solutions to meet client needs through a full set of investment management, brokerage, banking, trust and retirement products. We are a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world.

Recent Developments

Capital Management

During the first quarter of 2020, we repurchased $6.4 billion of common stock pursuant to the Board of Directors’ (the Board) repurchase authorization under our 2019 Comprehensive Capital Analysis and Review (CCAR) plan, including repurchases to offset equity-based compensation awards.

As announced on March 15, 2020, due to the impact of the Coronavirus Disease 2019 (COVID-19) pandemic on the global economy, we temporarily suspended common stock repurchases from the date of the announcement through the end of the second quarter of 2020. We made this decision to enable us to provide maximum support to our customers and the broader economy through lending and other services. The suspension does not include repurchases to offset shares issued under equity compensation plans. As a well-capitalized financial institution, we may reinstate our repurchase program at such time as our Board deems advisable, taking into account economic conditions and other considerations. For more information on our capital resources, see Capital Management on page 18.

COVID-19 Pandemic 2020

In the first quarter of 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The COVID-19 pandemic has resulted in authorities implementing numerous measures attempting to contain the spread and impact of COVID-19, such

as travel bans and restrictions, quarantines, shelter-in-place orders and limitations on business activity, including closures. These measures are, among other things, severely restricting global economic activity, which is disrupting global supply chains, lowering asset valuations, significantly increasing unemployment and underemployment levels, decreasing liquidity in markets for certain securities and causing significant volatility and disruptions in the financial, energy and commodity markets. These measures have also negatively impacted, and could continue to negatively impact businesses, market participants, our counterparties and clients, and the U.S. and/or global economy for a prolonged period of time.

To address the economic impact in the U.S., in March and April 2020, the President signed into law four economic stimulus packages to provide relief to businesses and individuals, including the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Among other measures, the CARES Act created funding for the Small Business Administration (SBA) Paycheck Protection Program (PPP), which provides loans to small businesses to keep their employees on payroll and make other eligible payments. The original funding for the PPP was fully allocated by mid-April 2020, with additional funding made available on April 24, 2020 under the Paycheck Protection Program and Health Care Enhancement Act.

On April 9, 2020, the Board of Governors of the Federal Reserve System (Federal Reserve) took additional steps to bolster the economy by providing additional funding sources for small and mid-sized businesses as well as for state and local governments as they work through cash flow stresses caused by the COVID-19 pandemic. Additionally, the Federal Reserve has taken other steps to provide fiscal and monetary stimuli, including reducing the federal funds rate and the interest rate on the Federal Reserve’s discount window, and implementing programs to promote liquidity in certain securities markets. The Federal Reserve, along with other U.S. banking regulators, has also issued interagency guidance to financial institutions that are working with borrowers affected by COVID-19.

In response to the pandemic, we have implemented protocols and processes to help protect our employees, community partners and clients. These measures include:

●

Operating our businesses from remote locations, leveraging our business continuity plans and capabilities that include having the majority of employees work from home, and other employees operating using pre-planned contingency strategies for critical site-based operations. These capabilities have allowed us to continue to service our clients. We will continue to manage the increased operational risk related to the execution of our business continuity plans in accordance with our Risk Framework and Operational Risk Management Program.

●

Offering assistance to our commercial, consumer and small business clients affected by the COVID-19 pandemic, which includes payment deferrals, refunds of certain fees, pausing foreclosure sales, evictions and repossessions, participation in the CARES Act and Federal Reserve lending programs for businesses, including the SBA PPP, and continuing to provide access to the important financial services on which our clients rely. For more information, see Credit Risk Management on page 25 and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.


●	Temporarily suspending common stock repurchases, except those offsetting shares issued under equity compensation plans, to maximize capital and liquidity resources. For more



3 Bank of America

information, see Capital Management on page 18, and Liquidity Risk on page 23.


●	Pledging $100 million to local communities to purchase medical supplies, food and other priorities.

In connection with reviewing our financial condition in light of the pandemic, we evaluated our assets, including goodwill and other intangibles and equity investments, for potential impairment, and reviewed fair values of financial instruments that are carried at fair value. Based upon our review as of March 31, 2020, no impairments have been recorded and there have been no significant changes in fair value hierarchy classifications. We have also elected to delay for two years the phase-in of the capital impact from our adoption of the new accounting standard on credit losses. For more information, see Capital Management on page 18.

The Corporation has implemented various consumer and commercial loan modification programs to provide its borrowers

relief from the economic impacts of COVID-19. Based on guidance

in the CARES Act that the Corporation adopted, COVID-19 related modifications to consumer and commercial loans that were current as of December 31, 2019 are exempt from troubled debt

restructuring (TDR) classification under accounting principles generally accepted in the United States of America (GAAP). In addition, the bank regulatory agencies issued interagency guidance stating that COVID-19 related short-term modifications (i.e., six months or less) granted to consumer or commercial loans that were current as of the loan modification program implementation date are not TDRs. For more information, see Note 1 – Summary of Significant Accounting Principles and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.

The table below provides a summary of the percentage of our loans and loan balances that we have modified in response to COVID-19 under payment deferral or forbearance programs, none of which are classified as TDRs.




Table 1	Client Loan Modifications

		April 27, 2020
		% of Accounts with Completed Modifications		% of Balances with Completed Modifications		Program Details
Consumer and Small Business Credit Card		4	%	8	%	Deferral of up to 90 days for Consumer and Small Business; interest continues to accrue and is added to principal balance each month
Small Business loans and lines of credit		19		41		Deferral of 90 days; for loans, interest continues to accrue and deferred payment is added to end of loan; for lines, interest continues to accrue and is added to principal balance when deferral ends
Mortgage and home equity lines of credit ⁽¹⁾		5		7		Deferral of 90 days; interest continues to accrue and deferred payment is added to end of loan
Consumer vehicle lending ⁽²⁾		5		6		Deferral of 60 days for Consumer; deferral of 90 days for Small Business; interest continues to accrue and deferred payment is added to end of loan
Commercial loans ⁽³⁾		3		1		Primarily deferral of up to 90 days; interest continues to accrue with various repayment options; may include short-term covenant waivers
Total		4	%	4	%


⁽¹⁾	Mortgage and home equity lines of credit includes loans that are held for investment (owned by Bank of America).


⁽²⁾	Vehicle lending includes both consumer and small business.


⁽³⁾	Statistics represent clients who have been given temporary deferment of principal and/or interest for a defined period of time.

Given the unprecedented uncertainty and rapidly evolving economic effects and social impacts of the COVID-19 pandemic, the future direct and indirect impact on our business, results of operations and financial condition are highly uncertain. Should current economic conditions persist or continue to deteriorate, we expect that this macroeconomic environment will have a continued adverse effect on our business and results of operations, which could include, but not be limited to: decreased demand for our products and services, protracted periods of lower interest rates, lower asset management fees, lower sales and trading revenue due to decreased market liquidity resulting from heightened volatility, increased noninterest expenses, including operational losses, and increased credit losses due to deterioration in the financial condition of our consumer and commercial borrowers, including declining asset and collateral values, which may continue to increase our provision for credit losses and net charge-offs. Our provision for credit losses and net charge-offs could also be impacted by continued volatility in the energy and commodity markets. For more information on how the risks related to COVID-19 may adversely affect our business, results of operations and financial condition, see Part II, Item 1A. Risk Factors on page 96.

LIBOR and Other Benchmark Rates

As previously disclosed, to facilitate an orderly transition from Interbank Offered Rates (IBORs) and other benchmark rates to

alternative reference rates (ARRs), the Corporation has established an enterprise-wide program to identify, assess and monitor risks associated with the expected discontinuation or unavailability of benchmarks, including the London InterBank Offered Rate (LIBOR). As part of this program, the Corporation continues to identify, assess and monitor risks associated with the expected discontinuation or unavailability of LIBOR and other benchmarks, and evaluate and address documentation and contractual mechanics of outstanding IBOR-based products and contracts that mature after 2021 and new and potential future ARR-based products and contracts to achieve operational readiness. This program, which is led by the Corporation’s Chief Operating Officer, includes active involvement of senior management and regular reports to the Enterprise Risk Committee. The program is structured to address the Corporation’s industry and regulatory engagement, client and financial contract changes, internal and external communications, technology and operations modifications, introduction of new products, migration of existing clients, and program strategy and governance. As the markets for ARRs continue to grow, the Corporation continues to monitor the development and usage of ARRs, including the Secured Overnight Financing Rate. Additionally, any prolonged economic and market disruptions resulting from COVID-19 may have an adverse impact on the market and industry transition to ARRs, including the readiness of other market participants and third-party vendors, and the



		Bank of America 4

Corporation’s engagement with impacted clients and their operational readiness to transition to ARRs. For more information on the expected replacement of LIBOR and other benchmark rates, see Executive Summary - Recent Developments - LIBOR and Other

Benchmark Rates in the MD&A and Item 1A. Risk Factors - Other of the Corporation’s 2019 Annual Report on Form 10-K. For more information about the Corporation's risks related to the COVID-19 pandemic, see Part II, Item 1A. Risk Factors on page 96.

Financial Highlights

Effective January 1, 2020, we adopted the new accounting standard on current expected credit losses (CECL), under which the allowance is measured based on management’s best estimate of lifetime expected credit losses. Prior periods presented reflect measurement of the allowance based on management’s estimate of probable incurred credit losses. For more information, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.




Table 2	Summary Income Statement and Selected Financial Data

		Three Months Ended March 31
(Dollars in millions, except per share information)		2020			2019
Income statement
Net interest income		$	12,130		$	12,375
Noninterest income		10,637			10,629
Total revenue, net of interest expense		22,767			23,004
Provision for credit losses		4,761			1,013
Noninterest expense		13,475			13,224
Income before income taxes		4,531			8,767
Income tax expense		521			1,456
Net income		4,010			7,311
Preferred stock dividends		469			442
Net income applicable to common shareholders		$	3,541		$	6,869

Per common share information
Earnings		$	0.40		$	0.71
Diluted earnings		0.40			0.70
Dividends paid		0.18			0.15
Performance ratios
Return on average assets ⁽¹⁾		0.65		%	1.26		%
Return on average common shareholders’ equity ⁽¹⁾		5.91			11.42
Return on average tangible common shareholders’ equity ⁽²⁾		8.32			16.01
Efficiency ratio⁽¹⁾		59.19			57.48

		March 31 2020			December 31 2019
Balance sheet
Total loans and leases		$	1,050,785		$	983,426
Total assets		2,619,954			2,434,079
Total deposits		1,583,325			1,434,803
Total liabilities		2,355,036			2,169,269
Total common shareholders’ equity		241,491			241,409
Total shareholders’ equity		264,918			264,810


⁽¹⁾	For definitions, see Key Metrics on page 95.


⁽²⁾	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, see Non-GAAP Reconciliations on page 45.

Net income was $4.0 billion, or $0.40 per diluted share, for the three months ended March 31, 2020 compared to $7.3 billion, or $0.70 per diluted share, for the same period in 2019. The decline in net income was largely due to an increase in the provision for credit losses primarily due to the deteriorating economic outlook related to COVID‐19, and to a lesser extent, an increase in noninterest expense and lower revenue.

Total assets increased $185.9 billion from December 31, 2019 to $2.6 trillion primarily driven by higher cash and cash equivalents due to elevated deposit balances, an increase in loans and leases due to commercial credit line draws as clients secure liquidity under current market conditions, and residential mortgage loan growth, and an increase in federal funds sold and securities borrowed or purchased under agreements to resell as a result of

elevated deposit balances being deployed to short-term investments.

Total liabilities increased $185.8 billion from December 31, 2019 to $2.4 trillion primarily driven by higher deposits as a result of client responses to market volatility as well as tax refund inflows, an increase in derivative liabilities driven by lower interest rates, and an increase in long-term debt due to debt issuances and a debt basis adjustment primarily due to lower interest rates.

Shareholders’ equity increased $108 million from December 31, 2019 primarily due to market value increases on debt securities and net income, partially offset by returns of capital to shareholders through common stock repurchases and common and preferred stock dividends as well as the impact of the adoption of the new credit loss accounting standard.



5 Bank of America

Net Interest Income

Net interest income decreased $245 million to $12.1 billion for the three months ended March 31, 2020 compared to the same period in 2019. Net interest yield on a fully taxable-equivalent (FTE) basis decreased 18 basis points (bps) to 2.33 percent. The decrease in net interest income was primarily driven by lower interest rates, partially offset by one additional day of interest accruals and loan and deposit growth. Based on the forward interest rate curve and other relevant assumptions at March 31, 2020, we expect net interest income of approximately $11 billion in the second quarter of 2020 which should begin to stabilize in the second half of 2020, assuming year-over-year average loan and deposit percentage growth in the mid-single digits across our businesses that would mitigate the impacts of longer-term asset repricing. For more information on net interest yield and the FTE basis, see Supplemental Financial Data on page 7, and for more information on interest rate risk management, see Interest Rate Risk Management for the Banking Book on page 41.

Noninterest Income




Table 3	Noninterest Income

		Three Months Ended March 31
(Dollars in millions)		2020			2019
Fees and commissions:
Card income		$	1,272		$	1,375
Service charges		1,903			1,839
Investment and brokerage services		3,758			3,360
Investment banking fees		1,388			1,264
Total fees and commissions		8,321			7,838
Market making and similar activities		2,807			2,768
Other income		(491		)	23
Total noninterest income		$	10,637		$	10,629

Noninterest income was relatively unchanged at $10.6 billion for the three months ended March 31, 2020 compared to the same period in 2019. The following highlights the significant changes in the components of noninterest income.


●	Card income decreased $103 million primarily driven by higher points and rewards expense.


●	Investment and brokerage services income increased $398 million primarily driven by higher market valuations, positive assets under management (AUM) flows and transactional revenue, partially offset by declines in AUM pricing.


●	Investment banking fees increased $124 million due to higher debt and equity underwriting fees.


●	Other income decreased $514 million primarily due to unrealized losses in the fair value option and leveraged finance portfolios, partially offset by higher gains on sales of debt securities.

Provision for Credit Losses

The provision for credit losses increased $3.7 billion to $4.8 billion for the three months ended March 31, 2020 compared to the same period in 2019, primarily due to a deteriorating economic outlook related to COVID-19. For more information on the provision for credit losses, see Allowance for Credit Losses on page 38.

Noninterest Expense




Table 4	Noninterest Expense

		Three Months Ended March 31
(Dollars in millions)		2020		2019
Compensation and benefits		$	8,341	$	8,249
Occupancy and equipment		1,702		1,605
Information processing and communications		1,209		1,164
Product delivery and transaction related		777		662
Marketing		438		442
Professional fees		375		360
Other general operating		633		742
Total noninterest expense		$	13,475	$	13,224

Noninterest expense increased $251 million to $13.5 billion for the three months ended March 31, 2020 compared to the same period in 2019. The increase was primarily due to investments across the franchise including in client-facing associates, employee compensation programs, technology and real estate, and an increase in revenue-related expenses, which were partially offset by efficiency savings.

Income Tax Expense




Table 5	Income Tax Expense

		Three Months Ended March 31
(Dollars in millions)		2020			2019
Income before income taxes		$	4,531		$	8,767
Income tax expense		521			1,456
Effective tax rate		11.5		%	16.6		%

The effective tax rates for the three months ended March 31, 2020 and 2019 were primarily driven by our recurring tax preference benefits and tax benefits from deductions associated with share-based compensation. The decline in the effective tax rate resulted from lower pretax income. We expect the effective tax rate for full-year 2020 to be approximately 14 to 15 percent, absent unusual items.



		Bank of America 6

Supplemental Financial Data

Non-GAAP Financial Measures

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 on an FTE basis. We believe that presentation of these items on an FTE basis allows for comparison of amounts from both taxable and tax-exempt sources and is consistent with industry practices.

We may present certain key performance indicators and ratios excluding certain items (e.g., debit valuation adjustment (DVA) gains (losses)) which result in non-GAAP financial measures. We believe that the presentation of measures that exclude these items is useful because such measures provide additional information to assess the underlying operational performance and trends of our businesses and to allow better comparison of period-to-period operating performance.

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

equity as key measures to support our overall growth goals. These ratios are as follows:


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


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


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

We believe that the use of ratios that utilize tangible equity provides additional useful information because they present measures of those assets that can generate income. Tangible book value per common share provides additional useful information about the level of tangible assets in relation to outstanding shares of common stock.

The aforementioned supplemental data and performance measures are presented in Tables 6 and 7.

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

Key Performance Indicators

We present certain key financial and nonfinancial performance indicators (key performance indicators) that management uses when assessing our consolidated and/or segment results. We believe they are useful to investors because they provide additional information about our underlying operational performance and trends. These key performance indicators (KPIs) may not be defined or calculated in the same way as similar KPIs used by other companies. For information on how these metrics are defined, see Key Metrics on page 95.

Our consolidated key performance indicators, which include various equity and credit metrics, are presented in Table 2 on page 5 and/or Table 6 on page 8.

For information on key segment performance metrics, see Business Segment Operations on page 10.



7 Bank of America




Table 6	Selected Quarterly Financial Data

		2020 Quarter			2019 Quarters
(In millions, except per share information)		First			Fourth			Third			Second			First
Income statement
Net interest income		$	12,130		$	12,140		$	12,187		$	12,189		$	12,375
Noninterest income		10,637			10,209			10,620			10,895			10,629
Total revenue, net of interest expense		22,767			22,349			22,807			23,084			23,004
Provision for credit losses		4,761			941			779			857			1,013
Noninterest expense		13,475			13,239			15,169			13,268			13,224
Income before income taxes		4,531			8,169			6,859			8,959			8,767
Income tax expense		521			1,175			1,082			1,611			1,456
Net income		4,010			6,994			5,777			7,348			7,311
Net income applicable to common shareholders		3,541			6,748			5,272			7,109			6,869
Average common shares issued and outstanding		8,815.6			9,017.1			9,303.6			9,523.2			9,725.9
Average diluted common shares issued and outstanding		8,862.7			9,079.5			9,353.0			9,559.6			9,787.3
Performance ratios
Return on average assets ⁽¹⁾		0.65		%	1.13		%	0.95		%	1.23		%	1.26		%
Four-quarter trailing return on average assets⁽²⁾		0.99			1.14			1.17			1.24			1.22
Return on average common shareholders’ equity ⁽¹⁾		5.91			11.00			8.48			11.62			11.42
Return on average tangible common shareholders’ equity⁽¹⁾		8.32			15.43			11.84			16.24			16.01
Return on average shareholders’ equity ⁽¹⁾		6.10			10.40			8.48			11.00			11.14
Return on average tangible shareholders’ equity⁽³⁾		8.29			14.09			11.43			14.88			15.10
Total ending equity to total ending assets		10.11			10.88			11.06			11.33			11.23
Total average equity to total average assets		10.60			10.89			11.21			11.17			11.28
Dividend payout		44.57			23.90			31.48			19.95			21.20
Per common share data
Earnings		$	0.40		$	0.75		$	0.57		$	0.75		$	0.71
Diluted earnings		0.40			0.74			0.56			0.74			0.70
Dividends paid		0.18			0.18			0.18			0.15			0.15
Book value ⁽¹⁾		27.84			27.32			26.96			26.41			25.57
Tangible book value ⁽³⁾		19.79			19.41			19.26			18.92			18.26
Market capitalization		$	184,181		$	311,209		$	264,842		$	270,935		$	263,992
Average balance sheet
Total loans and leases		$	990,283		$	973,986		$	964,733		$	950,525		$	944,020
Total assets		2,494,928			2,450,005			2,412,223			2,399,051			2,360,992
Total deposits		1,439,336			1,410,439			1,375,052			1,375,450			1,359,864
Long-term debt		210,816			206,026			202,620			201,007			196,726
Common shareholders’ equity		241,078			243,439			246,630			245,438			243,891
Total shareholders’ equity		264,534			266,900			270,430			267,975			266,217
Asset quality
Allowance for credit losses ⁽⁴⁾		$	17,126		$	10,229		$	10,242		$	10,333		$	10,379
Nonperforming loans, leases and foreclosed properties ⁽⁵⁾		4,331			3,837			3,723			4,452			5,145
Allowance for loan and lease losses as a percentage of total loans and leases outstanding ⁽⁵⁾		1.51		%	0.97		%	0.98		%	1.00		%	1.02		%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases ⁽⁵⁾		389			265			271			228			197
Net charge-offs		$	1,122		$	959		$	811		$	887		$	991
Annualized net charge-offs as a percentage of average loans and leases outstanding ⁽⁵⁾		0.46		%	0.39		%	0.34		%	0.38		%	0.43		%
Capital ratios at period end ⁽⁶⁾
Common equity tier 1 capital		10.8		%	11.2		%	11.4		%	11.7		%	11.6		%
Tier 1 capital		12.3			12.6			12.9			13.3			13.1
Total capital		14.6			14.7			15.1			15.4			15.2
Tier 1 leverage		7.9			7.9			8.2			8.4			8.4
Supplementary leverage ratio		6.4			6.4			6.6			6.8			6.8
Tangible equity⁽³⁾		7.7			8.2			8.4			8.7			8.5
Tangible common equity ⁽³⁾		6.7			7.3			7.4			7.6			7.6
Total loss-absorbing capacity and long-term debt metrics
Total loss-absorbing capacity to risk-weighted assets		24.6		%	24.6		%	24.8		%	25.5		%	24.8		%
Total loss-absorbing capacity to supplementary leverage exposure		12.8			12.5			12.7			13.0			12.8
Eligible long-term debt to risk-weighted assets		11.6			11.5			11.4			11.8			11.4
Eligible long-term debt to supplementary leverage exposure		6.1			5.8			5.8			6.0			5.9


⁽¹⁾	For definitions, see Key Metrics on page 95.


⁽²⁾	Calculated as total net income for four consecutive quarters divided by annualized average assets for four consecutive quarters.


⁽³⁾	Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. For more information on these ratios and corresponding reconciliations to GAAP financial measures, see Supplemental Financial Data on page 7 and Non-GAAP Reconciliations on page 45.


⁽⁴⁾	Includes the allowance for loan and lease losses and the reserve for unfunded lending commitments.

⁽⁵⁾

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 31 and corresponding Table 27 and Commercial Portfolio Credit Risk Management – Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page 35 and corresponding Table 34.


⁽⁶⁾	For more information, including which approach is used to assess capital adequacy, see Capital Management on page 18.



		Bank of America 8




Table 7	Quarterly Average Balances and Interest Rates - FTE Basis

		Average Balance		Interest Income/ Expense ⁽¹⁾		Yield/ Rate		Average Balance		Interest Income/ Expense ⁽¹⁾		Yield/ Rate
(Dollars in millions)		First Quarter 2020						First Quarter 2019
Earning assets
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		$	130,282	$	268	0.83	%	$	134,962	$	506	1.52	%
Time deposits placed and other short-term investments		10,894		30		1.11		8,453		59		2.82
Federal funds sold and securities borrowed or purchased under agreements to resell		278,794		819		1.18		274,308		1,195		1.77
Trading account assets		156,685		1,266		3.25		140,228		1,341		3.87
Debt securities		465,215		2,868		2.49		441,680		3,148		2.83
Loans and leases ⁽²⁾:
Residential mortgage		239,994		1,987		3.31		210,174		1,862		3.55
Home equity		40,040		421		4.22		47,690		593		5.03
Credit card		94,471		2,464		10.49		95,008		2,530		10.80
Direct/Indirect and other consumer ⁽³⁾		90,954		746		3.30		90,430		821		3.69
Total consumer		465,459		5,618		4.85		443,302		5,806		5.29
U.S. commercial		330,420		2,846		3.46		316,089		3,349		4.29
Non-U.S. commercial		111,388		802		2.90		101,996		886		3.52
Commercial real estate ⁽⁴⁾		63,418		583		3.70		60,859		702		4.68
Commercial lease financing		19,598		161		3.29		21,774		196		3.60
Total commercial		524,824		4,392		3.36		500,718		5,133		4.15
Total loans and leases		990,283		10,010		4.06		944,020		10,939		4.69
Other earning assets		87,876		981		4.49		67,667		1,135		6.80
Total earning assets		2,120,029		16,242		3.08		2,011,318		18,323		3.68
Cash and due from banks		27,997						25,824
Other assets, less allowance for loan and lease losses		346,902						323,850
Total assets		$	2,494,928					$	2,360,992
Interest-bearing liabilities
U.S. interest-bearing deposits:
Savings		$	50,600	$	1	0.01	%	$	53,573	$	1	0.01	%
NOW and money market deposit accounts		770,474		653		0.34		731,025		1,157		0.64
Consumer CDs and IRAs		53,363		151		1.14		41,791		74		0.72
Negotiable CDs, public funds and other deposits		67,985		209		1.23		65,974		367		2.25
Total U.S. interest-bearing deposits		942,422		1,014		0.43		892,363		1,599		0.73
Non-U.S. interest-bearing deposits:
Banks located in non-U.S. countries		1,904		3		0.60		2,387		6		1.02
Governments and official institutions		161		—		0.05		178		—		0.11
Time, savings and other		75,625		167		0.89		64,212		190		1.20
Total non-U.S. interest-bearing deposits		77,690		170		0.88		66,777		196		1.19
Total interest-bearing deposits		1,020,112		1,184		0.47		959,140		1,795		0.76
Federal funds purchased, securities loaned or sold under agreements to repurchase, short-term borrowings and other interest-bearing liabilities		304,503		1,120		1.48		265,163		1,852		2.83
Trading account liabilities		48,142		329		2.75		45,593		345		3.07
Long-term debt		210,816		1,335		2.54		196,726		1,803		3.69
Total interest-bearing liabilities		1,583,573		3,968		1.01		1,466,622		5,795		1.60
Noninterest-bearing sources:
Noninterest-bearing deposits		419,224						400,724
Other liabilities ⁽⁵⁾		227,597						227,429
Shareholders’ equity		264,534						266,217
Total liabilities and shareholders’ equity		$	2,494,928					$	2,360,992
Net interest spread						2.07	%					2.08	%
Impact of noninterest-bearing sources						0.26						0.43
Net interest income/yield on earning assets ⁽⁶⁾				$	12,274	2.33	%			$	12,528	2.51	%


⁽¹⁾	Includes the impact of interest rate risk management contracts. For more information, see Interest Rate Risk Management for the Banking Book on page 41.


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


⁽³⁾	Includes non-U.S. consumer loans of $2.9 billion and $2.8 billion for the first quarter of 2020 and 2019.


⁽⁴⁾	Includes U.S. commercial real estate loans of $59.6 billion and $56.4 billion, and non-U.S. commercial real estate loans of $3.8 billion and $4.5 billion for the first quarter of 2020 and 2019.


⁽⁵⁾	Includes $35.7 billion and $31.4 billion of structured notes and liabilities for the first quarter of 2020 and 2019.


⁽⁶⁾	Net interest income includes FTE adjustments of $144 million and $153 million for the first quarter of 2020 and 2019.



9 Bank of America

Business Segment Operations

Segment Description and Basis of Presentation

We report our results of operations through the following four business segments: Consumer Banking, GWIM, Global Banking and Global Markets, with the remaining operations recorded in All Other. We manage our segments and report their results on an FTE basis. For more information, see Business Segment Operations in the MD&A of the Corporation’s 2019 Annual Report on Form 10-K.

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 18. 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 7 – 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 7, and for reconciliations to consolidated total revenue, net income and period-end total assets, see Note 17 – Business Segment Information to the Consolidated Financial Statements.

Key Performance Indicators

We present certain key financial and nonfinancial performance indicators that management uses when evaluating segment results. We believe they are useful to investors because they provide additional information about our segments’ operational performance, customer trends and business growth.

Consumer Banking




	Deposits						Consumer Lending						Total Consumer Banking
	Three Months Ended March 31
(Dollars in millions)	2020			2019			2020			2019			2020			2019			% Change
Net interest income	$	3,948		$	4,307		$	2,914		$	2,799		$	6,862		$	7,106		(3	)%
Noninterest income:
Card income	(8		)	(7		)	1,118			1,204			1,110			1,197			(7	)
Service charges	995			1,020			—			—			995			1,020			(2	)
All other income	97			232			65			77			162			309			(48	)
Total noninterest income	1,084			1,245			1,183			1,281			2,267			2,526			(10	)
Total revenue, net of interest expense	5,032			5,552			4,097			4,080			9,129			9,632			(5	)

Provision for credit losses	115			46			2,143			928			2,258			974			132
Noninterest expense	2,725			2,655			1,770			1,712			4,495			4,367			3
Income before income taxes	2,192			2,851			184			1,440			2,376			4,291			(45	)
Income tax expense	537			698			45			353			582			1,051			(45	)
Net income	$	1,655		$	2,153		$	139		$	1,087		$	1,794		$	3,240		(45	)

Effective tax rate ⁽¹⁾													24.5		%	24.5		%

Net interest yield	2.17		%	2.52		%	3.76		%	3.95		%	3.57			3.96
Return on average allocated capital	55			73			2			18			19			36
Efficiency ratio	54.14			47.80			43.20			41.98			49.23			45.33

Balance Sheet
	Three Months Ended March 31
Average	2020			2019			2020			2019			2020			2019			% Change
Total loans and leases	$	5,435		$	5,311		$	311,511		$	286,956		$	316,946		$	292,267		8	%
Total earning assets⁽²⁾	731,928			693,091			312,127			287,259			773,635			727,390			6
Total assets ⁽²⁾	764,117			724,559			317,580			297,729			811,277			769,328			5
Total deposits	731,277			692,234			5,392			4,767			736,669			697,001			6
Allocated capital	12,000			12,000			26,500			25,000			38,500			37,000			4

Period end	March 31 2020			December 31 2019			March 31 2020			December 31 2019			March 31 2020			December 31 2019			% Change
Total loans and leases	$	5,466		$	5,467		$	312,069		$	311,942		$	317,535		$	317,409		—	%
Total earning assets ⁽²⁾	756,869			724,573			312,739			312,684			800,143			760,174			5
Total assets⁽²⁾	789,846			758,459			317,141			322,717			837,522			804,093			4
Total deposits	756,873			725,665			5,514			5,080			762,387			730,745			4


⁽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.

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 2019 Annual Report on Form 10-K.

Consumer Banking Results

Net income for Consumer Banking decreased $1.4 billion to $1.8 billion for the three months ended March 31, 2020 compared to



		Bank of America 10

the same period in 2019 primarily due to an increase in the provision for credit losses and lower revenue.

Net interest income decreased $244 million to $6.9 billion primarily due to lower interest rates partially offset by higher deposit and loan balances in the quarter. Noninterest income decreased $259 million to $2.3 billion driven by lower other income due to the allocation of asset and liability management (ALM) results and a decline in card income.

The provision for credit losses increased $1.3 billion to $2.3 billion primarily due to the impact of COVID-19. Noninterest expense increased $128 million to $4.5 billion primarily driven by the cost of increased client activity and continued investments for business growth, partially offset by improved productivity and lower support costs.

The return on average allocated capital was 19 percent, down from 36 percent, driven by lower net income and, to a lesser extent, an increase in allocated capital. For information on capital allocated to the business segments, see Business Segment Operations on page 10.

Deposits

Net income for Deposits decreased $498 million to $1.7 billion driven by lower net interest income and noninterest income. Net interest income declined $359 million to $3.9 billion primarily due to lower interest rates, partially offset by growth in deposits. Noninterest income decreased $161 million to $1.1 billion primarily driven by lower other income due to the allocation of ALM results and lower service charges.

The provision for credit losses increased $69 million to $115 million primarily due to the impact of COVID-19. Noninterest expense increased $70 million to $2.7 billion driven by continued investments in the business, partially offset by operating efficiencies.

Average deposits increased $39.0 billion to $731.3 billion driven by strong organic growth. Growth in checking and time deposits of $36.3 billion was coupled with growth in traditional savings and money market savings of $2.6 billion.

The following table provides key performance indicators for Deposits. Management uses these metrics, and we believe they are useful to investors because they provide additional information to evaluate our deposit profitability and mobile/digital trends.




Key Statistics – Deposits

	Three Months Ended March 31
	2020			2019
Total deposit spreads (excludes noninterest costs) ⁽¹⁾	2.17		%	2.38		%

Period End
Consumer investment assets (in millions) ⁽²⁾	$	212,227		$	210,930
Active digital banking users (units in thousands) ⁽³⁾	39,075			37,034
Active mobile banking users (units in thousands) ⁽⁴⁾	29,820			27,127
Financial centers	4,297			4,353
ATMs	16,855			16,378


⁽¹⁾	Includes deposits held in Consumer Lending.


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


⁽³⁾	Active digital banking users represents mobile and/or online users over the last three months.


⁽⁴⁾	Active mobile banking users represents mobile users over the last three months.

Consumer investment assets increased $1.3 billion driven by client flows offset by market performance. Active mobile banking users increased three million reflecting continuing changes in our customers’ banking preferences. The number of financial centers declined by a net 56 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

Net income for Consumer Lending decreased $948 million to $139 million primarily due to an increase in the provision for credit losses. Revenue of $4.1 billion was relatively unchanged.

Net interest income increased $115 million to $2.9 billion driven by loan growth. Noninterest income decreased $98 million to $1.2 billion primarily driven by lower card income.

The provision for credit losses increased $1.2 billion to $2.1 billion primarily due to the impact of COVID-19. Noninterest expense increased $58 million to $1.8 billion primarily driven by investments in the business.

Average loans increased $24.6 billion to $311.5 billion primarily driven by an increase in residential mortgages.

The following table provides key performance indicators for Consumer Lending. Management uses these metrics, and we believe they are useful to investors because they provide additional information about loan growth and profitability.




Key Statistics – Consumer Lending

	Three Months Ended March 31
(Dollars in millions)	2020			2019
Total credit card ⁽¹⁾
Gross interest yield ⁽²⁾	10.49		%	10.80		%
Risk-adjusted margin ⁽³⁾	7.94			8.03
New accounts (in thousands)	1,055			1,034
Purchase volumes	$	64,379		$	62,751
Debit card purchase volumes	$	88,588		$	85,030


⁽¹⁾	Includes GWIM's credit card portfolio.


⁽²⁾	Calculated as the effective annual percentage rate divided by average loans.


⁽³⁾	Calculated as the difference between total revenue less net credit losses divided by average loans.

During the three months ended March 31, 2020, the total credit card risk-adjusted margin decreased 9 bps, primarily driven by a portfolio shift away from promotional-rate loans. Total credit card purchase volumes increased $1.6 billion to $64.4 billion, and debit card purchase volumes increased $3.6 billion to $88.6 billion, reflecting higher levels of consumer spending.




Key Statistics – Loan Production ⁽¹⁾

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Consumer Banking:
First mortgage	$	12,881	$	8,155
Home equity	$	2,641	$	2,485
Total ⁽²⁾:
First mortgage	$	18,938	$	11,460
Home equity	3,024		2,825


⁽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 $4.7 billion and $7.5 billion for the three months ended March 31, 2020 compared to the same period in 2019 primarily driven by a lower interest rate environment driving higher first-lien mortgage refinances.

Home equity production in Consumer Banking and for the total Corporation increased $156 million and $199 million, primarily driven by higher demand.



11 Bank of America

Global Wealth & Investment Management




	Three Months Ended March 31
(Dollars in millions)	2020			2019			% Change
Net interest income	$	1,571		$	1,684		(7	)%
Noninterest income:
Investment and brokerage services	3,122			2,842			10
All other income	243			294			(17	)
Total noninterest income	3,365			3,136			7
Total revenue, net of interest expense	4,936			4,820			2

Provision for credit losses	189			5			n/m
Noninterest expense	3,600			3,434			5
Income before income taxes	1,147			1,381			(17	)
Income tax expense	281			338			(17	)
Net income	$	866		$	1,043		(17	)

Effective tax rate	24.5		%	24.5		%

Net interest yield	2.17			2.40
Return on average allocated capital	23			29
Efficiency ratio	72.95			71.25

Balance Sheet
	Three Months Ended March 31
Average	2020			2019			% Change
Total loans and leases	$	178,639		$	164,403		9	%
Total earning assets	290,916			285,050			2
Total assets	303,173			297,133			2
Total deposits	263,411			261,841			1
Allocated capital	15,000			14,500			3

Period end	March 31 2020			December 31 2019			% Change
Total loans and leases	$	181,492		$	176,600		3	%
Total earning assets	311,118			287,195			8
Total assets	323,866			299,770			8
Total deposits	282,395			263,113			7

n/m = not meaningful

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 2019 Annual Report on Form 10-K.

Net income for GWIM decreased $177 million to $866 million for the three months ended March 31, 2020 compared to the same period in 2019 due to higher provision for credit losses, higher noninterest expense and lower net interest income, partially offset by higher noninterest income. The operating margin was 23 percent compared to 29 percent a year ago.

Net interest income decreased $113 million to $1.6 billion due to the impact of lower interest rates, partially offset by the impact of growth in loans and deposits.

Noninterest income, which primarily includes investment and brokerage services income, increased $229 million to $3.4 billion. The increase was primarily driven by higher market valuations, positive AUM flows and increased transactional revenue, partially

offset by declines in AUM pricing compared to the same period in 2019.

The provision for credit losses increased $184 million to $189 million primarily due to the impact of COVID-19. Noninterest expense increased $166 million to $3.6 billion, primarily due to higher revenue-related incentives along with investments for business growth.

The return on average allocated capital was 23 percent, down from 29 percent, due to lower net income and, to a lesser extent, a small increase in allocated capital.

MLGWM revenue of $4.1 billion increased three percent primarily driven by higher market valuations, positive AUM flows and increased transactional revenue, partially offset by decreases in net interest income and AUM pricing.

Bank of America Private Bank revenue of $863 million increased one percent primarily driven by higher market valuations partially offset by lower net interest income.



		Bank of America 12




Key Indicators and Metrics

	Three Months Ended March 31
(Dollars in millions, except as noted)	2020			2019
Revenue by Business
Merrill Lynch Global Wealth Management	$	4,073		$	3,965
Bank of America Private Bank	863			855
Total revenue, net of interest expense	$	4,936		$	4,820

Client Balances by Business, at period end
Merrill Lynch Global Wealth Management	$	2,215,531		$	2,384,492
Bank of America Private Bank	443,080			452,477
Total client balances	$	2,658,611		$	2,836,969

Client Balances by Type, at period end
Assets under management	$	1,092,482		$	1,169,713
Brokerage and other assets	1,155,461			1,282,091
Deposits	282,395			261,168
Loans and leases ⁽¹⁾	184,011			167,455
Less: Managed deposits in assets under management	(55,738		)	(43,458		)
Total client balances	$	2,658,611		$	2,836,969

Assets Under Management Rollforward
Assets under management, beginning of period	$	1,275,555		$	1,072,234
Net client flows	7,035			5,918
Market valuation/other	(190,108		)	91,561
Total assets under management, end of period	$	1,092,482		$	1,169,713

Associates, at period end
Number of financial advisors	17,646			17,535
Total wealth advisors, including financial advisors	19,628			19,524
Total primary sales professionals, including financial advisors and wealth advisors	20,851			20,657

Merrill Lynch Global Wealth Management Metric
Financial advisor productivity ⁽²⁾ (in thousands)	$	1,138		$	1,039

Bank of America Private Bank Metric, at period end
Primary sales professionals	1,778			1,795


⁽¹⁾	Includes margin receivables which are classified in customer and other receivables on the Consolidated Balance Sheet.


⁽²⁾	For a definition, see Key Metrics on page 95.

Client Balances

Client balances decreased $178.4 billion, or six percent, to $2.7 trillion at March 31, 2020 compared to March 31, 2019. The decrease in client balances was primarily due to lower end of period market valuations partially offset by positive net flows.



13 Bank of America

Global Banking




	Three Months Ended March 31
(Dollars in millions)	2020			2019			% Change
Net interest income	$	2,612		$	2,790		(6	%)
Noninterest income:
Service charges	796			713			12
Investment banking fees	761			709			7
All other income	431			943			(54	)
Total noninterest income	1,988			2,365			(16	)
Total revenue, net of interest expense	4,600			5,155			(11	)

Provision for credit losses	2,093			111			n/m
Noninterest expense	2,321			2,266			2
Income before income taxes	186			2,778			(93	)
Income tax expense	50			750			(93	)
Net income	$	136		$	2,028		(93	)

Effective tax rate	27.0		%	27.0		%

Net interest yield	2.57			2.98
Return on average allocated capital	1			20
Efficiency ratio	50.44			43.96

Balance Sheet
	Three Months Ended March 31
Average	2020			2019			% Change
Total loans and leases	$	386,483		$	370,108		4	%
Total earning assets	409,052			380,308			8
Total assets	465,926			434,920			7
Total deposits	382,373			349,037			10
Allocated capital	42,500			41,000			4

Period end	March 31 2020			December 31 2019			% Change
Total loans and leases	$	437,122		$	379,268		15	%
Total earning assets	505,451			407,180			24
Total assets	562,529			464,032			21
Total deposits	477,108			383,180			25

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 2019 Annual Report on Form 10-K.

Net income for Global Banking decreased $1.9 billion to $136 million for the three months ended March 31, 2020 compared to the same period in 2019 primarily driven by higher provision for credit losses, and to a lesser extent, lower revenue.

Revenue decreased $555 million to $4.6 billion driven by lower net interest income and noninterest income. Net interest income decreased $178 million to $2.6 billion primarily due to the allocation of ALM results and spread compression, partially offset by growth in loan and deposit balances.

Noninterest income decreased $377 million to $2.0 billion primarily due to valuation adjustments on leveraged loans and the

fair value option loan portfolio, partially offset by higher investment banking fees.

The provision for credit losses increased $2.0 billion to $2.1 billion primarily due to the impact of COVID-19. Noninterest expense increased $55 million primarily due to continued investment in the business, partially offset by lower revenue-related incentives.

The return on average allocated capital was one percent in 2020 compared to 20 percent in 2019, due to lower net income and, to a lesser extent, an increase in allocated capital. For information on capital allocated to the business segments, see Business Segment Operations on page 10.

Global Corporate, Global Commercial and Business Banking

The table below and following discussion present a summary of the results, which exclude certain investment banking activities in Global Banking.



		Bank of America 14




Global Corporate, Global Commercial and Business Banking

	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
	Three Months Ended March 31
(Dollars in millions)	2020		2019		2020		2019		2020		2019		2020		2019
Revenue
Business Lending	$	951	$	1,045	$	981	$	1,034	$	82	$	94	$	2,014	$	2,173
Global Transaction Services	871		1,007		878		891		256		266		2,005		2,164
Total revenue, net of interest expense	$	1,822	$	2,052	$	1,859	$	1,925	$	338	$	360	$	4,019	$	4,337

Balance Sheet
Average
Total loans and leases	$	182,705	$	176,288	$	188,581	$	178,450	$	15,181	$	15,343	$	386,467	$	370,081
Total deposits	187,920		168,126		153,880		142,534		40,571		38,404		382,371		349,064

Period end
Total loans and leases	$	209,028	$	175,855	$	212,443	$	181,931	$	15,658	$	15,236	$	437,129	$	373,022
Total deposits	246,237		166,238		189,584		139,505		41,286		38,178		477,107		343,921

Business Lending revenue decreased $159 million for the three months ended March 31, 2020 compared to the same period in 2019. The decrease was primarily driven by valuation adjustments on loans in the fair value option portfolio, partly offset by the impact of higher loan and lease balances.

Global Transaction Services revenue decreased $159 million driven by the allocation of ALM results, partially offset by the impact of higher deposit balances.

Average loans and leases increased four percent driven by growth in the commercial and industrial loan portfolio. Average deposits increased 10 percent 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
	Three Months Ended March 31
(Dollars in millions)	2020			2019			2020			2019
Products
Advisory	$	247		$	303		$	269		$	343
Debt issuance	424			327			927			748
Equity issuance	90			79			283			234
Gross investment banking fees	761			709			1,479			1,325
Self-led deals	(43		)	(20		)	(91		)	(61		)
Total investment banking fees	$	718		$	689		$	1,388		$	1,264

Total Corporation investment banking fees, excluding self-led deals, of $1.4 billion, which are primarily included within Global Banking and Global Markets, increased 10 percent for the three months ended March 31, 2020 compared to the same period in 2019 primarily driven by higher debt and equity issuance fees, partially offset by lower advisory fees.



15 Bank of America

Global Markets




	Three Months Ended March 31
(Dollars in millions)	2020			2019			% Change
Net interest income	$	1,153		$	953		21	%
Noninterest income:
Investment and brokerage services	567			444			28
Investment banking fees	602			537			12
Market making and similar activities	2,973			2,082			43
All other income	(70		)	165			(142	)
Total noninterest income	4,072			3,228			26
Total revenue, net of interest expense	5,225			4,181			25

Provision for credit losses	107			(23		)	n/m
Noninterest expense	2,813			2,755			2
Income before income taxes	2,305			1,449			59
Income tax expense	599			413			45
Net income	$	1,706		$	1,036		65

Effective tax rate	26.0		%	28.5		%

Return on average allocated capital	19			12
Efficiency ratio	53.82			65.91

Balance Sheet
	Three Months Ended March 31
Average	2020			2019			% Change
Trading-related assets:
Trading account securities	$	257,254		$	225,254		14	%
Reverse repurchases	115,698			122,753			(6	)
Securities borrowed	83,271			84,343			(1	)
Derivative assets	46,825			41,953			12
Total trading-related assets	503,048			474,303			6
Total loans and leases	71,660			70,080			2
Total earning assets	501,616			472,414			6
Total assets	712,980			664,052			7
Total deposits	33,323			31,366			6
Allocated capital	36,000			35,000			3

Period end	March 31 2020			December 31 2019			% Change
Total trading-related assets	$	439,480		$	452,496		(3	)%
Total loans and leases	78,591			72,993			8
Total earning assets	465,632			471,701			(1	)
Total assets	654,735			641,806			2
Total deposits	38,536			34,676			11

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 2019 Annual Report on Form 10-K.

The following explanations for current period-over-period changes in results for Global Markets, including those disclosed under Sales and Trading Revenue, exclude net DVA, but the explanations would be the same if net DVA were included. Revenue amounts excluding net DVA are a non-GAAP financial measure. For more information on net DVA, see Supplemental Financial Data on page 7.

Net income for Global Markets increased $670 million to $1.7 billion for the three months ended March 31, 2020 compared to the same period in 2019. Net DVA gains were $300 million compared to losses of $90 million during the same period in 2019. Excluding net DVA, net income increased $374 million to $1.5 billion. These increases were primarily driven by an increase in

revenue, partially offset by higher noninterest expense and an increase in the provision for credit losses.

Revenue increased $1.0 billion to $5.2 billion as sales and trading revenue increased $1.2 billion, and excluding net DVA, increased $782 million. These increases were driven by higher revenue across Equities and Fixed Income, Currencies and Commodities (FICC).

The provision for credit losses increased $130 million primarily due to the impact of COVID-19. Noninterest expense increased $58 million to $2.8 billion primarily driven by higher revenue-related expenses.

Average total assets increased $48.9 billion to $713.0 billion for the three months ended March 31, 2020 compared to the same period in 2019 primarily due to increased levels of inventory in FICC to facilitate expected client demand and higher client balances in Equities. Period-end total assets increased $12.9 billion since December 31, 2019 to $654.7 billion primarily driven by higher loan and derivative balances in FICC.

The return on average allocated capital was 19 percent, up from 12 percent, reflecting higher net income, partially offset by a small increase in allocated capital. For more information on



		Bank of America 16

capital allocated to the business segments, see Business Segment Operations on page 10.

Sales and Trading Revenue

For a description of sales and trading revenue, see Business Segment Operations in the MD&A of the Corporation’s 2019 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 7.




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

	Three Months Ended March 31
(Dollars in millions)	2020		2019
Sales and trading revenue⁽²⁾
Fixed-income, currencies and commodities	$	2,945	$	2,281
Equities	1,690		1,182
Total sales and trading revenue	$	4,635	$	3,463

Sales and trading revenue, excluding net DVA ⁽⁴⁾
Fixed-income, currencies and commodities	$	2,671	$	2,360
Equities	1,664		1,193
Total sales and trading revenue, excluding net DVA	$	4,335	$	3,553


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


⁽²⁾	Includes FTE adjustments of $62 million and $48 million for the three months ended March 31, 2020 and 2019.


⁽³⁾	Includes Global Banking sales and trading revenue of $228 million and $118 million for the three months ended March 31, 2020 and 2019.


⁽⁴⁾	FICC and Equities sales and trading revenue, excluding net DVA, is a non-GAAP financial measure. FICC net DVA gains were $274 million and losses of $79 million for the three months ended March 31, 2020 and 2019. Equities net DVA gains were $26 million and losses of $11 million for the three months ended March 31, 2020 and 2019.

FICC revenue increased $311 million for the three months ended March 31, 2020 compared to the same period in 2019 driven by increased client activity and improved market making conditions across macro products, partially offset by weaker performances in credit sensitive businesses. Equities revenue increased $471 million driven by increased client activity and a strong trading performance in the more volatile market environment.

All Other




	Three Months Ended March 31
(Dollars in millions)	2020			2019			% Change
Net interest income	$	76		$	(5	)	n/m
Noninterest income (loss)	(1,055		)	(626		)	69	%
Total revenue, net of interest expense	(979		)	(631		)	55

Provision for credit losses	114			(54		)	n/m
Noninterest expense	246			402			(39	)
Loss before income taxes	(1,339		)	(979		)	37
Income tax benefit	(847		)	(943		)	(10	)
Net loss	$	(492	)	$	(36	)	n/m

Balance Sheet
	Three Months Ended March 31
Average	2020			2019			% Change
Total loans and leases	$	36,555		$	47,162		(22	)%
Total assets ⁽¹⁾	201,572			195,559			3
Total deposits	23,560			20,619			14

Period end	March 31 2020			December 31 2019			% Change
Total loans and leases	$	36,045		$	37,156		(3	)%
Total assets ⁽¹⁾	241,302			224,378			8
Total deposits	22,899			23,089			(1	)

⁽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 $572.2 billion and $542.5 billion for the three months ended March 31, 2020 and 2019, and period-end allocated assets were $665.8 billion and $565.4 billion at March 31, 2020 and December 31, 2019.

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. For more information on our ALM activities, see Note 17 – Business Segment

Information to the Consolidated Financial Statements. 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 10 – Commitments and Contingencies to the Consolidated Financial Statements. For more information about All Other, see Business Segment Operations in the MD&A of the Corporation’s 2019 Annual Report on Form 10-K.



17 Bank of America

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 three months ended March 31, 2020, residential mortgage loans held for ALM activities decreased $416 million to $21.3 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 three months ended March 31, 2020, total non-core loans decreased $806 million to $14.9 billion due primarily to payoffs and paydowns, as well as Federal Housing Administration (FHA) loan conveyances, partially offset by repurchases. For more information on the composition of the core and non-core portfolios, see Consumer Portfolio Credit Risk Management on page 25.

The net loss for All Other increased $456 million, driven by lower revenue and higher provision for credit losses, partially offset by lower noninterest expense.

Revenue decreased $348 million due primarily to certain valuation adjustments in noninterest income.

Noninterest expense decreased $156 million to $246 million primarily due to lower incentive compensation.

The income tax benefit decreased $96 million reflecting a lower level of tax preference benefits recognized in the quarter, partially offset by the impact of higher pretax losses. 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 10 – Commitments and Contingencies to the Consolidated Financial Statements herein, as well as Off-Balance Sheet Arrangements and Contractual Obligations in the MD&A of the Corporation’s 2019 Annual Report on Form 10-K, and Note 12 – Long-term Debt and Note 13 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2019 Annual Report on Form 10-K.

Representations and Warranties Obligations

For more information on representations and warranties obligations in connection with the sale of mortgage loans, see Note 13 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2019 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. We take 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 serves as the foundation for the 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 about the Corporation's risks related to the COVID-19 pandemic, see Part II, Item 1A. Risk Factors on page 96. These COVID-19 related risks are being managed within our Risk Framework and supporting risk management programs.

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 2019 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 2019 Annual Report on Form 10-K.

CCAR and Capital Planning

During the first quarter of 2020, we repurchased $6.4 billion of common stock pursuant to the Board’s authorization. For more information, see Capital Management -- CCAR and Capital Planning in the MD&A of the Corporation’s 2019 Annual Report on Form 10-K.

As announced on March 15, 2020, due to the impact of the COVID-19 pandemic on the global economy, we temporarily suspended common stock repurchases from the date of the announcement through the end of the second quarter of 2020. We made this decision to enable us to provide maximum support to our customers and the broader economy through lending and other services. The suspension does not include repurchases to offset shares issued under equity compensation plans. As a well-capitalized financial institution, we may reinstate our repurchase program at such time as our Board deems advisable, taking into account economic conditions and other considerations.

At such time that we reinstate our stock repurchase program, our stock repurchases will be 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).

The Federal Reserve requires BHCs to submit a capital plan and planned capital actions on an annual basis, consistent with the rules governing the CCAR capital plan. In April 2020, we submitted our 2020 CCAR capital plan and related supervisory stress tests. The Federal Reserve has announced that it will disclose CCAR capital plan supervisory stress test results by June 30, 2020. These results will determine the stress test depletion



		Bank of America 18

used in the calculation of the Corporation’s stress capital buffer under the final rule published by the Federal Reserve in March 2020. For more information, see Regulatory Developments in this section.

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 March 31, 2020, the Common equity tier 1 (CET1) and Tier 1 capital ratios for the Corporation were lower under the Standardized approach whereas the Advanced approaches yielded a lower Total capital ratio.

Minimum Capital Requirements

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 8 presents Bank of America Corporation’s capital ratios and related information in accordance with Basel 3 Standardized and Advanced approaches as measured at March 31, 2020 and December 31, 2019. For the periods presented herein, the Corporation met the definition of well capitalized under current regulatory requirements.




Table 8	Bank of America Corporation Regulatory Capital under Basel 3

		Standardized Approach ⁽¹⁾			Advanced Approaches ⁽¹⁾			Regulatory Minimum ⁽²⁾
(Dollars in millions, except as noted)		March 31, 2020
Risk-based capital metrics:
Common equity tier 1 capital		$	168,115		$	168,115
Tier 1 capital		191,532			191,532
Total capital ⁽³⁾		228,511			221,009
Risk-weighted assets (in billions)		1,561			1,512
Common equity tier 1 capital ratio		10.8		%	11.1		%	9.5	%
Tier 1 capital ratio		12.3			12.7			11.0
Total capital ratio		14.6			14.6			13.0

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽⁴⁾		$	2,422		$	2,422
Tier 1 leverage ratio		7.9		%	7.9		%	4.0

SLR leverage exposure (in billions)					$	2,984
SLR					6.4		%	5.0

		December 31, 2019
Risk-based capital metrics:
Common equity tier 1 capital		$	166,760		$	166,760
Tier 1 capital		188,492			188,492
Total capital ⁽³⁾		221,230			213,098
Risk-weighted assets (in billions)		1,493			1,447
Common equity tier 1 capital ratio		11.2		%	11.5		%	9.5	%
Tier 1 capital ratio		12.6			13.0			11.0
Total capital ratio		14.8			14.7			13.0

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽⁴⁾		$	2,374		$	2,374
Tier 1 leverage ratio		7.9		%	7.9		%	4.0

SLR leverage exposure (in billions)					$	2,946
SLR					6.4		%	5.0


⁽¹⁾	As of March 31, 2020, capital ratios are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of CECL.


⁽²⁾	The capital conservation buffer and G-SIB surcharge were 2.5 percent at both March 31, 2020 and December 31, 2019. The countercyclical capital buffer for both periods was zero. The SLR minimum includes a leverage buffer of 2.0 percent.


⁽³⁾	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.


⁽⁴⁾	Reflects total average assets adjusted for certain Tier 1 capital deductions.

At March 31, 2020, CET1 capital was $168.1 billion, an increase of $1.4 billion from December 31, 2019, driven by earnings and net unrealized gains on available-for-sale (AFS) debt securities included in accumulated other comprehensive income (OCI), partially offset by common stock repurchases and dividends.

Total capital under the Advanced approaches increased $7.9 billion primarily driven by the same factors as CET1 capital, increases in excess eligible credit reserves included in Tier 2 capital and issuance of preferred stock. Risk-weighted assets under the Standardized approach, which yielded the lower CET1



19 Bank of America

capital ratio at March 31, 2020, increased $67.6 billion during the three months ended March 31, 2020 to $1,561 billion primarily due to increased exposure in Global Markets and increased loan revolver draws in Global Banking.

Table 9 shows the capital composition at March 31, 2020 and December 31, 2019.




Table 9	Capital Composition under Basel 3

(Dollars in millions)		March 31 2020			December 31 2019
Total common shareholders’ equity		$	241,491		$	241,409
CECL transitional amount ⁽¹⁾		3,299			—
Goodwill, net of related deferred tax liabilities		(68,570		)	(68,570		)
Deferred tax assets arising from net operating loss and tax credit carryforwards		(5,337		)	(5,193		)
Intangibles, other than mortgage servicing rights and goodwill, net of related deferred tax liabilities		(1,236		)	(1,328		)
Defined benefit pension plan net assets		(1,014		)	(1,003		)
Cumulative unrealized net (gain) loss related to changes in fair value of financial liabilities attributable to own creditworthiness, net-of-tax		(370		)	1,278
Other		(148		)	167
Common equity tier 1 capital		168,115			166,760
Qualifying preferred stock, net of issuance cost		23,426			22,329
Other		(9		)	(597		)
Tier 1 capital		191,532			188,492
Tier 2 capital instruments		24,076			22,538
Eligible credit reserves included in Tier 2 capital ⁽²⁾		5,407			2,097
Other		(6		)	(29		)
Total capital under the Advanced approaches		$	221,009		$	213,098


⁽¹⁾	The CECL transitional amount includes 100 percent of the initial adoption impact of the new CECL accounting standard plus 25 percent of the increase in the allowance for credit losses from January 1, 2020 through March 31, 2020. For more information, see Regulatory Developments on page 22.


⁽²⁾	The balance at March 31, 2020 includes the impact of transition provisions related to the new CECL accounting standard.

Table 10 shows the components of risk-weighted assets as measured under Basel 3 at March 31, 2020 and December 31, 2019.




Table 10	Risk-weighted Assets under Basel 3

		Standardized Approach		Advanced Approaches		Standardized Approach		Advanced Approaches
(Dollars in billions)		March 31, 2020				December 31, 2019
Credit risk		$	1,492	$	901	$	1,437	$	858
Market risk		69		69		56		55
Operational risk		n/a		500		n/a		500
Risks related to credit valuation adjustments		n/a		42		n/a		34
Total risk-weighted assets		$	1,561	$	1,512	$	1,493	$	1,447

n/a = not applicable

Bank of America, N.A. Regulatory Capital

Table 11 presents regulatory capital information for BANA in accordance with Basel 3 Standardized and Advanced approaches as measured at March 31, 2020 and December 31, 2019. BANA met the definition of well capitalized under the PCA framework for both periods.



		Bank of America 20




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

		Standardized Approach ⁽¹⁾			Advanced Approaches ⁽¹⁾			Regulatory Minimum ⁽²⁾
(Dollars in millions, except as noted)		March 31, 2020
Risk-based capital metrics:
Common equity tier 1 capital		$	153,089		$	153,089
Tier 1 capital		153,089			153,089
Total capital ⁽³⁾		167,936			159,644
Risk-weighted assets (in billions)		1,288			1,042
Common equity tier 1 capital ratio		11.9		%	14.7		%	7.0	%
Tier 1 capital ratio		11.9			14.7			8.5
Total capital ratio		13.0			15.3			10.5

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽⁴⁾		$	1,797		$	1,797
Tier 1 leverage ratio		8.5		%	8.5		%	5.0

SLR leverage exposure (in billions)					$	2,183
SLR					7.0		%	6.0

		December 31, 2019
Risk-based capital metrics:
Common equity tier 1 capital		$	154,626		$	154,626
Tier 1 capital		154,626			154,626
Total capital ⁽³⁾		166,567			158,665
Risk-weighted assets (in billions)		1,241			991
Common equity tier 1 capital ratio		12.5		%	15.6		%	7.0	%
Tier 1 capital ratio		12.5			15.6			8.5
Total capital ratio		13.4			16.0			10.5

Leverage-based metrics:
Adjusted quarterly average assets (in billions) ⁽⁴⁾		$	1,780		$	1,780
Tier 1 leverage ratio		8.7		%	8.7		%	5.0

SLR leverage exposure (in billions)					$	2,177
SLR					7.1		%	6.0


⁽¹⁾	As of March 31, 2020, capital ratios are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of CECL.


⁽²⁾	Risk-based capital regulatory minimums at March 31, 2020 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, 2019 are the percent required to be considered well capitalized under the PCA framework.


⁽³⁾	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.


⁽⁴⁾	Reflects total average assets adjusted for certain Tier 1 capital deductions.

Total Loss-Absorbing Capacity Requirements

Total loss-absorbing capacity (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 to avoid restrictions on capital distributions and discretionary bonus payments. Table 12 presents the Corporation's TLAC and long-term debt ratios and related information as of March 31, 2020.




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

		TLAC ⁽¹⁾			Regulatory Minimum ⁽²⁾		Long-term Debt			Regulatory Minimum ⁽³⁾
(Dollars in millions)		March 31, 2020
Total eligible balance		$	383,281				$	181,135
Percentage of risk-weighted assets ⁽⁴⁾		24.6		%	22.0	%	11.6		%	8.5	%
Percentage of SLR leverage exposure		12.8			9.5		6.1			4.5

		December 31, 2019
Total eligible balance		$	367,449				$	171,349
Percentage of risk-weighted assets ⁽⁴⁾		24.6		%	22.0	%	11.5		%	8.5	%
Percentage of SLR leverage exposure		12.5			9.5		5.8			4.5


⁽¹⁾	As of March 31, 2020, TLAC ratios are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of CECL.

⁽²⁾

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 both periods. 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.


⁽³⁾	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. The long-term debt leverage exposure regulatory minimum is 4.5 percent.


⁽⁴⁾	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 March 31, 2020 and December 31, 2019.



21 Bank of America

Regulatory Developments

The following supplements the disclosure in Capital Management – Regulatory Developments in the MD&A of the Corporation’s 2019 Annual Report on Form 10-K.

Revisions to Basel 3 to Address Current Expected Credit Loss Accounting

On January 1, 2020, the Corporation adopted the new accounting standard that requires the measurement of the allowance for credit losses to be based on management’s best estimate of lifetime expected credit losses inherent in the Corporation's relevant financial assets. For more information, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements. On March 27, 2020, in response to the COVID-19 pandemic, U.S. banking regulators issued an interim final rule that the Corporation adopted to delay for two years the initial adoption impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during 2020 and 2021 (i.e., a five-year transition period). During the two-year delay, the Corporation will add back to CET1 capital 100 percent of the initial adoption impact of CECL plus 25 percent of the cumulative quarterly changes in the allowance for credit losses (i.e., quarterly transitional amounts). After two years, starting on January 1, 2022, the quarterly transitional amounts along with the initial adoption impact of CECL will be phased out of CET1 capital over the three-year period.

Stress Capital Buffer

On March 4, 2020, the Federal Reserve issued a final rule that integrates the annual quantitative assessment of the CCAR program with the buffer requirements in the U.S. Basel 3 Final Rule. The new approach replaces the existing static 2.5 percent capital conservation buffer for Basel 3 Standardized approach requirements with a stress capital buffer, calculated as the decline in the CET1 capital ratio under the supervisory severely adverse scenario plus four quarters of planned common stock dividends, floored at 2.5 percent. The stress capital buffer requirement is effective October 1, 2020. The Corporation will receive its stress capital buffer in its 2020 CCAR results.

In conjunction with this new requirement, the Federal Reserve has removed the annual CCAR quantitative objection process beginning with CCAR 2020. While the final rule continues to require that the Corporation describe its planned capital distributions in its CCAR capital plan, the Corporation is no longer required to seek prior approval if it makes capital distributions in excess of those included in its CCAR capital plan. The Corporation is instead subject to automatic distribution limitations if its capital ratios fall below its buffer requirements, which include the stress capital buffer.

Eligible Retained Income

On March 17, 2020, in response to the economic impact of the COVID-19 pandemic, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued an interim final rule that revises the definition of eligible retained income to be based on average net income over the prior four quarters. This change would more gradually phase in automatic distribution restrictions to the extent capital buffers are breached.

Supplementary Leverage Ratio

On April 1, 2020, in response to the economic impact of the COVID-19 pandemic, the Federal Reserve issued an interim final rule to temporarily exclude the on-balance sheet amounts of U.S. Treasury securities and deposits at Federal Reserve Banks from the calculation of SLR leverage exposure for bank holding

companies. The rule is effective for June 30, 2020 through March 31, 2021 reports.

Paycheck Protection Program Loans

On April 9, 2020, in response to the economic impact of the COVID-19 pandemic, the Federal Reserve, OCC and FDIC issued an interim final rule that excludes loans pledged as collateral to the Federal Reserve’s PPP Lending Facility from SLR leverage exposure, average total consolidated assets, and Advanced and Standardized risk-weighted assets. Additionally, PPP loans, which are guaranteed by the Small Business Administration, will receive a zero percent risk weight under the Basel 3 Advanced and Standardized approaches. For more information on the PPP, see Executive Summary - Recent Developments – COVID-19 Pandemic 2020 on page 3.

Volcker Rule

In 2019, U.S. financial regulators finalized certain changes to the Volcker Rule, including removing the requirement for banking organizations to deduct from Tier 1 capital ownership interests of covered funds acquired or retained under the underwriting or market-making exemptions of the Volcker Rule, which the banking entity did not organize or offer. This change became effective for the Corporation on January 1, 2020.

Regulatory Capital and Securities Regulation

The Corporation’s principal U.S. broker-dealer subsidiaries are BofA Securities, Inc. (BofAS), Merrill Lynch Professional Clearing Corp. (MLPCC) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S). BofAS was formed as a result of the reorganization of MLPF&S which was completed in May 2019. The Corporation's principal European broker-dealer subsidiaries are Merrill Lynch International (MLI) and BofA Securities Europe SA (BofASE).

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

BofAS provides institutional services, and in accordance with the alternative net capital requirements, 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 must also notify the Securities and Exchange Commission (SEC) in the event its tentative net capital is less than $5.0 billion. 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 March 31, 2020, BofAS had tentative net capital of $15.9 billion. BofAS also had regulatory net capital of $12.0 billion which exceeded the minimum requirement of $3.4 billion.

MLPCC is a fully-guaranteed subsidiary of BofAS and provides clearing and settlement services. At March 31, 2020, MLPCC’s regulatory net capital of $5.9 billion exceeded the minimum requirement of $1.0 billion.

MLPF&S provides retail services. At March 31, 2020, MLPF&S' regulatory net capital was $4.1 billion which exceeded the minimum requirement of $102 million.

Our European broker-dealers are regulated by non-U.S. regulators. MLI, a U.K. investment firm, is regulated by the Prudential Regulation Authority and the Financial Conduct Authority



		Bank of America 22

and is subject to certain regulatory capital requirements. At March 31, 2020, MLI’s capital resources were $34.6 billion, which exceeded the minimum Pillar 1 requirement of $14.6 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 March 31, 2020, BofASE's capital resources were $5.3 billion which exceeded the minimum Pillar 1 requirement of $2.1 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. These liquidity risk management practices have allowed us to effectively manage the market stress that began in the first quarter of 2020 from the COVID-19 pandemic. For more information on the effects of the pandemic, see Executive Summary - Recent Developments – COVID-19 Pandemic 2020 on page 3.

We define liquidity as readily available assets, limited to cash and high-quality, liquid, unencumbered securities that we can use to meet our contractual and contingent financial obligations as those obligations arise. We manage our liquidity position through line of business and ALM activities, as well as through our legal entity funding strategy, on both a forward and current (including intraday) basis under both expected and stressed conditions. We believe that a centralized approach to funding and liquidity management enhances our ability to monitor liquidity requirements, maximizes access to funding sources, minimizes borrowing costs and facilitates timely responses to liquidity events. For more information regarding global funding and liquidity risk management, as well as liquidity sources, liquidity arrangements, contingency planning and credit ratings discussed below, see Liquidity Risk in the MD&A of the Corporation’s 2019 Annual Report on Form 10-K.

NB Holdings Corporation

We have intercompany arrangements with certain key subsidiaries under which we transferred certain assets of Bank of America Corporation, as the parent company, which is a separate and distinct legal entity from our banking and nonbank subsidiaries, and agreed to transfer certain additional parent company assets not needed to satisfy anticipated near-term expenditures, to NB Holdings Corporation, a wholly-owned holding company subsidiary (NB Holdings). The parent company is expected to continue to have access to the same flow of dividends, interest and other amounts of cash necessary to service its debt, pay dividends and perform other obligations as it would have had if it had not entered into these arrangements and transferred any assets. These arrangements support our preferred single point of entry resolution strategy, under which only the parent company would be resolved under the U.S. Bankruptcy Code.

Global Liquidity Sources and Other Unencumbered Assets

Table 13 presents average Global Liquidity Sources (GLS) for the three months ended March 31, 2020 and December 31, 2019.




Table 13	Average Global Liquidity Sources

		Three Months Ended
(Dollars in billions)		March 31 2020		December 31 2019
Parent company and NB Holdings		$	50	$	59
Bank subsidiaries		451		454
Other regulated entities		64		63
Total Average Global Liquidity Sources		$	565	$	576

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 Federal Home Loan Banks (FHLBs) and the Federal Reserve Discount Window. The cash we could have obtained by borrowing against this pool of specifically-identified eligible assets was $359 billion and $372 billion at March 31, 2020 and December 31, 2019. We have established operational procedures to enable us to borrow against these assets, including regularly monitoring our total pool of eligible loans and securities collateral. Eligibility is defined in guidelines from the FHLBs and the Federal Reserve and is subject to change at their discretion. Due to regulatory restrictions, liquidity generated by the bank subsidiaries can generally be used only to fund obligations within the bank subsidiaries, and transfers to the parent company or nonbank subsidiaries may be subject to prior regulatory approval.

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

Table 14 presents the composition of average GLS for the three months ended March 31, 2020 and December 31, 2019.




Table 14	Average Global Liquidity Sources Composition

		Three Months Ended
(Dollars in billions)		March 31 2020		December 31 2019
Cash on deposit		$	113	$	103
U.S. Treasury securities		83		98
U.S. agency securities and mortgage-backed securities		354		358
Non-U.S. government securities		15		17
Total Average Global Liquidity Sources		$	565	$	576

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



23 Bank of America

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 $464 billion for both the three months ended March 31, 2020 and December 31, 2019. For the same periods, the average consolidated LCR was 115 percent and 116 percent. Our LCR fluctuates 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 2019 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 $1.58 trillion and $1.43 trillion at March 31, 2020 and December 31, 2019.

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 three months ended March 31, 2020, we issued $18.7 billion of long-term debt consisting of $15.9 billion of notes issued by Bank of America Corporation, substantially all of which was TLAC compliant, $516 million of notes issued by Bank of America, N.A. and $2.3 billion of other debt, substantially all of which was structured liabilities.

During the three months ended March 31, 2020, we had total long-term debt maturities and redemptions in the aggregate of $7.6 billion consisting of $2.1 billion for Bank of America Corporation, $2.6 billion for Bank of America, N.A. and $2.9 billion of other debt. Table 15 presents the carrying value of aggregate annual contractual maturities of long-term debt at March 31, 2020.




Table 15	Long-term Debt by Maturity

(Dollars in millions)		Remainder of 2020		2021		2022		2023		2024		Thereafter		Total
Bank of America Corporation
Senior notes ⁽¹⁾		$	8,074	$	15,726	$	14,772	$	23,518	$	17,543	$	99,150	$	178,783
Senior structured notes		662		396		2,095		296		473		14,119		18,041
Subordinated notes		—		338		339		—		3,370		20,199		24,246
Junior subordinated notes		—		—		—		—		—		738		738
Total Bank of America Corporation		8,736		16,460		17,206		23,814		21,386		134,206		221,808
Bank of America, N.A.
Senior notes		2,429		3,310		—		520		—		8		6,267
Subordinated notes		—		—		—		—		—		1,977		1,977
Advances from Federal Home Loan Banks		2,509		502		3		1		—		96		3,111
Securitizations and other Bank VIEs ⁽²⁾		1,100		4,023		1,248		—		—		—		6,371
Other		25		54		—		141		—		160		380
Total Bank of America, N.A.		6,063		7,889		1,251		662		—		2,241		18,106
Other debt
Structured liabilities		5,113		2,509		1,465		1,290		652		5,354		16,383
Nonbank VIEs ⁽²⁾		—		—		—		—		—		415		415
Total other debt		5,113		2,509		1,465		1,290		652		5,769		16,798
Total long-term debt		$	19,912	$	26,858	$	19,922	$	25,766	$	22,038	$	142,216	$	256,712

⁽¹⁾

Total includes $126.4 billion of outstanding notes that are both TLAC eligible and callable one year before their stated maturities, including $7.2 billion during the remainder of 2020, and $11.6 billion, $15.1 billion, $10.8 billion and $9.4 billion during each year of 2021 through 2024, respectively, and $72.3 billion thereafter. 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.


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

Table 16 presents our long-term debt by major currency at March 31, 2020 and December 31, 2019.




Table 16	Long-term Debt by Major Currency

(Dollars in millions)		March 31 2020		December 31 2019
U.S. dollar		$	207,035	$	191,284
Euro		33,782		32,781
British pound		4,834		5,067
Japanese yen		4,113		4,310
Canadian dollar		3,979		3,857
Australian dollar		1,664		1,957
Other		1,305		1,600
Total long-term debt		$	256,712	$	240,856

Total long-term debt increased $15.9 billion during three months ended March 31, 2020 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.

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 41.

We may issue unsecured debt in the form of structured notes for client purposes, certain of which qualify as TLAC-eligible debt. During three months ended March 31, 2020, we issued $4.6 billion



		Bank of America 24

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. For more information on long-term debt funding, including issuances and maturities and redemptions, see Note 12 – Long-term Debt to the Consolidated Financial Statements of the Corporation’s 2019 Annual Report on Form 10-K.

Credit Ratings

Credit ratings and outlooks are opinions expressed by rating agencies on our creditworthiness and that of our obligations or securities, including long-term debt, short-term borrowings, preferred stock and other securities, including asset securitizations. Table 17 presents the Corporation’s current long-term/short-term senior debt ratings and outlooks expressed by the rating agencies.

On April 22, 2020, Fitch Ratings (Fitch) completed its review of the large, complex securities trading and universal banks in the U.S., including Bank of America, in response to declining economic activity from the COVID-19 pandemic. The agency affirmed the long-term and short-term senior debt ratings of the Corporation and all of its rated subsidiaries, except for select issuer and instrument level ratings that had previously been placed under criteria observation (UCO) on March 4, 2020, following changes in the agency’s bank rating criteria on February 28, 2020.

Concurrently, Fitch reached a conclusion on select UCO designations for the Corporation and upgraded the long-term and short-term senior debt ratings of MLI and BofASE by one notch to AA-/F1+. The agency also upgraded the preferred stock rating of the Corporation by one notch to BBB and downgraded the subordinated debt rating of the Corporation by one notch to A-. According to Fitch, rating changes under UCO are the sole result of bank rating criteria change and do not reflect a change in the underlying fundamentals of the institution. Fitch’s rating outlook for all our long-term ratings is currently Stable.

The ratings from Moody’s Investors Service (Moody’s) and Standard & Poor’s Global Ratings (S&P) for the Corporation and its subsidiaries did not change from those disclosed in the Corporation's 2019 Annual Report on Form 10-K.

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 in the event of a credit rating downgrade, see Note 3 – Derivatives to the Consolidated Financial Statements herein and Item 1A. Risk Factors of the Corporation’s 2019 Annual Report on Form 10-K.

Table 17

Senior Debt Ratings

Moody’s Investors Service

Standard & Poor’s Global Ratings

Fitch Ratings

Long-term

Short-term

Outlook

Long-term

Short-term

Outlook

Long-term

Short-term

Outlook

Bank of America Corporation

P-1

Stable

A-

A-2

Stable

A+

Stable

Bank of America, N.A.

Aa2

P-1

Stable

A+

A-1

Stable

AA-

F1+

Stable

Bank of America Merrill Lynch International Designated Activity Company

A+

A-1

Stable

AA-

F1+

Stable

Merrill Lynch, Pierce, Fenner & Smith Incorporated

A+

A-1

Stable

AA-

F1+

Stable

BofA Securities, Inc.

A+

A-1

Stable

AA-

F1+

Stable

Merrill Lynch International

A+

A-1

Stable

AA-

F1+

Stable

BofA Securities Europe SA

A+

A-1

Stable

AA-

F1+

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 31, Non-U.S. Portfolio on page 37, Allowance for Credit Losses on page 38, and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.

During the first quarter of 2020, the COVID-19 pandemic negatively impacted economic activity in the U.S. and around the world. While we did see increases in Commercial nonperforming loans and reservable criticized exposures, we did not see meaningful impacts to Consumer portfolio delinquencies, nonperforming loans or charge-offs as of and during the three months ended March 31, 2020. To provide relief to individuals and businesses in the U.S., in March and April 2020, the President signed into law four economic stimulus packages, including the CARES Act. U.S. bank regulatory agencies also issued interagency guidance to financial institutions that are working with borrowers affected by COVID-19.

To support our customers, we have implemented various loan modification programs and other forms of support, including offering loan payment deferrals, refunding certain fees and pausing foreclosure sales, evictions and repossessions. For a summary of the loan modification programs that we have implemented along with a summary of deferral requests that have been executed, see Executive Summary - Recent Developments – COVID-19 Pandemic 2020 on page 3.

For information on the accounting for loan modifications related to the COVID-19 pandemic, 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



25 Bank of America

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

Although COVID-19 is severely impacting economic activity, it did not have a meaningful impact on the consumer portfolio delinquencies, nonperforming loans or charge-offs as of and during the three months ended March 31, 2020 but there may be adverse

impacts to credit quality metrics in future periods if negative economic conditions continue. Net charge-offs increased $37 million to $872 million for the three months ended March 31, 2020 driven by seasoning in the credit card portfolio.

The consumer allowance for loan and lease losses increased $4.5 billion during the three months ended March 31, 2020 to $9.1 billion due to the adoption of the new CECL accounting standard and deterioration in the economic outlook resulting from the impact of COVID-19. For more information, see Allowance for Credit Losses on page 38.

For more information on our accounting policies regarding delinquencies, nonperforming status, charge-offs and 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 2019 Annual Report on Form 10-K. For information on our interest accrual policies and delinquency status for loan modifications related to the COVID-19 pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.

Table 18 presents our outstanding consumer loans and leases, consumer nonperforming loans and accruing consumer loans past due 90 days or more.




Table 18	Consumer Credit Quality

		Outstandings				Nonperforming						Accruing Past Due 90 Days or More
(Dollars in millions)		March 31 2020		December 31 2019		March 31 2020			December 31 2019			March 31 2020			December 31 2019
Residential mortgage⁽¹⁾		$	243,545	$	236,169	$	1,580		$	1,470		$	951		$	1,088
Home equity		39,567		40,208		578			536			—			—
Credit card		91,890		97,608		n/a			n/a			991			1,042
Direct/Indirect consumer ⁽²⁾		90,246		90,998		46			47			30			33
Other consumer		150		192		—			—			—			—
Consumer loans excluding loans accounted for under the fair value option		$	465,398	$	465,175	$	2,204		$	2,053		$	1,972		$	2,163
Loans accounted for under the fair value option ⁽³⁾		556		594
Total consumer loans and leases		$	465,954	$	465,769
Percentage of outstanding consumer loans and leases ⁽⁴⁾		n/a		n/a		0.47		%	0.44		%	0.42		%	0.47		%
Percentage of outstanding consumer loans and leases, excluding fully-insured loan portfolios ⁽⁴⁾		n/a		n/a		0.49			0.46			0.23			0.24

⁽¹⁾

Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At March 31, 2020 and December 31, 2019, residential mortgage includes $637 million and $740 million of loans on which interest had been curtailed by the FHA, and therefore were no longer accruing interest, although principal was still insured, and $314 million and $348 million of loans on which interest was still accruing.


⁽²⁾	Outstandings primarily include auto and specialty lending loans and leases of $50.0 billion and $50.4 billion, U.S. securities-based lending loans of $36.4 billion and $36.7 billion and non-U.S. consumer loans of $3.0 billion and $2.8 billion at March 31, 2020 and December 31, 2019.


⁽³⁾	Consumer loans accounted for under the fair value option include residential mortgage loans of $231 million and $257 million and home equity loans of $325 million and $337 million at March 31, 2020 and December 31, 2019. For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.


⁽⁴⁾	Excludes consumer loans accounted for under the fair value option. At both March 31, 2020 and December 31, 2019, $6 million of loans accounted for under the fair value option were past due 90 days or more and not accruing interest.

n/a = not applicable

Table 19 presents net charge-offs and related ratios for consumer loans and leases.




Table 19	Consumer Net Charge-offs and Related Ratios

		Net Charge-offs						Net Charge-off Ratios ⁽¹⁾
		Three Months Ended March 31
(Dollars in millions)		2020			2019			2020		2019
Residential mortgage		$	(1	)	$	(16	)	—	%	(0.03	)%
Home equity		(11		)	11			(0.11	)	0.10
Credit card		770			745			3.28		3.18
Direct/Indirect consumer		40			54			0.18		0.24
Other consumer		74			41			n/m		n/m
Total		$	872		$	835		0.75		0.77


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

n/m = not meaningful

Table 20 presents outstandings, nonperforming balances, net charge-offs, allowance for credit losses and provision for credit 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



		Bank of America 26

strategy. Generally, loans that were originated after January 1, 2010, qualified under government-sponsored enterprise underwriting guidelines, or otherwise met our underwriting guidelines in place in 2015 are characterized as core loans. All other loans are generally characterized as non-core loans and represent runoff portfolios. Core loans as reported in Table 20

include loans held in the Consumer Banking and GWIM segments, as well as loans held for ALM activities in All Other.

As shown in Table 20, outstanding core consumer real estate loans increased $7.5 billion during the three months ended March 31, 2020 driven by an increase of $7.9 billion in residential mortgage, partially offset by a $353 million decrease in home equity.




Table 20	Consumer Real Estate Portfolio ⁽¹⁾

		Outstandings				Nonperforming					Net Charge-offs
		March 31		December 31		March 31			December 31		Three Months Ended March 31
(Dollars in millions)		2020		2019		2020			2019		2020			2019
Core portfolio
Residential mortgage		$	233,635	$	225,770	$	899		$	883	$	(1	)	$	(3	)
Home equity		34,873		35,226		388			363		2			21
Total core portfolio		268,508		260,996		1,287			1,246		1			18
Non-core portfolio
Residential mortgage		9,910		10,399		681			587		—			(13		)
Home equity		4,694		4,982		190			173		(13		)	(10		)
Total non-core portfolio		14,604		15,381		871			760		(13		)	(23		)
Consumer real estate portfolio
Residential mortgage		243,545		236,169		1,580			1,470		(1		)	(16		)
Home equity		39,567		40,208		578			536		(11		)	11
Total consumer real estate portfolio		$	283,112	$	276,377	$	2,158		$	2,006	$	(12	)	$	(5	)

						Allowance for Credit Losses					Provision for Credit Losses
						March 31			December 31		Three Months Ended March 31
						2020			2019		2020			2019
Core portfolio
Residential mortgage						$	338		$	229	$	124		$	(4	)
Home equity						602			120		146			(22		)
Total core portfolio						940			349		270			(26		)
Non-core portfolio
Residential mortgage						92			96		90			(31		)
Home equity ⁽²⁾						(75		)	101		21			(13		)
Total non-core portfolio						17			197		111			(44		)
Consumer real estate portfolio
Residential mortgage						430			325		214			(35		)
Home equity ⁽³⁾						527			221		167			(35		)
Total consumer real estate portfolio						$	957		$	546	$	381		$	(70	)

⁽¹⁾

Outstandings and nonperforming loans exclude loans accounted for under the fair value option. Consumer loans accounted for under the fair value option include residential mortgage loans of $231 million and $257 million and home equity loans of $325 million and $337 million at March 31, 2020 and December 31, 2019. For more information, see Note 15 – Fair Value Option to the Consolidated Financial Statements.


⁽²⁾	The home equity non-core allowance is in a negative position at March 31, 2020 as it includes expected recoveries of amounts previously charged off.


⁽³⁾	Home equity allowance includes a reserve for unfunded lending commitments of $149 million at March 31, 2020.

We believe that the presentation of information adjusted to exclude the impact of the fully-insured loan portfolio and loans accounted for under the fair value option is more representative of the ongoing operations and credit quality of the business. As a result, in the following tables and discussions of the residential mortgage and home equity portfolios, we exclude loans accounted for under the fair value option and provide information that excludes the impact of the fully-insured loan portfolio in certain credit quality statistics.

Residential Mortgage

The residential mortgage portfolio made up the largest percentage of our consumer loan portfolio at 52 percent of consumer loans and leases at March 31, 2020. Approximately 51 percent of the residential mortgage portfolio was in Consumer Banking and 36 percent was in GWIM. The remaining portion was in All Other and was comprised of loans used in our overall ALM activities,

delinquent FHA loans repurchased pursuant to our servicing agreements with the Government National Mortgage Association as well as loans repurchased related to our representations and warranties.

Outstanding balances in the residential mortgage portfolio increased $7.4 billion during the three months ended March 31, 2020 as retention of new originations was partially offset by runoff.

At March 31, 2020 and December 31, 2019, the residential mortgage portfolio included $18.8 billion and $18.7 billion of outstanding fully-insured loans, of which $10.9 billion and $11.2 billion had FHA insurance with the remainder protected by long-term standby agreements.

Table 21 presents certain residential mortgage key credit statistics on both a reported basis and excluding the fully-insured loan portfolio. The following discussion presents the residential mortgage portfolio excluding the fully-insured loan portfolio.



27 Bank of America




Table 21	Residential Mortgage – Key Credit Statistics

		Reported Basis ⁽¹⁾						Excluding Fully-insured Loans⁽¹⁾
(Dollars in millions)		March 31 2020			December 31 2019			March 31 2020			December 31 2019
Outstandings		$	243,545		$	236,169		$	224,720		$	217,479
Accruing past due 30 days or more		2,937			3,108			1,338			1,296
Accruing past due 90 days or more		951			1,088			—			—
Nonperforming loans		1,580			1,470			1,580			1,470
Percent of portfolio
Refreshed LTV greater than 90 but less than or equal to 100		2		%	2		%	2		%	2		%
Refreshed LTV greater than 100		1			1			1			1
Refreshed FICO below 620		2			3			1			2
2006 and 2007 vintages ⁽²⁾		3			4			3			4


⁽¹⁾	Outstandings, accruing past due, nonperforming loans and percentages of portfolio exclude loans accounted for under the fair value option. For information on our interest accrual policies and delinquency status for loan modifications related to the COVID-19 pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.


⁽²⁾	These vintages of loans accounted for $440 million, or 28 percent, and $365 million, or 25 percent, of nonperforming residential mortgage loans at March 31, 2020 and December 31, 2019.

Nonperforming outstanding balances in the residential mortgage portfolio increased $110 million during the three months ended March 31, 2020 primarily driven by the inclusion of certain loans that were previously classified as purchased credit-impaired loans and accounted for under a pool basis. Upon adoption of the new credit loss standard, these loans are accounted for on an individual basis and, if applicable, included in nonperforming loans. Of the nonperforming residential mortgage loans at March 31, 2020, $612 million, or 39 percent, were current on contractual payments. Loans accruing past due 30 days or more increased $42 million.

Net charge-offs increased $15 million to a net recovery of $1 million for the three months ended March 31, 2020 compared to a net recovery of $16 million for the same period in 2019, as the prior-year period included recoveries on sales of previously charged-off loans.

Of the $224.7 billion in total residential mortgage loans outstanding at March 31, 2020, as shown in Table 21, 26 percent were originated as interest-only loans. The outstanding balance of interest-only residential mortgage loans that have entered the amortization period was $7.0 billion, or 12 percent, at March 31, 2020. Residential mortgage loans that have entered the amortization period generally have experienced a higher rate of early stage delinquencies and nonperforming status compared to

the residential mortgage portfolio as a whole. At March 31, 2020, $125 million, or two percent of outstanding interest-only residential mortgages that had entered the amortization period were accruing past due 30 days or more compared to $1.3 billion, or one percent, for the entire residential mortgage portfolio. In addition, at March 31, 2020, $287 million, or four percent, of outstanding interest-only residential mortgage loans that had entered the amortization period were nonperforming, of which $115 million were contractually current, compared to $1.6 billion, or one percent, for the entire residential mortgage portfolio. Loans that have yet to enter the amortization period in our interest-only residential mortgage portfolio are primarily well-collateralized loans to our wealth management clients and have an interest-only period of three to ten years. Approximately 95 percent of these loans that have yet to enter the amortization period will not be required to make a fully-amortizing payment until 2022 or later.

Table 22 presents outstandings, nonperforming loans and net charge-offs by certain state concentrations for the residential mortgage portfolio. The Los Angeles-Long Beach-Santa Ana Metropolitan Statistical Area (MSA) within California represented 16 percent of outstandings at both March 31, 2020 and December 31, 2019. In the New York area, the New York-Northern New Jersey-Long Island MSA made up 13 percent of outstandings at both March 31, 2020 and December 31, 2019.




Table 22	Residential Mortgage State Concentrations

		Outstandings⁽¹⁾				Nonperforming ⁽¹⁾				Net Charge-offs
		March 31		December 31		March 31		December 31		Three Months Ended March 31
(Dollars in millions)		2020		2019		2020		2019		2020			2019
California		$	92,107	$	88,998	$	326	$	274	$	(3	)	$	(8	)
New York		23,192		22,385		212		196		1			—
Florida		13,172		12,833		156		143		(2		)	(3		)
Texas		9,237		8,943		66		65		—			(1		)
New Jersey		9,149		8,734		75		77		—			(2		)
Other		77,863		75,586		745		715		3			(2		)
Residential mortgage loans		$	224,720	$	217,479	$	1,580	$	1,470	$	(1	)	$	(16	)
Fully-insured loan portfolio		18,825		18,690
Total residential mortgage loan portfolio		$	243,545	$	236,169


⁽¹⁾	Outstandings and nonperforming loans exclude loans accounted for under the fair value option.

Home Equity

At March 31, 2020, the home equity portfolio made up nine percent of the consumer portfolio and was comprised of home equity lines of credit (HELOCs), home equity loans and reverse mortgages. We no longer originate home equity loans or reverse mortgages.

At March 31, 2020, our HELOC portfolio had an outstanding balance of $37.0 billion, or 94 percent of the total home equity

portfolio, compared to $37.5 billion, or 93 percent, at December 31, 2019. HELOCs generally have an initial draw period of 10 years, and after the initial draw period ends, the loans generally convert to 15- or 20-year amortizing loans.

At both March 31, 2020 and December 31, 2019, our home equity loan portfolio had an outstanding balance of $1.2 billion, or three percent of the total home equity portfolio. At March 31, 2020, our reverse mortgage portfolio had an outstanding balance



		Bank of America 28

of $1.4 billion, or three percent of the total home equity portfolio, compared to $1.5 billion, or four percent, at December 31, 2019.

At March 31, 2020, 80 percent of the home equity portfolio was in Consumer Banking, 12 percent was in All Other and the remainder of the portfolio was primarily in GWIM. Outstanding balances in the home equity portfolio decreased $641 million during the three months ended March 31, 2020 primarily due to paydowns outpacing new originations and draws on existing lines. Of the total home equity portfolio at March 31, 2020 and December 31, 2019, $14.8 billion, or 37 percent, and $15.0 billion, or 37 percent, were in first-lien positions. At March 31, 2020,

outstanding balances in the home equity portfolio that were in a second-lien or more junior-lien position and where we also held the first-lien loan totaled $6.9 billion, or 17 percent of our total home equity portfolio.

Unused HELOCs totaled $43.7 billion and $43.6 billion at March 31, 2020 and December 31, 2019. The increase was primarily driven by new production partially offset by customers choosing to close accounts. The HELOC utilization rate was 46 percent at both March 31, 2020 and December 31, 2019.

Table 23 presents certain home equity portfolio key credit statistics.




Table 23	Home Equity – Key Credit Statistics ⁽¹⁾

(Dollars in millions)		March 31 2020			December 31 2019
Outstandings		$	39,567		$	40,208
Accruing past due 30 days or more ⁽²⁾		205			218
Nonperforming loans ⁽²⁾		578			536
Percent of portfolio
Refreshed CLTV greater than 90 but less than or equal to 100		1		%	1		%
Refreshed CLTV greater than 100		2			2
Refreshed FICO below 620		3			3
2006 and 2007 vintages ⁽³⁾		17			18


⁽¹⁾	Outstandings, accruing past due, nonperforming loans and percentages of the portfolio exclude loans accounted for under the fair value option. For information on our interest accrual policies and delinquency status for loan modifications related to the COVID-19 pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.


⁽²⁾	Accruing past due 30 days or more include $29 million and $30 million and nonperforming loans include $59 million and $57 million of loans where we serviced the underlying first lien at March 31, 2020 and December 31, 2019.


⁽³⁾	These vintages of loans accounted for 35 percent and 34 percent of nonperforming home equity loans at March 31, 2020 and December 31, 2019.

Nonperforming outstanding balances in the home equity portfolio increased $42 million during the three months ended March 31, 2020 primarily driven by the inclusion of certain loans that were previously classified as purchased credit-impaired loans and accounted for under a pool basis. Upon adoption of the new credit loss standard, these loans are accounted for on an individual basis and, if applicable, included in nonperforming loans. Of the nonperforming home equity loans at March 31, 2020, $266 million, or 46 percent, were current on contractual payments. Nonperforming loans that are contractually current primarily consist of collateral-dependent TDRs, including those that have been discharged in Chapter 7 bankruptcy, junior-lien loans where the underlying first lien is 90 days or more past due, as well as loans that have not yet demonstrated a sustained period of payment performance following a TDR. In addition, $173 million, or 30 percent of nonperforming home equity loans were 180 days or more past due and had been written down to the estimated fair value of the collateral, less costs to sell. Accruing loans that were 30 days or more past due decreased $13 million during the three months ended March 31, 2020.

Net charge-offs decreased $22 million to a net recovery of $11 million for the three months ended March 31, 2020 compared to net charge-offs of $11 million for the same period in 2019, as the prior-year period included charge-offs from home equity loan sales.

Of the $39.6 billion in total home equity portfolio outstandings at March 31, 2020, as shown in Table 23, 16 percent require interest-only payments. The outstanding balance of HELOCs that have reached the end of their draw period and have entered the amortization period was $11.0 billion at March 31, 2020. The HELOCs that have entered the amortization period have

experienced a higher percentage of early stage delinquencies and nonperforming status when compared to the HELOC portfolio as a whole. At March 31, 2020, $144 million, or one percent of outstanding HELOCs that had entered the amortization period were accruing past due 30 days or more. In addition, at March 31, 2020, $406 million, or four percent, were nonperforming. Loans that have yet to enter the amortization period in our interest-only portfolio are primarily post-2008 vintages and generally have better credit quality than the previous vintages that had entered the amortization period. We communicate to contractually current customers more than a year prior to the end of their draw period to inform them of the potential change to the payment structure before entering the amortization period, and provide payment options to customers prior to the end of the draw period.

Although we do not actively track how many of our home equity customers pay only the minimum amount due on their home equity loans and lines, we can infer some of this information through a review of our HELOC portfolio that we service and that is still in its revolving period. During the three months ended March 31, 2020, 21 percent of these customers with an outstanding balance did not pay any principal on their HELOCs.

Table 24 presents outstandings, nonperforming balances and net charge-offs by certain state concentrations for the home equity portfolio. In the New York area, the New York-Northern New Jersey-Long Island MSA made up 13 percent of the outstanding home equity portfolio at both March 31, 2020 and December 31, 2019. The Los Angeles-Long Beach-Santa Ana MSA within California made up 11 percent of the outstanding home equity portfolio at both March 31, 2020 and December 31, 2019.



29 Bank of America




Table 24	Home Equity State Concentrations

		Outstandings ⁽¹⁾				Nonperforming ⁽¹⁾				Net Charge-offs
		March 31		December 31		March 31		December 31		Three Months Ended March 31
(Dollars in millions)		2020		2019		2020		2019		2020			2019
California		$	11,106	$	11,232	$	116	$	101	$	(5	)	$	(5	)
Florida		4,241		4,327		75		71		(3		)	(3		)
New Jersey		3,145		3,216		60		56		—			5
New York		2,819		2,899		88		85		1			10
Massachusetts		1,979		2,023		31		29		1			—
Other		16,277		16,511		208		194		(5		)	4
Total home equity loan portfolio		$	39,567	$	40,208	$	578	$	536	$	(11	)	$	11


⁽¹⁾	Outstandings and nonperforming loans exclude loans accounted for under the fair value option.

Credit Card

At March 31, 2020, 97 percent of the credit card portfolio was managed in Consumer Banking with the remainder in GWIM. Outstandings in the credit card portfolio decreased $5.7 billion during the three months ended March 31, 2020 to $91.9 billion due to a seasonal decline in purchase volumes. Net charge-offs increased $25 million to $770 million during the three months ended March 31, 2020 compared to $745 million for the same period in 2019 due to portfolio seasoning. Credit card loans 30

days or more past due and still accruing interest decreased $135 million and loans 90 days or more past due and still accruing interest decreased $51 million due to seasonal declines.

Unused lines of credit for credit card increased to $345.0 billion at March 31, 2020 from $336.9 billion at December 31, 2019 driven by seasonally lower purchase volumes.

Table 25 presents certain state concentrations for the credit card portfolio.




Table 25	Credit Card State Concentrations

		Outstandings				Accruing Past Due 90 Days or More ⁽¹⁾				Net Charge-offs
		March 31		December 31		March 31		December 31		Three Months Ended March 31
(Dollars in millions)		2020		2019		2020		2019		2020		2019
California		$	15,166	$	16,135	$	174	$	178	$	136	$	132
Florida		8,657		9,075		127		135		101		90
Texas		7,540		7,815		89		93		65		59
New York		5,670		5,975		75		80		60		61
Washington		4,184		4,639		26		26		18		18
Other		50,673		53,969		500		530		390		385
Total credit card portfolio		$	91,890	$	97,608	$	991	$	1,042	$	770	$	745


⁽¹⁾	For information on our interest accrual policies and delinquency status for loan modifications related to the COVID-19 pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.

Direct/Indirect Consumer

At March 31, 2020, 56 percent of the direct/indirect portfolio was included in Consumer Banking (consumer auto and specialty lending – automotive, recreational vehicle, marine, aircraft and consumer personal loans) and 44 percent was included in GWIM (principally securities-based lending loans).

Outstandings of $90.2 billion in the direct/indirect portfolio were relatively unchanged at March 31, 2020 compared to December 31, 2019.

Table 26 presents certain state concentrations for the direct/indirect consumer loan portfolio.




Table 26	Direct/Indirect State Concentrations

		Outstandings				Accruing Past Due 90 Days or More ⁽¹⁾				Net Charge-offs
		March 31		December 31		March 31		December 31		Three Months Ended March 31
(Dollars in millions)		2020		2019		2020		2019		2020		2019
California		$	11,827	$	11,912	$	4	$	4	$	6	$	7
Florida		10,245		10,154		4		4		7		8
Texas		9,297		9,516		5		5		6		10
New York		6,376		6,394		1		1		2		3
New Jersey		3,441		3,468		—		1		—		1
Other		49,060		49,554		16		18		19		25
Total direct/indirect loan portfolio		$	90,246	$	90,998	$	30	$	33	$	40	$	54


⁽¹⁾	For information on our interest accrual policies and delinquency status for loan modifications related to the COVID-19 pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.



		Bank of America 30

Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity

Table 27 presents nonperforming consumer loans, leases and foreclosed properties activity for the three months ended March 31, 2020 and 2019. During the three months ended March 31, 2020, nonperforming consumer loans increased $151 million to $2.2 billion primarily driven by the inclusion of $150 million of certain loans that were previously classified as purchased credit-impaired loans and accounted for under a pool basis.

At March 31, 2020, $673 million, or 31 percent of nonperforming loans were 180 days or more past due and had been written down to their estimated property value less costs to sell. In addition, at March 31, 2020, $921 million, or 42 percent of nonperforming consumer loans were modified and are now

current after successful trial periods, or are current loans classified as nonperforming loans in accordance with applicable policies.

Foreclosed properties decreased $3 million during the three months ended March 31, 2020 to $226 million as liquidations outpaced additions.

Nonperforming loans also include certain loans that have been modified in TDRs where economic concessions have been granted to borrowers experiencing financial difficulties. Nonperforming TDRs are included in Table 27. For more information on our loan modification programs offered in response to the COVID-19 pandemic, which are not TDRs, see Executive Summary - Recent Developments – COVID-19 Pandemic 2020 on page 3 and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.




Table 27	Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity

		Three Months Ended March 31
(Dollars in millions)		2020			2019
Nonperforming loans and leases, January 1		$	2,053		$	3,842
Additions		477			391
Reductions:
Paydowns and payoffs		(106		)	(188		)
Sales		(6		)	(164		)
Returns to performing status ⁽¹⁾		(165		)	(249		)
Charge-offs		(27		)	(28		)
Transfers to foreclosed properties		(22		)	(26		)
Total net reductions to nonperforming loans and leases		151			(264		)
Total nonperforming loans and leases, March 31		2,204			3,578
Foreclosed properties, March 31 ⁽²⁾		226			236
Nonperforming consumer loans, leases and foreclosed properties, March 31		$	2,430		$	3,814
Nonperforming consumer loans and leases as a percentage of outstanding consumer loans and leases ⁽³⁾		0.47		%	0.81		%
Nonperforming consumer loans, leases and foreclosed properties as a percentage of outstanding consumer loans, leases and foreclosed properties ⁽³⁾		0.52			0.86


⁽¹⁾	Consumer loans may be returned to performing status when all principal and interest is current and full repayment of the remaining contractual principal and interest is expected, or when the loan otherwise becomes well-secured and is in the process of collection.


⁽²⁾	Foreclosed property balances do not include properties insured by certain government-guaranteed loans, principally FHA-insured, of $224 million and $400 million at March 31, 2020 and 2019.


⁽³⁾	Outstanding consumer loans and leases exclude loans accounted for under the fair value option.

Table 28 presents TDRs for the consumer real estate portfolio. Performing TDR balances are excluded from nonperforming loans and leases in Table 27. For more information on our loan modification programs offered in response to the COVID-19 pandemic, which are not TDRs, see Executive Summary - Recent Developments – COVID-19 Pandemic 2020 on page 3.




Table 28	Consumer Real Estate Troubled Debt Restructurings

		March 31, 2020						December 31, 2019
(Dollars in millions)		Nonperforming		Performing		Total		Nonperforming		Performing		Total
Residential mortgage ^{(1, 2)}		$	881	$	3,654	$	4,535	$	921	$	3,832	$	4,753
Home equity ⁽³⁾		250		941		1,191		252		977		1,229
Total consumer real estate troubled debt restructurings		$	1,131	$	4,595	$	5,726	$	1,173	$	4,809	$	5,982


⁽¹⁾	At both March 31, 2020 and December 31, 2019, residential mortgage TDRs deemed collateral dependent totaled $1.2 billion, and included $720 million and $748 million of loans classified as nonperforming and $455 million and $468 million of loans classified as performing.


⁽²⁾	At March 31, 2020 and December 31, 2019, residential mortgage performing TDRs include $2.0 billion and $2.1 billion of loans that were fully-insured.


₍₃₎	At March 31, 2020 and December 31, 2019, home equity TDRs deemed collateral dependent totaled $427 million and $442 million, and include $207 million and $209 million of loans classified as nonperforming and $220 million and $233 million of loans classified as performing.

In addition to modifying consumer real estate loans, we work with customers who are experiencing financial difficulty by modifying credit card and other consumer loans. Credit card and other consumer loan modifications generally involve a reduction in the customer’s interest rate on the account and placing the customer on a fixed payment plan not exceeding 60 months, all of which are considered TDRs (the renegotiated TDR portfolio).

Modifications of credit card and other consumer loans are made through renegotiation programs utilizing direct customer contact, but may also utilize external renegotiation programs. The

renegotiated TDR portfolio is excluded in large part from Table 27 as substantially all of the loans remain on accrual status until either charged off or paid in full. At March 31, 2020 and December

31, 2019, our renegotiated TDR portfolio was $694 million and $679 million, of which $590 million and $570 million were current or less than 30 days past due under the modified terms. The increase in the renegotiated TDR portfolio was primarily driven by new renegotiated enrollments outpacing runoff of existing portfolios.

Commercial Portfolio Credit Risk Management

Commercial credit risk is evaluated and managed with the goal that concentrations of credit exposure continue to be aligned with our risk appetite. We review, measure and manage concentrations of credit exposure by industry, product, geography, customer relationship and loan size. We also review, measure and manage



31 Bank of America

commercial real estate loans by geographic location and property type. In addition, within our non-U.S. portfolio, we evaluate exposures by region and by country. Tables 33, 36 and 39 summarize our concentrations. We also utilize syndications of exposure to third parties, loan sales, hedging and other risk mitigation techniques to manage the size and risk profile of the commercial credit portfolio. For more information on our industry concentrations, see Commercial Portfolio Credit Risk Management – Industry Concentrations on page 35 and Table 36.

For more information on our accounting policies regarding delinquencies, nonperforming status, net charge-offs and TDRs for the commercial portfolio, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2019 Annual Report on Form 10-K.

For information on the accounting for loan modifications related to the COVID-19 pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.

Commercial Credit Portfolio

During the three months ended March 31, 2020, commercial asset quality weakened as a result of the economic impact from COVID-19. Large corporate and commercial clients drew down on their existing lines of credit which contributed to a $67.2 billion increase in commercial loans for the three months ended March 31, 2020. These draws were well diversified across industries and approximately 90 percent were investment grade or collateralized.

Credit quality of commercial real estate borrowers in most sectors remained stable but also began to experience varying degrees of strain as a result of COVID-19. Many real estate markets experienced disruption in demand, supply chain challenges and underlying tenant difficulties.

The commercial allowance for loan and lease losses increased $1.8 billion during the three months ended March 31, 2020 to $6.7 billion due to the deterioration in the economic outlook resulting from the impact of COVID-19. For more information, see Allowance for Credit Losses on page 38.

Total commercial utilized credit exposure increased $84.6 billion during the three months ended March 31, 2020 to $719.9 billion driven by higher loans and leases. The utilization rate for loans and leases, standby letters of credit (SBLCs) and financial guarantees, and commercial letters of credit, in the aggregate, was 64 percent at March 31, 2020 and 58 percent at December 31, 2019.

Table 29 presents commercial credit exposure by type for utilized, unfunded and total binding committed credit exposure. Commercial utilized credit exposure includes SBLCs and financial guarantees and commercial letters of credit that have been issued and for which we are legally bound to advance funds under prescribed conditions during a specified time period, and excludes exposure related to trading account assets. Although funds have not yet been advanced, these exposure types are considered utilized for credit risk management purposes.




Table 29	Commercial Credit Exposure by Type

		Commercial Utilized ⁽¹⁾				Commercial Unfunded ^{(2, 3, 4)}				Total Commercial Committed
(Dollars in millions)		March 31 2020		December 31 2019		March 31 2020		December 31 2019		March 31 2020		December 31 2019
Loans and leases		$	584,831	$	517,657	$	344,887	$	405,834	$	929,718	$	923,491
Derivative assets ⁽⁵⁾		57,654		40,485		—		—		57,654		40,485
Standby letters of credit and financial guarantees		35,720		36,062		458		468		36,178		36,530
Debt securities and other investments		27,228		25,546		4,440		5,101		31,668		30,647
Loans held-for-sale		5,919		7,047		10,712		15,135		16,631		22,182
Operating leases		6,994		6,660		—		—		6,994		6,660
Commercial letters of credit		871		1,049		365		451		1,236		1,500
Other		665		800		—		—		665		800
Total		$	719,882	$	635,306	$	360,862	$	426,989	$	1,080,744	$	1,062,295


⁽¹⁾	Commercial utilized exposure includes loans of $8.5 billion and $7.7 billion and issued letters of credit with a notional amount of $156 million and $170 million accounted for under the fair value option at March 31, 2020 and December 31, 2019.


⁽²⁾	Commercial unfunded exposure includes commitments accounted for under the fair value option with a notional amount of $3.6 billion and $4.2 billion at March 31, 2020 and December 31, 2019.


⁽³⁾	Excludes unused business card lines, which are not legally binding.


⁽⁴⁾	Includes the notional amount of unfunded legally binding lending commitments net of amounts distributed (i.e., syndicated or participated) to other financial institutions. The distributed amounts were $10.5 billion and $10.6 billion at March 31, 2020 and December 31, 2019.

⁽⁵⁾

Derivative assets are carried at fair value, reflect the effects of legally enforceable master netting agreements and have been reduced by cash collateral of $53.4 billion and $33.9 billion at March 31, 2020 and December 31, 2019. Not reflected in utilized and committed exposure is additional non-cash derivative collateral held of $35.7 billion and $35.2 billion at March 31, 2020 and December 31, 2019, which consists primarily of other marketable securities.

Outstanding commercial loans and leases increased $67.2 billion during the three months ended March 31, 2020 primarily in the commercial and industrial portfolio. Nonperforming commercial loans increased $353 million and commercial reservable criticized utilized exposure increased $5.9 billion driven primarily by the impact of COVID-19 and was broad-based across industries. Table 30 presents our commercial loans and leases portfolio and related credit quality information at March 31, 2020 and December 31, 2019.



		Bank of America 32




Table 30	Commercial Credit Quality

		Outstandings				Nonperforming				Accruing Past Due 90 Days or More ⁽³⁾
(Dollars in millions)		March 31 2020		December 31 2019		March 31 2020		December 31 2019		March 31 2020		December 31 2019
Commercial and industrial:
U.S. commercial		$	358,504	$	307,048	$	1,240	$	1,094	$	188	$	106
Non-U.S. commercial		116,612		104,966		90		43		1		8
Total commercial and industrial		475,116		412,014		1,330		1,137		189		114
Commercial real estate		66,654		62,689		408		280		39		19
Commercial lease financing		19,180		19,880		44		32		31		20
		560,950		494,583		1,782		1,449		259		153
U.S. small business commercial ⁽¹⁾		15,421		15,333		70		50		95		97
Commercial loans excluding loans accounted for under the fair value option		576,371		509,916		1,852		1,499		354		250
Loans accounted for under the fair value option ⁽²⁾		8,460		7,741		—		—		—		—
Total commercial loans and leases		$	584,831	$	517,657	$	1,852	$	1,499	$	354	$	250


⁽¹⁾	Includes card-related products.


⁽²⁾	Commercial loans accounted for under the fair value option include U.S. commercial of $5.1 billion and $4.7 billion and non-U.S. commercial of $3.4 billion and $3.1 billion at March 31, 2020 and December 31, 2019. For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.


⁽³⁾	For information on our interest accrual policies and delinquency status for loan modifications related to the COVID-19 pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.

Table 31 presents net charge-offs and related ratios for our commercial loans and leases for the three months ended March 31, 2020 and 2019.




Table 31	Commercial Net Charge-offs and Related Ratios

		Net Charge-offs				Net Charge-off Ratios⁽¹⁾
		Three Months Ended March 31
(Dollars in millions)		2020		2019		2020		2019
Commercial and industrial:
U.S. commercial		$	163	$	83	0.21	%	0.11	%
Non-U.S. commercial		1		—		—		—
Total commercial and industrial		164		83		0.16		0.08
Commercial real estate		6		5		0.04		0.03
Commercial lease financing		5		—		0.10		—
		175		88		0.14		0.07
U.S. small business commercial		75		68		1.95		1.90
Total commercial		$	250	$	156	0.19		0.13


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

Table 32 presents commercial reservable criticized utilized exposure by loan type. Criticized exposure corresponds to the Special Mention, Substandard and Doubtful asset categories as defined by regulatory authorities. Total commercial reservable criticized utilized exposure increased $5.9 billion, or 52 percent, during the three months ended March 31, 2020 driven by the

impact of COVID-19 with increases spread across multiple industries including the energy sector, which was also impacted by the weakness in oil prices and oil price volatility in the quarter. At March 31, 2020 and December 31, 2019, 89 percent and 90 percent of commercial reservable criticized utilized exposure was secured.




Table 32	Commercial Reservable Criticized Utilized Exposure ^{(1, 2)}

(Dollars in millions)		March 31, 2020				December 31, 2019
Commercial and industrial:
U.S. commercial		$	13,190	3.40	%	$	8,272	2.46	%
Non-U.S. commercial		1,499		1.23		989		0.89
Total commercial and industrial		14,689		2.88		9,261		2.07
Commercial real estate		1,560		2.27		1,129		1.75
Commercial lease financing		412		2.15		329		1.66
		16,661		2.79		10,719		2.01
U.S. small business commercial		739		4.79		733		4.78
Total commercial reservable criticized utilized exposure ⁽¹⁾		$	17,400	2.84		$	11,452	2.09


⁽¹⁾	Total commercial reservable criticized utilized exposure includes loans and leases of $16.5 billion and $10.7 billion and commercial letters of credit of $884 million and $715 million at March 31, 2020 and December 31, 2019.


⁽²⁾	Percentages are calculated as commercial reservable criticized utilized exposure divided by total commercial reservable utilized exposure for each exposure category.

Commercial and Industrial

Commercial and industrial loans include U.S. commercial and non-U.S. commercial portfolios.

U.S. Commercial

At March 31, 2020, 72 percent of the U.S. commercial loan portfolio, excluding small business, was managed in Global



33 Bank of America

Banking, 15 percent in Global Markets, 12 percent in GWIM (generally business-purpose loans for high net worth clients) and the remainder primarily in Consumer Banking. U.S. commercial loans increased $51.5 billion during the three months ended March 31, 2020 across all lines of business. Reservable criticized utilized exposure increased $4.9 billion, or 59 percent, driven by the impact of COVID-19 and was broad-based across industries.

Non-U.S. Commercial

At March 31, 2020, 83 percent of the non-U.S. commercial loan portfolio was managed in Global Banking and 17 percent in Global Markets. Non-U.S. commercial loans increased $11.6 billion during the three months ended March 31, 2020, primarily in Global Banking. For information on the non-U.S. commercial portfolio, see Non-U.S. Portfolio on page 37.

Commercial Real Estate

Commercial real estate primarily includes commercial loans secured by non-owner-occupied real estate and is dependent on the sale or lease of the real estate as the primary source of repayment. Outstanding loans increased $4.0 billion, or six percent, during the three months ended March 31, 2020 to $66.7

billion due to new originations and increased utilizations under existing credit facilities outpacing paydowns. The portfolio remains diversified across property types and geographic regions. California represented the largest state concentration at 23 percent and 24 percent of the commercial real estate portfolio at March 31, 2020 and December 31, 2019. The commercial real estate portfolio is predominantly managed in Global Banking and consists of loans made primarily to public and private developers, and commercial real estate firms.

For the three months ended March 31, 2020, we continued to see low default rates and solid credit quality although we began to see some developing weakness in the non-residential portfolio toward the end of the quarter. We use a number of proactive risk mitigation initiatives to reduce adversely rated exposure in the commercial real estate portfolio, including transfers of deteriorating exposures to management by independent special asset officers and the pursuit of loan restructurings or asset sales to achieve the best results for our customers and the Corporation.

Table 33 presents outstanding commercial real estate loans by geographic region, based on the geographic location of the collateral, and by property type.




Table 33	Outstanding Commercial Real Estate Loans

(Dollars in millions)		March 31 2020		December 31 2019
By Geographic Region
California		$	15,337	$	14,910
Northeast		12,649		12,408
Southwest		10,018		8,408
Southeast		6,600		5,937
Florida		4,519		3,984
Midwest		3,596		3,203
Illinois		3,458		3,349
Midsouth		2,830		2,468
Northwest		1,550		1,638
Non-U.S.		3,790		3,724
Other ⁽¹⁾		2,307		2,660
Total outstanding commercial real estate loans		$	66,654	$	62,689
By Property Type
Non-residential
Office		$	17,847	$	17,902
Industrial / Warehouse		9,664		8,677
Shopping centers / Retail		8,852		8,183
Multi-family rental		7,763		7,250
Hotels / Motels		7,687		6,982
Unsecured		3,248		3,438
Multi-use		2,026		1,788
Other		7,654		6,958
Total non-residential		64,741		61,178
Residential		1,913		1,511
Total outstanding commercial real estate loans		$	66,654	$	62,689


⁽¹⁾	Includes unsecured loans to real estate investment trusts and national home builders whose portfolios of properties span multiple geographic regions and properties in the states of Colorado, Utah, Hawaii, Wyoming and Montana.

U.S. Small Business Commercial

The U.S. small business commercial loan portfolio is comprised of small business card loans and small business loans managed in Consumer Banking. Credit card-related products were 52 percent of the U.S. small business commercial portfolio at both March 31, 2020 and December 31, 2019. Of the U.S. small business commercial net charge-offs, 90 percent and 95 percent were credit card-related products for the three months ended March 31, 2020 and 2019.

Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity

Table 34 presents the nonperforming commercial loans, leases and foreclosed properties activity during the three months ended

March 31, 2020 and 2019. Nonperforming loans do not include loans accounted for under the fair value option. During the three months ended March 31, 2020, nonperforming commercial loans and leases increased $353 million to $1.9 billion, driven primarily by the impact of COVID-19. At March 31, 2020, 92 percent of commercial nonperforming loans, leases and foreclosed properties were secured and 63 percent were contractually current. Commercial nonperforming loans were carried at 86 percent of their unpaid principal balance before consideration of the allowance for loan and lease losses as the carrying value of these loans has been reduced to the estimated collateral value less costs to sell.



		Bank of America 34




Table 34	Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity ^{(1, 2)}

		Three Months Ended March 31
(Dollars in millions)		2020			2019
Nonperforming loans and leases, January 1		$	1,499		$	1,102
Additions		781			640
Reductions:
Paydowns		(212		)	(108		)
Sales		(16		)	(43		)
Returns to performing status ⁽³⁾		(16		)	(34		)
Charge-offs		(184		)	(97		)
Transfers to foreclosed properties		—			(7		)
Transfers to loans held-for-sale		—			(181		)
Total net reductions to nonperforming loans and leases		353			170
Total nonperforming loans and leases, March 31		1,852			1,272
Foreclosed properties, March 31		49			59
Nonperforming commercial loans, leases and foreclosed properties, March 31		$	1,901		$	1,331
Nonperforming commercial loans and leases as a percentage of outstanding commercial loans and leases ⁽⁴⁾		0.32		%	0.26		%
Nonperforming commercial loans, leases and foreclosed properties as a percentage of outstanding commercial loans, leases and foreclosed properties ⁽⁴⁾		0.33			0.27


⁽¹⁾	Balances do not include nonperforming loans held-for-sale of $223 million and $457 million at March 31, 2020 and 2019.


⁽²⁾	Includes U.S. small business commercial activity. Small business card loans are excluded as they are not classified as nonperforming.


⁽³⁾	Commercial loans and leases may be returned to performing status when all principal and interest is current and full repayment of the remaining contractual principal and interest is expected, or when the loan otherwise becomes well-secured and is in the process of collection. TDRs are generally classified as performing after a sustained period of demonstrated payment performance.


⁽⁴⁾	Outstanding commercial loans exclude loans accounted for under the fair value option.

Table 35 presents our commercial TDRs by product type and performing status. U.S. small business commercial TDRs are comprised of renegotiated small business card loans and small business loans. The renegotiated small business card loans are

not classified as nonperforming as they are charged off no later

than the end of the month in which the loan becomes 180 days

past due. For more information on our loan modification programs offered in response to the COVID-19 pandemic, which are not TDRs, see Executive Summary - Recent Developments – COVID-19 Pandemic 2020 on page 3 and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.




Table 35	Commercial Troubled Debt Restructurings

		March 31, 2020						December 31, 2019
(Dollars in millions)		Nonperforming		Performing		Total		Nonperforming		Performing		Total
Commercial and industrial:
U.S. commercial		$	792	$	989	$	1,781	$	617	$	999	$	1,616
Non-U.S. commercial		74		169		243		41		193		234
Total commercial and industrial		866		1,158		2,024		658		1,192		1,850
Commercial real estate		198		6		204		212		14		226
Commercial lease financing		—		30		30		18		31		49
		1,064		1,194		2,258		888		1,237		2,125
U.S. small business commercial		—		28		28		—		27		27
Total commercial troubled debt restructurings		$	1,064	$	1,222	$	2,286	$	888	$	1,264	$	2,152

Industry Concentrations

Table 36 presents commercial committed and utilized credit exposure by industry and the total net credit default protection purchased to cover the funded and unfunded portions of certain credit exposures. Our commercial credit exposure is diversified across a broad range of industries. Total commercial committed exposure increased $18.4 billion, or two percent, during the three months ended March 31, 2020 to $1.1 trillion. The increase in commercial committed exposure was concentrated in the Financial markets infrastructure, Capital goods, and Transportation industry sectors. Increases were partially offset by decreased exposure to the Utilities, Consumer services, and Commercial services and supplies industry sectors.

For information on industry limits, see Commercial Portfolio Credit Risk Management - Industry Concentrations in the MD&A of the Corporation’s 2019 Annual Report on Form 10-K.

Asset managers and funds, our largest industry concentration with committed exposure of $109.3 billion, decreased $693 million, or one percent, during the three months ended March 31, 2020.

Real estate, our second largest industry concentration with committed exposure of $95.5 billion, decreased $875 million, or

one percent, during the three months ended March 31, 2020. For more information on the commercial real estate and related portfolios, see Commercial Portfolio Credit Risk Management – Commercial Real Estate on page 34.

Capital goods, our third largest industry concentration with committed exposure of $85.5 billion, increased $4.7 billion, or six percent, during the three months ended March 31, 2020 with the growth largely occurring in the aerospace and defense, and machinery and industrial conglomerates categories, partially offset by a decrease in building products.

Given the widespread impact the COVID-19 pandemic is having on the U.S. and global economy, a number of industries have been or will be adversely impacted. We continue to monitor all industries, particularly higher risk industries, that are experiencing or are expected to experience a more significant impact to their financial condition. In addition, we continue to assess potential mitigants such as the various stimulus programs designed to support these clients and industries through the COVID-19 pandemic. The impact of the COVID-19 pandemic has also placed significant stress on global demand for oil, resulting in a steep decline in prices. Our energy-related committed exposure increased $1.7 billion, or five percent, during the three months ended March 31, 2020 to $38.0



35 Bank of America

billion, driven by our integrated client exposure, partially offset by a decline in our higher risk exploration and production exposure.

For more information on COVID-19, see Executive Summary - Recent Developments – COVID-19 Pandemic 2020 on page 3.




Table 36	Commercial Credit Exposure by Industry ⁽¹⁾

		Commercial Utilized				Total Commercial Committed ⁽²⁾
(Dollars in millions)		March 31 2020		December 31 2019		March 31 2020			December 31 2019
Asset managers and funds		$	73,372	$	71,289	$	109,279		$	109,972
Real estate ⁽³⁾		75,649		70,341		95,474			96,349
Capital goods		48,272		41,060		85,525			80,871
Finance companies		46,089		40,171		66,609			63,940
Healthcare equipment and services		40,241		34,353		58,237			55,918
Government and public education		44,403		41,889		55,527			53,566
Materials		30,712		26,663		53,332			52,128
Retailing		33,505		25,868		49,501			48,317
Food, beverage and tobacco		27,653		24,163		47,384			45,956
Consumer services		34,753		28,434		46,304			49,071
Energy		18,328		16,407		38,041			36,327
Commercial services and supplies		25,572		23,102		36,774			38,943
Transportation		27,775		23,448		36,091			33,027
Utilities		14,537		12,383		31,743			36,060
Global commercial banks		29,072		26,492		31,267			28,670
Individuals and trusts		20,052		18,926		28,657			27,815
Media		13,604		12,429		24,512			23,629
Technology hardware and equipment		12,837		10,645		23,799			24,071
Vehicle dealers		18,315		18,013		21,196			21,435
Consumer durables and apparel		12,648		10,193		20,541			21,245
Software and services		11,337		10,432		19,817			20,556
Pharmaceuticals and biotechnology		6,285		5,962		19,554			20,203
Financial markets infrastructure (clearinghouses)		14,935		9,351		17,352			11,851
Automobiles and components		11,272		7,345		16,714			14,910
Telecommunication services		10,082		9,144		15,919			16,103
Insurance		7,413		6,669		14,793			15,214
Food and staples retailing		6,797		6,290		10,667			10,392
Religious and social organizations		4,372		3,844		6,135			5,756
Total commercial credit exposure by industry		$	719,882	$	635,306	$	1,080,744		$	1,062,295
Net credit default protection purchased on total commitments ⁽⁴⁾						$	(6,450	)	$	(3,349	)


⁽¹⁾	Includes U.S. small business commercial exposure.


⁽²⁾	Includes the notional amount of unfunded legally binding lending commitments net of amounts distributed (i.e., syndicated or participated) to other financial institutions. The distributed amounts were $10.5 billion and $10.6 billion at March 31, 2020 and December 31, 2019.


⁽³⁾	Industries are viewed from a variety of perspectives to best isolate the perceived risks. For purposes of this table, the real estate industry is defined based on the primary business activity of the borrowers or counterparties using operating cash flows and primary source of repayment as key factors.


⁽⁴⁾	Represents net notional credit protection purchased to hedge funded and unfunded exposures for which we elected the fair value option, as well as certain other credit exposures. For more information, see Commercial Portfolio Credit Risk Management – Risk Mitigation.

Risk Mitigation

We purchase credit protection to cover the funded portion as well as the unfunded portion of certain credit exposures. To lower the cost of obtaining our desired credit protection levels, we may add credit exposure within an industry, borrower or counterparty group by selling protection.

At March 31, 2020 and December 31, 2019, net notional credit default protection purchased in our credit derivatives portfolio to hedge our funded and unfunded exposures for which we elected the fair value option, as well as certain other credit exposures, was $6.5 billion and $3.3 billion. We recorded net gains on these positions of $229 million for the three months ended March 31, 2020 compared to net losses of $65 million for the same period in 2019. The gains and losses on these instruments were offset by gains and losses on the related exposures. The Value-at-Risk

(VaR) results for these exposures are included in the fair value option portfolio information in Table 42. For more information, see Trading Risk Management on page 40.

Tables 37 and 38 present the maturity profiles and the credit exposure debt ratings of the net credit default protection portfolio at March 31, 2020 and December 31, 2019.




Table 37	Net Credit Default Protection by Maturity

		March 31 2020		December 31 2019
Less than or equal to one year		32	%	54	%
Greater than one year and less than or equal to five years		43		45
Greater than five years		25		1
Total net credit default protection		100	%	100	%



		Bank of America 36




Table 38	Net Credit Default Protection by Credit Exposure Debt Rating

		Net Notional ⁽¹⁾			Percent of Total		Net Notional ⁽¹⁾			Percent of Total
(Dollars in millions)		March 31, 2020					December 31, 2019
Ratings ^{(2, 3)}
A		$	(857	)	13.3	%	$	(697	)	20.8	%
BBB		(2,761		)	42.8		(1,089		)	32.5
BB		(863		)	13.4		(766		)	22.9
B		(522		)	8.1		(373		)	11.1
CCC and below		(114		)	1.8		(119		)	3.6
NR ⁽⁴⁾		(1,333		)	20.6		(305		)	9.1
Total net credit default protection		$	(6,450	)	100.0	%	$	(3,349	)	100.0	%


⁽¹⁾	Represents net credit default protection purchased.


⁽²⁾	Ratings are refreshed on a quarterly basis.


⁽³⁾	Ratings of BBB- or higher are considered to meet the definition of investment grade.


⁽⁴⁾	NR is comprised of index positions held and any names that have not been rated.

For more information on credit derivatives and counterparty credit risk valuation adjustments, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2019 Annual Report on Form 10-K.

Non-U.S. Portfolio

Our non-U.S. credit and trading portfolios are subject to country risk. We define country risk as the risk of loss from unfavorable economic and political conditions, currency fluctuations, social instability and changes in government policies. A risk management framework is in place to measure, monitor and manage non-U.S. risk and exposures. In addition to the direct risk of doing business in a country, we also are exposed to indirect country risks (e.g., related to the collateral received on secured financing transactions or related to client clearing activities). These indirect exposures are managed in the normal course of business through credit, market and operational risk governance, rather than through country risk governance.

Table 39 presents our 20 largest non-U.S. country exposures at March 31, 2020. These exposures accounted for 90 percent and 88 percent of our total non-U.S. exposure at March 31, 2020 and December 31, 2019. Net country exposure for these 20 countries increased $43.9 billion in the three months ended March 31, 2020, primarily driven by increased sovereign and corporate exposure across multiple countries. The majority of the increase was due to higher deposits with non-U.S. central banks and increased counterparty exposure.




Table 39	Top 20 Non-U.S. Countries Exposure

(Dollars in millions)		Funded Loans and Loan Equivalents		Unfunded Loan Commitments		Net Counterparty Exposure		Securities/ Other Investments		Country Exposure at March 31 2020		Hedges and Credit Default Protection			Net Country Exposure at March 31 2020		Increase (Decrease) from December 31 2019
United Kingdom		$	35,343	$	14,564	$	10,902	$	3,081	$	63,890	$	(2,086	)	$	61,804	$	5,960
Germany		36,034		6,447		4,009		1,150		47,640		(2,706		)	44,934		14,106
Japan		20,528		904		1,967		2,380		25,779		(938		)	24,841		14,309
France		13,359		7,220		1,475		1,537		23,591		(1,858		)	21,733		5,478
Canada		10,098		6,529		2,071		3,558		22,256		(568		)	21,688		1,566
China		12,297		410		1,617		875		15,199		(353		)	14,846		(741		)
Australia		6,642		2,670		1,780		1,767		12,859		(447		)	12,412		1,310
India		7,843		268		599		3,542		12,252		(151		)	12,101		84
Brazil		7,602		234		372		3,301		11,509		(201		)	11,308		(464		)
Netherlands		6,834		2,489		959		488		10,770		(891		)	9,879		(448		)
Switzerland		5,561		2,769		400		477		9,207		(419		)	8,788		1,403
Hong Kong		6,735		292		402		1,170		8,599		(33		)	8,566		1,510
South Korea		5,692		828		529		1,433		8,482		(164		)	8,318		(387		)
Singapore		4,121		310		700		2,837		7,968		(50		)	7,918		92
Belgium		5,248		865		653		1,158		7,924		(237		)	7,687		1,180
Mexico		4,286		1,198		191		944		6,619		(424		)	6,195		(1,616		)
Spain		3,015		1,267		315		722		5,319		(464		)	4,855		133
Italy		2,657		1,628		593		692		5,570		(976		)	4,594		(783		)
Ireland		2,756		930		326		445		4,457		(15		)	4,442		1,075
United Arab Emirates		3,179		163		374		62		3,778		(43		)	3,735		148
Total top 20 non-U.S. countries exposure		$	199,830	$	51,985	$	30,234	$	31,619	$	313,668	$	(13,024	)	$	300,644	$	43,915

Our largest emerging market country exposure at March 31, 2020 was China, with net exposure of $14.8 billion, concentrated in large state-owned companies, subsidiaries of multinational corporations and commercial banks.

Our largest non-U.S. country exposure at March 31, 2020 was the U.K. with net exposure of $61.8 billion, which represents a $6.0 billion increase from December 31, 2019. Our second largest non-U.S. country exposure was Germany with net exposure of $44.9 billion at March 31, 2020, a $14.1 billion increase from December 31, 2019. The increase in Germany was primarily driven by an increase in sovereign exposure.

In light of the COVID-19 global pandemic, we are monitoring our non-U.S. exposure closely, particularly in countries where restrictions on certain activities, in an attempt to contain the spread and impact of the virus, have affected and will continue

to adversely affect economic activity. We are managing the impact to our international business operations as part of our overall response framework and are taking actions to manage exposure carefully in impacted regions while supporting the needs of our clients. The magnitude and duration of the COVID-19 pandemic and its full impact on the global economy is highly uncertain. The impact of the COVID-19 pandemic could have an adverse impact on the global economy for a prolonged period of time. For more information on how the COVID-19 pandemic may affect our operations, see Executive Summary - Recent Developments – COVID-19 Pandemic 2020 on page 3 and Part II, Item 1A. Risk Factors on page 96.



37 Bank of America

Allowance for Credit Losses

primarily driven by a $3.1 billion increase related to the credit card portfolio. The allowance for credit losses further increased by $3.6 billion at March 31, 2020, which included a $2.2 billion increase in the commercial portfolio and a $774 million increase in the credit card portfolio. The increases were primarily due to the deterioration in the economic outlook resulting from the impact of COVID-19. The following table presents an allocation of the allowance for credit losses by product type for March 31, 2020, January 1, 2020 and December 31, 2019 (prior to the adoption of the CECL accounting standard).




Table 40	Allocation of the Allowance for Credit Losses by Product Type

		Amount		Percent of Total		Percent of Loans and Leases Outstanding ⁽¹⁾		Amount		Percent of Total		Percent of Loans and Leases Outstanding ⁽¹⁾		Amount		Percent of Total		Percent of Loans and Leases Outstanding ⁽¹⁾
(Dollars in millions)		March 31, 2020						January 1, 2020						December 31, 2019
Allowance for loan and lease losses
Residential mortgage		$	430	2.73	%	0.18	%	$	212	1.72	%	0.09	%	$	325	3.45	%	0.14	%
Home equity		378		2.40		0.96		228		1.84		0.57		221		2.35		0.55
Credit card		7,583		48.10		8.25		6,809		55.10		6.98		3,710		39.39		3.80
Direct/Indirect consumer		623		3.95		0.69		566		4.58		0.62		234		2.49		0.26
Other consumer		52		0.32		n/m		55		0.45		n/m		52		0.55		n/m
Total consumer		9,066		57.50		1.95		7,870		63.69		1.69		4,542		48.23		0.98
U.S. commercial ⁽²⁾		4,135		26.23		1.11		2,723		22.03		0.84		3,015		32.02		0.94
Non-U.S. commercial		1,041		6.60		0.89		668		5.41		0.64		658		6.99		0.63
Commercial real estate		1,439		9.13		2.16		1,036		8.38		1.65		1,042		11.07		1.66
Commercial lease financing		85		0.54		0.45		61		0.49		0.31		159		1.69		0.80
Total commercial		6,700		42.50		1.16		4,488		36.31		0.88		4,874		51.77		0.96
Allowance for loan and lease losses		15,766		100.00	%	1.51		12,358		100.00	%	1.27		9,416		100.00	%	0.97
Reserve for unfunded lending commitments		1,360						1,123						813
Allowance for credit losses		$	17,126					$	13,481					$	10,229

⁽¹⁾

Ratios are calculated as allowance for loan and lease losses as a percentage of loans and leases outstanding excluding loans accounted for under the fair value option. Consumer loans accounted for under the fair value option include residential mortgage loans of $231 million at March 31, 2020 and $257 million at January 1, 2020 and December 31, 2019 and home equity loans of $325 million at March 31, 2020 and $337 million at January 1, 2020 and December 31, 2019. Commercial loans accounted for under the fair value option include U.S. commercial loans of $5.1 billion at March 31, 2020 and January 1, 2020 and $4.7 billion at December 31, 2019 and non-U.S. commercial loans of $3.4 billion, $3.2 billion and $3.1 billion at March 31, 2020, January 1, 2020 and December 31, 2019, respectively.


⁽²⁾	Includes allowance for loan and lease losses for U.S. small business commercial loans of $1.1 billion, $831 million and $523 million at March 31, 2020, January 1, 2020 and December 31, 2019.

n/m = not meaningful

Net charge-offs for the three months ended March 31, 2020 were $1.1 billion compared to $991 million for the same period in 2019 driven by increases in commercial losses. The provision for credit losses for the three months ended March 31, 2020 was $4.8 billion which was $3.7 billion higher than the same period in 2019. The provision for credit losses was $3.6 billion higher than net charge-offs for the three months ended March 31, 2020, which was primarily due to the deterioration in the economic outlook resulting from the impact of COVID-19 on both the consumer and commercial portfolios. The provision for credit losses for the consumer portfolio, including unfunded lending commitments, increased $1.3 billion to $2.1 billion for the three months ended March 31, 2020 compared to the same period in 2019. The provision for credit losses for the commercial portfolio, including

unfunded lending commitments, increased $2.5 billion to $2.7 billion for the three months ended March 31, 2020 compared to the same period in 2019.

The following table presents a rollforward of the allowance for credit losses, including certain loan and allowance ratios for the three months ended March 31, 2020 and 2019, noting that measurement of the allowance for credit losses for 2019 was based on management’s estimate of probable incurred losses. For more information on the Corporation’s credit loss accounting policies and activity related to the allowance for credit losses, see Note 1 – Summary of Significant Accounting Principles and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.



		Bank of America 38




Table 41	Allowance for Credit Losses

		Three Months Ended March 31
(Dollars in millions)		2020			2019
Allowance for loan and lease losses, December 31		$	9,416		$	9,601
January 1, 2020 adoption of Current Expected Credit Losses		2,942			—
Allowance for loan and lease losses, January 1		12,358			9,601
Loans and leases charged off
Residential mortgage		(11		)	(24		)
Home equity		(24		)	(79		)
Credit card		(924		)	(887		)
Direct/Indirect consumer		(116		)	(124		)
Other consumer		(81		)	(46		)
Total consumer charge-offs		(1,156		)	(1,160		)
U.S. commercial ⁽¹⁾		(267		)	(170		)
Non-U.S. commercial		(1		)	—
Commercial real estate		(7		)	(5		)
Commercial lease financing		(7		)	(2		)
Total commercial charge-offs		(282		)	(177		)
Total loans and leases charged off		(1,438		)	(1,337		)
Recoveries of loans and leases previously charged off
Residential mortgage		12			40
Home equity		35			68
Credit card		154			142
Direct/Indirect consumer		76			70
Other consumer		7			5
Total consumer recoveries		284			325
U.S. commercial ⁽²⁾		29			19
Commercial real estate		1			—
Commercial lease financing		2			2
Total commercial recoveries		32			21
Total recoveries of loans and leases previously charged off		316			346
Net charge-offs		(1,122		)	(991		)
Provision for loan and lease losses		4,525			1,008
Other ⁽³⁾		5			(41		)
Allowance for loan and lease losses, March 31		15,766			9,577
Reserve for unfunded lending commitments, December 31		813			797
January 1, 2020 adoption of Current Expected Credit Losses		310			—
Reserve for unfunded lending commitments, January 1		1,123			797
Provision for unfunded lending commitments		236			5
Other ⁽³⁾		1			—
Reserve for unfunded lending commitments, March 31		1,360			802
Allowance for credit losses, March 31		$	17,126		$	10,379

Loan and allowance ratios:
Loans and leases outstanding at March 31 ⁽⁴⁾		$	1,041,769		$	939,428
Allowance for loan and lease losses as a percentage of total loans and leases outstanding at March 31 ⁽⁴⁾		1.51		%	1.02		%
Consumer allowance for loan and lease losses as a percentage of total consumer loans and leases outstanding at March 31 ⁽⁵⁾		1.95			1.08
Commercial allowance for loan and lease losses as a percentage of total commercial loans and leases outstanding at March 31 ⁽⁶⁾		1.16			0.97
Average loans and leases outstanding ⁽⁴⁾		$	981,652		$	939,008
Annualized net charge-offs as a percentage of average loans and leases outstanding ⁽⁴⁾		0.46		%	0.43		%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases at March 31		389			197
Ratio of the allowance for loan and lease losses at March 31 to net charge-offs		3.49			2.38
Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases at March 31 ⁽⁷⁾		$	8,552		$	4,106
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases at March 31 ⁽⁷⁾		178		%	113		%


⁽¹⁾	Includes U.S. small business commercial charge-offs of $86 million and $79 million for the three months ended March 31, 2020 and 2019.


⁽²⁾	Includes U.S. small business commercial recoveries of $11 million and $11 million for the three months ended March 31, 2020 and 2019.


⁽³⁾	Primarily represents write-offs of purchased credit-impaired (PCI) loans in 2019, and the net impact of portfolio sales, transfers to held for sale and transfers to foreclosed properties.


⁽⁴⁾	Outstanding loan and lease balances and ratios do not include loans accounted for under the fair value option of $9.0 billion and $6.2 billion at March 31, 2020 and 2019. Average loans accounted for under the fair value option were $8.6 billion and $5.0 billion in March 31, 2020 and 2019.


⁽⁵⁾	Excludes consumer loans accounted for under the fair value option of $556 million and $668 million at March 31, 2020 and 2019.


⁽⁶⁾	Excludes commercial loans accounted for under the fair value option of $8.5 billion and $5.5 billion at March 31, 2020 and 2019.


⁽⁷⁾	Primarily includes amounts allocated to credit card and unsecured consumer lending portfolios in Consumer Banking.



39 Bank of America

Market Risk Management

For more information on our market risk management process, see Market Risk Management in the MD&A of the Corporation’s 2019 Annual Report on Form 10-K.

Market risk is the risk that changes in market conditions may adversely impact the value of assets or liabilities, or otherwise negatively impact earnings. This risk is inherent in the financial instruments associated with our operations, primarily within our Global Markets segment. We are also exposed to these risks in other areas of the Corporation (e.g., our ALM activities). In the event of market stress, these risks could have a material impact on our results.

We have been affected, and expect to continue to be affected, by market stress resulting from the COVID-19 pandemic that began in the first quarter of 2020. For more information on the effects of the pandemic, see Executive Summary - Recent Developments – COVID-19 Pandemic 2020 on page 3.

Trading Risk Management

To evaluate risks in our trading activities, we focus on the actual and potential volatility of revenues generated by individual positions as well as portfolios of positions. VaR is a common statistic used to measure market risk. Our primary VaR statistic is equivalent to a 99 percent confidence level, which means that for a VaR with a one-day holding period, there should not be losses in excess of VaR, on average, 99 out of 100 trading days.

Table 42 presents the total market-based portfolio VaR which is the combination of the total covered positions (and less liquid trading positions) portfolio and the fair value option portfolio. For more information on the market risk VaR for trading activities, see Trading Risk Management in the MD&A of the Corporation’s 2019 Annual Report on Form 10-K.

The total market-based portfolio VaR results in Table 42 include market risk to which we are exposed from all business segments, excluding credit valuation adjustment (CVA), DVA and related hedges. The majority of this portfolio is within the Global Markets segment.

Table 42 presents year-end, average, high and low daily trading VaR for the three months ended March 31, 2020, December 31, 2019 and March 31, 2019 using a 99 percent confidence level. The amounts disclosed in Table 42 and Table 43 align to the view of covered positions used in the Basel 3 capital calculations. Foreign exchange and commodity positions are always considered covered positions, regardless of trading or banking treatment for the trade, except for structural foreign currency positions that are excluded with prior regulatory approval.

The average of total covered positions and less liquid trading positions portfolio VaR increased for the three months ended March 31, 2020 compared to the previous quarter primarily due to increased market volatility in March as a result of the effects of the COVID-19 pandemic, which heightened VaR for equity and credit risk factors.

Table 42

Market Risk VaR for Trading Activities

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

Commercial Portfolio Credit Risk Management

Non-U.S. Portfolio

Allowance for Credit Losses

Market Risk Management

Trading 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

Commercial Portfolio Credit Risk Management

Non-U.S. Portfolio

Allowance for Credit Losses

Market Risk Management

Trading Risk Management