UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2021

☐ 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 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


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
of 5.000% Non-Cumulative Preferred Stock, Series LL
Depositary Shares, each representing a 1/1,000th interest in a share of	BAC PrO	New York Stock Exchange
4.375% Non-Cumulative Preferred Stock, Series NN
Depositary Shares, each representing a 1/1,000th interest in a share of	BAC PrP	New York Stock Exchange
4.125% Non-Cumulative Preferred Stock, Series PP

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

Yes ☑ No ☐

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

Yes ☑ No ☐

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

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company ☐

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

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

Yes ☐ No ☑

On July 29, 2021, there were 8,414,903,881 shares of Bank of America Corporation Common Stock outstanding.

Bank of America Corporation and Subsidiaries

June 30, 2021

Form 10-Q

INDEX

Part I. Financial Information


Item 1. Financial Statements						Page
Consolidated Statement of Income						48
Consolidated Statement of Comprehensive Income						48
Consolidated Balance Sheet						49
Consolidated Statement of Changes in Shareholders’ Equity						50
Consolidated Statement of Cash Flows						51
Notes to Consolidated Financial Statements						52
Note 1 – Summary of Significant Accounting Principles						52
Note 2 – Net Interest Income and Noninterest Income						52
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						75
Note 7 – Goodwill and Intangible Assets						79
Note 8 – Leases						79
Note 9 – Federal Funds Sold or Purchased, Securities Financing Agreements, Short-term Borrowings and Restricted Cash						80
Note 10 – Commitments and Contingencies						82
Note 11 – Shareholders’ Equity						85
Note 12 – Accumulated Other Comprehensive Income (Loss)						85
Note 13 – Earnings Per Common Share						86

Note 14 – Fair Value Measurements						86
Note 15 – Fair Value Option						93
Note 16 – Fair Value of Financial Instruments						95
Note 17 – Business Segment Information						95
Glossary						100
Acronyms						101



Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Executive Summary						3
Recent Developments						3
Financial Highlights						4

Supplemental Financial Data						7
Business Segment Operations						11
Consumer Banking						11
Global Wealth & Investment Management						15
Global Banking						17
Global Markets						19

All Other						21
Off-Balance Sheet Arrangements and Contractual Obligations						22
Managing Risk						22

Capital Management						22
Liquidity Risk						26
Credit Risk Management						29
Consumer Portfolio Credit Risk Management						29
Commercial Portfolio Credit Risk Management						35
Non-U.S. Portfolio						40

Allowance for Credit Losses						41
Market Risk Management						42
Trading Risk Management						43
Interest Rate Risk Management for the Banking Book						45
Mortgage Banking Risk Management						45



Climate Risk Management						46
Complex Accounting Estimates						46
Non-GAAP Reconciliations						47

Item 3. Quantitative and Qualitative Disclosures about Market Risk						47
Item 4. Controls and Procedures						47


1 Bank of America

Part II. Other Information


Item 1. Legal Proceedings						102
Item 1A. Risk Factors						102
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						102
Item 6. Exhibits						103
Signature						103

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, provision for credit losses, 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 the Corporation’s 2020 Annual Report on Form 10-K and in any of the Corporation’s subsequent Securities and Exchange Commission filings: the Corporation’s potential judgments, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory investigations, proceedings and enforcement actions, including as a result of our participation in and execution of government programs related to the Coronavirus Disease 2019 (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, and regulatory and government actions; the possibility that the Corporation could face increased claims from one or more parties involved in mortgage securitizations; the Corporation's ability to resolve representations and warranties repurchase and related 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 concentration of credit risk; the Corporation's ability to achieve its expense targets and expectations regarding revenue, 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, stress capital buffer 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 changes in or interpretations of income tax laws and regulations; 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 climate change; the impact of any future federal government shutdown and uncertainty regarding the federal government’s debt limit or changes in fiscal, monetary or regulatory policy; 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 financial market conditions and our business, results of operations, financial condition and prospects; the impact of natural disasters, extreme weather events, 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 various bank and nonbank subsidiaries throughout the U.S. and in international markets, we provide a diversified range of banking and nonbank financial services and products through four business segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking and Global Markets, with the remaining operations recorded in All Other. We operate our banking activities primarily under the Bank of America, National Association (Bank of America, N.A. or BANA) charter. At June 30, 2021, the Corporation had $3.0 trillion in assets and a headcount of approximately 212,000 employees.

As of June 30, 2021, we served clients through operations across the U.S., its territories and approximately 35 countries. Our retail banking footprint covers all major markets in the U.S., and we serve approximately 66 million consumer and small business clients with approximately 4,300 retail financial centers, approximately 17,000 ATMs, and leading digital banking platforms (www.bankofamerica.com) with approximately 41 million active users, including approximately 32 million active mobile users. We offer industry-leading support to approximately three million small business households. Our GWIM businesses, with client balances of $3.7 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.

The Corporation’s website is www.bankofamerica.com, and the Investor Relations portion of our website is https://investor.bankofamerica.com. We use our website to distribute company information, including as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. We routinely post and make accessible financial and other information, including environmental, social and governance (ESG) information, regarding the Corporation on our website. Investors should monitor the Investor Relations portion of our website, in addition to our press releases, U.S. Securities and Exchange Commission (SEC) filings, public conference calls and webcasts.

Recent Developments

Capital Management

On June 24, 2021, the Board of Governors of the Federal Reserve System (Federal Reserve) announced the results of our 2021 Comprehensive Capital Analysis and Review (CCAR) capital plan and related supervisory stress tests. Based on our results, we will be subject to a preliminary 2.5 percent stress capital buffer (SCB) beginning October 1, 2021, unchanged from the current level, and our minimum Basel 3 Common equity tier 1 (CET1) capital ratio requirement will also remain unchanged at 9.5 percent.

On July 21, 2021, the Corporation’s Board of Directors (the Board) declared a quarterly common stock dividend of $0.21 per share, an increase of 17 percent compared to the prior

dividend rate, payable on September 24, 2021 to shareholders of record as of September 3, 2021.

For more information on our capital resources and regulatory developments, see Capital Management on page 22.

U.K. Tax Law Change

On June 10, 2021, the U.K. enacted the 2021 Finance Act, which increases the U.K. corporation income tax rate to 25 percent from 19 percent, effective April 1, 2023. As a result, during the second quarter of 2021, the Corporation recorded a write-up of U.K. net deferred tax assets of approximately $2.0 billion with a corresponding positive income tax adjustment. For more information, see Financial Highlights – Income Tax Expense on page 6.

COVID-19 Pandemic

The Corporation has been, and may continue to be, impacted by the Coronavirus Disease 2019 (COVID-19) pandemic (the pandemic). During the first half of 2021, the macroeconomic outlook improved in the U.S. and several regions of the world, as COVID-19 cases decreased and vaccinations became more widely available. However, uncertainty still remains about the duration of the pandemic and the timing and strength of the global economic recovery. As the pandemic evolves, we continue to review protocols and processes in place to execute our business continuity plans. In conjunction with our efforts to support clients affected by the pandemic, we have cumulatively originated $35.4 billion in loans under the Paycheck Protection Program (PPP) with amounts outstanding of $15.7 billion and $21.1 billion at June 30, 2021 and March 31, 2021. For more information on PPP loans, see Commercial Portfolio Credit Risk Management on page 35.

Although the macroeconomic and public health outlooks improved in the U.S. and globally during the first half of 2021, the future direct and indirect impact of the pandemic on our businesses, results of operations and financial condition remains uncertain. Should current economic conditions deteriorate or if the pandemic worsens, including as the result of the spread of COVID-19 variants that are more easily communicable or resistant to currently available vaccines, such conditions could have an adverse effect on our businesses and results of operations and could adversely affect our financial condition.

For more information on the pandemic, see Executive Summary – Recent Developments – COVID-19 Pandemic in the MD&A and Item 1A. Risk Factors – Coronavirus Disease of the Corporation’s 2020 Annual Report on Form 10-K.

LIBOR and Other Benchmark Rates

Following the 2017 announcement by the U.K.’s Financial Conduct Authority (FCA) that it would no longer compel participating banks to submit rates for the London Interbank Offered Rate (LIBOR) after 2021, regulators, trade associations and financial industry working groups have identified recommended replacement rates for LIBOR, as well as other Interbank Offered Rates (IBORs), and have published recommended conventions to allow new and existing products to incorporate fallbacks or that reference these alternative reference rates (ARRs). Additionally, as previously disclosed, the FCA announced the dates for the cessation of all LIBOR benchmark settings currently published by the ICE Benchmark Administration. In connection with the transition, in April 2021, the State of New York approved legislation for contracts that are governed by New York law by providing a statutory framework to replace LIBOR with a benchmark rate based on the Secured


3 Bank of America

Overnight Financing Rate (SOFR), which is anticipated to help the Corporation reduce legal and economic uncertainty with regard to certain LIBOR-based products and contracts that are governed by New York law and have no fallback provisions or have fallback provisions that are based on LIBOR.

The Corporation continues to execute its enterprise-wide IBOR transition program. As part of this transition program, the Corporation continues to decrease initiation of new U.S. dollar LIBOR-linked commercial loans that mature after June 30, 2023, subject to certain exceptions, and continues to increase the usage of ARRs in its U.S. dollar commercial lending products and contracts. Additionally, the Corporation has ceased initiation of most GBP LIBOR-linked derivatives, subject to certain exceptions, and is prioritizing interdealer trading in SOFR rather than LIBOR for certain U.S. dollar interest rate swaps in accordance with recommendations by the Commodity Futures Trading Commission (CFTC). The Corporation continues to update its operational models, systems, processes and internal infrastructure.

While the Corporation continues to work towards meeting the regulatory and industry-wide recommended milestones on cessation of LIBOR, the market and client replacement of IBORs

and adoption of ARRs continue to evolve and, as a result, could impact the ability of market participants and the Corporation to transition activity across or within categories of contracts, products, services and markets. Accordingly, the Corporation continues to monitor a variety of market scenarios as part of its transition efforts, including risks associated with insufficient preparation by individual market participants or the overall market ecosystem, ability of market participants to meet regulatory and industry-wide recommended milestones, development and adoption of SOFR, credit-sensitive and other rates, access and demand by clients and market participants to liquidity in certain products, including LIBOR products, and IBOR continuity. Furthermore, banking regulators in the U.S. and globally have increased regulatory scrutiny and intensified supervisory focus of financial institution LIBOR transition plans, preparations and readiness.

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 2020 Annual Report on Form 10-K.

Financial Highlights



Table 1	Summary Income Statement and Selected Financial Data

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions, except per share information)		2021			2020			2021			2020
Income statement
Net interest income		$	10,233		$	10,848		$	20,430		$	22,978
Noninterest income		11,233			11,478			23,857			22,115
Total revenue, net of interest expense		21,466			22,326			44,287			45,093
Provision for credit losses		(1,621)			5,117			(3,481)			9,878
Noninterest expense		15,045			13,410			30,560			26,885
Income before income taxes		8,042			3,799			17,208			8,330
Income tax expense		(1,182)			266			(66)			787
Net income		9,224			3,533			17,274			7,543
Preferred stock dividends		260			249			750			718
Net income applicable to common shareholders		$	8,964		$	3,284		$	16,524		$	6,825

Per common share information
Earnings		$	1.04		$	0.38		$	1.91		$	0.78
Diluted earnings		1.03			0.37			1.90			0.77
Dividends paid		0.18			0.18			0.36			0.36
Performance ratios
Return on average assets (1)		1.23		%	0.53		%	1.18		%	0.58		%
Return on average common shareholders’ equity (1)		14.33			5.44			13.31			5.67
Return on average tangible common shareholders’ equity (2)		19.90			7.63			18.51			7.97
Efficiency ratio (1)		70.09			60.06			69.00			59.62
								June 30 2021			December 31 2020

Balance sheet
Total loans and leases								$	918,928		$	927,861
Total assets								3,029,894			2,819,627
Total deposits								1,909,142			1,795,480
Total liabilities								2,752,775			2,546,703
Total common shareholders’ equity								253,678			248,414
Total shareholders’ equity								277,119			272,924

(1)For definitions, see Key Metrics on page 101.

(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 (GAAP), see Non-GAAP Reconciliations on page 47.


						Bank of America 4

Net income was $9.2 billion and $17.3 billion, or $1.03 and $1.90 per diluted share, for the three and six months ended June 30, 2021 compared to $3.5 billion and $7.5 billion, or $0.37 and $0.77 per diluted share, for the same periods in 2020. The increase in net income was primarily due to improvement in the provision for credit losses and a positive income tax adjustment related to the revaluation of U.K. net deferred tax assets, partially offset by higher noninterest expense.

Total assets increased $210.3 billion from December 31, 2020 to $3.0 trillion primarily due to the deployment of cash from continued deposit inflows into debt securities, as well as higher trading account assets due to an increase in inventory in Global Markets.

Total liabilities increased $206.1 billion from December 31, 2020 to $2.8 trillion primarily driven by an increase in deposits due to additional government stimulus measures as well as seasonally higher deposits, higher federal funds purchased and securities loaned or sold under agreements to repurchase due to client activity in Global Markets and an increase in trading account liabilities resulting from higher levels of short positions in Global Markets.

Shareholders’ equity increased $4.2 billion from December 31, 2020 primarily due to net income, partially offset by returns of capital to shareholders through common stock repurchases and common and preferred stock dividends, as well as market value decreases on debt securities and derivatives.

Net Interest Income

Net interest income decreased $615 million to $10.2 billion, and $2.5 billion to $20.4 billion for the three and six months ended June 30, 2021 compared to the same periods in 2020. Net interest yield on a fully taxable-equivalent (FTE) basis decreased 26 basis points (bps) to 1.61 percent, and 45 bps to 1.64 percent for the same periods. The decrease in net interest income was primarily driven by lower interest rates and loan balances, partially offset by higher balances of debt securities. 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 45.

Noninterest Income



Table 2	Noninterest Income

		Three Months Ended June 30				Six Months Ended June 30

(Dollars in millions)		2021		2020		2021		2020
Fees and commissions:
Card income		$	1,586	$	1,249	$	3,021	$	2,521
Service charges		1,874		1,562		3,666		3,465
Investment and brokerage services		4,123		3,422		8,186		7,180
Investment banking fees		2,122		2,159		4,368		3,547
Total fees and commissions		9,705		8,392		19,241		16,713
Market making and similar activities		1,826		2,487		5,355		5,294


Other income		(298)		599		(739)		108

Total noninterest income		$	11,233	$	11,478	$	23,857	$	22,115

Noninterest income decreased $245 million to $11.2 billion and increased $1.7 billion to $23.9 billion for the three and six months ended June 30, 2021 compared to the same periods in 2020. The following highlights the significant changes.

● Card income increased $337 million and $500 million primarily driven by increased client activity and merchant services revenue.

● Service charges increased $312 million and $201 million primarily due to higher treasury fees and increased client activity in the three-month period.

● Investment and brokerage services income increased $701 million and $1.0 billion primarily driven by higher market valuations and assets under management (AUM) flows, partially offset by declines in AUM pricing.

● Investment banking fees increased $821 million for the six-month period primarily driven by higher equity issuance fees as well as advisory and debt issuance fees.

● Market making and similar activities decreased $661 million for the three-month period primarily driven by higher market-related gains in the prior-year period due to a more robust trading environment for macro products and market recoveries from the end of the first quarter of 2020.

● Other income decreased $897 million and $847 million primarily due to a $704 million gain on sales of certain mortgage loans in the prior year as well as higher partnership losses on tax credit investments.

Provision for Credit Losses

The provision for credit losses improved $6.7 billion to a benefit of $1.6 billion and $13.4 billion to a benefit of $3.5 billion for the three and six months ended June 30, 2021 compared to the same periods in 2020, primarily driven by improvement in the macroeconomic outlook. For more information on the provision for credit losses, see Allowance for Credit Losses on page 41.


5 Bank of America

Noninterest Expense



Table 3	Noninterest Expense

		Three Months Ended June 30				Six Months Ended June 30

(Dollars in millions)		2021		2020		2021		2020
Compensation and benefits		$	8,653	$	7,994	$	18,389	$	16,335
Occupancy and equipment		1,759		1,802		3,589		3,504
Information processing and communications		1,448		1,265		2,873		2,474
Product delivery and transaction related		976		811		1,953		1,588
Marketing		810		492		1,181		930
Professional fees		426		381		829		756
Other general operating		973		665		1,746		1,298
Total noninterest expense		$	15,045	$	13,410	$	30,560	$	26,885

Noninterest expense increased $1.6 billion to $15.0 billion, and $3.7 billion to $30.6 billion for the three and six months ended June 30, 2021 compared to the same periods in 2020. The increase in the three-month period was primarily due to higher compensation and benefits expense, a $500 million contribution to the Bank of America Foundation and approximately $300 million associated with processing

transactional card claims related to state unemployment benefits. The increase in the six-month period was primarily driven by the same factors as the three-month period as well as elevated net COVID-19 related costs, acceleration of expenses due to incentive compensation award changes, an impairment charge for real estate rationalization, higher revenue-related expenses and higher severance costs.

Income Tax Expense



Table 4	Income Tax Expense

		Three Months Ended June 30						Six Months Ended June 30

(Dollars in millions)		2021			2020			2021			2020
Income before income taxes		$	8,042		$	3,799		$	17,208		$	8,330
Income tax expense		(1,182)			266			(66)			787
Effective tax rate		(14.7)		%	7.0		%	(0.4)		%	9.4		%

Changes in the effective tax rates for the three and six months ended June 30, 2021 compared to the same periods a year ago were driven by the impact of our recurring tax preference benefits on higher levels of pretax income and the impact of the U.K. tax law change further discussed in this section. Our recurring tax preference benefits primarily consist of tax credits from investments in affordable housing and renewable energy, aligning with our responsible growth strategy to address global sustainability challenges. Absent these tax credits and the impact of the U.K. tax law change, the effective tax rate would have been approximately 25 percent.

On June 10, 2021, the U.K. enacted the 2021 Finance Act, which increases the U.K. corporation income tax rate to 25 percent from 19 percent. This change is effective April 1, 2023 and unfavorably affects income tax expense on future U.K. earnings. As a result, the Corporation recorded a write-up of U.K. net deferred tax assets of approximately $2.0 billion, with a corresponding positive income tax adjustment. This write-up is a reversal of previously recorded write-downs of net deferred tax assets for prior changes in the U.K. corporation income tax rate.


						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 objectives. 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 ratios utilizing tangible equity provide 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 Table 5.

For more information on the reconciliation of these non-GAAP financial measures to the corresponding GAAP financial measures, see Non-GAAP Reconciliations on page 47.

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 101.

Our consolidated key performance indicators, which include various equity and credit metrics, are presented in Table 1 on page 4 and Table 5 on page 8.

For information on key segment performance metrics, see Business Segment Operations on page 11.


7 Bank of America




Table 5	Selected Quarterly Financial Data

		2021 Quarters						2020 Quarters									Six Months Ended June 30
(In millions, except per share information)		Second			First			Fourth			Third			Second			2021			2020
Income statement
Net interest income		$	10,233		$	10,197		$	10,253		$	10,129		$	10,848		$	20,430		$	22,978
Noninterest income		11,233			12,624			9,846			10,207			11,478			23,857			22,115
Total revenue, net of interest expense		21,466			22,821			20,099			20,336			22,326			44,287			45,093
Provision for credit losses		(1,621)			(1,860)			53			1,389			5,117			(3,481)			9,878
Noninterest expense		15,045			15,515			13,927			14,401			13,410			30,560			26,885
Income before income taxes		8,042			9,166			6,119			4,546			3,799			17,208			8,330
Income tax expense		(1,182)			1,116			649			(335)			266			(66)			787
Net income		9,224			8,050			5,470			4,881			3,533			17,274			7,543
Net income applicable to common shareholders		8,964			7,560			5,208			4,440			3,284			16,524			6,825
Average common shares issued and outstanding		8,620.8			8,700.1			8,724.9			8,732.9			8,739.9			8,660.4			8,777.6
Average diluted common shares issued and outstanding		8,735.5			8,755.6			8,785.0			8,777.5			8,768.1			8,776.2			8,813.3
Performance ratios
Return on average assets (1)		1.23		%	1.13		%	0.78		%	0.71		%	0.53		%	1.18		%	0.58		%
Four-quarter trailing return on average assets (2)		0.97			0.79			0.67			0.75			0.81			n/a			n/a
Return on average common shareholders’ equity (1)		14.33			12.28			8.39			7.24			5.44			13.31			5.67
Return on average tangible common shareholders’ equity (3)		19.90			17.08			11.73			10.16			7.63			18.51			7.97
Return on average shareholders’ equity (1)		13.47			11.91			8.03			7.26			5.34			12.70			5.71
Return on average tangible shareholders’ equity (3)		18.11			16.01			10.84			9.84			7.23			17.07			7.76
Total ending equity to total ending assets		9.15			9.23			9.68			9.82			9.69			9.15			9.69
Total average equity to total average assets		9.11			9.52			9.71			9.76			9.85			9.31			10.21
Dividend payout		17.25			20.68			30.11			35.36			47.87			18.82			46.16
Per common share data
Earnings		$	1.04		$	0.87		$	0.60		$	0.51		$	0.38		$	1.91		$	0.78
Diluted earnings		1.03			0.86			0.59			0.51			0.37			1.90			0.77
Dividends paid		0.18			0.18			0.18			0.18			0.18			0.36			0.36
Book value (1)		29.89			29.07			28.72			28.33			27.96			29.89			27.96
Tangible book value (3)		21.61			20.90			20.60			20.23			19.90			21.61			19.90




Market capitalization		$	349,925		$	332,337		$	262,206		$	208,656		$	205,772		$	349,925		$	205,772
Average balance sheet
Total loans and leases		$	907,900		$	907,723		$	934,798		$	974,018		$	1,031,387
Total assets		3,015,113			2,879,221			2,791,874			2,739,684			2,704,186
Total deposits		1,888,834			1,805,747			1,737,139			1,695,488			1,658,197
Long-term debt		232,034			220,836			225,423			224,254			221,167
Common shareholders’ equity		250,948			249,648			246,840			243,896			242,889
Total shareholders’ equity		274,632			274,047			271,020			267,323			266,316
Asset quality
Allowance for credit losses (4)		$	15,782		$	17,997		$	20,680		$	21,506		$	21,091
Nonperforming loans, leases and foreclosed properties (5)		5,031			5,299			5,116			4,730			4,611
Allowance for loan and lease losses as a percentage of total loans and leases outstanding (5)		1.55		%	1.80		%	2.04		%	2.07		%	1.96		%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases (5)		287			313			380			431			441
Net charge-offs		$	595		$	823		$	881		$	972		$	1,146
Annualized net charge-offs as a percentage of average loans and leases outstanding (5)		0.27		%	0.37		%	0.38		%	0.40		%	0.45		%







Capital ratios at period end (6)

Common equity tier 1 capital		11.5		%	11.8		%	11.9		%	11.9		%	11.4		%

Tier 1 capital		13.0			13.3			13.5			13.5			12.9
Total capital		15.1			15.6			16.1			16.1			14.8
Tier 1 leverage		6.9			7.2			7.4			7.4			7.4
Supplementary leverage ratio		5.9			7.0			7.2			6.9			7.1
Tangible equity (3)		7.0			7.0			7.4			7.4			7.3
Tangible common equity (3)		6.2			6.2			6.5			6.6			6.5
Total loss-absorbing capacity and long-term debt metrics
Total loss-absorbing capacity to risk-weighted assets		27.7		%	26.8		%	27.4		%	26.9		%	26.0		%
Total loss-absorbing capacity to supplementary leverage exposure		12.5			14.1			14.5			13.7			14.2
Eligible long-term debt to risk-weighted assets		14.1			13.0			13.3			12.9			12.4
Eligible long-term debt to supplementary leverage exposure		6.3			6.8			7.1			6.6			6.7

(1)For definitions, see Key Metrics on page 101.

(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 47.

(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 34 and corresponding Table 25 and Commercial Portfolio Credit Risk Management – Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page 38 and corresponding Table 32.

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

n/a = not applicable


						Bank of America 8



Table 6	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)		Second Quarter 2021						Second Quarter 2020
Earning assets
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		$	247,673	$	27	0.04	%	$	314,661	$	33	0.04	%
Time deposits placed and other short-term investments		8,079		—		0.02		8,644		5		0.25
Federal funds sold and securities borrowed or purchased under agreements to resell		270,443		(42)		(0.06)		312,404		26		0.03
Trading account assets		152,307		967		2.55		143,370		1,021		2.86
Debt securities		895,902		2,834		1.27		476,060		2,462		2.10
Loans and leases (2)
Residential mortgage		214,096		1,498		2.80		241,486		1,880		3.11
Home equity		31,621		267		3.39		39,308		308		3.15
Credit card		73,399		1,876		10.25		86,191		2,140		9.99

Direct/Indirect and other consumer (3)		94,321		561		2.38		88,962		623		2.81

Total consumer		413,437		4,202		4.07		455,947		4,951		4.36
U.S. commercial (4)		322,633		2,049		2.55		374,965		2,526		2.71
Non-U.S. commercial (4)		96,343		429		1.78		116,040		578		2.00
Commercial real estate (5)		59,276		371		2.51		65,515		430		2.64
Commercial lease financing		16,211		108		2.67		18,920		128		2.71
Total commercial		494,463		2,957		2.40		575,440		3,662		2.56
Total loans and leases		907,900		7,159		3.16		1,031,387		8,613		3.35
Other earning assets		96,364		552		2.30		72,256		508		2.82
Total earning assets		2,578,668		11,497		1.79		2,358,782		12,668		2.16
Cash and due from banks		31,675						31,256
Other assets, less allowance for loan and lease losses		404,770						314,148
Total assets		$	3,015,113					$	2,704,186
Interest-bearing liabilities
U.S. interest-bearing deposits
Savings		$	72,798	$	1	0.01	%	$	56,931	$	2	0.01	%
Demand and money market deposit accounts		915,420		78		0.03		850,274		152		0.07
Consumer CDs and IRAs		36,181		16		0.17		50,882		123		0.97
Negotiable CDs, public funds and other deposits		53,537		23		0.17		81,532		56		0.29
Total U.S. interest-bearing deposits		1,077,936		118		0.04		1,039,619		333		0.13
Non-U.S. interest-bearing deposits
Banks located in non-U.S. countries		1,191		—		—		1,807		—		0.04
Governments and official institutions		204		—		—		183		—		—
Time, savings and other		80,747		10		0.05		74,158		40		0.21
Total non-U.S. interest-bearing deposits		82,142		10		0.05		76,148		40		0.21
Total interest-bearing deposits		1,160,078		128		0.04		1,115,767		373		0.13
Federal funds purchased, securities loaned or sold under agreements to repurchase, short-term borrowings and other interest-bearing liabilities		320,314		(85)		(0.11)		295,465		(72)		(0.10)
Trading account liabilities		58,823		293		2.01		40,717		223		2.20
Long-term debt		232,034		818		1.42		221,167		1,168		2.12
Total interest-bearing liabilities		1,771,249		1,154		0.26		1,673,116		1,692		0.41
Noninterest-bearing sources
Noninterest-bearing deposits		728,756						542,430
Other liabilities (6)		240,476						222,324
Shareholders’ equity		274,632						266,316
Total liabilities and shareholders’ equity		$	3,015,113					$	2,704,186
Net interest spread						1.53	%					1.75	%
Impact of noninterest-bearing sources						0.08						0.12
Net interest income/yield on earning assets (7)				$	10,343	1.61	%			$	10,976	1.87	%

(1)Includes the impact of interest rate risk management contracts. For more information, see Interest Rate Risk Management for the Banking Book on page 45.

(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 $3.0 billion and $2.8 billion for the second quarter of 2021 and 2020.

(4)Certain prior-period amounts have been reclassified to conform to current-period presentation.

(5)Includes U.S. commercial real estate loans of $56.0 billion and $61.8 billion, and non-U.S. commercial real estate loans of $3.3 billion and $3.7 billion for the second quarter of 2021 and 2020.

(6)Includes $30.5 billion and $35.5 billion of structured notes and liabilities for the second quarter of 2021 and 2020.

(7)Net interest income includes FTE adjustments of $110 million and $128 million for the second quarter of 2021 and 2020.


9 Bank of America



Table 7	Year-to-Date Average Balances and Interest Rates - FTE Basis

		Average Balance		Interest Income/ Expense (1)		Yield/ Rate		Average Balance		Interest Income/ Expense (1)		Yield/ Rate
		Six Months Ended June 30
(Dollars in millions)		2021						2020
Earning assets
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		$	262,802	$	56	0.04	%	$	222,472	$	301	0.27	%
Time deposits placed and other short-term investments		8,409		4		0.10		9,769		35		0.73
Federal funds sold and securities borrowed or purchased under agreements to resell		260,271		(49)		(0.04)		295,599		845		0.57
Trading account assets		148,718		1,852		2.51		150,028		2,287		3.06
Debt securities		842,566		5,579		1.33		470,638		5,330		2.29
Loans and leases (2)
Residential mortgage		216,537		3,027		2.80		240,740		3,867		3.21
Home equity		32,622		548		3.39		39,674		729		3.69
Credit card		73,780		3,823		10.45		90,331		4,604		10.25

Direct/Indirect and other consumer (3)		92,883		1,120		2.43		89,958		1,369		3.06

Total consumer		415,822		8,518		4.12		460,703		10,569		4.60
U.S. commercial (4)		322,323		4,100		2.56		352,692		5,436		3.10
Non-U.S. commercial (4)		93,639		838		1.80		113,714		1,316		2.33
Commercial real estate (5)		59,505		736		2.49		64,467		1,013		3.16
Commercial lease financing		16,523		240		2.91		19,259		289		3.00
Total commercial		491,990		5,914		2.42		550,132		8,054		2.94
Total loans and leases		907,812		14,432		3.20		1,010,835		18,623		3.70
Other earning assets		99,985		1,129		2.28		80,065		1,489		3.74
Total earning assets		2,530,563		23,003		1.83		2,239,406		28,910		2.59
Cash and due from banks		32,794						29,626
Other assets, less allowance for loan and lease losses		384,185						330,525
Total assets		$	2,947,542					$	2,599,557
Interest-bearing liabilities
U.S. interest-bearing deposits
Savings		$	70,207	$	3	0.01	%	$	53,765	$	3	0.01	%
Demand and money market deposit accounts		902,677		155		0.03		810,374		805		0.20
Consumer CDs and IRAs		37,188		42		0.23		52,123		274		1.06
Negotiable CDs, public funds and other deposits		53,162		46		0.18		74,759		265		0.72
Total U.S. interest-bearing deposits		1,063,234		246		0.05		991,021		1,347		0.27
Non-U.S. interest-bearing deposits
Banks located in non-U.S. countries		1,111		—		0.06		1,855		3		0.33
Governments and official institutions		201		—		—		172		—		0.02
Time, savings and other		80,742		15		0.04		74,891		207		0.55
Total non-U.S. interest-bearing deposits		82,054		15		0.04		76,918		210		0.55
Total interest-bearing deposits		1,145,288		261		0.05		1,067,939		1,557		0.29
Federal funds purchased, securities loaned or sold under agreements to repurchase, short-term borrowings and other interest-bearing liabilities		306,850		(164)		(0.11)		299,984		1,048		0.70
Trading account liabilities		50,917		539		2.14		44,430		552		2.50
Long-term debt		226,466		1,716		1.53		215,992		2,503		2.33
Total interest-bearing liabilities		1,729,521		2,352		0.27		1,628,345		5,660		0.70
Noninterest-bearing sources
Noninterest-bearing deposits		702,232						480,827
Other liabilities (6)		241,448						224,960
Shareholders’ equity		274,341						265,425
Total liabilities and shareholders’ equity		$	2,947,542					$	2,599,557
Net interest spread						1.56	%					1.89	%
Impact of noninterest-bearing sources						0.08						0.20
Net interest income/yield on earning assets (7)				$	20,651	1.64	%			$	23,250	2.09	%

(1)Includes the impact of interest rate risk management contracts. For more information, see Interest Rate Risk Management for the Banking Book on page 45.

(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 $3.0 billion and $2.9 billion for the six months ended June 30, 2021 and 2020.

(4)Certain prior-period amounts have been reclassified to conform to current-period presentation.

(5)Includes U.S. commercial real estate loans of $56.3 billion and $60.7 billion, and non-U.S. commercial real estate loans of $3.2 billion and $3.7 billion for the six months ended June 30, 2021 and 2020.

(6)Includes $30.9 billion and $35.6 billion of structured notes and liabilities for the six months ended June 30, 2021 and 2020.

(7)Net interest income includes FTE adjustments of $221 million and $272 million for the six months ended June 30, 2021 and 2020.


						Bank of America 10

Business Segment Operations

Segment Description and Basis of Presentation

We report our results of operations through 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 2020 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 22. The capital allocated to the business segments is referred to as

allocated capital. Allocated equity in the reporting units is comprised of allocated capital plus capital for the portion of goodwill and intangibles specifically assigned to the reporting unit. For more information, including the definition of a reporting unit, see Complex Accounting Estimates on page 46 and 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 June 30
(Dollars in millions)	2021			2020			2021			2020			2021			2020			% Change
Net interest income	$	3,480		$	3,299		$	2,493		$	2,692		$	5,973		$	5,991		—	%
Noninterest income:
Card income	(7)			(4)			1,319			1,057			1,312			1,053			25
Service charges	851			706			—			—			851			706			21
All other income	21			62			29			40			50			102			(51)
Total noninterest income	865			764			1,348			1,097			2,213			1,861			19
Total revenue, net of interest expense	4,345			4,063			3,841			3,789			8,186			7,852			4

Provision for credit losses	47			154			(744)			2,870			(697)			3,024			(123)
Noninterest expense	2,856			2,869			2,003			1,866			4,859			4,735			3
Income (loss) before income taxes	1,442			1,040			2,582			(947)			4,024			93			n/m
Income tax expense (benefit)	353			255			633			(232)			986			23			n/m
Net income (loss)	$	1,089		$	785		$	1,949		$	(715)		$	3,038		$	70		n/m

Effective tax rate (1)													24.5		%	24.7		%

Net interest yield	1.44		%	1.66		%	3.60		%	3.42		%	2.37			2.85
Return on average allocated capital	36			26			30			(11)			32			1
Efficiency ratio	65.73			70.62			52.16			49.25			59.36			60.31

Balance Sheet
	Three Months Ended June 30
Average	2021			2020			2021			2020			2021			2020			% Change


Total loans and leases	$	4,447		$	5,314		$	277,320		$	316,244		$	281,767		$	321,558		(12)	%
Total earning assets (2)	968,491			801,391			277,742			316,622			1,012,364			845,236			20
Total assets (2)	1,005,237			837,367			283,148			320,978			1,054,516			885,568			19
Total deposits	972,016			804,418			7,056			6,282			979,072			810,700			21
Allocated capital	12,000			12,000			26,500			26,500			38,500			38,500			—

(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.

n/m - not meaningful


11 Bank of America



	Deposits						Consumer Lending						Total Consumer Banking
	Six Months Ended June 30
(Dollars in millions)	2021			2020			2021			2020			2021			2020			% Change
Net interest income	$	6,758		$	7,247		$	5,135		$	5,606		$	11,893		$	12,853		(7)	%
Noninterest income:
Card income	(12)			(12)			2,513			2,175			2,501			2,163			16
Service charges	1,681			1,700			1			1			1,682			1,701			(1)
All other income	94			159			85			104			179			263			(32)
Total noninterest income	1,763			1,847			2,599			2,280			4,362			4,127			6
Total revenue, net of interest expense	8,521			9,094			7,734			7,886			16,255			16,980			(4)

Provision for credit losses	121			269			(1,435)			5,013			(1,314)			5,282			(125)
Noninterest expense	6,065			5,593			3,925			3,637			9,990			9,230			8
Income (loss) before income taxes	2,335			3,232			5,244			(764)			7,579			2,468			n/m
Income tax expense (benefit)	572			792			1,285			(187)			1,857			605			n/m
Net income (loss)	$	1,763		$	2,440		$	3,959		$	(577)		$	5,722		$	1,863		n/m

Effective tax rate (1)													24.5		%	24.5		%

Net interest yield	1.45		%	1.90		%	3.67		%	3.59		%	2.44			3.19
Return on average allocated capital	30			41			30			(4)			30			10
Efficiency ratio	71.19			61.50			50.74			46.12			61.46			54.36

Balance Sheet
	Six Months Ended June 30
Average	2021			2020			2021			2020			2021			2020			% Change


Total loans and leases	$	4,527		$	5,374		$	281,777		$	313,878		$	286,304		$	319,252		(10)	%
Total earning assets (2)	940,469			766,660			282,206			314,375			984,891			809,436			22
Total assets (2)	978,170			800,742			286,908			319,279			1,027,294			848,422			21
Total deposits	944,819			767,848			6,938			5,837			951,757			773,685			23
Allocated capital	12,000			12,000			26,500			26,500			38,500			38,500			—


Period end	June 30 2021			December 31 2020			June 30 2021			December 31 2020			June 30 2021			December 31 2020			% Change
Total loans and leases	$	4,410		$	4,673		$	278,490		$	295,261		$	282,900		$	299,934		(6)	%
Total earning assets (2)	978,402			899,951			278,850			295,627			1,022,092			945,343			8
Total assets (2)	1,013,887			939,629			284,923			299,185			1,063,650			988,580			8
Total deposits	980,486			906,092			7,169			6,560			987,655			912,652			8

See page 11 for footnotes.

Consumer Banking, 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, see Business Segment Operations in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

Consumer Banking Results

Three-Month Comparison

Net income for Consumer Banking was $3.0 billion compared to $70 million for the same period in 2020. The increase in net income was primarily due to improvement in the provision for credit losses and higher revenue, partially offset by higher noninterest expense. Noninterest income increased $352 million to $2.2 billion driven by higher card income due to increased client activity and higher service charges, partially offset by lower other income due to the allocation of asset and liability management (ALM) results.

The provision for credit losses improved $3.7 billion to a benefit of $697 million primarily due to a reserve release, as the macroeconomic outlook improved and our credit quality remained strong. Noninterest expense increased $124 million to $4.9 billion primarily driven by the contribution to the Bank of America Foundation, cost of increased client activity and continued investments for business growth, including the merchant services platform, partially offset by lower COVID-19 related costs to support customers and employees.

The return on average allocated capital was 32 percent, up from one percent, driven by higher net income. For more information on capital allocated to the business segments, see Business Segment Operations on page 11.

Six-Month Comparison

Net income for Consumer Banking increased $3.9 billion to $5.7 billion primarily due to improvement in the provision for credit losses, partially offset by lower revenue and higher noninterest expense. Net interest income decreased $960 million to $11.9 billion primarily due to lower interest rates and loan balances, partially offset by the benefit of higher deposit balances. Noninterest income increased $235 million to $4.4 billion driven by higher card income due to increased client activity, partially offset by lower other income due to the allocation of ALM results.

The provision for credit losses improved $6.6 billion to a benefit of $1.3 billion primarily driven by the same factors as described in the three-month discussion. Noninterest expense increased $760 million to $10.0 billion primarily driven by an impairment charge of $240 million for real estate rationalization, the contribution to the Bank of America Foundation, cost of increased client activity and continued investments for business growth, including the merchant services platform, partially offset by lower COVID-19 related costs to support customers and employees.

The return on average allocated capital was 30 percent, up from 10 percent, driven by higher net income.


						Bank of America 12

Deposits

Three-Month Comparison

Net income for Deposits increased $304 million to $1.1 billion primarily driven by higher revenue. Net interest income increased $181 million to $3.5 billion primarily due to the benefit of higher deposit balances. Noninterest income increased $101 million to $865 million primarily driven by higher service charges, partially offset by other income due to the allocation of ALM results.

The provision for credit losses decreased $107 million to $47 million due to an improved macroeconomic outlook.

Average deposits increased $167.6 billion to $972.0 billion primarily due to net inflows of $94.4 billion in checking and time deposits and $72.1 billion in traditional savings and money market savings driven by strong organic growth and additional government stimulus measures.

Six-Month Comparison

Net income for Deposits decreased $677 million to $1.8 billion primarily driven by lower revenue and higher noninterest expense. Net interest income declined $489 million to $6.8 billion primarily due to lower interest rates, partially offset by the

benefit of growth in deposits. Noninterest income decreased $84 million to $1.8 billion primarily driven by lower other income due to the allocation of ALM results, as well as lower service charges due to higher deposit balances.

The provision for credit losses decreased $148 million to $121 million due to an improved macroeconomic outlook. Noninterest expense increased $472 million to $6.1 billion primarily driven by an impairment charge for real estate rationalization, and the cost of increased client activity and continued investments for business growth, partially offset by lower COVID-19 related costs to support customers and employees.

Average deposits increased $177.0 billion to $944.8 billion primarily due to net inflows of $103.4 billion in checking and time deposits and $72.7 billion in traditional savings and money market savings driven by strong organic growth and additional government stimulus measures.

The table below 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 digital/mobile trends.



Key Statistics – Deposits

	Three Months Ended June 30		Six Months Ended June 30
	2021	2020	2021		2020
Total deposit spreads (excludes noninterest costs) (1)	1.71%	1.94%	1.72%		2.05%

Period End
Consumer investment assets (in millions) (2)			$	345,809	$	246,146
Active digital banking users (units in thousands) (3)			40,512		39,294
Active mobile banking users (units in thousands) (4)			31,796		30,307
Financial centers			4,296		4,298
ATMs			16,795		16,862

(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 active users over the past three months.

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

Consumer investment assets increased $99.7 billion to $345.8 billion driven by market performance and client flows. Active mobile banking users increased approximately one million reflecting continuing changes in our customers’ banking preferences. We had a net decrease of two financial centers as we continue to optimize our consumer banking network.

Consumer Lending

Three-Month Comparison

Net income for Consumer Lending was $1.9 billion, an increase of $2.7 billion, primarily due to improvement in the provision for credit losses. Net interest income decreased $199 million to $2.5 billion primarily due to lower loan balances. Noninterest income increased $251 million to $1.3 billion primarily driven by higher card income due to increased client activity.

The provision for credit losses improved $3.6 billion to a benefit of $744 million primarily due to a reserve release, as the macroeconomic outlook improved and our credit quality remained strong. Noninterest expense increased $137 million to $2.0 billion primarily driven by investments in the business.

Average loans decreased $38.9 billion to $277.3 billion primarily driven by a decline in residential mortgage and credit

cards.

Six-Month Comparison

Net income for Consumer Lending was $4.0 billion, an increase of $4.5 billion, primarily due to improvement in the provision for credit losses. Net interest income declined $471 million to $5.1 billion primarily due to lower interest rates and loan balances. Noninterest income increased $319 million to $2.6 billion primarily driven by higher card income due to increased client activity.

The provision for credit losses improved $6.4 billion to a benefit of $1.4 billion primarily driven by the same factors as described in the three-month discussion. Noninterest expense increased $288 million to $3.9 billion primarily driven by the same factors as described in the three-month discussion.

Average loans decreased $32.1 billion to $281.8 billion primarily driven by the same factors as described in the three-month discussion.


13 Bank of America

The table below 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 June 30						Six Months Ended June 30
(Dollars in millions)	2021			2020			2021			2020
Total credit card (1)
Gross interest yield (2)	10.10		%	9.95		%	10.31		%	10.23		%
Risk-adjusted margin (3)	9.76			8.49			9.53			8.20
New accounts (in thousands)	931			449			1,605			1,504
Purchase volumes	$	78,384		$	53,694		$	142,975		$	118,073
Debit card purchase volumes	$	121,905		$	89,631		$	229,812		$	178,219

(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, net of interest expense, and net credit losses divided by average loans.

During the three and six months ended June 30, 2021, the total risk-adjusted margin increased 127 bps and 133 bps primarily driven by higher net interest margin, higher fee income and lower net credit losses. During the three and six months ended June 30, 2021, total credit card purchase volumes increased $24.7 billion to $78.4 billion, and $24.9 billion to $143.0 billion as spending continued to recover, with

improvements across categories with growth primarily in retail and travel. During the three and six months ended June 30, 2021, debit card purchase volumes increased $32.3 billion to $121.9 billion, and $51.6 billion to $229.8 billion due to the impacts of government stimulus measures, tax refunds and continued retail growth from the pandemic recovery.



Key Statistics – Residential Mortgage Loan Production (1)

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2021		2020		2021		2020
Consumer Banking:
First mortgage	$	11,502	$	15,049	$	20,684	$	27,930
Home equity	907		3,176		1,317		5,817
Total (2):
First mortgage	$	20,266	$	23,124	$	35,499	$	42,062
Home equity	1,166		3,683		1,669		6,707

(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 for Consumer Banking and the total Corporation decreased $3.5 billion and $2.9 billion during the three months ended June 30, 2021 and $7.2 billion and $6.6 billion during the six months ended June 30, 2021, primarily driven by lower demand.

Home equity production in Consumer Banking and for the total Corporation decreased $2.3 billion and $2.5 billion during the three months ended June 30, 2021 and $4.5 billion and $5.0 billion during the six months ended June 30, 2021, driven by lower demand.


						Bank of America 14

Global Wealth & Investment Management



	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2021			2020			% Change		2021			2020			% Change
Net interest income	$	1,354		$	1,378		(2)	%	$	2,685		$	2,949		(9)	%
Noninterest income:
Investment and brokerage services	3,537			2,854			24		6,928			5,976			16
All other income	174			193			(10)		423			436			(3)
Total noninterest income	3,711			3,047			22		7,351			6,412			15
Total revenue, net of interest expense	5,065			4,425			14		10,036			9,361			7

Provision for credit losses	(62)			136			(146)		(127)			325			(139)
Noninterest expense	3,814			3,464			10		7,682			7,064			9
Income before income taxes	1,313			825			59		2,481			1,972			26
Income tax expense	322			202			59		608			483			26
Net income	$	991		$	623		59		$	1,873		$	1,489		26

Effective tax rate	24.5		%	24.5		%			24.5		%	24.5		%

Net interest yield	1.48			1.76					1.49			1.96
Return on average allocated capital	24			17					23			20

Efficiency ratio	75.29			78.26					76.54			75.46

Balance Sheet

	Three Months Ended June 30								Six Months Ended June 30
Average	2021			2020			% Change		2021			2020			% Change
Total loans and leases	$	193,988		$	182,150		6	%	$	191,257		$	180,395		6	%
Total earning assets	367,778			315,258			17		363,960			303,089			20
Total assets	380,315			327,594			16		376,476			315,383			19
Total deposits	333,487			287,109			16		329,948			275,260			20
Allocated capital	16,500			15,000			10		16,500			15,000			10


									June 30			December 31
Period end									2021			2020			% Change
Total loans and leases									$	198,361		$	188,562		5	%
Total earning assets									365,496			356,873			2
Total assets									378,220			369,736			2
Total deposits									330,624			322,157			3

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 2020 Annual Report on Form 10-K.

Three-Month Comparison

Net income for GWIM increased $368 million to $991 million primarily driven by higher revenue and improvement in the provision for credit losses, partially offset by higher noninterest expense. The operating margin was 26 percent compared to 19 percent a year ago.

Net interest income decreased $24 million to $1.4 billion due to lower interest rates, partially offset by the benefit of strong deposit and loan growth.

Noninterest income, which primarily includes investment and brokerage services income, increased $664 million to $3.7 billion primarily due to higher market valuations and positive AUM flows, partially offset by declines in AUM pricing.

The provision for credit losses improved $198 million to a benefit of $62 million primarily due to an improved macroeconomic outlook. Noninterest expense increased $350 million to $3.8 billion primarily driven by higher revenue-related incentives.

The return on average allocated capital was 24 percent, up from 17 percent, due to an increase in net income, partially offset by an increase in allocated capital. For more information

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

Average loans increased $11.8 billion to $194.0 billion primarily driven by securities-based lending and custom lending. Average deposits increased $46.4 billion to $333.5 billion primarily driven by inflows from new accounts and client responses to market volatility.

MLGWM revenue of $4.3 billion increased 18 percent primarily driven by the benefits of higher market valuations and positive AUM flows.

Bank of America Private Bank revenue of $805 million increased one percent primarily driven by the benefits of higher market valuations and AUM flows, partially offset by the realignment of certain business results to MLGWM.

Six-Month Comparison

Net income for GWIM increased $384 million to $1.9 billion due to the same factors as described in the three-month discussion. The operating margin was 25 percent compared to 21 percent a year ago.

Net interest income decreased $264 million to $2.7 billion due to the same factors as described in the three-month discussion.

Noninterest income, which primarily includes investment and brokerage services income, increased $939 million to $7.4 billion due to the same factors as described in the three-month discussion.


15 Bank of America

The provision for credit losses improved $452 million to a benefit of $127 million primarily due to an improved macroeconomic outlook. Noninterest expense increased $618 million to $7.7 billion, primarily due to the same factor as described in the three-month discussion.

The return on average allocated capital was 23 percent, up from 20 percent, due to higher net income, partially offset by an increase in allocated capital.

Average loans increased $10.9 billion to $191.3 billion primarily due to the same factors as described in the three-month discussion. Average deposits increased $54.7 billion to

$329.9 billion primarily due to the same factors as described in the three-month discussion.

MLGWM revenue of $8.4 billion increased 10 percent primarily driven by higher market valuations and positive AUM flows, partially offset by the impact of lower interest rates.

Bank of America Private Bank revenue of $1.6 billion decreased four percent primarily driven by the realignment of certain business results to MLGWM and lower interest rates, partially offset by the benefits of higher market valuations and AUM flows.



Key Indicators and Metrics

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2021		2020		2021		2020
Revenue by Business
Merrill Lynch Global Wealth Management	$	4,260	$	3,625	$	8,445	$	7,698
Bank of America Private Bank	805		800		1,591		1,663

Total revenue, net of interest expense	$	5,065	$	4,425	$	10,036	$	9,361

Client Balances by Business, at period end
Merrill Lynch Global Wealth Management					$	3,073,252	$	2,449,305
Bank of America Private Bank					579,562		478,521

Total client balances					$	3,652,814	$	2,927,826

Client Balances by Type, at period end


Assets under management					$	1,549,069	$	1,219,748
Brokerage and other assets					1,619,246		1,282,044

Deposits					330,624		291,740
Loans and leases (1)					201,154		187,004
Less: Managed deposits in assets under management					(47,279)		(52,710)
Total client balances					$	3,652,814	$	2,927,826

Assets Under Management Rollforward
Assets under management, beginning of period	$	1,467,487	$	1,092,482	$	1,408,465	$	1,275,555


Net client flows	11,714		3,573		29,922		10,608
Market valuation/other	69,868		123,693		110,682		(66,415)
Total assets under management, end of period	$	1,549,069	$	1,219,748	$	1,549,069	$	1,219,748


Total wealth advisors, at period end (2)					19,385		20,622

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

(2)Includes advisors across all wealth management businesses in GWIM and Consumer Banking. Prior period has been revised to conform to current-period presentation.

Client Balances

Client balances increased $725.0 billion, or 25 percent, to $3.7 trillion at June 30, 2021 compared to June 30, 2020. The increase in client balances was primarily due to higher market valuations and positive client flows.


						Bank of America 16

Global Banking



	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2021			2020			% Change		2021			2020			% Change
Net interest income	$	1,984		$	2,363		(16)	%	$	3,964		$	4,975		(20)	%
Noninterest income:
Service charges	900			738			22		1,747			1,533			14
Investment banking fees	1,173			1,181			(1)		2,345			1,942			21
All other income	1,032			809			28		1,666			1,241			34
Total noninterest income	3,105			2,728			14		5,758			4,716			22
Total revenue, net of interest expense	5,089			5,091			—		9,722			9,691			—

Provision for credit losses	(831)			1,873			(144)		(1,957)			3,966			(149)
Noninterest expense	2,599			2,222			17		5,380			4,540			19
Income before income taxes	3,321			996			n/m		6,299			1,185			n/m
Income tax expense	897			269			n/m		1,701			320			n/m
Net income	$	2,424		$	727		n/m		$	4,598		$	865		n/m

Effective tax rate	27.0		%	27.0		%			27.0		%	27.0		%

Net interest yield	1.49			1.82					1.52			2.15
Return on average allocated capital	23			7					22			4
Efficiency ratio	51.07			43.65					55.34			46.86

Balance Sheet

	Three Months Ended June 30								Six Months Ended June 30
Average	2021			2020			% Change		2021			2020			% Change
Total loans and leases	$	325,110		$	423,625		(23)	%	$	327,595		$	405,054		(19)	%
Total earning assets	534,680			521,930			2		525,332			465,491			13
Total assets	595,498			578,106			3		585,875			522,016			12
Total deposits	506,618			493,918			3		496,880			438,145			13
Allocated capital	42,500			42,500			—		42,500			42,500			—

Period end									June 30 2021			December 31 2020			% Change
Total loans and leases									$	323,256		$	339,649		(5)	%
Total earning assets									547,278			522,650			5
Total assets									607,969			580,561			5
Total deposits									520,026			493,748			5

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 2020 Annual Report on Form 10-K.

Three-Month Comparison

Net income for Global Banking increased $1.7 billion to $2.4 billion primarily driven by improvement in the provision for credit losses, partially offset by higher noninterest expense.

Net interest income decreased $379 million to $2.0 billion primarily driven by the impact of lower loan balances and lower deposit spreads, partially offset by higher credit spreads and the impact of higher deposit balances.

Noninterest income increased $377 million to $3.1 billion driven by higher leasing-related revenue and treasury and credit service charges as well as the addition of merchant services revenue, partially offset by lower valuation-driven adjustments on the fair value loan portfolio and leveraged loans.

The provision for credit losses improved $2.7 billion to a benefit of $831 million primarily driven by a reserve release due to an improved macroeconomic outlook.

Noninterest expense increased $377 million primarily due to higher operating costs and compensation and benefits expense, as well as the addition of merchant services costs.

The return on average allocated capital was 23 percent, up from seven percent, due to higher net income. For more information on capital allocated to the business segments, see Business Segment Operations on page 11.

Six-Month Comparison

Net income for Global Banking increased $3.7 billion to $4.6 billion primarily due to the same factors as described in the three-month discussion.

Net interest income decreased $1.0 billion to $4.0 billion primarily due to the same factors as described in the three-month discussion.

Noninterest income increased $1.0 billion to $5.8 billion driven by higher investment banking fees, treasury and credit service charges and higher valuation-driven adjustments on the fair value loan portfolio, debt securities and leveraged loans, as well as the addition of merchant services revenue.

The provision for credit losses improved $5.9 billion to a benefit of $2.0 billion primarily driven by a reserve release due to an improved macroeconomic outlook.


17 Bank of America

Noninterest expense increased $840 million to $5.4 billion, primarily due to higher revenue-related incentives and an acceleration in expenses from incentive compensation award changes, as well as higher operating costs, including the addition of merchant services costs.

The return on average allocated capital was 22 percent, up from four percent, due to higher net income.

Global Corporate, Global Commercial and Business Banking

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



Global Corporate, Global Commercial and Business Banking

	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
	Three Months Ended June 30
(Dollars in millions)	2021		2020		2021		2020		2021		2020		2021		2020
Revenue
Business Lending	$	989	$	916	$	867	$	881	$	56	$	66	$	1,912	$	1,863
Global Transaction Services	734		785		771		809		215		217		1,720		1,811
Total revenue, net of interest expense	$	1,723	$	1,701	$	1,638	$	1,690	$	271	$	283	$	3,632	$	3,674

Balance Sheet
Average
Total loans and leases	$	148,163	$	201,852	$	156,526	$	200,463	$	12,703	$	15,018	$	317,392	$	417,333
Total deposits	244,552		236,421		205,491		209,263		55,769		48,231		505,812		493,915

	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
	Six Months Ended June 30
(Dollars in millions)	2021		2020		2021		2020		2021		2020		2021		2020
Revenue
Business Lending	$	1,643	$	1,867	$	1,765	$	1,862	$	111	$	148	$	3,519	$	3,877
Global Transaction Services	1,424		1,656		1,515		1,687		426		473		3,365		3,816
Total revenue, net of interest expense	$	3,067	$	3,523	$	3,280	$	3,549	$	537	$	621	$	6,884	$	7,693

Balance Sheet

Average
Total loans and leases	$	148,200	$	192,278	$	158,407	$	194,522	$	12,851	$	15,100	$	319,458	$	401,900
Total deposits	237,112		212,170		204,573		181,572		54,538		44,401		496,223		438,143

Period end
Total loans and leases	$	148,210	$	182,374	$	157,248	$	183,869	$	12,678	$	14,378	$	318,136	$	380,621
Total deposits	255,710		238,862		207,003		210,853		56,285		51,195		518,998		500,910

Business Lending revenue increased $49 million for the three months ended June 30, 2021 compared to the same period in 2020 primarily due to higher credit spreads and leasing equity investment income, partially offset by the impact of lower loan balances. Business Lending revenue decreased $358 million for the six months ended June 30, 2021 primarily due to the impact of lower loan balances and interest rates, partially offset by higher credit spreads.

Global Transaction Services revenue decreased $91 million and $451 million for the three and six months ended June 30, 2021 driven by lower interest rates, partially offset by the impact of higher deposit balances.

Average loans and leases decreased 24 percent and 21 percent for the three and six months ended June 30, 2021 driven by client paydowns.

Average deposits increased two percent and 13 percent for the three and six months ended June 30, 2021 primarily driven

by elevated balances from prior-year inflows on client responses to market volatility and government stimulus measures.

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.


						Bank of America 18



Investment Banking Fees

	Global Banking				Total Corporation				Global Banking				Total Corporation
	Three Months Ended June 30								Six Months Ended June 30

(Dollars in millions)	2021		2020		2021		2020		2021		2020		2021		2020
Products
Advisory	$	376	$	345	$	407	$	406	$	733	$	592	$	807	$	675
Debt issuance	482		503		1,110		1,058		905		927		2,098		1,985
Equity issuance	315		333		702		740		707		423		1,602		1,023
Gross investment banking fees	1,173		1,181		2,219		2,204		2,345		1,942		4,507		3,683
Self-led deals	(44)		(18)		(97)		(45)		(61)		(61)		(139)		(136)
Total investment banking fees	$	1,129	$	1,163	$	2,122	$	2,159	$	2,284	$	1,881	$	4,368	$	3,547

Total Corporation investment banking fees, excluding self-led deals, which are primarily included within Global Banking and Global Markets, were $2.1 billion and $4.4 billion for the three and six months ended June 30, 2021. The three-month period decreased two percent compared to the same period in 2020. The six-month period increased 23 percent primarily driven by higher equity issuance fees as well as advisory and debt issuance fees.

Global Markets



	Three Months Ended June 30								Six Months Ended June 30
(Dollars in millions)	2021			2020			% Change		2021			2020			% Change
Net interest income	$	991		$	1,297		(24)	%	$	1,981		$	2,449		(19)	%
Noninterest income:
Investment and brokerage services	473			480			(1)		1,033			1,048			(1)
Investment banking fees	959			939			2		1,940			1,542			26
Market making and similar activities	1,964			2,360			(17)		5,434			5,334			2
All other income	333			274			22		530			202			n/m
Total noninterest income	3,729			4,053			(8)		8,937			8,126			10
Total revenue, net of interest expense	4,720			5,350			(12)		10,918			10,575			3

Provision for credit losses	22			105			(79)		17			212			(92)
Noninterest expense	3,471			2,684			29		6,898			5,498			25
Income before income taxes	1,227			2,561			(52)		4,003			4,865			(18)
Income tax expense	319			666			(52)		1,041			1,265			(18)
Net income	$	908		$	1,895		(52)		$	2,962		$	3,600		(18)

Effective tax rate	26.0		%	26.0		%			26.0		%	26.0		%

Return on average allocated capital	10			21					16			20
Efficiency ratio	73.55			50.17					63.19			51.99

Balance Sheet
	Three Months Ended June 30								Six Months Ended June 30
	2021			2020			% Change		2021			2020			% Change

Average
Trading-related assets:
Trading account securities	$	304,760		$	216,157		41	%	$	285,081		$	236,704		20	%
Reverse repurchases	116,424			104,883			11		108,201			110,291			(2)
Securities borrowed	101,144			96,448			5		95,231			89,860			6
Derivative assets	44,514			49,502			(10)		45,983			48,199			(5)
Total trading-related assets	566,842			466,990			21		534,496			485,054			10
Total loans and leases	87,826			74,131			18		82,649			72,896			13
Total earning assets	531,000			478,648			11		513,261			490,132			5
Total assets	797,558			663,072			20		760,616			688,062			11
Total deposits	55,584			45,083			23		54,723			39,203			40
Allocated capital	38,000			36,000			6		38,000			36,000			6

Period end									June 30 2021			December 31 2020			% Change


Total trading-related assets									$	542,614		$	421,698		29	%
Total loans and leases									96,105			78,415			23
Total earning assets									527,983			447,350			18
Total assets									773,714			616,609			25
Total deposits									57,297			53,925			6

n/m = not meaningful


19 Bank of America

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 2020 Annual Report on Form 10-K.

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

Three-Month Comparison

Net income for Global Markets decreased $987 million to $908 million. Net DVA losses were $34 million compared to losses of $261 million in the prior-year period. Excluding net DVA, net income decreased $1.2 billion to $934 million. These decreases were primarily driven by higher noninterest expense and lower revenue, partially offset by lower provision for credit losses.

Revenue decreased $630 million to $4.7 billion primarily driven by lower sales and trading revenue. Sales and trading revenue decreased $590 million, and excluding net DVA, decreased $817 million. These decreases were driven by lower revenue in Fixed Income, Currencies and Commodities (FICC), partially offset by higher revenue in Equities.

The provision for credit losses decreased $83 million primarily due to an improved macroeconomic outlook.

Noninterest expense increased $787 million to $3.5 billion driven by higher costs associated with processing transactional card claims related to state unemployment benefits and activity-related expenses for sales and trading.

Average total assets increased $134.5 billion to $797.6 billion driven by higher client balances in Global Equities, and higher levels of inventory and loan growth in FICC.

The return on average allocated capital was 10 percent, down from 21 percent, reflecting lower net income and an increase in allocated capital. For more information on capital allocated to the business segments, see Business Segment Operations on page 11.

Six-Month Comparison

Net income for Global Markets decreased $638 million to $3.0 billion. Net DVA losses were $36 million compared to gains of $39 million in the prior-year period. Excluding net DVA, net income decreased $581 million to $3.0 billion. These decreases were primarily driven by higher noninterest expense.

Revenue increased $343 million to $10.9 billion primarily driven by higher investment banking income. Sales and trading revenue decreased $147 million, and excluding net DVA, decreased $72 million driven by a decline in FICC revenue, partially offset by higher revenue in Equities. Noninterest expense increased $1.4 billion to $6.9 billion, primarily driven by the same factors as described in the three-month discussion, as well as an acceleration in expenses from incentive compensation award changes.

The provision for credit losses decreased $195 million primarily due to an improved macroeconomic outlook.

Average total assets increased $72.6 billion to $760.6 billion, primarily due to higher client balances in Global Equities. Period-end total assets increased $157.1 billion since December 31, 2020 to $773.7 billion driven by higher client balances and increased hedging of client activity with stock positions relative to derivatives in Global Equities, and higher levels of inventory and loan growth in FICC.

The return on average allocated capital was 16 percent, down from 20 percent, reflecting lower net income and an increase in allocated capital.

Sales and Trading Revenue

For a description of sales and trading revenue, see Business Segment Operations in the MD&A of the Corporation’s 2020 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 June 30				Six Months Ended June 30
(Dollars in millions)	2021		2020		2021		2020
Sales and trading revenue
Fixed income, currencies and commodities	$	1,937	$	2,941	$	5,179	$	5,886
Equities	1,624		1,210		3,460		2,900
Total sales and trading revenue	$	3,561	$	4,151	$	8,639	$	8,786

Sales and trading revenue, excluding net DVA (4)
Fixed income, currencies and commodities	$	1,965	$	3,186	$	5,216	$	5,857
Equities	1,630		1,226		3,459		2,890
Total sales and trading revenue, excluding net DVA	$	3,595	$	4,412	$	8,675	$	8,747

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

(2)Includes FTE adjustments of $59 million and $132 million for the three and six months ended June 30, 2021 compared to $38 million and $100 million for the same periods in 2020.

(3) Includes Global Banking sales and trading revenue of $170 million and $274 million for the three and six months ended June 30, 2021 compared to $65 million and $294 million for the same periods in 2020.

(4) FICC and Equities sales and trading revenue, excluding net DVA, is a non-GAAP financial measure. FICC net DVA losses were $28 million and $37 million for the three and six months ended June 30, 2021 compared to losses of $245 million and gains of $29 million for the same periods in 2020. Equities net DVA losses were $6 million and gains of $1 million for the three and six months ended June 30, 2021 compared to losses of $16 million and gains of $10 million for the same periods in 2020.


						Bank of America 20

Three-Month Comparison

FICC revenue decreased $1.2 billion as the prior year benefited from a robust trading environment for macro products and market recoveries from the end of the first quarter of 2020, whereas markets were more benign in the current-year period and weak for agency mortgages. Equities revenue increased $404 million driven by stronger trading performance and increased client activity in derivatives and Asia.

Six-Month Comparison

FICC revenue decreased $641 million driven by reduced activity in macro products, partially offset by stronger performance in credit and municipal products, and gains in commodities (partially offset by related losses in another segment) from market volatility driven by a weather-related event. Equities revenue increased $569 million driven by stronger trading performance and increased client activity.

All Other



	Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)	2021		2020		% Change		2021		2020		% Change
Net interest income	$	41	$	(53)	n/m		$	128	$	24	n/m





Noninterest income (loss)	(1,525)		(211)		n/m		(2,551)		(1,266)		102	%
Total revenue, net of interest expense	(1,484)		(264)		n/m		(2,423)		(1,242)		95

Provision for credit losses	(53)		(21)		n/m		(100)		93		n/m


Noninterest expense	302		305		(1)	%	610		553		10
Loss before income taxes	(1,733)		(548)		n/m		(2,933)		(1,888)		55
Income tax benefit	(3,596)		(766)		n/m		(5,052)		(1,614)		n/m
Net income (loss)	$	1,863	$	218	n/m		$	2,119	$	(274)	n/m

Balance Sheet

	Three Months Ended June 30						Six Months Ended June 30

Average	2021		2020		% Change		2021		2020		% Change
Total loans and leases	$	19,209	$	29,923	(36)	%	$	20,007	$	33,238	(40)	%
Total assets (1)	187,226		249,846		(25)		197,281		225,674		(13)
Total deposits	14,073		21,387		(34)		14,212		22,473		(37)

Period end							June 30 2021		December 31 2020		% Change





Total loans and leases							$	18,306	$	21,301	(14)	%

Total assets (1)							206,341		264,141		(22)
Total deposits							13,540		12,998		4

(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 $1.1 trillion and $1.0 trillion for the three and six months ended June 30, 2021 compared to $740.7 billion and $656.5 billion for the same periods in 2020, and period-end allocated assets were $1.1 trillion and $977.7 billion at June 30, 2021 and December 31, 2020.

n/m = not meaningful

All Other primarily consists of ALM activities, liquidating businesses and certain expenses not otherwise allocated to a business segment. ALM activities encompass interest rate and foreign currency risk management activities for which substantially all of the results are allocated to our business segments. For more information on our ALM activities, see Note 17 – Business Segment Information to the Consolidated Financial Statements.

Three-Month Comparison

Net income increased $1.6 billion to $1.9 billion primarily driven by an increase in the income tax benefit, partially offset by lower revenue.

Revenue decreased $1.2 billion primarily due to a $704 million gain on sales of certain mortgage loans in the prior-year period and lower market making and similar activities.

The income tax benefit increased $2.8 billion primarily due to the impact of the U.K. tax law change and a higher level of income tax credits associated with increased ESG investment

activities. For more information on the U.K. tax law change, see Financial Highlights on page 4. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking.

Six-Month Comparison

Net income increased $2.4 billion to $2.1 billion primarily due to an increase in the income tax benefit, partially offset by lower revenue.

Revenue decreased $1.2 billion primarily due to the same factors as described in the three-month discussion.

The provision for credit losses improved $193 million to a benefit of $100 million primarily due to an improved macroeconomic outlook.

The income tax benefit increased $3.4 billion primarily due to the same factors as described in the three-month discussion. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking.


21 Bank of America

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 2020 Annual Report on Form 10-K, and Note 11 – Long-term Debt and Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2020 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 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2020 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 pandemic, see Item 1A. Risk Factors – Coronavirus Disease of the Corporation’s 2020 Annual Report on Form 10-K. These pandemic-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 section in the MD&A of the Corporation’s 2020 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, including related regulatory requirements, see Capital Management in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

CCAR and Capital Planning

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. We submitted our 2021 CCAR capital plan and related supervisory stress tests in April 2021 and received our results on June 24, 2021. Based on our results, we will be subject to a preliminary 2.5 percent SCB, unchanged from the current level, effective October 1, 2021 to September 30, 2022. Our CET1 capital ratio under the Standardized approach must remain above 9.5 percent during this period in order to avoid restrictions on capital distributions and discretionary bonus payments.

Due to uncertainty resulting from the pandemic, the Federal Reserve imposed various restrictions on share repurchase programs and dividends. In conjunction with its release of 2021 CCAR supervisory stress test results, the Federal Reserve announced those restrictions would end as of July 1, 2021 for large banks, including the Corporation, and large banks would be subject to the normal restrictions under the Federal Reserve's SCB framework.

On April 15, 2021, the Corporation announced that the Board authorized the repurchase of up to $25 billion of common stock over time. The Board also authorized repurchases to offset shares awarded under equity-based compensation plans. During the second quarter of 2021, we repurchased $4.2 billion of common stock, including repurchases to offset shares awarded under equity-based compensation plans during the period.

The timing and amount of common stock repurchases made pursuant to our stock repurchase program are subject to various factors, including the Corporation’s capital position, liquidity, financial performance and alternative uses of capital, stock trading price, regulatory requirements and general market conditions, and may be suspended at any time. Such 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).

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 (RWA) under both the Standardized and Advanced approaches. The approach that yields the lower ratio is used to assess capital adequacy including under the PCA framework. As of June 30, 2021, the CET1, Tier 1 capital and Total capital ratios for the Corporation were lower under the Standardized approach.

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 or SCB, plus any applicable countercyclical capital buffer and a global systemically important bank (G-SIB) surcharge. The buffers and surcharge must be comprised solely


						Bank of America 22

of CET1 capital. The Corporation's CET1 capital ratio must be a minimum of 9.5 percent under both the Standardized and Advanced approaches.

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 June 30, 2021 and December 31, 2020. 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)		June 30, 2021
Risk-based capital metrics:
Common equity tier 1 capital		$	178,818		$	178,818
Tier 1 capital		202,245			202,245
Total capital (3)		234,486			227,736
Risk-weighted assets (in billions)		1,552			1,380
Common equity tier 1 capital ratio		11.5		%	13.0		%	9.5	%
Tier 1 capital ratio		13.0			14.7			11.0
Total capital ratio		15.1			16.5			13.0

Leverage-based metrics:
Adjusted quarterly average assets (in billions) (4)		$	2,938		$	2,938
Tier 1 leverage ratio		6.9		%	6.9		%	4.0

Supplementary leverage exposure (in billions) (5)					$	3,444
Supplementary leverage ratio					5.9		%	5.0

		December 31, 2020
Risk-based capital metrics:
Common equity tier 1 capital		$	176,660		$	176,660
Tier 1 capital		200,096			200,096
Total capital (3)		237,936			227,685
Risk-weighted assets (in billions)		1,480			1,371
Common equity tier 1 capital ratio		11.9		%	12.9		%	9.5	%
Tier 1 capital ratio		13.5			14.6			11.0
Total capital ratio		16.1			16.6			13.0

Leverage-based metrics:
Adjusted quarterly average assets (in billions) (4)		$	2,719		$	2,719
Tier 1 leverage ratio		7.4		%	7.4		%	4.0

Supplementary leverage exposure (in billions) (5)					$	2,786
Supplementary leverage ratio					7.2		%	5.0

(1)As of June 30, 2021 and December 31, 2020, capital ratios are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of the current expected credit losses (CECL) accounting standard.

(2)The capital conservation buffer and G-SIB surcharge were 2.5 percent at both June 30, 2021 and December 31, 2020. At June 30, 2021 and December 31, 2020, the Corporation's SCB of 2.5 percent was applied in place of the capital conservation buffer under the Standardized approach. The countercyclical capital buffer for both periods was zero. The CET1 capital regulatory minimum is the sum of the CET1 capital ratio minimum of 4.5 percent, our G-SIB surcharge of 2.5 percent and our SCB or the capital conservation buffer, as applicable, of 2.5 percent. The SLR regulatory 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.

(5)Supplementary leverage exposure at December 31, 2020 reflects the temporary exclusion of U.S. Treasury securities and deposits at Federal Reserve Banks. The temporary relief expired after March 31, 2021 and is not reflected in supplementary leverage exposure at June 30, 2021.

At June 30, 2021, CET1 capital was $178.8 billion, an increase of $2.2 billion from December 31, 2020, driven by earnings, partially offset by common stock repurchases, dividends, the increase in deferred tax assets due to the change in U.K. tax law and lower net unrealized gains on available-for-sale (AFS) debt securities included in accumulated other comprehensive income (OCI). Tier 1 capital increased $2.1 billion primarily driven by the same factors as CET1 capital. Total capital under the Standardized approach decreased $3.5 billion primarily driven by a decrease in the adjusted allowance for credit losses included in Tier 2 capital, partially offset by

the same factors driving the increase in CET1 capital. RWA under the Standardized approach, which yielded the lower CET1 capital ratio at June 30, 2021, increased $71.9 billion during the six months ended June 30, 2021 to $1,552 billion primarily due to strong client activity in Global Markets and investments of excess liquidity. Supplementary leverage exposure at June 30, 2021 increased $658.1 billion during the six months ended June 30, 2021 primarily due to the expiration of the Federal Reserve’s temporary relief to exclude U.S. Treasury securities and deposits at Federal Reserve Banks.


23 Bank of America

Table 9 shows the capital composition at June 30, 2021 and December 31, 2020.



Table 9	Capital Composition under Basel 3


(Dollars in millions)		June 30 2021		December 31 2020

Total common shareholders’ equity		$	253,678	$	248,414
CECL transitional amount (1)		2,994		4,213
Goodwill, net of related deferred tax liabilities		(68,638)		(68,565)
Deferred tax assets arising from net operating loss and tax credit carryforwards		(7,641)		(5,773)
Intangibles, other than mortgage servicing rights, net of related deferred tax liabilities		(1,662)		(1,617)
Defined benefit pension plan net assets		(1,196)		(1,164)
Cumulative unrealized net (gain) loss related to changes in fair value of financial liabilities attributable to own creditworthiness, net-of-tax		1,499		1,753
Other		(216)		(601)
Common equity tier 1 capital		178,818		176,660
Qualifying preferred stock, net of issuance cost		23,440		23,437
Other		(13)		(1)
Tier 1 capital		202,245		200,096
Tier 2 capital instruments		20,674		22,213
Qualifying allowance for credit losses (2)		11,993		15,649
Other		(426)		(22)
Total capital under the Standardized approach		234,486		237,936
Adjustment in qualifying allowance for credit losses under the Advanced approaches (2)		(6,750)		(10,251)
Total capital under the Advanced approaches		$	227,736	$	227,685

(1)Includes the impact of the Corporation's adoption of the CECL accounting standard on January 1, 2020 and 25 percent of the increase in reserves since the initial adoption.

(2)Includes the impact of transition provisions related to the CECL accounting standard.

Table 10 shows the components of RWA as measured under Basel 3 at June 30, 2021 and December 31, 2020.



Table 10	Risk-weighted Assets under Basel 3

		Standardized Approach		Advanced Approaches		Standardized Approach		Advanced Approaches


(Dollars in billions)		June 30, 2021				December 31, 2020
Credit risk		$	1,486	$	898	$	1,420	$	896
Market risk		66		65		60		60
Operational risk		n/a		373		n/a		372
Risks related to credit valuation adjustments		n/a		44		n/a		43
Total risk-weighted assets		$	1,552	$	1,380	$	1,480	$	1,371

n/a = not applicable


						Bank of America 24

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 June 30, 2021 and December 31, 2020. BANA met the definition of well capitalized under the PCA framework for both periods.



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)		June 30, 2021
Risk-based capital metrics:
Common equity tier 1 capital		$	170,512		$	170,512
Tier 1 capital		170,512			170,512
Total capital (3)		184,226			176,693
Risk-weighted assets (in billions)		1,270			1,009
Common equity tier 1 capital ratio		13.4		%	16.9		%	7.0	%
Tier 1 capital ratio		13.4			16.9			8.5
Total capital ratio		14.5			17.5			10.5

Leverage-based metrics:
Adjusted quarterly average assets (in billions) (4)		$	2,269		$	2,269
Tier 1 leverage ratio		7.5		%	7.5		%	5.0

Supplementary leverage exposure (in billions)					$	2,664
Supplementary leverage ratio					6.4		%	6.0

		December 31, 2020
Risk-based capital metrics:
Common equity tier 1 capital		$	164,593		$	164,593
Tier 1 capital		164,593			164,593
Total capital (3)		181,370			170,992
Risk-weighted assets (in billions)		1,221			1,014
Common equity tier 1 capital ratio		13.5		%	16.2		%	7.0	%
Tier 1 capital ratio		13.5			16.2			8.5
Total capital ratio		14.9			16.9			10.5

Leverage-based metrics:
Adjusted quarterly average assets (in billions) (4)		$	2,143		$	2,143
Tier 1 leverage ratio		7.7		%	7.7		%	5.0

Supplementary leverage exposure (in billions)					$	2,525
Supplementary leverage ratio					6.5		%	6.0

(1)Capital ratios for both June 30, 2021 and December 31, 2020 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 June 30, 2021 and December 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 are the percent required to be considered well capitalized under the PCA framework.

(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 June 30, 2021 and December 31, 2020.


25 Bank of America



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)		June 30, 2021
Total eligible balance		$	429,120				$	218,484
Percentage of risk-weighted assets (4)		27.7		%	22.0	%	14.1		%	8.5	%
Percentage of supplementary leverage exposure (5)		12.5			9.5		6.3			4.5

		December 31, 2020
Total eligible balance		$	405,153				$	196,997
Percentage of risk-weighted assets (4)		27.4		%	22.0	%	13.3		%	8.5	%
Percentage of supplementary leverage exposure (5)		14.5			9.5		7.1			4.5

(1)As of June 30, 2021 and December 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 RWA regulatory minimum consists of 18.0 percent plus a TLAC RWA 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 supplementary leverage exposure regulatory minimum consists of 7.5 percent plus a 2.0 percent TLAC leverage buffer. The TLAC RWA and leverage buffers must be comprised solely of CET1 capital and Tier 1 capital, respectively.

(3)The long-term debt RWA 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 RWA is used to calculate TLAC and long-term debt ratios, which was the Standardized approach as of June 30, 2021 and December 31, 2020.

(5)Supplementary leverage exposure at December 31, 2020 reflects the temporary exclusion of U.S. Treasury Securities and deposits at Federal Reserve Banks. The temporary relief expired after March 31, 2021 and is not reflected in supplementary leverage exposure at June 30, 2021.

Regulatory Developments

The following supplements the disclosure in Capital Management – Regulatory Developments in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

Supplementary Leverage Ratio

On March 19, 2021, the U.S. banking regulators announced that the temporary change to the SLR for BHCs and depository institutions issued in 2020 would expire as scheduled after March 31, 2021. While the temporary relief automatically applied to the Corporation, the Corporation’s lead depository institution, Bank of America, N.A., did not opt to take advantage of the SLR relief offered by the OCC. At June 30, 2021, the Corporation’s SLR, reflecting the expiration of the temporary relief, was 5.9 percent, which is 0.9 percent, or $30 billion, in excess of the 5.0 percent required by the Federal Reserve.

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). 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 15c3-1e, 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 CFTC Regulation 1.17. The U.S. broker-dealer subsidiaries are also registered with the Financial Industry Regulatory Authority, Inc. (FINRA). Pursuant to FINRA Rule 4110, FINRA may impose higher net capital requirements than Rule 15c3-1 under the Exchange Act with respect to each of the broker-dealers.

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 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 customers' and affiliates' risk-based margin in order to meet its CFTC minimum

net capital requirement. At June 30, 2021, BofAS had tentative net capital of $18.0 billion. BofAS also had regulatory net capital of $15.2 billion, which exceeded the minimum requirement of $3.0 billion.

MLPCC is a fully-guaranteed subsidiary of BofAS and provides clearing and settlement services as well as prime brokerage and arranged financing services for institutional clients. At June 30, 2021, MLPCC’s regulatory net capital of $5.7 billion exceeded the minimum requirement of $1.5 billion.

MLPF&S provides retail services. At June 30, 2021, MLPF&S' regulatory net capital was $3.7 billion, which exceeded the minimum requirement of $182 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 FCA and is subject to certain regulatory capital requirements. At June 30, 2021, MLI’s capital resources were $33.9 billion, which exceeded the minimum Pillar 1 requirement of $14.8 billion. BofASE, a French investment firm, is regulated by the Autorité de Contrôle Prudentiel et de Résolution and the Autorité des Marchés Financiers, and is subject to certain regulatory capital requirements. At June 30, 2021, BofASE's capital resources were $7.2 billion which exceeded the minimum Pillar 1 requirement of $2.7 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 from the 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 on page 3 herein and Item 1A. Risk Factors – Coronavirus Disease of the Corporation’s 2020 Annual Report on Form 10-K.

We define liquidity as readily available assets, limited to cash and high-quality, liquid, unencumbered securities that we


						Bank of America 26

can use to meet our contractual and contingent financial obligations as they 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 2020 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 bank 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 June 30, 2021 and December 31, 2020.



Table 13	Average Global Liquidity Sources

		Three Months Ended


(Dollars in billions)		June 30 2021		December 31 2020
Bank entities		$	909	$	773
Nonbank and other entities (1)		154		170
Total Average Global Liquidity Sources		$	1,063	$	943

(1) Nonbank includes Parent, NB Holdings and other regulated entities.

Our bank subsidiaries’ liquidity is primarily driven by deposit and lending activity, as well as securities valuation and net debt activity. 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 $300 billion and $306 billion at June 30, 2021 and December 31, 2020. 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 is also held in nonbank entities, including the Parent, NB Holdings and other regulated entities. Parent company and NB Holdings liquidity is typically in the form of cash deposited at BANA, which is excluded from the liquidity at bank subsidiaries, and high-quality, liquid, unencumbered securities. 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 June 30, 2021 and December 31, 2020.



Table 14	Average Global Liquidity Sources Composition

		Three Months Ended


(Dollars in billions)		June 30 2021		December 31 2020
Cash on deposit		$	247	$	322
U.S. Treasury securities		227		141
U.S. agency securities, mortgage-backed securities, and other investment-grade securities		570		462
Non-U.S. government securities		19		18
Total Average Global Liquidity Sources		$	1,063	$	943

Our GLS are substantially the same in composition to what qualifies as High Quality Liquid Assets (HQLA) under the final U.S. Liquidity Coverage Ratio (LCR) rules. However, HQLA for purposes of calculating LCR is not reported at market value, but at a lower value that incorporates regulatory deductions and the exclusion of excess liquidity held at certain subsidiaries. The LCR is calculated as the amount of a financial institution’s unencumbered HQLA relative to the estimated net cash outflows the institution could encounter over a 30-day period of significant liquidity stress, expressed as a percentage. Our average consolidated HQLA, on a net basis, was $602 billion and $584 billion for the three months ended June 30, 2021 and December 31, 2020. For the same periods, the average consolidated LCR was 117 percent and 122 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 liquidity stress analysis, see Liquidity Risk – Liquidity Stress Analysis in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

Net Stable Funding Ratio Final Rule

On October 20, 2020, the U.S. Agencies finalized the Net Stable Funding Ratio (NSFR), a rule requiring large banks to maintain a minimum level of stable funding over a one-year period. The final rule is intended to support the ability of banks to lend to households and businesses in both normal and adverse economic conditions and is complementary to the LCR rule, which focuses on short-term liquidity risks. The final rule was effective July 1, 2021. The U.S. NSFR applies to the Corporation on a consolidated basis and to our insured depository institutions. The Corporation is in compliance with


27 Bank of America

the final NSFR rule in the regulatory timeline provided, and there have not been any significant impacts to the Corporation.

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 $1.91 trillion and $1.80 trillion at June 30, 2021 and December 31, 2020.

Our trading activities in other regulated entities are primarily funded on a secured basis through securities lending and repurchase agreements, and these amounts will vary based on customer activity and market conditions.

Long-term Debt

During the six months ended June 30, 2021, we issued $48.2 billion of long-term debt consisting of $36.9 billion of notes issued by Bank of America Corporation, substantially all of which was TLAC compliant, $4.4 billion of notes issued by Bank of America, N.A. and $6.9 billion of other debt.

During the six months ended June 30, 2021, we had total long-term debt maturities and redemptions in the aggregate of $29.0 billion consisting of $17.6 billion for Bank of America Corporation, $5.4 billion for Bank of America, N.A. and $6.0 billion of other debt. Table 15 presents the carrying value of aggregate annual contractual maturities of long-term debt at June 30, 2021.



Table 15	Long-term Debt by Maturity

(Dollars in millions)		Remainder of 2021		2022		2023		2024		2025		Thereafter		Total
Bank of America Corporation
Senior notes (1)		$	3,391	$	5,819	$	23,615	$	23,845	$	20,020	$	129,724	$	206,414
Senior structured notes		192		1,990		599		344		409		11,266		14,800
Subordinated notes		371		—		—		3,299		5,444		14,216		23,330
Junior subordinated notes		—		—		—		—		—		740		740
Total Bank of America Corporation		3,954		7,809		24,214		27,488		25,873		155,946		245,284
Bank of America, N.A.
Senior notes		—		2,945		507		—		—		3		3,455
Subordinated notes		—		—		—		—		—		1,794		1,794
Advances from Federal Home Loan Banks		500		3		1		—		17		73		594
Securitizations and other Bank VIEs (2)		1,250		1,249		999		999		—		74		4,571
Other		50		88		192		119		198		27		674
Total Bank of America, N.A.		1,800		4,285		1,699		1,118		215		1,971		11,088
Other debt
Structured Liabilities		2,872		3,964		2,273		1,563		615		6,379		17,666
Nonbank VIEs (2)		1		—		—		—		—		565		566

Total other debt		2,873		3,964		2,273		1,563		615		6,944		18,232
Total long-term debt		$	8,627	$	16,058	$	28,186	$	30,169	$	26,703	$	164,861	$	274,604

(1) Total includes $168.7 billion of outstanding notes that are both TLAC eligible and callable one year before their stated maturities, including $2.5 billion during the remainder of 2021, and $15.2 billion, $17.1 billion, $16.1 billion and $12.9 billion during each year of 2022 through 2025, respectively, and $104.9 billion thereafter. For more information on our TLAC eligible and callable outstanding notes, see Liquidity Risk – Diversified Funding Sources in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

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

Total long-term debt increased $11.7 billion to $274.6 billion during the six months ended June 30, 2021, primarily due to debt issuances, partially offset by debt maturities and redemptions and valuation adjustments. 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.

During the six months ended June 30, 2021, we issued $2.2 billion of structured notes, which are unsecured debt obligations that pay investors returns linked to other debt or equity securities, indices, currencies or commodities. These structured notes are typically issued to meet client demand, and notes with certain attributes may also be TLAC eligible. 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 11 – Long-term Debt to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

We use derivative transactions to manage interest rate and currency risks of our borrowings, considering the characteristics of the assets they are funding. For more information on our ALM activities, see Interest Rate Risk Management for the Banking Book on page 45.

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


						Bank of America 28

On May 24, 2021, Standard & Poor’s Global Ratings (S&P) affirmed the current ratings of the Corporation and its subsidiaries, while at the same time revising its rating outlook to Positive from Stable.

On June 7, 2021, Fitch Ratings (Fitch) upgraded the long-term senior debt ratings of the Corporation and its rated subsidiaries by one notch, to AA- and AA, respectively. Fitch also upgraded the Corporation’s short-term rating to F1+ which is now aligned with the short-term rating of its subsidiaries, including BANA. Following the upgrade, the rating outlook for the Corporation and its subsidiaries is Stable.

The current ratings and Stable outlooks for the Corporation and its subsidiaries from Moody's Investors Service did not change from those disclosed in the Corporation's 2020 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 2020 Annual Report on Form 10-K.

Table 16

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

Positive

AA-

F1+

Stable

Bank of America, N.A.

Aa2

P-1

Stable

A+

A-1

Positive

F1+

Stable

Bank of America Europe Designated Activity Company

A+

A-1

Positive

F1+

Stable

Merrill Lynch, Pierce, Fenner & Smith Incorporated

A+

A-1

Positive

F1+

Stable

BofA Securities, Inc.

A+

A-1

Positive

F1+

Stable

Merrill Lynch International

A+

A-1

Positive

F1+

Stable

BofA Securities Europe SA

A+

A-1

Positive

F1+

Stable

NR = not rated

Finance Subsidiary Issuers and Parent Guarantor

BofA Finance LLC, a Delaware limited liability company, is a consolidated finance subsidiary of the Corporation that has issued and sold, and is expected to continue to issue and sell, its senior unsecured debt securities. In addition, each of BAC Capital Trust XIII and BAC Capital Trust XIV, Delaware statutory trusts, is a 100 percent owned finance subsidiary of the Corporation that has issued and sold trust preferred securities that remained outstanding at June 30, 2021. The Corporation has fully and unconditionally guaranteed (or effectively provided for the full and unconditional guarantee of) all such securities issued by such finance subsidiaries. For more information regarding such guarantees by the Corporation, see Liquidity Risk – Finance Subsidiary Issuers and Parent Guarantor in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

Credit Risk Management

For information on our credit risk management activities, see Consumer Portfolio Credit Risk Management below, Commercial Portfolio Credit Risk Management on page 35, Non-U.S. Portfolio on page 40, Allowance for Credit Losses on page 41, and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.

During the six months ended June 30, 2021, the economy gained momentum as unemployment continued to decline from double-digit highs during 2020 and parts of the economy continued to open as vaccination rates increased, case levels showed improvements and restrictions generally began to ease. Individuals and businesses in the U.S. continue to receive various forms of support through economic stimulus packages enacted in 2020 and 2021. While there has been improvement, uncertainty remains about the timing and strength of the economy's recovery, which could lead to adverse impacts to credit quality metrics in future periods. For more information on how the pandemic may affect our operations, see Executive Summary – Recent Developments – COVID-19 Pandemic on page 3 and Item 1A. Risk Factors – Coronavirus Disease of the Corporation’s 2020 Annual Report on Form 10-K.

Consumer Portfolio Credit Risk Management

Credit risk management for the consumer portfolio begins with initial underwriting and continues throughout a borrower’s credit cycle. Statistical techniques in conjunction with experiential judgment are used in all aspects of portfolio management including underwriting, product pricing, risk appetite, setting credit limits, and establishing operating processes and metrics to quantify and balance risks and returns. Statistical models are built using detailed behavioral information from external sources such as credit bureaus and/or internal historical experience and are a component of our consumer credit risk management process. These models are used in part to assist in making both new and ongoing credit decisions, as well as portfolio management strategies, including authorizations and line management, collection practices and strategies, and determination of the allowance for loan and lease losses and allocated capital for credit risk.

Consumer Credit Portfolio

The economic environment improved during the six months ended June 30, 2021, with the U.S. unemployment rate continuing to decline and home prices increasing. During the three and six months ended June 30, 2021, net charge-offs decreased $221 million and $400 million to $513 million and $1.2 billion primarily due to lower credit card losses, as balance declines and the impact of government stimulus measures were partially offset by charge-offs associated with deferrals that expired in 2020. During the six months ended June 30, 2021, nonperforming loans increased due to deferral activity.

The consumer allowance for loan and lease losses decreased $2.6 billion during the six months ended June 30, 2021 to $7.4 billion primarily due to an improved economic outlook. For more information, see Allowance for Credit Losses on page 41.

For more information on our accounting policies regarding delinquencies, nonperforming status, charge-offs and troubled debt restructurings (TDRs) for the consumer portfolio, as well as interest accrual policies and delinquency status for loan


29 Bank of America

modifications related to the pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K and Note 5 – Outstanding Loans and Leases and Allowance

for Credit Losses to the Consolidated Financial Statements.

Table 17 presents our outstanding consumer loans and leases, consumer nonperforming loans and accruing consumer loans past due 90 days or more.



Table 17	Consumer Credit Quality

		Outstandings (1)				Nonperforming						Accruing Past Due 90 Days or More


(Dollars in millions)		June 30 2021		December 31 2020		June 30 2021			December 31 2020			June 30 2021			December 31 2020
Residential mortgage (2)		$	214,324	$	223,555	$	2,343		$	2,005		$	687		$	762
Home equity		30,469		34,311		651			649			—			—
Credit card		75,599		78,708		n/a			n/a			533			903
Direct/Indirect consumer (3)		96,903		91,363		50			71			15			33
Other consumer		172		124		—			—			—			—
Consumer loans excluding loans accounted for under the fair value option		$	417,467	$	428,061	$	3,044		$	2,725		$	1,235		$	1,698
Loans accounted for under the fair value option (4)		654		735
Total consumer loans and leases		$	418,121	$	428,796
Percentage of outstanding consumer loans and leases (5)		n/a		n/a		0.73		%	0.64		%	0.30		%	0.40		%
Percentage of outstanding consumer loans and leases, excluding fully-insured loan portfolios (5)		n/a		n/a		0.75			0.65			0.14			0.22

(1)Outstandings include non-core residential mortgage of $7.2 billion and $8.3 billion and home equity of $3.6 billion and $4.0 billion at June 30, 2021 and December 31, 2020. For more information on non-core loans, see Consumer Credit Risk Management in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

(2)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At June 30, 2021 and December 31, 2020, residential mortgage includes $501 million and $537 million of loans on which interest had been curtailed by the Federal Housing Administration (FHA), and therefore were no longer accruing interest, although principal was still insured, and $186 million and $225 million of loans on which interest was still accruing.

(3)Outstandings primarily include auto and specialty lending loans and leases of $46.4 billion and $46.4 billion, U.S. securities-based lending loans of $46.4 billion and $41.1 billion and non-U.S. consumer loans of $3.0 billion and $3.0 billion at June 30, 2021 and December 31, 2020.

(4)Consumer loans accounted for under the fair value option include residential mortgage loans of $257 million and $298 million and home equity loans of $397 million and $437 million at June 30, 2021 and December 31, 2020. For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.

(5)Excludes consumer loans accounted for under the fair value option. At June 30, 2021 and December 31, 2020, $13 million and $11 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 18 presents net charge-offs and related ratios for consumer loans and leases.



Table 18	Consumer Net Charge-offs and Related Ratios

		Net Charge-offs								Net Charge-off Ratios (1)
		Three Months Ended June 30				Six Months Ended June 30				Three Months Ended June 30				Six Months Ended June 30

(Dollars in millions)		2021		2020		2021		2020		2021		2020		2021		2020
Residential mortgage		$	(6)	$	(20)	$	(10)	$	(21)	(0.01)	%	(0.03)	%	(0.01)	%	(0.02)	%
Home equity		(24)		(14)		(59)		(25)		(0.31)		(0.14)		(0.37)		(0.13)
Credit card		488		665		1,122		1,435		2.67		3.10		3.07		3.19

Direct/Indirect consumer		(9)		26		22		66		(0.04)		0.12		0.05		0.15
Other consumer		64		77		131		151		n/m		n/m		n/m		n/m
Total		$	513	$	734	$	1,206	$	1,606	0.50		0.65		0.59		0.70

(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

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 51 percent of consumer loans and leases at June 30, 2021. Approximately 51 percent of the residential mortgage portfolio was in Consumer

Banking and 42 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 decreased $9.2 billion during the six months ended June 30, 2021 as paydowns were partially offset by originations.

At June 30, 2021 and December 31, 2020, the residential mortgage portfolio included $12.5 billion and $11.8 billion of outstanding fully-insured loans, of which $2.5 billion and $2.8 billion had FHA insurance, with the remainder protected by Fannie Mae long-term standby agreements.


						Bank of America 30

Table 19 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.



Table 19	Residential Mortgage – Key Credit Statistics

		Reported Basis (1)						Excluding Fully-insured Loans (1)


(Dollars in millions)		June 30 2021			December 31 2020			June 30 2021			December 31 2020
Outstandings		$	214,324		$	223,555		$	201,805		$	211,737
Accruing past due 30 days or more		1,906			2,314			909			1,224
Accruing past due 90 days or more		687			762			—			—
Nonperforming loans (2)		2,343			2,005			2,343			2,005
Percent of portfolio
Refreshed LTV greater than 90 but less than or equal to 100		1		%	2		%	1		%	1		%
Refreshed LTV greater than 100		—			1			—			1
Refreshed FICO below 620		2			2			1			1
2006 and 2007 vintages (3)		3			3			3			3

(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 pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

(2)Includes loans that are contractually current which primarily consist of collateral-dependent TDRs, including those that have been discharged in Chapter 7 bankruptcy and loans that have not yet demonstrated a sustained period of payment performance following a TDR.

(3)These vintages of loans accounted for $458 million, or 20 percent, and $503 million, or 25 percent, of nonperforming residential mortgage loans at June 30, 2021 and December 31, 2020.

Nonperforming outstanding balances in the residential mortgage portfolio increased $338 million during the six months ended June 30, 2021 primarily driven by deferral activity. Of the nonperforming residential mortgage loans at June 30, 2021, $1.2 billion, or 53 percent, were current on contractual payments. Loans accruing past due 30 days or more decreased $315 million driven by continued improvement in credit quality.

Net recoveries of $6 million and $10 million for the three and six months ended June 30, 2021 remained relatively unchanged compared to the same periods in the prior year.

Of the $201.8 billion in total residential mortgage loans outstanding at June 30, 2021, as shown in Table 20, 28 percent were originated as interest-only loans. The outstanding balance of interest-only residential mortgage loans that have entered the amortization period was $5.3 billion, or nine percent, at June 30, 2021. Residential mortgage loans that have entered the amortization period generally experienced a higher rate of early stage delinquencies and nonperforming status compared to the residential mortgage portfolio as a whole. At June 30, 2021, $66 million, or one percent, of outstanding interest-only residential mortgages that had entered the amortization period were accruing past due 30 days or more

compared to $909 million, or less than one percent, for the entire residential mortgage portfolio. In addition, at June 30, 2021, $314 million, or six percent, of outstanding interest-only residential mortgage loans that had entered the amortization period were nonperforming, of which $112 million were contractually current, compared to $2.3 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 98 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 20 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 15 percent and 16 percent of outstandings at June 30, 2021 and December 31, 2020. In the New York area, the New York-Northern New Jersey-Long Island MSA made up 15 percent and 14 percent of outstandings at June 30, 2021 and December 31, 2020.



Table 20	Residential Mortgage State Concentrations

		Outstandings (1)				Nonperforming (1)				Net Charge-offs
		June 30 2021		December 31 2020		June 30 2021		December 31 2020		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)										2021		2020		2021		2020
California		$	75,531	$	83,185	$	739	$	570	$	(5)	$	(8)	$	(7)	$	(11)
New York		23,996		23,832		361		272		—		—		2		1
Florida		13,080		13,017		173		175		(2)		(1)		(4)		(3)
Texas		8,648		8,868		86		78		—		—		—		—
New Jersey		8,415		8,806		110		98		—		—		—		—
Other		72,135		74,029		874		812		1		(11)		(1)		(8)
Residential mortgage loans		$	201,805	$	211,737	$	2,343	$	2,005	$	(6)	$	(20)	$	(10)	$	(21)
Fully-insured loan portfolio		12,519		11,818

Total residential mortgage loan portfolio		$	214,324	$	223,555

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


31 Bank of America

Home Equity

At June 30, 2021, the home equity portfolio made up seven percent of the consumer portfolio and was comprised of home equity lines of credit (HELOCs), home equity loans and reverse mortgages. 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. We no longer originate home equity loans or reverse mortgages.

At June 30, 2021, 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 $3.8 billion during the six months ended June 30, 2021 primarily due to paydowns outpacing new originations and draws on existing

lines. Of the total home equity portfolio at June 30, 2021 and December 31, 2020, $12.8 billion, or 42 percent, and $13.8 billion, or 40 percent, were in first-lien positions. At June 30, 2021, 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 $5.1 billion, or 17 percent of our total home equity portfolio.

Unused HELOCs totaled $41.0 billion and $42.3 billion at June 30, 2021 and December 31, 2020. The HELOC utilization rate was 41 percent and 43 percent at June 30, 2021 and December 31, 2020.

Table 21 presents certain home equity portfolio key credit statistics.



Table 21	Home Equity – Key Credit Statistics (1)




(Dollars in millions)							June 30 2021			December 31 2020
Outstandings							$	30,469		$	34,311
Accruing past due 30 days or more (2)				167		186
Nonperforming loans (2, 3)							651			649
Percent of portfolio
Refreshed CLTV greater than 90 but less than or equal to 100		1	%	1	%
Refreshed CLTV greater than 100				1		1
Refreshed FICO below 620							3			3
2006 and 2007 vintages (4)						16			16

(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 pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

(2)Accruing past due 30 days or more include $21 million and $25 million and nonperforming loans include $90 million and $88 million of loans where we serviced the underlying first lien at June 30, 2021 and December 31, 2020.

(3)Includes loans that are contractually current which 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.

(4)These vintages of loans accounted for 35 percent and 36 percent of nonperforming home equity loans at June 30, 2021 and December 31, 2020.

Nonperforming outstanding balances in the home equity portfolio remained relatively unchanged at $651 million at June 30, 2021. Of the nonperforming home equity loans at June 30, 2021, $264 million, or 41 percent were current on contractual payments. In addition, $246 million, or 38 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 $19 million during the six months ended June 30, 2021.

Net recoveries increased $10 million to $24 million and $34 million to $59 million for the three and six months ended June 30, 2021 compared to the same periods in 2020. The increase was driven by favorable portfolio trends due partly to improvement in home prices.

Of the $30.5 billion in total home equity portfolio outstandings at June 30, 2021, as shown in Table 21, 15 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 $8.0 billion at June 30, 2021. 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 June 30, 2021, $107 million, or one percent, of outstanding HELOCs that had entered the amortization period were accruing past due 30 days or more. In addition, at June 30, 2021, $473 million, or six 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 June 30, 2021, 19 percent of these customers with an outstanding balance did not pay any principal on their HELOCs.

Table 22 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 June 30, 2021 and December 31, 2020. The Los Angeles-Long Beach-Santa Ana MSA within California made up 11 percent of the outstanding home equity portfolio at both June 30, 2021 and December 31, 2020.


						Bank of America 32



Table 22	Home Equity State Concentrations

		Outstandings (1)				Nonperforming (1)				Net Charge-offs


		June 30 2021		December 31 2020		June 30 2021		December 31 2020		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)										2021		2020		2021		2020
California		$	8,334	$	9,488	$	145	$	143	$	(10)	$	(4)	$	(22)	$	(9)
Florida		3,295		3,715		81		80		(5)		(2)		(11)		(5)
New Jersey		2,470		2,749		70		67		—		(1)		(2)		(1)
New York		2,263		2,495		100		103		2		—		(1)		1
Massachusetts		1,532		1,719		30		32		(1)		—		—		1
Other		12,575		14,145		225		224		(10)		(7)		(23)		(12)
Total home equity loan portfolio		$	30,469	$	34,311	$	651	$	649	$	(24)	$	(14)	$	(59)	$	(25)

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

Credit Card

At June 30, 2021, 97 percent of the credit card portfolio was managed in Consumer Banking with the remainder in GWIM. Outstandings in the credit card portfolio decreased $3.1 billion during the six months ended June 30, 2021 to $75.6 billion as increased payments more than offset higher purchase volumes as spending continued to recover. Net charge-offs decreased $177 million to $488 million and $313 million to $1.1 billion during the three and six months ended June 30, 2021 compared to the same periods in 2020 due to balance declines and the impact of government stimulus measures, partially offset by charge-offs of certain loans with deferrals that expired

in 2020. Credit card loans 30 days or more past due and still accruing interest decreased $713 million, and loans 90 days or more past due and still accruing interest decreased $370 million primarily due to charge-offs of certain loans with deferrals that expired in 2020 and the impact of government stimulus measures.

Unused lines of credit for credit card increased to $351.1 billion at June 30, 2021 from $342.4 billion at December 31, 2020.

Table 23 presents certain state concentrations for the credit card portfolio.



Table 23	Credit Card State Concentrations

		Outstandings				Accruing Past Due 90 Days or More (1)				Net Charge-offs


		June 30 2021		December 31 2020		June 30 2021		December 31 2020		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)										2021		2020		2021		2020
California		$	12,055	$	12,543	$	98	$	166	$	94	$	119	$	213	$	255
Florida		7,321		7,666		78		135		68		85		159		186
Texas		6,327		6,499		52		87		44		56		102		121
New York		4,388		4,654		39		76		38		51		92		111
Washington		3,753		3,685		13		21		10		17		25		35
Other		41,755		43,661		253		418		234		337		531		727
Total credit card portfolio		$	75,599	$	78,708	$	533	$	903	$	488	$	665	$	1,122	$	1,435

(1)For information on our interest accrual policies and delinquency status for loan modifications related to the pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

Direct/Indirect Consumer

At June 30, 2021, 48 percent of the direct/indirect portfolio was included in Consumer Banking (consumer auto and recreational vehicle lending) and 52 percent was included in GWIM (principally securities-based lending loans). Outstandings in the direct/indirect portfolio increased by $5.5 billion during

the six months ended June 30, 2021 to $96.9 billion driven by client demand for liquidity and high asset values in the securities-based lending portfolio.

Table 24 presents certain state concentrations for the direct/indirect consumer loan portfolio.



Table 24	Direct/Indirect State Concentrations

		Outstandings				Accruing Past Due 90 Days or More (1)				Net Charge-offs


		June 30 2021		December 31 2020		June 30 2021		December 31 2020		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)										2021		2020		2021		2020

California		$	13,402	$	12,248	$	3	$	6	$	(2)	$	5	$	5	$	11
Florida		12,009		10,891		2		4		(1)		4		2		11
Texas		9,199		8,981		2		6		1		3		6		9
New York		7,668		6,609		—		2		—		2		3		4
New Jersey		3,841		3,572		—		—		(1)		1		(1)		1
Other		50,784		49,062		8		15		(6)		11		7		30
Total direct/indirect loan portfolio		$	96,903	$	91,363	$	15	$	33	$	(9)	$	26	$	22	$	66


33 Bank of America

Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity

Table 25 presents nonperforming consumer loans, leases and foreclosed properties activity for the three and six months ended June 30, 2021 and 2020. During the six months ended June 30, 2021, nonperforming consumer loans increased $319 million to $3.0 billion primarily driven by consumer real estate deferral activity.

At June 30, 2021, $823 million, or 27 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 June 30, 2021, $1.6 billion, or 51

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 $30 million during the six months ended June 30, 2021 to $93 million as the Corporation has continued to pause formal loan foreclosure proceedings and foreclosure sales for occupied properties during 2021.

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 25.



Table 25	Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)		2021			2020			2021		2020
Nonperforming loans and leases, beginning of period		$	3,091		$	2,204		$	2,725	$	2,053
Additions		431			354			1,282		831
Reductions:
Paydowns and payoffs		(160)			(84)			(283)		(190)
Sales		(1)			(25)			(2)		(31)
Returns to performing status (1)		(291)			(233)			(638)		(398)
Charge-offs		(25)			(22)			(37)		(49)
Transfers to foreclosed properties		(1)			(3)			(3)		(25)

Total net additions/(reductions) to nonperforming loans and leases		(47)			(13)			319		138
Total nonperforming loans and leases, June 30		3,044			2,191			3,044		2,191
Foreclosed properties, June 30 (2)		93			169			93		169
Nonperforming consumer loans, leases and foreclosed properties, June 30		$	3,137		$	2,360		$	3,137	$	2,360
Nonperforming consumer loans and leases as a percentage of outstanding consumer loans and leases (3)		0.73		%	0.49		%
Nonperforming consumer loans, leases and foreclosed properties as a percentage of outstanding consumer loans, leases and foreclosed properties (3)		0.75			0.52

(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 $66 million and $124 million at June 30, 2021 and 2020.

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

Table 26 presents TDRs for the consumer real estate portfolio. Performing TDR balances are excluded from nonperforming loans and leases in Table 25.



Table 26	Consumer Real Estate Troubled Debt Restructurings

		June 30, 2021						December 31, 2020
(Dollars in millions)		Nonperforming		Performing		Total		Nonperforming		Performing		Total
Residential mortgage (1, 2)		$	1,548	$	2,585	$	4,133	$	1,195	$	2,899	$	4,094
Home equity (3)		268		743		1,011		248		836		1,084
Total consumer real estate troubled debt restructurings		$	1,816	$	3,328	$	5,144	$	1,443	$	3,735	$	5,178

(1)At June 30, 2021 and December 31, 2020, residential mortgage TDRs deemed collateral dependent totaled $1.7 billion and $1.4 billion, and included $1.4 billion and $1.0 billion of loans classified as nonperforming and $315 million and $361 million of loans classified as performing.

(2)At June 30, 2021 and December 31, 2020, residential mortgage performing TDRs include $1.4 billion and $1.5 billion of loans that were fully-insured.

(3)At June 30, 2021 and December 31, 2020, home equity TDRs deemed collateral dependent totaled $405 million and $407 million, and include $234 million and $216 million of loans classified as nonperforming and $171 million and $191 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.

Modifications of credit card and other consumer loans are made through programs utilizing direct customer contact, but may also utilize external programs. At June 30, 2021 and December 31, 2020, our credit card and other consumer TDR portfolio was $673 million and $701 million, of which $600 million and $614 million were current or less than 30 days past due under the modified terms.


						Bank of America 34

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 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 31, 34 and 37 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 Table 34 and Commercial Portfolio Credit Risk Management – Industry Concentrations on page 38.

For more information on our accounting policies regarding delinquencies, nonperforming status, net charge-offs and TDRs for the commercial portfolio as well as interest accrual policies and delinquency status for loan modifications related to the pandemic, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

Commercial Credit Portfolio

During the six months ended June 30, 2021, commercial asset quality improved as the economic recovery gained momentum amid COVID-19 containment and vaccination progress. Accordingly, charge-offs, nonperforming commercial loans and reservable criticized utilized exposure declined during this period. Outstanding commercial loans and leases increased $1.7 billion during the six months ended June 30, 2021 due to growth in commercial and industrial, primarily in Global Markets with most of the increase in investment grade exposures. This increase was largely offset by lower U.S. small business

commercial loans due to PPP forgiveness. For more information on PPP loans, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

Credit quality of commercial real estate borrowers has begun to stabilize in many sectors as economies have reopened. However, certain sectors, including hospitality and retail, while showing signs of improvement, continue to be negatively impacted due to the pandemic. Moreover, many real estate markets, while improving, are still experiencing some disruptions in demand, supply chain challenges and tenant difficulties.

The commercial allowance for loan and lease losses decreased $2.1 billion during the six months ended June 30, 2021 to $6.7 billion primarily driven by an improved macroeconomic outlook. For more information, see Allowance for Credit Losses on page 41.

Total commercial utilized credit exposure decreased $7.3 billion during the six months ended June 30, 2021 to $613.0 billion primarily driven by lower derivative assets. The utilization rate for loans and leases, standby letters of credit (SBLCs) and financial guarantees, and commercial letters of credit, in the aggregate, was 55 percent at June 30, 2021 and 57 percent at December 31, 2020.

Table 27 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 27	Commercial Credit Exposure by Type

		Commercial Utilized (1)				Commercial Unfunded (2, 3, 4)				Total Commercial Committed

(Dollars in millions)		June 30 2021		December 31 2020		June 30 2021		December 31 2020		June 30 2021		December 31 2020
Loans and leases		$	500,807	$	499,065	$	433,822	$	404,740	$	934,629	$	903,805
Derivative assets (5)		41,498		47,179		—		—		41,498		47,179
Standby letters of credit and financial guarantees		33,864		34,616		452		538		34,316		35,154
Debt securities and other investments		21,593		22,618		5,506		4,827		27,099		27,445
Loans held-for-sale		6,784		8,378		21,411		9,556		28,195		17,934
Operating leases		6,020		6,424		—		—		6,020		6,424
Commercial letters of credit		1,235		855		742		280		1,977		1,135
Other		1,229		1,168		—		—		1,229		1,168
Total		$	613,030	$	620,303	$	461,933	$	419,941	$	1,074,963	$	1,040,244

(1)Commercial utilized exposure includes loans of $6.3 billion and $5.9 billion and issued letters of credit with a notional amount of $80 million and $89 million accounted for under the fair value option at June 30, 2021 and December 31, 2020.

(2)Commercial unfunded exposure includes commitments accounted for under the fair value option with a notional amount of $5.2 billion and $3.9 billion at June 30, 2021 and December 31, 2020.

(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 $10.9 billion and $10.5 billion at June 30, 2021 and December 31, 2020.

(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 $32.3 billion and $42.5 billion at June 30, 2021 and December 31, 2020. Not reflected in utilized and committed exposure is additional non-cash derivative collateral held of $37.1 billion and $39.3 billion at June 30, 2021 and December 31, 2020, which consists primarily of other marketable securities.


35 Bank of America

Nonperforming commercial loans decreased $364 million and commercial reservable criticized utilized exposure decreased $9.8 billion, which was broad-based across

industries. Table 28 presents our commercial loans and leases portfolio and related credit quality information at June 30, 2021 and December 31, 2020.



Table 28	Commercial Credit Quality

		Outstandings				Nonperforming				Accruing Past Due 90 Days or More

(Dollars in millions)		June 30 2021		December 31 2020		June 30 2021		December 31 2020		June 30 2021		December 31 2020
Commercial and industrial:
U.S. commercial		$	291,120	$	288,728	$	1,060	$	1,243	$	172	$	228
Non-U.S. commercial		98,150		90,460		275		418		19		10
Total commercial and industrial		389,270		379,188		1,335		1,661		191		238
Commercial real estate		59,606		60,364		404		404		—		6
Commercial lease financing		15,768		17,098		81		87		24		25
		464,644		456,650		1,820		2,152		215		269
U.S. small business commercial (1)		29,867		36,469		43		75		69		115
Commercial loans excluding loans accounted for under the fair value option		494,511		493,119		$	1,863	$	2,227	$	284	$	384
Loans accounted for under the fair value option (2)		6,296		5,946
Total commercial loans and leases		$	500,807	$	499,065

(1)Includes card-related products.

(2)Commercial loans accounted for under the fair value option include U.S. commercial of $4.4 billion and $2.9 billion and non-U.S. commercial of $1.9 billion and $3.0 billion at June 30, 2021 and December 31, 2020. For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.

Table 29 presents net charge-offs and related ratios for our commercial loans and leases for the three and six months ended June 30, 2021 and 2020.



Table 29	Commercial Net Charge-offs and Related Ratios

		Net Charge-offs								Net Charge-off Ratios (1)
		Three Months Ended June 30				Six Months Ended June 30				Three Months Ended June 30				Six Months Ended June 30

(Dollars in millions)		2021		2020		2021		2020		2021		2020		2021		2020
Commercial and industrial:
U.S. commercial		$	(31)	$	219	$	(19)	$	382	(0.04)	%	0.26	%	(0.01)	%	0.24	%
Non-U.S. commercial		14		32		40		33		0.06		0.12		0.09		0.06
Total commercial and industrial		(17)		251		21		415		(0.02)		0.22		0.01		0.19
Commercial real estate		17		57		28		63		0.11		0.35		0.09		0.20
Commercial lease financing		—		31		—		36		—		0.66		—		0.38
		—		339		49		514		—		0.25		0.02		0.20
U.S. small business commercial		82		73		163		148		0.98		0.96		0.93		1.29
Total commercial		$	82	$	412	$	212	$	662	0.07		0.29		0.09		0.25

(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.

Table 30 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 decreased $9.8 billion during the six months ended June 30, 2021, which was broad-based across industries. At June 30, 2021 and December 31, 2020, 84 percent and 79 percent of commercial reservable criticized utilized exposure was secured.



Table 30	Commercial Reservable Criticized Utilized Exposure (1, 2)




(Dollars in millions)		June 30, 2021				December 31, 2020
Commercial and industrial:
U.S. commercial		$	14,903	4.66	%	$	21,388	6.83	%
Non-U.S. commercial		3,559		3.44		5,051		5.03
Total commercial and industrial		18,462		4.36		26,439		6.40
Commercial real estate		8,898		14.51		10,213		16.42
Commercial lease financing		733		4.65		714		4.18
		28,093		5.61		37,366		7.59
U.S. small business commercial		785		2.63		1,300		3.56
Total commercial reservable criticized utilized exposure		$	28,878	5.45		$	38,666	7.31

(1)Total commercial reservable criticized utilized exposure includes loans and leases of $27.4 billion and $36.6 billion and commercial letters of credit of $1.5 billion and $2.1 billion at June 30, 2021 and December 31, 2020.

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


						Bank of America 36

Commercial and Industrial

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

U.S. Commercial

At June 30, 2021, 61 percent of the U.S. commercial loan portfolio, excluding small business, was managed in Global Banking, 21 percent in Global Markets, 16 percent in GWIM (loans that provide financing for asset purchases, business investments and other liquidity needs for high net worth clients) and the remainder primarily in Consumer Banking. U.S. commercial loans increased $2.4 billion during the six months ended June 30, 2021 driven by Global Markets. Reservable criticized utilized exposure decreased $6.5 billion, which was broad-based across industries.

Non-U.S. Commercial

At June 30, 2021, 72 percent of the non-U.S. commercial loan portfolio was managed in Global Banking and 28 percent in Global Markets. Non-U.S. commercial loans increased $7.7 billion during the six months ended June 30, 2021 primarily in Global Markets. For information on the non-U.S. commercial portfolio, see Non-U.S. Portfolio on page 40.

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 declined by $758 million during the six months ended June 30, 2021 as paydowns exceeded new originations. The portfolio remains diversified across property types and geographic regions. California represented the largest state concentration at 24 percent and 23 percent of the commercial real estate portfolio at June 30, 2021 and December 31, 2020. 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 and six months ended June 30, 2021 and 2020, we continued to see low default rates and varying degrees of improvement in the portfolio. 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 for 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 31 presents outstanding commercial real estate loans by geographic region, based on the geographic location of the collateral, and by property type.



Table 31	Outstanding Commercial Real Estate Loans


(Dollars in millions)		June 30 2021		December 31 2020
By Geographic Region
California		$	14,178	$	14,028
Northeast		11,949		11,628
Southwest		7,715		8,551
Southeast		6,434		6,588
Florida		4,455		4,294
Illinois		2,675		2,594
Midwest		2,569		3,483
Midsouth		2,367		2,370
Northwest		1,588		1,634
Non-U.S.		3,764		3,187
Other		1,912		2,007
Total outstanding commercial real estate loans		$	59,606	$	60,364
By Property Type
Non-residential
Office		$	17,517	$	17,667
Industrial / Warehouse		8,903		8,330
Multi-family rental		7,649		7,051
Hotels / Motels		6,725		7,226
Shopping centers / Retail		6,624		7,931
Unsecured		2,694		2,336
Multi-use		1,442		1,460

Other		6,643		7,146
Total non-residential		58,197		59,147
Residential		1,409		1,217
Total outstanding commercial real estate loans		$	59,606	$	60,364

U.S. Small Business Commercial

The U.S. small business commercial loan portfolio is comprised of small business card loans and small business loans primarily managed in Consumer Banking, and includes $15.7 billion and $22.7 billion of PPP loans outstanding at June 30, 2021 and December 31, 2020. The decline of $7.0 billion in PPP loans during the six months ended June 30, 2021 was due to repayment of the loans by the Small Business Administration under the terms of the program. Excluding PPP, credit card-related products were 51 percent and 50 percent of the U.S.

small business commercial portfolio at June 30, 2021 and December 31, 2020. Of the U.S. small business commercial net charge-offs, 100 percent and 95 percent were credit card-related products for the three and six months ended June 30, 2021 compared to 95 percent and 92 percent for the same periods in 2020.

Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity

Table 32 presents the nonperforming commercial loans, leases and foreclosed properties activity during the three and six


37 Bank of America

months ended June 30, 2021 and 2020. Nonperforming loans do not include loans accounted for under the fair value option. During the six months ended June 30, 2021, nonperforming commercial loans and leases decreased $364 million to $1.9 billion. At June 30, 2021, 78 percent of commercial nonperforming loans, leases and foreclosed properties were

secured and 59 percent were contractually current. Commercial nonperforming loans were carried at approximately 88 percent of their unpaid principal balance, as the carrying value of these loans has been reduced to the estimated collateral value less costs to sell.



Table 32	Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity (1, 2)

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)		2021			2020			2021		2020
Nonperforming loans and leases, beginning of period		$	2,071		$	1,852		$	2,227	$	1,499
Additions		503			889			975		1,670


Reductions:
Paydowns		(264)			(177)			(576)		(389)
Sales		(77)			(10)			(99)		(26)
Returns to performing status (3)		(59)			(8)			(87)		(24)
Charge-offs		(108)			(344)			(186)		(528)

Transfers to loans held-for-sale		(203)			—			(391)		—
Total net additions (reductions) to nonperforming loans and leases		(208)			350			(364)		703
Total nonperforming loans and leases, June 30		1,863			2,202			1,863		2,202






Foreclosed properties, June 30		31			49			31		49
Nonperforming commercial loans, leases and foreclosed properties, June 30		$	1,894		$	2,251		$	1,894	$	2,251
Nonperforming commercial loans and leases as a percentage of outstanding commercial loans and leases (4)		0.38		%	0.41		%
Nonperforming commercial loans, leases and foreclosed properties as a percentage of outstanding commercial loans, leases and foreclosed properties (4)		0.38			0.42

(1)Balances do not include nonperforming loans held-for-sale of $348 million and $151 million at June 30, 2021 and 2020.

(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 33 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.



Table 33	Commercial Troubled Debt Restructurings

		June 30, 2021						December 31, 2020
(Dollars in millions)		Nonperforming		Performing		Total		Nonperforming		Performing		Total
Commercial and industrial:
U.S. commercial		$	483	$	702	$	1,185	$	509	$	850	$	1,359
Non-U.S. commercial		72		37		109		49		119		168
Total commercial and industrial		555		739		1,294		558		969		1,527
Commercial real estate		121		453		574		137		—		137
Commercial lease financing		37		—		37		42		2		44
		713		1,192		1,905		737		971		1,708
U.S. small business commercial		—		35		35		—		29		29
Total commercial troubled debt restructurings		$	713	$	1,227	$	1,940	$	737	$	1,000	$	1,737

Industry Concentrations

Table 34 presents commercial committed and utilized credit exposure by industry. For information on 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, see Commercial Portfolio Credit Risk Management – Risk Mitigation.

Our commercial credit exposure is diversified across a broad range of industries. Total commercial committed exposure increased $34.7 billion, or three percent, during the six months ended June 30, 2021 to $1.1 trillion. The increase in commercial committed exposure was concentrated in Asset managers and funds, Finance companies, Healthcare equipment and services and Media industry sectors. Increases were partially offset by decreased exposure to the Government and public education and Vehicle dealers industry sectors.

For information on industry limits, see Commercial Portfolio Credit Risk Management – Industry Concentrations in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

Asset managers and funds, our largest industry concentration with committed exposure of $118.6 billion, increased $18.3 billion, or 18 percent, during the six months ended June 30, 2021.

Real estate, our second largest industry concentration with committed exposure of $92.9 billion, increased $1.2 billion, or one percent, during the six months ended June 30, 2021. For more information on the commercial real estate and related portfolios, see Commercial Portfolio Credit Risk Management – Commercial Real Estate on page 37.

Capital goods, our third largest industry concentration with committed exposure of $84.2 billion, increased $3.4 billion, or four percent, during the six months ended June 30, 2021.


						Bank of America 38

Given the widespread impact of the pandemic on the U.S. and global economy, a number of industries have been and may continue to be adversely impacted. We continue to monitor all industries, particularly higher risk industries that are

experiencing or could experience a more significant impact to their financial condition. For more information on the pandemic, see Executive Summary – Recent Developments – COVID-19 Pandemic on page 3.



Table 34	Commercial Credit Exposure by Industry (1)

		Commercial Utilized				Total Commercial Committed (2)

(Dollars in millions)		June 30 2021		December 31 2020		June 30 2021		December 31 2020
Asset managers and funds		$	78,769	$	67,360	$	118,559	$	100,296
Real estate (3)		66,707		68,967		92,913		91,730
Capital goods		38,906		39,807		84,180		80,815
Finance companies		52,314		46,948		78,342		70,004
Healthcare equipment and services		32,112		33,488		62,851		57,540
Materials		23,641		24,516		50,630		50,757
Government and public education		38,295		41,669		50,468		56,212
Retailing		23,388		23,700		48,318		48,306
Consumer services		28,438		31,993		48,055		47,997
Food, beverage and tobacco		22,569		22,755		46,276		44,417
Commercial services and supplies		20,027		21,107		39,836		38,092
Individuals and trusts		28,785		24,727		38,329		34,036
Transportation		21,842		23,126		32,210		33,082
Energy		13,223		13,930		31,830		32,974
Utilities		13,044		12,387		31,777		29,234
Media		12,318		12,632		29,157		24,120
Technology hardware and equipment		9,446		9,935		25,208		24,196
Software and services		8,213		10,853		21,991		22,524
Global commercial banks		20,143		20,544		21,791		22,595
Consumer durables and apparel		8,587		9,232		19,731		20,223
Telecommunication services		8,983		9,411		18,456		15,605
Automobiles and components		9,340		10,792		17,022		20,575
Pharmaceuticals and biotechnology		4,934		4,830		16,099		15,901
Vehicle dealers		10,821		15,028		14,852		18,696
Insurance		5,123		5,772		13,759		13,277
Food and staples retailing		5,354		5,209		10,716		11,795
Religious and social organizations		4,042		4,646		5,828		6,597
Financial markets infrastructure (clearinghouses)		3,666		4,939		5,779		8,648

Total commercial credit exposure by industry		$	613,030	$	620,303	$	1,074,963	$	1,040,244

(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 $10.9 billion and $10.5 billion at June 30, 2021 and December 31, 2020.

(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.

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 June 30, 2021 and December 31, 2020, 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 $3.6 billion and $4.2 billion. For these same positions, we recorded net losses of $32 million and $68 million for the three and six months ended June 30, 2021 compared to net losses of $231 million and $2 million for the same periods in 2020. 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 40. For more information, see Trading Risk Management on page 43.

Tables 35 and 36 present the maturity profiles and the credit exposure debt ratings of the net credit default protection portfolio at June 30, 2021 and December 31, 2020.



Table 35	Net Credit Default Protection by Maturity


		June 30 2021		December 31 2020
Less than or equal to one year		47	%	65	%
Greater than one year and less than or equal to five years		51		34
Greater than five years		2		1
Total net credit default protection		100	%	100	%


39 Bank of America



Table 36	Net Credit Default Protection by Credit Exposure Debt Rating

		Net Notional (1)		Percent of Total		Net Notional (1)		Percent of Total


(Dollars in millions)		June 30, 2021				December 31, 2020
Ratings (2, 3)


A		$	(345)	9.5	%	$	(250)	6.0	%
BBB		(1,329)		36.7		(1,856)		44.5
BB		(1,133)		31.3		(1,363)		32.7
B		(603)		16.7		(465)		11.2
CCC and below		(157)		4.3		(182)		4.4
NR (4)		(52)		1.5		(54)		1.2
Total net credit default protection		$	(3,619)	100.0	%	$	(4,170)	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 2020 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. For more information on our non-U.S. credit and trading portfolios, see Non-U.S. Portfolio in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

Table 37 presents our 20 largest non-U.S. country exposures at June 30, 2021. These exposures accounted for 91 percent and 90 percent of our total non-U.S. exposure at June 30, 2021 and December 31, 2020. Net country exposure for these 20 countries increased $37.9 billion in the six months ended June 30, 2021. The majority of the increase was due to higher deposits with central banks in Japan, Switzerland and Ireland, increased exposure with central clearing counterparts in the U.K. and increased corporate exposure in Canada.



Table 37	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 June 30 2021		Hedges and Credit Default Protection		Net Country Exposure at June 30 2021		Increase (Decrease) from December 31 2020
United Kingdom		$	33,009	$	19,674	$	8,601	$	4,733	$	66,017	$	(1,105)	$	64,912	$	5,440
Germany		27,174		10,533		1,914		2,351		41,972		(1,336)		40,636		(4,267)
Canada		8,804		12,903		1,931		4,140		27,778		(387)		27,391		6,257
Japan		19,776		1,121		1,971		4,847		27,715		(503)		27,212		9,716
France		12,078		9,455		1,149		2,225		24,907		(856)		24,051		3,260
Australia		7,726		4,709		739		2,800		15,974		(281)		15,693		2,606
China		10,895		591		1,233		1,698		14,417		(427)		13,990		570
Switzerland		8,976		3,382		395		320		13,073		(186)		12,887		5,992
Brazil		5,949		786		887		3,980		11,602		(180)		11,422		1,129
Netherlands		5,637		3,857		815		800		11,109		(434)		10,675		991
Singapore		4,154		250		338		4,518		9,260		(62)		9,198		(84)
India		5,559		174		450		2,448		8,631		(163)		8,468		657
Ireland		5,830		2,184		94		260		8,368		(24)		8,344		4,179
South Korea		5,313		873		521		1,655		8,362		(124)		8,238		(313)
Spain		2,648		2,995		277		1,072		6,992		(271)		6,721		1,905
Hong Kong		4,708		235		388		1,161		6,492		(59)		6,433		(104)
Mexico		3,715		1,682		172		802		6,371		(285)		6,086		(201)
Italy		2,508		1,540		544		2,120		6,712		(629)		6,083		391
Belgium		2,725		1,454		299		282		4,760		(204)		4,556		(411)
United Arab Emirates		2,414		116		46		306		2,882		(12)		2,870		183
Total top 20 non-U.S. countries exposure		$	179,598	$	78,514	$	22,764	$	42,518	$	323,394	$	(7,528)	$	315,866	$	37,896

Our largest non-U.S. country exposure at June 30, 2021 was the U.K. with net exposure of $64.9 billion, which represents a $5.4 billion increase from December 31, 2020. Our second largest non-U.S. country exposure was Germany with net exposure of $40.6 billion at June 30, 2021, a $4.3 billion decrease from December 31, 2020.

In light of the 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 likely 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


						Bank of America 40

carefully in impacted regions while supporting the needs of our clients. While vaccines have become more widely available in certain countries, the magnitude and duration of the pandemic and its full impact on the global economy continue to be highly uncertain. The impact of the pandemic could have an adverse impact on the global economy for a prolonged period of time. For more information on the pandemic, see Item 1A. Risk Factors – Coronavirus Disease and Executive Summary – Recent Developments – COVID-19 Pandemic of the Corporation’s 2020 Annual Report on Form 10-K.

Allowance for Credit Losses

The allowance for credit losses decreased by $4.9 billion from December 31, 2020 to $15.8 billion at June 30, 2021, which included a $2.2 billion reserve decrease related to the commercial portfolio and a $2.7 billion reserve decrease related to the consumer portfolio. The decreases were primarily driven by an improved macroeconomic outlook.

Table 38 presents an allocation of the allowance for credit losses by product type for June 30, 2021 and December 31, 2020.



Table 38	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)
(Dollars in millions)		June 30, 2021						December 31, 2020
Allowance for loan and lease losses
Residential mortgage		$	394	2.80	%	0.18	%		$	459	2.44	%	0.21	%
Home equity		203		1.44		0.67			399		2.12		1.16
Credit card		6,234		44.22		8.25			8,420		44.79		10.70

Direct/Indirect consumer		555		3.93		0.57			752		4.00		0.82
Other consumer		46		0.33		n/m			41		0.22		n/m
Total consumer		7,432		52.72		1.78			10,071		53.57		2.35
U.S. commercial (2)		3,529		25.04		1.10			5,043		26.82		1.55
Non-U.S. commercial		1,091		7.74		1.11			1,241		6.60		1.37
Commercial real estate		1,956		13.88		3.28			2,285		12.15		3.79
Commercial lease financing		87		0.62		0.55			162		0.86		0.95
Total commercial		6,663		47.28		1.35			8,731		46.43		1.77
Allowance for loan and lease losses		14,095		100.00	%	1.55			18,802		100.00	%	2.04


Reserve for unfunded lending commitments		1,687							1,878
Allowance for credit losses		$	15,782						$	20,680

(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.

(2)Includes allowance for loan and lease losses for U.S. small business commercial loans of $1.4 billion and $1.5 billion at June 30, 2021 and December 31, 2020.

n/m = not meaningful

Net charge-offs for the three and six months ended June 30, 2021 were $595 million and $1.4 billion compared to $1.1 billion and $2.3 billion for the same periods in 2020 driven by decreases across most products. The provision for credit losses decreased $6.7 billion to a $1.6 billion benefit, and $13.4 billion to a $3.5 billion benefit, for the three and six months ended June 30, 2021 compared to the same periods in 2020. The allowance for credit losses had a reserve release of $4.9 billion for the six months ended June 30, 2021, primarily driven by an improved macroeconomic outlook. The provision for credit losses for the consumer portfolio, including unfunded lending commitments, decreased $3.3 billion to a $707 million benefit and $6.2 billion to a $1.5 billion benefit for the three and six months ended June 30, 2021 compared to the

same periods in 2020. The provision for credit losses for the commercial portfolio, including unfunded lending commitments, decreased $3.4 billion to a $914 million benefit and $7.2 billion to a $2.0 billion benefit for the three and six months ended June 30, 2021 compared to the same periods in 2020.

Table 39 presents a rollforward of the allowance for credit losses, including certain loan and allowance ratios for the three and six months ended June 30, 2021 and 2020. 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 of the Corporation's 2020 Annual Report on Form 10-K and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.


41 Bank of America



Table 39	Allowance for Credit Losses

		Three Months Ended June 30						Six Months Ended June 30
(Dollars in millions)		2021			2020			2021			2020


Allowance for loan and lease losses, January 1		$	16,168		$	15,766		$	18,802		$	12,358
Loans and leases charged off
Residential mortgage		(11)			(12)			(20)			(23)
Home equity		(19)			(15)			(25)			(39)
Credit card		(661)			(818)			(1,461)			(1,742)
Direct/Indirect consumer		(68)			(86)			(170)			(202)
Other consumer		(70)			(81)			(145)			(162)
Total consumer charge-offs		(829)			(1,012)			(1,821)			(2,168)
U.S. commercial (1)		(194)			(324)			(350)			(591)
Non-U.S. commercial		(16)			(33)			(42)			(34)
Commercial real estate		(22)			(57)			(34)			(64)
Commercial lease financing		—			(33)			—			(40)
Total commercial charge-offs		(232)			(447)			(426)			(729)
Total loans and leases charged off		(1,061)			(1,459)			(2,247)			(2,897)
Recoveries of loans and leases previously charged off
Residential mortgage		17			32			30			44
Home equity		43			29			84			64
Credit card		173			153			339			307
Direct/Indirect consumer		77			60			148			136
Other consumer		6			4			14			11
Total consumer recoveries		316			278			615			562
U.S. commercial (2)		143			32			206			61
Non-U.S. commercial		2			1			2			1
Commercial real estate		5			—			6			1
Commercial lease financing		—			2			—			4
Total commercial recoveries		150			35			214			67
Total recoveries of loans and leases previously charged off		466			313			829			629
Net charge-offs		(595)			(1,146)			(1,418)			(2,268)

Provision for loan and lease losses		(1,480)			4,775			(3,291)			9,300
Other		2			(6)			2			(1)


Allowance for loan and lease losses, June 30		14,095			19,389			14,095			19,389


Reserve for unfunded lending commitments, January 1		1,829			1,360			1,878			1,123
Provision for unfunded lending commitments		(141)			342			(190)			578
Other		(1)			—			(1)			1
Reserve for unfunded lending commitments, June 30		1,687			1,702			1,687			1,702
Allowance for credit losses, June 30		$	15,782		$	21,091		$	15,782		$	21,091

Loan and allowance ratios (3):
Loans and leases outstanding at June 30		$	911,978		$	989,768		$	911,978		$	989,768
Allowance for loan and lease losses as a percentage of total loans and leases outstanding at June 30		1.55		%	1.96		%	1.55		%	1.96		%
Consumer allowance for loan and lease losses as a percentage of total consumer loans and leases outstanding at June 30		1.78			2.43			1.78			2.43
Commercial allowance for loan and lease losses as a percentage of total commercial loans and leases outstanding at June 30		1.35			1.57			1.35			1.57
Average loans and leases outstanding		$	900,863		$	1,022,294		$	901,223		$	1,001,972
Annualized net charge-offs as a percentage of average loans and leases outstanding		0.27		%	0.45		%	0.32		%	0.46		%

Allowance for loan and lease losses as a percentage of total nonperforming loans and leases at June 30		287			441			287			441
Ratio of the allowance for loan and lease losses at June 30 to net charge-offs		5.90			4.21			4.93			4.25

Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases at June 30 (4)		$	7,532		$	10,517		$	7,532		$	10,517
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 June 30 (4)		134		%	202		%	134		%	202		%

(1)Includes U.S. small business commercial charge-offs of $102 million and $203 million for the three and six months ended June 30, 2021 compared to $84 million and $170 million for the same periods in 2020.

(2)Includes U.S. small business commercial recoveries of $20 million and $40 million for the three and six months ended June 30, 2021 compared to $11 million and $22 million for the same periods in 2020.

(3)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.

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

Market Risk Management

For more information on our market risk management process, see Market Risk Management in the MD&A of the Corporation’s 2020 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.


						Bank of America 42

We have been affected, and may continue to be affected, by market stress resulting from the pandemic that began in the first quarter of 2020. For more information, see Executive Summary – Recent Developments – COVID-19 Pandemic on page 3 and Item 1A. Risk Factors – Coronavirus Disease of the Corporation’s 2020 Annual Report on Form 10-K.

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 40 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 2020 Annual Report on Form 10-K.

The total market-based portfolio VaR results in Table 40 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 40 presents period-end, average, high and low daily trading VaR for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020 using a 99 percent confidence level, as well as average daily trading VaR for the six months ended June 30, 2021 and 2020. The amounts disclosed in Table 40 and Table 41 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 June 30, 2021 compared to the prior quarter primarily due to an increase in interest rate risk, partially offset by an increased diversification benefit between asset classes.



Table 40	Market Risk VaR for Trading Activities

		Three Months Ended																							Six Months Ended June 30

		June 30, 2021								March 31, 2021								June 30, 2020
(Dollars in millions)		Period End		Average		High (1)		Low (1)		Period End		Average		High (1)		Low (1)		Period End		Average		High (1)		Low (1)			2021 Average				2020 Average
Foreign exchange		$	15	$	16	$	20	$	10	$	13	$	10	$	17	$	5	$	5	$	7	$	11	$		4			$	13			$	7
Interest rate		37		58		80		30		53		35		53		18		17		15		23		7			47				18
Credit		77		73		84		58		58		64		82		53		64		65		91		48			69				50
Equity		23		23		27		20		22		24		35		19		16		24		43		15			24				30
Commodities		9		8		12		4		4		9		28		4		7		7		12		5			9				7
Portfolio diversification		(106)		(119)		—		—		(96)		(90)		—		—		(39)		(60)		—		—			(106)				(59)
Total covered positions portfolio		55		59		73		47		54		52		85		34		70		58		85		28			56				53
Impact from less liquid exposures		23		18		—		—		9		22		—		—		30		23		—		—			20				12
Total covered positions and less liquid trading positions portfolio		78		77		119		52		63		74		125		47		100		81		111		47			76				65
Fair value option loans		50		50		55		42		48		56		64		37		56		67		84		55			53				42
Fair value option hedges		14		16		17		14		15		13		16		11		15		15		17		12			15				13
Fair value option portfolio diversification		(34)		(37)		—		—		(33)		(24)		—		—		(36)		(31)		—		—			(31)				(21)
Total fair value option portfolio		30		29		31		24		30		45		53		30		35		51		86		34			37				34
Portfolio diversification		(14)		(9)		—		—		(19)		(1)		—		—		(16)		(12)		—		—			(5)				(12)
Total market-based portfolio		$	94	$	97	146		64		$	74	$	118	169		62		$	119	$	120	159		76			$	108			$	87

(1)The high and low for each portfolio may have occurred on different trading days than the high and low for the components. Therefore the impact from less liquid exposures and the amount of portfolio diversification, which is the difference between the total portfolio and the sum of the individual components, is not relevant.

The graph below presents the daily covered positions and less liquid trading positions portfolio VaR for the previous five quarters, corresponding to the data in Table 40.

Line graph displaying the daily total covered positions and less liquid trading portfolio VR History for the previous 5 quarters. The X axis represents the date and the Y axis represents the dollars in millions.


43 Bank of America

Additional VaR statistics produced within our single VaR model are provided in Table 41 at the same level of detail as in Table 40. Evaluating VaR with additional statistics allows for an increased understanding of the risks in the portfolio as the historical market data used in the VaR calculation does not

necessarily follow a predefined statistical distribution. Table 41 presents average trading VaR statistics at 99 percent and 95

percent confidence levels for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020.



Table 41	Average Market Risk VaR for Trading Activities – 99 percent and 95 percent VaR Statistics


		Three Months Ended
		June 30, 2021				March 31, 2021				June 30, 2020
(Dollars in millions)		99 percent		95 percent		99 percent		95 percent		99 percent		95 percent
Foreign exchange		$	16	$	9	$	10	$	6	$	7	$	4
Interest rate		58		28		35		17		15		6
Credit		73		21		64		18		65		18
Equity		23		12		24		12		24		12
Commodities		8		4		9		4		7		4
Portfolio diversification		(119)		(44)		(90)		(34)		(60)		(25)
Total covered positions portfolio		59		30		52		23		58		19
Impact from less liquid exposures		18		2		22		3		23		2
Total covered positions and less liquid trading positions portfolio		77		32		74		26		81		21
Fair value option loans		50		11		56		14		67		15
Fair value option hedges		16		9		13		7		15		8
Fair value option portfolio diversification		(37)		(10)		(24)		(6)		(31)		(12)
Total fair value option portfolio		29		10		45		15		51		11
Portfolio diversification		(9)		(6)		(1)		(8)		(12)		(7)
Total market-based portfolio		$	97	$	36	$	118	$	33	$	120	$	25

Backtesting

The accuracy of the VaR methodology is evaluated by backtesting, which compares the daily VaR results, utilizing a one-day holding period, against a comparable subset of trading revenue. For more information on our backtesting process, see Trading Risk Management – Backtesting in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

During the three and six months ended June 30, 2021, there were no days where this subset of trading revenue had losses that exceeded our total covered portfolio VaR, utilizing a one-day holding period.

Total Trading-related Revenue

Total trading-related revenue, excluding brokerage fees, and CVA, DVA and funding valuation adjustment gains (losses), represents the total amount earned from trading positions, including market-based net interest income, which are taken in a diverse range of financial instruments and markets. For more information, see Trading Risk Management – Total Trading-related Revenue in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

The following histogram is a graphic depiction of trading volatility and illustrates the daily level of trading-related revenue for the three months ended June 30, 2021 compared to the three months ended March 31, 2021. During the three months ended June 30, 2021, positive trading-related revenue was recorded for 100 percent of the trading days, of which 77 percent were daily trading gains of over $25 million. This

compares to the three months ended March 31, 2021 where positive trading-related revenue was recorded for 98 percent of the trading days, of which 94 percent were daily trading gains of over $25 million.

Histogram that is a graphic depiction of trading volatility and illustrates the daily level of trading-related revenue for the three months ended June 30, 2021 compared to the three months ended March 31, 2021

Trading Portfolio Stress Testing

Because the very nature of a VaR model suggests results can exceed our estimates and it is dependent on a limited historical window, we also stress test our portfolio using scenario analysis. This analysis estimates the change in the value of our trading portfolio that may result from abnormal market movements. For more information, see Trading Risk Management – Trading Portfolio Stress Testing in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.


						Bank of America 44

Interest Rate Risk Management for the Banking Book

The following discussion presents net interest income for banking book activities. For more information, see Interest Rate Risk Management for the Banking Book in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

Table 42 presents the spot and 12-month forward rates used in our baseline forecasts at June 30, 2021 and December 31, 2020.



Table 42	Forward Rates

		June 30, 2021
		Federal Funds		Three-month LIBOR		10-Year Swap
Spot rates		0.25	%	0.15	%	1.44	%
12-month forward rates		0.25		0.27		1.65

		December 31, 2020
Spot rates		0.25	%	0.24	%	0.93	%
12-month forward rates		0.25		0.19		1.06

Table 43 shows the pretax impact to forecasted net interest income over the next 12 months from June 30, 2021 and December 31, 2020 resulting from instantaneous parallel and non-parallel shocks to the market-based forward curve. Periodically we evaluate the scenarios presented so that they are meaningful in the context of the current rate environment. The interest rate scenarios also assume U.S. dollar rates are floored at zero.

During the six months ended June 30, 2021, the decrease in asset sensitivity of our balance sheet to Up-rate and Down-rate scenarios was primarily due to ALM activity and an increase in long-end rates. We continue to be asset sensitive to a parallel upward move in interest rates with the majority of that impact coming from the short end of the yield curve. Additionally, higher interest rates impact the fair value of debt securities and, accordingly, for debt securities classified as AFS, may adversely affect accumulated OCI and thus capital levels under the Basel 3 capital rules. Under instantaneous upward parallel shifts, the near-term adverse impact to Basel 3 capital is reduced over time by offsetting positive impacts to net interest income. For more information on Basel 3, see Capital Management – Regulatory Capital on page 22.



Table 43	Estimated Banking Book Net Interest Income Sensitivity to Curve Changes

		Short Rate (bps)	Long Rate (bps)

(Dollars in millions)				June 30 2021		December 31 2020

Parallel Shifts
+100 bps instantaneous shift		+100	+100	$	8,035	$	10,468
-25 bps instantaneous shift		-25	-25	(2,255)		(2,766)
Flatteners
Short-end instantaneous change		+100	—	5,556		6,321
Long-end instantaneous change		—	-25	(1,219)		(1,686)
Steepeners
Short-end instantaneous change		-25	—	(1,014)		(1,084)
Long-end instantaneous change		—	+100	2,651		4,333

The sensitivity analysis in Table 43 assumes that we take no action in response to these rate shocks and does not assume any change in other macroeconomic variables normally correlated with changes in interest rates. As part of our ALM activities, we use securities, certain residential mortgages, and interest rate and foreign exchange derivatives in managing interest rate sensitivity.

The behavior of our deposits portfolio in the baseline forecast and in alternate interest rate scenarios is a key assumption in our projected estimates of net interest income. The sensitivity analysis in Table 43 assumes no change in deposit portfolio size or mix from the baseline forecast in alternate rate environments. In higher rate scenarios, any customer activity resulting in the replacement of low-cost or non-interest-bearing deposits with higher yielding deposits or market-based funding would reduce our benefit in those scenarios.

Interest Rate and Foreign Exchange Derivative Contracts

We use interest rate and foreign exchange derivative contracts in our ALM activities to manage our interest rate and foreign exchange risks. Specifically, we use those derivatives to manage both the variability in cash flows and changes in fair value of various assets and liabilities arising from those risks. Our interest rate derivative contracts are generally non-leveraged swaps tied to various benchmark interest rates and foreign exchange basis swaps, options, futures and forwards, and our foreign exchange contracts include cross-currency interest rate swaps, foreign currency futures contracts, foreign currency forward contracts and options.

The derivatives used in our ALM activities can be split into two broad categories: designated accounting hedges and other risk management derivatives. Designated accounting hedges are primarily used to manage our exposure to interest rates as described in the Interest Rate Risk Management for the Banking Book section and are included in the sensitivities presented in Table 43. The Corporation also uses foreign currency derivatives in accounting hedges to manage substantially all of the foreign exchange risk of our foreign operations. By hedging the foreign exchange risk of our foreign operations, the Corporation's market risk exposure in this area is insignificant.

Risk management derivatives are predominantly used to hedge foreign exchange risks related to various foreign currency-denominated assets and liabilities and eliminate substantially all foreign currency exposures in the cash flows of the Corporation’s non-trading foreign currency-denominated financial instruments. These foreign exchange derivatives are sensitive to other market risk exposures such as cross-currency basis spreads and interest rate risk. However, as these features are not a significant component of these foreign exchange derivatives, the market risk related to this exposure is insignificant. For more information on the accounting for derivatives, see Note 3 – Derivatives to the Consolidated Financial Statements.

Mortgage Banking Risk Management

We originate, fund and service mortgage loans, which subject us to credit, liquidity and interest rate risks, among others. We determine whether loans will be held for investment or held for sale at the time of commitment and manage credit and liquidity risks by selling or securitizing a portion of the loans we originate.


45 Bank of America

Changes in interest rates impact the value of interest rate lock commitments (IRLCs) and the related residential first mortgage loans held-for-sale (LHFS), as well as the value of the MSRs. Because the interest rate risks of these hedged items offset, we combine them into one overall hedged item with one combined economic hedge portfolio consisting of derivative contracts and securities. For more information on IRLCs and the related residential mortgage LHFS, see Mortgage Banking Risk Management in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K.

During the three and six months ended June 30, 2021, we recorded gains of $9 million and $22 million related to the change in fair value of the MSRs, IRLCs and LHFS, net of gains and losses on the hedge portfolio, compared to gains of $65 million and $228 million for the same periods in 2020. For more information on MSRs, see Note 14 – Fair Value Measurements to the Consolidated Financial Statements.

Climate Risk Management

Climate-related risks are divided into two major categories: (1) risks related to the transition to a low-carbon economy, and (2) risks related to the physical impacts of climate change. The financial impacts of transition risk can lead to and amplify credit risk. Physical risk can also lead to increased credit risk by diminishing borrowers’ repayment capacity or collateral values. As climate risk is interconnected with all key risk types, we have developed and continue to enhance processes to embed climate risk considerations into our Risk Framework and risk management programs established for strategic, credit, market, liquidity, compliance, operational and reputational risks. For more information on our governance framework and climate risk management process, see the Managing Risk and the Climate Risk Management sections in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K. For additional information on climate risk, see Item 1A. Risk Factors – Other of the Corporation’s 2020 Annual Report on Form 10-K.

Complex Accounting Estimates

Our significant accounting principles are essential in understanding the MD&A. Many of our significant accounting principles require complex judgments to estimate the values of assets and liabilities. We have procedures and processes in place to facilitate making these judgments. For more

information, see Complex Accounting Estimates in the MD&A of the Corporation’s 2020 Annual Report on Form 10-K and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K.

Goodwill and Intangible Assets

The nature of and accounting for goodwill and intangible assets are discussed in Note 7 – Goodwill and Intangible Assets to the Consolidated Financial Statements herein and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2020 Annual Report on Form 10-K. Table 44 presents goodwill recorded on our consolidated balance sheet as of the periods presented.



Table 44	Goodwill by Reporting Unit


(Dollars in millions)		June 30 2021		December 31 2020
Consumer Banking
Consumer Lending		$	11,723	$	11,709
Deposits		18,414		18,414
Global Wealth and Investment Management
Private Bank		2,918		2,918
Merrill Lynch Global Wealth Management		6,759		6,759
Global Banking
Global Commercial Banking		16,204		16,146
Global Corporate and Investment Banking (1)		6,277		6,277
Business Banking		1,546		1,546
Global Markets		5,182		5,182


Total		$	69,023	$	68,951

(1) Prior period has been revised to conform to current-period presentation.

We completed our annual goodwill impairment test as of June 30, 2021 by using a qualitative assessment to determine whether it is more likely than not that the fair value of each reporting unit is less than its respective carrying value. Factors considered in the qualitative assessment include, among other things, macroeconomic conditions, industry and market considerations, financial performance of the respective reporting unit and other relevant entity- and reporting-unit specific considerations. Based on our qualitative assessment, we have concluded that it was not “more likely than not” that the reporting units’ fair values were less than their carrying values.


						Bank of America 46

Non-GAAP Reconciliations

Table 45 provides reconciliations of certain non-GAAP financial measures to the most closely related GAAP financial measures.



Table 45	Period-end and Average Supplemental Financial Data and Reconciliations to GAAP Financial Measures (1)

		Period-end				Average

		June 30 2021		December 31 2020		Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)						2021		2020		2021		2020













































Shareholders’ equity		$	277,119	$	272,924	$	274,632	$	266,316	$	274,341	$	265,425
Goodwill		(69,023)		(68,951)		(69,023)		(68,951)		(68,987)		(68,951)
Intangible assets (excluding MSRs)		(2,192)		(2,151)		(2,212)		(1,640)		(2,179)		(1,648)
Related deferred tax liabilities		915		920		915		790		917		759
Tangible shareholders’ equity		$	206,819	$	202,742	$	204,312	$	196,515	$	204,092	$	195,585
Preferred stock		(23,441)		(24,510)		(23,684)		(23,427)		(24,039)		(23,442)
Tangible common shareholders’ equity		$	183,378	$	178,232	$	180,628	$	173,088	$	180,053	$	172,143

Total assets		$	3,029,894	$	2,819,627
Goodwill		(69,023)		(68,951)
Intangible assets (excluding MSRs)		(2,192)		(2,151)
Related deferred tax liabilities		915		920
Tangible assets		$	2,959,594	$	2,749,445

(1)For more information on non-GAAP financial measures and ratios we use in assessing the results of the Corporation, see Supplemental Financial Data on page 7.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

See Market Risk Management on page 42 in the MD&A and the sections referenced therein for Quantitative and Qualitative Disclosures about Market Risk.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, the Corporation’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness and design of the Corporation’s disclosure controls and procedures (as that term is defined in Rule 13a-15(e) of the Exchange Act). Based upon that evaluation, the Corporation’s Chief Executive Officer and Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures were effective, as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Corporation’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the three months ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.


47 Bank of America

Part I. Financial Information

Item 1. Financial Statements

Bank of America Corporation and Subsidiaries



Consolidated Statement of Income

	Three Months Ended June 30				Six Months Ended June 30
(In millions, except per share information)	2021		2020		2021		2020
Net interest income
Interest income	$	11,387	$	12,540	$	22,782	$	28,638
Interest expense	1,154		1,692		2,352		5,660
Net interest income	10,233		10,848		20,430		22,978

Noninterest income
Fees and commissions	9,705		8,392		19,241		16,713
Market making and similar activities	1,826		2,487		5,355		5,294
Other income	(298)		599		(739)		108
Total noninterest income	11,233		11,478		23,857		22,115
Total revenue, net of interest expense	21,466		22,326		44,287		45,093

Provision for credit losses	(1,621)		5,117		(3,481)		9,878

Noninterest expense
Compensation and benefits	8,653		7,994		18,389		16,335
Occupancy and equipment	1,759		1,802		3,589		3,504
Information processing and communications	1,448		1,265		2,873		2,474
Product delivery and transaction related	976		811		1,953		1,588
Marketing	810		492		1,181		930
Professional fees	426		381		829		756
Other general operating	973		665		1,746		1,298


Total noninterest expense	15,045		13,410		30,560		26,885
Income before income taxes	8,042		3,799		17,208		8,330
Income tax expense	(1,182)		266		(66)		787
Net income	$	9,224	$	3,533	$	17,274	$	7,543
Preferred stock dividends	260		249		750		718
Net income applicable to common shareholders	$	8,964	$	3,284	$	16,524	$	6,825

Per common share information
Earnings	$	1.04	$	0.38	$	1.91	$	0.78
Diluted earnings	1.03		0.37		1.90		0.77

Average common shares issued and outstanding	8,620.8		8,739.9		8,660.4		8,777.6
Average diluted common shares issued and outstanding	8,735.5		8,768.1		8,776.2		8,813.3



Consolidated Statement of Comprehensive Income

	Three Months Ended June 30				Six Months Ended June 30
(Dollars in millions)	2021		2020		2021		2020
Net income	$	9,224	$	3,533	$	17,274	$	7,543
Other comprehensive income (loss), net-of-tax:
Net change in debt securities	(250)		(102)		(1,090)		4,693
Net change in debit valuation adjustments	149		(1,293)		265		53
Net change in derivatives	415		315		(699)		732
Employee benefit plan adjustments	69		57		120		100
Net change in foreign currency translation adjustments	26		(19)		(3)		(107)
Other comprehensive income (loss)	409		(1,042)		(1,407)		5,471
Comprehensive income	$	9,633	$	2,491	$	15,867	$	13,014

See accompanying Notes to Consolidated Financial Statements.


						Bank of America 48

Bank of America Corporation and Subsidiaries



Consolidated Balance Sheet


		June 30		December 31
(Dollars in millions)		2021		2020
Assets
Cash and due from banks		$	30,327	$	36,430
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		229,703		344,033
Cash and cash equivalents		260,030		380,463
Time deposits placed and other short-term investments		7,356		6,546
Federal funds sold and securities borrowed or purchased under agreements to resell (includes $163,344 and $108,856 measured at fair value)		268,594		304,058
Trading account assets (includes $114,268 and $91,510 pledged as collateral)		291,733		198,854
Derivative assets		41,498		47,179
Debt securities:
Carried at fair value		288,913		246,601
Held-to-maturity, at cost (fair value – $650,025 and $448,180)		651,401		438,249
Total debt securities		940,314		684,850
Loans and leases (includes $6,950 and $6,681 measured at fair value)		918,928		927,861
Allowance for loan and lease losses		(14,095)		(18,802)
Loans and leases, net of allowance		904,833		909,059
Premises and equipment, net		10,747		11,000
Goodwill		69,023		68,951
Loans held-for-sale (includes $2,207 and $1,585 measured at fair value)		8,277		9,243
Customer and other receivables		67,967		64,221
Other assets (includes $14,928 and $15,718 measured at fair value)		159,522		135,203
Total assets		$	3,029,894	$	2,819,627

Liabilities
Deposits in U.S. offices:
Noninterest-bearing		$	719,481	$	650,674
Interest-bearing (includes $515 and $481 measured at fair value)		1,076,355		1,038,341
Deposits in non-U.S. offices:
Noninterest-bearing		25,190		17,698
Interest-bearing		88,116		88,767
Total deposits		1,909,142		1,795,480
Federal funds purchased and securities loaned or sold under agreements to repurchase (includes $165,781 and $135,391 measured at fair value)		213,787		170,323
Trading account liabilities		110,084		71,320
Derivative liabilities		38,916		45,526
Short-term borrowings (includes $4,490 and $5,874 measured at fair value)		21,635		19,321
Accrued expenses and other liabilities (includes $15,174 and $16,311 measured at fair value and $1,687 and $1,878 of reserve for unfunded lending commitments)		184,607		181,799
Long-term debt (includes $30,361 and $32,200 measured at fair value)		274,604		262,934
Total liabilities		2,752,775		2,546,703
Commitments and contingencies (Note 6 – Securitizations and Other Variable Interest Entities and Note 10 – Commitments and Contingencies)
Shareholders’ equity
Preferred stock, $0.01 par value; authorized – 100,000,000 shares; issued and outstanding – 3,887,686 and 3,931,440 shares		23,441		24,510
Common stock and additional paid-in capital, $0.01 par value; authorized – 12,800,000,000 shares; issued and outstanding – 8,487,151,465 and 8,650,814,105 shares		79,242		85,982
Retained earnings		177,499		164,088
Accumulated other comprehensive income (loss)		(3,063)		(1,656)

Total shareholders’ equity		277,119		272,924
Total liabilities and shareholders’ equity		$	3,029,894	$	2,819,627

	Assets of consolidated variable interest entities included in total assets above (isolated to settle the liabilities of the variable interest entities)
	Trading account assets	$	4,418	$	5,225


	Loans and leases	16,970		23,636
	Allowance for loan and lease losses	(1,047)		(1,693)
	Loans and leases, net of allowance	15,923		21,943

	All other assets	1,134		1,387
	Total assets of consolidated variable interest entities	$	21,475	$	28,555
	Liabilities of consolidated variable interest entities included in total liabilities above
	Short-term borrowings (includes $37 and $22 of non-recourse short-term borrowings)	$	324	$	454
	Long-term debt (includes $5,137 and $7,053 of non-recourse debt)	5,137		7,053
	All other liabilities (includes $15 and $16 of non-recourse liabilities)	15		16
	Total liabilities of consolidated variable interest entities	$	5,476	$	7,523

See accompanying Notes to Consolidated Financial Statements.


49 Bank of America

Bank of America Corporation and Subsidiaries



Consolidated Statement of Changes in Shareholders’ Equity

	Preferred Stock		Common Stock and Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
(In millions)			Shares	Amount
Balance, March 31, 2021	$	24,319	8,589.7	$	83,071	$	170,082	$	(3,472)	$	274,000


Net income						9,224				9,224
Net change in debt securities								(250)		(250)
Net change in debit valuation adjustments								149		149
Net change in derivatives								415		415
Employee benefit plan adjustments								69		69
Net change in foreign currency translation adjustments								26		26
Dividends declared:
Common						(1,547)				(1,547)
Preferred						(260)				(260)

Redemption of preferred stock	(878)									(878)
Common stock issued under employee plans, net, and other			0.2	380						380
Common stock repurchased			(102.7)	(4,209)						(4,209)
Balance, June 30, 2021	$	23,441	8,487.2	$	79,242	$	177,499	$	(3,063)	$	277,119
Balance, December 31, 2020	$	24,510	8,650.8	$	85,982	$	164,088	$	(1,656)	$	272,924

Net income						17,274				17,274
Net change in debt securities								(1,090)		(1,090)
Net change in debit valuation adjustments								265		265
Net change in derivatives								(699)		(699)
Employee benefit plan adjustments								120		120
Net change in foreign currency translation adjustments								(3)		(3)
Dividends declared:
Common						(3,110)				(3,110)
Preferred						(750)				(750)
Issuance of preferred stock	902									902
Redemption of preferred stock	(1,971)									(1,971)

Common stock issued under employee plans, net, and other			40.1	939		(

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

FORM 10-Q

INDEX

Part I. Financial Information

Item 1. Financial Statements

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Item 4. Controls and Procedures

Part II. Other Information

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 6. Exhibits

Signature

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

Interest Rate Risk Management for the Banking Book

Mortgage Banking Risk Management

Climate Risk Management

Complex Accounting Estimates

Non-GAAP Reconciliations

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Item 4. Controls and Procedures

Item 1. Financial Statements

Consolidated Statement of Income

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Statement of Changes in Shareholders’ Equity