May 1, 2023 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2023

☐ 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
Depositary Shares, each representing a 1/1,000th interest in a share of	BAC PrQ	New York Stock Exchange
4.250% Non-Cumulative Preferred Stock, Series QQ
Depositary Shares, each representing a 1/1,000th interest in a share	BAC PrS	New York Stock Exchange
of 4.750% Non-Cumulative Preferred Stock, Series SS

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

Yes ☑ No ☐

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

Yes ☑ No ☐

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

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company ☐

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

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

Yes ☐ No ☑

On April 28, 2023, there were 7,969,152,819 shares of Bank of America Corporation Common Stock outstanding.

Bank of America Corporation and Subsidiaries

March 31, 2023

Form 10-Q

INDEX

Part I. Financial Information


Item 1. Financial Statements						Page
Consolidated Statement of Income						44
Consolidated Statement of Comprehensive Income						44
Consolidated Balance Sheet						45
Consolidated Statement of Changes in Shareholders’ Equity						46
Consolidated Statement of Cash Flows						47
Notes to Consolidated Financial Statements						48
Note 1 – Summary of Significant Accounting Principles						48
Note 2 – Net Interest Income and Noninterest Income						49
Note 3 – Derivatives						50
Note 4 – Securities						57
Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses						60

Note 6 – Securitizations and Other Variable Interest Entities						71
Note 7 – Goodwill and Intangible Assets						75
Note 8 – Leases						75
Note 9 – Securities Financing Agreements, Collateral and Restricted Cash						76
Note 10 – Commitments and Contingencies						78
Note 11 – Shareholders’ Equity						80
Note 12 – Accumulated Other Comprehensive Income (Loss)						81
Note 13 – Earnings Per Common Share						82

Note 14 – Fair Value Measurements						82
Note 15 – Fair Value Option						88
Note 16 – Fair Value of Financial Instruments						89
Note 17 – Business Segment Information						90
Glossary						93
Acronyms						95



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

Supplemental Financial Data						6
Business Segment Operations						9
Consumer Banking						9
Global Wealth & Investment Management						11
Global Banking						13
Global Markets						15

All Other						16
Managing Risk						17

Capital Management						17
Liquidity Risk						21
Credit Risk Management						25
Consumer Portfolio Credit Risk Management						25
Commercial Portfolio Credit Risk Management						29
Non-U.S. Portfolio						35

Allowance for Credit Losses						36
Market Risk Management						38
Trading Risk Management						38
Interest Rate Risk Management for the Banking Book						40
Mortgage Banking Risk Management						41



Climate Risk Management						41
Complex Accounting Estimates						42
Non-GAAP Reconciliations						43

Item 3. Quantitative and Qualitative Disclosures about Market Risk						43
Item 4. Controls and Procedures						43


1 Bank of America

Part II. Other Information


Item 1. Legal Proceedings						96
Item 1A. Risk Factors						96
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						96

Item 6. Exhibits						97
Signature						97

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, liquidity, provision for credit losses, expenses, efficiency ratio, capital measures, strategy, deposits, assets, 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 2022 Annual Report on Form 10-K and in any of the Corporation’s subsequent Securities and Exchange Commission filings: the Corporation’s potential judgments, orders, settlements, 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, such as the processing of unemployment benefits for California and certain other states; 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, inflationary, macroeconomic, banking and regulatory environment on the Corporation’s assets, business, financial condition and results of operations; the impact of adverse developments affecting the U.S. or global banking industry, including bank failures and liquidity concerns, which could cause continued or worsening economic and market volatility, and regulatory responses thereto; 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, including the impact of supply chain disruptions, inflationary pressures and labor shortages on economic conditions and our business; potential losses related to 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 cyberattacks or campaigns; the risks related to the transition and physical


						Bank of America 2

impacts of climate change; our ability to achieve environmental, social and governance goals and commitments or the impact of any changes in the Corporation’s sustainability strategy or commitments generally; 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 or continuation of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic and its impact on 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 (including the Russia/Ukraine conflict, the possible expansion of such conflict and potential geopolitical consequences), 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.

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, “Bank of America,” “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 March 31, 2023, the Corporation had $3.2 trillion in assets and a headcount of approximately 217,000 employees.

As of March 31, 2023, we served clients through operations across the U.S., its territories and more than 35 countries. Our retail banking footprint covers all major markets in the U.S., and we serve approximately 68 million consumer and small business clients with approximately 3,900 retail financial centers, approximately 15,000 ATMs, and leading digital banking platforms (www.bankofamerica.com) with approximately 45 million active users, including approximately 36 million active mobile users. We offer industry-leading support to approximately three million small business households. Our GWIM businesses, with client balances of $3.5 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 our website, including the Investor Relations portion, in addition to our press releases, U.S. Securities and Exchange Commission (SEC) filings, public conference calls and webcasts. Notwithstanding the foregoing, the information contained on our website as referenced in this paragraph is not incorporated by reference into this Quarterly Report on Form 10-Q.

Recent Developments

Capital Management

On April 26, 2023, the Corporation’s Board of Directors (the Board) declared a quarterly common stock dividend of $0.22 per share, payable on June 30, 2023 to shareholders of record as of June 2, 2023.

For more information on our capital resources, see Capital Management on page 17.

Financial Market Events

In March 2023, the global financial system experienced increased volatility due to the failure of certain financial institutions. At March 31, 2023, Bank of America’s direct exposure to these financial institutions was not significant.

To help deploy financial strength and liquidity into the larger banking system, Bank of America and certain other U.S. financial institutions made uninsured deposits totaling $30 billion into First Republic Bank. The amount of Bank of America’s uninsured deposit was $5 billion and is recorded in Time deposits placed and other short-term investments on the Consolidated Balance Sheet.

On May 1, 2023, the Federal Deposit Insurance Corporation (FDIC) announced that it was appointed as receiver of First Republic Bank and entered into a purchase and assumption agreement with JPMorgan Chase Bank, National Association (JPMorgan Chase Bank) to assume all of the deposits and substantially all of the assets of First Republic Bank. As a result, Bank of America has become a depositor of JPMorgan Chase Bank with regard to its $5 billion uninsured deposit originally deposited into First Republic Bank.

The potential impacts of rising interest rates and continued deposit outflows on global markets, financial institutions and macroeconomic conditions, generally, remain uncertain. Episodes of increased economic and market volatility may continue to occur and could worsen if there are additional instances of actual or threatened bank failures, which could adversely affect the Corporation’s businesses, results of operations and financial condition. For more information on the risks related to rising interest rates, declining asset values and liquidity, see the Market, Liquidity and Credit sections within Item 1A. Risk Factors of the Corporation’s 2022 Annual Report on Form 10-K.


3 Bank of America

U.S. Government Debt Ceiling

In response to the upcoming U.S. government’s deadline to raise the debt ceiling, the Corporation has implemented protocols and processes to prepare for the impacts that could begin in the period leading up to a potential breach of the U.S. government’s debt ceiling and increasing in severity if a default occurs. The Corporation is monitoring these potential events through regular routines. For more information on the risks related to a potential U.S. government debt ceiling breach, see the Market and Geopolitical sections within Item 1A. Risk Factors of the Corporation’s 2022 Annual Report on Form 10-K.

LIBOR and Other Benchmark Rates

The Corporation and the global financial markets continue to make progress with respect to the transition away from the London Interbank Offered Rate (LIBOR) and other Interbank Offered Rates (IBORs) to alternative reference rates (ARRs). As previously disclosed, the remaining U.S. dollar (USD) LIBOR settings (i.e., overnight, one month, three month, six month and 12 month) will cease or become non-representative immediately after June 30, 2023, although the Financial Conduct Authority (FCA) announced on April 3, 2023 that it will require LIBOR’s administrator, ICE Benchmark Administration Limited, to continue publication of the one-month, three-month and six-month USD LIBOR settings on a “synthetic” basis (calculated using the relevant CME Term SOFR Reference Rate plus the respective International Swaps and Derivatives Association (ISDA) fixed spread adjustment) for use in legacy contracts and that it intends for such publication to cease on September 30, 2024.

In April 2023, certain central counterparties (CCPs) completed processes to convert certain outstanding USD LIBOR-cleared derivatives to ARR positions, and the Corporation expects those CCPs will convert remaining USD LIBOR-cleared derivatives to ARR positions in the second quarter of 2023. In March 2023, the Corporation announced that after June 30, 2023, the relevant CME Term SOFR Reference Rate, plus the respective ISDA fixed spread adjustment, will be the replacement reference rate for certain outstanding floating rate and fixed-to-floating rate debt securities, preferred stock represented by depositary shares and trust preferred securities issued by the Corporation, BofA Finance LLC and certain other affiliated issuers (USD LIBOR Securities) that use USD LIBOR as the reference rate and are governed by New York and Delaware law. For more information on the Corporation’s replacement of relevant USD LIBOR rates of certain USD LIBOR Securities, see the Corporation’s Current Report on Form 8-K filed with the SEC on March 31, 2023. Additionally, as the Corporation continues to transition IBOR-based products to various ARRs, including the Secured Overnight Financing Rate (SOFR), it has increased the use of those ARRs in its baseline forecast of net interest income. For more information, see Interest Rate Risk Management for the Banking Book on page 40.

For more information on the expected replacement of LIBOR and other benchmark rates, including the Corporation’s efforts and overall progress with respect to LIBOR transition, see Executive Summary – Recent Developments – LIBOR and Other Benchmark Rates in the MD&A and Item 1A. Risk Factors – Other of the Corporation’s 2022 Annual Report on Form 10-K.

Financial Highlights



Table 1	Summary Income Statement and Selected Financial Data
		Three Months Ended March 31
(Dollars in millions, except per share information)			2023			2022
Income statement
Net interest income			$	14,448		$	11,572
Noninterest income			11,810			11,656
Total revenue, net of interest expense			26,258			23,228
Provision for credit losses			931			30
Noninterest expense			16,238			15,319
Income before income taxes			9,089			7,879
Income tax expense			928			812
Net income			8,161			7,067
Preferred stock dividends			505			467
Net income applicable to common shareholders			$	7,656		$	6,600
Per common share information
Earnings			$	0.95		$	0.81
Diluted earnings			0.94			0.80
Dividends paid			0.22			0.21
Performance ratios
Return on average assets (1)			1.07		%	0.89		%
Return on average common shareholders’ equity (1)			12.48			11.02
Return on average tangible common shareholders’ equity (2)			17.38			15.51
Efficiency ratio (1)			61.84			65.95
			March 31 2023			December 31 2022

Balance sheet
Total loans and leases			$	1,046,406		$	1,045,747
Total assets			3,194,657			3,051,375
Total deposits			1,910,402			1,930,341
Total liabilities			2,914,461			2,778,178
Total common shareholders’ equity			251,799			244,800
Total shareholders’ equity			280,196			273,197

(1)For definitions, see Key Metrics on page 94.

(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 43.

Net income was $8.2 billion, or $0.94 per diluted share, for the three months ended March 31, 2023 compared to $7.1 billion, or $0.80 per diluted share, for the same period in 2022. The increase in net income was primarily due to higher net interest income, partially offset by higher noninterest expense and provision for credit losses.


						Bank of America 4

Total assets increased $143.3 billion from December 31, 2022 to $3.2 trillion primarily driven by higher cash and cash equivalents due to securities financing activity to support balance sheet and liquidity positioning, as well as higher trading account assets to support Global Markets client activity.

Total liabilities increased $136.3 billion from December 31, 2022 to $2.9 trillion primarily driven by higher securities financing activity and short-term borrowings to support balance sheet and liquidity positioning, partially offset by lower deposits primarily due to customers’ movement of balances to higher yielding investment alternatives.

Shareholders’ equity increased $7.0 billion from December 31, 2022 primarily due to net income and market value increases on derivatives, partially offset by returns of capital to shareholders through common and preferred stock dividends and common stock repurchases.

Net Interest Income

Net interest income increased $2.9 billion to $14.4 billion for the three months ended March 31, 2023 compared to the same period in 2022. Net interest yield on a fully taxable-equivalent (FTE) basis increased 51 basis points (bps) to 2.20 percent. The increase was primarily driven by benefits from higher interest rates, including lower premium amortization expense and loan growth, partially offset by lower net interest income related to Global Markets activity, higher rates paid on deposits and lower debt securities. For more information on net interest yield and FTE basis, see Supplemental Financial Data on page 6, and for more information on interest rate risk management, see Interest Rate Risk Management for the Banking Book on page 40.

Noninterest Income



Table 2	Noninterest Income

		Three Months Ended March 31
(Dollars in millions)		2023		2022
Fees and commissions:
Card income		$	1,469	$	1,403
Service charges		1,410		1,833
Investment and brokerage services		3,852		4,292
Investment banking fees		1,163		1,457
Total fees and commissions		7,894		8,985
Market making and similar activities		4,712		3,238


Other income		(796)		(567)

Total noninterest income		$	11,810	$	11,656

Noninterest income increased $154 million to $11.8 billion for the three months ended March 31, 2023 compared to the same period in 2022. The following highlights the significant changes.

● Service charges decreased $423 million primarily driven by the impact of non-sufficient funds and overdraft policy changes as well as lower treasury service charges.

● Investment and brokerage services decreased $440 million primarily driven by lower market valuations and declines in assets under management (AUM) pricing, partially offset by the impact of positive AUM flows.

● Investment banking fees decreased $294 million primarily due to lower debt issuance, advisory and equity issuance fees.

● Market making and similar activities increased $1.5 billion primarily driven by improved performance in fixed income, currencies and commodities (FICC) and by the impact of higher interest rates on client financing activities in Equities.

● Other income decreased $229 million primarily due to losses on sales of available-for-sale (AFS) debt securities.

Provision for Credit Losses

The provision for credit losses increased $901 million to $931 million for the three months ended March 31, 2023 compared to the same period in 2022. The provision for credit losses for the current-year period was driven by our consumer portfolio primarily due to higher-than-expected credit card balances, partially offset by certain improved macroeconomic conditions that primarily benefited our commercial portfolio. The provision for credit losses in the prior-year period was $30 million, as asset quality improvement was offset by a reserve build related to our Russian exposure and loan growth. For more information on the provision for credit losses, see Allowance for Credit Losses on page 36.

Noninterest Expense



Table 3	Noninterest Expense

		Three Months Ended March 31
(Dollars in millions)			2023		2022
Compensation and benefits			$	9,918	$	9,482
Occupancy and equipment			1,799		1,760
Information processing and communications			1,697		1,540
Product delivery and transaction related			890		933
Marketing			458		397
Professional fees			537		450
Other general operating			939		757
Total noninterest expense			$	16,238	$	15,319

Noninterest expense increased $919 million to $16.2 billion for the three months ended March 31, 2023 compared to the same period in 2022. The increase was primarily due to higher investments in people and technology and higher FDIC expense, partially offset by lower revenue-related incentive compensation.

Income Tax Expense



Table 4	Income Tax Expense

		Three Months Ended March 31
(Dollars in millions)			2023			2022
Income before income taxes			$	9,089		$	7,879
Income tax expense			928			812
Effective tax rate			10.2		%	10.3		%

The effective tax rates for the three months ended March 31, 2023 and 2022 were primarily driven by our recurring tax preference benefits that mainly consist of tax credits from ESG investments in affordable housing and renewable energy. Absent ESG tax credits and discrete tax benefits, the effective tax rates would have been approximately 26 percent and 25 percent.


5 Bank of America

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.

When presented on a consolidated basis, we view net interest income on an FTE basis as a non-GAAP financial measure. 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:

● 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 on page 7.

For more information on the reconciliation of these non-GAAP financial measures to the corresponding GAAP financial measures, see Non-GAAP Reconciliations on page 43.

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 94.

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 7.

For information on key segment performance metrics, see Business Segment Operations on page 9.


						Bank of America 6




Table 5	Selected Quarterly Financial Data

		2023 Quarter			2022 Quarters
(In millions, except per share information)		First			Fourth			Third			Second			First
Income statement
Net interest income		$	14,448		$	14,681		$	13,765		$	12,444		$	11,572
Noninterest income		11,810			9,851			10,737			10,244			11,656
Total revenue, net of interest expense		26,258			24,532			24,502			22,688			23,228
Provision for credit losses		931			1,092			898			523			30
Noninterest expense		16,238			15,543			15,303			15,273			15,319
Income before income taxes		9,089			7,897			8,301			6,892			7,879
Income tax expense		928			765			1,219			645			812
Net income		8,161			7,132			7,082			6,247			7,067
Net income applicable to common shareholders		7,656			6,904			6,579			5,932			6,600
Average common shares issued and outstanding		8,065.9			8,088.3			8,107.7			8,121.6			8,136.8
Average diluted common shares issued and outstanding		8,182.3			8,155.7			8,160.8			8,163.1			8,202.1
Performance ratios
Return on average assets (1)		1.07		%	0.92		%	0.90		%	0.79		%	0.89		%
Four-quarter trailing return on average assets (2)		0.92			0.88			0.87			0.89			0.99
Return on average common shareholders’ equity (1)		12.48			11.24			10.79			9.93			11.02
Return on average tangible common shareholders’ equity (3)		17.38			15.79			15.21			14.05			15.51
Return on average shareholders’ equity (1)		11.94			10.38			10.37			9.34			10.64
Return on average tangible shareholders’ equity (3)		15.98			13.98			13.99			12.66			14.40
Total ending equity to total ending assets		8.77			8.95			8.77			8.65			8.23
Common equity ratio (1)		7.88			8.02			7.82			7.71			7.40
Total average equity to total average assets		8.95			8.87			8.73			8.49			8.40
Dividend payout (1)		23.17			25.71			27.06			28.68			25.86
Per common share data
Earnings		$	0.95		$	0.85		$	0.81		$	0.73		$	0.81
Diluted earnings		0.94			0.85			0.81			0.73			0.80
Dividends paid		0.22			0.22			0.22			0.21			0.21
Book value (1)		31.58			30.61			29.96			29.87			29.70
Tangible book value (3)		22.78			21.83			21.21			21.13			20.99




Market capitalization		$	228,012		$	264,853		$	242,338		$	250,136		$	332,320
Average balance sheet
Total loans and leases		$	1,041,352		$	1,039,247		$	1,034,334		$	1,014,886		$	977,793
Total assets		3,096,058			3,074,289			3,105,546			3,157,885			3,207,702
Total deposits		1,893,649			1,925,544			1,962,775			2,012,079			2,045,811
Long-term debt		244,759			243,871			250,204			245,781			246,042
Common shareholders’ equity		248,855			243,647			241,882			239,523			242,865
Total shareholders’ equity		277,252			272,629			271,017			268,197			269,309
Asset quality
Allowance for credit losses (4)		$	13,951		$	14,222		$	13,817		$	13,434		$	13,483
Nonperforming loans, leases and foreclosed properties (5)		4,083			3,978			4,156			4,326			4,778
Allowance for loan and lease losses as a percentage of total loans and leases outstanding (5)		1.20		%	1.22		%	1.20		%	1.17		%	1.23		%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases (5)		319			333			309			288			262
Net charge-offs		$	807		$	689		$	520		$	571		$	392
Annualized net charge-offs as a percentage of average loans and leases outstanding (5)		0.32		%	0.26		%	0.20		%	0.23		%	0.16		%







Capital ratios at period end (6)

Common equity tier 1 capital		11.4		%	11.2		%	11.0		%	10.5		%	10.4		%

Tier 1 capital		13.1			13.0			12.8			12.3			12.0
Total capital		15.0			14.9			14.7			14.2			14.0
Tier 1 leverage		7.1			7.0			6.8			6.5			6.3
Supplementary leverage ratio		6.0			5.9			5.8			5.5			5.4
Tangible equity (3)		6.7			6.8			6.6			6.5			6.2
Tangible common equity (3)		5.8			5.9			5.7			5.6			5.3
Total loss-absorbing capacity and long-term debt metrics
Total loss-absorbing capacity to risk-weighted assets		28.8		%	29.0		%	28.9		%	27.8		%	27.2		%
Total loss-absorbing capacity to supplementary leverage exposure		13.1			13.2			13.0			12.6			12.2
Eligible long-term debt to risk-weighted assets		14.8			15.2			15.2			14.7			14.4
Eligible long-term debt to supplementary leverage exposure		6.7			6.9			6.8			6.6			6.5

(1)For definitions, see Key Metrics on page 94.

(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 6 and Non-GAAP Reconciliations on page 43.

(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 29 and corresponding Table 24 and Commercial Portfolio Credit Risk Management – Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page 33 and corresponding Table 30.

(6)For more information, including which approach is used to assess capital adequacy, see Capital Management on page 17.


7 Bank of America



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)		First Quarter 2023						First Quarter 2022
Earning assets
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		$	202,700	$	1,999	4.00	%	$	244,971	$	86	0.14	%
Time deposits placed and other short-term investments		10,581		108		4.16		9,253		12		0.52
Federal funds sold and securities borrowed or purchased under agreements to resell (2)		287,532		3,712		5.24		299,404		(7)		(0.01)
Trading account assets		183,657		2,040		4.50		151,969		1,096		2.92
Debt securities		851,177		5,485		2.58		975,656		3,838		1.58
Loans and leases (3)
Residential mortgage		229,275		1,684		2.94		223,979		1,525		2.73
Home equity		26,513		317		4.84		27,784		220		3.21
Credit card		91,775		2,426		10.72		78,409		1,940		10.03

Direct/Indirect and other consumer		105,657		1,186		4.55		104,632		579		2.25

Total consumer		453,220		5,613		5.00		434,804		4,264		3.96
U.S. commercial		376,852		4,471		4.81		346,510		2,127		2.49
Non-U.S. commercial		127,003		1,778		5.68		118,767		504		1.72
Commercial real estate (4)		70,591		1,144		6.57		63,065		387		2.49
Commercial lease financing		13,686		147		4.33		14,647		106		2.92
Total commercial		588,132		7,540		5.20		542,989		3,124		2.33
Total loans and leases		1,041,352		13,153		5.11		977,793		7,388		3.06
Other earning assets		94,427		2,292		9.82		120,798		587		1.97
Total earning assets		2,671,426		28,789		4.36		2,779,844		13,000		1.89
Cash and due from banks		27,784						28,082
Other assets, less allowance for loan and lease losses		396,848						399,776
Total assets		$	3,096,058					$	3,207,702
Interest-bearing liabilities
U.S. interest-bearing deposits

Demand and money market deposits		$	975,085	$	2,790	1.16	%	$	1,001,184	$	80	0.03	%

Time and savings deposits		196,984		919		1.89		163,981		40		0.10
Total U.S. interest-bearing deposits		1,172,069		3,709		1.28		1,165,165		120		0.04




Non-U.S. interest-bearing deposits		91,603		605		2.68		81,879		44		0.22
Total interest-bearing deposits		1,263,672		4,314		1.38		1,247,044		164		0.05
Federal funds purchased and securities loaned or sold under agreements to repurchase		256,015		3,551		5.63		217,152		79		0.15
Short-term borrowings and other interest-bearing liabilities (2)		156,887		2,629		6.79		126,454		(191)		(0.61)
Trading account liabilities		43,953		504		4.65		64,240		364		2.30
Long-term debt		244,759		3,209		5.28		246,042		906		1.50
Total interest-bearing liabilities		1,965,286		14,207		2.93		1,900,932		1,322		0.28
Noninterest-bearing sources
Noninterest-bearing deposits		629,977						798,767
Other liabilities (5)		223,543						238,694
Shareholders’ equity		277,252						269,309
Total liabilities and shareholders’ equity		$	3,096,058					$	3,207,702
Net interest spread						1.43	%					1.61	%
Impact of noninterest-bearing sources						0.77						0.08
Net interest income/yield on earning assets (6)				$	14,582	2.20	%			$	11,678	1.69	%

(1)Includes the impact of interest rate risk management contracts. For more information, see Interest Rate Risk Management for the Banking Book on page 40.

(2)For more information on negative interest, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K.

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

(4)Includes U.S. commercial real estate loans of $65.5 billion and $58.5 billion, and non-U.S. commercial real estate loans of $5.1 billion and $4.5 billion for the first quarter of 2023 and 2022.

(5)Includes $37.3 billion and $30.2 billion of structured notes and liabilities for the first quarter of 2023 and 2022.

(6)Net interest income includes FTE adjustments of $134 million and $106 million for the first quarter of 2023 and 2022.


						Bank of America 8

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 2022 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. 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 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 6, and for reconciliations to consolidated total revenue, net income and period-end total assets, see Note 17 – Business Segment Information to the Consolidated Financial Statements.

Key Performance Indicators

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

Consumer Banking



	Deposits						Consumer Lending						Total Consumer Banking
	Three Months Ended March 31
(Dollars in millions)	2023			2022			2023			2022			2023			2022			% Change
Net interest income	$	5,816		$	4,052		$	2,777		$	2,628		$	8,593		$	6,680		29	%
Noninterest income:
Card income	(10)			(8)			1,284			1,193			1,274			1,185			8
Service charges	598			843			1			1			599			844			(29)
All other income	197			68			43			36			240			104			131
Total noninterest income	785			903			1,328			1,230			2,113			2,133			(1)
Total revenue, net of interest expense	6,601			4,955			4,105			3,858			10,706			8,813			21

Provision for credit losses	183			73			906			(125)			1,089			(52)			n/m
Noninterest expense	3,415			3,008			2,058			1,913			5,473			4,921			11
Income before income taxes	3,003			1,874			1,141			2,070			4,144			3,944			5
Income tax expense	751			459			285			507			1,036			966			7
Net income	$	2,252		$	1,415		$	856		$	1,563		$	3,108		$	2,978		4

Effective tax rate (1)													25.0		%	24.5		%

Net interest yield	2.31		%	1.56		%	3.76		%	3.79		%	3.27		%	2.48		%
Return on average allocated capital	67			44			12			23			30			30
Efficiency ratio	51.76			60.71			50.10			49.58			51.12			55.84

Balance Sheet
	Three Months Ended March 31

Average	2023			2022			2023			2022			2023			2022			% Change


Total loans and leases	$	4,119		$	4,215		$	299,653		$	279,853		$	303,772		$	284,068		7	%
Total earning assets (2)	1,022,445			1,050,490			299,794			281,255			1,065,202			1,092,742			(3)
Total assets (2)	1,056,007			1,084,343			306,275			287,660			1,105,245			1,133,001			(2)
Total deposits	1,021,374			1,050,247			4,868			5,853			1,026,242			1,056,100			(3)
Allocated capital	13,700			13,000			28,300			27,000			42,000			40,000			5


Period end	March 31 2023			December 31 2022			March 31 2023			December 31 2022			March 31 2023			December 31 2022			% Change
Total loans and leases	$	4,065		$	4,148		$	300,415		$	300,613		$	304,480		$	304,761		—	%
Total earning assets (2)	1,038,545			1,043,049			300,595			300,787			1,081,780			1,085,079			—
Total assets (2)	1,074,571			1,077,203			307,227			308,007			1,124,438			1,126,453			—
Total deposits	1,039,744			1,043,194			5,024			5,605			1,044,768			1,048,799			—

(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

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 2022 Annual Report on Form 10-K.

Consumer Banking Results

Net income for Consumer Banking increased $130 million to $3.1 billion for the three months ended March 31, 2023 compared to the same period in 2022 due to higher revenue, largely offset by an increase in provision for credit losses and higher noninterest expense. Net interest income increased $1.9 billion to $8.6 billion primarily driven by higher interest rates and loan balances. Noninterest income decreased $20 million to $2.1 billion, relatively unchanged from the same period a year ago.


9 Bank of America

The provision for credit losses increased $1.1 billion to $1.1 billion primarily driven by higher-than-expected credit card balances in the current-year period. Noninterest expense increased $552 million to $5.5 billion primarily driven by continued investments for business growth, including people and technology.

The return on average allocated capital was 30 percent, unchanged from the same period a year ago. For more information on capital allocated to the business segments, see Business Segment Operations on page 9.

Deposits

Net income for Deposits increased $837 million to $2.3 billion primarily due to higher revenue, partially offset by higher noninterest expense. Net interest income increased $1.8 billion to $5.8 billion primarily due to higher interest rates. Noninterest income decreased $118 million to $785 million primarily driven by the impact of non-sufficient funds and overdraft policy changes.

Noninterest expense increased $407 million to $3.4 billion primarily driven by continued investments for business growth, including people and technology.

Average deposits decreased $28.9 billion to $1.0 trillion primarily due to net outflows of $15.0 billion in money market savings and $11.5 billion in checking. The decline was largely driven by clients moving deposits to higher yielding investment alternatives and higher levels of consumer spending.

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 March 31
		2023		2022
Total deposit spreads (excludes noninterest costs) (1)		2.54%		1.65%

Period End
Consumer investment assets (in millions) (2)		$	354,892	$	357,593
Active digital banking users (in thousands) (3)		44,962		42,269
Active mobile banking users (in thousands) (4)		36,322		33,589
Financial centers		3,892		4,056
ATMs		15,407		15,959

(1)Includes deposits held in Consumer Lending.

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

(3)Represents mobile and/or online active users over the past 90 days.

(4)Represents mobile active users over the past 90 days.

Consumer investment assets decreased $2.7 billion to $354.9 billion driven by market performance, partially offset by client flows. Active mobile banking users increased approximately three million, reflecting continuing changes in our clients’ banking preferences. We had a net decrease of 164 financial centers and 552 ATMs as we continue to optimize our consumer banking network.

Consumer Lending

Net income for Consumer Lending decreased $707 million to $856 million primarily due to an increase in provision for credit

losses. Net interest income increased $149 million to $2.8 billion due to higher interest rates and loan balances. Noninterest income increased $98 million to $1.3 billion primarily driven by card income.

The provision for credit losses increased $1.0 billion to $906 million primarily driven by higher-than-expected credit card balances in the current-year period. Noninterest expense increased $145 million to $2.1 billion largely driven by continued investments for business growth, including people and technology.

Average loans increased $19.8 billion to $299.7 billion primarily driven by an increase in credit card loans.

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 March 31
(Dollars in millions)	2023			2022
Total credit card (1)
Gross interest yield (2)	11.85		%	9.90		%
Risk-adjusted margin (3)	8.69			10.40
New accounts (in thousands)	1,187			977
Purchase volumes	$	85,544		$	80,914
Debit card purchase volumes	$	124,376		$	117,584

(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 months ended March 31, 2023, the total risk-adjusted margin decreased 171 bps compared to the same period in 2022 driven by lower net interest margin, lower fee income and higher net credit losses. Total credit card purchase volumes increased $4.6 billion to $85.5 billion, and debit card purchase volumes increased $6.8 billion to $124.4 billion, reflecting higher levels of consumer spending.



Key Statistics – Loan Production (1)

	Three Months Ended March 31
(Dollars in millions)	2023		2022
Consumer Banking:
First mortgage	$	1,956	$	8,116
Home equity	2,183		1,725
Total (2):
First mortgage	$	3,937	$	16,353
Home equity	2,596		2,040

(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 $6.2 billion and $12.4 billion during the three months ended March 31, 2023 compared to the same period in 2022 primarily driven by higher interest rates, resulting in lower customer demand.

Home equity production in Consumer Banking and the total Corporation increased $458 million and $556 million during the three months ended March 31, 2023 primarily driven by higher demand.


						Bank of America 10

Global Wealth & Investment Management



	Three Months Ended March 31
(Dollars in millions)		2023			2022			% Change
Net interest income		$	1,876		$	1,668		12	%
Noninterest income:
Investment and brokerage services		3,238			3,654			(11)
All other income		201			154			31
Total noninterest income		3,439			3,808			(10)
Total revenue, net of interest expense		5,315			5,476			(3)

Provision for credit losses		25			(41)			n/m
Noninterest expense		4,067			4,015			1
Income before income taxes		1,223			1,502			(19)
Income tax expense		306			368			(17)
Net income		$	917		$	1,134		(19)

Effective tax rate		25.0		%	24.5		%

Net interest yield		2.20			1.62
Return on average allocated capital		20			26

Efficiency ratio		76.53			73.31

Balance Sheet
	Three Months Ended March 31

Average		2023			2022			% Change
Total loans and leases		$	221,448		$	210,937		5	%
Total earning assets		346,384			418,248			(17)
Total assets		359,164			431,040			(17)
Total deposits		314,019			384,902			(18)
Allocated capital		18,500			17,500			6

Period end		March 31 2023			December 31 2022			% Change


Total loans and leases		$	217,804		$	223,910		(3)	%
Total earning assets		336,560			355,461			(5)
Total assets		349,888			368,893			(5)
Total deposits		301,471			323,899			(7)

n/m = not meaningful

GWIM consists of two primary businesses: Merrill Wealth Management and Bank of America Private Bank. For more information about GWIM, see Business Segment Operations in the MD&A of the Corporation’s 2022 Annual Report on Form 10-K.

Net income for GWIM decreased $217 million to $917 million for the three months ended March 31, 2023 compared to the same period in 2022 primarily driven by lower revenue. The operating margin was 23 percent compared to 27 percent a year ago.

Net interest income increased $208 million to $1.9 billion due to the impacts of higher interest rates and loan balances, partially offset by lower deposit balances.

Noninterest income, which primarily includes investment and brokerage services income, decreased $369 million to $3.4 billion primarily due to the impacts of lower market valuations and declines in AUM pricing, partially offset by the impact of positive AUM flows.

Noninterest expense increased $52 million to $4.1 billion primarily due to continued investments in the business, including strategic hiring and technology, largely offset by lower revenue-related incentives.

The return on average allocated capital was 20 percent, down from 26 percent, due to 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 9.

Average loans increased $10.5 billion to $221.4 billion primarily due to residential mortgages and custom lending, partially offset by securities-based lending. Average deposits decreased $70.9 billion to $314.0 billion primarily driven by clients moving deposits to higher yielding investment alternatives.

Merrill Wealth Management revenue of $4.4 billion decreased four percent primarily driven by the impact of lower market valuations and declines in AUM pricing, partially offset by the impact of higher interest rates.

Bank of America Private Bank revenue of $918 million increased three percent primarily driven by the benefits of higher interest rates, partially offset by the impact of lower market valuations.


11 Bank of America



Key Indicators and Metrics

	Three Months Ended March 31
(Dollars in millions)		2023		2022
Revenue by Business
Merrill Wealth Management		$	4,397	$	4,589
Bank of America Private Bank		918		887

Total revenue, net of interest expense		$	5,315	$	5,476

Client Balances by Business, at period end
Merrill Wealth Management		$	2,952,681	$	3,116,052
Bank of America Private Bank		568,925		598,100

Total client balances		$	3,521,606	$	3,714,152

Client Balances by Type, at period end


Assets under management		$	1,467,242	$	1,571,605
Brokerage and other assets		1,571,409		1,592,802

Deposits		301,471		385,288
Loans and leases (1)		220,633		217,461
Less: Managed deposits in assets under management		(39,149)		(53,004)
Total client balances		$	3,521,606	$	3,714,152

Assets Under Management Rollforward
Assets under management, beginning of period		$	1,401,474	$	1,638,782


Net client flows		15,262		15,537
Market valuation/other		50,506		(82,714)
Total assets under management, end of period		$	1,467,242	$	1,571,605


Total wealth advisors, at period end (2)		19,243		18,571

(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.

Client Balances

Client balances decreased $192.5 billion, or five percent, to $3.5 trillion at March 31, 2023 compared to March 31, 2022. The decrease in client balances was primarily due to the impact of lower market valuations, partially offset by positive client flows.


						Bank of America 12

Global Banking



	Three Months Ended March 31
(Dollars in millions)	2023			2022			% Change
Net interest income	$	3,907		$	2,344		67	%
Noninterest income:
Service charges	714			886			(19)
Investment banking fees	668			880			(24)
All other income	914			1,084			(16)
Total noninterest income	2,296			2,850			(19)
Total revenue, net of interest expense	6,203			5,194			19

Provision for credit losses	(237)			165			n/m
Noninterest expense	2,940			2,683			10
Income before income taxes	3,500			2,346			49
Income tax expense	945			622			52
Net income	$	2,555		$	1,724		48

Effective tax rate	27.0		%	26.5		%

Net interest yield	3.03			1.68
Return on average allocated capital	21			16
Efficiency ratio	47.41			51.65

Balance Sheet

	Three Months Ended March 31
Average	2023			2022			% Change
Total loans and leases	$	381,009		$	358,807		6	%
Total earning assets	522,374			566,277			(8)
Total assets	588,886			630,517			(7)
Total deposits	492,577			539,912			(9)
Allocated capital	49,250			44,500			11

Period End	March 31 2023			December 31 2022			% Change
Total loans and leases	$	383,491		$	379,107		1	%
Total earning assets	524,299			522,539			—
Total assets	591,231			588,466			—
Total deposits	495,949			498,661			(1)

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 2022 Annual Report on Form 10-K.

Net income for Global Banking increased $831 million to $2.6 billion for the three months ended March 31, 2023 compared to the same period in 2022 driven by higher revenue and lower provision for credit losses, partially offset by higher noninterest expense.

Net interest income increased $1.6 billion to $3.9 billion primarily due to the benefit of higher interest rates, partially offset by the impact of lower deposit balances.

Noninterest income decreased $554 million to $2.3 billion driven by lower investment banking fees, lower treasury service charges due to higher earnings credit rates and lower revenue from ESG investment activities.

The provision for credit losses improved $402 million to a benefit of $237 million primarily driven by certain improved macroeconomic conditions.

Noninterest expense increased $257 million to $2.9 billion, primarily due to continued investments in the business, including strategic hiring in 2022.

The return on average allocated capital was 21 percent, up from 16 percent, due to higher net income, partially offset by higher allocated capital. For more information on capital allocated to the business segments, see Business Segment Operations on page 9.

Global Corporate, Global Commercial and Business Banking

The following table and discussion present a summary of the results, which exclude certain investment banking and Paycheck Protection Program (PPP) activities in Global Banking.


13 Bank of America



Global Corporate, Global Commercial and Business Banking














	Global Corporate Banking				Global Commercial Banking				Business Banking				Total
	Three Months Ended March 31
(Dollars in millions)	2023		2022		2023		2022		2023		2022		2023		2022
Revenue
Business Lending	$	1,034	$	1,060	$	1,233	$	993	$	67	$	58	$	2,334	$	2,111
Global Transaction Services	1,549		949		1,129		896		387		243		3,065		2,088
Total revenue, net of interest expense	$	2,583	$	2,009	$	2,362	$	1,889	$	454	$	301	$	5,399	$	4,199

Balance Sheet

Average
Total loans and leases	$	175,293	$	166,994	$	192,796	$	177,483	$	12,618	$	12,837	$	380,707	$	357,314
Total deposits	259,177		257,903		182,614		223,741		50,795		58,268		492,586		539,912

Period end
Total loans and leases	$	175,777	$	174,134	$	194,889	$	179,253	$	12,580	$	12,794	$	383,246	$	366,181
Total deposits	263,131		255,694		181,315		219,462		51,511		58,660		495,957		533,816

Business Lending revenue increased $223 million for the three months ended March 31, 2023 compared to the same period in 2022 primarily due to the benefits of higher interest rates, partially offset by lower ESG investment activities.

Global Transaction Services revenue increased $977 million for the three months ended March 31, 2023 driven by higher interest rates, partially offset by the impact of lower deposit balances and treasury service charges.

Average loans and leases increased seven percent for the three months ended March 31, 2023 due to client demand. Average deposits decreased nine percent due to declines in domestic balances.

Global Investment Banking

Client teams and product specialists underwrite and distribute debt, equity and loan products, and provide advisory services and tailored risk management solutions. The economics of certain investment banking and underwriting activities are shared primarily between Global Banking and Global Markets under an internal revenue-sharing arrangement. Global Banking originates certain deal-related transactions with our corporate and commercial clients that are executed and distributed by Global Markets. To provide a complete discussion of our consolidated investment banking fees, the table below presents

total Corporation investment banking fees and the portion attributable to Global Banking.



Investment Banking Fees

		Global Banking	Total Corporation
	Three Months Ended March 31

(Dollars in millions)			2023		2022		2023		2022
Products
Advisory			$	313	$	439	$	363	$	473
Debt issuance			290		359		644		831
Equity issuance			65		82		168		225
Gross investment banking fees			668		880		1,175		1,529
Self-led deals			(4)		(29)		(12)		(72)
Total investment banking fees			$	664	$	851	$	1,163	$	1,457

Total Corporation investment banking fees of $1.2 billion, which exclude self-led deals and are primarily included within Global Banking and Global Markets, decreased 20 percent for the three months ended March 31, 2023 compared to the same period in 2022. The decrease was primarily due to lower debt issuance, advisory and equity issuance fees.


						Bank of America 14

Global Markets



	Three Months Ended March 31
(Dollars in millions)	2023			2022			% Change
Net interest income	$	109		$	993		(89)	%
Noninterest income:
Investment and brokerage services	533			545			(2)
Investment banking fees	469			582			(19)
Market making and similar activities	4,398			3,190			38
All other income	117			(18)			n/m
Total noninterest income	5,517			4,299			28
Total revenue, net of interest expense	5,626			5,292			6

Provision for credit losses	(53)			5			n/m
Noninterest expense	3,351			3,117			8
Income before income taxes	2,328			2,170			7
Income tax expense	640			575			11
Net income	$	1,688		$	1,595		6

Effective tax rate	27.5		%	26.5		%

Return on average allocated capital	15			15
Efficiency ratio	59.56			58.90

Balance Sheet
	Three Months Ended March 31
	2023			2022			% Change

Average
Trading-related assets:
Trading account securities	$	339,248		$	301,285		13	%
Reverse repurchases	126,760			138,581			(9)
Securities borrowed	116,280			114,468			2
Derivative assets	43,747			41,820			5
Total trading-related assets	626,035			596,154			5
Total loans and leases	125,046			108,576			15
Total earning assets	627,935			610,926			3
Total assets	870,038			858,719			1
Total deposits	36,109			44,393			(19)
Allocated capital	45,500			42,500			7

Period end	March 31 2023			December 31 2022			% Change


Total trading-related assets	$	599,841		$	564,769		6	%
Total loans and leases	130,804			127,735			2
Total earning assets	632,873			587,772			8
Total assets	861,477			812,489			6
Total deposits	33,624			39,077			(14)

n/m = not meaningful

Global Markets offers sales and trading services and research services to institutional clients across fixed-income, credit, currency, commodity and equity businesses. Global Markets product coverage includes securities and derivative products in both the primary and secondary markets. For more information about Global Markets, see Business Segment Operations in the MD&A of the Corporation’s 2022 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 6.

Net income for Global Markets increased $93 million to $1.7 billion for the three months ended March 31, 2023 compared to the same period in 2022. Net DVA gains were $14 million compared to $69 million in the same period in 2022. Excluding net DVA, net income increased $134 million to $1.7 billion. These increases were primarily driven by higher revenue, partially offset by higher noninterest expense.

Revenue increased $334 million to $5.6 billion primarily due to higher sales and trading revenue. Sales and trading revenue increased $348 million, and excluding net DVA, sales and trading revenue increased $403 million. These increases were driven by higher revenue in FICC, partially offset by lower revenue in Equities.

Noninterest expense increased $234 million to $3.4 billion primarily driven by continued investments in the business, including people and technology.

Average total assets increased $11.3 billion to $870.0 billion for the three months ended March 31, 2023 compared to the same period in 2022 driven by loan growth in FICC. Period-end total assets increased $49.0 billion from December 31, 2022 to $861.5 billion driven by increased securities financing activity and higher levels of inventory in FICC to satisfy client demand.

The return on average allocated capital was 15 percent, unchanged from the same period a year ago. For more information on capital allocated to the business segments, see Business Segment Operations on page 9.


15 Bank of America

Sales and Trading Revenue

For a description of sales and trading revenue, see Business Segment Operations in the MD&A of the Corporation’s 2022 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 also present sales and trading revenue, excluding net DVA, which is a non-GAAP financial measure. For more information on net DVA, see Supplemental Financial Data on page 6.



Sales and Trading Revenue (1, 2, 3)

	Three Months Ended March 31
(Dollars in millions)	2023		2022
Sales and trading revenue
Fixed income, currencies and commodities	$	3,440	$	2,708
Equities	1,627		2,011
Total sales and trading revenue	$	5,067	$	4,719

Sales and trading revenue, excluding net DVA (4)
Fixed income, currencies and commodities	$	3,429	$	2,648
Equities	1,624		2,002
Total sales and trading revenue, excluding net DVA	$	5,053	$	4,650

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

(2)Includes FTE adjustments of $90 million and $93 million for the three months ended March 31, 2023 and 2022.

(3) Includes Global Banking sales and trading revenue of $177 million and $179 million for the three months ended March 31, 2023 and 2022.

(4) FICC and Equities sales and trading revenue, excluding net DVA, is a non-GAAP financial measure. FICC net DVA gains were $11 million and $60 million for the three months ended March 31, 2023 and 2022. Equities net DVA gains were $3 million and $9 million for the three months ended March 31, 2023 and 2022.

Including and excluding net DVA, FICC revenue increased $732 million and $781 million for the three months ended March 31, 2023 compared to the same period in 2022 primarily driven by improved trading performance across mortgage, credit and municipal products and increased secured financing activity. Including and excluding net DVA, Equities revenue decreased $384 million and $378 million driven by weaker trading performance and lower client activity in derivatives and cash.

All Other



	Three Months Ended March 31
(Dollars in millions)	2023		2022		% Change
Net interest income	$	97	$	(7)	n/m





Noninterest income (loss)	(1,555)		(1,434)		8	%
Total revenue, net of interest expense	(1,458)		(1,441)		1

Provision for credit losses	107		(47)		n/m


Noninterest expense	407		583		(30)
Loss before income taxes	(1,972)		(1,977)		—
Income tax benefit	(1,865)		(1,613)		16
Net loss	$	(107)	$	(364)	(71)

Balance Sheet

	Three Months Ended March 31

Average	2023		2022		% Change
Total loans and leases	$	10,077	$	15,405	(35)	%
Total assets (1)	172,725		154,425		12
Total deposits	24,702		20,504		20

Period end	March 31 2023		December 31 2022		% Change





Total loans and leases	$	9,827	$	10,234	(4)	%
Total assets (1)	267,623		155,074		73
Total deposits	34,590		19,905		74

(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 $1.0 trillion and $1.2 trillion for the three months ended March 31, 2023 and 2022, and period-end allocated assets were $1.0 trillion at both March 31, 2023 and December 31 2022.

n/m = not meaningful

All Other primarily consists of asset and liability management (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.

The net loss in All Other decreased $257 million to a loss of $107 million primarily due to a higher income tax benefit,

partially offset by lower noninterest income.

Noninterest income decreased $121 million primarily due to $220 million of losses on sales of AFS debt securities, primarily offset by derivative gains related to risk management activities.

The income tax benefit increased $252 million reflecting an increase in tax preference benefits primarily driven from income tax credits related to ESG investment activity. Both periods included income tax benefit adjustments to eliminate the FTE treatment of certain tax credits recorded in Global Banking and Global Markets.


						Bank of America 16

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, risk 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 roles and responsibilities 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 provides a common framework that includes a set of measures to assist senior management and the Board in assessing the Corporation’s risk profile against our risk appetite and risk capacity. Our risk appetite is formally articulated in the Risk Appetite Statement, which includes both qualitative statements and quantitative limits.

For more information on the Corporation’s risks, see Item 1A. Risk Factors of the Corporation’s 2022 Annual Report on Form 10-K. These risks are being managed within our Risk Framework and supporting risk management programs. For more information on our Risk Framework, 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 2022 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 2022 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 Comprehensive Capital Analysis and Review (CCAR) capital plan. Based on the results of our 2022 CCAR stress test, we are subject to a 3.4 percent stress capital buffer (SCB) from October 1, 2022 through September 30, 2023. In April 2023, we submitted our 2023 CCAR capital plan and related supervisory stress tests. The Federal Reserve has indicated that it will disclose CCAR capital plan supervisory stress test results by June 30, 2023.

In October 2021, the Board authorized the Corporation’s $25 billion common stock repurchase program. Additionally, the Board authorized common stock repurchases to offset shares awarded under the Corporation’s equity-based compensation plans. Pursuant to the Board’s authorizations, during the first quarter of 2023, we repurchased $2.2 billion of common stock, including repurchases to offset shares awarded under equity-based compensation plans.

The timing and amount of common stock repurchases 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 lower of the capital ratios under Standardized or Advanced approaches compared to their respective regulatory capital ratio requirements is used to assess capital adequacy, including under the PCA framework. As of March 31, 2023, the Common equity tier 1 (CET1), Tier 1 capital and Total capital ratios under the Standardized approach were the binding ratios.

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 of 2.5 percent (under the Advanced approaches only), an SCB (under the Standardized approach only), plus any applicable countercyclical capital buffer and a global systemically important bank (G-SIB) surcharge. The buffers and surcharge must be comprised solely of CET1 capital. For the period from October 1, 2022 through September 30, 2023, the Corporation's minimum CET1 capital ratio requirements are 10.4 percent under the Standardized approach and 9.5 percent under the Advanced approaches.

The Corporation is required to calculate its G-SIB surcharge on an annual basis under two methods and is subject to the higher of the resulting two surcharges. Method 1 is consistent with the approach prescribed by the Basel Committee’s assessment methodology and is calculated using specified indicators of systemic importance. Method 2 modifies the Method 1 approach by, among other factors, including a measure of the Corporation’s reliance on short-term wholesale funding. The Corporation’s G-SIB surcharge, which is higher under Method 2, is expected to increase to 3.0 percent from 2.5 percent on January 1, 2024, which will increase our minimum CET1 capital ratio requirement. At March 31, 2023, the Corporation’s CET1 capital ratio of 11.4 percent under the Standardized approach exceeded its current CET1 capital ratio requirement as well as the minimum requirement expected to be in place as of January 1, 2024 due to the anticipated increase in our G-SIB surcharge.

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.


17 Bank of America

Capital Composition and Ratios

Table 7 presents Bank of America Corporation’s capital ratios and related information in accordance with Basel 3 Standardized and Advanced approaches as measured at March 31, 2023 and December 31, 2022. For the periods presented herein, the Corporation met the definition of well capitalized under current regulatory requirements.



Table 7	Bank of America Corporation Regulatory Capital under Basel 3


		Standardized Approach (1)			Advanced Approaches (1)			Regulatory Minimum (2)
(Dollars in millions, except as noted)		March 31, 2023
Risk-based capital metrics:
Common equity tier 1 capital		$	184,432		$	184,432
Tier 1 capital		212,825			212,825
Total capital (3)		242,743			233,877
Risk-weighted assets (in billions)		1,622			1,427
Common equity tier 1 capital ratio		11.4		%	12.9		%	10.4	%
Tier 1 capital ratio		13.1			14.9			11.9
Total capital ratio		15.0			16.4			13.9

Leverage-based metrics:
Adjusted quarterly average assets (in billions) (4)		$	3,018		$	3,018
Tier 1 leverage ratio		7.1		%	7.1		%	4.0

Supplementary leverage exposure (in billions)					$	3,555
Supplementary leverage ratio					6.0		%	5.0

		December 31, 2022
Risk-based capital metrics:
Common equity tier 1 capital		$	180,060		$	180,060
Tier 1 capital		208,446			208,446
Total capital (3)		238,773			230,916
Risk-weighted assets (in billions)		1,605			1,411
Common equity tier 1 capital ratio		11.2		%	12.8		%	10.4	%
Tier 1 capital ratio		13.0			14.8			11.9
Total capital ratio		14.9			16.4			13.9

Leverage-based metrics:
Adjusted quarterly average assets (in billions) (4)		$	2,997		$	2,997
Tier 1 leverage ratio		7.0		%	7.0		%	4.0

Supplementary leverage exposure (in billions)					$	3,523
Supplementary leverage ratio					5.9		%	5.0

(1)Capital ratios as of March 31, 2023 and December 31, 2022 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 on January 1, 2020.

(2)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 capital conservation buffer of 2.5 percent (under the Advanced approaches) or the SCB of 3.4 percent (under the Standardized approach), as applicable, at both March 31, 2023 and December 31, 2022. The Corporation's SCB under the Standardized approach was 3.4 percent, the G-SIB surcharge was 2.5 percent and the countercyclical capital buffer was zero for both periods. 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.

At March 31, 2023, CET1 capital was $184.4 billion, an increase of $4.4 billion from December 31, 2022, primarily due to earnings, partially offset by dividends and common stock repurchases. Tier 1 capital increased $4.4 billion primarily driven by the same factors as CET1 capital. Total capital under the Standardized approach increased $4.0 billion primarily due to the same factors driving the increase in Tier 1 capital and an increase in the adjusted allowance for credit losses included in Tier 2 capital, partially offset by a decrease in subordinated

debt. RWA under the Standardized approach, which yielded the lower CET1 capital ratio at March 31, 2023, increased $17.0 billion during the three months ended March 31, 2023 to $1,622 billion primarily due to higher counterparty exposures in Global Markets. Supplementary leverage exposure at March 31, 2023 increased $31.4 billion primarily due to higher trading assets from increased business activities and higher cash held at central banks, partially offset by lower derivative exposures and debt securities balances.


						Bank of America 18

Table 8 shows the capital composition at March 31, 2023 and December 31, 2022.



Table 8	Capital Composition under Basel 3



(Dollars in millions)		March 31 2023		December 31 2022
Total common shareholders’ equity		$	251,799	$	244,800
CECL transitional amount (1)		1,254		1,881
Goodwill, net of related deferred tax liabilities		(68,644)		(68,644)
Deferred tax assets arising from net operating loss and tax credit carryforwards		(7,835)		(7,776)
Intangibles, other than mortgage servicing rights, net of related deferred tax liabilities		(1,538)		(1,554)
Defined benefit pension plan net assets		(882)		(867)
Cumulative unrealized net (gain) loss related to changes in fair value of financial liabilities attributable to own creditworthiness, net-of-tax		484		496
Accumulated net (gain) loss on certain cash flow hedges (2)		9,886		11,925
Other		(92)		(201)
Common equity tier 1 capital		184,432		180,060
Qualifying preferred stock, net of issuance cost		28,396		28,396
Other		(3)		(10)
Tier 1 capital		212,825		208,446
Tier 2 capital instruments		17,845		18,751
Qualifying allowance for credit losses (3)		12,449		11,739
Other		(376)		(163)
Total capital under the Standardized approach		242,743		238,773
Adjustment in qualifying allowance for credit losses under the Advanced approaches (3)		(8,866)		(7,857)
Total capital under the Advanced approaches		$	233,877	$	230,916

(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 amounts in accumulated other comprehensive income (OCI) related to the hedging of items that are not recognized at fair value on the Consolidated Balance Sheet.

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

Table 9 shows the components of RWA as measured under Basel 3 at March 31, 2023 and December 31, 2022.



Table 9	Risk-weighted Assets under Basel 3

		Standardized Approach		Advanced Approaches		Standardized Approach		Advanced Approaches


(Dollars in billions)		March 31, 2023				December 31, 2022
Credit risk		$	1,558	$	958	$	1,538	$	939
Market risk		64		63		67		67
Operational risk		n/a		364		n/a		364
Risks related to credit valuation adjustments		n/a		42		n/a		41
Total risk-weighted assets		$	1,622	$	1,427	$	1,605	$	1,411

n/a = not applicable


19 Bank of America

Bank of America, N.A. Regulatory Capital

Table 10 presents regulatory capital information for BANA in accordance with Basel 3 Standardized and Advanced approaches as measured at March 31, 2023 and December 31, 2022. BANA met the definition of well capitalized under the PCA framework for both periods.



Table 10	Bank of America, N.A. Regulatory Capital under Basel 3

		Standardized Approach (1)			Advanced Approaches (1)			Regulatory Minimum (2)
(Dollars in millions, except as noted)		March 31, 2023
Risk-based capital metrics:
Common equity tier 1 capital		$	185,410		$	185,410
Tier 1 capital		185,410			185,410
Total capital (3)		199,325			190,730
Risk-weighted assets (in billions)		1,389			1,104
Common equity tier 1 capital ratio		13.3		%	16.8		%	7.0	%
Tier 1 capital ratio		13.3			16.8			8.5
Total capital ratio		14.3			17.3			10.5

Leverage-based metrics:
Adjusted quarterly average assets (in billions) (4)		$	2,365		$	2,365
Tier 1 leverage ratio		7.8		%	7.8		%	5.0

Supplementary leverage exposure (in billions)					$	2,799
Supplementary leverage ratio					6.6		%	6.0

		December 31, 2022
Risk-based capital metrics:
Common equity tier 1 capital		$	181,089		$	181,089
Tier 1 capital		181,089			181,089
Total capital (3)		194,254			186,648
Risk-weighted assets (in billions)		1,386			1,087
Common equity tier 1 capital ratio		13.1		%	16.7		%	7.0	%
Tier 1 capital ratio		13.1			16.7			8.5
Total capital ratio		14.0			17.2			10.5

Leverage-based metrics:
Adjusted quarterly average assets (in billions) (4)		$	2,358		$	2,358
Tier 1 leverage ratio		7.7		%	7.7		%	5.0

Supplementary leverage exposure (in billions)					$	2,785
Supplementary leverage ratio					6.5		%	6.0

(2)Risk-based capital regulatory minimums at both March 31, 2023 and December 31, 2022 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 11 presents the Corporation's TLAC and long-term debt ratios and related information as of March 31, 2023 and December 31, 2022.


						Bank of America 20



Table 11	Bank of America Corporation Total Loss-Absorbing Capacity and Long-Term Debt

		TLAC (1)			Regulatory Minimum (2)		Long-term Debt			Regulatory Minimum (3)
(Dollars in millions)		March 31, 2023
Total eligible balance		$	466,319				$	239,255
Percentage of risk-weighted assets (4)		28.8		%	22.0	%	14.8		%	8.5	%
Percentage of supplementary leverage exposure		13.1			9.5		6.7			4.5

		December 31, 2022
Total eligible balance		$	465,451				$	243,833
Percentage of risk-weighted assets (4)		29.0		%	22.0	%	15.2		%	8.5	%
Percentage of supplementary leverage exposure		13.2			9.5		6.9			4.5

(1)As of March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022.

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 Commodity Futures Trading Commission (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 $5.0 billion and net capital in excess of the greater of $1.0 billion or a certain percentage of its reserve requirement in addition to a certain percentage of securities-based swap risk margin. BofAS must also notify the SEC in the event its tentative net capital is less than $6.0 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 March 31, 2023, BofAS had tentative net capital of $19.3 billion. BofAS also had regulatory net capital of $17.1 billion, which exceeded the minimum requirement of $4.5 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 March 31, 2023, MLPCC’s regulatory net capital of $7.1 billion exceeded the minimum requirement of $1.5 billion.

MLPF&S provides retail services. At March 31, 2023, MLPF&S' regulatory net capital was $6.3 billion, which exceeded the minimum requirement of $137 million.

Our European broker-dealers are subject to requirements from U.S. and 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

March 31, 2023, MLI’s capital resources were $33.5 billion, which exceeded the minimum Pillar 1 requirement of $11.7 billion.

BofASE, an authorized credit institution with its head office located in France, is regulated by the Autorité de Contrôle Prudentiel et de Résolution and the Autorité des Marchés Financiers, and supervised under the Single Supervisory Mechanism by the European Central Bank. At March 31, 2023, BofASE's capital resources were $9.1 billion, which exceeded the minimum Pillar 1 requirement of $3.3 billion.

In addition, MLI and BofASE became conditionally registered with the SEC as security-based swap dealers in the fourth quarter of 2021, and maintained net liquid assets at March 31, 2023 that exceeded the applicable minimum requirements under the Exchange Act.

Liquidity Risk

Funding and Liquidity Risk Management

Our primary liquidity risk management objective is to meet expected or unexpected cash flow and collateral requirements, including payments under long-term debt agreements, commitments to extend credit and customer deposit withdrawals, 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 increased volatility due to the failure of certain financial institutions in March 2023. For more information, see Executive Summary – Recent Developments – Financial Market Events on page 3. Our practices have also allowed us to effectively manage market fluctuations from the rising interest rate environment, inflationary pressures and changes in the macroeconomic environment.

We define liquidity as readily available assets, limited to cash and high-quality, liquid, unencumbered securities that we can use to meet our contractual and contingent financial obligations as 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


21 Bank of America

liquidity requirements, maximizes access to funding sources, minimizes borrowing costs and facilitates timely responses to liquidity events. For more information on the Corporation’s liquidity risks, see the Liquidity section within Item 1A. Risk Factors of the Corporation’s 2022 Annual Report on Form 10-K. 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 2022 Annual Report on Form 10-K.

NB Holdings Corporation

Bank of America Corporation, as the parent company (the Parent), which is a separate and distinct legal entity from our bank and nonbank subsidiaries, has an intercompany arrangement with our wholly-owned holding company subsidiary, NB Holdings Corporation (NB Holdings). We have transferred, and agreed to transfer, additional Parent assets not required to satisfy anticipated near-term expenditures to NB Holdings. The Parent 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 it 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 would be resolved under the U.S. Bankruptcy Code.

Global Liquidity Sources and Other Unencumbered Assets

We maintain liquidity available to the Corporation, including the Parent and selected subsidiaries, in the form of cash and high-quality, liquid, unencumbered securities. Our liquidity buffer, referred to as Global Liquidity Sources (GLS), is comprised of assets that are readily available to the Parent and selected subsidiaries, including holding company, bank and broker-dealer subsidiaries, even during stressed market conditions. Our cash is primarily on deposit with the Federal Reserve Bank and, to a lesser extent, central banks outside of the U.S. We limit the composition of high-quality, liquid, unencumbered securities to U.S. government securities, U.S. agency securities, U.S. agency mortgage-backed securities and other investment-grade securities, and a select group of non-U.S. government securities. We can obtain cash for these securities, even in stressed conditions, through repurchase agreements or outright sales. We hold our GLS in legal entities that allow us to meet the liquidity requirements of our global businesses, and we consider the impact of potential regulatory, tax, legal and other restrictions that could limit the transferability of funds among entities.

Table 12 presents average GLS for the three months ended March 31, 2023 and December 31, 2022.



Table 12	Average Global Liquidity Sources


		Three Months Ended
(Dollars in billions)		March 31 2023		December 31 2022

Bank entities		$	683	$	694
Nonbank and other entities (1)		171		174
Total Average Global Liquidity Sources		$	854	$	868

(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 $319 billion and $348 billion at March 31, 2023 and December 31, 2022. 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 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. The Parent 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 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 13 presents the composition of average GLS for the three months ended March 31, 2023 and December 31, 2022.



Table 13	Average Global Liquidity Sources Composition

		Three Months Ended


(Dollars in billions)		March 31 2023		December 31 2022
Cash on deposit		$	204	$	174
U.S. Treasury securities		225		252
U.S. agency securities, mortgage-backed securities, and other investment-grade securities		411		427
Non-U.S. government securities		14		15
Total Average Global Liquidity Sources		$	854	$	868

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 $591 billion and $605 billion for the three months ended March 31, 2023 and December 31, 2022. For the same periods, the average consolidated LCR was 117 percent and 120 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


						Bank of America 22

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 2022 Annual Report on Form 10-K.

Net Stable Funding Ratio

The Net Stable Funding Ratio (NSFR) is a liquidity requirement for large banks to maintain a minimum level of stable funding over a one-year period. The requirement 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, which focuses on short-term liquidity risks. The U.S. NSFR applies to the Corporation on a consolidated basis and to our insured depository institutions. At March 31, 2023, the Corporation and its insured depository institutions were in compliance with this requirement.

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 $1.93 trillion at March 31, 2023 and December 31, 2022. 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.

Deposits

Our deposit base is well-diversified by clients, geography and product type across our business segments. At March 31,

2023, 55 percent of our deposits were in Consumer Banking, 16 percent in GWIM and 26 percent in Global Banking. We consider a substantial portion of our deposit base to be a stable, low-cost and consistent source of liquidity. At March 31, 2023, approximately 67 percent of consumer and small business deposits and 80 percent of U.S. deposits in Global Banking were held by clients who have had accounts with us for 10 or more years. In addition, at March 31, 2023 and December 31, 2022, 33 percent and 34 percent of our deposits were noninterest-bearing and included operating accounts of our consumer and commercial clients. Deposits at March 31, 2023 decreased $19.9 billion, or one percent, from December 31, 2022 primarily due to clients in GWIM moving deposits into higher yielding investment alternatives. Period-end deposits for Consumer Banking and Global Banking were relatively stable at March 31, 2023 compared to December 31, 2022.

Long-term Debt

During the three months ended March 31, 2023, we issued $14.3 billion of long-term debt consisting of $3.8 billion of notes issued by Bank of America Corporation, which were largely TLAC compliant, $4.4 billion of notes issued by Bank of America, N.A. and $6.1 billion of other debt.

During the three months ended March 31, 2023, we had total long-term debt maturities and redemptions in the aggregate of $11.3 billion consisting of $8.9 billion for Bank of America Corporation, $500 million for Bank of America, N.A. and $1.9 billion of other debt. Table 14 presents the carrying value of aggregate annual contractual maturities of long-term debt at March 31, 2023.



Table 14	Long-term Debt by Maturity

(Dollars in millions)		Remainder of 2023		2024		2025		2026		2027		Thereafter		Total
Bank of America Corporation
Senior notes (1)		$	3,702	$	18,207	$	24,909	$	24,274	$	19,248	$	113,206	$	203,546
Senior structured notes		763		562		573		956		628		9,575		13,057
Subordinated notes		—		3,160		5,163		4,926		2,148		10,341		25,738
Junior subordinated notes		—		—		—		—		188		556		744
Total Bank of America Corporation		4,465		21,929		30,645		30,156		22,212		133,678		243,085
Bank of America, N.A.
Senior notes		—		5,970		—		—		—		—		5,970
Subordinated notes		—		—		—		—		—		1,514		1,514
Advances from Federal Home Loan Banks		100		1,000		14		9		4		52		1,179
Securitizations and other Bank VIEs (2)		999		999		2,248		—		—		52		4,298
Other		219		719		71		33		70		—		1,112
Total Bank of America, N.A.		1,318		8,688		2,333		42		74		1,618		14,073
Other debt
Structured Liabilities		3,999		3,203		2,519		3,272		2,002		11,137		26,132
Nonbank VIEs (2)		—		—		—		—		—		583		583

Total other debt		3,999		3,203		2,519		3,272		2,002		11,720		26,715
Total long-term debt		$	9,782	$	33,820	$	35,497	$	33,470	$	24,288	$	147,016	$	283,873

(1)Total includes $180.8 billion of outstanding notes that are both TLAC eligible and callable one year before their stated maturities, including $12.2 billion during the remainder of 2023, and $21.6 billion, $21.6 billion, $19.2 billion and $24.8 billion during each year of 2024 through 2027, respectively, and $81.4 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 2022 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 $7.9 billion to $283.9 billion during the three months ended March 31, 2023 primarily due to debt issuances and valuation adjustments, partially offset by debt maturities and redemptions. We may, from time to time, purchase outstanding debt instruments in various transactions, depending on market conditions, liquidity and other factors. Our

other regulated entities may also make markets in our debt instruments to provide liquidity for investors.

During the three months ended March 31, 2023, we issued $4.0 billion of structured notes, which are 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


23 Bank of America

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 2022 Annual Report on Form 10-K.

We use derivative transactions to manage the duration, interest rate and currency risks of our borrowings, considering the characteristics of the assets they are funding. For more information on our ALM activities, see Interest Rate Risk Management for the Banking Book on page 40.

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

The ratings and outlooks from Fitch Ratings for the Corporation and its subsidiaries have not changed from those disclosed in the Corporation's 2022 Annual Report on Form 10-K.

On March 31, 2023, 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 Stable from Positive. S&P concurrently changed its outlooks on three other large U.S. bank holding companies to Stable from Positive, noting that the agency has reduced its upside expectations for bank ratings in the near term.

On January 23, 2023, Moody’s Investors Service (Moody’s) placed the long-term rating of the Corporation as well as the long-term rating of its rated subsidiaries, including BANA, on review for upgrade. The agency cited the Corporation’s strengthened capital ratios, improved earnings profile and continued commitment to maintaining a restrained risk appetite as drivers of the review. Moody’s concurrently affirmed all Prime-1 short-term ratings of the Corporation and rated subsidiaries. A review for upgrade indicates that those ratings are under consideration for a change in the near term and typically concludes within 90 days. As of May 1, 2023, Moody’s had not yet announced the completion of its review of the long-term ratings.

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 2022 Annual Report on Form 10-K.

Table 15

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

Review for Upgrade

A-

A-2

Stable

AA-

F1+

Stable

Bank of America, N.A.

Aa2

P-1

Review for Upgrade

A+

A-1

Stable

F1+

Stable

Bank of America Europe Designated Activity Company

A+

A-1

Stable

F1+

Stable

Merrill Lynch, Pierce, Fenner & Smith Incorporated

A+

A-1

Stable

F1+

Stable

BofA Securities, Inc.

A+

A-1

Stable

F1+

Stable

Merrill Lynch International

A+

A-1

Stable

F1+

Stable

BofA Securities Europe SA

A+

A-1

Stable

F1+

Stable

NR = not rated

Finance Subsidiary Issuers and Parent Guarantor

BofA Finance LLC, a Delaware limited liability company (BofA Finance), 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 (Guaranteed Notes) that are fully and unconditionally guaranteed by the Corporation. The Corporation guarantees the due and punctual payment, on demand, of amounts payable on the Guaranteed Notes if not paid by BofA Finance. In addition, each of BAC Capital Trust XIII, BAC Capital Trust XIV and BAC Capital Trust XV, Delaware statutory trusts (collectively, the Trusts), is a 100 percent owned finance subsidiary of the Corporation that has issued and sold trust preferred securities (the Trust Preferred Securities) or capital securities (the Capital Securities and, together with the Guaranteed Notes and the Trust Preferred

Securities, the Guaranteed Securities), as applicable, that remained outstanding at March 31, 2023. 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 2022 Annual Report on Form 10-K.

Representations and Warranties Obligations

For information on representations and warranties obligations in connection with the sale of mortgage loans, see Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K.


						Bank of America 24

Credit Risk Management

For information on our credit risk management activities, see the following: Consumer Portfolio Credit Risk Management, Commercial Portfolio Credit Risk Management on page 29, Non-U.S. Portfolio on page 35, Allowance for Credit Losses on page 36, and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements. For information on the Corporation’s loan modification programs, see Note 1 – Summary of Significant Accounting Principles and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.

During the three months ended March 31, 2023, our asset quality remained relatively healthy. Our net charge-off ratio increased primarily driven by credit card loans, as delinquency trends continue to slowly increase off of historic lows; however, they remain below pre-pandemic levels. Nonperforming loans increased modestly compared to December 31, 2022 driven by office, while commercial reservable criticized exposure increased driven by both office as well as other industries that have been impacted by the current environment. Uncertainty remains regarding broader economic impacts as a result of inflationary pressures, rising rates and the current geopolitical environment and could lead to adverse impacts to credit quality metrics in future periods.

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

During the three months ended March 31, 2023, the U.S. unemployment rate remained relatively stable and home prices continued to decline modestly. During the three months ended March 31, 2023, net charge-offs increased $313 million to $653 million compared to the same period in 2022, as late-stage delinquent credit card loans were charged off.

The consumer allowance for loan and lease losses increased $124 million during the three months ended March 31, 2023 to $7.4 billion. For more information, see Allowance for Credit Losses on page 36.

For more information on our accounting policies regarding delinquencies, nonperforming status, charge-offs and loan modifications for the consumer portfolio, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.

Table 16 presents our outstanding consumer loans and leases, consumer nonperforming loans and accruing consumer loans past due 90 days or more.



Table 16	Consumer Credit Quality

		Outstandings				Nonperforming						Accruing Past Due 90 Days or More


(Dollars in millions)		March 31 2023		December 31 2022		March 31 2023			December 31 2022			March 31 2023			December 31 2022
Residential mortgage (1)		$	228,827	$	229,670	$	2,125		$	2,167		$	338		$	368
Home equity		25,868		26,563		488			510			—			—
Credit card		92,469		93,421		n/a			n/a			828			717
Direct/Indirect consumer (2)		104,540		106,236		101			77			2			2
Other consumer		120		156		—			—			—			—
Consumer loans excluding loans accounted for under the fair value option		$	451,824	$	456,046	$	2,714		$	2,754		$	1,168		$	1,087
Loans accounted for under the fair value option (3)		334		339
Total consumer loans and leases		$	452,158	$	456,385
Percentage of outstanding consumer loans and leases (4)		n/a		n/a		0.60		%	0.60		%	0.26		%	0.24		%
Percentage of outstanding consumer loans and leases, excluding fully-insured loan portfolios (4)		n/a		n/a		0.62			0.62			0.19			0.16

(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At March 31, 2023 and December 31 2022, residential mortgage included $232 million and $260 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 $106 million and $108 million of loans on which interest was still accruing.

(2)Outstandings primarily includes auto and specialty lending loans and leases of $52.7 billion and $51.8 billion, U.S. securities-based lending loans of $48.1 billion and $50.4 billion at March 31, 2023 and December 31 2022, and non-U.S. consumer loans of $2.8 billion and $3.0 billion at March 31, 2023 and December 31 2022.

(3)For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.

(4)Excludes consumer loans accounted for under the fair value option. At both March 31, 2023 and December 31 2022, $7 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


25 Bank of America

Table 17 presents net charge-offs and related ratios for consumer loans and leases.



Table 17	Consumer Net Charge-offs and Related Ratios

			Net Charge-offs				Net Charge-off Ratios (1)
		Three Months Ended March 31

(Dollars in millions)			2023		2022		2023		2022
Residential mortgage			$	1	$	(10)	—	%	(0.02)	%
Home equity			(12)		(30)		(0.18)		(0.44)
Credit card			501		297		2.21		1.53

Direct/Indirect consumer			1		4		—		0.02
Other consumer			162		79		n/m		n/m
Total			$	653	$	340	0.58		0.32

(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 March 31, 2023. Approximately 51 percent of the residential mortgage portfolio was in

Consumer Banking, 45 percent was in GWIM and the remaining portion was in All Other.

Outstanding balances in the residential mortgage portfolio decreased $843 million during the three months ended March 31, 2023, as paydowns outpaced new originations.

At March 31, 2023 and December 31, 2022, the residential mortgage portfolio included $11.4 billion and $11.7 billion of outstanding fully-insured loans, of which $2.1 billion and $2.2 billion had FHA insurance, with the remainder protected by Fannie Mae long-term standby agreements.

Table 18 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 18	Residential Mortgage – Key Credit Statistics

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


(Dollars in millions)		March 31 2023			December 31 2022			March 31 2023			December 31 2022
Outstandings		$	228,827		$	229,670		$	217,445		$	217,976
Accruing past due 30 days or more		1,304			1,471			724			844
Accruing past due 90 days or more		338			368			—			—
Nonperforming loans (2)		2,125			2,167			2,125			2,167
Percent of portfolio
Refreshed LTV greater than 90 but less than or equal to 100		1		%	1		%	1		%	1		%
Refreshed LTV greater than 100		—			—			—			—
Refreshed FICO below 620		1			1			1			1

(1)Outstandings, accruing past due, nonperforming loans and percentages of portfolio exclude loans accounted for under the fair value option.

(2)Includes loans that are contractually current that have not yet demonstrated a sustained period of payment performance following a modification.

Nonperforming outstanding balances in the residential mortgage portfolio decreased $42 million during the three months ended March 31, 2023 primarily due to returns to performing and paydowns outpacing new additions. Of the nonperforming residential mortgage loans at March 31, 2023, $1.3 billion, or 63 percent, were current on contractual payments. Loans accruing past due 30 days or more decreased $120 million.

Of the $217.4 billion in total residential mortgage loans outstanding at March 31, 2023, 28 percent were originated as interest-only loans. The outstanding balance of interest-only residential mortgage loans that had entered the amortization period was $3.4 billion, or six percent, at March 31, 2023. Residential mortgage loans that have entered the amortization period generally experience a higher rate of early stage delinquencies and nonperforming status compared to the residential mortgage portfolio as a whole. At March 31, 2023, $64 million, or two percent, of outstanding interest-only residential mortgages that had entered the amortization period were accruing past due 30 days or more compared to $724 million, or less than one percent, for the entire residential

mortgage portfolio. In addition, at March 31, 2023, $185 million, or five percent, of outstanding interest-only residential mortgage loans that had entered the amortization period were nonperforming, of which $67 million were contractually current. 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 3 to 10 years. Approximately 96 percent of these loans that have yet to enter the amortization period will not be required to make a fully-amortizing payment until 2025 or later.

Table 19 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 14 percent of outstandings at both March 31, 2023 and December 31, 2022. In the New York area, the New York-Northern New Jersey-Long Island MSA made up 15 percent of outstandings at both March 31, 2023 and December 31, 2022.


						Bank of America 26



Table 19	Residential Mortgage State Concentrations

		Outstandings (1)				Nonperforming (1)					Net Charge-offs
		March 31 2023		December 31 2022		March 31 2023		December 31 2022		Three Months Ended March 31
(Dollars in millions)											2023		2022


California		$	80,629	$	80,878	$	649	$	656		$	—	$	(3)
New York		26,191		26,228		329		328			2		—
Florida		15,241		15,225		136		145			(2)		(1)
Texas		9,399		9,399		84		88			—		—
New Jersey		8,772		8,810		94		96			—		—
Other		77,213		77,436		833		854			1		(6)
Residential mortgage loans		$	217,445	$	217,976	$	2,125	$	2,167		$	1	$	(10)
Fully-insured loan portfolio		11,382		11,694

Total residential mortgage loan portfolio		$	228,827	$	229,670

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

Home Equity

At March 31, 2023, the home equity portfolio made up six 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 March 31, 2023, 82 percent of the home equity portfolio was in Consumer Banking, eight percent was in All Other and the remainder of the portfolio was primarily in GWIM. Outstanding balances in the home equity portfolio decreased $695 million during the three months ended March 31, 2023 primarily due to paydowns outpacing draws on existing lines and new

originations. Of the total home equity portfolio at March 31, 2023 and December 31, 2022, $10.7 billion and $11.1 billion, or 41 percent and 42 percent, were in first-lien positions. At March 31, 2023, 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 $4.4 billion, or 17 percent of our total home equity portfolio.

Unused HELOCs totaled $44.0 billion and $42.4 billion at March 31, 2023 and December 31, 2022. The HELOC utilization rate was 36 percent and 38 percent at March 31, 2023 and December 31, 2022.

Table 20 presents certain home equity portfolio key credit statistics.



Table 20	Home Equity – Key Credit Statistics (1)




(Dollars in millions)							March 31 2023		December 31 2022
Outstandings							$	25,868	$	26,563
Accruing past due 30 days or more				93		96
Nonperforming loans (2)							488		510
Percent of portfolio
Refreshed CLTV greater than 90 but less than or equal to 100		—	%	—	%
Refreshed CLTV greater than 100				—		—
Refreshed FICO below 620							2		2

(1)Outstandings, accruing past due, nonperforming loans and percentages of the portfolio exclude loans accounted for under the fair value option.

(2)Includes loans that are contractually current that have not yet demonstrated a sustained period of payment performance following a modification.

Nonperforming outstanding balances in the home equity portfolio decreased $22 million to $488 million at March 31, 2023, primarily driven by returns to performing status and paydowns outpacing new additions. Of the nonperforming home equity loans at March 31, 2023, $265 million, or 54 percent, were current on contractual payments, and $144 million, or 29 percent, 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 remained relatively unchanged during the three months ended March 31, 2023.

Net recoveries decreased $18 million to $12 million during the three months ended March 31, 2023 compared to the same period in 2022.

Of the $25.9 billion in total home equity portfolio outstandings at March 31, 2023, as shown in Table 20, 12 percent require interest-only payments. The outstanding balance of HELOCs that had reached the end of their draw period and

entered the amortization period was $4.9 billion at March 31, 2023. The HELOCs that have entered the amortization period have experienced a higher percentage of early stage delinquencies and nonperforming status when compared to the HELOC portfolio as a whole. At March 31, 2023, $50 million, or one percent, of outstanding HELOCs that had entered the amortization period were accruing past due 30 days or more. In addition, at March 31, 2023, $329 million, or seven percent, were nonperforming.

For our interest-only HELOC portfolio, 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; however, we can infer some of this information through a review of our HELOC portfolio that we service and is still in its revolving period. During the three months ended March 31, 2023, 23 percent of these customers with an outstanding balance did not pay any principal on their HELOCs.


27 Bank of America

Table 21 presents outstandings, nonperforming balances and net recoveries 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 12 percent of the outstanding home equity portfolio at both March 31, 2023 and

December 31, 2022. The Los Angeles-Long Beach-Santa Ana MSA within California made up 11 percent of the outstanding home equity portfolio at both March 31, 2023 and December 31, 2022.



Table 21	Home Equity State Concentrations

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


		March 31 2023		December 31 2022		March 31 2023		December 31 2022		Three Months Ended March 31
(Dollars in millions)											2023		2022
California		$	7,208	$	7,406	$	113	$	119		$	(1)	$	(6)
Florida		2,667		2,743		60		63			(3)		(7)
New Jersey		1,964		2,047		50		53			—		(2)
New York		1,733		1,806		77		80			(2)		(2)
Massachusetts		1,293		1,347		15		23			—		(1)
Other		11,003		11,214		173		172			(6)		(12)
Total home equity loan portfolio		$	25,868	$	26,563	$	488	$	510		$	(12)	$	(30)

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

Credit Card

At March 31, 2023, 97 percent of the credit card portfolio was managed in Consumer Banking with the remainder in GWIM. Outstandings in the credit card portfolio decreased $952 million during the three months ended March 31, 2023 to $92.5 billion primarily driven by a seasonal decline in purchase volumes. Net charge-offs increased $204 million to $501 million during the three months ended March 31, 2023 compared to the same period in 2022, as late-stage credit card delinquencies were

charged off. Credit card loans 30 days or more past due and still accruing interest increased $169 million, and 90 days or more past due and still accruing interest increased $111 million.

Unused lines of credit for credit card increased to $381.1 billion at March 31, 2023 from $370.1 billion at December 31, 2022.

Table 22 presents certain state concentrations for the credit card portfolio.



Table 22	Credit Card State Concentrations

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


		March 31 2023		December 31 2022		March 31 2023		December 31 2022		Three Months Ended March 31
(Dollars in millions)											2023		2022
California		$	15,235	$	15,363	$	145	$	126		$	88	$	50
Florida		9,504		9,512		110		100			69		42
Texas		8,124		8,125		81		72			48		27
New York		5,339		5,381		71		56			39		22
Washington		4,777		4,844		26		21			14		7
Other		49,490		50,196		395		342			243		149
Total credit card portfolio		$	92,469	$	93,421	$	828	$	717		$	501	$	297

Direct/Indirect Consumer

At March 31, 2023, 51 percent of the direct/indirect portfolio was included in Consumer Banking (consumer auto and recreational vehicle lending) and 49 percent was included in GWIM (principally securities-based lending loans). Outstandings in the direct/indirect portfolio decreased $1.7 billion during the

three months ended March 31, 2023 to $104.5 billion driven by declines in securities-based lending stemming from higher paydown activity due to higher interest rates, partially offset by growth in our auto portfolio.

Table 23 presents certain state concentrations for the direct/indirect consumer loan portfolio.



Table 23	Direct/Indirect State Concentrations

		Outstandings				Nonperforming					Net Charge-offs


		March 31 2023		December 31 2022		March 31 2023		December 31 2022		Three Months Ended March 31
(Dollars in millions)											2023		2022

California		$	15,438	$	15,516	$	16	$	12		$	2	$	1
Florida		13,420		13,783		12		10			—		1
Texas		9,818		9,837		11		9			—		1
New York		7,548		7,891		7		5			—		—
New Jersey		4,378		4,456		3		3			—		—
Other		53,938		54,753		52		38			(1)		1
Total direct/indirect loan portfolio		$	104,540	$	106,236	$	101	$	77		$	1	$	4

Other Consumer

Other consumer primarily consists of deposit overdraft balances. Net charge-offs increased $83 million to $162 million

during the three months ended March 31, 2023 compared to the same period in 2022, primarily driven by higher overdraft losses due to industry-wide check fraud activity.


						Bank of America 28

Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity

Table 24 presents nonperforming consumer loans, leases and foreclosed properties activity for the three months ended March 31, 2023 and 2022. During the three months ended March 31, 2023, nonperforming consumer loans decreased $40 million to $2.7 billion primarily due to returns to performing status and paydowns outpacing new additions during the first quarter of 2023.

At March 31, 2023, $550 million, or 20 percent, of nonperforming loans were 180 days or more past due and had been written down to their estimated property value less costs 7to sell. In addition, at March 31, 2023, $1.6 billion, or 60 percent, of nonperforming consumer loans were current and classified as nonperforming loans in accordance with applicable policies.

Foreclosed properties decreased $4 million during the three months ended March 31, 2023 to $117 million.



Table 24	Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity

		Three Months Ended March 31
(Dollars in millions)			2023			2022
Nonperforming loans and leases, January 1			$	2,754		$	2,989
Additions			253			644
Reductions:
Paydowns and payoffs			(103)			(175)
Sales			(2)			(131)
Returns to performing status (1)			(170)			(202)
Charge-offs			(12)			(15)
Transfers to foreclosed properties			(6)			(6)

Total net additions/(reductions) to nonperforming loans and leases			(40)			115
Total nonperforming loans and leases, March 31			2,714			3,104
Foreclosed properties, March 31			117			118
Nonperforming consumer loans, leases and foreclosed properties, March 31			$	2,831		$	3,222
Nonperforming consumer loans and leases as a percentage of outstanding consumer loans and leases (2)			0.60		%	0.71		%
Nonperforming consumer loans, leases and foreclosed properties as a percentage of outstanding consumer loans, leases and foreclosed properties (2)			0.63			0.74

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

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 29, 31 and 34 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 31 and Commercial Portfolio Credit Risk Management – Industry Concentrations on page 33.

For more information on our accounting policies regarding delinquencies, nonperforming status, net charge-offs and loan modifications for the commercial portfolio, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.

Commercial Credit Portfolio

Outstanding commercial loans and leases increased $4.9 billion during the three months ended March 31, 2023 due to growth in commercial real estate and our U.S. commercial and industrial portfolio, primarily in Global Banking. During the three months ended March 31, 2023, commercial credit quality deteriorated and nonperforming commercial loans and reservable criticized utilized exposure increased; however, the

commercial net charge off ratio of 0.11 percent for the three months ended March 31, 2023 remained low. For more information, see Commercial Real Estate on page 31.

With the exception of the office property type, which is further discussed in the Commercial Real Estate section herein, credit quality of commercial real estate borrowers has remained relatively stable since December 31, 2022; however, we are closely monitoring borrower performance in the increased rate environment and emerging trends. Many commercial real estate markets are still experiencing disruptions in demand, supply chain challenges, tenant difficulties and challenging capital markets. Recent demand for office space has been stagnant, and future demand for office space continues to be uncertain as companies evaluate space needs with employment models that utilize a mix of remote and conventional office use.

The commercial allowance for loan and lease losses decreased $292 million during the three months ended March 31, 2023 to $5.2 billion, primarily driven by certain improved macroeconomic conditions. For more information, see Allowance for Credit Losses on page 36.

Total commercial utilized credit exposure decreased $4.2 billion during the three months ended March 31, 2023 to $700.7 billion primarily driven by lower derivative assets, partially offset by higher loans and leases. The utilization rate for loans and leases, standby letters of credit (SBLCs) and financial guarantees, and commercial letters of credit, in the aggregate, was 56 percent at both March 31, 2023 and at December 31, 2022.


29 Bank of America

Table 25 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 25	Commercial Credit Exposure by Type

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


(Dollars in millions)		March 31 2023		December 31 2022		March 31 2023		December 31 2022		March 31 2023		December 31 2022
Loans and leases		$	594,248	$	589,362	$	487,291	$	487,772	$	1,081,539	$	1,077,134
Derivative assets (5)		40,947		48,642		—		—		40,947		48,642
Standby letters of credit and financial guarantees		32,952		33,376		1,513		1,266		34,465		34,642
Debt securities and other investments		19,378		20,195		2,872		2,551		22,250		22,746
Loans held-for-sale		5,895		6,112		3,953		3,729		9,848		9,841
Operating leases		5,474		5,509		—		—		5,474		5,509
Commercial letters of credit		1,020		973		43		28		1,063		1,001
Other		800		698		—		—		800		698
Total		$	700,714	$	704,867	$	495,672	$	495,346	$	1,196,386	$	1,200,213

(1)Commercial utilized exposure includes loans of $4.1 billion and $5.4 billion accounted for under the fair value option at March 31, 2023 and December 31, 2022.

(2)Commercial unfunded exposure includes commitments accounted for under the fair value option with a notional amount of $3.1 billion and $3.0 billion at March 31, 2023 and December 31, 2022.

(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 $10.1 billion and $10.4 billion at March 31, 2023 and December 31, 2022.

(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 $29.0 billion and $33.8 billion at March 31, 2023 and December 31, 2022. Not reflected in utilized and committed exposure is additional non-cash derivative collateral held of $51.0 billion and $51.6 billion at March 31, 2023 and December 31, 2022, which consists primarily of other marketable securities.

Nonperforming commercial loans increased $150 million primarily in commercial real estate, partially offset by non-U.S. commercial. Table 26 presents our commercial loans and leases portfolio and related credit quality information at March 31, 2023 and December 31, 2022.



Table 26	Commercial Credit Quality

		Outstandings				Nonperforming				Accruing Past Due 90 Days or More

(Dollars in millions)		March 31 2023		December 31 2022		March 31 2023		December 31 2022		March 31 2023		December 31 2022
Commercial and industrial:
U.S. commercial		$	360,655	$	358,481	$	559	$	553	$	112	$	190
Non-U.S. commercial		124,827		124,479		125		212		92		25
Total commercial and industrial		485,482		482,960		684		765		204		215
Commercial real estate		73,051		69,766		502		271		35		46
Commercial lease financing		13,448		13,644		4		4		6		8
		571,981		566,370		1,190		1,040		245		269
U.S. small business commercial (1)		18,204		17,560		14		14		261		355
Commercial loans excluding loans accounted for under the fair value option		$	590,185	$	583,930	$	1,204	$	1,054	$	506	$	624
Loans accounted for under the fair value option (2)		4,063		5,432
Total commercial loans and leases		$	594,248	$	589,362

(1)Includes card-related products.

(2)Commercial loans accounted for under the fair value option includes U.S. commercial of $2.2 billion and $2.9 billion and non-U.S. commercial of $1.9 billion and $2.5 billion at March 31, 2023 and December 31, 2022. For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.


						Bank of America 30

Table 27 presents net charge-offs and related ratios for our commercial loans and leases for the three months ended March 31, 2023 and 2022.



Table 27	Commercial Net Charge-offs and Related Ratios

			Net Charge-offs				Net Charge-off Ratios (1)
		Three Months Ended March 31

(Dollars in millions)			2023		2022		2023		2022
Commercial and industrial:
U.S. commercial			$	47	$	(14)	0.05	%	(0.02	%)
Non-U.S. commercial			20		1		0.07		—
Total commercial and industrial			67		(13)		0.06		(0.01)
Commercial real estate			22		23		0.12		0.15
Commercial lease financing			(1)		—		(0.01)		—
			88		10		0.06		0.01
U.S. small business commercial			66		42		1.48		0.94
Total commercial			$	154	$	52	0.11		0.04

(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 28 presents commercial reservable criticized utilized exposure by loan type. Criticized exposure corresponds to the Special Mention, Substandard and Doubtful asset categories as defined by regulatory authorities. Total commercial reservable criticized utilized exposure increased $515 million during the

three months ended March 31, 2023 driven by U.S. commercial and commercial real estate office, partially offset by non-U.S. commercial. At March 31, 2023 and December 31, 2022, 87 percent and 88 percent of commercial reservable criticized utilized exposure was secured.



Table 28	Commercial Reservable Criticized Utilized Exposure (1, 2)




(Dollars in millions)		March 31, 2023				December 31, 2022
Commercial and industrial:
U.S. commercial		$	11,132	2.87	%	$	10,724	2.78	%
Non-U.S. commercial		2,363		1.81		2,665		2.04
Total commercial and industrial		13,495		2.60		13,389		2.59
Commercial real estate		5,579		7.49		5,201		7.30
Commercial lease financing		222		1.65		240		1.76
		19,296		3.18		18,830		3.13
U.S. small business commercial		493		2.17		444		2.53
Total commercial reservable criticized utilized exposure		$	19,789	3.17		$	19,274	3.12

(1)Total commercial reservable criticized utilized exposure includes loans and leases of $19.0 billion and $18.5 billion and commercial letters of credit of $820 million and $817 million at March 31, 2023 and December 31, 2022.

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

Commercial and Industrial

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

U.S. Commercial

At March 31, 2023, 64 percent of the U.S. commercial loan portfolio, excluding small business, was managed in Global Banking, 21 percent in Global Markets, 14 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 $2.2 billion, or one percent, during the three months ended March 31, 2023 primarily driven by Global Markets. Reservable criticized utilized exposure increased $408 million, or four percent, driven by increases across a broad range of industries.

Non-U.S. Commercial

At March 31, 2023, 65 percent of the non-U.S. commercial loan portfolio was managed in Global Banking, 34 percent in Global Markets and the remainder in GWIM. Non-U.S. commercial loans remained relatively unchanged during the three months ended March 31, 2023. Reservable criticized utilized exposure decreased $302 million, or 11 percent, primarily due to paydowns and sales of Russian exposure. For information on the non-U.S. commercial portfolio, see Non-U.S. Portfolio on page 35.

Commercial Real Estate

Commercial real estate primarily includes commercial loans secured by non-owner-occupied real estate and is dependent on the sale or lease of the real estate as the primary source of repayment. Outstanding loans increased $3.3 billion, or five percent, during the three months ended March 31, 2023 to $73.1 billion with increases across multiple property types. The commercial real estate portfolio is primarily managed in Global Banking and consists of loans made primarily to public and private developers, and commercial real estate firms. The portfolio remains diversified across property types and geographic regions. California represented the largest state concentration at 19 percent of the commercial real estate portfolio at both March 31, 2023 and December 31, 2022.

Reservable criticized utilized exposure increased $378 million, or seven percent, primarily driven by office loans. Office loans represented the largest property type concentration, at 26 percent of the commercial real estate portfolio at March 31, 2023, but only represented approximately two percent of total loans for the Corporation. This property type is roughly 75 percent Class A and has origination loan-to-value of approximately 55 percent. Reservable criticized exposure for the office property type was $3.7 billion at March 31, 2023 and approximately $9.8 billion of office loans are scheduled to mature by the end of 2024. Although we have seen collateral value declines in this property type, these loans remain well secured as of March 31, 2023.


31 Bank of America

During the three months ended March 31, 2023, we continued to see low default rates. 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 29 presents outstanding commercial real estate loans by geographic region, based on the geographic location of the collateral, and by property type.



Table 29	Outstanding Commercial Real Estate Loans


(Dollars in millions)		March 31 2023		December 31 2022
By Geographic Region
Northeast		$	16,281	$	15,601
California		13,824		13,360
Southwest		9,051		8,723
Southeast		8,436		7,713
Florida		5,345		5,374
Illinois		3,606		3,327
Midwest		3,394		3,419
Midsouth		2,752		2,716
Northwest		1,992		1,959
Non-U.S.		5,815		5,518
Other		2,555		2,056
Total outstanding commercial real estate loans		$	73,051	$	69,766
By Property Type
Non-residential
Office		$	18,682	$	18,230
Industrial / Warehouse		14,178		13,775
Multi-family rental		10,883		10,412
Shopping centers /Retail		6,018		5,830
Hotel / Motels		5,732		5,696

Multi-use		2,720		2,403

Other		13,511		12,241
Total non-residential		71,724		68,587
Residential		1,327		1,179
Total outstanding commercial real estate loans		$	73,051	$	69,766

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 included $749 million and $1.0 billion of PPP loans outstanding at March 31, 2023 and December 31, 2022. The decline of $259 million in PPP loans during the three months ended March 31, 2023 was primarily due to repayment of the loans by the Small Business Administration (SBA) under the terms of the program. Excluding PPP, credit card-related products were 55 percent and 53 percent of the U.S. small business commercial portfolio at March 31, 2023 and December 31, 2022 and represented 99 percent of the net charge-offs for the three months ended March 31, 2023 compared to 100 percent for the three months ended March 31, 2022. The increase of $94 million in accruing past due 90 days or more for the three months ended March 31, 2023 was driven by PPP loans, which are fully guaranteed by the SBA.

Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity

Table 30 presents the nonperforming commercial loans, leases and foreclosed properties activity during the three months ended March 31, 2023 and 2022. Nonperforming loans do not include loans accounted for under the fair value option. During the three months ended March 31, 2023, nonperforming commercial loans and leases increased $150 million to $1.2 billion. At March 31, 2023, 97 percent of commercial nonperforming loans, leases and foreclosed properties were secured, and 58 percent were contractually current. Commercial nonperforming loans were carried at 84 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.


						Bank of America 32



Table 30	Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity (1, 2)

		Three Months Ended March 31
(Dollars in millions)			2023			2022
Nonperforming loans and leases, January 1			$	1,054		$	1,578
Additions			419			183


Reductions:
Paydowns			(72)			(159)
Sales			—			(25)
Returns to performing status (3)			(52)			(5)
Charge-offs			(88)			(12)

Transfers to loans held-for-sale			(57)			(39)
Total net reductions to nonperforming loans and leases			150			(57)
Total nonperforming loans and leases, March 31			1,204			1,521






Foreclosed properties, March 31			48			35
Nonperforming commercial loans, leases and foreclosed properties, March 31			$	1,252		$	1,556
Nonperforming commercial loans and leases as a percentage of outstanding commercial loans and leases (4)			0.20		%	0.28		%
Nonperforming commercial loans, leases and foreclosed properties as a percentage of outstanding commercial loans, leases and foreclosed properties (4)			0.21			0.28

(1)Balances do not include nonperforming loans held-for-sale of $250 million and $336 million at March 31, 2023 and 2022.

(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, when the loan otherwise becomes well-secured and is in the process of collection, or when a modified loan demonstrates a sustained period of payment performance.

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

Industry Concentrations

Table 31 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.

Commercial credit exposure is diversified across a broad range of industries. Total commercial committed exposure decreased $3.8 billion during the three months ended March 31, 2023 to $1.2 trillion and was primarily driven by derivative asset activity.

For information on industry limits, see Commercial Portfolio Credit Risk Management – Industry Concentrations in the MD&A of the Corporation’s 2022 Annual Report on Form 10-K.

Asset managers and funds, our largest industry concentration with committed exposure of $164.5 billion, decreased $607 million during the three months ended March 31, 2023.

Real estate, our second largest industry concentration with committed exposure of $101.1 billion, increased $1.4 billion, or

one percent, during the three months ended March 31, 2023. For more information on the commercial real estate and related portfolios, see Commercial Portfolio Credit Risk Management – Commercial Real Estate on page 31.

Capital goods, our third largest industry concentration with committed exposure of $88.1 billion, increased $746 million, or one percent, during the three months ended March 31, 2023. The increase in committed exposure occurred primarily as a result of increases in Trading companies and distributors and Aerospace and defense, partially offset by a decrease in Electric equipment.

There is uncertainty in the U.S. and global economies due to various macroeconomic challenges including geopolitical, inflationary pressures and elevated interest rates, and a number of industries will likely continue to be adversely impacted due to these conditions. We continue to monitor all industries, particularly higher risk industries that are experiencing or could experience a more significant impact to their financial condition.


33 Bank of America



Table 31	Commercial Credit Exposure by Industry (1)

		Commercial Utilized				Total Commercial Committed (2)

(Dollars in millions)		March 31 2023		December 31 2022		March 31 2023		December 31 2022
Asset managers & funds		$	102,345	$	106,842	$	164,480	$	165,087
Real estate (3)		73,515		72,180		101,072		99,722
Capital goods		48,146		45,580		88,060		87,314
Finance companies		58,226		55,248		81,811		79,546
Healthcare equipment and services		34,245		33,554		59,280		58,761
Materials		27,224		26,304		56,244		55,589
Retailing		26,021		24,785		54,127		53,714
Consumer services		27,475		26,980		48,491		47,372
Government & public education		33,443		34,861		46,931		48,134
Food, beverage and tobacco		24,307		23,232		46,838		47,486
Individuals and trusts		31,874		34,897		43,488		45,572
Commercial services and supplies		24,136		23,628		41,711		41,596
Utilities		19,118		20,292		39,209		40,164
Energy		13,667		15,132		34,923		36,043
Transportation		22,051		22,273		33,846		33,858
Technology hardware and equipment		10,500		11,441		29,807		29,825
Global commercial banks		26,910		27,217		29,047		29,293
Media		15,102		14,781		29,006		28,216
Software and services		11,678		12,961		25,300		25,633
Consumer durables and apparel		10,167		10,009		21,784		21,389
Pharmaceuticals and biotechnology		6,581		7,547		21,419		26,208
Vehicle dealers		13,281		12,909		21,237		20,638
Insurance		10,007		10,224		19,109		19,444
Telecommunication services		9,646		9,679		17,666		17,349
Automobiles and components		8,163		8,774		15,910		16,911
Food and staples retailing		7,331		7,157		12,507		11,908
Financial markets infrastructure (clearinghouses)		3,013		3,913		8,526		8,752
Religious and social organizations		2,542		2,467		4,557		4,689

Total commercial credit exposure by industry		$	700,714	$	704,867	$	1,196,386	$	1,200,213

(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 $10.1 billion and $10.4 billion at March 31, 2023 and December 31, 2022.

(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 March 31, 2023 and December 31, 2022, 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 $9.8 billion and $9.0 billion. We recorded net losses of $77 million for the three months ended March 31, 2023 compared to net losses of $9 million for the three months ended March 31, 2022. The gains and losses on these instruments were largely 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 37. For more information, see Trading Risk Management on page 38.

Tables 32 and 33 present the maturity profiles and the credit exposure debt ratings of the net credit default protection portfolio at March 31, 2023 and December 31, 2022.



Table 32	Net Credit Default Protection by Maturity


		March 31 2023		December 31 2022
Less than or equal to one year		10	%	14	%
Greater than one year and less than or equal to five years		87		85
Greater than five years		3		1
Total net credit default protection		100	%	100	%



Table 33	Net Credit Default Protection by Credit Exposure Debt Rating

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


(Dollars in millions)		March 31, 2023				December 31, 2022
Ratings (2, 3)
AAA		$	(479)	4.9	%	$	(379)	4.0	%
AA		(870)		8.9		(867)		10.0
A		(4,269)		43.6		(3,257)		36.0
BBB		(2,216)		22.6		(2,476)		28.0
BB		(894)		9.1		(1,049)		12.0
B		(852)		8.7		(676)		7.0
CCC and below		(120)		1.2		(93)		1.0
NR (4)		(99)		1.0		(182)		2.0
Total net credit default protection		$	(9,799)	100.0	%	$	(8,979)	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.


						Bank of America 34

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 2022 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 2022 Annual Report on Form 10-K. For more information on risks related to our non-U.S. portfolio, see the Geopolitical section within Item 1A. Risk Factors of the Corporation’s 2022 Annual Report on Form 10-K.

Table 34 presents our 20 largest non-U.S. country exposures at March 31, 2023. These exposures accounted for 89 percent of our total non-U.S. exposure at both March 31, 2023 and December 31, 2022. Net country exposure for these 20 countries decreased $23.7 billion in 2023 primarily driven by decreases in Germany, Japan and France.



Table 34	Top 20 Non-U.S. Countries Exposure

(Dollars in millions)		Funded Loans and Loan Equivalents		Unfunded Loan Commitments		Net Counterparty Exposure		Securities/ Other Investments		Country Exposure at March 31 2023		Hedges and Credit Default Protection		Net Country Exposure at March 31 2023		Increase (Decrease) from December 31 2022
United Kingdom		$	27,566	$	16,909	$	11,117	$	1,629	$	57,221	$	(2,376)	$	54,845	$	(500)
Germany		26,231		9,029		1,487		1,561		38,308		(2,197)		36,111		(9,615)
Canada		11,289		9,558		1,459		3,461		25,767		(415)		25,352		(221)
France		14,459		7,975		1,366		1,414		25,214		(2,163)		23,051		(3,542)
Australia		14,128		4,080		673		2,120		21,001		(241)		20,760		543
Japan		13,834		1,768		1,246		1,258		18,106		(787)		17,319		(5,768)
Brazil		8,554		1,293		691		4,192		14,730		(84)		14,646		2,146
India		7,374		484		466		3,620		11,944		(76)		11,868		1,099
China		6,118		289		568		2,604		9,579		(261)		9,318		(1,490)
South Korea		6,300		737		633		1,676		9,346		(61)		9,285		159
Switzerland		5,610		3,223		318		230		9,381		(832)		8,549		(2,139)
Ireland		6,855		1,240		105		282		8,482		(31)		8,451		(639)
Singapore		3,908		681		45		3,851		8,485		(36)		8,449		(1,158)
Netherlands		2,893		4,756		716		1,097		9,462		(1,365)		8,097		(1,186)
Mexico		4,102		1,745		439		1,601		7,887		(65)		7,822		430
Hong Kong		4,392		344		443		1,105		6,284		(17)		6,267		(1,004)
Spain		2,604		1,866		278		1,257		6,005		(445)		5,560		(281)
Italy		3,613		1,729		233		255		5,830		(1,472)		4,358		(1,310)
Belgium		1,397		1,491		1,102		415		4,405		(178)		4,227		364
Sweden		1,207		1,804		111		232		3,354		(380)		2,974		370
Total top 20 non-U.S. countries exposure		$	172,434	$	71,001	$	23,496	$	33,860	$	300,791	$	(13,482)	$	287,309	$	(23,742)

Our largest non-U.S. country exposure at March 31, 2023 was the United Kingdom with net exposure of $54.8 billion, which represents a decrease of $500 million from December 31, 2022. The decline was driven by decreased exposure across a mix of clients offset by increased net

counterparty exposure with central clearing counterparties. Our second largest non-U.S. country exposure was Germany with net exposure of $36.1 billion at March 31, 2023, a decrease of $9.6 billion from December 31, 2022. The decrease was primarily driven by lower deposits with the central bank.


35 Bank of America

Allowance for Credit Losses

The allowance for credit losses decreased $271 million from December 31, 2022 to $14.0 billion at March 31, 2023, which included a $123 million reserve increase related to the consumer portfolio and a $394 million reserve decrease related to the commercial portfolio. The decrease in the allowance reflected a reserve release in our commercial portfolio primarily driven by certain improved macroeconomic conditions, partially offset by a reserve build in our consumer portfolio primarily due to higher-than-expected credit card balances during the three

months ended March 31, 2023. The decrease in allowance also includes the impact of the accounting change to remove the recognition and measurement guidance on TDRs, which reduced the allowance for credit losses by $243 million. For more information on this change in accounting guidance, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.

Table 35 presents an allocation of the allowance for credit losses by product type at March 31, 2023 and December 31, 2022.



Table 35	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)		March 31, 2023						December 31, 2022
Allowance for loan and lease losses
Residential mortgage		$	305	2.44	%	0.13	%		$	328	2.59	%	0.14	%
Home equity		98		0.78		0.38			92		0.73		0.35
Credit card		6,220		49.70		6.73			6,136		48.38		6.57

Direct/Indirect consumer		628		5.02		0.60			585		4.61		0.55
Other consumer		110		0.88		n/m			96		0.76		n/m
Total consumer		7,361		58.82		1.63			7,237		57.07		1.59
U.S. commercial (2)		2,835		22.66		0.75			3,007		23.71		0.80
Non-U.S. commercial		1,019		8.14		0.82			1,194		9.41		0.96
Commercial real estate		1,253		10.01		1.72			1,192		9.40		1.71
Commercial lease financing		46		0.37		0.34			52		0.41		0.38
Total commercial		5,153		41.18		0.87			5,445		42.93		0.93
Allowance for loan and lease losses		12,514		100.00	%	1.20			12,682		100.00	%	1.22


Reserve for unfunded lending commitments		1,437							1,540
Allowance for credit losses		$	13,951						$	14,222

(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 $864 million and $844 million at March 31, 2023 and December 31, 2022.

n/m = not meaningful

Net charge-offs for the three months ended March 31, 2023 were $807 million and increased $415 million, or 106 percent, compared to $392 million for the same period in 2022 primarily driven by credit card losses increasing off of historic lows and higher overdraft losses due to an increase in industry-wide check fraud activity. The provision for credit losses increased $901 million to $931 million for the three months ended March 31, 2023 compared to the same period in 2022. The provision for credit losses for the three months ended March 31, 2023 was driven by our consumer portfolio primarily due to higher-than-expected credit card balances during the first quarter of 2023. This was partially offset by certain improved macroeconomic conditions that primarily benefited our commercial portfolio. The provision for credit losses for the consumer portfolio, including unfunded lending commitments, increased $932 million to $946 million for the three months

ended March 31, 2023 compared to the same period in 2022. The provision for credit losses for the commercial portfolio, including unfunded lending commitments, decreased $165 million to $149 million for the three months ended March 31, 2023 compared to the same period in 2022.

Table 36 presents a rollforward of the allowance for credit losses, including certain loan and allowance ratios for the three months ended March 31, 2023 and 2022. 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 to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.


						Bank of America 36



Table 36	Allowance for Credit Losses

		Three Months Ended March 31
(Dollars in millions)		2023			2022
Allowance for loan and lease losses, December 31		$	12,682		$	12,387
January 1, 2023 adoption of credit loss standard		(243)			—
Allowance for loan and lease losses, January 1		12,439			12,387
Loans and leases charged off
Residential mortgage		(8)			(10)
Home equity		(6)			(13)
Credit card		(650)			(473)
Direct/Indirect consumer		(40)			(62)
Other consumer		(171)			(84)
Total consumer charge-offs		(875)			(642)
U.S. commercial (1)		(134)			(67)
Non-U.S. commercial		(23)			(2)
Commercial real estate		(24)			(23)

Total commercial charge-offs		(181)			(92)
Total loans and leases charged off		(1,056)			(734)
Recoveries of loans and leases previously charged off
Residential mortgage		7			20
Home equity		18			43
Credit card		149			176
Direct/Indirect consumer		39			58
Other consumer		9			5
Total consumer recoveries		222			302
U.S. commercial (2)		21			39
Non-U.S. commercial		3			1
Commercial real estate		2			—
Commercial lease financing		1			—
Total commercial recoveries		27			40
Total recoveries of loans and leases previously charged off		249			342
Net charge-offs		(807)			(392)

Provision for loan and lease losses		900			108
Other		(18)			1
Allowance for loan and lease losses, March 31		12,514			12,104




Reserve for unfunded lending commitments, January 1		1,540			1,456
Provision for unfunded lending commitments		(103)			(78)
Other		—			1
Reserve for unfunded lending commitments, March 31		1,437			1,379
Allowance for credit losses, March 31		$	13,951		$	13,483

Loan and allowance ratios (3) :
Loans and leases outstanding at March 31		$	1,042,009		$	986,034
Allowance for loan and lease losses as a percentage of total loans and leases outstanding at March 31		1.20		%	1.23		%
Consumer allowance for loan and lease losses as a percentage of total consumer loans and leases outstanding at March 31		1.63			1.53
Commercial allowance for loan and lease losses as a percentage of total commercial loans and leases outstanding at March 31		0.87			0.98
Average loans and leases outstanding		$	1,036,337		$	970,491
Net charge-offs as a percentage of average loans and leases outstanding		0.32		%	0.16		%

Allowance for loan and lease losses as a percentage of total nonperforming loans and leases at March 31		319			262
Ratio of the allowance for loan and lease losses at March 31 to annualized net charge-offs		3.83			7.62

Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases at March 31 (4)		$	7,122		$	6,646
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases at March 31 (4)		138		%	118		%

(1)Includes U.S. small business commercial charge-offs of $75 million and $56 million for the three months ended March 31, 2023 and 2022.

(2)Includes U.S. small business commercial recoveries of $9 million and $14 million for the three months ended March 31, 2023 and 2022.

(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.


37 Bank of America

Market Risk Management

For more information on our market risk management process, see Market Risk Management in the MD&A of the Corporation’s 2022 Annual Report on Form 10-K. For more information on market risks, see the Market section within Item 1A. Risk Factors of the Corporation’s 2022 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.

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 37 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 2022 Annual Report on Form 10-K.

The total market-based portfolio VaR results in Table 37 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 37 presents period-end, average, high and low daily trading VaR for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022 using a 99 percent confidence level. The amounts disclosed in Table 37 and Table 38 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 for the three months ended March 31, 2023 compared to the prior quarter slightly decreased due to reductions in market making inventory across FICC and improved diversification across asset classes.



Table 37	Market Risk VaR for Trading Activities

		Three Months Ended

		March 31, 2023								December 31, 2022								March 31, 2022
(Dollars in millions)		Period End		Average		High (1)		Low (1)		Period End		Average		High (1)		Low (1)		Period End		Average		High (1)		Low (1)
Foreign exchange		$	39	$	32	$	42	$	17	$	38	$	30	$	39	$	20	$	20	$	18	$	24	$	13
Interest rate		43		43		56		32		36		36		$	52	28		49		36		56		25
Credit		52		84		108		52		76		79		92		66		55		64		71		52
Equity		19		19		25		14		18		18		23		14		23		23		28		19
Commodities		11		11		14		8		8		11		15		7		13		10		18		7
Portfolio diversification		(103)		(122)		n/a		n/a		(81)		(98)		n/a		n/a		(99)		(95)		n/a		n/a
Total covered positions portfolio		61		67		92		54		95		76		103		56		61		56		69		48
Impact from less liquid exposures (2)		14		42		n/a		n/a		35		41		n/a		n/a		17		23		n/a		n/a
Total covered positions and less liquid trading positions portfolio		75		109		149		69		130		117		152		81		78		79		135		61
Fair value option loans		15		41		49		15		48		46		60		40		63		54		63		45
Fair value option hedges		14		16		17		14		16		16		18		14		22		18		22		16
Fair value option portfolio diversification		(19)		(32)		n/a		n/a		(38)		(36)		n/a		n/a		(51)		(35)		n/a		n/a
Total fair value option portfolio		10		25		30		10		26		26		34		24		34		37		41		31
Portfolio diversification		(7)		(10)		n/a		n/a		9		(7)		n/a		n/a		(18)		(19)		n/a		n/a
Total market-based portfolio		$	78	$	124	173		73		$	165	$	136	197		90		$	94	$	97	153		70

(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.

(2)Impact is net of diversification effects between the covered positions and less liquid trading positions portfolios.

n/a = not applicable


						Bank of America 38

The following graph presents the daily covered positions and less liquid trading positions portfolio VaR for the previous five quarters, corresponding to the data in Table 37.

Additional VaR statistics produced within our single VaR model are provided in Table 38 at the same level of detail as in Table 37. 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 38 presents average trading VaR statistics at 99 percent and 95 percent confidence levels for the three months ended March 31, 2023, December 31, 2022 and March 31, 2022.



Table 38	Average Market Risk VaR for Trading Activities – 99 percent and 95 percent VaR Statistics


		Three Months Ended
		March 31, 2023				December 31, 2022				March 31, 2022
(Dollars in millions)		99 percent		95 percent		99 percent		95 percent		99 percent		95 percent
Foreign exchange		$	32	$	20	$	30	$	17	$	18	$	12
Interest rate		43		22		36		18		36		16
Credit		84		31		79		33		64		27
Equity		19		8		18		9		23		13
Commodities		11		6		11		6		10		6
Portfolio diversification		(122)		(53)		(98)		(49)		(95)		(47)
Total covered positions portfolio		67		34		76		34		56		27
Impact from less liquid exposures		42		8		41		9		23		3
Total covered positions and less liquid trading positions portfolio		109		42		117		43		79		30
Fair value option loans		41		14		46		13		54		14
Fair value option hedges		16		10		16		10		18		10
Fair value option portfolio diversification		(32)		(14)		(36)		(12)		(35)		(12)
Total fair value option portfolio		25		10		26		11		37		12
Portfolio diversification		(10)		(7)		(7)		(8)		(19)		(8)
Total market-based portfolio		$	124	$	45	$	136	$	46	$	97	$	34

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 2022 Annual Report on Form 10-K.

During the three months ended March 31, 2023, 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 2022 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 March 31, 2023 compared to the three months ended December 31, 2022. During the three months ended March 31, 2023, positive trading-related revenue was recorded for 100 percent of the trading days, of which 98 percent were daily trading gains of over $25 million. This compares to the three months ended December 31, 2022 where positive trading-related revenue was recorded for 98 percent of the trading days, of which 85 percent were daily trading gains of over $25 million.


39 Bank of America

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 2022 Annual Report on Form 10-K.

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 2022 Annual Report on Form 10-K.

Table 39 presents the spot and 12-month forward rates used in our baseline forecasts at March 31, 2023 and December 31, 2022.



Table 39	Forward Rates

		March 31, 2023
		Federal Funds		SOFR (1)		10-Year Swap
Spot rates		5.00	%	4.87	%	3.46	%
12-month forward rates		4.00		4.07		3.31

		December 31, 2022
		Federal Funds		Three-month LIBOR		10-Year Swap
Spot rates		4.50	%	4.77	%	3.84	%
12-month forward rates		4.75		4.78		3.62

(1) The Corporation uses SOFR in its baseline forecast as one of the primary ARRs used as a result of the planned cessation of LIBOR in 2023. For more information on the transition from LIBOR to ARRs, see Executive Summary – Recent Developments – LIBOR and Other Benchmark Rates on page 3.

Table 40 shows the pretax impact to forecasted net interest income over the next 12 months from March 31, 2023 and December 31, 2022 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 interest rates are floored at zero.

During the three months ended March 31, 2023, the overall decrease in asset sensitivity of our balance sheet to higher and lower rate scenarios was primarily due to changes in deposit product mix and risk management activities performed in our ALM portfolio to respond to changing market conditions. 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 negatively impact the fair value of our debt securities classified as available for sale and 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 would be reduced over time by offsetting positive impacts to net interest income generated from the banking book activities. For more information on Basel 3, see Capital Management – Regulatory Capital on page 17.



Table 40	Estimated Banking Book Net Interest Income Sensitivity to Curve Changes

		Short Rate (bps)	Long Rate (bps)

(Dollars in millions)				March 31, 2023		December 31, 2022

Parallel Shifts
+100 bps instantaneous shift		+100	+100	$	3,251	$	3,829

-100 bps instantaneous shift		-100	-100	(3,593)		(4,591)
Flatteners
Short-end instantaneous change		+100	—	3,134		3,698

Long-end instantaneous change		—	-100	(152)		(157)
Steepeners

Short-end instantaneous change		-100	—	(3,445)		(4,420)
Long-end instantaneous change		—	+100	122		131

The sensitivity analysis in Table 40 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.


						Bank of America 40

The behavior of our deposit 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 40 assumes no change in deposit portfolio size or mix from the baseline forecast in alternate rate environments. In higher rate scenarios, the increase in net interest income would be impacted by any customer activity resulting in the replacement of low-cost or noninterest-bearing deposits with higher yielding deposits or market-based funding as our benefit in those scenarios would be reduced. Conversely, in lower-rate scenarios, any customer activity that results in the replacement of higher yielding deposits or market-based funding with low-cost or noninterest-bearing deposits would reduce our exposure in those scenarios.

For interest rate scenarios larger than 100 bps shifts, it is expected that the interest rate sensitivity will illustrate non-linear behaviors as there are numerous estimates and assumptions, which require a high degree of judgment and are often interrelated, that could impact the outcome. Pertaining to the mortgage-backed securities and residential mortgage portfolio, if long-end interest rates were to significantly decrease over the next twelve months, for example over 200 bps, there would generally be an increase in customer prepayment behaviors with an incremental reduction to net interest income, noting that the extent of changes in customer prepayment activity can be impacted by multiple factors and is not necessarily limited to long-end interest rates. Conversely, if long-end interest rates were to significantly increase over the next twelve months, for example, over 200 bps, customer prepayments would likely modestly decrease and result in an incremental increase to net interest income. In addition, deposit pricing will have non-linear impacts to larger short-end rate movements. In decreasing interest rate scenarios, and particularly where interest rates have decreased to small amounts, the ability to further reduce rates paid is reduced as customer rates near zero. In higher short-end rate scenarios, deposit pricing will likely increase at a faster rate, leading to incremental interest expense and reducing asset sensitivity. While the impact related to the above assumptions used in the asset sensitivity analysis can provide directional analysis on how net interest income will be impacted in changing environments, the ultimate impact is dependent upon the interrelationship of the assumptions and factors, which vary in different macroeconomic 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 40. 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 not significant.

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 not significant. 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.

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 2022 Annual Report on Form 10-K.

There were no significant gains or losses related to the change in fair value of MSRs, IRLCs and LHFS, net of gains and losses on the hedge portfolio, for the three months ended March 31, 2023 and 2022. 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 physical impacts of climate change, driven by extreme weather events such as hurricanes and floods, as well as chronic longer-term shifts such as rising average global temperatures and sea levels, and (2) risks related to the transition to a low-carbon economy, which may entail extensive policy, legal, technology and market changes. These changes and events may have broad impacts on operations, supply chains, distribution networks, customers and markets and are otherwise referred to, respectively, as physical risk and transition risk. These risks may impact both financial and nonfinancial risk types. Physical climate events may lead to increased credit risk by diminishing borrowers’ repayment capacity or collateral value, or increased operational risk by impacting the Corporation’s facilities, employees, customers or vendors. Climate-related transition changes in policy, technology or the market may amplify credit risk through financial impacts to the Corporation or its customers or counterparties or increase market risk, including through sudden price adjustments. In addition, reputational risk may arise, including from our climate-related practices, disclosures and commitments.


41 Bank of America

As climate risk spans 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 each of our seven key types of risk.

We publicly announced our commitment to achieve net zero emissions in our financing activities, operations, and supply chain before 2050 (Net Zero Goal). In connection with our Net Zero Goal, we set certain 2030 targets, including reducing emissions associated with our operations and financing activities, related to auto manufacturing, energy and power generation, and for our supply chain, including that a certain proportion of our global suppliers set their own climate targets (2030 Targets). We disclosed our 2019 and 2020 financed emission and emission intensity metrics for the above referenced sectors in our 2022 Task Force on Climate-related Financial Disclosures (TCFD) Report, with 2019 serving as the baseline for our financed emissions targets.

We plan to disclose the financed emissions for additional portions of our business loan portfolio in 2023, and we plan to set financing activity emission reduction targets for other key sectors by April 2024.

Achieving our climate-related goals and targets, including our Net Zero Goal and 2030 Targets, may require technological advances, clearly defined roadmaps for industry sectors, new standards and public policies, including those that improve the cost of capital for the transition to a low-carbon economy and better emissions data reporting, as well as ongoing, strong and active engagement with customers, suppliers, investors, government officials and other stakeholders.

Given the extended period of these and other climate-related goals we have established, our initiatives have not resulted in a significant effect on our results of operations or financial position in the relevant periods presented herein.

For more information on our governance framework and climate risk management process, see the Managing Risk and Climate Risk Management sections in the MD&A of the Corporation’s 2022 Annual Report on Form 10-K. For more information on climate risk, see Item 1A. Risk Factors – Other of the Corporation’s 2022 Annual Report on Form 10-K. For more information on climate-related matters and the Corporation’s climate-related goals and commitments, including our plans to achieve our Net Zero Goal and 2030 Targets and progress on our sustainable finance goals, see the Corporation’s website, including our 2022 TCFD Report and the 2022 Annual Report to shareholders available on the Investor Relations portion of our website. The contents of the Corporation’s website, including the 2022 TCFD Report and 2022 Annual Report to shareholders are not incorporated by reference into this Quarterly Report on Form 10-Q.

The foregoing discussion and our discussion in the 2022 TCFD Report and Annual Report to shareholders regarding our goals and commitments with respect to climate risk management, including environmental transition considerations, include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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.

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 2022 Annual Report on Form 10-K and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K.


						Bank of America 42

Non-GAAP Reconciliations

Table 41 provides reconciliations of certain non-GAAP financial measures to the most closely related GAAP financial measures.



Table 41	Average and Period-end Supplemental Financial Data and Reconciliations to GAAP Financial Measures (1)




		2023 Quarter		2022 Quarters
(Dollars in millions)		First		Fourth		Third		Second		First














































Reconciliation of average shareholders’ equity to average tangible shareholders’ equity and average tangible common shareholders’ equity
Shareholders’ equity		$	277,252	$	272,629	$	271,017	$	268,197	$	269,309
Goodwill		(69,022)		(69,022)		(69,022)		(69,022)		(69,022)
Intangible assets (excluding MSRs)		(2,068)		(2,088)		(2,107)		(2,127)		(2,146)
Related deferred tax liabilities		899		914		920		926		929
Tangible shareholders’ equity		$	207,061	$	202,433	$	200,808	$	197,974	$	199,070
Preferred stock		(28,397)		(28,982)		(29,134)		(28,674)		(26,444)
Tangible common shareholders’ equity		$	178,664	$	173,451	$	171,674	$	169,300	$	172,626
Reconciliation of period-end shareholders’ equity to period-end tangible shareholders’ equity and period-end tangible common shareholders’ equity




Shareholders’ equity		$	280,196	$	273,197	$	269,524	$	269,118	$	266,617
Goodwill		(69,022)		(69,022)		(69,022)		(69,022)		(69,022)
Intangible assets (excluding MSRs)		(2,055)		(2,075)		(2,094)		(2,114)		(2,133)
Related deferred tax liabilities		895		899		915		920		926
Tangible shareholders’ equity		$	210,014	$	202,999	$	199,323	$	198,902	$	196,388
Preferred stock		(28,397)		(28,397)		(29,134)		(29,134)		(27,137)
Tangible common shareholders’ equity		$	181,617	$	174,602	$	170,189	$	169,768	$	169,251
Reconciliation of period-end assets to period-end tangible assets
Assets		$	3,194,657	$	3,051,375	$	3,072,953	$	3,111,606	$	3,238,223
Goodwill		(69,022)		(69,022)		(69,022)		(69,022)		(69,022)
Intangible assets (excluding MSRs)		(2,055)		(2,075)		(2,094)		(2,114)		(2,133)
Related deferred tax liabilities		895		899		915		920		926
Tangible assets		$	3,124,475	$	2,981,177	$	3,002,752	$	3,041,390	$	3,167,994

(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 6.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

See Market Risk Management on page 38 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 March 31, 2023, that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.


43 Bank of America

Part I. Financial Information

Item 1. Financial Statements

Bank of America Corporation and Subsidiaries



Consolidated Statement of Income

	Three Months Ended March 31
(In millions, except per share information)		2023		2022
Net interest income
Interest income		$	28,655	$	12,894
Interest expense		14,207		1,322
Net interest income		14,448		11,572

Noninterest income
Fees and commissions		7,894		8,985
Market making and similar activities		4,712		3,238
Other income		(796)		(567)
Total noninterest income		11,810		11,656
Total revenue, net of interest expense		26,258		23,228

Provision for credit losses		931		30

Noninterest expense
Compensation and benefits		9,918		9,482
Occupancy and equipment		1,799		1,760
Information processing and communications		1,697		1,540
Product delivery and transaction related		890		933
Professional fees		537		450
Marketing		458		397
Other general operating		939		757


Total noninterest expense		16,238		15,319
Income before income taxes		9,089		7,879
Income tax expense		928		812
Net income		$	8,161	$	7,067
Preferred stock dividends		505		467
Net income applicable to common shareholders		$	7,656	$	6,600

Per common share information
Earnings		$	0.95	$	0.81
Diluted earnings		0.94		0.80

Average common shares issued and outstanding		8,065.9		8,136.8
Average diluted common shares issued and outstanding		8,182.3		8,202.1



Consolidated Statement of Comprehensive Income

	Three Months Ended March 31
(Dollars in millions)		2023		2022
Net income		$	8,161	$	7,067
Other comprehensive income (loss), net-of-tax:
Net change in debt securities		555		(3,447)
Net change in debit valuation adjustments		10		261
Net change in derivatives		2,042		(5,179)
Employee benefit plan adjustments		10		24
Net change in foreign currency translation adjustments		12		28
Other comprehensive income (loss)		2,629		(8,313)
Comprehensive income (loss)		$	10,790	$	(1,246)

See accompanying Notes to Consolidated Financial Statements.


						Bank of America 44

Bank of America Corporation and Subsidiaries



Consolidated Balance Sheet

		March 31 2023		December 31 2022
(Dollars in millions)
Assets
Cash and due from banks		$	29,327	$	30,334
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks		346,891		199,869
Cash and cash equivalents		376,218		230,203
Time deposits placed and other short-term investments		11,637		7,259
Federal funds sold and securities borrowed or purchased under agreements to resell (includes $163,505 and $146,999 measured at fair value)		298,078		267,574
Trading account assets (includes $141,314 and $115,505 pledged as collateral)		314,978		296,108
Derivative assets		40,947		48,642
Debt securities:
Carried at fair value		172,510		229,994
Held-to-maturity, at cost (fair value – $525,452 and $524,267)		624,495		632,825
Total debt securities		797,005		862,819
Loans and leases (includes $4,397 and $5,771 measured at fair value)		1,046,406		1,045,747
Allowance for loan and lease losses		(12,514)		(12,682)
Loans and leases, net of allowance		1,033,892		1,033,065
Premises and equipment, net		11,708		11,510
Goodwill		69,022		69,022
Loans held-for-sale (includes $1,386 and $1,115 measured at fair value)		6,809		6,871
Customer and other receivables		79,902		67,543
Other assets (includes $12,551 and $9,594 measured at fair value)		154,461		150,759
Total assets		$	3,194,657	$	3,051,375

Liabilities
Deposits in U.S. offices:
Noninterest-bearing		$	617,922	$	640,745
Interest-bearing (includes $378 and $311 measured at fair value)		1,183,106		1,182,590
Deposits in non-U.S. offices:
Noninterest-bearing		17,686		20,480
Interest-bearing		91,688		86,526
Total deposits		1,910,402		1,930,341
Federal funds purchased and securities loaned or sold under agreements to repurchase (includes $234,338 and $151,708 measured at fair value)		314,380		195,635
Trading account liabilities		92,452		80,399
Derivative liabilities		40,169		44,816
Short-term borrowings (includes $1,805 and $832 measured at fair value)		56,564		26,932
Accrued expenses and other liabilities (includes $13,659 and $9,752 measured at fair value and $1,437 and $1,540 of reserve for unfunded lending commitments)		216,621		224,073
Long-term debt (includes $39,413 and $33,070 measured at fair value)		283,873		275,982
Total liabilities		2,914,461		2,778,178
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 – 4,088,099 and 4,088,101 shares		28,397		28,397
Common stock and additional paid-in capital, $0.01 par value; authorized – 12,800,000,000 shares; issued and outstanding – 7,972,438,148 and 7,996,777,943 shares		57,264		58,953
Retained earnings		213,062		207,003
Accumulated other comprehensive income (loss)		(18,527)		(21,156)

Total shareholders’ equity		280,196		273,197
Total liabilities and shareholders’ equity		$	3,194,657	$	3,051,375

	Assets of consolidated variable interest entities included in total assets above (isolated to settle the liabilities of the variable interest entities)
	Trading account assets	$	4,276	$	2,816


	Loans and leases	15,754		16,738
	Allowance for loan and lease losses	(797)		(797)
	Loans and leases, net of allowance	14,957		15,941

	All other assets	129		116
	Total assets of consolidated variable interest entities	$	19,362	$	18,873
	Liabilities of consolidated variable interest entities included in total liabilities above
	Short-term borrowings (includes $22 and $42 of non-recourse short-term borrowings)	$	1,339	$	42
	Long-term debt (includes $4,883 and $4,581 of non-recourse debt)	4,883		4,581
	All other liabilities (includes $7 and $13 of non-recourse liabilities)	7		12
	Total liabilities of consolidated variable interest entities	$	6,229	$	4,635

See accompanying Notes to Consolidated Financial Statements.


45 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, December 31, 2021	$	24,708	8,077.8	$	62,398	$	188,064	$	(5,104)	$	270,066

Net income						7,067				7,067
Net change in debt securities								(3,447)		(3,447)
Net change in debit valuation adjustments								261		261
Net change in derivatives								(5,179)		(5,179)
Employee benefit plan adjustments								24		24
Net change in foreign currency translation adjustments								28		28
Dividends declared:
Common						(1,706)				(1,706)
Preferred						(467)				(467)
Issuance of preferred stock	2,429									2,429

Common stock issued under employee plans, net, and other			41.7	220		(29)				191
Common stock repurchased			(57.4)	(2,650)						(2,650)
Balance, March 31, 2022	$	27,137	8,062.1	$	59,968	$	192,929	$	(13,417)	$	266,617

















































Balance, December 31, 2022	$	28,397	7,996.8	$	58,953	$	207,003	$	(21,156)	$	273,197
Cumulative adjustment for adoption of credit loss accounting standard						184				184
Net income						8,161				8,161
Net change in debt securities								555		555
Net change in debit valuation adjustments								10		10
Net change in derivatives								2,042		2,042
Employee benefit plan adjustments								10		10
Net change in foreign currency translation adjustments								12		12
Dividends declared:
Common						(1,774)				(1,774)
Preferred						(505)				(505)


Common stock issued under employee plans, net, and other			42.4	526		(7)				519
Common stock repurchased			(66.8)	(2,215)						(2,215)
Balance, March 31, 2023	$	28,397	7,972.4	$	57,264	$	213,062	$	(18,527)	$	280,196

See accompanying Notes to Consolidated Financial Statements.


						Bank of America 46

Bank of America Corporation and Subsidiaries



Consolidated Statement of Cash Flows

	Three Months Ended March 31

(Dollars in millions)	2023		2022
Operating activities
Net income	$	8,161	$	7,067
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	931		30
(Gains) losses on sales of debt securities	210		(7)
Depreciation and amortization	503		494
Net amortization of premium/discount on debt securities	34		905
Deferred income taxes	(169)		47
Stock-based compensation	794		739

Loans held-for-sale:
Originations and purchases	(2,285)		(6,832)
Proceeds from sales and paydowns of loans originally classified as held for sale and instruments from related securitization activities	2,378		12,934
Net change in:
Trading and derivative assets/liabilities	(725)		(64,939)
Other assets	(16,078)		(14,876)
Accrued expenses and other liabilities	(7,066)		19,820
Other operating activities, net	2,012		(812)
Net cash used in operating activities	(11,300)		(45,430)
Investing activities
Net change in:
Time deposits placed and other short-term investments	(4,512)		1,499
Federal funds sold and securities borrowed or purchased under agreements to resell	(30,504)		(51,388)
Debt securities carried at fair value:
Proceeds from sales	61,493		2,341
Proceeds from paydowns and maturities	19,085		29,654
Purchases	(19,104)		(35,661)
Held-to-maturity debt securities:
Proceeds from paydowns and maturities	8,042		21,496
Purchases	(38)		(19,599)
Loans and leases:
Proceeds from sales of loans originally classified as held for investment and instruments from related securitization activities	2,168		2,042
Purchases	(1,510)		(1,624)
Other changes in loans and leases, net	(2,319)		(16,193)
Other investing activities, net	(1,955)		(975)
Net cash provided by (used in) investing activities	30,846		(68,408)
Financing activities
Net change in:
Deposits	(19,939)		7,878
Federal funds purchased and securities loaned or sold under agreements to repurchase	118,745		22,356
Short-term borrowings	29,632		1,036
Long-term debt:
Proceeds from issuance	14,319		21,123
Retirement	(11,341)		(8,241)
Preferred stock:
Proceeds from issuance	—		2,429

Common stock repurchased	(2,215)		(2,650)
Cash dividends paid	(2,352)		(2,222)
Other financing activities, net	(728)		(823)
Net cash provided by financing activities	126,121		40,886
Effect of exchange rate changes on cash and cash equivalents	348		(1,335)
Net increase (decrease) in cash and cash equivalents	146,015		(74,287)
Cash and cash equivalents at January 1	230,203		348,221
Cash and cash equivalents at March 31	$	376,218	$	273,934

See accompanying Notes to Consolidated Financial Statements.


47 Bank of America

Bank of America Corporation and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 1 Summary of Significant Accounting Principles

Bank of America Corporation, a bank holding company and a financial holding company, provides a diverse range of financial services and products throughout the U.S. and in certain international markets. The term “the Corporation” as used herein 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.

Principles of Consolidation and Basis of Presentation

The Consolidated Financial Statements include the accounts of the Corporation and its majority-owned subsidiaries and those variable interest entities (VIEs) where the Corporation is the primary beneficiary. Intercompany accounts and transactions have been eliminated. Results of operations of acquired companies are included from the dates of acquisition, and for VIEs, from the dates that the Corporation became the primary beneficiary. Assets held in an agency or fiduciary capacity are not included in the Consolidated Financial Statements. The Corporation accounts for investments in companies for which it owns a voting interest and for which it has the ability to exercise significant influence over operating and financing decisions using the equity method of accounting. These investments, which include the Corporation’s interests in affordable housing and renewable energy partnerships, are recorded in other assets. Equity method investments are subject to impairment testing, and the Corporation’s proportionate share of income or loss is included in other income.

The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could materially differ from those estimates and assumptions.

These unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements, and related notes thereto, of the Corporation’s 2022 Annual Report on Form 10-K.

The nature of the Corporation’s business is such that the results of any interim period are not necessarily indicative of results for a full year. In the opinion of management, all adjustments, which consist of normal recurring adjustments necessary for a fair statement of the interim period results, have been made. The Corporation evaluates subsequent events through the date of filing with the Securities and Exchange Commission (SEC). Certain prior-period amounts have been reclassified to conform to current-period presentation.

New Accounting Standard Issued

Investments – Equity Method and Joint Ventures

The FASB updated its guidance on the accounting for tax credit investments, which permits entities to make an accounting policy election to apply the proportional amortization method

when certain conditions are met. The new accounting guidance is effective on a retrospective or modified retrospective basis beginning on January 1, 2024, with early adoption permitted. If adopted, the Corporation does not expect the guidance to have a material impact on its consolidated financial position or results of operations.

New Accounting Standard Adopted

Financial Instruments – Credit Losses

On January 1, 2023, the Corporation adopted the new accounting and disclosure requirements for expected credit losses (ECL) that removed the recognition and measurement guidance on troubled debt restructurings (TDRs) and added disclosures on the financial effect and subsequent performance of certain types of modifications made to borrowers experiencing financial difficulties.

Upon adoption of the standard, the Corporation recorded a reduction of $243 million in the allowance for credit losses for the impact of changes in the methodology used to estimate the allowance for credit losses for non-collateral dependent consumer and commercial TDRs. There was no impact to the valuation of loans previously classified as collateral-dependent TDRs. After adjusting for deferred taxes, the Corporation recorded an increase of $184 million in retained earnings through a cumulative-effect adjustment.

The additional disclosures are included in Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses on a prospective basis and include loan modifications where the contractual payment terms of the borrower’s loan agreement were modified through a refinancing or restructuring. Modifications that do not impact the contractual payment terms, such as covenant waivers, insignificant payment deferrals, and any modifications made to loans carried at fair value, loans held-for-sale (LHFS) and leases are not included in the disclosures.

The Corporation uses various indicators to identify borrowers in financial difficulty. Consumer loan borrowers that are delinquent and commercial loan borrowers that are rated substandard or worse are the primary criteria used to identify borrowers who are experiencing financial difficulty.

If a borrower is current at the time of modification, the loan generally remains a performing loan as long as there is demonstrated performance prior to the modification, and payment in full under the modified terms is expected. Otherwise, the loan is placed on nonaccrual status and reported as nonperforming, excluding fully-insured consumer real estate loans, until there is sustained repayment performance for a reasonable period.

The allowance for loan and lease losses for modified loans is determined in a manner consistent with the methodology for the respective class and credit rating of the financing receivable as described in Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K.


						Bank of America 48

NOTE 2 Net Interest Income and Noninterest Income

The table below presents the Corporation’s net interest income and noninterest income disaggregated by revenue source for the three months ended March 31, 2023 and 2022. For more information, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K. For a disaggregation of noninterest income by business segment and All Other, see Note 17 – Business Segment Information.



	Three Months Ended March 31
(Dollars in millions)		2023		2022
Net interest income
Interest income
Loans and leases		$	13,097	$	7,352
Debt securities		5,460		3,823
Federal funds sold and securities borrowed or purchased under agreements to resell (1)		3,712		(7)
Trading account assets		2,028		1,081
Other interest income		4,358		645
Total interest income		28,655		12,894

Interest expense
Deposits		4,314		164
Short-term borrowings (1)		6,180		(112)
Trading account liabilities		504		364
Long-term debt		3,209		906
Total interest expense		14,207		1,322
Net interest income		$	14,448	$	11,572

Noninterest income
Fees and commissions
Card income
Interchange fees (2)		$	956	$	935
Other card income		513		468
Total card income		1,469		1,403
Service charges
Deposit-related fees		1,097		1,530
Lending-related fees		313		303
Total service charges		1,410		1,833
Investment and brokerage services
Asset management fees		2,918		3,286
Brokerage fees		934		1,006
Total investment and brokerage services		3,852		4,292
Investment banking fees
Underwriting income		569		672
Syndication fees		231		312
Financial advisory services		363		473
Total investment banking fees		1,163		1,457
Total fees and commissions		7,894		8,985
Market making and similar activities		4,712		3,238
Other income (loss)		(796)		(567)
Total noninterest income		$	11,810	$	11,656

(1)For more information on negative interest, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K.

(2)Gross interchange fees and merchant income were $3.2 billion and $2.9 billion for the three months ended March 31, 2023 and 2022 and are presented net of $2.2 billion and $2.0 billion of expenses for rewards and partner payments as well as certain other card costs for the same periods.


49 Bank of America

NOTE 3 Derivatives

Derivative Balances

Derivatives are entered into on behalf of customers, for trading or to support risk management activities. Derivatives used in risk management activities include derivatives that may or may not be designated in qualifying hedge accounting relationships. Derivatives that are not designated in qualifying hedge accounting relationships are referred to as other risk management derivatives. For more information on the Corporation’s derivatives and hedging activities, see Note 1 – Summary of Significant Accounting Principles and Note 3 –

Derivatives to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K. The following tables present derivative instruments included on the Consolidated Balance Sheet in derivative assets and liabilities at March 31, 2023 and December 31, 2022. Balances are presented on a gross basis, prior to the application of counterparty and cash collateral netting. Total derivative assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of legally enforceable master netting agreements and have been reduced by cash collateral received or paid.



			March 31, 2023
			Gross Derivative Assets						Gross Derivative Liabilities
(Dollars in billions)	Contract/ Notional (1)		Trading and Other Risk Management Derivatives		Qualifying Accounting Hedges		Total		Trading and Other Risk Management Derivatives		Qualifying Accounting Hedges		Total
Interest rate contracts
Swaps	$	22,832.3	$	149.7	$	8.8	$	158.5	$	129.0	$	28.1	$	157.1
Futures and forwards	4,314.7		7.8		—		7.8		8.0		—		8.0
Written options (2)	1,869.5		—		—		—		34.9		—		34.9
Purchased options (3)	1,751.5		36.5		—		36.5		—		—		—
Foreign exchange contracts
Swaps	1,636.0		36.5		1.1		37.6		33.7		1.1		34.8
Spot, futures and forwards	4,876.0		39.3		0.1		39.4		39.5		0.4		39.9
Written options (2)	444.1		—		—		—		6.6		—		6.6
Purchased options (3)	402.4		6.7		—		6.7		—		—		—
Equity contracts
Swaps	423.9		12.7		—		12.7		13.9		—		13.9
Futures and forwards	140.6		2.4		—		2.4		1.2		—		1.2
Written options (2)	884.7		—		—		—		46.4		—		46.4
Purchased options (3)	767.8		39.2		—		39.2		—		—		—
Commodity contracts
Swaps	59.3		4.0		—		4.0		5.0		—		5.0
Futures and forwards	196.8		4.3		—		4.3		4.0		0.2		4.2
Written options (2)	70.8		—		—		—		3.9		—		3.9
Purchased options (3)	79.1		3.4		—		3.4		—		—		—
Credit derivatives (4)
Purchased credit derivatives:
Credit default swaps	386.9		2.8		—		2.8		1.9		—		1.9
Total return swaps/options	133.3		0.7		—		0.7		2.9		—		2.9
Written credit derivatives:
Credit default swaps	358.7		1.4		—		1.4		2.4		—		2.4
Total return swaps/options	124.4		3.3		—		3.3		0.8		—		0.8
Gross derivative assets/liabilities			$	350.7	$	10.0	$	360.7	$	334.1	$	29.8	$	363.9
Less: Legally enforceable master netting agreements							(290.8)						(290.8)
Less: Cash collateral received/paid							(29.0)						(32.9)
Total derivative assets/liabilities							$	40.9					$	40.2

(1)Represents the total contract/notional amount of derivative assets and liabilities outstanding.

(2)Includes certain out-of-the-money purchased options that have a liability amount primarily due to the deferral of option premiums to the end of the contract.

(3)Includes certain out-of-the-money written options that have an asset amount primarily due to the deferral of option premiums to the end of the contract.

(4)The net derivative asset (liability) and notional amount of written credit derivatives for which the Corporation held purchased credit derivatives with identical underlying referenced names were $(1.0) billion and $336.3 billion at March 31, 2023.


						Bank of America 50



			December 31, 2022
			Gross Derivative Assets						Gross Derivative Liabilities
(Dollars in billions)	Contract/ Notional (1)		Trading and Other Risk Management Derivatives		Qualifying Accounting Hedges		Total		Trading and Other Risk Management Derivatives		Qualifying Accounting Hedges		Total
Interest rate contracts
Swaps	$	18,285.9	$	138.2	$	20.7	$	158.9	$	120.3	$	36.7	$	157.0
Futures and forwards	2,796.3		8.6		—		8.6		7.8		—		7.8
Written options (2)	1,657.9		—		—		—		41.4		—		41.4
Purchased options (3)	1,594.7		42.4		—		42.4		—		—		—
Foreign exchange contracts
Swaps	1,509.0		44.0		0.3		44.3		43.3		0.4		43.7
Spot, futures and forwards	4,159.3		59.9		0.1		60.0		62.1		0.6		62.7
Written options (2)	392.2		—		—		—		8.1		—		8.1
Purchased options (3)	362.6		8.3		—		8.3		—		—		—
Equity contracts
Swaps	394.0		10.8		—		10.8		12.2		—		12.2
Futures and forwards	114.6		3.3		—		3.3		1.0		—		1.0
Written options (2)	746.8		—		—		—		45.0		—		45.0
Purchased options (3)	671.6		40.9		—		40.9		—		—		—
Commodity contracts
Swaps	56.0		5.1		—		5.1		5.3		—		5.3
Futures and forwards	157.3		3.0		—		3.0		2.3		0.8		3.1
Written options (2)	59.5		—		—		—		3.3		—		3.3
Purchased options (3)	61.8		3.6		—		3.6		—		—		—
Credit derivatives (4)
Purchased credit derivatives:
Credit default swaps	319.9		2.8		—		2.8		1.6		—		1.6
Total return swaps/options	71.5		0.7		—		0.7		3.0		—		3.0
Written credit derivatives:
Credit default swaps	295.2		1.2		—		1.2		2.4		—		2.4
Total return swaps/options	85.3		4.4		—		4.4		0.9		—		0.9
Gross derivative assets/liabilities			$	377.2	$	21.1	$	398.3	$	360.0	$	38.5	$	398.5
Less: Legally enforceable master netting agreements							(315.9)						(315.9)
Less: Cash collateral received/paid							(33.8)						(37.8)
Total derivative assets/liabilities							$	48.6					$	44.8

(1)Represents the total contract/notional amount of derivative assets and liabilities outstanding.

(2)Includes certain out-of-the-money purchased options that have a liability amount primarily due to the deferral of option premiums to the end of the contract.

(3)Includes certain out-of-the-money written options that have an asset amount primarily due to the deferral of option premiums to the end of the contract.

Offsetting of Derivatives

The Corporation enters into International Swaps and Derivatives Association, Inc. (ISDA) master netting agreements or similar agreements with substantially all of the Corporation’s derivative counterparties. For more information, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2022 Annual Report on Form 10-K.

The following table presents derivative instruments included in derivative assets and liabilities on the Consolidated Balance Sheet at March 31, 2023 and December 31, 2022 by primary risk (e.g., interest rate risk) and the platform, where applicable,

on which these derivatives are transacted. Balances are presented on a gross basis, prior to the application of counterparty and cash collateral netting. Total gross derivative assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of legally enforceable master netting agreements, which include reducing the balance for counterparty netting and cash collateral received or paid.

For more information on offsetting of securities financing agreements, see Note 9 – Securities Financing Agreements, Collateral and Restricted Cash.


51 Bank of America



Offsetting of Derivatives (1)

	Derivative Assets		Derivative Liabilities		Derivative Assets		Derivative Liabilities
(Dollars in billions)	March 31, 2023				December 31, 2022
Interest rate contracts
Over-the-counter	$	130.0	$	125.0	$	138.4	$	132.3
Exchange-traded	0.3		0.2		0.4		0.1
Over-the-counter cleared	73.8		72.8		71.4		71.1
Foreign exchange contracts
Over-the-counter	81.8		79.2		109.7		110.6
Over-the-counter cleared	0.9		0.9		1.3		1.2
Equity contracts
Over-the-counter	23.8		27.3		21.5		22.6
Exchange-traded	29.9		31.9		33.0		33.8
Commodity contracts
Over-the-counter	8.2		10.3		8.3		9.3
Exchange-traded	2.5		2.3		2.4		1.9
Over-the-counter cleared	0.2		0.3		0.3		0.3
Credit derivatives
Over-the-counter	8.1		7.6		8.9		7.5
Over-the-counter cleared	—		—		—		—
Total gross derivative assets/liabilities, before netting
Over-the-counter	251.9		249.4		286.8		282.3
Exchange-traded	32.7		34.4		35.8		35.8
Over-the-counter cleared	74.9		74.0		73.0		72.6
Less: Legally enforceable master netting agreements and cash collateral received/paid
Over-the-counter	(214.4)		(218.2)		(243.8)		(248.2)
Exchange-traded	(31.7)		(31.7)		(33.5)		(33.5)
Over-the-counter cleared	(73.7)		(73.8)		(72.4)		(72.0)
Derivative assets/liabilities, after netting	39.7		34.1		45.9		37.0
Other gross derivative assets/liabilities (2)	1.2		6.1		2.7		7.8
Total derivative assets/liabilities	40.9		40.2		48.6		44.8
Less: Financial instruments collateral (3)	(15.8)		(8.8)		(18.5)		(7.4)
Total net derivative assets/liabilities	$	25.1	$	31.4	$	30.1	$	37.4

(1)Over-the-counter derivatives include bilateral transactions between the Corporation and a particular counterparty. Over-the-counter cleared derivatives include bilateral transactions between the Corporation and a counterparty where the transaction is cleared through a clearinghouse. Exchange-traded derivatives include listed options transacted on an exchange.

(2)Consists of derivatives entered into under master netting agreements where the enforceability of these agreements is uncertain under bankruptcy laws in some countries or industries.

(3)Amounts are limited to the derivative asset/liability balance and, accordingly, do not include excess collateral received/pledged. Financial instruments collateral includes securities collateral received or pledged and cash securities held and posted at third-party custodians that are not offset on the Consolidated Balance Sheet but shown as a reduction to derive net derivative assets and liabilities.

Derivatives Designated as Accounting Hedges

The Corporation uses various types of interest rate and foreign exchange derivative contracts to protect against changes in the fair value of its assets and liabilities due to fluctuations in interest rates and foreign exchange rates (fair value hedges). The Corporation also uses these types of contracts to protect against changes in the cash flows of its assets and liabilities, and other forecasted transactions (cash flow hedges). The Corporation hedges its net investment in consolidated non-U.S.

operations determined to have functional currencies other than the U.S. dollar using forward exchange contracts and cross-currency basis swaps, and by issuing foreign currency denominated debt (net investment hedges).

Fair Value Hedges

The table below summarizes information related to fair value hedges for the three months ended March 31, 2023 and 2022.



Gains and Losses on Derivatives Designated as Fair Value Hedges

	Three Months Ended March 31
	2023				2022

(Dollars in millions)	Derivative		Hedged Item		Derivative		Hedged Item
Interest rate risk on long-term debt (1)	$	3,308	$	(3,305)	$	(11,034)	$	11,219
Interest rate and foreign currency risk on long-term debt (2)	8		(8)		(9)		8
Interest rate risk on available-for-sale securities (3)	(3,027)		3,016		9,817		(9,905)
Price risk on commodity inventory (4)	(519)		519		(232)		237
Total	$	(230)	$	222	$	(1,458)	$	1,559

(1)Amounts are recorded in interest expense in the Consolidated Statement of Income.

(2)For the three months ended March 31, 2023 and 2022, the derivative amount includes gains (losses) of $8 million and $(21) million in interest expense, $1 million and $14 million in market making and similar activities, and $(1) million and $(2) million in accumulated other comprehensive income (OCI). Line item totals are in the Consolidated Statement of Income and on the Consolidated Balance Sheet.

(3)Amounts are recorded in interest income in the Consolidated Statement of Income.

(4)Amounts are recorded in market making and similar activities in the Consolidated Statement of Income.


						Bank of America 52

The table below summarizes the carrying value of hedged assets and liabilities that are designated and qualifying in fair value hedging relationships along with the cumulative amount of fair value hedging adjustments included in the carrying value that have been recorded in the current hedging relationships. These fair value hedging adjustments are open basis adjustments that are not subject to amortization as long as the hedging relationship remains designated.



Designated Fair Value Hedged Assets and Liabilities

	March 31, 2023				December 31, 2022
(Dollars in millions)	Carrying Value		Cumulative Fair Value Adjustments (1)		Carrying Value		Cumulative Fair Value Adjustments (1)

Long-term debt (2)	$	187,097	$	(12,629)	$	187,402	$	(21,372)
Available-for-sale debt securities (2, 3, 4)	107,422		(4,283)		167,518		(18,190)
Trading account assets (5)	8,295		487		16,119		146

(1)Increase (decrease) to carrying value.

(2)At March 31, 2023 and December 31, 2022, the cumulative fair value adjustments remaining on long-term debt and available-for-sale debt securities from discontinued hedging relationships resulted in a decrease of $4.6 billion and an increase of $137 million in the related liability and a decrease in the related asset of $8.3 billion and $4.9 billion, which are being amortized over the remaining contractual life of the de-designated hedged items.

(3)These amounts include the amortized cost of the financial assets in closed portfolios used to designate hedging relationships in which the hedged item is a stated layer that is expected to be remaining at the end of the hedging relationship (i.e. portfolio layer hedging relationship). At March 31, 2023 and December 31, 2022, the amortized cost of the closed portfolios used in these hedging relationships was $21.1 billion and $21.4 billion, of which $9.3 billion and $9.2 billion were designated in a portfolio layer hedging relationship. At March 31, 2023 and December 31, 2022, the cumulative adjustment associated with these hedging relationships was a decrease of $329 million and $451 million.

(4)Carrying value represents amortized cost.

(5)Represents hedging activities related to certain commodities inventory.

Cash Flow and Net Investment Hedges

The table below summarizes certain information related to cash flow hedges and net investment hedges for the three months ended March 31, 2023 and 2022. Of the $9.9 billion after-tax net loss ($13.2 billion pretax) on derivatives in accumulated OCI at March 31, 2023, losses of $4.4 billion after-tax ($5.9 billion pretax) related to both open and terminated cash flow hedges are expected to be reclassified into earnings in the next 12 months. These net losses reclassified into earnings are

expected to primarily decrease net interest income related to the respective hedged items. For open cash flow hedges, the maximum length of time over which forecasted transactions are hedged is approximately seven years. For terminated cash flow hedges, the time period over which the forecasted transactions will be recognized in interest income is approximately five years, with the aggregated amount beyond this time period being insignificant.



Gains and Losses on Derivatives Designated as Cash Flow and Net Investment Hedges

					Three Months Ended March 31
					2023				2022
(Dollars in millions, amounts pretax)	Gains (Losses) Recognized in Accumulated OCI on Derivatives	Gains (Losses) in Income Reclassified from Accumulated OCI	Gains (Losses) Recognized in Accumulated OCI on Derivatives	Gains (Losses) in Income Reclassified from Accumulated OCI

Cash flow hedges
Interest rate risk on variable-rate portfolios (1)					$	2,550	$	(160)	$	(6,774)	$	(8)
Price risk on forecasted MBS purchases (1)					2		—		(90)		3
Price risk on certain compensation plans (2)					17		5		(27)		12
Total					$	2,569	$	(155)	$	(6,891)	$	7
Net investment hedges
Foreign exchange risk (3)					$	(377)	$	—	$	219	$	—

(1)Amounts reclassified from accumulated OCI are recorded in interest income in the Consolidated Statement of Income.

(2)Amounts reclassified from accumulated OCI are recorded in compensation and benefits expense in the Consolidated Statement of Income.

(3)Amounts reclassified from accumulated OCI are recorded in other income in the Consolidated Statement of Income. For the three months ended March 31, 2023 and 2022, amounts excluded from effectiveness testing and recognized in market making and similar activities were gains (losses) of $33 million and $(74) million.


53 Bank of America

Other Risk Management Derivatives

Other risk management derivatives are used by the Corporation to reduce certain risk exposures by economically hedging various assets and liabilities. The table below presents gains (losses) on these derivatives for the three months ended March 31, 2023 and 2022. These gains (losses) are largely offset by the income or expense recorded on the hedged item.



Gains and Losses on Other Risk Management Derivatives

	Three Months Ended March 31
(Dollars in millions)	2023		2022
Interest rate risk on mortgage activities (1, 2)	$	26	$	(147)
Credit risk on loans (2)	(28)		(3)
Interest rate and foreign currency risk on asset and liability management activities (3)	(122)		1,310
Price risk on certain compensation plans (4)	195		(335)

(1)Includes hedges of interest rate risk on mortgage servicing rights (MSRs) and interest rate lock commitments (IRLCs) to originate mortgage loans that will be held for sale.

(2)Gains (losses) on these derivatives are recorded in other income.

(3)Gains (losses) on these derivatives are recorded in market making and similar activities.

(4)Gains (losses) on these derivatives are recorded in compensation and benefits expense.

Transfers of Financial Assets with Risk Retained through Derivatives

The Corporation enters into certain transactions involving the transfer of financial assets that are accounted for as sales where substantially all of the economic exposure to the transferred financial assets is retained through derivatives (e.g., interest rate and/or credit), but the Corporation does not retain control over the assets transferred. At both March 31, 2023 and December 31, 2022, the Corporation had transferred $4.8 billion of non-U.S. government-guaranteed mortgage-backed securities to a third-party trust and retained economic exposure to the transferred assets through derivative contracts. In connection with these transfers, the Corporation received gross cash proceeds of $4.9 billion at the transfer dates. At both March 31, 2023 and December 31, 2022, the fair value of the transferred securities was $4.7 billion.

Sales and Trading Revenue

The Corporation enters into trading derivatives to facilitate client transactions and to manage risk exposures arising from trading account assets and liabilities. It is the Corporation’s policy to include these derivative instruments in its trading activities, which include derivatives and non-derivative cash instruments. The resulting risk from these derivatives is managed on a portfolio basis as part of the Corporation’s Global Markets business segment. For more information on sales and trading revenue, see Note 3 – Derivatives

Form: 10-Q

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