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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, 2024
or
☐ 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:
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| 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 |
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| 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
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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.
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| Large accelerated filer |
☑ |
|
Accelerated filer |
☐ |
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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 29, 2024, there were 7,820,370,305 shares of Bank of America Corporation Common Stock outstanding.
Bank of America Corporation and Subsidiaries
March 31, 2024
Form 10-Q
INDEX
Part I. Financial Information
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| Item 1. Financial Statements |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Part II. Other Information
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, net interest income, 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 2023 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 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, resulting in 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 potential changes to loss allocations between financial institutions and customers, including for losses incurred from the use of our products and services, including electronic payments and payment of checks, that were authorized by the customer but induced by fraud; the impact of failures or disruptions in or breaches of the Corporation’s operations or information systems, or those of third parties, including as a result of cybersecurity incidents; the risks related to the development, implementation, use and management of emerging technologies, including artificial intelligence and machine learning; the risks related to the transition and physical 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; the impact of natural disasters, extreme weather events, military conflicts (including the
Russia/Ukraine conflict, the conflict in the Middle East, the possible expansion of such conflicts 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, 2024, the Corporation had $3.3 trillion in assets and a headcount of approximately 212,000 employees.
As of March 31, 2024, 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 69 million consumer and small business clients with approximately 3,800 retail financial centers, approximately 15,000 ATMs, and leading digital banking platforms (www.bankofamerica.com) with approximately 47 million active users, including approximately 39 million active mobile users. We offer industry-leading support to approximately four million small business households. Our GWIM businesses, with client balances of $4.0 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 25, 2024, the Corporation’s Board of Directors (the Board) declared a quarterly common stock dividend of $0.24 per share, payable on June 28, 2024 to shareholders of record as of June 7, 2024.
For more information on our capital resources, see Capital Management on page 16.
FDIC Special Assessment
During the first quarter of 2024, the Federal Deposit Insurance Corporation (FDIC) increased its estimate of the loss to the Deposit Insurance Fund (DIF) arising from the closures of Silicon Valley Bank and Signature Bank. The estimated loss to the DIF will be recovered through the collection of a special assessment from certain insured depository institutions. Accordingly, the Corporation recorded a pretax charge of $700 million in noninterest expense to increase the accrual for its estimated share of the special assessment. For more information, see Note 10 – Commitments and Contingencies to the Consolidated Financial Statements.
Financial Highlights
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| Table 1 |
Summary Income Statement and Selected Financial Data |
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Three Months Ended March 31 |
| (Dollars in millions, except per share information) |
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2024 |
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2023 |
| Income statement |
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| Net interest income |
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$ |
14,032 |
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$ |
14,448 |
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| Noninterest income |
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11,786 |
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11,810 |
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| Total revenue, net of interest expense |
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25,818 |
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26,258 |
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| Provision for credit losses |
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1,319 |
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931 |
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| Noninterest expense |
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17,237 |
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16,238 |
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| Income before income taxes |
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7,262 |
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9,089 |
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| Income tax expense |
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588 |
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928 |
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| Net income |
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6,674 |
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8,161 |
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| Preferred stock dividends |
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532 |
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505 |
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| Net income applicable to common shareholders |
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$ |
6,142 |
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$ |
7,656 |
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| Per common share information |
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| Earnings |
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$ |
0.77 |
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$ |
0.95 |
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| Diluted earnings |
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0.76 |
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0.94 |
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| Dividends paid |
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0.24 |
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0.22 |
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| Performance ratios |
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Return on average assets (1) |
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0.83 |
% |
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1.07 |
% |
Return on average common shareholders’ equity (1) |
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9.35 |
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12.48 |
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Return on average tangible common shareholders’ equity (2) |
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12.73 |
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17.38 |
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Efficiency ratio (1) |
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66.77 |
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61.84 |
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March 31 2024 |
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December 31 2023 |
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| Balance sheet |
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| Total loans and leases |
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$ |
1,049,156 |
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$ |
1,053,732 |
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| Total assets |
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3,273,803 |
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3,180,151 |
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| Total deposits |
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1,946,496 |
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1,923,827 |
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| Total liabilities |
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2,980,251 |
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2,888,505 |
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| Total common shareholders’ equity |
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265,155 |
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263,249 |
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| Total shareholders’ equity |
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293,552 |
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291,646 |
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(1)For definitions, see Key Metrics on page 91.
(2)Return on average tangible common shareholders’ equity is a non-GAAP financial measure. For more information and a corresponding reconciliation to the most directly comparable financial measures defined by accounting principles generally accepted in the United States of America (GAAP), see Non-GAAP Reconciliations on page 42.
Net income was $6.7 billion, or $0.76 per diluted share, for the three months ended March 31, 2024 compared to $8.2 billion, or $0.94 per diluted share, for the same period in 2023. The decrease in net income was due to higher noninterest expense, lower revenue and higher provision for credit losses.
Total assets increased $93.7 billion from December 31, 2023 to $3.3 trillion primarily driven by higher trading account assets and securities borrowed or purchased under agreements to resell to support Global Markets client activity, as well as higher debt securities.
Total liabilities increased $91.7 billion from December 31, 2023 to $3.0 trillion primarily driven by higher securities loaned or sold under agreements to repurchase and trading account liabilities to support Global Markets client activity, as well as higher deposits due to time deposit growth and seasonal deposit inflows.
Shareholders’ equity increased $1.9 billion from December 31, 2023 primarily due to net income, partially offset by returns of capital to shareholders through common stock repurchases and common and preferred stock dividends.
Net Interest Income
Net interest income decreased $416 million to $14.0 billion for the three months ended March 31, 2024 compared to the same period in 2023. Net interest yield on a fully taxable-equivalent (FTE) basis decreased 21 basis points (bps) to 1.99 percent. The decreases were primarily driven by higher deposits and funding costs, partially offset by higher asset yields, higher net interest income related to Global Markets activity and modest loan growth. For more information on net interest yield and FTE basis, see Supplemental Financial Data on page 5, and for more information on interest rate risk management, see Interest Rate Risk Management for the Banking Book on page 39.
Noninterest Income
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| Table 2 |
Noninterest Income |
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Three Months Ended March 31 |
| (Dollars in millions) |
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2024 |
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2023 |
| Fees and commissions: |
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| Card income |
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$ |
1,463 |
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$ |
1,469 |
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| Service charges |
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1,442 |
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1,410 |
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| Investment and brokerage services |
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4,187 |
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3,852 |
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| Investment banking fees |
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1,568 |
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1,163 |
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| Total fees and commissions |
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8,660 |
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7,894 |
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| Market making and similar activities |
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3,888 |
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4,712 |
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| Other income |
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(762) |
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(796) |
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| Total noninterest income |
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|
$ |
11,786 |
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$ |
11,810 |
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Noninterest income decreased $24 million to $11.8 billion for the three months ended March 31, 2024 compared to the same period in 2023. The following highlights the significant changes.
● Service charges increased $32 million primarily driven by higher treasury service charges.
● Investment and brokerage services increased $335 million primarily driven by higher asset management fees due to higher average equity market valuations and positive assets under management (AUM) flows, partially offset by the impact of lower AUM pricing.
● Investment banking fees increased $405 million primarily due to higher debt and equity issuance fees.
● Market making and similar activities decreased $824 million primarily driven by lower trading revenue from macro products in Fixed Income, Currencies and Commodities (FICC).
● Other income increased $34 million primarily due to losses on sales of available-for-sale (AFS) debt securities in the prior year, largely offset by higher partnership losses on tax credit investments in the current year.
Provision for Credit Losses
The provision for credit losses increased $388 million to $1.3 billion for the three months ended March 31, 2024 compared to the same period in 2023. The provision for credit losses for the current-year period was primarily driven by credit card loans and the commercial real estate office portfolio, partially offset by an improved macroeconomic outlook. For more information on the provision for credit losses, see Allowance for Credit Losses on page 35.
Noninterest Expense
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| Table 3 |
Noninterest Expense |
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Three Months Ended March 31 |
| (Dollars in millions) |
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2024 |
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2023 |
| Compensation and benefits |
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$ |
10,195 |
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$ |
9,918 |
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| Occupancy and equipment |
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1,811 |
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1,799 |
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| Information processing and communications |
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1,800 |
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1,697 |
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| Product delivery and transaction related |
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|
|
851 |
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890 |
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| Marketing |
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|
455 |
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458 |
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| Professional fees |
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548 |
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537 |
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| Other general operating |
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|
1,577 |
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|
939 |
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| Total noninterest expense |
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|
$ |
17,237 |
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$ |
16,238 |
|
Noninterest expense increased $1.0 billion to $17.2 billion for the three months ended March 31, 2024 compared to the same period in 2023. The increase was primarily driven by the additional accrual of $700 million for the FDIC special assessment, as well as higher revenue-related compensation.
Income Tax Expense
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| Table 4 |
Income Tax Expense |
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Three Months Ended March 31 |
| (Dollars in millions) |
|
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|
2024 |
|
2023 |
| Income before income taxes |
|
|
|
|
$ |
7,262 |
|
|
$ |
9,089 |
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| Income tax expense |
|
|
|
|
588 |
|
|
928 |
|
| Effective tax rate |
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|
|
8.1 |
% |
|
10.2 |
% |
The effective tax rates for the three months ended March 31, 2024 and 2023 were primarily driven by our recurring tax preference benefits that mainly consist of tax credits from investments in affordable housing and renewable energy. Also included in the effective tax rate for the first quarter of 2024 was a discrete tax benefit from the $700 million charge recorded for the FDIC special assessment. Absent recurring tax credits and discrete tax benefits, the effective tax rates would have been approximately 26 percent for both periods.
Supplemental Financial Data
Non-GAAP Financial Measures
In this Quarterly Report on 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 6.
For more information on the reconciliation of these non-GAAP financial measures to the corresponding GAAP financial measures, see Non-GAAP Reconciliations on page 42.
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 91.
Our consolidated key performance indicators, which include various equity and credit metrics, are presented in Table 1 on page 3 and Table 5 on page 6.
For information on key segment performance metrics, see Business Segment Operations on page 8.
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| Table 5 |
Selected Quarterly Financial Data |
|
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|
2024 Quarter |
|
2023 Quarters |
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|
|
|
| (In millions, except per share information) |
First |
|
Fourth |
|
Third |
|
Second |
|
First |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income |
$ |
14,032 |
|
|
$ |
13,946 |
|
|
$ |
14,379 |
|
|
$ |
14,158 |
|
|
$ |
14,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest income |
11,786 |
|
|
8,013 |
|
|
10,788 |
|
|
11,039 |
|
|
11,810 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total revenue, net of interest expense |
25,818 |
|
|
21,959 |
|
|
25,167 |
|
|
25,197 |
|
|
26,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for credit losses |
1,319 |
|
|
1,104 |
|
|
1,234 |
|
|
1,125 |
|
|
931 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense |
17,237 |
|
|
17,731 |
|
|
15,838 |
|
|
16,038 |
|
|
16,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income before income taxes |
7,262 |
|
|
3,124 |
|
|
8,095 |
|
|
8,034 |
|
|
9,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Income tax expense |
588 |
|
|
(20) |
|
|
293 |
|
|
626 |
|
|
928 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
6,674 |
|
|
3,144 |
|
|
7,802 |
|
|
7,408 |
|
|
8,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income applicable to common shareholders |
6,142 |
|
|
2,838 |
|
|
7,270 |
|
|
7,102 |
|
|
7,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares issued and outstanding |
7,968.2 |
|
|
7,990.9 |
|
|
8,017.1 |
|
|
8,040.9 |
|
|
8,065.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average diluted common shares issued and outstanding |
8,031.4 |
|
|
8,062.5 |
|
|
8,075.9 |
|
|
8,080.7 |
|
|
8,182.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Performance ratios |
|
|
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|
|
|
|
|
|
|
Return on average assets (1) |
0.83 |
% |
|
0.39 |
% |
|
0.99 |
% |
|
0.94 |
% |
|
1.07 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Four-quarter trailing return on average assets (2) |
0.78 |
|
|
0.84 |
|
|
0.98 |
|
|
0.96 |
|
|
0.92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average common shareholders’ equity (1) |
9.35 |
|
|
4.33 |
|
|
11.24 |
|
|
11.21 |
|
|
12.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible common shareholders’ equity (3) |
12.73 |
|
|
5.92 |
|
|
15.47 |
|
|
15.49 |
|
|
17.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average shareholders’ equity (1) |
9.18 |
|
|
4.32 |
|
|
10.86 |
|
|
10.52 |
|
|
11.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible shareholders’ equity (3) |
12.07 |
|
|
5.71 |
|
|
14.41 |
|
|
14.00 |
|
|
15.98 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total ending equity to total ending assets |
8.97 |
|
|
9.17 |
|
|
9.10 |
|
|
9.07 |
|
|
8.77 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity ratio (1) |
8.10 |
|
|
8.28 |
|
|
8.20 |
|
|
8.16 |
|
|
7.88 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total average equity to total average assets |
9.01 |
|
|
8.98 |
|
|
9.11 |
|
|
8.89 |
|
|
8.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend payout (1) |
31.11 |
|
|
67.42 |
|
|
26.39 |
|
|
24.88 |
|
|
23.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Per common share data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Earnings |
$ |
0.77 |
|
|
$ |
0.36 |
|
|
$ |
0.91 |
|
|
$ |
0.88 |
|
|
$ |
0.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted earnings |
0.76 |
|
|
0.35 |
|
|
0.90 |
|
|
0.88 |
|
|
0.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Dividends paid |
0.24 |
|
|
0.24 |
|
|
0.24 |
|
|
0.22 |
|
|
0.22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value (1) |
33.71 |
|
|
33.34 |
|
|
32.65 |
|
|
32.05 |
|
|
31.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value (3) |
24.79 |
|
|
24.46 |
|
|
23.79 |
|
|
23.23 |
|
|
22.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Market capitalization |
$ |
298,312 |
|
|
$ |
265,840 |
|
|
$ |
216,942 |
|
|
$ |
228,188 |
|
|
$ |
228,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average balance sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans and leases |
$ |
1,047,890 |
|
|
$ |
1,050,705 |
|
|
$ |
1,046,254 |
|
|
$ |
1,046,608 |
|
|
$ |
1,041,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total assets |
3,247,159 |
|
|
3,213,159 |
|
|
3,128,466 |
|
|
3,175,358 |
|
|
3,096,058 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total deposits |
1,907,462 |
|
|
1,905,011 |
|
|
1,876,153 |
|
|
1,875,353 |
|
|
1,893,649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Long-term debt |
254,782 |
|
|
256,262 |
|
|
245,819 |
|
|
248,480 |
|
|
244,759 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common shareholders’ equity |
264,114 |
|
|
260,221 |
|
|
256,578 |
|
|
254,028 |
|
|
248,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total shareholders’ equity |
292,511 |
|
|
288,618 |
|
|
284,975 |
|
|
282,425 |
|
|
277,252 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset quality |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses (4) |
$ |
14,371 |
|
|
$ |
14,551 |
|
|
$ |
14,640 |
|
|
$ |
14,338 |
|
|
$ |
13,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans, leases and foreclosed properties (5) |
6,034 |
|
|
5,630 |
|
|
4,993 |
|
|
4,274 |
|
|
4,083 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses as a percentage of total loans and leases outstanding (5) |
1.26 |
% |
|
1.27 |
% |
|
1.27 |
% |
|
1.24 |
% |
|
1.20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases (5) |
225 |
|
|
243 |
|
|
275 |
|
|
314 |
|
|
319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net charge-offs |
$ |
1,498 |
|
|
$ |
1,192 |
|
|
$ |
931 |
|
|
$ |
869 |
|
|
$ |
807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualized net charge-offs as a percentage of average loans and leases outstanding (5) |
0.58 |
% |
|
0.45 |
% |
|
0.35 |
% |
|
0.33 |
% |
|
0.32 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
Capital ratios at period end (6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common equity tier 1 capital |
11.9 |
% |
|
11.8 |
% |
|
11.9 |
% |
|
11.6 |
% |
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 capital |
13.6 |
|
|
13.5 |
|
|
13.6 |
|
|
13.3 |
|
|
13.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capital |
15.2 |
|
|
15.2 |
|
|
15.4 |
|
|
15.1 |
|
|
15.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 leverage |
7.1 |
|
|
7.1 |
|
|
7.3 |
|
|
7.1 |
|
|
7.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary leverage ratio |
6.0 |
|
|
6.1 |
|
|
6.2 |
|
|
6.0 |
|
|
6.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible equity (3) |
7.0 |
|
|
7.1 |
|
|
7.0 |
|
|
7.0 |
|
|
6.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common equity (3) |
6.1 |
|
|
6.2 |
|
|
6.1 |
|
|
6.1 |
|
|
5.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loss-absorbing capacity and long-term debt metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loss-absorbing capacity to risk-weighted assets |
28.7 |
% |
|
29.0 |
% |
|
29.3 |
% |
|
28.8 |
% |
|
28.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loss-absorbing capacity to supplementary leverage exposure |
12.8 |
|
|
13.0 |
|
|
13.3 |
|
|
13.0 |
|
|
13.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Eligible long-term debt to risk-weighted assets |
14.2 |
|
|
14.5 |
|
|
14.8 |
|
|
14.6 |
|
|
14.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Eligible long-term debt to supplementary leverage exposure |
6.3 |
|
|
6.5 |
|
|
6.7 |
|
|
6.6 |
|
|
6.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)For definitions, see Key Metrics on page 91.
(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 5 and Non-GAAP Reconciliations on page 42.
(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 28 and corresponding Table 24 and Commercial Portfolio Credit Risk Management – Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page 32 and corresponding Table 30.
(6)For more information, including which approach is used to assess capital adequacy, see Capital Management on page 16.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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 2024 |
|
First Quarter 2023 |
| Earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits with the Federal Reserve, non-U.S. central
banks and other banks
|
$ |
346,463 |
|
|
$ |
4,531 |
|
|
5.26 |
% |
|
$ |
202,700 |
|
|
$ |
1,999 |
|
|
4.00 |
% |
| Time deposits placed and other short-term investments |
9,728 |
|
|
116 |
|
|
4.80 |
|
|
10,581 |
|
|
108 |
|
|
4.16 |
|
|
Federal funds sold and securities borrowed or purchased under
agreements to resell
|
304,821 |
|
|
5,175 |
|
|
6.83 |
|
|
287,532 |
|
|
3,712 |
|
|
5.24 |
|
| Trading account assets |
202,461 |
|
|
2,482 |
|
|
4.93 |
|
|
183,657 |
|
|
2,040 |
|
|
4.50 |
|
| Debt securities |
842,483 |
|
|
6,162 |
|
|
2.92 |
|
|
851,177 |
|
|
5,485 |
|
|
2.58 |
|
Loans and leases (2) |
|
|
|
|
|
|
|
|
|
|
|
| Residential mortgage |
227,748 |
|
|
1,803 |
|
|
3.17 |
|
|
229,275 |
|
|
1,684 |
|
|
2.94 |
|
| Home equity |
25,522 |
|
|
390 |
|
|
6.14 |
|
|
26,513 |
|
|
317 |
|
|
4.84 |
|
| Credit card |
99,815 |
|
|
2,786 |
|
|
11.22 |
|
|
91,775 |
|
|
2,426 |
|
|
10.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Direct/Indirect and other consumer |
103,371 |
|
|
1,399 |
|
|
5.45 |
|
|
105,657 |
|
|
1,186 |
|
|
4.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total consumer |
456,456 |
|
|
6,378 |
|
|
5.61 |
|
|
453,220 |
|
|
5,613 |
|
|
5.00 |
|
| U.S. commercial |
379,566 |
|
|
5,236 |
|
|
5.55 |
|
|
376,852 |
|
|
4,471 |
|
|
4.81 |
|
| Non-U.S. commercial |
125,024 |
|
|
2,170 |
|
|
6.98 |
|
|
127,003 |
|
|
1,778 |
|
|
5.68 |
|
Commercial real estate (3) |
71,986 |
|
|
1,311 |
|
|
7.33 |
|
|
70,591 |
|
|
1,144 |
|
|
6.57 |
|
| Commercial lease financing |
14,858 |
|
|
200 |
|
|
5.41 |
|
|
13,686 |
|
|
147 |
|
|
4.33 |
|
| Total commercial |
591,434 |
|
|
8,917 |
|
|
6.06 |
|
|
588,132 |
|
|
7,540 |
|
|
5.20 |
|
| Total loans and leases |
1,047,890 |
|
|
15,295 |
|
|
5.87 |
|
|
1,041,352 |
|
|
13,153 |
|
|
5.11 |
|
| Other earning assets |
106,737 |
|
|
2,682 |
|
|
10.10 |
|
|
94,427 |
|
|
2,292 |
|
|
9.82 |
|
| Total earning assets |
2,860,583 |
|
|
36,443 |
|
|
5.12 |
|
|
2,671,426 |
|
|
28,789 |
|
|
4.36 |
|
| Cash and due from banks |
24,185 |
|
|
|
|
|
|
27,784 |
|
|
|
|
|
| Other assets, less allowance for loan and lease losses |
362,391 |
|
|
|
|
|
|
396,848 |
|
|
|
|
|
| Total assets |
$ |
3,247,159 |
|
|
|
|
|
|
$ |
3,096,058 |
|
|
|
|
|
| Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
| U.S. interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Demand and money market deposits |
$ |
956,716 |
|
|
$ |
5,012 |
|
|
2.11 |
% |
|
$ |
975,085 |
|
|
$ |
2,790 |
|
|
1.16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
| Time and savings deposits |
325,765 |
|
|
3,059 |
|
|
3.78 |
|
|
196,984 |
|
|
919 |
|
|
1.89 |
|
| Total U.S. interest-bearing deposits |
1,282,481 |
|
|
8,071 |
|
|
2.53 |
|
|
1,172,069 |
|
|
3,709 |
|
|
1.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-U.S. interest-bearing deposits |
104,373 |
|
|
1,067 |
|
|
4.11 |
|
|
91,603 |
|
|
605 |
|
|
2.68 |
|
| Total interest-bearing deposits |
1,386,854 |
|
|
9,138 |
|
|
2.65 |
|
|
1,263,672 |
|
|
4,314 |
|
|
1.38 |
|
| Federal funds purchased and securities loaned or sold under agreements to repurchase
|
350,507 |
|
|
6,026 |
|
|
6.92 |
|
|
256,015 |
|
|
3,551 |
|
|
5.63 |
|
| Short-term borrowings and other interest-bearing liabilities |
141,091 |
|
|
2,509 |
|
|
7.15 |
|
|
156,887 |
|
|
2,629 |
|
|
6.79 |
|
| Trading account liabilities |
51,757 |
|
|
546 |
|
|
4.24 |
|
|
43,953 |
|
|
504 |
|
|
4.65 |
|
| Long-term debt |
254,782 |
|
|
4,034 |
|
|
6.35 |
|
|
244,759 |
|
|
3,209 |
|
|
5.28 |
|
| Total interest-bearing liabilities |
2,184,991 |
|
|
22,253 |
|
|
4.10 |
|
|
1,965,286 |
|
|
14,207 |
|
|
2.93 |
|
| Noninterest-bearing sources |
|
|
|
|
|
|
|
|
|
|
|
| Noninterest-bearing deposits |
520,608 |
|
|
|
|
|
|
629,977 |
|
|
|
|
|
Other liabilities (4) |
249,049 |
|
|
|
|
|
|
223,543 |
|
|
|
|
|
| Shareholders’ equity |
292,511 |
|
|
|
|
|
|
277,252 |
|
|
|
|
|
| Total liabilities and shareholders’ equity |
$ |
3,247,159 |
|
|
|
|
|
|
$ |
3,096,058 |
|
|
|
|
|
| Net interest spread |
|
|
|
|
1.02 |
% |
|
|
|
|
|
1.43 |
% |
| Impact of noninterest-bearing sources |
|
|
|
|
0.97 |
|
|
|
|
|
|
0.77 |
|
Net interest income/yield on earning assets (5) |
|
|
$ |
14,190 |
|
|
1.99 |
% |
|
|
|
$ |
14,582 |
|
|
2.20 |
% |
(1)Includes the impact of interest rate risk management contracts. For more information, see Interest Rate Risk Management for the Banking Book on page 39.
(2)Nonperforming loans are included in the respective average loan balances. Income on these nonperforming loans is generally recognized on a cost recovery basis.
(3)Includes U.S. commercial real estate loans of $66.2 billion and $65.5 billion, and non-U.S. commercial real estate loans of $5.8 billion and $5.1 billion for the first quarter of 2024 and 2023.
(4)Includes $44.1 billion and $37.3 billion of structured notes and liabilities for the first quarter of 2024 and 2023.
(5)Net interest income includes FTE adjustments of $158 million and $134 million for the first quarter of 2024 and 2023.
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 2023 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 5, 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, client trends and business growth.
Consumer Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
Consumer Lending |
|
Total Consumer Banking |
|
|
|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
2024 |
2023 |
|
2024 |
2023 |
|
2024 |
2023 |
|
% Change |
| Net interest income |
$ |
5,269 |
|
$ |
5,816 |
|
|
$ |
2,928 |
|
$ |
2,777 |
|
|
$ |
8,197 |
|
$ |
8,593 |
|
|
(5) |
% |
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
| Card income |
(10) |
|
(10) |
|
|
1,282 |
|
1,284 |
|
|
1,272 |
|
1,274 |
|
|
— |
|
| Service charges |
577 |
|
598 |
|
|
1 |
|
1 |
|
|
578 |
|
599 |
|
|
(4) |
|
| All other income |
102 |
|
197 |
|
|
17 |
|
43 |
|
|
119 |
|
240 |
|
|
(50) |
|
| Total noninterest income |
669 |
|
785 |
|
|
1,300 |
|
1,328 |
|
|
1,969 |
|
2,113 |
|
|
(7) |
|
Total revenue, net of interest expense |
5,938 |
|
6,601 |
|
|
4,228 |
|
4,105 |
|
|
10,166 |
|
10,706 |
|
|
(5) |
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for credit losses |
76 |
|
183 |
|
|
1,074 |
|
906 |
|
|
1,150 |
|
1,089 |
|
|
6 |
|
| Noninterest expense |
3,378 |
|
3,415 |
|
|
2,097 |
|
2,058 |
|
|
5,475 |
|
5,473 |
|
|
— |
|
| Income before income taxes |
2,484 |
|
3,003 |
|
|
1,057 |
|
1,141 |
|
|
3,541 |
|
4,144 |
|
|
(15) |
|
| Income tax expense |
621 |
|
751 |
|
|
264 |
|
285 |
|
|
885 |
|
1,036 |
|
|
(15) |
|
| Net income |
$ |
1,863 |
|
$ |
2,252 |
|
|
$ |
793 |
|
$ |
856 |
|
|
$ |
2,656 |
|
$ |
3,108 |
|
|
(15) |
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate (1) |
|
|
|
|
|
|
25.0 |
% |
25.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest yield |
2.23 |
% |
2.31 |
% |
|
3.81 |
% |
3.76 |
% |
|
3.31 |
% |
3.27 |
% |
|
|
| Return on average allocated capital |
55 |
|
67 |
|
|
11 |
|
12 |
|
|
25 |
|
30 |
|
|
|
| Efficiency ratio |
56.89 |
|
51.76 |
|
|
49.60 |
|
50.10 |
|
|
53.86 |
|
51.12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
| Average |
|
2024 |
2023 |
|
2024 |
2023 |
|
2024 |
2023 |
|
% Change |
| Total loans and leases |
$ |
4,241 |
|
$ |
4,119 |
|
|
$ |
308,797 |
|
$ |
299,653 |
|
|
$ |
313,038 |
|
$ |
303,772 |
|
|
3 |
% |
Total earning assets (2) |
950,194 |
|
1,022,445 |
|
|
308,914 |
|
299,794 |
|
|
995,556 |
|
1,065,202 |
|
|
(7) |
|
Total assets (2) |
982,857 |
|
1,056,007 |
|
|
313,795 |
|
306,275 |
|
|
1,033,101 |
|
1,105,245 |
|
|
(7) |
|
| Total deposits |
947,843 |
|
1,021,374 |
|
|
4,623 |
|
4,868 |
|
|
952,466 |
|
1,026,242 |
|
|
(7) |
|
| Allocated capital |
13,700 |
|
13,700 |
|
|
29,550 |
|
28,300 |
|
|
43,250 |
|
42,000 |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Period end |
|
March 31
2024 |
December 31
2023 |
|
March 31
2024 |
December 31
2023 |
|
March 31
2024 |
December 31
2023 |
|
% Change |
| Total loans and leases |
$ |
4,260 |
|
$ |
4,218 |
|
|
$ |
307,465 |
|
$ |
310,901 |
|
|
$ |
311,725 |
|
$ |
315,119 |
|
|
(1) |
% |
Total earning assets (2) |
976,167 |
|
965,088 |
|
|
307,634 |
|
311,008 |
|
|
1,022,320 |
|
1,009,360 |
|
|
1 |
|
Total assets (2) |
1,008,366 |
|
999,372 |
|
|
313,598 |
|
317,194 |
|
|
1,060,482 |
|
1,049,830 |
|
|
1 |
|
| Total deposits |
972,906 |
|
964,136 |
|
|
5,855 |
|
5,436 |
|
|
978,761 |
|
969,572 |
|
|
1 |
|
(1)Estimated at the segment level only.
(2)In segments and businesses where the total of liabilities and equity exceeds assets, we allocate assets from All Other to match the segments’ and businesses’ liabilities and allocated shareholders’ equity. As a result, total earning assets and total assets of the businesses may not equal total Consumer Banking.
Consumer Banking, 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 2023 Annual Report on Form 10-K.
Consumer Banking Results
Net income for Consumer Banking decreased $452 million to $2.7 billion for the three months ended March 31, 2024 compared to the same period in 2023 largely due to lower revenue. Net interest income decreased $396 million to $8.2 billion primarily driven by lower deposit balances, partially offset by higher loan balances. Noninterest income decreased $144 million to $2.0 billion primarily driven by lower other income
driven by the allocation of asset and liability management (ALM) results.
The provision for credit losses increased $61 million to $1.2 billion primarily driven by credit card asset quality. Noninterest expense was $5.5 billion, unchanged from the same period a year ago.
The return on average allocated capital was 25 percent, down from 30 percent, due to an increase in allocated capital and lower net income. For more information on capital allocated to the business segments, see Business Segment Operations on page 8.
Deposits
Net income for Deposits decreased $389 million to $1.9 billion primarily due to lower revenue. Net interest income decreased $547 million to $5.3 billion primarily driven by lower deposit balances. Noninterest income decreased $116 million to $669 million primarily due to lower other income driven by the allocation of ALM results.
Noninterest expense decreased $37 million to $3.4 billion, relatively unchanged from the same period a year ago.
Average deposits decreased $73.5 billion to $947.8 billion primarily due to net outflows of $73.7 billion in money market savings and $32.1 billion in checking, partially offset by growth in time deposits of $43.5 billion.
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 |
|
|
|
|
|
2024 |
|
2023 |
Total deposit spreads (excludes noninterest costs) (1) |
|
|
|
|
2.69% |
|
2.54% |
|
|
|
|
|
|
|
|
| Period end |
|
|
|
|
|
|
|
Consumer investment assets (in millions) (2) |
|
|
|
|
$ |
456,391 |
|
$ |
354,892 |
Active digital banking users (in thousands) (3) |
|
|
|
|
47,079 |
|
44,962 |
Active mobile banking users (in thousands) (4) |
|
|
|
|
38,544 |
|
36,322 |
| Financial centers |
|
|
|
|
3,804 |
|
3,892 |
| ATMs |
|
|
|
|
15,028 |
|
15,407 |
(1)Includes deposits held in Consumer Lending.
(2)Includes client brokerage assets, deposit sweep balances, Bank of America, N.A. brokered CDs 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 increased $101.5 billion to $456.4 billion driven by market performance and positive net client flows. Active mobile banking users increased approximately two million, reflecting continuing changes in our clients’ banking preferences. We had a net decrease of 88 financial centers and 379 ATMs as we continue to optimize our consumer banking network.
Consumer Lending
Net income for Consumer Lending decreased $63 million to $793 million primarily due to an increase in provision for credit losses, partially offset by higher revenue. Net interest income
increased $151 million to $2.9 billion primarily due to higher loan balances. Noninterest income decreased $28 million to $1.3 billion, relatively unchanged from the same period a year ago.
The provision for credit losses increased $168 million to $1.1 billion primarily driven by credit card asset quality. Noninterest expense increased $39 million to $2.1 billion, relatively unchanged from the same period a year ago.
Average loans increased $9.1 billion to $308.8 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.
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Key Statistics – Consumer Lending |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
Total credit card (1) |
|
|
|
|
|
|
|
Gross interest yield (2) |
|
|
|
|
12.24 |
% |
|
11.85 |
% |
Risk-adjusted margin (3) |
|
|
|
|
6.81 |
|
|
8.69 |
|
| New accounts (in thousands) |
|
|
|
|
998 |
|
|
1,187 |
|
| Purchase volumes |
|
|
|
|
$ |
87,011 |
|
|
$ |
85,544 |
|
Debit card purchase volumes |
|
|
|
|
$ |
132,407 |
|
|
$ |
124,376 |
|
(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, 2024, the total risk-adjusted margin decreased 188 bps compared to the same period in 2023 primarily driven by higher net credit losses, lower net fee income and lower interest margin. Total credit card purchase volumes increased $1.5 billion to $87.0 billion and debit card purchase volumes increased $8.0 billion to $132.4 billion, reflecting higher levels of consumer spending.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Statistics – Loan Production (1) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
| Consumer Banking: |
|
|
|
|
|
|
|
| First mortgage |
|
|
|
|
$ |
1,688 |
|
|
$ |
1,956 |
|
| Home equity |
|
|
|
|
1,600 |
|
|
2,183 |
|
Total (2): |
|
|
|
|
|
|
|
| First mortgage |
|
|
|
|
$ |
3,443 |
|
|
$ |
3,937 |
|
| Home equity |
|
|
|
|
1,891 |
|
|
2,596 |
|
(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 $268 million and $494 million during the three months ended March 31, 2024 compared to the same period in 2023 primarily driven by lower demand.
Home equity production in Consumer Banking and the total Corporation decreased $583 million and $705 million during the three months ended March 31, 2024 primarily driven by lower demand.
Global Wealth & Investment Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
|
|
|
|
|
|
2024 |
|
2023 |
|
% Change |
| Net interest income |
|
|
|
|
|
|
$ |
1,814 |
|
|
$ |
1,876 |
|
|
(3) |
% |
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
| Investment and brokerage services |
|
|
|
|
|
|
3,600 |
|
|
3,238 |
|
|
11 |
|
| All other income |
|
|
|
|
|
|
177 |
|
|
201 |
|
|
(12) |
|
| Total noninterest income |
|
|
|
|
|
|
3,777 |
|
|
3,439 |
|
|
10 |
|
| Total revenue, net of interest expense |
|
|
|
|
|
|
5,591 |
|
|
5,315 |
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for credit losses |
|
|
|
|
|
|
(13) |
|
|
25 |
|
|
n/m |
| Noninterest expense |
|
|
|
|
|
|
4,264 |
|
|
4,067 |
|
|
5 |
|
| Income before income taxes |
|
|
|
|
|
|
1,340 |
|
|
1,223 |
|
|
10 |
|
| Income tax expense |
|
|
|
|
|
|
335 |
|
|
306 |
|
|
9 |
|
| Net income |
|
|
|
|
|
|
$ |
1,005 |
|
|
$ |
917 |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective tax rate |
|
|
|
|
|
|
25.0 |
% |
|
25.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest yield |
|
|
|
|
|
|
2.23 |
|
|
2.20 |
|
|
|
| Return on average allocated capital |
|
|
|
|
|
|
22 |
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Efficiency ratio |
|
|
|
|
|
|
76.27 |
|
|
76.53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
| Average |
|
|
|
|
|
|
2024 |
|
2023 |
|
% Change |
| Total loans and leases |
|
|
|
|
|
|
$ |
218,616 |
|
|
$ |
221,448 |
|
|
(1) |
% |
| Total earning assets |
|
|
|
|
|
|
327,692 |
|
|
346,384 |
|
|
(5) |
|
| Total assets |
|
|
|
|
|
|
341,119 |
|
|
359,164 |
|
|
(5) |
|
| Total deposits |
|
|
|
|
|
|
297,373 |
|
|
314,019 |
|
|
(5) |
|
| Allocated capital |
|
|
|
|
|
|
18,500 |
|
|
18,500 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Period end |
|
|
|
|
|
|
March 31
2024 |
|
December 31
2023 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans and leases |
|
|
|
|
|
|
$ |
219,844 |
|
|
$ |
219,657 |
|
|
— |
% |
| Total earning assets |
|
|
|
|
|
|
329,515 |
|
|
330,653 |
|
|
— |
|
| Total assets |
|
|
|
|
|
|
343,718 |
|
|
344,626 |
|
|
— |
|
| Total deposits |
|
|
|
|
|
|
298,039 |
|
|
299,657 |
|
|
(1) |
|
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 2023 Annual Report on Form 10-K.
Net income for GWIM increased $88 million to $1.0 billion for the three months ended March 31, 2024 compared to the same period in 2023 primarily due to higher revenue, partially offset by higher noninterest expense. The operating margin was 24 percent compared to 23 percent a year ago.
Net interest income decreased $62 million to $1.8 billion primarily driven by an increase in the deposit rate paid and lower average deposit balances.
Noninterest income, which primarily includes investment and brokerage services income, increased $338 million to $3.8 billion. The increase was primarily driven by higher asset management fees due to higher average equity market valuations and positive AUM flows, partially offset by the impact of lower AUM pricing.
Noninterest expense increased $197 million to $4.3 billion primarily due to higher revenue-related incentives.
The return on average allocated capital was 22 percent, up from 20 percent, due to higher net income. For more information on capital allocated to the business segments, see Business Segment Operations on page 8.
Average loans of $218.6 billion remained relatively unchanged compared to the same period in 2023. Average deposits decreased $16.6 billion to $297.4 billion primarily driven by clients moving deposits to higher yielding investment cash alternatives, including offerings on our investment and brokerage platforms.
Merrill Wealth Management revenue of $4.6 billion increased six percent primarily driven by higher asset management fees due to higher average equity market valuations and positive AUM flows, partially offset by the impact of lower AUM pricing.
Bank of America Private Bank revenue of $944 million increased three percent primarily driven by higher asset management fees due to higher average market valuations and the impact of positive AUM flows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Indicators and Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
| Revenue by Business |
|
|
|
|
|
|
|
| Merrill Wealth Management |
|
|
|
|
$ |
4,647 |
|
|
$ |
4,397 |
|
| Bank of America Private Bank |
|
|
|
|
944 |
|
|
918 |
|
|
|
|
|
|
|
|
|
| Total revenue, net of interest expense |
|
|
|
|
$ |
5,591 |
|
|
$ |
5,315 |
|
|
|
|
|
|
|
|
|
| Client Balances by Business, at period end |
|
|
|
|
|
|
|
| Merrill Wealth Management |
|
|
|
|
$ |
3,339,693 |
|
|
$ |
2,952,681 |
|
Bank of America Private Bank |
|
|
|
|
633,697 |
|
|
568,925 |
|
|
|
|
|
|
|
|
|
| Total client balances |
|
|
|
|
$ |
3,973,390 |
|
|
$ |
3,521,606 |
|
|
|
|
|
|
|
|
|
| Client Balances by Type, at period end |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets under management |
|
|
|
|
$ |
1,730,005 |
|
|
$ |
1,467,242 |
|
| Brokerage and other assets |
|
|
|
|
1,758,642 |
|
|
1,571,409 |
|
|
|
|
|
|
|
|
|
| Deposits |
|
|
|
|
298,039 |
|
|
301,471 |
|
Loans and leases (1) |
|
|
|
|
222,528 |
|
|
220,633 |
|
| Less: Managed deposits in assets under management |
|
|
|
|
(35,824) |
|
|
(39,149) |
|
| Total client balances |
|
|
|
|
$ |
3,973,390 |
|
|
$ |
3,521,606 |
|
|
|
|
|
|
|
|
|
| Assets Under Management Rollforward |
|
|
|
|
|
|
|
| Assets under management, beginning of period |
|
|
|
|
$ |
1,617,740 |
|
|
$ |
1,401,474 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net client flows |
|
|
|
|
24,655 |
|
|
15,262 |
|
Market valuation/other |
|
|
|
|
87,610 |
|
|
50,506 |
|
| Total assets under management, end of period |
|
|
|
|
$ |
1,730,005 |
|
|
$ |
1,467,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Includes margin receivables which are classified in customer and other receivables on the Consolidated Balance Sheet.
Client balances increased $451.8 billion, or 13 percent, to $4.0 trillion at March 31, 2024 compared to March 31, 2023. The increase in client balances was primarily due to the impact of higher end-of-period market valuations and positive net client flows.
Global Banking
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
|
|
|
|
|
| (Dollars in millions) |
|
|
|
|
|
|
2024 |
|
2023 |
|
% Change |
|
|
|
|
|
| Net interest income |
|
|
|
|
|
|
$ |
3,460 |
|
|
$ |
3,907 |
|
|
(11) |
% |
|
|
|
|
|
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Service charges |
|
|
|
|
|
|
750 |
|
|
714 |
|
|
5 |
|
|
|
|
|
|
| Investment banking fees |
|
|
|
|
|
|
850 |
|
|
668 |
|
|
27 |
|
|
|
|
|
|
| All other income |
|
|
|
|
|
|
920 |
|
|
914 |
|
|
1 |
|
|
|
|
|
|
| Total noninterest income |
|
|
|
|
|
|
2,520 |
|
|
2,296 |
|
|
10 |
|
|
|
|
|
|
| Total revenue, net of interest expense |
|
|
|
|
|
|
5,980 |
|
|
6,203 |
|
|
(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for credit losses |
|
|
|
|
|
|
229 |
|
|
(237) |
|
|
n/m |
|
|
|
|
|
| Noninterest expense |
|
|
|
|
|
|
3,012 |
|
|
2,940 |
|
|
2 |
|
|
|
|
|
|
| Income before income taxes |
|
|
|
|
|
|
2,739 |
|
|
3,500 |
|
|
(22) |
|
|
|
|
|
|
| Income tax expense |
|
|
|
|
|
|
753 |
|
|
945 |
|
|
(20) |
|
|
|
|
|
|
| Net income |
|
|
|
|
|
|
$ |
1,986 |
|
|
$ |
2,555 |
|
|
(22) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective tax rate |
|
|
|
|
|
|
27.5 |
% |
|
27.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest yield |
|
|
|
|
|
|
2.50 |
|
|
3.03 |
|
|
|
|
|
|
|
|
| Return on average allocated capital |
|
|
|
|
|
|
16 |
|
|
21 |
|
|
|
|
|
|
|
|
| Efficiency ratio |
|
|
|
|
|
|
50.37 |
|
|
47.41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
|
|
|
|
|
| Average |
|
|
|
|
|
|
2024 |
|
2023 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases |
|
|
|
|
|
|
$ |
373,608 |
|
|
$ |
381,009 |
|
|
(2) |
% |
|
|
|
|
|
| Total earning assets |
|
|
|
|
|
|
555,957 |
|
|
522,374 |
|
|
6 |
|
|
|
|
|
|
| Total assets |
|
|
|
|
|
|
623,073 |
|
|
588,886 |
|
|
6 |
|
|
|
|
|
|
| Total deposits |
|
|
|
|
|
|
525,699 |
|
|
492,577 |
|
|
7 |
|
|
|
|
|
|
| Allocated capital |
|
|
|
|
|
|
49,250 |
|
|
49,250 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Period end |
|
|
|
|
|
|
March 31
2024 |
|
December 31 2023 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans and leases |
|
|
|
|
|
|
$ |
373,403 |
|
|
$ |
373,891 |
|
|
— |
% |
|
|
|
|
|
| Total earning assets |
|
|
|
|
|
|
554,253 |
|
|
552,453 |
|
|
— |
|
|
|
|
|
|
| Total assets |
|
|
|
|
|
|
623,204 |
|
|
621,751 |
|
|
— |
|
|
|
|
|
|
| Total deposits |
|
|
|
|
|
|
527,113 |
|
|
527,060 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 global offices and client relationship teams. For more information about Global Banking, see Business Segment Operations in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Net income for Global Banking decreased $569 million to $2.0 billion for the three months ended March 31, 2024 compared to the same period in 2023 driven by higher provision for credit losses, lower revenue and higher noninterest expense.
Net interest income decreased $447 million to $3.5 billion primarily due to the impact of interest rates, partially offset by the benefit of higher average deposit balances.
Noninterest income increased $224 million to $2.5 billion driven by higher investment banking fees and higher treasury service charges.
The provision for credit losses increased $466 million to $229 million primarily driven by commercial real estate office exposure in the current-year period compared to a benefit in the prior-year period due to certain improved macroeconomic conditions.
Noninterest expense increased $72 million to $3.0 billion primarily due to continued investments in the business, including technology.
The return on average allocated capital was 16 percent, down from 21 percent, due to lower net income. For more information on capital allocated to the business segments, see Business Segment Operations on page 8.
Global Corporate, Global Commercial and Business Banking
The following table and discussion present a summary of the results, which exclude certain investment banking and other activities in Global Banking.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Global Corporate, Global Commercial and Business Banking |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Corporate Banking |
|
Global Commercial Banking |
|
Business Banking |
|
Total |
|
|
Three Months Ended March 31 |
| (Dollars in millions) |
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
| Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Business Lending |
$ |
1,065 |
|
|
$ |
1,034 |
|
|
$ |
1,280 |
|
|
$ |
1,233 |
|
|
$ |
59 |
|
|
$ |
67 |
|
|
$ |
2,404 |
|
|
$ |
2,334 |
|
| Global Transaction Services |
1,335 |
|
|
1,549 |
|
|
970 |
|
|
1,129 |
|
|
361 |
|
|
387 |
|
|
2,666 |
|
|
3,065 |
|
Total revenue, net of interest expense |
$ |
2,400 |
|
|
$ |
2,583 |
|
|
$ |
2,250 |
|
|
$ |
2,362 |
|
|
$ |
420 |
|
|
$ |
454 |
|
|
$ |
5,070 |
|
|
$ |
5,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases |
$ |
165,040 |
|
|
$ |
175,293 |
|
|
$ |
196,276 |
|
|
$ |
192,796 |
|
|
$ |
12,132 |
|
|
$ |
12,618 |
|
|
$ |
373,448 |
|
|
$ |
380,707 |
|
Total deposits |
290,392 |
|
|
259,177 |
|
|
185,727 |
|
|
182,614 |
|
|
49,578 |
|
|
50,795 |
|
|
525,697 |
|
|
492,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Period end |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total loans and leases |
$ |
164,161 |
|
|
$ |
175,777 |
|
|
$ |
196,850 |
|
|
$ |
194,889 |
|
|
$ |
12,262 |
|
|
$ |
12,580 |
|
|
$ |
373,273 |
|
|
$ |
383,246 |
|
| Total deposits |
291,066 |
|
|
263,131 |
|
|
186,051 |
|
|
181,315 |
|
|
49,992 |
|
|
51,511 |
|
|
527,109 |
|
|
495,957 |
|
Business Lending revenue increased $70 million for the three months ended March 31, 2024 compared to the same period in 2023 primarily driven by tax credit activity in affordable housing and renewable energy.
Global Transaction Services revenue decreased $399 million for the three months ended March 31, 2024 primarily driven by the impact of interest rates, partially offset by the benefit of higher average deposit balances and higher treasury service charges.
Average loans and leases decreased two percent for the three months ended March 31, 2024 due to lower client demand. Average deposits increased seven percent due to growth in both domestic and international 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) |
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
| Products |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Advisory |
|
|
|
|
|
|
|
|
$ |
317 |
|
|
$ |
313 |
|
|
$ |
373 |
|
|
$ |
363 |
|
|
|
|
|
|
|
|
|
| Debt issuance |
|
|
|
|
|
|
|
|
383 |
|
|
290 |
|
|
885 |
|
|
644 |
|
|
|
|
|
|
|
|
|
| Equity issuance |
|
|
|
|
|
|
|
|
150 |
|
|
65 |
|
|
363 |
|
|
168 |
|
|
|
|
|
|
|
|
|
Gross investment banking fees |
|
|
|
|
|
|
|
|
850 |
|
|
668 |
|
|
1,621 |
|
|
1,175 |
|
|
|
|
|
|
|
|
|
| Self-led deals |
|
|
|
|
|
|
|
|
(13) |
|
|
(4) |
|
|
(53) |
|
|
(12) |
|
|
|
|
|
|
|
|
|
Total investment banking fees |
|
|
|
|
|
|
|
|
$ |
837 |
|
|
$ |
664 |
|
|
$ |
1,568 |
|
|
$ |
1,163 |
|
|
|
|
|
|
|
|
|
Total Corporation investment banking fees of $1.6 billion, which exclude self-led deals and are primarily included within Global Banking and Global Markets, increased 35 percent for the three months ended March 31, 2024 compared to the same period in 2023. The increase was primarily due to higher debt and equity issuance fees.
Global Markets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
|
|
|
|
|
|
2024 |
|
2023 |
|
% Change |
| Net interest income |
|
|
|
|
|
|
$ |
681 |
|
|
$ |
109 |
|
|
n/m |
| Noninterest income: |
|
|
|
|
|
|
|
|
|
|
|
| Investment and brokerage services |
|
|
|
|
|
|
495 |
|
|
533 |
|
|
(7) |
% |
| Investment banking fees |
|
|
|
|
|
|
708 |
|
|
469 |
|
|
51 |
|
| Market making and similar activities |
|
|
|
|
|
|
3,830 |
|
|
4,398 |
|
|
(13) |
|
| All other income |
|
|
|
|
|
|
169 |
|
|
117 |
|
|
44 |
|
| Total noninterest income |
|
|
|
|
|
|
5,202 |
|
|
5,517 |
|
|
(6) |
|
| Total revenue, net of interest expense |
|
|
|
|
|
|
5,883 |
|
|
5,626 |
|
|
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for credit losses |
|
|
|
|
|
|
(36) |
|
|
(53) |
|
|
n/m |
| Noninterest expense |
|
|
|
|
|
|
3,492 |
|
|
3,351 |
|
|
4 |
|
| Income before income taxes |
|
|
|
|
|
|
2,427 |
|
|
2,328 |
|
|
4 |
|
| Income tax expense |
|
|
|
|
|
|
704 |
|
|
640 |
|
|
10 |
|
| Net income |
|
|
|
|
|
|
$ |
1,723 |
|
|
$ |
1,688 |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Effective tax rate |
|
|
|
|
|
|
29.0 |
% |
|
27.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Return on average allocated capital |
|
|
|
|
|
|
15 |
|
|
15 |
|
|
|
| Efficiency ratio |
|
|
|
|
|
|
59.38 |
|
|
59.56 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance Sheet |
|
|
|
|
|
Three Months Ended March 31 |
|
|
| Average |
|
|
|
|
|
|
|
2024 |
|
2023 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trading-related assets: |
|
|
|
|
|
|
|
|
|
|
|
| Trading account securities |
|
|
|
|
|
|
$ |
323,210 |
|
|
$ |
339,248 |
|
|
(5) |
% |
| Reverse repurchases |
|
|
|
|
|
|
134,081 |
|
|
126,760 |
|
|
6 |
|
| Securities borrowed |
|
|
|
|
|
|
134,852 |
|
|
116,280 |
|
|
16 |
|
| Derivative assets |
|
|
|
|
|
|
37,683 |
|
|
43,747 |
|
|
(14) |
|
| Total trading-related assets |
|
|
|
|
|
|
629,826 |
|
|
626,035 |
|
|
1 |
|
| Total loans and leases |
|
|
|
|
|
|
133,756 |
|
|
125,046 |
|
|
7 |
|
| Total earning assets |
|
|
|
|
|
|
692,851 |
|
|
627,935 |
|
|
10 |
|
| Total assets |
|
|
|
|
|
|
895,382 |
|
|
870,038 |
|
|
3 |
|
| Total deposits |
|
|
|
|
|
|
32,585 |
|
|
36,109 |
|
|
(10) |
|
| Allocated capital |
|
|
|
|
|
|
45,500 |
|
|
45,500 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
| Period end |
|
|
|
|
|
|
March 31
2024 |
|
December 31
2023 |
|
% Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total trading-related assets |
|
|
|
|
|
|
$ |
629,082 |
|
|
$ |
542,544 |
|
|
16 |
% |
| Total loans and leases |
|
|
|
|
|
|
135,267 |
|
|
136,223 |
|
|
(1) |
|
| Total earning assets |
|
|
|
|
|
|
698,279 |
|
|
637,955 |
|
|
9 |
|
| Total assets |
|
|
|
|
|
|
902,741 |
|
|
817,588 |
|
|
10 |
|
| Total deposits |
|
|
|
|
|
|
34,847 |
|
|
34,833 |
|
|
— |
|
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 2023 Annual Report on Form 10-K.
The following explanations for period-over-period changes in results 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 5.
Net income for Global Markets increased $35 million to $1.7 billion for the three months ended March 31, 2024 compared to the same period in 2023. Net DVA losses were $85 million compared to gains of $14 million in 2023. Excluding net DVA, net income increased $111 million to $1.8 billion. These increases were primarily driven by higher revenue, partially offset by higher noninterest expense.
Revenue increased $257 million to $5.9 billion primarily due to higher investment banking fees and sales and trading revenue. Sales and trading revenue increased $25 million, and
excluding net DVA, increased $124 million. These increases were primarily driven by higher revenue in Equities, partially offset by lower revenue in FICC.
Noninterest expense increased $141 million to $3.5 billion, primarily driven by continued investments in the business, including technology.
Average total assets increased $25.3 billion to $895.4 billion for the three months ended March 31, 2024 compared to the same period in 2023 driven by higher levels of inventory, increased secured financing activity and loan growth in FICC, partially offset by lower levels of inventory in Equities. Period-end total assets increased $85.2 billion from December 31, 2023 to $902.7 billion driven by seasonally higher levels of client activity across both Equities and FICC.
The return on average allocated capital was 15 percent, unchanged from the same period a year ago. For information on capital allocated to the business segments, see Business Segment Operations on page 8.
Sales and Trading Revenue
For a description of sales and trading revenue, see Business Segment Operations in the MD&A of the Corporation’s 2023 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 5.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and Trading Revenue (1, 2, 3) |
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
2024 |
|
2023 |
|
|
|
|
Sales and trading revenue (2) |
|
|
|
|
|
|
|
Fixed-income, currencies and commodities |
$ |
3,231 |
|
|
$ |
3,440 |
|
|
|
|
|
| Equities |
1,861 |
|
|
1,627 |
|
|
|
|
|
| Total sales and trading revenue |
$ |
5,092 |
|
|
$ |
5,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and trading revenue, excluding net DVA (4) |
|
|
|
|
|
|
|
Fixed-income, currencies and commodities |
$ |
3,307 |
|
|
$ |
3,429 |
|
|
|
|
|
| Equities |
1,870 |
|
|
1,624 |
|
|
|
|
|
Total sales and trading revenue, excluding net DVA |
$ |
5,177 |
|
|
$ |
5,053 |
|
|
|
|
|
(1)For more information on sales and trading revenue, see Note 3 – Derivatives to the Consolidated Financial Statements.
(2)Includes FTE adjustments of $149 million and $90 million for the three months ended March 31, 2024 and 2023.
(3)Includes Global Banking sales and trading revenue of $144 million and $177 million for the three months ended March 31, 2024 and 2023.
(4)FICC and Equities sales and trading revenue, excluding net DVA, is a non-GAAP financial measure. FICC net DVA gains (losses) were $(76) million and $11 million for the three months ended March 31, 2024 and 2023. Equities net DVA gains (losses) were $(9) million and $3 million for the three months ended March 31, 2024 and 2023.
Including and excluding net DVA, FICC revenue decreased $209 million and $122 million for the three months ended March 31, 2024 compared to the same period in 2023 driven by a weaker trading environment for macro products, partially offset by improved trading in mortgages. Including and excluding net DVA, Equities revenue increased $234 million and $246 million driven by a strong trading performance in derivatives.
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
|
|
|
|
|
|
2024 |
|
2023 |
|
% Change |
| Net interest income |
|
|
|
|
|
|
$ |
38 |
|
|
$ |
97 |
|
|
(61) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest income (loss) |
|
|
|
|
|
|
(1,682) |
|
|
(1,555) |
|
|
8 |
|
| Total revenue, net of interest expense |
|
|
|
|
|
|
(1,644) |
|
|
(1,458) |
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for credit losses |
|
|
|
|
|
|
(11) |
|
|
107 |
|
|
(110) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense |
|
|
|
|
|
|
994 |
|
|
407 |
|
|
144 |
|
| Loss before income taxes |
|
|
|
|
|
|
(2,627) |
|
|
(1,972) |
|
|
33 |
|
| Income tax benefit |
|
|
|
|
|
|
(1,931) |
|
|
(1,865) |
|
|
4 |
|
| Net loss |
|
|
|
|
|
|
$ |
(696) |
|
|
$ |
(107) |
|
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance Sheet |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average |
|
|
|
|
|
|
2024 |
|
2023 |
|
% Change |
| Total loans and leases |
|
|
|
|
|
|
$ |
8,872 |
|
|
$ |
10,077 |
|
|
(12) |
% |
Total assets (1) |
|
|
|
|
|
|
354,484 |
|
|
172,725 |
|
|
105 |
|
| Total deposits |
|
|
|
|
|
|
99,339 |
|
|
24,702 |
|
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Period end |
|
|
|
|
|
|
March 31
2024 |
|
December 31
2023 |
|
% Change |
| Total loans and leases |
|
|
|
|
|
|
$ |
8,917 |
|
|
$ |
8,842 |
|
|
1 |
% |
Total assets (1) |
|
|
|
|
|
|
|
343,658 |
|
|
346,356 |
|
|
(1) |
|
| Total deposits |
|
|
|
|
|
|
107,736 |
|
|
92,705 |
|
|
16 |
|
(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 $958.0 billion and $1.0 trillion for the three months ended March 31, 2024 and 2023, and period-end allocated assets were $987.1 billion and $972.9 billion at March 31, 2024 and December 31, 2023.
n/m = not meaningful
All Other primarily consists of ALM activities, liquidating businesses and certain expenses not otherwise allocated to a business segment. ALM activities encompass interest rate and foreign currency risk management activities for which substantially all of the results are allocated to our business segments. For more information on our ALM activities, see Note 17 – Business Segment Information to the Consolidated Financial Statements.
The net loss in All Other increased $589 million to $696 million primarily due to higher noninterest expense.
Noninterest expense increased $587 million primarily due to a $700 million accrual for the increase in the Corporation’s estimated share of the FDIC special assessment, partially offset by lower expenses related to a liquidating business activity.
The income tax benefit increased $66 million to $1.9 billion due to higher tax preference benefits primarily related to tax credit 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.
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 2023 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 2023 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, see Capital Management in the MD&A of the Corporation’s 2023 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, which includes supervisory stress testing by the Federal Reserve. Based on 2023 stress test results, our stress capital buffer (SCB) is 2.5 percent effective October 1, 2023 through September 30, 2024. In April 2024, we submitted our 2024 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, 2024.
The Board has authorized the repurchase of up to $25 billion of common stock over time, which includes common stock repurchases to offset shares awarded under the Corporation’s equity-based compensation plans. Pursuant to Board authorization, during the three months ended March 31, 2024, we repurchased $2.5 billion of common stock. For more information, see Part II, Item 2. Unregistered Sales of Equity securities and Use of Proceeds on page 93 and Capital Management – CCAR and Capital Planning in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
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 BHC, 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, 2024, the Common equity tier 1 (CET1) capital, 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 to executive officers, 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. Effective January 1, 2024, the Corporation's minimum CET1 capital ratio requirements were 10.0 percent under both the Standardized approach and 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. Effective January 1, 2024, the Corporation’s G-SIB surcharge, which is higher under Method 2, increased 50 bps, resulting in an increase in our minimum CET1 capital ratio requirement under the Standardized approach to 10.0 percent from 9.5 percent. At March 31, 2024, the Corporation’s CET1 capital ratio of 11.9 percent under the Standardized approach exceeded its CET1 capital ratio requirement.
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 to executive officers. At March 31, 2024, our insured depository institution subsidiaries exceeded their requirement to maintain a minimum 6.0 percent SLR to be considered well capitalized under the PCA framework.
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, 2024 and December 31, 2023. 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, 2024 |
|
|
| Risk-based capital metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common equity tier 1 capital |
|
|
|
|
|
|
$ |
196,625 |
|
|
$ |
196,625 |
|
|
|
|
|
|
|
| Tier 1 capital |
|
|
|
|
|
|
225,021 |
|
|
225,021 |
|
|
|
|
|
|
|
Total capital (3) |
|
|
|
|
|
|
252,400 |
|
|
242,576 |
|
|
|
|
|
|
|
| Risk-weighted assets (in billions) |
|
|
|
|
|
|
1,658 |
|
|
1,463 |
|
|
|
|
|
|
|
| Common equity tier 1 capital ratio |
|
|
|
|
|
|
11.9 |
% |
|
13.4 |
% |
|
10.0 |
% |
|
|
|
|
| Tier 1 capital ratio |
|
|
|
|
|
|
13.6 |
|
|
15.4 |
|
|
11.5 |
|
|
|
|
|
| Total capital ratio |
|
|
|
|
|
|
15.2 |
|
|
16.6 |
|
|
13.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Leverage-based metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted quarterly average assets (in billions) (4) |
|
|
|
|
|
|
$ |
3,169 |
|
|
$ |
3,169 |
|
|
|
|
|
|
|
| Tier 1 leverage ratio |
|
|
|
|
|
|
7.1 |
% |
|
7.1 |
% |
|
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Supplementary leverage exposure (in billions) |
|
|
|
|
|
|
|
|
$ |
3,724 |
|
|
|
|
|
|
|
| Supplementary leverage ratio |
|
|
|
|
|
|
|
|
6.0 |
% |
|
5.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
|
| Risk-based capital metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common equity tier 1 capital |
|
|
|
|
|
|
$ |
194,928 |
|
|
$ |
194,928 |
|
|
|
|
|
|
|
| Tier 1 capital |
|
|
|
|
|
|
223,323 |
|
|
223,323 |
|
|
|
|
|
|
|
Total capital (3) |
|
|
|
|
|
|
251,399 |
|
|
241,449 |
|
|
|
|
|
|
|
| Risk-weighted assets (in billions) |
|
|
|
|
|
|
1,651 |
|
|
1,459 |
|
|
|
|
|
|
|
| Common equity tier 1 capital ratio |
|
|
|
|
|
|
11.8 |
% |
|
13.4 |
% |
|
9.5 |
% |
|
|
|
|
| Tier 1 capital ratio |
|
|
|
|
|
|
13.5 |
|
|
15.3 |
|
|
11.0 |
|
|
|
|
|
| Total capital ratio |
|
|
|
|
|
|
15.2 |
|
|
16.6 |
|
|
13.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Leverage-based metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted quarterly average assets (in billions) (4) |
|
|
|
|
|
|
$ |
3,135 |
|
|
$ |
3,135 |
|
|
|
|
|
|
|
| Tier 1 leverage ratio |
|
|
|
|
|
|
7.1 |
% |
|
7.1 |
% |
|
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Supplementary leverage exposure (in billions) |
|
|
|
|
|
|
|
|
$ |
3,676 |
|
|
|
|
|
|
|
| Supplementary leverage ratio |
|
|
|
|
|
|
|
|
6.1 |
% |
|
5.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Capital ratios as of March 31, 2024 and December 31, 2023 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 3.0 percent at March 31, 2024 and 2.5 percent at December 31, 2023, and our capital conservation buffer (under the Advanced approaches) or SCB (under the Standardized approach) of 2.5 percent, as applicable. 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, 2024, CET1 capital was $196.6 billion, an increase of $1.7 billion from December 31, 2023, primarily due to earnings, partially offset by capital distributions. Tier 1 capital increased $1.7 billion primarily driven by the same factors as CET1 capital. Total capital under the Standardized approach increased $1.0 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, 2024, increased $6.4 billion during 2024 to $1,658 billion primarily driven by client activity in Global Markets. Supplementary leverage exposure at March 31, 2024 increased $47.5 billion primarily driven by increased activity in Global Markets.
Table 8 shows the capital composition at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 8 |
Capital Composition under Basel 3 |
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
March 31
2024 |
|
December 31
2023 |
|
|
|
|
| Total common shareholders’ equity |
$ |
265,155 |
|
|
$ |
263,249 |
|
CECL transitional amount (1) |
627 |
|
|
1,254 |
|
| Goodwill, net of related deferred tax liabilities |
(68,648) |
|
|
(68,648) |
|
| Deferred tax assets arising from net operating loss and tax credit carryforwards |
(8,148) |
|
|
(7,912) |
|
| Intangibles, other than mortgage servicing rights, net of related deferred tax liabilities |
(1,482) |
|
|
(1,496) |
|
| Defined benefit pension plan net assets |
(775) |
|
|
(764) |
|
Cumulative unrealized net (gain) loss related to changes in fair value of financial liabilities attributable to own creditworthiness,
net-of-tax |
1,585 |
|
|
1,342 |
|
Accumulated net (gain) loss on certain cash flow hedges (2) |
8,449 |
|
|
8,025 |
|
| Other |
(138) |
|
|
(122) |
|
| Common equity tier 1 capital |
196,625 |
|
|
194,928 |
|
| Qualifying preferred stock, net of issuance cost |
28,396 |
|
|
28,396 |
|
| Other |
— |
|
|
(1) |
|
| Tier 1 capital |
225,021 |
|
|
223,323 |
|
| Tier 2 capital instruments |
14,185 |
|
|
15,340 |
|
Qualifying allowance for credit losses (3) |
13,592 |
|
|
12,920 |
|
| Other |
(398) |
|
|
(184) |
|
| Total capital under the Standardized approach |
252,400 |
|
|
251,399 |
|
Adjustment in qualifying allowance for credit losses under the Advanced approaches (3) |
(9,824) |
|
|
(9,950) |
|
| Total capital under the Advanced approaches |
$ |
242,576 |
|
|
$ |
241,449 |
|
(1)March 31, 2024 and December 31, 2023 include 25 percent and 50 percent of the CECL transition provision’s impact as of December 31, 2021.
(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, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 9 |
Risk-weighted Assets under Basel 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Standardized Approach |
|
Advanced Approaches |
|
Standardized Approach |
|
Advanced Approaches |
|
|
|
|
|
|
(Dollars in billions)
|
March 31, 2024 |
|
December 31, 2023 |
| Credit risk |
$ |
1,588 |
|
|
$ |
992 |
|
|
$ |
1,580 |
|
|
$ |
983 |
|
| Market risk |
70 |
|
|
70 |
|
|
71 |
|
|
71 |
|
| Operational risk |
n/a |
|
359 |
|
|
n/a |
|
361 |
|
| Risks related to credit valuation adjustments |
n/a |
|
42 |
|
|
n/a |
|
44 |
|
| Total risk-weighted assets |
$ |
1,658 |
|
|
$ |
1,463 |
|
|
$ |
1,651 |
|
|
$ |
1,459 |
|
n/a = not applicable
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, 2024 and December 31, 2023. 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, 2024 |
| Risk-based capital metrics: |
|
|
|
|
|
|
|
| Common equity tier 1 capital |
$ |
188,744 |
|
|
|
|
$ |
188,744 |
|
|
|
| Tier 1 capital |
188,744 |
|
|
|
|
188,744 |
|
|
|
Total capital (3) |
203,699 |
|
|
|
|
194,099 |
|
|
|
| Risk-weighted assets (in billions) |
1,398 |
|
|
|
|
1,118 |
|
|
|
| Common equity tier 1 capital ratio |
13.5 |
% |
|
|
|
16.9 |
% |
|
7.0 |
% |
| Tier 1 capital ratio |
13.5 |
|
|
|
|
16.9 |
|
|
8.5 |
|
| Total capital ratio |
14.6 |
|
|
|
|
17.4 |
|
|
10.5 |
|
|
|
|
|
|
|
|
|
| Leverage-based metrics: |
|
|
|
|
|
|
|
Adjusted quarterly average assets (in billions) (4) |
$ |
2,481 |
|
|
|
|
$ |
2,481 |
|
|
|
| Tier 1 leverage ratio |
7.6 |
% |
|
|
|
7.6 |
% |
|
5.0 |
|
|
|
|
|
|
|
|
|
| Supplementary leverage exposure (in billions) |
|
|
|
|
$ |
2,926 |
|
|
|
| Supplementary leverage ratio |
|
|
|
|
6.5 |
% |
|
6.0 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
| Risk-based capital metrics: |
|
|
|
|
|
|
|
| Common equity tier 1 capital |
$ |
187,621 |
|
|
|
|
$ |
187,621 |
|
|
|
| Tier 1 capital |
187,621 |
|
|
|
|
187,621 |
|
|
|
Total capital (3) |
201,932 |
|
|
|
|
192,175 |
|
|
|
| Risk-weighted assets (in billions) |
1,395 |
|
|
|
|
1,114 |
|
|
|
| Common equity tier 1 capital ratio |
13.5 |
% |
|
|
|
16.8 |
% |
|
7.0 |
% |
| Tier 1 capital ratio |
13.5 |
|
|
|
|
16.8 |
|
|
8.5 |
|
| Total capital ratio |
14.5 |
|
|
|
|
17.2 |
|
|
10.5 |
|
|
|
|
|
|
|
|
|
| Leverage-based metrics: |
|
|
|
|
|
|
|
Adjusted quarterly average assets (in billions) (4) |
$ |
2,471 |
|
|
|
|
$ |
2,471 |
|
|
|
| Tier 1 leverage ratio |
7.6 |
% |
|
|
|
7.6 |
% |
|
5.0 |
|
|
|
|
|
|
|
|
|
| Supplementary leverage exposure (in billions) |
|
|
|
|
$ |
2,910 |
|
|
|
| Supplementary leverage ratio |
|
|
|
|
6.4 |
% |
|
6.0 |
|
(1)Capital ratios as of March 31, 2024 and December 31, 2023 are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of the CECL accounting standard on January 1, 2020.
(2)Risk-based capital regulatory minimums at both March 31, 2024 and December 31, 2023 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.
(3)Total capital under the Advanced approaches differs from the Standardized approach due to differences in the amount permitted in Tier 2 capital related to the qualifying allowance for credit losses.
(4)Reflects total average assets adjusted for certain Tier 1 capital deductions.
Total Loss-Absorbing Capacity Requirements
Total loss-absorbing capacity (TLAC) consists of the Corporation’s Tier 1 capital and eligible long-term debt issued directly by the Corporation. Eligible long-term debt for TLAC ratios is comprised of unsecured debt that has a remaining maturity of at least one year and satisfies additional requirements as prescribed in the TLAC final rule. As with the
risk-based capital ratios and SLR, the Corporation is required to maintain TLAC ratios in excess of minimum requirements plus applicable buffers to avoid restrictions on capital distributions and discretionary bonus payments to executive officers. Table 11 presents the Corporation's TLAC and long-term debt ratios and related information as of March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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, 2024 |
| Total eligible balance |
$ |
475,215 |
|
|
|
|
|
|
$ |
235,649 |
|
|
|
Percentage of risk-weighted assets (4) |
28.7 |
% |
|
22.0 |
% |
|
|
|
14.2 |
% |
|
9.0 |
% |
| Percentage of supplementary leverage exposure |
12.8 |
|
|
9.5 |
|
|
|
|
6.3 |
|
|
4.5 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
| Total eligible balance |
$ |
479,156 |
|
|
|
|
|
|
$ |
239,892 |
|
|
|
Percentage of risk-weighted assets (4) |
29.0 |
% |
|
22.0 |
% |
|
|
|
14.5 |
% |
|
8.5 |
% |
| Percentage of supplementary leverage exposure |
13.0 |
|
|
9.5 |
|
|
|
|
6.5 |
|
|
4.5 |
|
(1)As of March 31, 2024 and December 31, 2023, TLAC ratios are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of the CECL accounting standard on January 1, 2020.
(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 the Corporation’s G-SIB surcharge of 3.0 percent at March 31, 2024 and 2.5 percent at December 31, 2023. The long-term debt leverage exposure regulatory minimum is 4.5 percent. Effective January 1, 2024, the Corporation’s G-SIB surcharge, which is higher under Method 2, increased 50 bps, resulting in an increase in our long-term debt RWA regulatory minimum requirement to 9.0 percent from 8.5 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, 2024 and December 31, 2023.
Regulatory Developments
For information on regulatory developments, see Capital Management – Regulatory Developments in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Regulatory Capital and Securities Regulation
The Corporation’s principal U.S. broker-dealer subsidiaries are BofA Securities, Inc. (BofAS) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S). The Corporation's principal European subsidiaries undertaking broker-dealer activities 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 capital requirements as an alternative net capital broker-dealer under Rule 15c3-1e, and MLPF&S computes its capital requirements in accordance with the alternative standard under Rule 15c3-1. BofAS is registered as a futures commission merchant and is 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, 2024, BofAS had tentative net capital of $22.6 billion. BofAS also had regulatory net capital of $20.3 billion, which exceeded the minimum requirement of $4.3 billion.
MLPF&S provides retail services. At March 31, 2024, MLPF&S' regulatory net capital was $6.4 billion, which exceeded the minimum requirement of $148 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 Financial Conduct Authority and is subject to certain regulatory
capital requirements. At March 31, 2024, MLI’s capital resources were $33.8 billion, which exceeded the minimum Pillar 1 requirement of $12.8 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, 2024, BofASE's capital resources were $9.9 billion, which exceeded the minimum Pillar 1 requirement of $3.8 billion.
In addition, MLI and BofASE remained conditionally registered with the SEC as security-based swap dealers, and maintained net liquid assets at March 31, 2024 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 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 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 2023 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 2023 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, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 12 |
Average Global Liquidity Sources |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
| (Dollars in billions) |
March 31 2024 |
|
December 31 2023 |
|
|
|
|
| Bank entities |
$ |
747 |
|
|
$ |
735 |
|
Nonbank and other entities (1) |
162 |
|
|
162 |
|
Total Average Global Liquidity Sources |
$ |
909 |
|
|
$ |
897 |
|
(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 $326 billion and $312 billion at March 31, 2024 and December 31, 2023. 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, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 13 |
Average Global Liquidity Sources Composition |
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
| (Dollars in billions) |
March 31 2024 |
|
December 31 2023 |
| Cash on deposit |
$ |
344 |
|
|
$ |
380 |
|
| U.S. Treasury securities |
228 |
|
|
197 |
|
U.S. agency securities, mortgage-backed securities, and other investment-grade securities |
313 |
|
|
299 |
|
| Non-U.S. government securities |
24 |
|
|
21 |
|
| Total Average Global Liquidity Sources |
$ |
909 |
|
|
$ |
897 |
|
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 $586 billion and $590 billion for the three months ended March 31, 2024 and December 31, 2023. For the same periods, the average consolidated LCR was 113 percent and 115 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 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 2023 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, 2024, the Corporation and its insured depository institutions were in compliance with the U.S. NSFR.
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 $1.95 trillion and $1.92 trillion at March 31, 2024 and December 31, 2023. 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, 2024, 50 percent of our deposits were in Consumer Banking, 15 percent in GWIM and 27 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, 2024 approximately 68 percent of consumer and small business deposits and 81 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 both March 31, 2024 and December 31, 2023, 28 percent of our deposits were noninterest bearing and included operating accounts of our consumer and commercial clients. Deposits at March 31, 2024 increased $22.7 billion from December 31, 2023 primarily due to time deposit growth and seasonal deposit inflows.
During the three months ended March 31, 2024 and 2023, rates paid on deposits were 55 bps and 12 bps in Consumer Banking, 289 bps and 197 bps in GWIM, and 312 bps and 170 bps in Global Banking. For information on rates paid on consolidated deposit balances, see Table 6 on page 7.
Long-term Debt
During the three months ended March 31, 2024 we issued $15.4 billion of long-term debt consisting of $6.5 billion of notes issued by Bank of America Corporation, substantially all of which were TLAC compliant, $3.5 billion of notes issued by Bank of America, N.A. and $5.4 billion of other debt.
During the three months ended March 31, 2024, we had total long-term debt maturities and redemptions in the aggregate of $15.0 billion consisting of $9.4 billion for Bank of America Corporation, $2.5 billion for Bank of America, N.A. and $3.1 billion of other debt. Table 14 presents the carrying value of aggregate annual contractual maturities of long-term debt at March 31, 2024.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 14 |
Long-term Debt by Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
Remainder of 2024 |
|
2025 |
|
2026 |
|
2027 |
|
2028 |
|
Thereafter |
|
Total |
| Bank of America Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes (1) |
$ |
5,146 |
|
|
$ |
19,029 |
|
|
$ |
24,508 |
|
|
$ |
21,302 |
|
|
$ |
27,475 |
|
|
$ |
103,463 |
|
|
$ |
200,923 |
|
| Senior structured notes |
490 |
|
|
1,094 |
|
|
1,166 |
|
|
802 |
|
|
1,035 |
|
|
10,948 |
|
|
15,535 |
|
| Subordinated notes |
3,117 |
|
|
5,080 |
|
|
4,870 |
|
|
2,062 |
|
|
929 |
|
|
9,162 |
|
|
25,220 |
|
| Junior subordinated notes |
— |
|
|
— |
|
|
— |
|
|
191 |
|
|
— |
|
|
557 |
|
|
748 |
|
| Total Bank of America Corporation |
8,753 |
|
|
25,203 |
|
|
30,544 |
|
|
24,357 |
|
|
29,439 |
|
|
124,130 |
|
|
242,426 |
|
| Bank of America, N.A. |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Senior notes |
1,000 |
|
|
3,397 |
|
|
3,144 |
|
|
— |
|
|
650 |
|
|
— |
|
|
8,191 |
|
| Subordinated notes |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,435 |
|
|
1,435 |
|
| Advances from Federal Home Loan Banks |
4,750 |
|
|
2,512 |
|
|
8 |
|
|
3 |
|
|
9 |
|
|
41 |
|
|
7,323 |
|
Securitizations and other Bank VIEs (2) |
1,094 |
|
|
2,234 |
|
|
3,245 |
|
|
— |
|
|
866 |
|
|
211 |
|
|
7,650 |
|
| Other |
40 |
|
|
601 |
|
|
79 |
|
|
46 |
|
|
44 |
|
|
— |
|
|
810 |
|
| Total Bank of America, N.A. |
6,884 |
|
|
8,744 |
|
|
6,476 |
|
|
49 |
|
|
1,569 |
|
|
1,687 |
|
|
25,409 |
|
| Other debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Structured Liabilities |
3,649 |
|
|
3,853 |
|
|
3,871 |
|
|
2,935 |
|
|
2,038 |
|
|
11,604 |
|
|
27,950 |
|
Nonbank VIEs (2) |
44 |
|
|
16 |
|
|
7 |
|
|
— |
|
|
7 |
|
|
487 |
|
|
561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total other debt |
3,693 |
|
|
3,869 |
|
|
3,878 |
|
|
2,935 |
|
|
2,045 |
|
|
12,091 |
|
|
28,511 |
|
| Total long-term debt |
$ |
19,330 |
|
|
$ |
37,816 |
|
|
$ |
40,898 |
|
|
$ |
27,341 |
|
|
$ |
33,053 |
|
|
$ |
137,908 |
|
|
$ |
296,346 |
|
(1)Total includes $183.0 billion of outstanding notes that are both TLAC eligible and callable one year before their stated maturities, including $15.6 billion during the remainder of 2024, and $21.8 billion, $21.3 billion, $24.6 billion and $19.5 billion during each year of 2025 through 2028, respectively, and $80.2 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 2023 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 decreased $5.9 billion to $296.3 billion during the three months ended March 31, 2024 primarily due to debt maturities and valuation adjustments, partially offset by debt issuances. 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, 2024, we issued $6.8 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 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 2023 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 39.
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 Moody's Investors Service, Standard & Poor’s Global Ratings and Fitch Ratings for the Corporation and its subsidiaries have not changed from those disclosed in the Corporation's 2023 Annual Report on Form 10-K.
For more information on additional collateral and termination payments that could be required in connection with certain over-the-counter derivative contracts and other trading agreements in the event of a credit rating downgrade, see Note 3 – Derivatives to the Consolidated Financial Statements herein and Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K.
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|
|
|
|
|
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|
| 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 |
A1 |
|
P-1 |
|
Stable |
|
A- |
|
A-2 |
|
Stable |
|
AA- |
|
F1+ |
|
Stable |
| Bank of America, N.A. |
Aa1 |
|
P-1 |
|
Negative |
|
A+ |
|
A-1 |
|
Stable |
|
AA |
|
F1+ |
|
Stable |
| Bank of America Europe Designated Activity Company |
NR |
|
NR |
|
NR |
|
A+ |
|
A-1 |
|
Stable |
|
AA |
|
F1+ |
|
Stable |
| Merrill Lynch, Pierce, Fenner & Smith Incorporated |
NR |
|
NR |
|
NR |
|
A+ |
|
A-1 |
|
Stable |
|
AA |
|
F1+ |
|
Stable |
| BofA Securities, Inc. |
NR |
|
NR |
|
NR |
|
A+ |
|
A-1 |
|
Stable |
|
AA |
|
F1+ |
|
Stable |
| Merrill Lynch International |
NR |
|
NR |
|
NR |
|
A+ |
|
A-1 |
|
Stable |
|
AA |
|
F1+ |
|
Stable |
| BofA Securities Europe SA |
NR |
|
NR |
|
NR |
|
A+ |
|
A-1 |
|
Stable |
|
AA |
|
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, 2024. 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 2023 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 2023 Annual Report on Form 10-K.
Credit Risk Management
For information on our credit risk management activities, see the following: Consumer Portfolio Credit Risk Management on page 24, Commercial Portfolio Credit Risk Management on page 28, Non-U.S. Portfolio on page 34, Allowance for Credit Losses on page 35, Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements, and Credit Risk Management in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K. 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. For more information on the Corporation’s credit risks, see the Credit section within Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K.
During the three months ended March 31, 2024, our net charge-off ratio increased primarily driven by credit card loans and the commercial real estate office portfolio. In addition, nonperforming loans increased compared to December 31, 2023 driven by the commercial real estate office property type, while commercial reservable criticized exposure increased driven by an increase across a broad range of industries in commercial excluding commercial real estate. Uncertainty remains regarding broader economic impacts as a result of inflationary pressures, elevated 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, 2024, the U.S. unemployment rate remained relatively stable and home prices increased slightly. During the three months ended March 31, 2024, net charge-offs increased $375 million to $1.0 billion compared to the same period in 2023, primarily due to higher credit card loan charge-offs.
The consumer allowance for loan and lease losses decreased $44 million during the three months ended March 31, 2024 to $8.5 billion. For more information, see Allowance for Credit Losses on page 35.
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 2023 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.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 16 |
Consumer Credit Quality |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Outstandings |
|
Nonperforming |
|
Accruing Past Due
90 Days or More |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
March 31
2024 |
|
December 31
2023 |
|
March 31
2024 |
|
December 31
2023 |
|
March 31
2024 |
|
December 31
2023 |
Residential mortgage (1) |
$ |
227,435 |
|
|
$ |
228,403 |
|
|
$ |
2,112 |
|
|
$ |
2,114 |
|
|
$ |
230 |
|
|
$ |
252 |
|
| Home equity |
25,185 |
|
|
25,527 |
|
|
438 |
|
|
450 |
|
|
— |
|
|
— |
|
| Credit card |
98,453 |
|
|
102,200 |
|
|
n/a |
|
n/a |
|
1,299 |
|
|
1,224 |
|
Direct/Indirect consumer (2) |
102,849 |
|
|
103,468 |
|
|
147 |
|
|
148 |
|
|
2 |
|
|
2 |
|
| Other consumer |
115 |
|
|
124 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Consumer loans excluding loans accounted for under the fair value option |
$ |
454,037 |
|
|
$ |
459,722 |
|
|
$ |
2,697 |
|
|
$ |
2,712 |
|
|
$ |
1,531 |
|
|
$ |
1,478 |
|
Loans accounted for under the fair value option (3) |
235 |
|
|
243 |
|
|
|
|
|
|
|
|
|
| Total consumer loans and leases |
$ |
454,272 |
|
|
$ |
459,965 |
|
|
|
|
|
|
|
|
|
Percentage of outstanding consumer loans and leases (4) |
n/a |
|
n/a |
|
0.59 |
% |
|
0.59 |
% |
|
0.34 |
% |
|
0.32 |
% |
Percentage of outstanding consumer loans and leases, excluding fully-insured loan portfolios (4) |
n/a |
|
n/a |
|
0.61 |
|
|
0.60 |
|
|
0.29 |
|
|
0.27 |
|
(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At March 31, 2024 and December 31, 2023, residential mortgage included $140 million and $156 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 $90 million and $96 million of loans on which interest was still accruing.
(2)Outstandings primarily includes auto and specialty lending loans and leases of $54.1 billion and $53.9 billion, U.S. securities-based lending loans of $45.3 billion and $46.0 billion at March 31, 2024 and December 31, 2023, and non-U.S. consumer loans of $2.7 billion and $2.8 billion at March 31, 2024 and December 31, 2023.
(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, 2024 and December 31, 2023, $4 million of loans accounted for under the fair value option were past due 90 days or more and not accruing interest.
n/a= not applicable
Table 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) |
|
|
|
|
2024 |
|
2023 |
|
|
|
|
|
2024 |
|
2023 |
| Residential mortgage |
|
|
|
|
$ |
3 |
|
|
$ |
1 |
|
|
|
|
|
|
0.01 |
% |
|
— |
% |
| Home equity |
|
|
|
|
(13) |
|
|
(12) |
|
|
|
|
|
|
(0.20) |
|
|
(0.18) |
|
| Credit card |
|
|
|
|
899 |
|
|
501 |
|
|
|
|
|
|
3.62 |
|
|
2.21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Direct/Indirect consumer |
|
|
|
|
65 |
|
|
1 |
|
|
|
|
|
|
0.26 |
|
|
— |
|
| Other consumer |
|
|
|
|
74 |
|
|
162 |
|
|
|
|
|
|
n/m |
|
n/m |
| Total |
|
|
|
|
$ |
1,028 |
|
|
$ |
653 |
|
|
|
|
|
|
0.91 |
|
|
0.58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 50 percent of consumer loans and leases at March 31, 2024. Approximately 51 percent of the residential mortgage portfolio was in Consumer Banking, 46 percent was in GWIM and the remaining portion was in All Other.
Outstanding balances in the residential mortgage portfolio decreased $968 million during the three months ended March
31, 2024, as paydowns and payoffs outpaced new originations.
At March 31, 2024 and December 31, 2023, the residential mortgage portfolio included $10.6 billion and $11.0 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
2024 |
|
December 31
2023 |
|
March 31
2024 |
|
December 31
2023 |
| Outstandings |
|
|
|
|
|
|
|
$ |
227,435 |
|
|
$ |
228,403 |
|
|
$ |
216,791 |
|
|
$ |
217,439 |
|
| Accruing past due 30 days or more |
|
|
|
|
|
|
|
1,308 |
|
|
1,513 |
|
|
832 |
|
|
986 |
|
| Accruing past due 90 days or more |
|
|
|
|
|
|
|
230 |
|
|
252 |
|
|
— |
|
|
— |
|
Nonperforming loans (2) |
|
|
|
|
|
|
|
2,112 |
|
|
2,114 |
|
|
2,112 |
|
|
2,114 |
|
| 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 remained relatively unchanged during the three months ended March 31, 2024. Of the nonperforming residential mortgage loans at March 31, 2024, $1.3 billion, or 64 percent, were current on contractual payments. Loans accruing past due 30 days or more decreased $154 million.
Of the $216.8 billion in total residential mortgage loans outstanding at March 31, 2024, $62.9 billion, or 29 percent, of loans were originated as interest-only. The outstanding balance of interest-only residential mortgage loans that had entered the amortization period was $3.6 billion, or six percent, at March 31, 2024. 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, 2024, $51 million, or one percent, of outstanding interest-only residential mortgages that had entered the amortization period were accruing past due 30 days or more compared to $832 million, or less than one percent, for the entire residential mortgage portfolio. In addition, at March 31, 2024, $188
million, or five percent, of outstanding interest-only residential mortgage loans that had entered the amortization period were nonperforming, of which $62 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 three years to 10 years. Substantially all 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. In the New York area, the New York-Northern New Jersey-Long Island Metropolitan Statistical Area (MSA) made up 15 percent of outstandings at both March 31, 2024 and December 31, 2023. The Los Angeles-Long Beach-Santa Ana MSA within California represented 14 percent of outstandings at both March 31, 2024 and December 31, 2023.
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
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|
|
|
|
| Table 19 |
Residential Mortgage State Concentrations |
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstandings (1) |
|
Nonperforming (1) |
|
|
|
|
|
Net Charge-offs |
|
|
|
|
|
|
March 31
2024 |
|
December 31
2023 |
|
March 31
2024 |
|
December 31
2023 |
|
|
|
|
|
Three Months Ended March 31 |
|
|
|
|
| (Dollars in millions) |
|
|
|
|
|
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| California |
$ |
80,920 |
|
|
$ |
81,085 |
|
|
$ |
643 |
|
|
$ |
641 |
|
|
|
|
|
|
$ |
3 |
|
|
$ |
— |
|
|
|
|
|
| New York |
25,825 |
|
|
25,975 |
|
|
317 |
|
|
320 |
|
|
|
|
|
|
— |
|
|
2 |
|
|
|
|
|
| Florida |
15,451 |
|
|
15,450 |
|
|
142 |
|
|
131 |
|
|
|
|
|
|
(1) |
|
|
(2) |
|
|
|
|
|
| Texas |
9,334 |
|
|
9,361 |
|
|
89 |
|
|
88 |
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
| New Jersey |
8,613 |
|
|
8,671 |
|
|
99 |
|
|
97 |
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
| Other |
76,648 |
|
|
76,897 |
|
|
822 |
|
|
837 |
|
|
|
|
|
|
1 |
|
|
1 |
|
|
|
|
|
| Residential mortgage loans |
$ |
216,791 |
|
|
$ |
217,439 |
|
|
$ |
2,112 |
|
|
$ |
2,114 |
|
|
|
|
|
|
$ |
3 |
|
|
$ |
1 |
|
|
|
|
|
| Fully-insured loan portfolio |
10,644 |
|
|
10,964 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total residential mortgage loan portfolio |
$ |
227,435 |
|
|
$ |
228,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Outstandings and nonperforming loans exclude loans accounted for under the fair value option.
Home Equity
At March 31, 2024, 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, 2024, 84 percent of the home equity portfolio was in Consumer Banking, ten percent was in GWIM and the remainder of the portfolio was in All Other. Outstanding balances in the home equity portfolio decreased $342 million during the three months ended March 31, 2024 primarily due to paydowns outpacing draws on existing lines and new
originations. Of the total home equity portfolio at March 31, 2024 and December 31, 2023, $9.8 billion and $10.1 billion, or 39 percent as of both periods, were in first-lien positions. At March 31, 2024, 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 $45.5 billion and $45.1 billion at March 31, 2024 and December 31, 2023. The HELOC utilization rate was 35 percent at both March 31, 2024 and December 31, 2023.
Table 20 presents certain home equity portfolio key credit statistics.
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|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
|
| Table 20 |
Home Equity – Key Credit Statistics (1) |
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
|
|
|
|
|
|
|
|
March 31 2024 |
|
December 31 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Outstandings |
|
|
|
|
|
|
|
|
$ |
25,185 |
|
|
$ |
25,527 |
|
|
|
|
|
| Accruing past due 30 days or more |
|
|
|
|
|
83 |
|
|
95 |
|
|
|
|
|
Nonperforming loans (2) |
|
|
|
|
|
|
|
|
438 |
|
|
450 |
|
|
|
|
|
| Percent of portfolio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Refreshed CLTV greater than 90 but less than or equal to 100 |
|
|
|
— |
% |
|
— |
% |
|
|
|
|
| Refreshed CLTV greater than 100 |
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
| Refreshed FICO below 620 |
|
|
|
|
|
|
|
|
3 |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 $12 million to $438 million at March 31, 2024, primarily driven by paydowns and payoffs and returns to performing status outpacing new additions. Of the nonperforming home equity loans at March 31, 2024, $255 million, or 58 percent, were current on contractual payments. In addition, $101 million, or 23 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, 2024.
Of the $25.2 billion in total home equity portfolio outstandings at March 31, 2024, as shown in Table 20, 10 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 $3.8 billion at March 31, 2024. 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, 2024, $33 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, 2024, $274 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, 2024, 28 percent of these customers with an outstanding balance did not pay any principal on their HELOCs.
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 11 percent of the outstanding home equity portfolio at both March 31, 2024 and December 31, 2023. The Los Angeles-Long Beach-Santa Ana MSA within California made up 11 percent and 10 percent of the outstanding home equity portfolio at March 31, 2024 and December 31, 2023.
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 21 |
Home Equity State Concentrations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstandings (1) |
|
Nonperforming (1) |
|
|
|
|
|
Net Charge-Offs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31
2024 |
|
December 31
2023 |
|
March 31
2024 |
|
December 31
2023 |
|
|
|
Three Months Ended March 31 |
| (Dollars in millions) |
|
|
|
|
|
|
|
|
2024 |
|
2023 |
| California |
$ |
6,890 |
|
|
$ |
6,966 |
|
|
$ |
108 |
|
|
$ |
109 |
|
|
|
|
|
|
$ |
(3) |
|
|
$ |
(1) |
|
| Florida |
2,543 |
|
|
2,576 |
|
|
51 |
|
|
53 |
|
|
|
|
|
|
(2) |
|
|
(3) |
|
| New Jersey |
1,815 |
|
|
1,870 |
|
|
42 |
|
|
46 |
|
|
|
|
|
|
(2) |
|
|
— |
|
| New York |
1,544 |
|
|
1,590 |
|
|
69 |
|
|
71 |
|
|
|
|
|
|
— |
|
|
(2) |
|
| Texas |
1,422 |
|
|
1,410 |
|
|
15 |
|
|
16 |
|
|
|
|
|
|
— |
|
|
— |
|
| Other |
10,971 |
|
|
11,115 |
|
|
153 |
|
|
155 |
|
|
|
|
|
|
(6) |
|
|
(6) |
|
| Total home equity loan portfolio |
$ |
25,185 |
|
|
$ |
25,527 |
|
|
$ |
438 |
|
|
$ |
450 |
|
|
|
|
|
|
$ |
(13) |
|
|
$ |
(12) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Outstandings and nonperforming loans exclude loans accounted for under the fair value option.
Credit Card
At March 31, 2024, 97 percent of the credit card portfolio was managed in Consumer Banking with the remainder in GWIM. Outstandings in the credit card portfolio decreased $3.7 billion during the three months ended March 31, 2024 to $98.5 billion primarily driven by a seasonal decline in purchase volume. Net charge-offs increased $398 million to $899 million during the three months ended March 31, 2024 compared to the same period in 2023 primarily due to late-stage delinquent credit card
loans that were charged off. Credit card loans 30 days or more past due and still accruing interest increased $27 million, and 90 days or more past due and still accruing interest increased $75 million at March 31, 2024.
Unused lines of credit for credit card increased to $395.5 billion at March 31, 2024 from $390.2 billion at December 31, 2023.
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
2024 |
|
December 31
2023 |
|
March 31
2024 |
|
December 31
2023 |
|
|
|
Three Months Ended March 31 |
|
|
|
|
| (Dollars in millions) |
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
|
|
|
| California |
$ |
16,377 |
|
|
$ |
16,952 |
|
|
$ |
237 |
|
|
$ |
216 |
|
|
|
|
|
|
$ |
161 |
|
|
$ |
88 |
|
|
|
|
|
| Florida |
10,254 |
|
|
10,521 |
|
|
178 |
|
|
168 |
|
|
|
|
|
|
123 |
|
|
69 |
|
|
|
|
|
| Texas |
8,704 |
|
|
8,978 |
|
|
133 |
|
|
125 |
|
|
|
|
|
|
90 |
|
|
48 |
|
|
|
|
|
| New York |
5,540 |
|
|
5,788 |
|
|
83 |
|
|
84 |
|
|
|
|
|
|
62 |
|
|
39 |
|
|
|
|
|
| Washington |
5,204 |
|
|
5,352 |
|
|
45 |
|
|
41 |
|
|
|
|
|
|
27 |
|
|
14 |
|
|
|
|
|
| Other |
52,374 |
|
|
54,609 |
|
|
623 |
|
|
590 |
|
|
|
|
|
|
436 |
|
|
243 |
|
|
|
|
|
| Total credit card portfolio |
$ |
98,453 |
|
|
$ |
102,200 |
|
|
$ |
1,299 |
|
|
$ |
1,224 |
|
|
|
|
|
|
$ |
899 |
|
|
$ |
501 |
|
|
|
|
|
Direct/Indirect Consumer
At March 31, 2024, 53 percent of the direct/indirect portfolio was included in Consumer Banking (consumer auto and recreational vehicle lending) and 47 percent was included in GWIM (principally securities-based lending loans). Outstandings in the direct/indirect portfolio decreased $619 million during the
three months ended March 31, 2024 to $102.8 billion driven by declines in securities-based lending stemming from paydown activity due to higher interest rates.
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
2024 |
|
December 31
2023 |
|
March 31
2024 |
|
December 31
2023 |
|
|
|
Three Months Ended March 31 |
|
|
|
|
| (Dollars in millions) |
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| California |
$ |
15,325 |
|
|
$ |
15,416 |
|
|
$ |
26 |
|
|
$ |
27 |
|
|
|
|
|
|
$ |
15 |
|
|
$ |
2 |
|
|
|
|
|
| Florida |
13,557 |
|
|
13,550 |
|
|
17 |
|
|
18 |
|
|
|
|
|
|
9 |
|
|
— |
|
|
|
|
|
| Texas |
9,881 |
|
|
9,668 |
|
|
14 |
|
|
14 |
|
|
|
|
|
|
8 |
|
|
— |
|
|
|
|
|
| New York |
7,320 |
|
|
7,335 |
|
|
11 |
|
|
11 |
|
|
|
|
|
|
4 |
|
|
— |
|
|
|
|
|
| New Jersey |
4,360 |
|
|
4,376 |
|
|
7 |
|
|
5 |
|
|
|
|
|
|
2 |
|
|
— |
|
|
|
|
|
| Other |
52,406 |
|
|
53,123 |
|
|
72 |
|
|
73 |
|
|
|
|
|
|
27 |
|
|
(1) |
|
|
|
|
|
| Total direct/indirect loan portfolio |
$ |
102,849 |
|
|
$ |
103,468 |
|
|
$ |
147 |
|
|
$ |
148 |
|
|
|
|
|
|
$ |
65 |
|
|
$ |
1 |
|
|
|
|
|
Other Consumer
Other consumer primarily consists of deposit overdraft balances. Net charge-offs decreased $88 million to $74 million during the three months ended March 31, 2024 compared to the same period in 2023, primarily driven by lower overdraft losses from fraud activity.
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, 2024 and 2023. During the three months ended March 31,
2024, nonperforming consumer loans of $2.7 billion remained relatively unchanged.
At March 31, 2024, $487 million, or 18 percent, of nonperforming loans were 180 days or more past due and had been written down to their estimated property value less costs to sell. In addition, at March 31, 2024, $1.7 billion, or 61 percent, of nonperforming consumer loans were current and classified as nonperforming loans in accordance with applicable policies.
Foreclosed properties increased $9 million during the three months ended March 31, 2024 to $112 million.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 24 |
Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
| Nonperforming loans and leases, January 1 |
|
|
|
|
$ |
2,712 |
|
|
$ |
2,754 |
|
| Additions |
|
|
|
|
254 |
|
|
253 |
|
| Reductions: |
|
|
|
|
|
|
|
| Paydowns and payoffs |
|
|
|
|
(131) |
|
|
(103) |
|
| Sales |
|
|
|
|
(1) |
|
|
(2) |
|
Returns to performing status (1) |
|
|
|
|
(113) |
|
|
(170) |
|
| Charge-offs |
|
|
|
|
(10) |
|
|
(12) |
|
| Transfers to foreclosed properties |
|
|
|
|
(14) |
|
|
(6) |
|
|
|
|
|
|
|
|
|
| Total net reductions to nonperforming loans and leases |
|
|
|
|
(15) |
|
|
(40) |
|
Total nonperforming loans and leases, March 31 |
|
|
|
|
2,697 |
|
|
2,714 |
|
Foreclosed properties, March 31 |
|
|
|
|
112 |
|
|
117 |
|
Nonperforming consumer loans, leases and foreclosed properties, March 31 (2) |
|
|
|
|
$ |
2,809 |
|
|
$ |
2,831 |
|
Nonperforming consumer loans and leases as a percentage of outstanding consumer loans and leases (3) |
|
|
|
|
0.59 |
% |
|
0.60 |
% |
Nonperforming consumer loans, leases and foreclosed properties as a percentage of outstanding consumer loans, leases and foreclosed properties (3) |
|
|
|
|
0.62 |
|
|
0.63 |
|
(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)Includes repossessed non-real estate assets of $22 million and $0 at March 31, 2024 and 2023.
(3)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 32.
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 2023 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 $1.1 billion during the three months ended March 31, 2024 due to growth in U.S. commercial primarily in Global Banking and GWIM. During the three months ended March 31, 2024, commercial credit quality deteriorated as nonperforming commercial loans increased primarily driven by the commercial real estate office property type, and reservable criticized utilized exposure increased primarily driven by U.S. commercial increases across a broad range of industries. Commercial net charge-offs
increased $316 million to $470 million during the three months ended March 31, 2024 compared to the same period in 2023 primarily due to higher losses in the commercial real estate office portfolio.
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, 2023; however, we are closely monitoring emerging trends and borrower performance in the higher interest rate environment. 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 $85 million during the three months ended March 31, 2024 to $4.7 billion. For more information, see Allowance for Credit Losses on page 35.
Total commercial utilized credit exposure decreased $546 million during the three months ended March 31, 2024 to $695.8 billion primarily driven by lower derivative assets. The utilization rate for loans and leases, standby letters of credit (SBLCs) and financial guarantees, and commercial letters of credit, in the aggregate, was 55 percent at both March 31, 2024 and December 31, 2023.
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 2024 |
|
December 31 2023 |
|
March 31 2024 |
|
December 31 2023 |
|
March 31 2024 |
|
December 31 2023 |
| Loans and leases |
$ |
594,884 |
|
|
$ |
593,767 |
|
|
$ |
510,338 |
|
|
$ |
507,641 |
|
|
$ |
1,105,222 |
|
|
$ |
1,101,408 |
|
Derivative assets (5) |
36,236 |
|
|
39,323 |
|
|
— |
|
|
— |
|
|
36,236 |
|
|
39,323 |
|
| Standby letters of credit and financial guarantees |
31,396 |
|
|
31,348 |
|
|
1,861 |
|
|
1,953 |
|
|
33,257 |
|
|
33,301 |
|
| Debt securities and other investments |
18,247 |
|
|
20,422 |
|
|
4,299 |
|
|
3,083 |
|
|
22,546 |
|
|
23,505 |
|
| Loans held-for-sale |
7,821 |
|
|
4,338 |
|
|
4,673 |
|
|
4,904 |
|
|
12,494 |
|
|
9,242 |
|
| Operating leases |
5,281 |
|
|
5,312 |
|
|
— |
|
|
— |
|
|
5,281 |
|
|
5,312 |
|
| Commercial letters of credit |
1,042 |
|
|
943 |
|
|
248 |
|
|
232 |
|
|
1,290 |
|
|
1,175 |
|
| Other |
846 |
|
|
846 |
|
|
— |
|
|
— |
|
|
846 |
|
|
846 |
|
| Total |
$ |
695,753 |
|
|
$ |
696,299 |
|
|
$ |
521,419 |
|
|
$ |
517,813 |
|
|
$ |
1,217,172 |
|
|
$ |
1,214,112 |
|
(1)Commercial utilized exposure includes loans of $2.7 billion and $3.3 billion accounted for under the fair value option at March 31, 2024 and December 31, 2023.
(2)Commercial unfunded exposure includes commitments accounted for under the fair value option with a notional amount of $3.1 billion and $2.6 billion at March 31, 2024 and December 31, 2023.
(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 $9.9 billion and $10.3 billion at March 31, 2024 and December 31, 2023.
(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 $27.9 billion and $29.4 billion at March 31, 2024 and December 31, 2023. Not reflected in utilized and committed exposure is additional non-cash derivative collateral held of $57.9 billion and $56.1 billion at March 31, 2024 and December 31, 2023, which consists primarily of other marketable securities.
Nonperforming commercial loans increased $413 million during the three months ended March 31, 2024 primarily in commercial real estate. Table 26 presents our commercial loans and leases portfolio and related credit quality information at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 26 |
Commercial Credit Quality |
|
|
|
|
|
Outstandings |
|
Nonperforming |
|
Accruing Past Due
90 Days or More |
|
|
|
| (Dollars in millions) |
March 31 2024 |
|
December 31 2023 |
|
March 31 2024 |
|
December 31 2023 |
|
March 31 2024 |
|
December 31 2023 |
| Commercial and industrial: |
|
|
|
|
|
|
|
|
|
|
|
| U.S. commercial |
$ |
362,744 |
|
|
$ |
358,931 |
|
|
$ |
720 |
|
|
$ |
636 |
|
|
$ |
106 |
|
|
$ |
51 |
|
| Non-U.S. commercial |
123,073 |
|
|
124,581 |
|
|
157 |
|
|
175 |
|
|
11 |
|
|
4 |
|
| Total commercial and industrial |
485,817 |
|
|
483,512 |
|
|
877 |
|
|
811 |
|
|
117 |
|
|
55 |
|
| Commercial real estate |
71,652 |
|
|
72,878 |
|
|
2,273 |
|
|
1,927 |
|
|
12 |
|
|
32 |
|
| Commercial lease financing |
14,781 |
|
|
14,854 |
|
|
16 |
|
|
19 |
|
|
13 |
|
|
7 |
|
|
572,250 |
|
|
571,244 |
|
|
3,166 |
|
|
2,757 |
|
|
142 |
|
|
94 |
|
U.S. small business commercial (1) |
19,931 |
|
|
19,197 |
|
|
20 |
|
|
16 |
|
|
199 |
|
|
184 |
|
| Commercial loans excluding loans accounted for under the fair value option |
$ |
592,181 |
|
|
$ |
590,441 |
|
|
$ |
3,186 |
|
|
$ |
2,773 |
|
|
$ |
341 |
|
|
$ |
278 |
|
Loans accounted for under the fair value option (2) |
2,703 |
|
|
3,326 |
|
|
|
|
|
|
|
|
|
| Total commercial loans and leases |
$ |
594,884 |
|
|
$ |
593,767 |
|
|
|
|
|
|
|
|
|
(1)Includes card-related products.
(2)Commercial loans accounted for under the fair value option includes U.S. commercial of $1.7 billion and $2.2 billion and non-U.S. commercial of $965 million and $1.2 billion at March 31, 2024 and December 31, 2023. For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.
Table 27 presents net charge-offs and related ratios for the three months ended March 31, 2024 and 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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) |
|
|
|
|
2024 |
|
2023 |
|
|
|
|
|
2024 |
|
2023 |
| Commercial and industrial: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. commercial |
|
|
|
|
$ |
66 |
|
|
$ |
47 |
|
|
|
|
|
|
0.07 |
% |
|
0.05 |
% |
| Non-U.S. commercial |
|
|
|
|
(9) |
|
|
20 |
|
|
|
|
|
|
(0.03) |
|
|
0.07 |
|
| Total commercial and industrial |
|
|
|
|
57 |
|
|
67 |
|
|
|
|
|
|
0.05 |
|
|
0.06 |
|
| Commercial real estate |
|
|
|
|
304 |
|
|
22 |
|
|
|
|
|
|
1.70 |
|
|
0.12 |
|
| Commercial lease financing |
|
|
|
|
1 |
|
|
(1) |
|
|
|
|
|
|
0.03 |
|
|
(0.01) |
|
|
|
|
|
|
362 |
|
|
88 |
|
|
|
|
|
|
0.26 |
|
|
0.06 |
|
| U.S. small business commercial |
|
|
|
|
108 |
|
|
66 |
|
|
|
|
|
|
2.22 |
|
|
1.48 |
|
| Total commercial |
|
|
|
|
$ |
470 |
|
|
$ |
154 |
|
|
|
|
|
|
0.32 |
|
|
0.11 |
|
(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 $1.2 billion during the
three months ended March 31, 2024 primarily driven by U.S. commercial. At both March 31, 2024 and December 31, 2023, 89 percent of commercial reservable criticized utilized exposure was secured.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 28 |
Commercial Reservable Criticized Utilized Exposure (1, 2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
March 31 2024 |
|
December 31 2023 |
| Commercial and industrial: |
| U.S. commercial |
$ |
12,972 |
|
|
3.34 |
% |
|
$ |
12,006 |
|
|
3.12 |
% |
| Non-U.S. commercial |
1,942 |
|
|
1.51 |
|
|
1,787 |
|
|
1.37 |
|
| Total commercial and industrial |
14,914 |
|
|
2.88 |
|
|
13,793 |
|
|
2.68 |
|
| Commercial real estate |
8,824 |
|
|
12.11 |
|
|
8,749 |
|
|
11.80 |
|
| Commercial lease financing |
178 |
|
|
1.20 |
|
|
166 |
|
|
1.12 |
|
|
|
23,916 |
|
|
3.95 |
|
|
22,708 |
|
|
3.76 |
|
| U.S. small business commercial |
613 |
|
|
3.08 |
|
|
592 |
|
|
3.08 |
|
| Total commercial reservable criticized utilized exposure |
$ |
24,529 |
|
|
3.93 |
|
|
$ |
23,300 |
|
|
3.74 |
|
(1)Total commercial reservable criticized utilized exposure includes loans and leases of $23.7 billion and $22.5 billion and commercial letters of credit of $847 million and $795 million at March 31, 2024 and December 31, 2023.
(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, 2024, 62 percent of the U.S. commercial loan portfolio, excluding small business, was managed in Global Banking, 22 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 $3.8 billion, or one percent, during the three months ended March 31, 2024 primarily driven by Global Banking and GWIM. Reservable criticized utilized exposure increased $1.0 billion, or eight percent, driven by a broad range of industries.
Non-U.S. Commercial
At March 31, 2024, 61 percent of the non-U.S. commercial loan portfolio was managed in Global Banking, 38 percent in Global Markets and the remainder primarily in GWIM. Non-U.S. commercial loans decreased $1.5 billion, or one percent, during the three months ended March 31, 2024 primarily driven by Global Banking. Reservable criticized utilized exposure increased $155 million, or nine percent. For information on the non-U.S. commercial portfolio, see Non-U.S. Portfolio on page 34.
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 decreased $1.2 billion, or two percent, during the three months ended March 31, 2024 to
$71.7 billion with decreases 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 20 percent of commercial real estate at both March 31, 2024 and December 31, 2023.
Reservable criticized utilized exposure increased $75 million, or one percent, during the three months ended March 31, 2024. Office loans represented the largest property type concentration at 24 percent of the commercial real estate portfolio at March 31, 2024, and approximately two percent of total loans for the Corporation. This property type is roughly 75 percent Class A and had an origination loan-to-value of approximately 55 percent. Reservable criticized exposure for the office property type was $5.6 billion at March 31, 2024, and approximately $7.0 billion of office loans are scheduled to mature by the end of 2024.
During the three months ended March 31, 2024, net charge-offs increased by $282 million to $304 million compared to the same period in 2023 driven by office loans. 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 2024 |
|
December 31 2023 |
|
| By Geographic Region |
|
|
|
|
| Northeast |
$ |
15,743 |
|
|
$ |
15,920 |
|
|
| California |
13,988 |
|
|
14,551 |
|
|
| Southwest |
9,073 |
|
|
9,318 |
|
|
| Southeast |
8,212 |
|
|
8,368 |
|
|
| Florida |
4,968 |
|
|
4,986 |
|
|
| Illinois |
3,341 |
|
|
3,361 |
|
|
| Midwest |
2,972 |
|
|
3,149 |
|
|
| Midsouth |
2,858 |
|
|
2,785 |
|
|
| Northwest |
2,172 |
|
|
2,095 |
|
|
| Non-U.S. |
6,155 |
|
|
6,052 |
|
|
| Other |
2,170 |
|
|
2,293 |
|
|
Total outstanding commercial real estate loans |
$ |
71,652 |
|
|
$ |
72,878 |
|
|
| By Property Type |
|
|
|
|
| Non-residential |
|
|
|
|
| Office |
$ |
17,442 |
|
|
$ |
17,976 |
|
|
| Industrial / Warehouse |
14,635 |
|
|
14,746 |
|
|
| Multi-family rental |
11,414 |
|
|
10,606 |
|
|
| Shopping centers / Retail |
5,682 |
|
|
5,756 |
|
|
| Hotel / Motels |
5,434 |
|
|
5,665 |
|
|
|
|
|
|
|
| Multi-use |
2,491 |
|
|
2,681 |
|
|
|
|
|
|
|
| Other |
13,835 |
|
|
14,201 |
|
|
| Total non-residential |
70,933 |
|
|
71,631 |
|
|
| Residential |
719 |
|
|
1,247 |
|
|
Total outstanding commercial real estate loans |
$ |
71,652 |
|
|
$ |
72,878 |
|
|
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. Credit card-related products were 54 percent of the U.S. small business commercial portfolio at both March 31, 2024 and December 31, 2023 and represented 98 percent of net charge-offs compared to 99 percent for March 31, 2023. Accruing past due 90 days or more increased $15 million in the three months ended March 31, 2024 driven by deteriorating asset quality in the small business card portfolio.
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, 2024 and 2023. Nonperforming loans do not include loans accounted for under the fair value option. During the three months ended March 31, 2024, nonperforming commercial loans and leases increased $413 million to $3.2 billion. At March 31, 2024, 97 percent of commercial nonperforming loans, leases and foreclosed properties were secured, and 46 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 30 |
Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity (1, 2) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31 |
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
| Nonperforming loans and leases, January 1 |
|
|
|
|
$ |
2,773 |
|
|
$ |
1,054 |
|
| Additions |
|
|
|
|
1,006 |
|
|
419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reductions: |
|
|
|
|
|
|
|
| Paydowns |
|
|
|
|
(220) |
|
|
(72) |
|
| Sales |
|
|
|
|
(1) |
|
|
— |
|
Returns to performing status (3) |
|
|
|
|
(4) |
|
|
(52) |
|
| Charge-offs |
|
|
|
|
(368) |
|
|
(88) |
|
|
|
|
|
|
|
|
|
| Transfers to loans held-for-sale |
|
|
|
|
— |
|
|
(57) |
|
| Total net additions to nonperforming loans and leases |
|
|
|
|
413 |
|
|
150 |
|
| Total nonperforming loans and leases, March 31 |
|
|
|
|
3,186 |
|
|
1,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Foreclosed properties, March 31 |
|
|
|
|
39 |
|
|
48 |
|
| Nonperforming commercial loans, leases and foreclosed properties, March 31 |
|
|
|
|
$ |
3,225 |
|
|
$ |
1,252 |
|
Nonperforming commercial loans and leases as a percentage of outstanding commercial loans and leases (4) |
|
|
|
|
0.54 |
% |
|
0.20 |
% |
Nonperforming commercial loans, leases and foreclosed properties as a percentage of outstanding commercial loans, leases and foreclosed properties (4) |
|
|
|
|
0.54 |
|
|
0.21 |
|
(1)Balances do not include nonperforming loans held-for-sale of $379 million and $250 million at March 31, 2024 and 2023.
(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 increased $3.1 billion during the three months ended March 31, 2024 to $1.2 trillion. The increase in commercial committed exposure was concentrated in Asset managers and funds, Software and services and Consumer services.
For information on industry limits, see Commercial Portfolio Credit Risk Management – Risk Mitigation in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K.
Asset managers and funds, our largest industry concentration with committed exposure of $172.3 billion, increased $3.0 billion, or two percent, during the three months ended March 31, 2024, which was primarily driven by investment-grade exposures.
Real estate, our second largest industry concentration with committed exposure of $99.3 billion decreased $931 million or one percent during the three months ended March 31, 2024. For more information on the commercial real estate and related portfolios, see Commercial Portfolio Credit Risk Management – Commercial Real Estate on page 30.
Capital goods, our third largest industry concentration with committed exposure of $94.7 billion, decreased $2.3 billion, or two percent, during the three months ended March 31, 2024. The decrease in committed exposure occurred primarily as a result of decreases in Industrial conglomerates and Aerospace and defense, partially offset by an increase in Building products.
Various macroeconomic challenges, including geopolitical tensions, inflationary pressures and elevated interest rates, have led to uncertainty in the U.S. and global economies and have adversely impacted, and may continue to adversely impact, a number of industries. We continue to monitor all industries, particularly higher risk industries that are experiencing or could experience a more significant impact to their financial condition.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 31 |
Commercial Credit Exposure by Industry (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Utilized |
|
Total Commercial
Committed (2)
|
|
|
|
| (Dollars in millions) |
March 31 2024 |
|
December 31 2023 |
|
March 31 2024 |
|
December 31 2023 |
| Asset managers and funds |
$ |
104,602 |
|
|
$ |
103,138 |
|
|
$ |
172,321 |
|
|
$ |
169,318 |
|
Real estate (3) |
72,992 |
|
|
73,150 |
|
|
99,338 |
|
|
100,269 |
|
| Capital goods |
49,292 |
|
|
49,698 |
|
|
94,710 |
|
|
97,044 |
|
| Finance companies |
60,501 |
|
|
62,906 |
|
|
89,253 |
|
|
89,119 |
|
| Healthcare equipment and services |
35,013 |
|
|
35,037 |
|
|
61,827 |
|
|
61,766 |
|
| Materials |
25,257 |
|
|
25,223 |
|
|
54,935 |
|
|
55,296 |
|
| Retailing |
25,399 |
|
|
24,561 |
|
|
53,193 |
|
|
54,523 |
|
| Consumer services |
29,287 |
|
|
27,355 |
|
|
51,724 |
|
|
49,105 |
|
| Food, beverage and tobacco |
23,624 |
|
|
23,865 |
|
|
48,283 |
|
|
49,426 |
|
| Government and public education |
31,453 |
|
|
31,051 |
|
|
47,041 |
|
|
45,873 |
|
| Individuals and trusts |
32,800 |
|
|
32,481 |
|
|
44,587 |
|
|
43,938 |
|
| Commercial services and supplies |
23,073 |
|
|
22,642 |
|
|
41,480 |
|
|
41,473 |
|
| Utilities |
17,571 |
|
|
18,610 |
|
|
39,298 |
|
|
39,481 |
|
| Energy |
12,143 |
|
|
12,450 |
|
|
37,978 |
|
|
36,996 |
|
| Transportation |
23,868 |
|
|
24,200 |
|
|
35,924 |
|
|
36,267 |
|
| Technology hardware and equipment |
11,363 |
|
|
11,951 |
|
|
29,605 |
|
|
29,160 |
|
| Global commercial banks |
22,816 |
|
|
22,749 |
|
|
25,667 |
|
|
25,684 |
|
| Software and services |
9,904 |
|
|
9,830 |
|
|
25,257 |
|
|
22,381 |
|
| Media |
12,944 |
|
|
13,033 |
|
|
24,998 |
|
|
24,908 |
|
| Vehicle dealers |
17,365 |
|
|
16,283 |
|
|
23,370 |
|
|
22,570 |
|
| Consumer durables and apparel |
8,948 |
|
|
9,184 |
|
|
20,771 |
|
|
20,732 |
|
| Pharmaceuticals and biotechnology |
7,202 |
|
|
6,852 |
|
|
20,428 |
|
|
22,169 |
|
| Insurance |
8,499 |
|
|
9,371 |
|
|
19,423 |
|
|
19,322 |
|
| Telecommunication services |
9,396 |
|
|
9,224 |
|
|
17,186 |
|
|
17,269 |
|
| Automobiles and components |
7,508 |
|
|
7,049 |
|
|
15,724 |
|
|
16,459 |
|
| Food and staples retailing |
7,512 |
|
|
7,423 |
|
|
13,200 |
|
|
12,496 |
|
| Financial markets infrastructure (clearinghouses) |
2,687 |
|
|
4,229 |
|
|
5,008 |
|
|
6,503 |
|
| Religious and social organizations |
2,734 |
|
|
2,754 |
|
|
4,643 |
|
|
4,565 |
|
|
|
|
|
|
|
|
|
| Total commercial credit exposure by industry |
$ |
695,753 |
|
|
$ |
696,299 |
|
|
$ |
1,217,172 |
|
|
$ |
1,214,112 |
|
|
|
|
|
|
|
|
|
(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 $9.9 billion and $10.3 billion at March 31, 2024 and December 31, 2023.
(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, 2024 and December 31, 2023, 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 $12.8 billion and $10.9 billion. We recorded net losses of $25 million for the three months ended March 31, 2024 compared to net losses of $77 million for the three months ended March 31, 2023. 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 37.
Tables 32 and 33 present the maturity profiles and the credit exposure debt ratings of the net credit default protection portfolio at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 32 |
Net Credit Default Protection by Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 2024 |
|
December 31 2023 |
|
| Less than or equal to one year |
32 |
% |
|
36 |
% |
|
Greater than one year and less than or equal to five years |
68 |
|
|
64 |
|
|
| Greater than five years |
— |
|
|
— |
|
|
| 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 2024 |
|
December 31 2023 |
Ratings (2, 3) |
|
|
|
|
|
|
|
| AAA |
$ |
(399) |
|
|
3.1 |
% |
|
$ |
(479) |
|
|
4.4 |
% |
| AA |
(1,672) |
|
|
13.0 |
|
|
(1,080) |
|
|
9.9 |
|
| A |
(6,038) |
|
|
47.1 |
|
|
(5,237) |
|
|
48.2 |
|
| BBB |
(3,660) |
|
|
28.5 |
|
|
(2,912) |
|
|
26.8 |
|
| BB |
(623) |
|
|
4.9 |
|
|
(698) |
|
|
6.4 |
|
| B |
(395) |
|
|
3.1 |
|
|
(419) |
|
|
3.9 |
|
| CCC and below |
(37) |
|
|
0.3 |
|
|
(52) |
|
|
0.5 |
|
NR (4) |
1 |
|
|
— |
|
|
2 |
|
|
(0.1) |
|
|
Total net credit
default protection
|
$ |
(12,823) |
|
|
100.0 |
% |
|
$ |
(10,875) |
|
|
100.0 |
% |
(1)Represents net credit default protection purchased.
(2)Ratings are refreshed on a quarterly basis.
(3)Ratings of BBB- or higher are considered to meet the definition of investment grade.
(4)NR is comprised of index positions held and any names that have not been rated.
For more information on credit derivatives and counterparty credit risk valuation adjustments, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 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 2023 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 2023 Annual Report on Form 10-K.
Table 34 presents our 20 largest non-U.S. country exposures at March 31, 2024. These exposures accounted for 90 percent and 89 percent of our total non-U.S. exposure at March 31, 2024 and December 31, 2023. Net country exposure for these 20 countries decreased $3.0 billion in 2024 primarily driven by decreases in Canada, Japan, Germany and Australia, partially offset by an increase in the United Kingdom.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 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
2024 |
|
Hedges and Credit Default Protection |
|
Net Country Exposure at March 31
2024 |
|
Increase (Decrease) from December 31
2023 |
| United Kingdom |
$ |
39,799 |
|
|
$ |
18,178 |
|
|
$ |
4,301 |
|
|
$ |
1,628 |
|
|
$ |
63,906 |
|
|
$ |
(1,988) |
|
|
$ |
61,918 |
|
|
$ |
5,983 |
|
| Germany |
24,170 |
|
|
9,977 |
|
|
1,496 |
|
|
2,096 |
|
|
37,739 |
|
|
(3,680) |
|
|
34,059 |
|
|
(1,596) |
|
| Canada |
11,738 |
|
|
10,149 |
|
|
1,217 |
|
|
3,063 |
|
|
26,167 |
|
|
(497) |
|
|
25,670 |
|
|
(2,345) |
|
| France |
14,132 |
|
|
8,921 |
|
|
892 |
|
|
1,744 |
|
|
25,689 |
|
|
(1,406) |
|
|
24,283 |
|
|
(575) |
|
| Australia |
13,117 |
|
|
4,699 |
|
|
553 |
|
|
1,763 |
|
|
20,132 |
|
|
(337) |
|
|
19,795 |
|
|
(1,527) |
|
| Brazil |
9,546 |
|
|
1,344 |
|
|
811 |
|
|
4,364 |
|
|
16,065 |
|
|
(70) |
|
|
15,995 |
|
|
712 |
|
| Japan |
9,109 |
|
|
1,905 |
|
|
1,098 |
|
|
3,415 |
|
|
15,527 |
|
|
(779) |
|
|
14,748 |
|
|
(2,226) |
|
| India |
6,826 |
|
|
205 |
|
|
671 |
|
|
5,914 |
|
|
13,616 |
|
|
(40) |
|
|
13,576 |
|
|
1,651 |
|
| Singapore |
5,594 |
|
|
560 |
|
|
122 |
|
|
4,783 |
|
|
11,059 |
|
|
(53) |
|
|
11,006 |
|
|
189 |
|
| Ireland |
8,013 |
|
|
1,553 |
|
|
71 |
|
|
361 |
|
|
9,998 |
|
|
(51) |
|
|
9,947 |
|
|
(386) |
|
| Mexico |
5,052 |
|
|
1,671 |
|
|
594 |
|
|
1,811 |
|
|
9,128 |
|
|
(50) |
|
|
9,078 |
|
|
159 |
|
| Switzerland |
4,316 |
|
|
3,997 |
|
|
429 |
|
|
340 |
|
|
9,082 |
|
|
(241) |
|
|
8,841 |
|
|
(388) |
|
| China |
5,016 |
|
|
285 |
|
|
459 |
|
|
3,028 |
|
|
8,788 |
|
|
(235) |
|
|
8,553 |
|
|
41 |
|
| South Korea |
4,890 |
|
|
1,039 |
|
|
535 |
|
|
1,773 |
|
|
8,237 |
|
|
(108) |
|
|
8,129 |
|
|
(331) |
|
| Netherlands |
2,530 |
|
|
3,660 |
|
|
698 |
|
|
700 |
|
|
7,588 |
|
|
(1,073) |
|
|
6,515 |
|
|
(634) |
|
| Italy |
4,047 |
|
|
2,027 |
|
|
232 |
|
|
327 |
|
|
6,633 |
|
|
(822) |
|
|
5,811 |
|
|
(804) |
|
| Hong Kong |
3,178 |
|
|
574 |
|
|
408 |
|
|
1,127 |
|
|
5,287 |
|
|
(56) |
|
|
5,231 |
|
|
(621) |
|
| Spain |
2,712 |
|
|
1,733 |
|
|
203 |
|
|
779 |
|
|
5,427 |
|
|
(331) |
|
|
5,096 |
|
|
(500) |
|
| Belgium |
1,595 |
|
|
1,329 |
|
|
446 |
|
|
192 |
|
|
3,562 |
|
|
(162) |
|
|
3,400 |
|
|
(47) |
|
| Sweden |
1,370 |
|
|
2,159 |
|
|
127 |
|
|
125 |
|
|
3,781 |
|
|
(483) |
|
|
3,298 |
|
|
284 |
|
Total top 20 non-U.S. countries exposure |
$ |
176,750 |
|
|
$ |
75,965 |
|
|
$ |
15,363 |
|
|
$ |
39,333 |
|
|
$ |
307,411 |
|
|
$ |
(12,462) |
|
|
$ |
294,949 |
|
|
$ |
(2,961) |
|
Our largest non-U.S. country exposure at March 31, 2024 was the United Kingdom with net exposure of $61.9 billion, which represents an increase of $6.0 billion from December 31, 2023. The increase was primarily driven by higher deposits with the central bank. Our second largest non-U.S. country exposure was Germany with net exposure of $34.1 billion at March 31, 2024, a decrease of $1.6 billion from December 31, 2023. The decrease was primarily driven by lower exposure with financial institutions.
Allowance for Credit Losses
The allowance for credit losses decreased $180 million from December 31, 2023 to $14.4 billion at March 31, 2024, which included a $111 million reserve decrease related to the commercial portfolio and a $69 million reserve decrease related to the consumer portfolio. The decrease in the allowance was
primarily driven by the commercial portfolio due to an improved macroeconomic outlook.
Table 35 presents an allocation of the allowance for credit losses by product type at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
|
|
|
| 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, 2024 |
|
|
|
December 31, 2023 |
| Allowance for loan and lease losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential mortgage |
$ |
292 |
|
|
2.21 |
% |
|
0.13 |
% |
|
|
|
|
|
|
|
$ |
339 |
|
|
2.54 |
% |
|
0.15 |
% |
| Home equity |
63 |
|
|
0.48 |
|
|
0.25 |
|
|
|
|
|
|
|
|
47 |
|
|
0.35 |
|
|
0.19 |
|
| Credit card |
7,296 |
|
|
55.22 |
|
|
7.41 |
|
|
|
|
|
|
|
|
7,346 |
|
|
55.06 |
|
|
7.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Direct/Indirect consumer |
751 |
|
|
5.68 |
|
|
0.73 |
|
|
|
|
|
|
|
|
715 |
|
|
5.36 |
|
|
0.69 |
|
| Other consumer |
74 |
|
|
0.56 |
|
|
n/m |
|
|
|
|
|
|
|
73 |
|
|
0.55 |
|
|
n/m |
| Total consumer |
8,476 |
|
|
64.15 |
|
|
1.87 |
|
|
|
|
|
|
|
|
8,520 |
|
|
63.86 |
|
|
1.85 |
|
U.S. commercial (2) |
2,596 |
|
|
19.65 |
|
|
0.68 |
|
|
|
|
|
|
|
|
2,600 |
|
|
19.49 |
|
|
0.69 |
|
| Non-U.S. commercial |
812 |
|
|
6.14 |
|
|
0.66 |
|
|
|
|
|
|
|
|
842 |
|
|
6.31 |
|
|
0.68 |
|
| Commercial real estate |
1,292 |
|
|
9.78 |
|
|
1.80 |
|
|
|
|
|
|
|
|
1,342 |
|
|
10.06 |
|
|
1.84 |
|
| Commercial lease financing |
37 |
|
|
0.28 |
|
|
0.25 |
|
|
|
|
|
|
|
|
38 |
|
|
0.28 |
|
|
0.26 |
|
| Total commercial |
4,737 |
|
|
35.85 |
|
|
0.80 |
|
|
|
|
|
|
|
|
4,822 |
|
|
36.14 |
|
|
0.82 |
|
| Allowance for loan and lease losses |
13,213 |
|
|
100.00 |
% |
|
1.26 |
|
|
|
|
|
|
|
|
13,342 |
|
|
100.00 |
% |
|
1.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reserve for unfunded lending commitments |
1,158 |
|
|
|
|
|
|
|
|
|
|
|
|
1,209 |
|
|
|
|
|
| Allowance for credit losses |
$ |
14,371 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
14,551 |
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Ratios are calculated as allowance for loan and lease losses as a percentage of loans and leases outstanding excluding loans accounted for under the fair value option.
(2)Includes allowance for loan and lease losses for U.S. small business commercial loans of $1.1 billion and $1.0 billion at March 31, 2024 and December 31, 2023.
n/m = not meaningful
Net charge-offs for the three months ended March 31, 2024 were $1.5 billion compared to $807 million for the same period in 2023 primarily due to credit card loans and the commercial real estate office portfolio. The provision for credit losses increased $388 million to $1.3 billion for the three months ended March 31, 2024 compared to the same period in 2023. The provision for credit losses for the three months ended March 31, 2024 was primarily driven by credit card loans and the commercial real estate office portfolio. The provision for credit losses for the consumer portfolio, including unfunded lending commitments, increased $13 million to $959 million for the three months ended March 31, 2024 compared to the same period in 2023. The provision for credit losses for the
commercial portfolio, including unfunded lending commitments, increased $509 million to $360 million for the three months ended March 31, 2024 compared to the same period in 2023.
Table 36 presents a rollforward of the allowance for credit losses, including certain loan and allowance ratios for the three months ended March 31, 2024 and 2023. 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 2023 Annual Report on Form 10-K and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 36 |
Allowance for Credit Losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
| Allowance for loan and lease losses, December 31 |
|
|
|
|
$ |
13,342 |
|
|
$ |
12,682 |
|
| January 1, 2023 adoption of credit loss standard |
|
|
|
|
— |
|
|
(243) |
|
| Allowance for loan and lease losses, January 1 |
|
|
|
|
$ |
13,342 |
|
|
$ |
12,439 |
|
| Loans and leases charged off |
|
|
|
|
|
|
|
| Residential mortgage |
|
|
|
|
(8) |
|
|
(8) |
|
| Home equity |
|
|
|
|
(3) |
|
|
(6) |
|
| Credit card |
|
|
|
|
(1,045) |
|
|
(650) |
|
| Direct/Indirect consumer |
|
|
|
|
(102) |
|
|
(40) |
|
| Other consumer |
|
|
|
|
(78) |
|
|
(171) |
|
| Total consumer charge-offs |
|
|
|
|
(1,236) |
|
|
(875) |
|
U.S. commercial (1) |
|
|
|
|
(196) |
|
|
(134) |
|
| Non-U.S. commercial |
|
|
|
|
(1) |
|
|
(23) |
|
| Commercial real estate |
|
|
|
|
(304) |
|
|
(24) |
|
| Commercial lease financing |
|
|
|
|
(1) |
|
|
— |
|
| Total commercial charge-offs |
|
|
|
|
(502) |
|
|
(181) |
|
| Total loans and leases charged off |
|
|
|
|
(1,738) |
|
|
(1,056) |
|
| Recoveries of loans and leases previously charged off |
|
|
|
|
|
|
|
| Residential mortgage |
|
|
|
|
5 |
|
|
7 |
|
| Home equity |
|
|
|
|
16 |
|
|
18 |
|
| Credit card |
|
|
|
|
146 |
|
|
149 |
|
| Direct/Indirect consumer |
|
|
|
|
37 |
|
|
39 |
|
| Other consumer |
|
|
|
|
4 |
|
|
9 |
|
| Total consumer recoveries |
|
|
|
|
208 |
|
|
222 |
|
U.S. commercial (2) |
|
|
|
|
22 |
|
|
21 |
|
| Non-U.S. commercial |
|
|
|
|
10 |
|
|
3 |
|
| Commercial real estate |
|
|
|
|
— |
|
|
2 |
|
| Commercial lease financing |
|
|
|
|
— |
|
|
1 |
|
| Total commercial recoveries |
|
|
|
|
32 |
|
|
27 |
|
| Total recoveries of loans and leases previously charged off |
|
|
|
|
240 |
|
|
249 |
|
| Net charge-offs |
|
|
|
|
(1,498) |
|
|
(807) |
|
|
|
|
|
|
|
|
|
| Provision for loan and lease losses |
|
|
|
|
1,370 |
|
|
900 |
|
| Other |
|
|
|
|
(1) |
|
|
(18) |
|
Allowance for loan and lease losses, March 31 |
|
|
|
|
13,213 |
|
|
12,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reserve for unfunded lending commitments, January 1 |
|
|
|
|
1,209 |
|
|
1,540 |
|
| Provision for unfunded lending commitments |
|
|
|
|
(51) |
|
|
(103) |
|
|
|
|
|
|
|
|
|
Reserve for unfunded lending commitments, March 31 |
|
|
|
|
1,158 |
|
|
1,437 |
|
Allowance for credit losses, March 31 |
|
|
|
|
$ |
14,371 |
|
|
$ |
13,951 |
|
|
|
|
|
|
|
|
|
|
Loan and allowance ratios (3) : |
|
|
|
|
|
|
|
Loans and leases outstanding at March 31 |
|
|
|
|
$ |
1,046,218 |
|
|
$ |
1,042,009 |
|
Allowance for loan and lease losses as a percentage of total loans and leases outstanding at March 31 |
|
|
|
|
1.26 |
% |
|
1.20 |
% |
Consumer allowance for loan and lease losses as a percentage of total consumer loans and leases outstanding at March 31 |
|
|
|
|
1.87 |
|
|
1.63 |
|
Commercial allowance for loan and lease losses as a percentage of total commercial loans and leases outstanding at March 31 |
|
|
|
|
0.80 |
|
|
0.87 |
|
| Average loans and leases outstanding |
|
|
|
|
$ |
1,044,723 |
|
|
$ |
1,036,337 |
|
| Net charge-offs as a percentage of average loans and leases outstanding |
|
|
|
|
0.58 |
% |
|
0.32 |
% |
|
|
|
|
|
|
|
|
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases at March 31 |
|
|
|
|
225 |
|
|
319 |
|
Ratio of the allowance for loan and lease losses at March 31 to annualized net charge-offs |
|
|
|
|
2.19 |
|
|
3.83 |
|
|
|
|
|
|
|
|
|
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) |
|
|
|
|
$ |
8,353 |
|
|
$ |
7,122 |
|
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) |
|
|
|
|
83 |
% |
|
138 |
% |
(1)Includes U.S. small business commercial charge-offs of $118 million and $75 million for the three months ended March 31, 2024 and 2023.
(2)Includes U.S. small business commercial recoveries of $10 million and $9 million for the three months ended March 31, 2024 and 2023.
(3)Ratios are calculated as allowance for loan and lease losses as a percentage of loans and leases outstanding excluding loans accounted for under the fair value option.
(4)Primarily includes amounts related to credit card and unsecured consumer lending portfolios in Consumer Banking.
Market Risk Management
For more information on our market risk management process, see Market Risk Management in the MD&A of the Corporation’s 2023 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 2023 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 2023 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, 2024, December 31, 2023 and March 31, 2023 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, 2024 compared to the prior quarter remained stable.
|
|
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|
|
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
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|
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|
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|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 37 |
Market Risk VaR for Trading Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
March 31, 2024 |
|
December 31, 2023 |
|
March 31, 2023 |
|
| (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 |
$ |
34 |
|
|
$ |
34 |
|
|
$ |
42 |
|
|
$ |
27 |
|
|
$ |
29 |
|
|
$ |
30 |
|
|
$ |
43 |
|
|
$ |
19 |
|
|
$ |
39 |
|
|
$ |
32 |
|
|
$ |
42 |
|
|
$ |
17 |
|
|
|
|
|
| Interest rate |
56 |
|
|
63 |
|
|
89 |
|
|
41 |
|
|
51 |
|
|
49 |
|
|
68 |
|
|
35 |
|
|
43 |
|
|
43 |
|
|
56 |
|
|
32 |
|
|
|
|
|
| Credit |
48 |
|
|
46 |
|
|
55 |
|
|
42 |
|
|
53 |
|
|
55 |
|
|
65 |
|
|
46 |
|
|
52 |
|
|
84 |
|
|
108 |
|
|
52 |
|
|
|
|
|
| Equity |
19 |
|
|
17 |
|
|
25 |
|
|
13 |
|
|
9 |
|
|
13 |
|
|
20 |
|
|
9 |
|
|
19 |
|
|
19 |
|
|
25 |
|
|
14 |
|
|
|
|
|
| Commodities |
10 |
|
|
10 |
|
|
12 |
|
|
8 |
|
|
9 |
|
|
9 |
|
|
11 |
|
|
7 |
|
|
11 |
|
|
11 |
|
|
14 |
|
|
8 |
|
|
|
|
|
| Portfolio diversification |
(97) |
|
|
(103) |
|
|
n/a |
|
n/a |
|
(90) |
|
|
(89) |
|
|
n/a |
|
n/a |
|
(103) |
|
|
(122) |
|
|
n/a |
|
n/a |
|
|
|
|
| Total covered positions portfolio |
70 |
|
|
67 |
|
|
86 |
|
|
55 |
|
|
61 |
|
|
67 |
|
|
83 |
|
|
52 |
|
|
61 |
|
|
67 |
|
|
92 |
|
|
54 |
|
|
|
|
|
Impact from less liquid exposures (2) |
6 |
|
|
13 |
|
|
n/a |
|
n/a |
|
12 |
|
|
12 |
|
|
n/a |
|
n/a |
|
14 |
|
|
42 |
|
|
n/a |
|
n/a |
|
|
|
|
Total covered positions and less liquid trading positions portfolio |
76 |
|
|
80 |
|
|
100 |
|
|
69 |
|
|
73 |
|
|
79 |
|
|
101 |
|
|
63 |
|
|
75 |
|
|
109 |
|
|
149 |
|
|
69 |
|
|
|
|
|
| Fair value option loans |
12 |
|
|
14 |
|
|
17 |
|
|
11 |
|
|
16 |
|
|
19 |
|
|
23 |
|
|
14 |
|
|
15 |
|
|
41 |
|
|
49 |
|
|
15 |
|
|
|
|
|
| Fair value option hedges |
8 |
|
|
9 |
|
|
12 |
|
|
6 |
|
|
11 |
|
|
14 |
|
|
18 |
|
|
9 |
|
|
14 |
|
|
16 |
|
|
17 |
|
|
14 |
|
|
|
|
|
| Fair value option portfolio diversification |
(11) |
|
|
(11) |
|
|
n/a |
|
n/a |
|
(12) |
|
|
(18) |
|
|
n/a |
|
n/a |
|
(19) |
|
|
(32) |
|
|
n/a |
|
n/a |
|
|
|
|
| Total fair value option portfolio |
9 |
|
|
12 |
|
|
16 |
|
|
9 |
|
|
15 |
|
|
15 |
|
|
21 |
|
|
10 |
|
|
10 |
|
|
25 |
|
|
30 |
|
|
10 |
|
|
|
|
|
| Portfolio diversification |
(5) |
|
|
(7) |
|
|
n/a |
|
n/a |
|
(9) |
|
|
(8) |
|
|
n/a |
|
n/a |
|
(7) |
|
|
(10) |
|
|
n/a |
|
n/a |
|
|
|
|
| Total market-based portfolio |
$ |
80 |
|
|
$ |
85 |
|
|
106 |
|
|
74 |
|
|
$ |
79 |
|
|
$ |
86 |
|
|
109 |
|
|
68 |
|
|
$ |
78 |
|
|
$ |
124 |
|
|
173 |
|
|
73 |
|
|
|
|
|
(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
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, 2024, December 31, 2023 and March 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 38 |
Average Market Risk VaR for Trading Activities – 99 percent and 95 percent VaR Statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 31, 2024 |
|
December 31, 2023 |
|
March 31, 2023 |
| (Dollars in millions) |
|
99 percent |
|
95 percent |
|
99 percent |
|
95 percent |
|
99 percent |
|
95 percent |
| Foreign exchange |
|
$ |
34 |
|
|
$ |
21 |
|
|
$ |
30 |
|
|
$ |
20 |
|
|
$ |
32 |
|
|
$ |
20 |
|
| Interest rate |
|
63 |
|
|
32 |
|
|
49 |
|
|
29 |
|
|
43 |
|
|
22 |
|
| Credit |
|
46 |
|
|
26 |
|
|
55 |
|
|
31 |
|
|
84 |
|
|
31 |
|
| Equity |
|
17 |
|
|
7 |
|
|
13 |
|
|
6 |
|
|
19 |
|
|
8 |
|
| Commodities |
|
10 |
|
|
6 |
|
|
9 |
|
|
6 |
|
|
11 |
|
|
6 |
|
| Portfolio diversification |
|
(103) |
|
|
(57) |
|
|
(89) |
|
|
(58) |
|
|
(122) |
|
|
(53) |
|
| Total covered positions portfolio |
|
67 |
|
|
35 |
|
|
67 |
|
|
34 |
|
|
67 |
|
|
34 |
|
| Impact from less liquid exposures |
|
13 |
|
|
8 |
|
|
12 |
|
|
8 |
|
|
42 |
|
|
8 |
|
Total covered positions and less liquid trading positions portfolio |
|
80 |
|
|
43 |
|
|
79 |
|
|
42 |
|
|
109 |
|
|
42 |
|
| Fair value option loans |
|
14 |
|
|
9 |
|
|
19 |
|
|
12 |
|
|
41 |
|
|
14 |
|
| Fair value option hedges |
|
9 |
|
|
5 |
|
|
14 |
|
|
8 |
|
|
16 |
|
|
10 |
|
| Fair value option portfolio diversification |
|
(11) |
|
|
(7) |
|
|
(18) |
|
|
(11) |
|
|
(32) |
|
|
(14) |
|
| Total fair value option portfolio |
|
12 |
|
|
7 |
|
|
15 |
|
|
9 |
|
|
25 |
|
|
10 |
|
| Portfolio diversification |
|
(7) |
|
|
(4) |
|
|
(8) |
|
|
(5) |
|
|
(10) |
|
|
(7) |
|
| Total market-based portfolio |
|
$ |
85 |
|
|
$ |
46 |
|
|
$ |
86 |
|
|
$ |
46 |
|
|
$ |
124 |
|
|
$ |
45 |
|
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 2023 Annual Report on Form 10-K.
During the three months ended March 31, 2024, 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 2023 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, 2024 compared to the three months ended December 31, 2023. During the three months ended March 31, 2024, positive trading-related revenue was recorded for 100 percent of the trading days, of which 97 percent were daily trading gains of over $25 million. This compares to the three months ended December 31, 2023 where positive trading-related revenue was recorded for 100 percent of the trading days, of which 85 percent were daily trading gains of over $25 million.
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 2023 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 2023 Annual Report on Form 10-K.
Table 39 presents the spot and 12-month forward rates used in our baseline forecasts at March 31, 2024 and December 31, 2023.
|
|
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|
|
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|
|
|
|
|
|
| Table 39 |
Forward Rates |
|
|
|
|
|
|
|
|
|
|
|
|
Federal
Funds |
|
SOFR |
|
10-Year
SOFR |
|
|
March 31, 2024 |
| Spot rates |
5.50 |
% |
|
5.34 |
% |
|
3.84 |
% |
| 12-month forward rates |
4.50 |
|
|
4.43 |
|
|
3.68 |
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
|
|
|
|
|
|
| Spot rates |
5.50 |
% |
|
5.38 |
% |
|
3.47 |
% |
| 12-month forward rates |
3.89 |
|
|
3.93 |
|
|
3.32 |
|
Table 40 shows the pretax impact to forecasted net interest income over the next 12 months from March 31, 2024 and December 31, 2023 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, 2024, the overall decrease in asset sensitivity of our balance sheet to higher and lower rate scenarios was primarily due to higher expenses on interest-bearing deposits as a result of higher forward rates. We continue to be asset sensitive to a parallel upward move in interest rates with the majority of that impact coming from the
short end of the yield curve. Additionally, higher interest rates 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 16.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Table 40 |
Estimated Banking Book Net Interest Income Sensitivity to Curve Changes |
|
|
|
|
|
|
|
|
|
|
|
Short
Rate (bps) |
|
Long
Rate (bps) |
|
|
|
|
|
|
|
|
| (Dollars in millions) |
|
|
March 31
2024 |
|
December 31
2023 |
|
|
|
|
|
|
|
|
| Parallel Shifts |
|
|
|
|
|
|
|
|
+100 bps
instantaneous shift
|
+100 |
|
+100 |
|
$ |
3,037 |
|
|
$ |
3,476 |
|
|
|
|
|
|
|
|
|
-100 bps
instantaneous shift |
-100 |
|
-100 |
|
(2,869) |
|
|
(3,077) |
|
| Flatteners |
|
|
|
|
|
|
|
|
Short-end
instantaneous change
|
+100 |
|
— |
|
|
2,844 |
|
|
3,242 |
|
|
|
|
|
|
|
|
|
|
Long-end
instantaneous change
|
— |
|
|
-100 |
|
(227) |
|
|
(257) |
|
| Steepeners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-end
instantaneous change
|
-100 |
|
|
— |
|
|
(2,596) |
|
|
(2,773) |
|
|
Long-end
instantaneous change
|
— |
|
|
+100 |
|
226 |
|
|
272 |
|
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.
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 2023 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, 2024 and 2023. For more information on MSRs, see Note 14 – Fair Value Measurements to the Consolidated Financial Statements.
Climate Risk
Climate Risk Management
Climate risk is the risk that climate change or actions taken to mitigate climate change expose the Corporation to economic, legal/regulatory, operational or reputational harm. Climate-related risks are divided into two major categories, both of which span across the seven key risk types discussed in the Managing Risk section in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K: (1) Physical Risk: 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) Transition Risk: risks related to the transition to a low-carbon economy, which may entail extensive policy, legal, technology and market changes.
Physical risks of climate change, such as more frequent and severe extreme weather events, can increase the Corporation’s risks, including credit risk by diminishing borrowers’ repayment capacity or collateral values, and operational risk by negatively impacting the Corporation’s facilities, employees, or vendors. Transition risks of climate change may amplify credit risks through the financial impacts of changes in policy, technology or the market on the Corporation or our counterparties. Unanticipated market changes can lead to sudden price adjustments and give rise to heightened market risk. Reputational risk can arise if we do not meet our climate-related goals and/or targets, or are perceived to be inadequately responsive to climate change or otherwise.
Our approach to managing climate risk is consistent with our risk management governance structure, from senior management to our Board and its committees, including the
Enterprise Risk Committee (ERC) and the Corporate Governance, ESG and Sustainability Committee (CGESC) of the Board, which regularly discuss climate-related topics. The ERC oversees climate risk as set forth in our Risk Framework and Risk Appetite Statement. The CGESC is responsible for overseeing the Corporation’s environmental and sustainability-related activities and practices, and regularly reviews the Corporation’s climate-related policies and practices. Our Climate Risk Council consists of leaders across risk, Front Line Unit and control functions, and meets routinely to discuss our approach to managing climate-related risks.
Our climate risk management efforts are overseen by an officer who reports to the Chief Risk Officer. The Corporation has a Climate and Environmental Risk Management function that is responsible for overseeing climate risk management. They are responsible for establishing the Climate Risk Framework (described below) and governance structure, and providing an independent assessment of enterprise-wide climate risks.
Based on the Corporation’s Risk Framework, in 2023 we created our internal Climate Risk Framework, which addresses how the Corporation identifies, measures, monitors and controls climate risk by enhancing existing risk management processes and also includes examples of how climate risk manifests across the seven risk types. The framework details the roles and responsibilities for climate risk management across our three lines of defense (i.e., Front Line Units, Global Risk Management and Corporate Audit).
For more information on our governance framework, see the Managing Risk section in the MD&A of the Corporation’s 2023 Annual Report on Form 10-K. For more information on climate risk, see Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K.
Climate-related Goals and Targets
In 2021, the Corporation announced a goal of achieving net zero greenhouse gas emissions before 2050 in our financing activities, operations and supply chain (Net Zero goal), and in 2022, we released our Approach to ZeroTM, a framework for how we plan to achieve our Net Zero goal. In line with this approach, we have set interim 2030 targets across our financing activities related to certain high-emitting sectors (2030 Financing Activity Emissions Targets), operations and supply chain, all of which are further supported and complemented by our $1.5 trillion sustainable finance goal (which is aligned with the 17 UN Sustainable Development Goals) of which $1 trillion is dedicated to supporting the transition toward a low-carbon economy, including capital mobilized across clean energy sectors and tailored financial solutions for emerging areas of the low-carbon economy. In particular, we have announced 2030 Financing Activity Emissions Targets for auto manufacturing, aviation, cement, energy, iron and steel, maritime shipping and power generation sectors.
Achieving our climate--related goals and targets, including our Net Zero goal and 2030 Financing Activity Emissions Targets, may require technological advances, clearly defined roadmaps for industry sectors, better emissions data reporting, new standards and public policies, including those that improve the cost of capital for the transition to a low-carbon economy, as well as strong and active engagement with customers, suppliers, investors, government officials and other stakeholders. Activities related to our climate-related goals and targets 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 climate-related matters and the Corporation’s climate-related goals and targets, including the Corporation’s plans to achieve its Net Zero goal and its 2030 targets, and progress on its sustainable finance goal, see the Corporation’s website, including its 2023 Task Force on Climate-related Financial Disclosures (TCFD) Report (2023 TCFD Report) and Addendum to the 2023 TCFD Report (2023 TCFD Addendum). The contents of the Corporation’s website, including the 2023 TCFD Report and 2023 TCFD Addendum are not incorporated by reference into this Quarterly Report on Form 10-Q.
The foregoing discussion and the statements on the Corporation’s website, including in the 2023 TCFD Report and 2023 TCFD Addendum, regarding the Corporation’s climate-related goals and targets, its approach with respect to climate risk management, and the nature and extent of climate-related risks, contain “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 2023 Annual Report on Form 10-K and Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Non-GAAP Reconciliations
Table 41 provides reconciliations of certain non-GAAP financial measures to the most directly comparable GAAP financial measures.
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| Table 41 |
Average and Period-end Supplemental Financial Data and Reconciliations to GAAP Financial Measures (1) |
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2024 Quarter |
|
2023 Quarters |
|
|
| (Dollars in millions) |
First |
|
Fourth |
|
Third |
|
Second |
|
First |
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| Reconciliation of average shareholders’ equity to average tangible shareholders’ equity and average tangible common shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders’ equity |
$ |
292,511 |
|
|
$ |
288,618 |
|
|
$ |
284,975 |
|
|
$ |
282,425 |
|
|
$ |
277,252 |
|
|
|
|
|
| Goodwill |
(69,021) |
|
|
(69,021) |
|
|
(69,021) |
|
|
(69,022) |
|
|
(69,022) |
|
|
|
|
|
| Intangible assets (excluding MSRs) |
(1,990) |
|
|
(2,010) |
|
|
(2,029) |
|
|
(2,049) |
|
|
(2,068) |
|
|
|
|
|
| Related deferred tax liabilities |
874 |
|
|
886 |
|
|
890 |
|
|
895 |
|
|
899 |
|
|
|
|
|
| Tangible shareholders’ equity |
$ |
222,374 |
|
|
$ |
218,473 |
|
|
$ |
214,815 |
|
|
$ |
212,249 |
|
|
$ |
207,061 |
|
|
|
|
|
| Preferred stock |
(28,397) |
|
|
(28,397) |
|
|
(28,397) |
|
|
(28,397) |
|
|
(28,397) |
|
|
|
|
|
| Tangible common shareholders’ equity |
$ |
193,977 |
|
|
$ |
190,076 |
|
|
$ |
186,418 |
|
|
$ |
183,852 |
|
|
$ |
178,664 |
|
|
|
|
|
| Reconciliation of period-end shareholders’ equity to period-end tangible shareholders’ equity and period-end tangible common shareholders’ equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Shareholders’ equity |
$ |
293,552 |
|
|
$ |
291,646 |
|
|
$ |
287,064 |
|
|
$ |
283,319 |
|
|
$ |
280,196 |
|
|
|
|
|
| Goodwill |
(69,021) |
|
|
(69,021) |
|
|
(69,021) |
|
|
(69,021) |
|
|
(69,022) |
|
|
|
|
|
| Intangible assets (excluding MSRs) |
(1,977) |
|
|
(1,997) |
|
|
(2,016) |
|
|
(2,036) |
|
|
(2,055) |
|
|
|
|
|
| Related deferred tax liabilities |
869 |
|
|
874 |
|
886 |
|
|
890 |
|
|
895 |
|
|
|
|
|
| Tangible shareholders’ equity |
$ |
223,423 |
|
|
$ |
221,502 |
|
|
$ |
216,913 |
|
|
$ |
213,152 |
|
|
$ |
210,014 |
|
|
|
|
|
| Preferred stock |
(28,397) |
|
|
(28,397) |
|
|
(28,397) |
|
|
(28,397) |
|
|
(28,397) |
|
|
|
|
|
| Tangible common shareholders’ equity |
$ |
195,026 |
|
|
$ |
193,105 |
|
|
$ |
188,516 |
|
|
$ |
184,755 |
|
|
$ |
181,617 |
|
|
|
|
|
| Reconciliation of period-end assets to period-end tangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets |
$ |
3,273,803 |
|
|
$ |
3,180,151 |
|
|
$ |
3,153,090 |
|
|
$ |
3,123,198 |
|
|
$ |
3,194,657 |
|
|
|
|
|
| Goodwill |
(69,021) |
|
|
(69,021) |
|
|
(69,021) |
|
|
(69,021) |
|
|
(69,022) |
|
|
|
|
|
| Intangible assets (excluding MSRs) |
(1,977) |
|
|
(1,997) |
|
|
(2,016) |
|
|
(2,036) |
|
|
(2,055) |
|
|
|
|
|
| Related deferred tax liabilities |
869 |
|
|
874 |
|
886 |
|
|
890 |
|
|
895 |
|
|
|
|
|
| Tangible assets |
$ |
3,203,674 |
|
|
$ |
3,110,007 |
|
|
$ |
3,082,939 |
|
|
$ |
3,053,031 |
|
|
$ |
3,124,475 |
|
|
|
|
|
(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 5.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
See Market Risk Management on page 37 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, 2024, that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.
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) |
|
|
|
|
2024 |
|
2023 |
|
|
| Net interest income |
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
|
|
$ |
36,285 |
|
|
$ |
28,655 |
|
|
|
| Interest expense |
|
|
|
|
22,253 |
|
|
14,207 |
|
|
|
| Net interest income |
|
|
|
|
14,032 |
|
|
14,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest income |
|
|
|
|
|
|
|
|
|
| Fees and commissions |
|
|
|
|
8,660 |
|
|
7,894 |
|
|
|
| Market making and similar activities |
|
|
|
|
3,888 |
|
|
4,712 |
|
|
|
| Other income (loss) |
|
|
|
|
(762) |
|
|
(796) |
|
|
|
| Total noninterest income |
|
|
|
|
11,786 |
|
|
11,810 |
|
|
|
| Total revenue, net of interest expense |
|
|
|
|
25,818 |
|
|
26,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Provision for credit losses |
|
|
|
|
1,319 |
|
|
931 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest expense |
|
|
|
|
|
|
|
|
|
| Compensation and benefits |
|
|
|
|
10,195 |
|
|
9,918 |
|
|
|
| Occupancy and equipment |
|
|
|
|
1,811 |
|
|
1,799 |
|
|
|
| Information processing and communications |
|
|
|
|
1,800 |
|
|
1,697 |
|
|
|
| Product delivery and transaction related |
|
|
|
|
851 |
|
|
890 |
|
|
|
| Professional fees |
|
|
|
|
548 |
|
|
537 |
|
|
|
| Marketing |
|
|
|
|
455 |
|
|
458 |
|
|
|
| Other general operating |
|
|
|
|
1,577 |
|
|
939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total noninterest expense |
|
|
|
|
17,237 |
|
|
16,238 |
|
|
|
| Income before income taxes |
|
|
|
|
7,262 |
|
|
9,089 |
|
|
|
| Income tax expense |
|
|
|
|
588 |
|
|
928 |
|
|
|
| Net income |
|
|
|
|
$ |
6,674 |
|
|
$ |
8,161 |
|
|
|
| Preferred stock dividends |
|
|
|
|
532 |
|
|
505 |
|
|
|
| Net income applicable to common shareholders |
|
|
|
|
$ |
6,142 |
|
|
$ |
7,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Per common share information |
|
|
|
|
|
|
|
|
|
| Earnings |
|
|
|
|
$ |
0.77 |
|
|
$ |
0.95 |
|
|
|
| Diluted earnings |
|
|
|
|
0.76 |
|
|
0.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average common shares issued and outstanding |
|
|
|
|
7,968.2 |
|
|
8,065.9 |
|
|
|
| Average diluted common shares issued and outstanding |
|
|
|
|
8,031.4 |
|
|
8,182.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Comprehensive Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
|
|
| Net income |
|
|
|
|
$ |
6,674 |
|
|
$ |
8,161 |
|
|
|
| Other comprehensive income (loss), net-of-tax: |
|
|
|
|
|
|
|
|
|
| Net change in debt securities |
|
|
|
|
332 |
|
|
555 |
|
|
|
| Net change in debit valuation adjustments |
|
|
|
|
(188) |
|
|
10 |
|
|
|
| Net change in derivatives |
|
|
|
|
(416) |
|
|
2,042 |
|
|
|
| Employee benefit plan adjustments |
|
|
|
|
23 |
|
|
10 |
|
|
|
| Net change in foreign currency translation adjustments |
|
|
|
|
(20) |
|
|
12 |
|
|
|
| Other comprehensive income (loss) |
|
|
|
|
(269) |
|
|
2,629 |
|
|
|
| Comprehensive income (loss) |
|
|
|
|
$ |
6,405 |
|
|
$ |
10,790 |
|
|
|
See accompanying Notes to Consolidated Financial Statements.
Bank of America Corporation and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance Sheet |
|
|
|
|
March 31
2024 |
|
December 31
2023 |
| (Dollars in millions) |
|
| Assets |
|
|
|
| Cash and due from banks |
$ |
23,550 |
|
|
$ |
27,892 |
|
| Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks |
289,854 |
|
|
305,181 |
|
| Cash and cash equivalents |
313,404 |
|
|
333,073 |
|
| Time deposits placed and other short-term investments |
7,859 |
|
|
8,346 |
|
|
Federal funds sold and securities borrowed or purchased under agreements to resell
(includes $158,281 and $133,053 measured at fair value)
|
316,093 |
|
|
280,624 |
|
Trading account assets (includes $154,424 and $130,815 pledged as collateral) |
318,364 |
|
|
277,354 |
|
| Derivative assets |
36,236 |
|
|
39,323 |
|
| Debt securities: |
|
|
|
| Carried at fair value |
323,119 |
|
|
276,852 |
|
Held-to-maturity, at cost (fair value $477,748 and $496,597) |
586,863 |
|
|
594,555 |
|
| Total debt securities |
909,982 |
|
|
871,407 |
|
Loans and leases (includes $2,938 and $3,569 measured at fair value) |
1,049,156 |
|
|
1,053,732 |
|
| Allowance for loan and lease losses |
(13,213) |
|
|
(13,342) |
|
| Loans and leases, net of allowance |
1,035,943 |
|
|
1,040,390 |
|
| Premises and equipment, net |
11,901 |
|
|
11,855 |
|
| Goodwill |
69,021 |
|
|
69,021 |
|
Loans held-for-sale (includes $2,070 and $2,059 measured at fair value) |
8,571 |
|
|
6,002 |
|
| Customer and other receivables |
86,106 |
|
|
81,881 |
|
Other assets (includes $13,935 and $11,861 measured at fair value) |
160,323 |
|
|
160,875 |
|
| Total assets |
$ |
3,273,803 |
|
|
$ |
3,180,151 |
|
|
|
|
|
|
| Liabilities |
|
|
|
| Deposits in U.S. offices: |
|
|
|
| Noninterest-bearing |
$ |
524,982 |
|
|
$ |
530,619 |
|
Interest-bearing (includes $341 and $284 measured at fair value) |
1,304,508 |
|
|
1,273,904 |
|
| Deposits in non-U.S. offices: |
|
|
|
| Noninterest-bearing |
16,502 |
|
|
16,427 |
|
| Interest-bearing |
100,504 |
|
|
102,877 |
|
| Total deposits |
1,946,496 |
|
|
1,923,827 |
|
|
Federal funds purchased and securities loaned or sold under agreements to repurchase
(includes $206,867 and $178,609 measured at fair value)
|
329,658 |
|
|
283,887 |
|
| Trading account liabilities |
114,326 |
|
|
95,530 |
|
| Derivative liabilities |
40,401 |
|
|
43,432 |
|
Short-term borrowings (includes $6,611 and $4,690 measured at fair value) |
38,895 |
|
|
32,098 |
|
|
Accrued expenses and other liabilities (includes $14,605 and $11,473 measured at fair value
and $1,158 and $1,209 of reserve for unfunded lending commitments)
|
214,129 |
|
|
207,527 |
|
Long-term debt (includes $43,975 and $42,809 measured at fair value) |
296,346 |
|
|
302,204 |
|
| Total liabilities |
2,980,251 |
|
|
2,888,505 |
|
|
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 4,088,099 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 – 7,866,868,200 and 7,895,457,665 shares
|
54,310 |
|
|
56,365 |
|
| Retained earnings |
228,902 |
|
|
224,672 |
|
| Accumulated other comprehensive income (loss) |
(18,057) |
|
|
(17,788) |
|
|
|
|
|
| Total shareholders’ equity |
293,552 |
|
|
291,646 |
|
| Total liabilities and shareholders’ equity |
$ |
3,273,803 |
|
|
$ |
3,180,151 |
|
|
|
|
|
|
|
Assets of consolidated variable interest entities included in total assets above (isolated to settle the liabilities of the variable interest entities) |
|
|
|
|
Trading account assets |
$ |
5,838 |
|
|
$ |
6,054 |
|
|
|
|
|
|
|
|
|
|
|
|
Loans and leases |
19,250 |
|
|
18,276 |
|
|
Allowance for loan and lease losses |
(920) |
|
|
(826) |
|
|
Loans and leases, net of allowance |
18,330 |
|
|
17,450 |
|
|
|
|
|
|
|
All other assets |
256 |
|
|
269 |
|
|
Total assets of consolidated variable interest entities |
$ |
24,424 |
|
|
$ |
23,773 |
|
|
Liabilities of consolidated variable interest entities included in total liabilities above |
|
|
|
|
Short-term borrowings (includes $23 and $23 of non-recourse short-term borrowings) |
$ |
3,387 |
|
|
$ |
2,957 |
|
|
Long-term debt (includes $8,157 and $8,456 of non-recourse debt) |
8,157 |
|
|
8,456 |
|
|
All other liabilities (includes $18 and $19 of non-recourse liabilities) |
18 |
|
|
19 |
|
|
Total liabilities of consolidated variable interest entities |
$ |
11,562 |
|
|
$ |
11,432 |
|
See accompanying Notes to Consolidated Financial Statements.
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, 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 |
|
| Balance, December 31, 2023 |
$ |
28,397 |
|
|
7,895.5 |
|
|
$ |
56,365 |
|
|
$ |
224,672 |
|
|
$ |
(17,788) |
|
|
|
|
$ |
291,646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income |
|
|
|
|
|
|
6,674 |
|
|
|
|
|
|
6,674 |
|
| Net change in debt securities |
|
|
|
|
|
|
|
|
332 |
|
|
|
|
332 |
|
| Net change in debit valuation adjustments |
|
|
|
|
|
|
|
|
(188) |
|
|
|
|
(188) |
|
| Net change in derivatives |
|
|
|
|
|
|
|
|
(416) |
|
|
|
|
(416) |
|
| Employee benefit plan adjustments |
|
|
|
|
|
|
|
|
23 |
|
|
|
|
23 |
|
| Net change in foreign currency translation adjustments |
|
|
|
|
|
|
|
|
(20) |
|
|
|
|
(20) |
|
| Dividends declared: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common |
|
|
|
|
|
|
(1,910) |
|
|
|
|
|
|
(1,910) |
|
| Preferred |
|
|
|
|
|
|
(532) |
|
|
|
|
|
|
(532) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock issued under employee plans, net, and other |
|
|
44.0 |
|
|
445 |
|
|
(2) |
|
|
|
|
|
|
443 |
|
| Common stock repurchased |
|
|
(72.6) |
|
|
(2,500) |
|
|
|
|
|
|
|
|
(2,500) |
|
| Balance, March 31, 2024 |
$ |
28,397 |
|
|
7,866.9 |
|
|
$ |
54,310 |
|
|
$ |
228,902 |
|
|
$ |
(18,057) |
|
|
|
|
$ |
293,552 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
See accompanying Notes to Consolidated Financial Statements.
Bank of America Corporation and Subsidiaries
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
|
|
|
|
| (Dollars in millions) |
2024 |
|
2023 |
|
|
|
|
|
|
| Operating activities |
|
|
|
|
|
|
|
|
|
| Net income |
$ |
6,674 |
|
|
$ |
8,161 |
|
|
|
|
|
|
|
| Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
| Provision for credit losses |
1,319 |
|
|
931 |
|
|
|
|
|
|
|
| (Gains) losses on sales of debt securities |
(10) |
|
|
210 |
|
|
|
|
|
|
|
| Depreciation and amortization |
538 |
|
|
503 |
|
|
|
|
|
|
|
| Net (accretion) amortization of discount/premium on debt securities |
(352) |
|
|
34 |
|
|
|
|
|
|
|
| Deferred income taxes |
(512) |
|
|
(169) |
|
|
|
|
|
|
|
| Stock-based compensation |
865 |
|
|
794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans held-for-sale: |
|
|
|
|
|
|
|
|
|
| Originations and purchases |
(5,843) |
|
|
(2,285) |
|
|
|
|
|
|
|
|
Proceeds from sales and paydowns of loans originally classified as held for sale and instruments
from related securitization activities
|
3,244 |
|
|
2,378 |
|
|
|
|
|
|
|
| Net change in: |
|
|
|
|
|
|
|
|
|
| Trading and derivative assets/liabilities |
(23,795) |
|
|
(725) |
|
|
|
|
|
|
|
| Other assets |
(6,026) |
|
|
(16,078) |
|
|
|
|
|
|
|
| Accrued expenses and other liabilities |
6,907 |
|
|
(7,066) |
|
|
|
|
|
|
|
| Other operating activities, net |
1,452 |
|
|
2,012 |
|
|
|
|
|
|
|
| Net cash used in operating activities |
(15,539) |
|
|
(11,300) |
|
|
|
|
|
|
|
| Investing activities |
|
|
|
|
|
|
|
|
|
| Net change in: |
|
|
|
|
|
|
|
|
|
| Time deposits placed and other short-term investments |
487 |
|
|
(4,512) |
|
|
|
|
|
|
|
| Federal funds sold and securities borrowed or purchased under agreements to resell |
(32,969) |
|
|
(30,504) |
|
|
|
|
|
|
|
| Debt securities carried at fair value: |
|
|
|
|
|
|
|
|
|
| Proceeds from sales |
16,266 |
|
|
61,493 |
|
|
|
|
|
|
|
| Proceeds from paydowns and maturities |
93,060 |
|
|
19,085 |
|
|
|
|
|
|
|
| Purchases |
(157,726) |
|
|
(19,104) |
|
|
|
|
|
|
|
| Held-to-maturity debt securities: |
|
|
|
|
|
|
|
|
|
| Proceeds from paydowns and maturities |
7,407 |
|
|
8,042 |
|
|
|
|
|
|
|
| Purchases |
— |
|
|
(38) |
|
|
|
|
|
|
|
| Loans and leases: |
|
|
|
|
|
|
|
|
|
|
Proceeds from sales of loans originally classified as held for investment and instruments
from related securitization activities
|
2,170 |
|
|
2,168 |
|
|
|
|
|
|
|
| Purchases |
(1,303) |
|
|
(1,510) |
|
|
|
|
|
|
|
| Other changes in loans and leases, net |
2,100 |
|
|
(2,319) |
|
|
|
|
|
|
|
| Other investing activities, net |
(814) |
|
|
(1,955) |
|
|
|
|
|
|
|
| Net cash provided by (used in) investing activities |
(71,322) |
|
|
30,846 |
|
|
|
|
|
|
|
| Financing activities |
|
|
|
|
|
|
|
|
|
| Net change in: |
|
|
|
|
|
|
|
|
|
| Deposits |
22,669 |
|
|
(19,939) |
|
|
|
|
|
|
|
| Federal funds purchased and securities loaned or sold under agreements to repurchase |
45,771 |
|
|
118,745 |
|
|
|
|
|
|
|
| Short-term borrowings |
6,797 |
|
|
29,632 |
|
|
|
|
|
|
|
| Long-term debt: |
|
|
|
|
|
|
|
|
|
| Proceeds from issuance |
15,662 |
|
|
14,319 |
|
|
|
|
|
|
|
| Retirement |
(16,607) |
|
|
(11,341) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common stock repurchased |
(2,500) |
|
|
(2,215) |
|
|
|
|
|
|
|
| Cash dividends paid |
(2,519) |
|
|
(2,352) |
|
|
|
|
|
|
|
| Other financing activities, net |
(615) |
|
|
(728) |
|
|
|
|
|
|
|
| Net cash provided by financing activities |
68,658 |
|
|
126,121 |
|
|
|
|
|
|
|
| Effect of exchange rate changes on cash and cash equivalents |
(1,466) |
|
|
348 |
|
|
|
|
|
|
|
| Net increase (decrease) in cash and cash equivalents |
(19,669) |
|
|
146,015 |
|
|
|
|
|
|
|
| Cash and cash equivalents at January 1 |
333,073 |
|
|
230,203 |
|
|
|
|
|
|
|
| Cash and cash equivalents at March 31 |
$ |
313,404 |
|
|
$ |
376,218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Consolidated Financial Statements.
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 2023 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).
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, 2024 and 2023. For more information, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 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) |
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
|
|
|
| Net interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans and leases |
|
|
|
|
|
|
|
|
|
$ |
15,240 |
|
|
$ |
13,097 |
|
|
|
|
|
| Debt securities |
|
|
|
|
|
|
|
|
|
6,137 |
|
|
5,460 |
|
|
|
|
|
| Federal funds sold and securities borrowed or purchased under agreements to resell |
|
|
|
|
|
|
|
|
|
5,175 |
|
|
3,712 |
|
|
|
|
|
| Trading account assets |
|
|
|
|
|
|
|
|
|
2,455 |
|
|
2,028 |
|
|
|
|
|
Other interest income (1) |
|
|
|
|
|
|
|
|
|
7,278 |
|
|
4,358 |
|
|
|
|
|
| Total interest income |
|
|
|
|
|
|
|
|
|
36,285 |
|
|
28,655 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposits |
|
|
|
|
|
|
|
|
|
9,138 |
|
|
4,314 |
|
|
|
|
|
| Short-term borrowings |
|
|
|
|
|
|
|
|
|
8,535 |
|
|
6,180 |
|
|
|
|
|
| Trading account liabilities |
|
|
|
|
|
|
|
|
|
546 |
|
|
504 |
|
|
|
|
|
| Long-term debt |
|
|
|
|
|
|
|
|
|
4,034 |
|
|
3,209 |
|
|
|
|
|
| Total interest expense |
|
|
|
|
|
|
|
|
|
22,253 |
|
|
14,207 |
|
|
|
|
|
| Net interest income |
|
|
|
|
|
|
|
|
|
$ |
14,032 |
|
|
$ |
14,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fees and commissions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Card income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interchange fees (2) |
|
|
|
|
|
|
|
|
|
$ |
931 |
|
|
$ |
956 |
|
|
|
|
|
| Other card income |
|
|
|
|
|
|
|
|
|
532 |
|
|
513 |
|
|
|
|
|
| Total card income |
|
|
|
|
|
|
|
|
|
1,463 |
|
|
1,469 |
|
|
|
|
|
| Service charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposit-related fees |
|
|
|
|
|
|
|
|
|
1,122 |
|
|
1,097 |
|
|
|
|
|
| Lending-related fees |
|
|
|
|
|
|
|
|
|
320 |
|
|
313 |
|
|
|
|
|
| Total service charges |
|
|
|
|
|
|
|
|
|
1,442 |
|
|
1,410 |
|
|
|
|
|
| Investment and brokerage services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset management fees |
|
|
|
|
|
|
|
|
|
3,270 |
|
|
2,918 |
|
|
|
|
|
| Brokerage fees |
|
|
|
|
|
|
|
|
|
917 |
|
|
934 |
|
|
|
|
|
| Total investment and brokerage services |
|
|
|
|
|
|
|
|
|
4,187 |
|
|
3,852 |
|
|
|
|
|
| Investment banking fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Underwriting income |
|
|
|
|
|
|
|
|
|
901 |
|
|
569 |
|
|
|
|
|
| Syndication fees |
|
|
|
|
|
|
|
|
|
294 |
|
|
231 |
|
|
|
|
|
| Financial advisory services |
|
|
|
|
|
|
|
|
|
373 |
|
|
363 |
|
|
|
|
|
| Total investment banking fees |
|
|
|
|
|
|
|
|
|
1,568 |
|
|
1,163 |
|
|
|
|
|
| Total fees and commissions |
|
|
|
|
|
|
|
|
|
8,660 |
|
|
7,894 |
|
|
|
|
|
| Market making and similar activities |
|
|
|
|
|
|
|
|
|
3,888 |
|
|
4,712 |
|
|
|
|
|
| Other income (loss) |
|
|
|
|
|
|
|
|
|
(762) |
|
|
(796) |
|
|
|
|
|
| Total noninterest income |
|
|
|
|
|
|
|
|
|
$ |
11,786 |
|
|
$ |
11,810 |
|
|
|
|
|
(1)Includes interest income on interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks of $4.5 billion and $2.0 billion for the three months ended March 31, 2024 and 2023.
(2)Gross interchange fees and merchant income were $3.2 billion for both the three months ended March 31, 2024 and 2023 and are presented net of $2.3 billion and $2.2 billion of expenses for rewards and partner payments as well as certain other card costs for the same periods.
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 2023 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, 2024 and December 31, 2023. 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, 2024 |
|
|
|
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 |
$ |
18,724.5 |
|
|
$ |
75.6 |
|
|
$ |
8.1 |
|
|
$ |
83.7 |
|
|
$ |
61.9 |
|
|
$ |
19.8 |
|
|
$ |
81.7 |
|
| Futures and forwards |
3,410.1 |
|
|
1.5 |
|
|
— |
|
|
1.5 |
|
|
1.5 |
|
|
— |
|
|
1.5 |
|
Written options (2) |
1,890.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
31.5 |
|
|
— |
|
|
31.5 |
|
Purchased options (3) |
1,813.2 |
|
|
32.4 |
|
|
— |
|
|
32.4 |
|
|
— |
|
|
— |
|
|
— |
|
| Foreign exchange contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Swaps |
1,863.3 |
|
|
37.3 |
|
|
0.3 |
|
|
37.6 |
|
|
35.2 |
|
|
0.2 |
|
|
35.4 |
|
| Spot, futures and forwards |
4,995.8 |
|
|
28.9 |
|
|
6.1 |
|
|
35.0 |
|
|
28.1 |
|
|
6.0 |
|
|
34.1 |
|
Written options (2) |
513.5 |
|
|
— |
|
|
— |
|
|
— |
|
|
6.0 |
|
|
— |
|
|
6.0 |
|
Purchased options (3) |
471.2 |
|
|
5.9 |
|
|
— |
|
|
5.9 |
|
|
— |
|
|
— |
|
|
— |
|
| Equity contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Swaps |
461.9 |
|
|
13.6 |
|
|
— |
|
|
13.6 |
|
|
17.0 |
|
|
— |
|
|
17.0 |
|
| Futures and forwards |
148.7 |
|
|
2.7 |
|
|
— |
|
|
2.7 |
|
|
1.9 |
|
|
— |
|
|
1.9 |
|
Written options (2) |
927.7 |
|
|
— |
|
|
— |
|
|
— |
|
|
65.5 |
|
|
— |
|
|
65.5 |
|
Purchased options (3) |
806.2 |
|
|
54.8 |
|
|
— |
|
|
54.8 |
|
|
— |
|
|
— |
|
|
— |
|
| Commodity contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Swaps |
61.6 |
|
|
3.1 |
|
|
— |
|
|
3.1 |
|
|
4.6 |
|
|
— |
|
|
4.6 |
|
| Futures and forwards |
191.4 |
|
|
4.9 |
|
|
— |
|
|
4.9 |
|
|
4.1 |
|
|
0.5 |
|
|
4.6 |
|
Written options (2) |
72.6 |
|
|
— |
|
|
— |
|
|
— |
|
|
3.0 |
|
|
— |
|
|
3.0 |
|
Purchased options (3) |
79.1 |
|
|
2.7 |
|
|
— |
|
|
2.7 |
|
|
— |
|
|
— |
|
|
— |
|
Credit derivatives (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Purchased credit derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit default swaps |
391.3 |
|
|
1.8 |
|
|
— |
|
|
1.8 |
|
|
2.7 |
|
|
— |
|
|
2.7 |
|
| Total return swaps/options |
85.1 |
|
|
0.8 |
|
|
— |
|
|
0.8 |
|
|
0.9 |
|
|
— |
|
|
0.9 |
|
| Written credit derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit default swaps |
366.4 |
|
|
2.2 |
|
|
— |
|
|
2.2 |
|
|
1.5 |
|
|
— |
|
|
1.5 |
|
| Total return swaps/options |
78.6 |
|
|
1.0 |
|
|
— |
|
|
1.0 |
|
|
0.4 |
|
|
— |
|
|
0.4 |
|
| Gross derivative assets/liabilities |
|
|
$ |
269.2 |
|
|
$ |
14.5 |
|
|
$ |
283.7 |
|
|
$ |
265.8 |
|
|
$ |
26.5 |
|
|
$ |
292.3 |
|
| Less: Legally enforceable master netting agreements |
|
|
|
|
|
|
(219.6) |
|
|
|
|
|
|
(219.6) |
|
| Less: Cash collateral received/paid |
|
|
|
|
|
|
(27.9) |
|
|
|
|
|
|
(32.3) |
|
| Total derivative assets/liabilities |
|
|
|
|
|
|
$ |
36.2 |
|
|
|
|
|
|
$ |
40.4 |
|
(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 $571 million and $337.8 billion at March 31, 2024.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 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 |
$ |
15,715.2 |
|
|
$ |
78.4 |
|
|
$ |
7.9 |
|
|
$ |
86.3 |
|
|
$ |
66.6 |
|
|
$ |
18.5 |
|
|
$ |
85.1 |
|
| Futures and forwards |
2,803.8 |
|
|
5.1 |
|
|
— |
|
|
5.1 |
|
|
7.0 |
|
|
— |
|
|
7.0 |
|
Written options (2) |
1,807.7 |
|
|
— |
|
|
— |
|
|
— |
|
|
31.7 |
|
|
— |
|
|
31.7 |
|
Purchased options (3) |
1,714.9 |
|
|
32.9 |
|
|
— |
|
|
32.9 |
|
|
— |
|
|
— |
|
|
— |
|
| Foreign exchange contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Swaps |
1,814.7 |
|
|
41.1 |
|
|
0.2 |
|
|
41.3 |
|
|
38.2 |
|
|
0.5 |
|
|
38.7 |
|
| Spot, futures and forwards |
3,561.7 |
|
|
37.2 |
|
|
6.1 |
|
|
43.3 |
|
|
40.3 |
|
|
6.2 |
|
|
46.5 |
|
Written options (2) |
462.8 |
|
|
— |
|
|
— |
|
|
— |
|
|
6.8 |
|
|
— |
|
|
6.8 |
|
Purchased options (3) |
405.3 |
|
|
6.2 |
|
|
— |
|
|
6.2 |
|
|
— |
|
|
— |
|
|
— |
|
| Equity contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Swaps |
427.0 |
|
|
13.3 |
|
|
— |
|
|
13.3 |
|
|
16.7 |
|
|
— |
|
|
16.7 |
|
| Futures and forwards |
136.9 |
|
|
2.1 |
|
|
— |
|
|
2.1 |
|
|
1.6 |
|
|
— |
|
|
1.6 |
|
Written options (2) |
854.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
50.1 |
|
|
— |
|
|
50.1 |
|
Purchased options (3) |
716.2 |
|
|
44.1 |
|
|
— |
|
|
44.1 |
|
|
— |
|
|
— |
|
|
— |
|
| Commodity contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Swaps |
59.0 |
|
|
3.1 |
|
|
— |
|
|
3.1 |
|
|
4.5 |
|
|
— |
|
|
4.5 |
|
| Futures and forwards |
187.8 |
|
|
3.8 |
|
|
— |
|
|
3.8 |
|
|
3.1 |
|
|
0.4 |
|
|
3.5 |
|
Written options (2) |
67.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
3.3 |
|
|
— |
|
|
3.3 |
|
Purchased options (3) |
70.9 |
|
|
3.0 |
|
|
— |
|
|
3.0 |
|
|
— |
|
|
— |
|
|
— |
|
Credit derivatives (4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Purchased credit derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit default swaps |
312.8 |
|
|
1.7 |
|
|
— |
|
|
1.7 |
|
|
2.5 |
|
|
— |
|
|
2.5 |
|
| Total return swaps/options |
69.4 |
|
|
0.8 |
|
|
— |
|
|
0.8 |
|
|
1.3 |
|
|
— |
|
|
1.3 |
|
| Written credit derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit default swaps |
289.1 |
|
|
2.2 |
|
|
— |
|
|
2.2 |
|
|
1.6 |
|
|
— |
|
|
1.6 |
|
| Total return swaps/options |
68.6 |
|
|
1.1 |
|
|
— |
|
|
1.1 |
|
|
0.3 |
|
|
— |
|
|
0.3 |
|
| Gross derivative assets/liabilities |
|
|
$ |
276.1 |
|
|
$ |
14.2 |
|
|
$ |
290.3 |
|
|
$ |
275.6 |
|
|
$ |
25.6 |
|
|
$ |
301.2 |
|
| Less: Legally enforceable master netting agreements |
|
|
|
|
|
|
(221.6) |
|
|
|
|
|
|
(221.6) |
|
| Less: Cash collateral received/paid |
|
|
|
|
|
|
(29.4) |
|
|
|
|
|
|
(36.2) |
|
| Total derivative assets/liabilities |
|
|
|
|
|
|
$ |
39.3 |
|
|
|
|
|
|
$ |
43.4 |
|
(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 $520 million and $266.5 billion at December 31, 2023.
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 2023 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, 2024 and December 31, 2023 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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Offsetting of Derivatives (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative
Assets |
|
Derivative
Liabilities |
|
Derivative
Assets |
|
Derivative
Liabilities |
| (Dollars in billions) |
March 31, 2024 |
|
December 31, 2023 |
| Interest rate contracts |
|
|
|
|
|
|
|
| Over-the-counter |
$ |
115.1 |
|
|
$ |
110.6 |
|
|
$ |
119.2 |
|
|
$ |
117.7 |
|
| Exchange-traded |
0.1 |
|
|
0.1 |
|
|
0.2 |
|
|
0.2 |
|
| Over-the-counter cleared |
2.0 |
|
|
1.8 |
|
|
4.4 |
|
|
3.3 |
|
| Foreign exchange contracts |
|
|
|
|
|
|
|
| Over-the-counter |
77.4 |
|
|
74.6 |
|
|
89.7 |
|
|
90.4 |
|
| Over-the-counter cleared |
0.2 |
|
|
0.2 |
|
|
0.2 |
|
|
0.2 |
|
| Equity contracts |
|
|
|
|
|
|
|
| Over-the-counter |
26.4 |
|
|
36.6 |
|
|
24.7 |
|
|
32.2 |
|
| Exchange-traded |
44.2 |
|
|
46.1 |
|
|
34.4 |
|
|
33.9 |
|
| Commodity contracts |
|
|
|
|
|
|
|
| Over-the-counter |
7.6 |
|
|
9.6 |
|
|
6.6 |
|
|
8.4 |
|
| Exchange-traded |
2.0 |
|
|
1.9 |
|
|
2.3 |
|
|
2.1 |
|
| Over-the-counter cleared |
0.5 |
|
|
0.5 |
|
|
0.4 |
|
|
0.5 |
|
| Credit derivatives |
|
|
|
|
|
|
|
| Over-the-counter |
5.6 |
|
|
5.4 |
|
|
5.7 |
|
|
5.6 |
|
|
|
|
|
|
|
|
|
| Total gross derivative assets/liabilities, before netting |
|
|
|
|
|
|
|
| Over-the-counter |
232.1 |
|
|
236.8 |
|
|
245.9 |
|
|
254.3 |
|
| Exchange-traded |
46.3 |
|
|
48.1 |
|
|
36.9 |
|
|
36.2 |
|
| Over-the-counter cleared |
2.7 |
|
|
2.5 |
|
|
5.0 |
|
|
4.0 |
|
| Less: Legally enforceable master netting agreements and cash collateral received/paid |
|
|
|
|
|
|
|
| Over-the-counter |
(199.9) |
|
|
(204.3) |
|
|
(212.1) |
|
|
(218.9) |
|
| Exchange-traded |
(45.3) |
|
|
(45.3) |
|
|
(35.4) |
|
|
(35.4) |
|
| Over-the-counter cleared |
(2.3) |
|
|
(2.3) |
|
|
(3.5) |
|
|
(3.5) |
|
| Derivative assets/liabilities, after netting |
33.6 |
|
|
35.5 |
|
|
36.8 |
|
|
36.7 |
|
Other gross derivative assets/liabilities (2) |
2.6 |
|
|
4.9 |
|
|
2.5 |
|
|
6.7 |
|
| Total derivative assets/liabilities |
36.2 |
|
|
40.4 |
|
|
39.3 |
|
|
43.4 |
|
Less: Financial instruments collateral (3) |
(15.8) |
|
|
(14.1) |
|
|
(15.5) |
|
|
(13.0) |
|
| Total net derivative assets/liabilities |
$ |
20.4 |
|
|
$ |
26.3 |
|
|
$ |
23.8 |
|
|
$ |
30.4 |
|
(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, 2024 and 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gains and Losses on Derivatives Designated as Fair Value Hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
Derivative |
|
Hedged Item |
|
Derivative |
|
Hedged Item |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate risk on long-term debt (1) |
$ |
(3,104) |
|
|
$ |
3,090 |
|
|
$ |
3,308 |
|
|
$ |
(3,305) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate and foreign currency risk (2) |
344 |
|
|
(329) |
|
|
8 |
|
|
(8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate risk on available-for-sale securities (3) |
2,490 |
|
|
(2,502) |
|
|
(3,027) |
|
|
3,016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Price risk on commodity inventory (4) |
(220) |
|
|
220 |
|
|
(519) |
|
|
519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
$ |
(490) |
|
|
$ |
479 |
|
|
$ |
(230) |
|
|
$ |
222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Amounts are recorded in interest expense in the Consolidated Statement of Income.
(2)Represents cross-currency interest rate swaps related to available-for-sale debt securities and long-term debt. For the three months ended March 31, 2024 and 2023, the derivative amount includes gains (losses) of $9 million and $0 in interest income, $0 and $8 million in interest expense, $324 million and $1 million in market making and similar activities, and $11 million and $(1) 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.
The following table 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, 2024 |
|
December 31, 2023 |
|
|
|
|
|
| (Dollars in millions) |
Carrying Value |
|
Cumulative
Fair Value
Adjustments (1)
|
|
Carrying Value |
|
Cumulative
Fair Value
Adjustments (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (2) |
$ |
197,036 |
|
|
$ |
(8,615) |
|
|
$ |
203,986 |
|
|
$ |
(5,767) |
|
|
|
|
|
|
Available-for-sale debt securities (2, 3, 4) |
181,553 |
|
|
(4,598) |
|
|
134,077 |
|
|
(1,793) |
|
|
|
|
|
|
Trading account assets (5) |
5,303 |
|
|
397 |
|
|
7,475 |
|
|
414 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Increase (decrease) to carrying value.
(2)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 $10.5 billion in the related liability at both March 31, 2024 and December 31, 2023, and a decrease in the related asset of $5.3 billion and $5.6 billion at March 31, 2024 and December 31, 2023, 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, 2024 and December 31, 2023, the amortized cost of the closed portfolios used in these hedging relationships was $37.9 billion and $39.1 billion, of which $22.2 billion and $22.5 billion were designated in a portfolio layer hedging relationship. At March 31, 2024 and December 31, 2023, the cumulative adjustment associated with these hedging relationships was a decrease of $339 million and an increase of $48 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, 2024 and 2023. Of the $8.4 billion after-tax net loss ($11.2 billion pretax) on derivatives in accumulated OCI at March 31, 2024, losses of $3.9 billion after-tax ($5.2 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 nine 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
| (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) |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(1,090) |
|
|
$ |
(514) |
|
|
$ |
2,550 |
|
|
$ |
(160) |
|
Price risk on forecasted MBS purchases (1) |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
(2) |
|
|
2 |
|
|
— |
|
Price risk on certain compensation plans (2) |
|
|
|
|
|
|
|
|
|
|
|
|
14 |
|
|
9 |
|
|
17 |
|
|
5 |
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(1,076) |
|
|
$ |
(507) |
|
|
$ |
2,569 |
|
|
$ |
(155) |
|
| Net investment hedges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange risk (3) |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
797 |
|
|
$ |
— |
|
|
$ |
(377) |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2024 and 2023, amounts excluded from effectiveness testing and recognized in market making and similar activities were gains of $66 million and $33 million.
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, 2024 and 2023. 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) |
2024 |
|
2023 |
|
|
|
|
|
|
Interest rate risk on mortgage activities (1, 2) |
$ |
(30) |
|
|
$ |
26 |
|
|
|
|
|
|
|
Credit risk on loans (2) |
(19) |
|
|
(28) |
|
|
|
|
|
|
|
Interest rate and foreign currency risk on asset and liability management activities (3) |
91 |
|
|
(122) |
|
|
|
|
|
|
|
Price risk on certain compensation plans (4) |
242 |
|
|
195 |
|
|
|
|
|
|
|
(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 March 31, 2024 and December 31, 2023, the Corporation had transferred $4.2 billion and $4.1 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 $4.2 billion at the transfer dates. At both March 31, 2024 and December 31, 2023, the fair value of the transferred securities was $4.1 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 to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
The table below, which includes both derivatives and non-derivative cash instruments, identifies the amounts in the respective income statement line items attributable to the Corporation’s sales and trading revenue in Global Markets, categorized by primary risk, for the three months ended March 31, 2024 and 2023. This table includes debit valuation adjustment (DVA) and funding valuation adjustment (FVA) gains (losses). Global Markets results in Note 17 – Business Segment Information are presented on a fully taxable-equivalent (FTE) basis. The table below is not presented on an FTE basis.
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sales and Trading Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market making and similar activities |
|
Net Interest
Income |
|
Other (1) |
|
Total |
| (Dollars in millions) |
|
|
Three Months Ended March 31, 2024 |
| Interest rate risk |
|
|
|
|
|
|
|
|
$ |
853 |
|
|
$ |
230 |
|
|
$ |
77 |
|
|
$ |
1,160 |
|
| Foreign exchange risk |
|
|
|
|
|
|
|
|
437 |
|
|
34 |
|
|
23 |
|
|
494 |
|
| Equity risk |
|
|
|
|
|
|
|
|
1,864 |
|
|
(429) |
|
|
427 |
|
|
1,862 |
|
| Credit risk |
|
|
|
|
|
|
|
|
551 |
|
|
604 |
|
|
131 |
|
|
1,286 |
|
Other risk (2) |
|
|
|
|
|
|
|
|
125 |
|
|
29 |
|
|
(13) |
|
|
141 |
|
Total sales and trading revenue |
|
|
|
|
|
|
|
|
$ |
3,830 |
|
|
$ |
468 |
|
|
$ |
645 |
|
|
$ |
4,943 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2023 |
| Interest rate risk |
|
|
|
|
|
|
|
|
$ |
1,244 |
|
|
$ |
99 |
|
|
$ |
86 |
|
|
$ |
1,429 |
|
| Foreign exchange risk |
|
|
|
|
|
|
|
|
402 |
|
|
49 |
|
|
24 |
|
|
475 |
|
| Equity risk |
|
|
|
|
|
|
|
|
2,000 |
|
|
(838) |
|
|
460 |
|
|
1,622 |
|
| Credit risk |
|
|
|
|
|
|
|
|
480 |
|
|
666 |
|
|
115 |
|
|
1,261 |
|
Other risk (2) |
|
|
|
|
|
|
|
|
272 |
|
|
(78) |
|
|
(4) |
|
|
190 |
|
Total sales and trading revenue |
|
|
|
|
|
|
|
|
$ |
4,398 |
|
|
$ |
(102) |
|
|
$ |
681 |
|
|
$ |
4,977 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Represents amounts in investment and brokerage services and other income that are recorded in Global Markets and included in the definition of sales and trading revenue. Includes investment and brokerage services revenue of $494 million and $529 million for the three months ended March 31, 2024 and 2023.
(2)Includes commodity risk.
Credit Derivatives
The Corporation enters into credit derivatives primarily to facilitate client transactions and to manage credit risk exposures. Credit derivatives are classified as investment and non-investment grade based on the credit quality of the underlying referenced obligation. The Corporation considers ratings of BBB- or higher as investment grade. Non-investment grade includes non-rated credit derivative instruments. The Corporation discloses internal categorizations of investment grade and non-investment grade consistent with how risk is managed for these instruments. For more information on credit derivatives, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Credit derivative instruments where the Corporation is the seller of credit protection and their expiration at March 31, 2024 and December 31, 2023 are summarized in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit Derivative Instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than
One Year |
|
One to
Three Years |
|
Three to
Five Years |
|
Over Five
Years |
|
Total |
|
March 31, 2024 |
| (Dollars in millions) |
Carrying Value |
| Credit default swaps: |
|
|
|
|
|
|
|
|
|
| Investment grade |
$ |
1 |
|
|
$ |
7 |
|
|
$ |
15 |
|
|
$ |
21 |
|
|
$ |
44 |
|
| Non-investment grade |
23 |
|
|
237 |
|
|
670 |
|
|
552 |
|
|
1,482 |
|
| Total |
24 |
|
|
244 |
|
|
685 |
|
|
573 |
|
|
1,526 |
|
| Total return swaps/options: |
|
|
|
|
|
|
|
|
|
| Investment grade |
18 |
|
|
— |
|
|
— |
|
|
— |
|
|
18 |
|
| Non-investment grade |
237 |
|
|
63 |
|
|
70 |
|
|
7 |
|
|
377 |
|
| Total |
255 |
|
|
63 |
|
|
70 |
|
|
7 |
|
|
395 |
|
| Total credit derivatives |
$ |
279 |
|
|
$ |
307 |
|
|
$ |
755 |
|
|
$ |
580 |
|
|
$ |
1,921 |
|
| Credit-related notes: |
|
|
|
|
|
|
|
|
|
| Investment grade |
$ |
— |
|
|
$ |
— |
|
|
$ |
10 |
|
|
$ |
558 |
|
|
$ |
568 |
|
| Non-investment grade |
— |
|
|
6 |
|
|
18 |
|
|
1,012 |
|
|
1,036 |
|
| Total credit-related notes |
$ |
— |
|
|
$ |
6 |
|
|
$ |
28 |
|
|
$ |
1,570 |
|
|
$ |
1,604 |
|
| |
Maximum Payout/Notional |
| Credit default swaps: |
|
|
|
|
|
|
|
|
|
| Investment grade |
$ |
37,594 |
|
|
$ |
68,197 |
|
|
$ |
114,691 |
|
|
$ |
49,572 |
|
|
$ |
270,054 |
|
| Non-investment grade |
16,093 |
|
|
31,315 |
|
|
36,608 |
|
|
12,291 |
|
|
96,307 |
|
| Total |
53,687 |
|
|
99,512 |
|
|
151,299 |
|
|
61,863 |
|
|
366,361 |
|
| Total return swaps/options: |
|
|
|
|
|
|
|
|
|
| Investment grade |
49,019 |
|
|
1,770 |
|
|
1,378 |
|
|
894 |
|
|
53,061 |
|
| Non-investment grade |
20,858 |
|
|
1,544 |
|
|
2,205 |
|
|
889 |
|
|
25,496 |
|
| Total |
69,877 |
|
|
3,314 |
|
|
3,583 |
|
|
1,783 |
|
|
78,557 |
|
| Total credit derivatives |
$ |
123,564 |
|
|
$ |
102,826 |
|
|
$ |
154,882 |
|
|
$ |
63,646 |
|
|
$ |
444,918 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
Carrying Value |
| Credit default swaps: |
|
|
|
|
|
|
|
|
|
| Investment grade |
$ |
— |
|
|
$ |
11 |
|
|
$ |
26 |
|
|
$ |
20 |
|
|
$ |
57 |
|
| Non-investment grade |
38 |
|
|
277 |
|
|
601 |
|
|
595 |
|
|
1,511 |
|
| Total |
38 |
|
|
288 |
|
|
627 |
|
|
615 |
|
|
1,568 |
|
| Total return swaps/options: |
|
|
|
|
|
|
|
|
|
| Investment grade |
59 |
|
|
— |
|
|
— |
|
|
— |
|
|
59 |
|
| Non-investment grade |
149 |
|
|
69 |
|
|
56 |
|
|
5 |
|
|
279 |
|
| Total |
208 |
|
|
69 |
|
|
56 |
|
|
5 |
|
|
338 |
|
| Total credit derivatives |
$ |
246 |
|
|
$ |
357 |
|
|
$ |
683 |
|
|
$ |
620 |
|
|
$ |
1,906 |
|
| Credit-related notes: |
|
|
|
|
|
|
|
|
|
| Investment grade |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
859 |
|
|
$ |
859 |
|
| Non-investment grade |
— |
|
|
5 |
|
|
16 |
|
|
1,103 |
|
|
1,124 |
|
| Total credit-related notes |
$ |
— |
|
|
$ |
5 |
|
|
$ |
16 |
|
|
$ |
1,962 |
|
|
$ |
1,983 |
|
| |
Maximum Payout/Notional |
| Credit default swaps: |
|
|
|
|
|
|
|
|
|
| Investment grade |
$ |
33,750 |
|
|
$ |
65,015 |
|
|
$ |
83,313 |
|
|
$ |
17,023 |
|
|
$ |
199,101 |
|
| Non-investment grade |
18,061 |
|
|
32,155 |
|
|
33,934 |
|
|
5,827 |
|
|
89,977 |
|
| Total |
51,811 |
|
|
97,170 |
|
|
117,247 |
|
|
22,850 |
|
|
289,078 |
|
| Total return swaps/options: |
|
|
|
|
|
|
|
|
|
| Investment grade |
40,515 |
|
|
1,503 |
|
|
1,561 |
|
|
23 |
|
|
43,602 |
|
| Non-investment grade |
20,694 |
|
|
1,414 |
|
|
1,907 |
|
|
988 |
|
|
25,003 |
|
| Total |
61,209 |
|
|
2,917 |
|
|
3,468 |
|
|
1,011 |
|
|
68,605 |
|
| Total credit derivatives |
$ |
113,020 |
|
|
$ |
100,087 |
|
|
$ |
120,715 |
|
|
$ |
23,861 |
|
|
$ |
357,683 |
|
The notional amount represents the maximum amount payable by the Corporation for most credit derivatives. However, the Corporation does not monitor its exposure to credit derivatives based solely on the notional amount because this measure does not take into consideration the probability of occurrence. As such, the notional amount is not a reliable indicator of the Corporation’s exposure to these contracts. Instead, a risk framework is used to define risk tolerances and establish limits so that certain credit risk-related losses occur within acceptable, predefined limits.
Credit-related notes in the table above include investments in securities issued by collateralized debt obligation (CDO), collateralized loan obligation (CLO) and credit-linked note vehicles. These instruments are primarily classified as trading securities. The carrying value of these instruments equals the Corporation’s maximum exposure to loss. The Corporation is not obligated to make any payments to the entities under the terms of the securities owned.
Credit-related Contingent Features and Collateral
Certain of the Corporation’s derivative contracts contain credit risk-related contingent features, primarily in the form of ISDA master netting agreements and credit support documentation that enhance the creditworthiness of these instruments compared to other obligations of the respective counterparty with whom the Corporation has transacted. These contingent features may be for the benefit of the Corporation as well as its counterparties with respect to changes in the Corporation’s creditworthiness and the mark-to-market exposure under the derivative transactions. At March 31, 2024 and December 31, 2023, the Corporation held cash and securities collateral of $105.1 billion and $104.1 billion and posted cash and securities collateral of $89.7 billion and $93.4 billion in the normal course of business under derivative agreements, excluding cross-product margining agreements where clients are permitted to margin on a net basis for both derivative and secured financing arrangements.
In connection with certain OTC derivative contracts and other trading agreements, the Corporation can be required to provide additional collateral or to terminate transactions with certain counterparties in the event of a downgrade of the senior debt ratings of the Corporation or certain subsidiaries. The amount of additional collateral required depends on the contract and is usually a fixed incremental amount and/or the market value of the exposure. For more information on credit-related contingent features and collateral, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
At March 31, 2024, the amount of collateral, calculated based on the terms of the contracts, that the Corporation and certain subsidiaries could be required to post to counterparties but had not yet posted to counterparties was $3.1 billion, including $1.6 billion for Bank of America, National Association.
Some counterparties are currently able to unilaterally terminate certain contracts, or the Corporation or certain subsidiaries may be required to take other action such as find a suitable replacement or obtain a guarantee. At March 31, 2024 and December 31, 2023, the liability recorded for these derivative contracts was not significant.
The following table presents the amount of additional collateral that would have been contractually required by derivative contracts and other trading agreements at March 31, 2024 if the rating agencies had downgraded their long-term
senior debt ratings for the Corporation or certain subsidiaries by one incremental notch and by an additional second incremental notch. The table also presents derivative liabilities that would be subject to unilateral termination by counterparties upon downgrade of the Corporation's or certain subsidiaries’ long-term senior debt ratings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Collateral Required to be Posted and Derivative Liabilities Subject to Unilateral Termination Upon Downgrade
at March 31, 2024 |
|
|
|
|
| (Dollars in millions) |
One
Incremental
Notch |
|
Second
Incremental
Notch |
| Additional collateral required to be posted upon downgrade |
|
|
|
| Bank of America Corporation |
$ |
132 |
|
|
$ |
878 |
|
Bank of America, N.A. and subsidiaries (1) |
40 |
|
|
708 |
|
|
|
|
|
| Derivative liabilities subject to unilateral termination upon downgrade |
|
|
|
| Derivative liabilities |
$ |
5 |
|
|
$ |
158 |
|
| Collateral posted |
4 |
|
|
63 |
|
(1)Included in Bank of America Corporation collateral requirements in this table.
Valuation Adjustments on Derivatives
The table below presents credit valuation adjustment (CVA), DVA and FVA gains (losses) on derivatives (excluding the effect of any related hedge activities), which are recorded in market making and similar activities, for the three months ended March 31, 2024 and 2023. For more information on the valuation adjustments on derivatives, see Note 3 – Derivatives to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation Adjustments Gains (Losses) on Derivatives (1) |
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
2024 |
|
2023 |
|
|
| Derivative assets (CVA) |
$ |
62 |
|
|
$ |
12 |
|
|
|
Derivative assets/liabilities (FVA) |
14 |
|
|
(43) |
|
|
|
| Derivative liabilities (DVA) |
(69) |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)At March 31, 2024 and December 31, 2023, cumulative CVA reduced the derivative assets balance by $297 million and $359 million, cumulative FVA reduced the net derivative balance by $73 million and $87 million, and cumulative DVA reduced the derivative liabilities balance by $230 million and $299 million.
NOTE 4 Securities
The table below presents the amortized cost, gross unrealized gains and losses, and fair value of available-for-sale (AFS) debt securities, other debt securities carried at fair value and held-to-maturity (HTM) debt securities at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Debt Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
Cost |
|
Gross
Unrealized
Gains |
|
Gross
Unrealized
Losses |
|
Fair
Value |
|
Amortized
Cost |
|
Gross
Unrealized
Gains |
|
Gross
Unrealized
Losses |
|
Fair
Value |
| (Dollars in millions) |
March 31, 2024 |
|
December 31, 2023 |
| Available-for-sale debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Agency |
$ |
37,971 |
|
|
$ |
28 |
|
|
$ |
(1,487) |
|
|
$ |
36,512 |
|
|
$ |
39,195 |
|
|
$ |
37 |
|
|
$ |
(1,420) |
|
|
$ |
37,812 |
|
| Agency-collateralized mortgage obligations |
2,661 |
|
|
8 |
|
|
(219) |
|
|
2,450 |
|
|
2,739 |
|
|
6 |
|
|
(201) |
|
|
2,544 |
|
| Commercial |
10,978 |
|
|
66 |
|
|
(469) |
|
|
10,575 |
|
|
10,909 |
|
|
40 |
|
|
(514) |
|
|
10,435 |
|
Non-agency residential (1) |
310 |
|
|
46 |
|
|
(58) |
|
|
298 |
|
|
449 |
|
|
3 |
|
|
(70) |
|
|
382 |
|
| Total mortgage-backed securities |
51,920 |
|
|
148 |
|
|
(2,233) |
|
|
49,835 |
|
|
53,292 |
|
|
86 |
|
|
(2,205) |
|
|
51,173 |
|
| U.S. Treasury and government agencies |
229,830 |
|
|
81 |
|
|
(1,072) |
|
|
228,839 |
|
|
179,108 |
|
|
19 |
|
|
(1,461) |
|
|
177,666 |
|
| Non-U.S. securities |
21,249 |
|
|
23 |
|
|
(21) |
|
|
21,251 |
|
|
22,868 |
|
|
27 |
|
|
(20) |
|
|
22,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other taxable securities |
3,285 |
|
|
2 |
|
|
(49) |
|
|
3,238 |
|
|
4,910 |
|
|
1 |
|
|
(76) |
|
|
4,835 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tax-exempt securities |
10,134 |
|
|
11 |
|
|
(235) |
|
|
9,910 |
|
|
10,304 |
|
|
17 |
|
|
(221) |
|
|
10,100 |
|
| Total available-for-sale debt securities |
316,418 |
|
|
265 |
|
|
(3,610) |
|
|
313,073 |
|
|
270,482 |
|
|
150 |
|
|
(3,983) |
|
|
266,649 |
|
Other debt securities carried at fair value (2) |
10,035 |
|
|
90 |
|
|
(79) |
|
|
10,046 |
|
|
10,202 |
|
|
56 |
|
|
(55) |
|
|
10,203 |
|
| Total debt securities carried at fair value |
326,453 |
|
|
355 |
|
|
(3,689) |
|
|
323,119 |
|
|
280,684 |
|
|
206 |
|
|
(4,038) |
|
|
276,852 |
|
| Held-to-maturity debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Agency mortgage-backed securities |
457,841 |
|
|
— |
|
|
(88,505) |
|
|
369,336 |
|
|
465,456 |
|
|
— |
|
|
(78,930) |
|
|
386,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
121,658 |
|
|
— |
|
|
(19,526) |
|
|
102,132 |
|
|
121,645 |
|
|
— |
|
|
(17,963) |
|
|
103,682 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other taxable securities |
7,400 |
|
|
— |
|
|
(1,120) |
|
|
6,280 |
|
|
7,490 |
|
|
— |
|
|
(1,101) |
|
|
6,389 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total held-to-maturity debt securities |
586,899 |
|
|
— |
|
|
(109,151) |
|
|
477,748 |
|
|
594,591 |
|
|
— |
|
|
(97,994) |
|
|
496,597 |
|
Total debt securities (3,4) |
$ |
913,352 |
|
|
$ |
355 |
|
|
$ |
(112,840) |
|
|
$ |
800,867 |
|
|
$ |
875,275 |
|
|
$ |
206 |
|
|
$ |
(102,032) |
|
|
$ |
773,449 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)At March 31, 2024 and December 31, 2023, the underlying collateral type included approximately 24 percent and 17 percent prime and 76 percent and 83 percent subprime.
(2)Primarily includes non-U.S. securities used to satisfy certain international regulatory requirements. Any changes in value are reported in market making and similar activities. For detail on the components, see Note 14 – Fair Value Measurements.
(3)Includes securities pledged as collateral of $188.3 billion and $204.9 billion at March 31, 2024 and December 31, 2023.
(4)The Corporation held debt securities from Fannie Mae (FNMA) and Freddie Mac (FHLMC) that each exceeded 10 percent of shareholders’ equity, with an amortized cost of $268.0 billion and $169.0 billion, and a fair value of $216.4 billion and $136.6 billion at March 31, 2024, and an amortized cost of $272.5 billion and $171.5 billion, and a fair value of $226.4 billion and $142.3 billion at December 31, 2023.
At March 31, 2024, the accumulated net unrealized loss on AFS debt securities, excluding the amount related to debt securities previously transferred to held to maturity, included in accumulated OCI was $2.5 billion, net of the related income tax benefit of $836 million. At March 31, 2024 and December 31, 2023, nonperforming AFS debt securities held by the Corporation were not significant.
At March 31, 2024 and December 31, 2023, $866.7 billion and $824.9 billion of AFS and HTM debt securities, which were predominantly U.S. agency and U.S. Treasury securities, have a zero credit loss assumption. For the same periods, the expected credit losses on the remaining $36.6 billion and $40.2 billion of AFS and HTM debt securities were insignificant. For more information on the zero credit loss assumption, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
At March 31, 2024 and December 31, 2023, the Corporation held equity securities at an aggregate fair value of $250 million and $251 million and other equity securities,
as valued under the measurement alternative, at a carrying value of $390 million and $377 million, both of which are included in other assets. At March 31, 2024 and December 31, 2023, the Corporation also held money market investments at a fair value of $1.5 billion and $1.2 billion, which are included in time deposits placed and other short-term investments.
The gross realized gains and losses on sales of AFS debt securities for the three months ended March 31, 2024 and 2023 are presented in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gains and Losses on Sales of AFS Debt Securities |
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
|
|
| Gross gains |
|
|
|
|
$ |
11 |
|
|
$ |
96 |
|
|
|
| Gross losses |
|
|
|
|
(1) |
|
|
(306) |
|
|
|
| Net gains (losses) on sales of AFS debt securities |
|
|
|
|
$ |
10 |
|
|
$ |
(210) |
|
|
|
| Income tax expense (benefit) attributable to realized net gains (losses) on sales of AFS debt securities |
|
|
|
|
$ |
2 |
|
|
$ |
(53) |
|
|
|
The table below presents the fair value and the associated gross unrealized losses on AFS debt securities and whether these securities have had gross unrealized losses for less than 12 months or for 12 months or longer at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total AFS Debt Securities in a Continuous Unrealized Loss Position |
|
|
|
|
|
|
|
|
|
Less than Twelve Months |
|
Twelve Months or Longer |
|
Total |
|
Fair
Value |
|
Gross
Unrealized
Losses |
|
Fair
Value |
|
Gross
Unrealized
Losses |
|
Fair
Value |
|
Gross
Unrealized
Losses |
| (Dollars in millions) |
March 31, 2024 |
| Continuously unrealized loss-positioned AFS debt securities |
|
|
|
|
|
|
|
|
|
|
|
| Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| Agency |
$ |
9,729 |
|
|
$ |
(31) |
|
|
$ |
20,061 |
|
|
$ |
(1,456) |
|
|
$ |
29,790 |
|
|
$ |
(1,487) |
|
| Agency-collateralized mortgage obligations |
— |
|
|
— |
|
|
1,630 |
|
|
(219) |
|
|
1,630 |
|
|
(219) |
|
| Commercial |
770 |
|
|
(13) |
|
|
4,700 |
|
|
(456) |
|
|
5,470 |
|
|
(469) |
|
| Non-agency residential |
— |
|
|
— |
|
|
158 |
|
|
(58) |
|
|
158 |
|
|
(58) |
|
| Total mortgage-backed securities |
10,499 |
|
|
(44) |
|
|
26,549 |
|
|
(2,189) |
|
|
37,048 |
|
|
(2,233) |
|
| U.S. Treasury and government agencies |
5,793 |
|
|
(3) |
|
|
68,837 |
|
|
(1,069) |
|
|
74,630 |
|
|
(1,072) |
|
| Non-U.S. securities |
9,661 |
|
|
(11) |
|
|
1,996 |
|
|
(10) |
|
|
11,657 |
|
|
(21) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other taxable securities |
608 |
|
|
(3) |
|
|
2,450 |
|
|
(46) |
|
|
3,058 |
|
|
(49) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tax-exempt securities |
154 |
|
|
(1) |
|
|
3,244 |
|
|
(234) |
|
|
3,398 |
|
|
(235) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total AFS debt securities in a continuous
unrealized loss position |
$ |
26,715 |
|
|
$ |
(62) |
|
|
$ |
103,076 |
|
|
$ |
(3,548) |
|
|
$ |
129,791 |
|
|
$ |
(3,610) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
| Continuously unrealized loss-positioned AFS debt securities |
|
|
|
|
|
|
|
|
|
|
|
| Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
| Agency |
$ |
8,624 |
|
|
$ |
(21) |
|
|
$ |
20,776 |
|
|
$ |
(1,399) |
|
|
$ |
29,400 |
|
|
$ |
(1,420) |
|
| Agency-collateralized mortgage obligations |
— |
|
|
— |
|
|
1,701 |
|
|
(201) |
|
|
1,701 |
|
|
(201) |
|
| Commercial |
2,363 |
|
|
(27) |
|
|
4,588 |
|
|
(487) |
|
|
6,951 |
|
|
(514) |
|
| Non-agency residential |
— |
|
|
— |
|
|
370 |
|
|
(70) |
|
|
370 |
|
|
(70) |
|
| Total mortgage-backed securities |
10,987 |
|
|
(48) |
|
|
27,435 |
|
|
(2,157) |
|
|
38,422 |
|
|
(2,205) |
|
| U.S. Treasury and government agencies |
14,907 |
|
|
(12) |
|
|
69,669 |
|
|
(1,449) |
|
|
84,576 |
|
|
(1,461) |
|
| Non-U.S. securities |
7,702 |
|
|
(8) |
|
|
1,524 |
|
|
(12) |
|
|
9,226 |
|
|
(20) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other taxable securities |
3,269 |
|
|
(19) |
|
|
1,437 |
|
|
(57) |
|
|
4,706 |
|
|
(76) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tax-exempt securities |
466 |
|
|
(5) |
|
|
2,106 |
|
|
(216) |
|
|
2,572 |
|
|
(221) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total AFS debt securities in a continuous
unrealized loss position |
$ |
37,331 |
|
|
$ |
(92) |
|
|
$ |
102,171 |
|
|
$ |
(3,891) |
|
|
$ |
139,502 |
|
|
$ |
(3,983) |
|
The remaining contractual maturity distribution and yields of the Corporation’s debt securities carried at fair value and HTM debt securities at March 31, 2024 are summarized in the table below. Actual duration and yields may differ as prepayments on the loans underlying the mortgage-backed securities (MBS) or other asset-backed securities (ABS) are passed through to the Corporation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maturities of Debt Securities Carried at Fair Value and Held-to-maturity Debt Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due in One
Year or Less |
|
Due after One Year
through Five Years |
|
Due after Five Years
through Ten Years |
|
Due after
Ten Years |
|
Total |
| (Dollars in millions) |
Amount |
|
Yield (1) |
|
Amount |
|
Yield (1) |
|
Amount |
|
Yield (1) |
|
Amount |
|
Yield (1) |
|
Amount |
|
Yield (1) |
| Amortized cost of debt securities carried at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Agency |
$ |
— |
|
|
— |
% |
|
$ |
4 |
|
|
4.00 |
% |
|
$ |
8 |
|
|
3.13 |
% |
|
$ |
37,959 |
|
|
4.70 |
% |
|
$ |
37,971 |
|
|
4.70 |
% |
| Agency-collateralized mortgage obligations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,661 |
|
|
3.38 |
|
|
2,661 |
|
|
3.38 |
|
| Commercial |
32 |
|
|
3.03 |
|
|
1,940 |
|
|
5.88 |
|
|
7,449 |
|
|
3.92 |
|
|
1,570 |
|
|
2.74 |
|
|
10,991 |
|
|
4.09 |
|
| Non-agency residential |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
576 |
|
|
10.15 |
|
|
576 |
|
|
10.15 |
|
| Total mortgage-backed securities |
32 |
|
|
3.03 |
|
|
1,944 |
|
|
5.88 |
|
|
7,457 |
|
|
3.92 |
|
|
42,766 |
|
|
4.62 |
|
|
52,199 |
|
|
4.57 |
|
| U.S. Treasury and government agencies |
82,297 |
|
|
5.29 |
|
|
135,534 |
|
|
3.72 |
|
|
13,857 |
|
|
2.75 |
|
|
37 |
|
|
3.92 |
|
|
231,725 |
|
|
4.21 |
|
| Non-U.S. securities |
18,124 |
|
|
3.91 |
|
|
6,087 |
|
|
1.49 |
|
|
3,751 |
|
|
5.34 |
|
|
1,148 |
|
|
5.09 |
|
|
29,110 |
|
|
3.63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other taxable securities |
733 |
|
|
6.55 |
|
|
2,233 |
|
|
6.11 |
|
|
244 |
|
|
4.36 |
|
|
75 |
|
|
2.82 |
|
|
3,285 |
|
|
6.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tax-exempt securities |
1,066 |
|
|
4.18 |
|
|
3,881 |
|
|
3.65 |
|
|
996 |
|
|
3.29 |
|
|
4,191 |
|
|
4.02 |
|
|
10,134 |
|
|
3.82 |
|
Total amortized cost of debt securities carried at fair value |
$ |
102,252 |
|
|
5.04 |
|
|
$ |
149,679 |
|
|
3.69 |
|
|
$ |
26,305 |
|
|
3.49 |
|
|
$ |
48,217 |
|
|
4.57 |
|
|
$ |
326,453 |
|
|
4.23 |
|
| Amortized cost of HTM debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Agency mortgage-backed securities |
$ |
— |
|
|
— |
% |
|
$ |
— |
|
|
— |
% |
|
$ |
11 |
|
|
2.73 |
% |
|
$ |
457,830 |
|
|
2.16 |
% |
|
$ |
457,841 |
|
|
2.16 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
— |
|
|
— |
|
|
13,043 |
|
|
1.93 |
|
|
108,615 |
|
|
1.32 |
|
|
— |
|
|
— |
|
|
121,658 |
|
|
1.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other taxable securities |
76 |
|
|
1.73 |
|
|
1,219 |
|
|
2.58 |
|
|
279 |
|
|
3.46 |
|
|
5,826 |
|
|
2.49 |
|
|
7,400 |
|
|
2.54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total amortized cost of HTM debt securities |
$ |
76 |
|
|
1.73 |
|
|
$ |
14,262 |
|
|
1.98 |
|
|
$ |
108,905 |
|
|
1.33 |
|
|
$ |
463,656 |
|
|
2.16 |
|
|
$ |
586,899 |
|
|
2.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Debt securities carried at fair value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Agency |
$ |
— |
|
|
|
|
$ |
4 |
|
|
|
|
$ |
7 |
|
|
|
|
$ |
36,501 |
|
|
|
|
$ |
36,512 |
|
|
|
| Agency-collateralized mortgage obligations |
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
2,450 |
|
|
|
|
2,450 |
|
|
|
| Commercial |
32 |
|
|
|
|
1,899 |
|
|
|
|
7,291 |
|
|
|
|
1,364 |
|
|
|
|
10,586 |
|
|
|
| Non-agency residential |
— |
|
|
|
|
2 |
|
|
|
|
— |
|
|
|
|
559 |
|
|
|
|
561 |
|
|
|
| Total mortgage-backed securities |
32 |
|
|
|
|
1,905 |
|
|
|
|
7,298 |
|
|
|
|
40,874 |
|
|
|
|
50,109 |
|
|
|
| U.S. Treasury and government agencies |
82,294 |
|
|
|
|
134,902 |
|
|
|
|
13,502 |
|
|
|
|
36 |
|
|
|
|
230,734 |
|
|
|
| Non-U.S. securities |
18,136 |
|
|
|
|
6,089 |
|
|
|
|
3,750 |
|
|
|
|
1,149 |
|
|
|
|
29,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other taxable securities |
730 |
|
|
|
|
2,222 |
|
|
|
|
222 |
|
|
|
|
68 |
|
|
|
|
3,242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Tax-exempt securities |
1,065 |
|
|
|
|
3,847 |
|
|
|
|
971 |
|
|
|
|
4,027 |
|
|
|
|
9,910 |
|
|
|
| Total debt securities carried at fair value |
$ |
102,257 |
|
|
|
|
$ |
148,965 |
|
|
|
|
$ |
25,743 |
|
|
|
|
$ |
46,154 |
|
|
|
|
$ |
323,119 |
|
|
|
| Fair value of HTM debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Agency mortgage-backed securities |
$ |
— |
|
|
|
|
$ |
— |
|
|
|
|
$ |
10 |
|
|
|
|
$ |
369,326 |
|
|
|
|
$ |
369,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
— |
|
|
|
|
11,695 |
|
|
|
|
90,437 |
|
|
|
|
— |
|
|
|
|
102,132 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other taxable securities |
75 |
|
|
|
|
1,156 |
|
|
|
|
225 |
|
|
|
|
4,824 |
|
|
|
|
6,280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total fair value of HTM debt securities |
$ |
75 |
|
|
|
|
$ |
12,851 |
|
|
|
|
$ |
90,672 |
|
|
|
|
$ |
374,150 |
|
|
|
|
$ |
477,748 |
|
|
|
(1)The weighted-average yield is computed based on a constant effective yield over the contractual life of each security. The yield considers the contractual coupon and the amortization of premiums and accretion of discounts, excluding the effect of related hedging derivatives.
NOTE 5 Outstanding Loans and Leases and Allowance for Credit Losses
The following tables present total outstanding loans and leases and an aging analysis for the Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments, by class of financing receivables, at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days
Past Due (1)
|
|
60-89 Days
Past Due (1)
|
|
90 Days or
More
Past Due (1)
|
|
Total Past
Due 30 Days
or More |
|
Total
Current or
Less Than
30 Days
Past Due (1)
|
|
|
|
Loans
Accounted
for Under
the Fair
Value
Option |
|
Total
Outstandings |
| (Dollars in millions) |
March 31, 2024 |
| Consumer real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential mortgage |
$ |
1,049 |
|
|
$ |
261 |
|
|
$ |
761 |
|
|
$ |
2,071 |
|
|
$ |
225,364 |
|
|
|
|
|
|
$ |
227,435 |
|
| Home equity |
85 |
|
|
35 |
|
|
145 |
|
|
265 |
|
|
24,920 |
|
|
|
|
|
|
25,185 |
|
| Credit card and other consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit card |
661 |
|
|
486 |
|
|
1,299 |
|
|
2,446 |
|
|
96,007 |
|
|
|
|
|
|
98,453 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct/Indirect consumer (2) |
297 |
|
|
91 |
|
|
82 |
|
|
470 |
|
|
102,379 |
|
|
|
|
|
|
102,849 |
|
| Other consumer |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
115 |
|
|
|
|
|
|
115 |
|
| Total consumer |
2,092 |
|
|
873 |
|
|
2,287 |
|
|
5,252 |
|
|
448,785 |
|
|
|
|
|
|
454,037 |
|
Consumer loans accounted for under the fair value option (3) |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
235 |
|
|
235 |
|
| Total consumer loans and leases |
2,092 |
|
|
873 |
|
|
2,287 |
|
|
5,252 |
|
|
448,785 |
|
|
|
|
235 |
|
|
454,272 |
|
| Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. commercial |
553 |
|
|
80 |
|
|
248 |
|
|
881 |
|
|
361,863 |
|
|
|
|
|
|
362,744 |
|
| Non-U.S. commercial |
29 |
|
|
1 |
|
|
55 |
|
|
85 |
|
|
122,988 |
|
|
|
|
|
|
123,073 |
|
Commercial real estate (4) |
403 |
|
|
319 |
|
|
684 |
|
|
1,406 |
|
|
70,246 |
|
|
|
|
|
|
71,652 |
|
| Commercial lease financing |
50 |
|
|
39 |
|
|
27 |
|
|
116 |
|
|
14,665 |
|
|
|
|
|
|
14,781 |
|
| U.S. small business commercial |
165 |
|
|
83 |
|
|
201 |
|
|
449 |
|
|
19,482 |
|
|
|
|
|
|
19,931 |
|
| Total commercial |
1,200 |
|
|
522 |
|
|
1,215 |
|
|
2,937 |
|
|
589,244 |
|
|
|
|
|
|
592,181 |
|
Commercial loans accounted for under the fair value option (3) |
|
|
|
|
|
|
|
|
|
|
|
|
2,703 |
|
|
2,703 |
|
| Total commercial loans and leases |
1,200 |
|
|
522 |
|
|
1,215 |
|
|
2,937 |
|
|
589,244 |
|
|
|
|
2,703 |
|
|
594,884 |
|
Total loans and leases (5) |
$ |
3,292 |
|
|
$ |
1,395 |
|
|
$ |
3,502 |
|
|
$ |
8,189 |
|
|
$ |
1,038,029 |
|
|
|
|
$ |
2,938 |
|
|
$ |
1,049,156 |
|
| Percentage of outstandings |
0.32 |
% |
|
0.13 |
% |
|
0.33 |
% |
|
0.78 |
% |
|
98.94 |
% |
|
|
|
0.28 |
% |
|
100.00 |
% |
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $175 million and nonperforming loans of $167 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $72 million and nonperforming loans of $103 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $230 million and nonperforming loans of $676 million. Consumer real estate loans current or less than 30 days past due includes $1.6 billion, and direct/indirect consumer includes $46 million of nonperforming loans.
(2)Total outstandings primarily includes auto and specialty lending loans and leases of $54.1 billion, U.S. securities-based lending loans of $45.3 billion and non-U.S. consumer loans of $2.7 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $62 million and home equity loans of $173 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $1.7 billion and non-U.S. commercial loans of $965 million. For more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.
(4)Total outstandings includes U.S. commercial real estate loans of $65.5 billion and non-U.S. commercial real estate loans of $6.2 billion.
(5)Total outstandings includes loans and leases pledged as collateral of $32.8 billion. The Corporation also pledged $226.5 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 Days
Past Due (1) |
|
60-89 Days
Past Due (1)
|
|
90 Days or
More
Past Due (1) |
|
Total Past
Due 30 Days
or More |
|
Total
Current or
Less Than
30 Days
Past Due (1)
|
|
|
|
Loans
Accounted
for Under
the Fair
Value Option |
|
Total Outstandings |
| (Dollars in millions) |
December 31, 2023 |
| Consumer real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential mortgage |
$ |
1,177 |
|
|
$ |
302 |
|
|
$ |
829 |
|
|
$ |
2,308 |
|
|
$ |
226,095 |
|
|
|
|
|
|
$ |
228,403 |
|
| Home equity |
90 |
|
|
38 |
|
|
161 |
|
|
289 |
|
|
25,238 |
|
|
|
|
|
|
25,527 |
|
| Credit card and other consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit card |
680 |
|
|
515 |
|
|
1,224 |
|
|
2,419 |
|
|
99,781 |
|
|
|
|
|
|
102,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct/Indirect consumer (2) |
306 |
|
|
99 |
|
|
91 |
|
|
496 |
|
|
102,972 |
|
|
|
|
|
|
103,468 |
|
| Other consumer |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
124 |
|
|
|
|
|
|
124 |
|
| Total consumer |
2,253 |
|
|
954 |
|
|
2,305 |
|
|
5,512 |
|
|
454,210 |
|
|
|
|
|
|
459,722 |
|
Consumer loans accounted for under the fair value option (3) |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
243 |
|
|
243 |
|
| Total consumer loans and leases |
2,253 |
|
|
954 |
|
|
2,305 |
|
|
5,512 |
|
|
454,210 |
|
|
|
|
243 |
|
|
459,965 |
|
| Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. commercial |
477 |
|
|
96 |
|
|
225 |
|
|
798 |
|
|
358,133 |
|
|
|
|
|
|
358,931 |
|
| Non-U.S. commercial |
86 |
|
|
21 |
|
|
64 |
|
|
171 |
|
|
124,410 |
|
|
|
|
|
|
124,581 |
|
Commercial real estate (4) |
247 |
|
|
133 |
|
|
505 |
|
|
885 |
|
|
71,993 |
|
|
|
|
|
|
72,878 |
|
| Commercial lease financing |
44 |
|
|
8 |
|
|
24 |
|
|
76 |
|
|
14,778 |
|
|
|
|
|
|
14,854 |
|
| U.S. small business commercial |
166 |
|
|
89 |
|
|
184 |
|
|
439 |
|
|
18,758 |
|
|
|
|
|
|
19,197 |
|
| Total commercial |
1,020 |
|
|
347 |
|
|
1,002 |
|
|
2,369 |
|
|
588,072 |
|
|
|
|
|
|
590,441 |
|
Commercial loans accounted for under the fair value option (3) |
|
|
|
|
|
|
|
|
|
|
|
|
3,326 |
|
|
3,326 |
|
Total commercial loans and leases |
1,020 |
|
|
347 |
|
|
1,002 |
|
|
2,369 |
|
|
588,072 |
|
|
|
|
3,326 |
|
|
593,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans and leases (5) |
$ |
3,273 |
|
|
$ |
1,301 |
|
|
$ |
3,307 |
|
|
$ |
7,881 |
|
|
$ |
1,042,282 |
|
|
|
|
$ |
3,569 |
|
|
$ |
1,053,732 |
|
| Percentage of outstandings |
0.31 |
% |
|
0.12 |
% |
|
0.31 |
% |
|
0.75 |
% |
|
98.91 |
% |
|
|
|
0.34 |
% |
|
100.00 |
% |
(1)Consumer real estate loans 30-59 days past due includes fully-insured loans of $198 million and nonperforming loans of $150 million. Consumer real estate loans 60-89 days past due includes fully-insured loans of $77 million and nonperforming loans of $102 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $252 million and nonperforming loans of $738 million. Consumer real estate loans current or less than 30 days past due includes $1.6 billion, and direct/indirect consumer includes $39 million of nonperforming loans.
(2)Total outstandings primarily includes auto and specialty lending loans and leases of $53.9 billion, U.S. securities-based lending loans of $46.0 billion and non-U.S. consumer loans of $2.8 billion.
(3)Consumer loans accounted for under the fair value option includes residential mortgage loans of $66 million and home equity loans of $177 million. Commercial loans accounted for under the fair value option includes U.S. commercial loans of $2.2 billion and non-U.S. commercial loans of $1.2 billion. For more information, see Note 14 – Fair Value Measurements and Note 15 – Fair Value Option.
(4)Total outstandings includes U.S. commercial real estate loans of $66.8 billion and non-U.S. commercial real estate loans of $6.1 billion.
(5)Total outstandings includes loans and leases pledged as collateral of $33.7 billion. The Corporation also pledged $246.0 billion of loans with no related outstanding borrowings to secure potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.
The Corporation has entered into long-term credit protection agreements with FNMA and FHLMC on loans totaling $8.5 billion and $8.7 billion at March 31, 2024 and December 31, 2023, providing full credit protection on residential mortgage loans that become severely delinquent. All of these loans are individually insured, and therefore the Corporation does not record an allowance for credit losses related to these loans.
Nonperforming Loans and Leases
Commercial nonperforming loans increased to $3.2 billion at March 31, 2024 from $2.8 billion at December 31, 2023 driven primarily by the commercial real estate office property type. Consumer nonperforming loans remained relatively unchanged
at $2.7 billion at March 31, 2024.
The following table presents the Corporation’s nonperforming loans and leases and loans accruing past due 90 days or more at March 31, 2024 and December 31, 2023. Nonperforming loans held-for-sale (LHFS) are excluded from nonperforming loans and leases as they are recorded at either fair value or the lower of cost or fair value. For more information on the criteria for classification as nonperforming, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit Quality |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming Loans
and Leases |
|
Accruing Past Due
90 Days or More |
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
March 31 2024 |
|
December 31 2023 |
|
March 31 2024 |
|
December 31 2023 |
|
|
|
|
Residential mortgage (1) |
$ |
2,112 |
|
|
$ |
2,114 |
|
|
$ |
230 |
|
|
$ |
252 |
|
|
|
|
|
With no related allowance (2) |
2,052 |
|
|
1,974 |
|
|
— |
|
|
— |
|
|
|
|
|
Home equity (1) |
438 |
|
|
450 |
|
|
— |
|
|
— |
|
|
|
|
|
With no related allowance (2) |
404 |
|
|
375 |
|
|
— |
|
|
— |
|
|
|
|
|
| Credit Card |
n/a |
|
n/a |
|
1,299 |
|
|
1,224 |
|
|
|
|
|
| Direct/indirect consumer |
147 |
|
|
148 |
|
|
2 |
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total consumer |
2,697 |
|
|
2,712 |
|
|
1,531 |
|
|
1,478 |
|
|
|
|
|
| U.S. commercial |
720 |
|
|
636 |
|
|
106 |
|
|
51 |
|
|
|
|
|
| Non-U.S. commercial |
157 |
|
|
175 |
|
|
11 |
|
|
4 |
|
|
|
|
|
| Commercial real estate |
2,273 |
|
|
1,927 |
|
|
12 |
|
|
32 |
|
|
|
|
|
| Commercial lease financing |
16 |
|
|
19 |
|
|
13 |
|
|
7 |
|
|
|
|
|
| U.S. small business commercial |
20 |
|
|
16 |
|
|
199 |
|
|
184 |
|
|
|
|
|
| Total commercial |
3,186 |
|
|
2,773 |
|
|
341 |
|
|
278 |
|
|
|
|
|
| Total nonperforming loans |
$ |
5,883 |
|
|
$ |
5,485 |
|
|
$ |
1,872 |
|
|
$ |
1,756 |
|
|
|
|
|
Percentage of outstanding loans and leases |
0.56 |
% |
|
0.52 |
% |
|
0.18 |
% |
|
0.17 |
% |
|
|
|
|
(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At March 31, 2024 and December 31, 2023 residential mortgage included $140 million and $156 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 $90 million and $96 million of loans on which interest was still accruing.
(2)Primarily relates to loans for which the estimated fair value of the underlying collateral less any costs to sell is greater than the amortized cost of the loans as of the reporting date.
n/a = not applicable
Credit Quality Indicators
The Corporation monitors credit quality within its Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments based on primary credit quality indicators. For more information on the portfolio segments, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. Within the Consumer Real Estate portfolio segment, the primary credit quality indicators are refreshed loan-to-value (LTV) and refreshed Fair Isaac Corporation (FICO) score. Refreshed LTV measures the carrying value of the loan as a percentage of the value of the property securing the loan, refreshed quarterly. Home equity loans are evaluated using combined loan-to-value (CLTV), which measures the carrying value of the Corporation’s loan and available line of credit combined with any outstanding senior liens against the property as a percentage of the value of the property securing the loan, refreshed quarterly. FICO score measures the creditworthiness of the borrower based on the financial obligations of the borrower and the borrower’s credit history. FICO scores are typically refreshed quarterly or more frequently. Certain borrowers (e.g., borrowers that have had debts discharged in a
bankruptcy proceeding) may not have their FICO scores updated. FICO scores are also a primary credit quality indicator for the Credit Card and Other Consumer portfolio segment and the business card portfolio within U.S. small business commercial. Within the Commercial portfolio segment, loans are evaluated using the internal classifications of pass rated or reservable criticized as the primary credit quality indicators. The term reservable criticized refers to those commercial loans that are internally classified or listed by the Corporation as Special Mention, Substandard or Doubtful, which are asset quality categories defined by regulatory authorities. These assets have an elevated level of risk and may have a high probability of default or total loss. Pass rated refers to all loans not considered reservable criticized. In addition to these primary credit quality indicators, the Corporation uses other credit quality indicators for certain types of loans.
The following tables present certain credit quality indicators and gross charge-offs for the Corporation's Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments by year of origination, except for revolving loans and revolving loans that were modified into term loans, which are shown on an aggregate basis at March 31, 2024.
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|
Residential Mortgage – Credit Quality Indicators By Vintage |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term Loans by Origination Year |
|
|
|
|
|
|
| (Dollars in millions) |
Total as of
March 31,
2024 |
|
2024 |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
|
|
Prior |
|
|
|
|
|
|
| Residential Mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refreshed LTV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than or equal to 90 percent |
$ |
213,881 |
|
|
$ |
3,226 |
|
|
$ |
14,662 |
|
|
$ |
37,802 |
|
|
$ |
75,271 |
|
|
$ |
34,487 |
|
|
|
|
$ |
48,433 |
|
|
|
|
|
|
|
Greater than 90 percent but less than or equal to 100 percent |
2,089 |
|
|
145 |
|
|
657 |
|
|
913 |
|
|
271 |
|
|
51 |
|
|
|
|
52 |
|
|
|
|
|
|
|
Greater than 100 percent |
821 |
|
|
88 |
|
|
261 |
|
|
310 |
|
|
88 |
|
|
28 |
|
|
|
|
46 |
|
|
|
|
|
|
|
Fully-insured loans |
10,644 |
|
|
62 |
|
|
411 |
|
|
331 |
|
|
3,354 |
|
|
2,771 |
|
|
|
|
3,715 |
|
|
|
|
|
|
|
| Total Residential Mortgage |
$ |
227,435 |
|
|
$ |
3,521 |
|
|
$ |
15,991 |
|
|
$ |
39,356 |
|
|
$ |
78,984 |
|
|
$ |
37,337 |
|
|
|
|
$ |
52,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential Mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than 620 |
$ |
2,437 |
|
|
$ |
32 |
|
|
$ |
132 |
|
|
$ |
480 |
|
|
$ |
611 |
|
|
$ |
422 |
|
|
|
|
$ |
760 |
|
|
|
|
|
|
|
Greater than or equal to 620 and less than 680 |
4,619 |
|
|
46 |
|
|
375 |
|
|
911 |
|
|
1,227 |
|
|
725 |
|
|
|
|
1,335 |
|
|
|
|
|
|
|
Greater than or equal to 680 and less than 740 |
22,432 |
|
|
314 |
|
|
1,857 |
|
|
4,272 |
|
|
6,605 |
|
|
3,645 |
|
|
|
|
5,739 |
|
|
|
|
|
|
|
Greater than or equal to 740 |
187,303 |
|
|
3,067 |
|
|
13,216 |
|
|
33,362 |
|
|
67,187 |
|
|
29,774 |
|
|
|
|
40,697 |
|
|
|
|
|
|
|
Fully-insured loans |
10,644 |
|
|
62 |
|
|
411 |
|
|
331 |
|
|
3,354 |
|
|
2,771 |
|
|
|
|
3,715 |
|
|
|
|
|
|
|
| Total Residential Mortgage |
$ |
227,435 |
|
|
$ |
3,521 |
|
|
$ |
15,991 |
|
|
$ |
39,356 |
|
|
$ |
78,984 |
|
|
$ |
37,337 |
|
|
|
|
$ |
52,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross charge-offs for the three months ended March 31, 2024 |
$ |
8 |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
|
|
$ |
5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Home Equity - Credit Quality Indicators |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
Home Equity Loans and Reverse Mortgages (1) |
|
Revolving Loans |
|
Revolving Loans Converted to Term Loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
March 31, 2024 |
|
|
|
|
|
|
|
| Home Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refreshed LTV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than or equal to 90 percent |
$ |
25,045 |
|
|
$ |
1,021 |
|
|
$ |
20,252 |
|
|
$ |
3,772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than 90 percent but less than or equal to 100 percent |
62 |
|
|
14 |
|
|
40 |
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than 100 percent |
78 |
|
|
32 |
|
|
32 |
|
|
14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Home Equity |
$ |
25,185 |
|
|
$ |
1,067 |
|
|
$ |
20,324 |
|
|
$ |
3,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Home Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than 620 |
$ |
681 |
|
|
$ |
121 |
|
|
$ |
279 |
|
|
$ |
281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than or equal to 620 and less than 680 |
1,085 |
|
|
115 |
|
|
593 |
|
|
377 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than or equal to 680 and less than 740 |
4,258 |
|
|
228 |
|
|
3,142 |
|
|
888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater than or equal to 740 |
19,161 |
|
|
603 |
|
|
16,310 |
|
|
2,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total Home Equity |
$ |
25,185 |
|
|
$ |
1,067 |
|
|
$ |
20,324 |
|
|
$ |
3,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross charge-offs for the three months ended March 31, 2024 |
$ |
3 |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Includes reverse mortgages of $740 million and home equity loans of $327 million, which are no longer originated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct/Indirect |
|
|
|
|
|
|
|
Term Loans by Origination Year |
|
Credit Card |
| (Dollars in millions) |
Total Direct/
Indirect as of March 31,
2024 |
|
Revolving Loans |
|
2024 |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
Prior |
|
Total Credit Card as of March 31,
2024 |
|
Revolving Loans |
|
Revolving Loans Converted to Term Loans (1) |
| Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than 620 |
$ |
1,339 |
|
|
$ |
11 |
|
|
$ |
35 |
|
|
$ |
371 |
|
|
$ |
452 |
|
|
$ |
318 |
|
|
$ |
76 |
|
|
$ |
76 |
|
|
$ |
5,549 |
|
|
$ |
5,199 |
|
|
$ |
350 |
|
| Greater than or equal to 620 and less than 680 |
2,441 |
|
|
11 |
|
|
168 |
|
|
894 |
|
|
715 |
|
|
436 |
|
|
106 |
|
|
111 |
|
|
11,304 |
|
|
11,006 |
|
|
298 |
|
Greater than or equal to 680 and less than 740 |
8,284 |
|
|
44 |
|
|
790 |
|
|
3,057 |
|
|
2,281 |
|
|
1,378 |
|
|
386 |
|
|
348 |
|
|
33,522 |
|
|
33,264 |
|
|
258 |
|
| Greater than or equal to 740 |
42,130 |
|
|
68 |
|
|
5,144 |
|
|
15,089 |
|
|
10,772 |
|
|
6,601 |
|
|
2,306 |
|
|
2,150 |
|
|
48,078 |
|
|
48,022 |
|
|
56 |
|
|
Other internal credit
metrics (2,3)
|
48,655 |
|
|
48,035 |
|
|
51 |
|
|
62 |
|
|
174 |
|
|
70 |
|
|
44 |
|
|
219 |
|
|
— |
|
|
— |
|
|
— |
|
Total credit card and other
consumer |
$ |
102,849 |
|
|
$ |
48,169 |
|
|
$ |
6,188 |
|
|
$ |
19,473 |
|
|
$ |
14,394 |
|
|
$ |
8,803 |
|
|
$ |
2,918 |
|
|
$ |
2,904 |
|
|
$ |
98,453 |
|
|
$ |
97,491 |
|
|
$ |
962 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross charge-offs for the three
months ended March 31, 2024 |
$ |
102 |
|
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
35 |
|
|
$ |
33 |
|
|
$ |
18 |
|
|
$ |
4 |
|
|
$ |
10 |
|
|
$ |
1,045 |
|
|
$ |
1,002 |
|
|
$ |
43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1)Represents loans that were modified into term loans.
(2)Other internal credit metrics may include delinquency status, geography or other factors.
(3)Direct/indirect consumer includes $48.0 billion of securities-based lending, which is typically supported by highly liquid collateral with market value greater than or equal to the outstanding loan balance and therefore has minimal credit risk at March 31, 2024.
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|
Commercial – Credit Quality Indicators By Vintage (1) |
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|
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|
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|
|
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|
|
Term Loans |
|
|
|
|
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|
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Amortized Cost Basis by Origination Year |
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|
|
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|
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|
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| (Dollars in millions) |
Total as of
March 31,
2024 |
|
2024 |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
Prior |
|
Revolving Loans |
|
|
| U.S. Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Risk ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass rated |
$ |
350,445 |
|
|
$ |
10,141 |
|
|
$ |
39,257 |
|
|
$ |
40,246 |
|
|
$ |
25,040 |
|
|
$ |
12,993 |
|
|
$ |
41,671 |
|
|
$ |
181,097 |
|
|
|
| Reservable criticized |
12,299 |
|
|
8 |
|
|
528 |
|
|
1,315 |
|
|
826 |
|
|
403 |
|
|
1,602 |
|
|
7,617 |
|
|
|
Total U.S. Commercial |
$ |
362,744 |
|
|
$ |
10,149 |
|
|
$ |
39,785 |
|
|
$ |
41,561 |
|
|
$ |
25,866 |
|
|
$ |
13,396 |
|
|
$ |
43,273 |
|
|
$ |
188,714 |
|
|
|
Gross charge-offs for the three months ended
March 31, 2024 |
$ |
78 |
|
|
$ |
— |
|
|
$ |
6 |
|
|
$ |
19 |
|
|
$ |
2 |
|
|
$ |
1 |
|
|
$ |
5 |
|
|
$ |
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-U.S. Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Risk ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass rated |
$ |
121,292 |
|
|
$ |
4,081 |
|
|
$ |
15,918 |
|
|
$ |
14,034 |
|
|
$ |
13,960 |
|
|
$ |
2,228 |
|
|
$ |
8,105 |
|
|
$ |
62,966 |
|
|
|
| Reservable criticized |
1,781 |
|
|
— |
|
|
84 |
|
|
149 |
|
|
205 |
|
|
74 |
|
|
235 |
|
|
1,034 |
|
|
|
Total Non-U.S. Commercial |
$ |
123,073 |
|
|
$ |
4,081 |
|
|
$ |
16,002 |
|
|
$ |
14,183 |
|
|
$ |
14,165 |
|
|
$ |
2,302 |
|
|
$ |
8,340 |
|
|
$ |
64,000 |
|
|
|
Gross charge-offs for the three months ended
March 31, 2024 |
$ |
1 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Risk ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass rated |
$ |
62,850 |
|
|
$ |
1,376 |
|
|
$ |
4,836 |
|
|
$ |
14,821 |
|
|
$ |
11,404 |
|
|
$ |
3,614 |
|
|
$ |
16,355 |
|
|
$ |
10,444 |
|
|
|
| Reservable criticized |
8,802 |
|
|
— |
|
|
164 |
|
|
1,006 |
|
|
1,774 |
|
|
764 |
|
|
4,697 |
|
|
397 |
|
|
|
Total Commercial Real Estate |
$ |
71,652 |
|
|
$ |
1,376 |
|
|
$ |
5,000 |
|
|
$ |
15,827 |
|
|
$ |
13,178 |
|
|
$ |
4,378 |
|
|
$ |
21,052 |
|
|
$ |
10,841 |
|
|
|
Gross charge-offs for the three months ended
March 31, 2024 |
$ |
304 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
47 |
|
|
$ |
237 |
|
|
$ |
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial Lease Financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Risk ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass rated |
$ |
14,603 |
|
|
$ |
859 |
|
|
$ |
4,145 |
|
|
$ |
2,796 |
|
|
$ |
2,225 |
|
|
$ |
1,318 |
|
|
$ |
3,260 |
|
|
$ |
— |
|
|
|
| Reservable criticized |
178 |
|
|
— |
|
|
10 |
|
|
40 |
|
|
26 |
|
|
18 |
|
|
84 |
|
|
— |
|
|
|
Total Commercial Lease Financing |
$ |
14,781 |
|
|
$ |
859 |
|
|
$ |
4,155 |
|
|
$ |
2,836 |
|
|
$ |
2,251 |
|
|
$ |
1,336 |
|
|
$ |
3,344 |
|
|
$ |
— |
|
|
|
Gross charge-offs for the three months ended
March 31, 2024 |
$ |
1 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Small Business Commercial (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Risk ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass rated |
$ |
9,227 |
|
|
$ |
471 |
|
|
$ |
1,878 |
|
|
$ |
1,803 |
|
|
$ |
1,482 |
|
|
$ |
778 |
|
|
$ |
2,378 |
|
|
$ |
437 |
|
|
|
| Reservable criticized |
384 |
|
|
3 |
|
|
11 |
|
|
72 |
|
|
108 |
|
|
34 |
|
|
153 |
|
|
3 |
|
|
|
Total U.S. Small Business Commercial |
$ |
9,611 |
|
|
$ |
474 |
|
|
$ |
1,889 |
|
|
$ |
1,875 |
|
|
$ |
1,590 |
|
|
$ |
812 |
|
|
$ |
2,531 |
|
|
$ |
440 |
|
|
|
Gross charge-offs for the three months ended
March 31, 2024 |
$ |
7 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
3 |
|
|
$ |
2 |
|
|
$ |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
$ |
581,861 |
|
|
$ |
16,939 |
|
|
$ |
66,831 |
|
|
$ |
76,282 |
|
|
$ |
57,050 |
|
|
$ |
22,224 |
|
|
$ |
78,540 |
|
|
$ |
263,995 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross charge-offs for the three months ended
March 31, 2024 |
$ |
391 |
|
|
$ |
— |
|
|
$ |
6 |
|
|
$ |
19 |
|
|
$ |
3 |
|
|
$ |
51 |
|
|
$ |
244 |
|
|
$ |
68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
(1)Excludes $2.7 billion of loans accounted for under the fair value option at March 31, 2024.
(2)Excludes U.S. Small Business Card loans of $10.3 billion. Refreshed FICO scores for this portfolio are $597 million for less than 620; $1.1 billion for greater than or equal to 620 and less than 680; $2.9 billion for greater than or equal to 680 and less than 740; and $5.8 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $111 million.
The following tables present certain credit quality indicators for the Corporation's Consumer Real Estate, Credit Card and Other Consumer, and Commercial portfolio segments by year of origination, except for revolving loans and revolving loans that were modified into term loans, which are shown on an aggregate basis at December 31, 2023.
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|
Residential Mortgage – Credit Quality Indicators By Vintage |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term Loans by Origination Year |
|
|
|
|
|
|
| (Dollars in millions) |
Total as of
December 31,
2023 |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
|
|
Prior |
|
|
|
|
|
|
| Residential Mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refreshed LTV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than or equal to 90 percent |
$ |
214,661 |
|
|
$ |
15,224 |
|
|
$ |
38,225 |
|
|
$ |
76,229 |
|
|
$ |
35,072 |
|
|
$ |
17,432 |
|
|
|
|
$ |
32,479 |
|
|
|
|
|
|
|
Greater than 90 percent but less than or equal to 100 percent |
1,994 |
|
|
698 |
|
|
911 |
|
|
286 |
|
|
53 |
|
|
25 |
|
|
|
|
21 |
|
|
|
|
|
|
|
Greater than 100 percent |
785 |
|
|
264 |
|
|
342 |
|
|
100 |
|
|
31 |
|
|
14 |
|
|
|
|
34 |
|
|
|
|
|
|
|
Fully-insured loans |
10,963 |
|
|
540 |
|
|
350 |
|
|
3,415 |
|
|
2,834 |
|
|
847 |
|
|
|
|
2,977 |
|
|
|
|
|
|
|
| Total Residential Mortgage |
$ |
228,403 |
|
|
$ |
16,726 |
|
|
$ |
39,828 |
|
|
$ |
80,030 |
|
|
$ |
37,990 |
|
|
$ |
18,318 |
|
|
|
|
$ |
35,511 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential Mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than 620 |
$ |
2,335 |
|
|
$ |
115 |
|
|
$ |
471 |
|
|
$ |
589 |
|
|
$ |
402 |
|
|
$ |
136 |
|
|
|
|
$ |
622 |
|
|
|
|
|
|
|
Greater than or equal to 620 and less than 680 |
4,671 |
|
|
359 |
|
|
919 |
|
|
1,235 |
|
|
777 |
|
|
296 |
|
|
|
|
1,085 |
|
|
|
|
|
|
|
Greater than or equal to 680 and less than 740 |
23,357 |
|
|
1,934 |
|
|
4,652 |
|
|
6,988 |
|
|
3,742 |
|
|
1,836 |
|
|
|
|
4,205 |
|
|
|
|
|
|
|
| Greater than or equal to 740 |
187,077 |
|
|
13,778 |
|
|
33,436 |
|
|
67,803 |
|
|
30,235 |
|
|
15,203 |
|
|
|
|
26,622 |
|
|
|
|
|
|
|
Fully-insured loans |
10,963 |
|
|
540 |
|
|
350 |
|
|
3,415 |
|
|
2,834 |
|
|
847 |
|
|
|
|
2,977 |
|
|
|
|
|
|
|
| Total Residential Mortgage |
$ |
228,403 |
|
|
$ |
16,726 |
|
|
$ |
39,828 |
|
|
$ |
80,030 |
|
|
$ |
37,990 |
|
|
$ |
18,318 |
|
|
|
|
$ |
35,511 |
|
|
|
|
|
|
|
| Gross charge-offs for the year ended December 31, 2023 |
$ |
67 |
|
|
$ |
— |
|
|
$ |
7 |
|
|
$ |
12 |
|
|
$ |
6 |
|
|
$ |
2 |
|
|
|
|
$ |
40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Home Equity - Credit Quality Indicators |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
Home Equity Loans and Reverse Mortgages (1) |
|
Revolving Loans |
|
Revolving Loans Converted to Term Loans |
|
|
|
|
|
| (Dollars in millions) |
|
|
December 31, 2023 |
|
|
|
|
|
| Home Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Refreshed LTV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than or equal to 90 percent |
|
|
|
|
|
|
|
|
$ |
25,378 |
|
|
$ |
1,051 |
|
|
$ |
20,380 |
|
|
$ |
3,947 |
|
|
|
|
|
|
Greater than 90 percent but less than or equal to 100 percent |
|
|
|
|
|
|
|
|
61 |
|
|
17 |
|
|
35 |
|
|
9 |
|
|
|
|
|
|
Greater than 100 percent |
|
|
|
|
|
|
|
|
88 |
|
|
35 |
|
|
36 |
|
|
17 |
|
|
|
|
|
|
| Total Home Equity |
|
|
|
|
|
|
|
|
$ |
25,527 |
|
|
$ |
1,103 |
|
|
$ |
20,451 |
|
|
$ |
3,973 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Home Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than 620 |
|
|
|
|
|
|
|
|
$ |
654 |
|
|
$ |
123 |
|
|
$ |
253 |
|
|
$ |
278 |
|
|
|
|
|
|
Greater than or equal to 620 and less than 680 |
|
|
|
|
|
|
|
|
1,107 |
|
|
118 |
|
|
589 |
|
|
400 |
|
|
|
|
|
|
Greater than or equal to 680 and less than 740 |
|
|
|
|
|
|
|
|
4,340 |
|
|
240 |
|
|
3,156 |
|
|
944 |
|
|
|
|
|
|
Greater than or equal to 740 |
|
|
|
|
|
|
|
|
19,426 |
|
|
622 |
|
|
16,453 |
|
|
2,351 |
|
|
|
|
|
|
| Total Home Equity |
|
|
|
|
|
|
|
|
$ |
25,527 |
|
|
$ |
1,103 |
|
|
$ |
20,451 |
|
|
$ |
3,973 |
|
|
|
|
|
|
| Gross charge-offs for the year ended December 31, 2023 |
|
|
|
|
|
|
|
|
$ |
36 |
|
|
$ |
4 |
|
|
$ |
21 |
|
|
$ |
11 |
|
|
|
|
|
|
(1)Includes reverse mortgages of $763 million and home equity loans of $340 million, which are no longer originated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct/Indirect |
|
|
|
|
|
|
|
Term Loans by Origination Year |
|
Credit Card |
| (Dollars in millions) |
Total Direct/Indirect as of December 31, 2023 |
|
Revolving Loans |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
Prior |
|
Total Credit Card as of December 31, 2023 |
|
Revolving Loans |
|
Revolving Loans Converted to Term Loans (1) |
| Refreshed FICO score |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Less than 620 |
$ |
1,246 |
|
|
$ |
11 |
|
|
$ |
292 |
|
|
$ |
428 |
|
|
$ |
336 |
|
|
$ |
85 |
|
|
$ |
55 |
|
|
$ |
39 |
|
|
$ |
5,338 |
|
|
$ |
5,030 |
|
|
$ |
308 |
|
Greater than or equal to 620 and less than 680 |
2,506 |
|
|
11 |
|
|
937 |
|
|
799 |
|
|
501 |
|
|
121 |
|
|
73 |
|
|
64 |
|
|
11,623 |
|
|
11,345 |
|
|
278 |
|
Greater than or equal to 680 and less than 740 |
8,629 |
|
|
48 |
|
|
3,451 |
|
|
2,582 |
|
|
1,641 |
|
|
462 |
|
|
244 |
|
|
201 |
|
|
34,777 |
|
|
34,538 |
|
|
239 |
|
| Greater than or equal to 740 |
41,656 |
|
|
74 |
|
|
16,761 |
|
|
11,802 |
|
|
7,643 |
|
|
2,707 |
|
|
1,417 |
|
|
1,252 |
|
|
50,462 |
|
|
50,410 |
|
|
52 |
|
|
Other internal credit
metrics (2, 3)
|
49,431 |
|
|
48,764 |
|
|
106 |
|
|
183 |
|
|
110 |
|
|
53 |
|
|
57 |
|
|
158 |
|
|
— |
|
|
— |
|
|
— |
|
Total credit card and other
consumer |
$ |
103,468 |
|
|
$ |
48,908 |
|
|
$ |
21,547 |
|
|
$ |
15,794 |
|
|
$ |
10,231 |
|
|
$ |
3,428 |
|
|
$ |
1,846 |
|
|
$ |
1,714 |
|
|
$ |
102,200 |
|
|
$ |
101,323 |
|
|
$ |
877 |
|
Gross charge-offs for the year
ended December 31, 2023 |
$ |
233 |
|
|
$ |
5 |
|
|
$ |
32 |
|
|
$ |
95 |
|
|
$ |
53 |
|
|
$ |
15 |
|
|
$ |
10 |
|
|
$ |
23 |
|
|
$ |
3,133 |
|
|
$ |
3,013 |
|
|
$ |
120 |
|
(1)Represents loans that were modified into term loans.
(2)Other internal credit metrics may include delinquency status, geography or other factors.
(3)Direct/indirect consumer includes $48.8 billion of securities-based lending, which is typically supported by highly liquid collateral with market value greater than or equal to the outstanding loan balance and therefore has minimal credit risk at December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial – Credit Quality Indicators By Vintage (1) |
|
|
|
|
|
|
|
|
|
|
|
Term Loans |
|
|
|
|
|
|
|
Amortized Cost Basis by Origination Year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
Total as of December 31, 2023 |
|
2023 |
|
2022 |
|
2021 |
|
2020 |
|
2019 |
|
Prior |
|
Revolving Loans |
|
|
| U.S. Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Risk ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass rated |
$ |
347,563 |
|
|
$ |
41,842 |
|
|
$ |
43,290 |
|
|
$ |
27,738 |
|
|
$ |
13,495 |
|
|
$ |
11,772 |
|
|
$ |
29,923 |
|
|
$ |
179,503 |
|
|
|
| Reservable criticized |
11,368 |
|
|
278 |
|
|
1,316 |
|
|
708 |
|
|
363 |
|
|
537 |
|
|
1,342 |
|
|
6,824 |
|
|
|
Total U.S. Commercial |
$ |
358,931 |
|
|
$ |
42,120 |
|
|
$ |
44,606 |
|
|
$ |
28,446 |
|
|
$ |
13,858 |
|
|
$ |
12,309 |
|
|
$ |
31,265 |
|
|
$ |
186,327 |
|
|
|
Gross charge-offs for the year ended
December 31, 2023 |
$ |
191 |
|
|
$ |
5 |
|
|
$ |
38 |
|
|
$ |
29 |
|
|
$ |
4 |
|
|
$ |
2 |
|
|
$ |
27 |
|
|
$ |
86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-U.S. Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Risk ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass rated |
$ |
122,931 |
|
|
$ |
17,053 |
|
|
$ |
15,810 |
|
|
$ |
15,256 |
|
|
$ |
2,405 |
|
|
$ |
2,950 |
|
|
$ |
5,485 |
|
|
$ |
63,972 |
|
|
|
| Reservable criticized |
1,650 |
|
|
50 |
|
|
184 |
|
|
294 |
|
|
90 |
|
|
158 |
|
|
74 |
|
|
800 |
|
|
|
Total Non-U.S. Commercial |
$ |
124,581 |
|
|
$ |
17,103 |
|
|
$ |
15,994 |
|
|
$ |
15,550 |
|
|
$ |
2,495 |
|
|
$ |
3,108 |
|
|
$ |
5,559 |
|
|
$ |
64,772 |
|
|
|
Gross charge-offs for the year ended
December 31, 2023 |
$ |
37 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
8 |
|
|
$ |
7 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial Real Estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Risk ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass rated |
$ |
64,150 |
|
|
$ |
4,877 |
|
|
$ |
16,147 |
|
|
$ |
11,810 |
|
|
$ |
4,026 |
|
|
$ |
7,286 |
|
|
$ |
10,127 |
|
|
$ |
9,877 |
|
|
|
| Reservable criticized |
8,728 |
|
|
134 |
|
|
749 |
|
|
1,728 |
|
|
782 |
|
|
2,132 |
|
|
2,794 |
|
|
409 |
|
|
|
Total Commercial Real Estate |
$ |
72,878 |
|
|
$ |
5,011 |
|
|
$ |
16,896 |
|
|
$ |
13,538 |
|
|
$ |
4,808 |
|
|
$ |
9,418 |
|
|
$ |
12,921 |
|
|
$ |
10,286 |
|
|
|
Gross charge-offs for the year ended
December 31, 2023 |
$ |
254 |
|
|
$ |
2 |
|
|
$ |
— |
|
|
$ |
4 |
|
|
$ |
— |
|
|
$ |
59 |
|
|
$ |
189 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial Lease Financing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Risk ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass rated |
$ |
14,688 |
|
|
$ |
4,188 |
|
|
$ |
3,077 |
|
|
$ |
2,373 |
|
|
$ |
1,349 |
|
|
$ |
1,174 |
|
|
$ |
2,527 |
|
|
$ |
— |
|
|
|
| Reservable criticized |
166 |
|
|
9 |
|
|
22 |
|
|
46 |
|
|
16 |
|
|
32 |
|
|
41 |
|
|
— |
|
|
|
Total Commercial Lease Financing |
$ |
14,854 |
|
|
$ |
4,197 |
|
|
$ |
3,099 |
|
|
$ |
2,419 |
|
|
$ |
1,365 |
|
|
$ |
1,206 |
|
|
$ |
2,568 |
|
|
$ |
— |
|
|
|
Gross charge-offs for the year ended
December 31, 2023 |
$ |
2 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Small Business Commercial (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Risk ratings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pass rated |
$ |
9,031 |
|
|
$ |
1,886 |
|
|
$ |
1,830 |
|
|
$ |
1,550 |
|
|
$ |
836 |
|
|
$ |
721 |
|
|
$ |
1,780 |
|
|
$ |
428 |
|
|
|
| Reservable criticized |
384 |
|
|
6 |
|
|
64 |
|
|
95 |
|
|
40 |
|
|
63 |
|
|
113 |
|
|
3 |
|
|
|
Total U.S. Small Business Commercial |
$ |
9,415 |
|
|
$ |
1,892 |
|
|
$ |
1,894 |
|
|
$ |
1,645 |
|
|
$ |
876 |
|
|
$ |
784 |
|
|
$ |
1,893 |
|
|
$ |
431 |
|
|
|
Gross charge-offs for the year ended
December 31, 2023 |
$ |
43 |
|
|
$ |
1 |
|
|
$ |
2 |
|
|
$ |
2 |
|
|
$ |
19 |
|
|
$ |
3 |
|
|
$ |
4 |
|
|
$ |
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
$ |
580,659 |
|
|
$ |
70,323 |
|
|
$ |
82,489 |
|
|
$ |
61,598 |
|
|
$ |
23,402 |
|
|
$ |
26,825 |
|
|
$ |
54,206 |
|
|
$ |
261,816 |
|
|
|
Gross charge-offs for the year ended
December 31, 2023 |
$ |
527 |
|
|
$ |
8 |
|
|
$ |
40 |
|
|
$ |
44 |
|
|
$ |
31 |
|
|
$ |
65 |
|
|
$ |
220 |
|
|
$ |
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes $3.3 billion of loans accounted for under the fair value option at December 31, 2023.
(2) Excludes U.S. Small Business Card loans of $9.8 billion. Refreshed FICO scores for this portfolio are $530 million for less than 620; $1.1 billion for greater than or equal to 620 and less than 680; $2.7 billion for greater than or equal to 680 and less than 740; and $5.5 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $317 million.
During the three months ended March 31, 2024, commercial reservable criticized utilized exposure increased to $24.5 billion at March 31, 2024 from $23.3 billion (to 3.93 percent from 3.74 percent of total commercial reservable utilized exposure) at December 31, 2023, primarily driven by U.S. commercial.
Loan Modifications to Borrowers in Financial Difficulty
As part of its credit risk management, the Corporation may modify a loan agreement with a borrower experiencing financial difficulties through a refinancing or restructuring of the borrower’s loan agreement (modification programs). Effective January 1, 2023, the Corporation adopted the new accounting standard on loan modifications. Accordingly, March 31, 2024 balances presented in payment status tables represent loans that were modified over the last 12 months, and March 31, 2023 balances presented in payment status tables represent loans that were modified during the first quarter of 2023.
Consumer Real Estate
The following modification programs are offered for consumer real estate loans to borrowers experiencing financial difficulties. These modifications represented outstanding residential mortgage and home equity loans of 0.03 percent and 0.04 percent at March 31, 2024, compared to 0.09 percent and 0.15 percent at March 31, 2023.
Forbearance and Other Payment Plans: Forbearance plans generally consist of the Corporation suspending the borrower’s payments for a defined period with those payments then due over a defined period of time or at the conclusion of the forbearance period. The aging status of a loan is generally frozen when it enters into a forbearance plan. At March 31, 2024, the amortized cost of residential mortgage loans that were modified through these plans during the three months ended March 31, 2024 and 2023 was $20 million and $158 million. The amortized cost of home equity loans that were modified through these plans during the same periods was $0 and $30 million. The weighted-average duration of the mortgage and home equity loan modifications was insignificant, ranging from 3 months to 9 months for the three months ended March 31, 2024 and 2023. If a borrower is unable to fulfill their obligations under the forbearance plans, they may be offered a trial offer or permanent modification.
Trial Offer and Permanent Modifications: Trial offer for modification plans generally consist of the Corporation offering a borrower modified loan terms that reduce their contractual payments temporarily over a three-to-four-month trial period. At March 31, 2024 and 2023, the amortized cost of residential
mortgage loans entering trial offer for modifications during the three months ended March 31, 2024 and 2023 was $53 million and $21 million. The amortized cost of home equity loans entering trial offer for modifications during both periods was $9 million. If the customer successfully makes the modified payments during the trial period and formally accepts the modified terms, the modified loan terms become permanent. Some borrowers may enter into permanent modifications without a trial period. In a permanent modification, the borrower’s payment terms are typically modified in more than one manner but generally include a term extension and an interest rate reduction. At times, the permanent modification may also include principal forgiveness and/or a deferral of past due principal and interest amounts to the end of the loan term. The combinations utilized are based on modifying the terms that give the borrower an improved ability to meet the contractual obligations. At March 31, 2024, the amortized cost of residential mortgage loans that were granted a permanent modification during the three months ended March 31, 2024 and 2023 was $58 million and $47 million. The amortized cost of home equity loans that were granted permanent modification during the same periods was $9 million and $10 million. The term extensions granted for residential mortgage and home equity permanent modifications vary widely and can be up to 30 years, but are mostly in the range of 1 to 20 years. The weighted-average term extension of permanent modifications for residential mortgage was 9.3 years and 7.7 years for the three months ended March 31, 2024 and 2023, while the weighted-average interest rate reduction was 1.28 percent and 1.50 percent. For the same periods, the weighted-average term extension of permanent modifications for home equity loans was 16.0 years and 12.1 years, while the weighted-average interest rate reduction was 2.84 percent and 2.37 percent. Principal forgiveness and payment deferrals were insignificant during the three months ended March 31, 2024 and 2023.
For consumer real estate borrowers in financial difficulty that received a forbearance, trial or permanent modification, there were no commitments to lend additional funds at March 31, 2024 and 2023.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. During the three months ended March 31, 2024 and 2023, modified residential mortgage and home equity loans that defaulted were insignificant. The table below provides aging information as of March 31, 2024 for consumer real estate loans that were modified over the last 12 months and as of March 31, 2023 for consumer real estate loans that were modified during the first quarter of 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer Real Estate - Payment Status of Modifications to Borrowers in Financial Difficulty |
|
|
|
|
|
|
|
|
|
Current |
|
30–89 Days
Past Due
|
|
90+ Days
Past Due
|
|
Total |
| (Dollars in millions) |
March 31, 2024 |
| Residential mortgage |
$ |
304 |
|
|
$ |
78 |
|
|
$ |
94 |
|
|
$ |
476 |
|
| Home equity |
51 |
|
|
6 |
|
|
14 |
|
|
71 |
|
| Total |
$ |
355 |
|
|
$ |
84 |
|
|
$ |
108 |
|
|
$ |
547 |
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
| Residential mortgage |
$ |
126 |
|
|
$ |
49 |
|
|
$ |
30 |
|
|
$ |
205 |
|
| Home equity |
23 |
|
|
7 |
|
|
10 |
|
|
40 |
|
| Total |
$ |
149 |
|
|
$ |
56 |
|
|
$ |
40 |
|
|
$ |
245 |
|
Consumer real estate foreclosed properties totaled $90 million and $83 million at March 31, 2024 and December 31, 2023. The carrying value of consumer real estate loans, including fully-insured loans, for which formal foreclosure proceedings were in process at March 31, 2024 and December 31, 2023, was $627 million and $633 million. During the three months ended March 31, 2024 and 2023, the Corporation reclassified $30 million and $37 million of consumer real estate loans to foreclosed properties or, for properties acquired upon foreclosure of certain government-guaranteed loans (principally FHA-insured loans), to other assets. The reclassifications represent non-cash investing activities and, accordingly, are not reflected in the Consolidated Statement of Cash Flows.
Credit Card and Other Consumer
Credit card and other consumer loans are primarily modified by placing the customer on a fixed payment plan with a significantly reduced fixed interest rate, with terms ranging from 6 months to 72 months. As of March 31, 2024, substantially all payment plans provided to customers had a 60-month term. In certain circumstances, the Corporation will forgive a portion of the outstanding balance if the borrower makes payments up to a set amount. The Corporation makes modifications directly with borrowers for loans held by the Corporation (internal programs) as well as through third-party renegotiation agencies that provide solutions to customers’ entire unsecured debt structures (external programs). The March 31, 2024 amortized cost of credit card and other consumer loans that were modified through these programs during the three months ended March 31, 2024 and 2023 was $231 million and $157 million. These modifications represented 0.11 percent and 0.08 percent of outstanding credit card and other consumer loans at March 31, 2024 and 2023. The financial effect of modifications resulted in a weighted-average interest rate reduction of 19.80 percent and 18.65 percent, and principal forgiveness of $28 million and $11 million during the three months ended March 31, 2024 and 2023.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. As of March 31, 2024, defaults of modified credit card and other consumer loans over the last 12 months were insignificant. As of March 31, 2023, defaults of modified credit card and other consumer loans during the first quarter of 2023 were insignificant. At March 31, 2024, modified credit card and other consumer loans to borrowers experiencing financial difficulty over the last 12 months totaled $658 million, of which $537 million were current, $62 million were 30-89 days past due, and $59 million were greater than 90 days past due. At March 31, 2023, modified credit card and other consumer loans to borrowers experiencing financial difficulty during the first quarter of 2023 totaled $157 million, of which $109 million were current, $24 million were 30-89 days past due, and $24 million were greater than 90 days past due.
Commercial Loans
Modifications of loans to commercial borrowers experiencing financial difficulty are designed to reduce the Corporation’s loss exposure while providing borrowers with an opportunity to work through financial difficulties, often to avoid foreclosure or bankruptcy. Each modification is unique, reflects the borrower’s individual circumstances and is designed to benefit the borrower while mitigating the Corporation’s risk exposure. Commercial modifications are primarily term extensions and payment forbearances. Payment forbearances involve the Bank forbearing its contractual right to collect certain payments or payment in full (maturity forbearance) for a defined period of time. Reductions in interest rates and principal forgiveness occur infrequently for commercial borrowers. Principal forgiveness may occur in connection with foreclosure, short sales or other settlement agreements, leading to termination or sale of the loan. The table below provides the ending amortized cost of commercial loans modified during the three months ended March 31, 2024 and 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial Loans - Modifications to Borrowers in Financial Difficulty |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term Extension |
|
|
|
Forbearances |
Interest Rate Reduction |
Total |
|
| (Dollars in Millions) |
|
March 31, 2024 |
| U.S. commercial |
|
$ |
370 |
|
|
|
$ |
6 |
$ |
— |
$ |
376 |
|
| Non-U.S. commercial |
|
— |
|
|
|
— |
— |
— |
|
| Commercial real estate |
|
581 |
|
|
|
479 |
36 |
1,096 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
951 |
|
|
|
$ |
485 |
$ |
36 |
$ |
1,472 |
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
| U.S. commercial |
|
$ |
297 |
|
|
|
$ |
96 |
$ |
— |
$ |
393 |
|
| Non-U.S. commercial |
|
104 |
|
|
|
— |
— |
104 |
|
| Commercial real estate |
|
299 |
|
|
|
— |
— |
299 |
|
| Total |
|
$ |
700 |
|
|
|
$ |
96 |
$ |
— |
$ |
796 |
|
Term extensions granted increased the weighted-average life of the impacted loans by 1.3 years at both the three months ended March 31, 2024 and 2023. The deferral period for loan payments can vary, but are mostly in the range of 8 months to 24 months. The weighted-average interest rate reduction was 0.16 percent and 0 percent during the three months ended March 31, 2024 and 2023. Modifications of loans to troubled borrowers for Commercial Lease Financing and U.S. Small Business Commercial were not significant during the three months ended March 31, 2024 and 2023.
The Corporation tracks the performance of modified loans to assess effectiveness of modification programs. As of March 31, 2024, defaults of commercial loans modified during the last 12 months were insignificant. As of March 31, 2023, defaults of commercial loans modified during the first quarter of 2023 were insignificant. The following table provides aging information as of March 31, 2024 for commercial loans that were modified over the last 12 months and as of March 31, 2023 for commercial loans that were modified during the first quarter of 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial - Payment Status of Modified Loans to Borrowers in Financial Difficulty |
|
|
|
|
|
|
|
|
|
|
|
Current |
|
30–89 Days
Past Due
|
|
90+ Days
Past Due
|
|
Total |
% of Total Class of Financing Receivable |
| (Dollars in millions) |
March 31, 2024 |
| U.S. Commercial |
$ |
1,046 |
|
|
$ |
34 |
|
|
$ |
24 |
|
|
$ |
1,104 |
0.30 |
% |
| Non-U.S. Commercial |
149 |
|
|
— |
|
|
3 |
|
|
152 |
0.12 |
|
| Commercial Real Estate |
1,569 |
|
|
292 |
|
|
330 |
|
|
2,191 |
3.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
$ |
2,764 |
|
|
$ |
326 |
|
|
$ |
357 |
|
|
$ |
3,447 |
0.62 |
|
|
|
|
|
|
|
|
|
|
|
March 31, 2023 |
| U.S. Commercial |
$ |
355 |
|
|
$ |
— |
|
|
$ |
38 |
|
|
$ |
393 |
0.11 |
% |
| Non-U.S. Commercial |
104 |
|
|
— |
|
|
— |
|
|
104 |
0.08 |
|
| Commercial Real Estate |
299 |
|
|
— |
|
|
— |
|
|
299 |
0.41 |
|
| Total |
$ |
758 |
|
|
$ |
— |
|
|
$ |
38 |
|
|
$ |
796 |
0.14 |
|
For the three months ended March 31, 2024 and 2023, the Corporation had commitments to lend $717 million and $534 million to commercial borrowers experiencing financial difficulty whose loans were modified during the period.
Loans Held-for-sale
The Corporation had LHFS of $8.6 billion and $6.0 billion at March 31, 2024 and December 31, 2023. Cash and non-cash proceeds from sales and paydowns of loans originally classified as LHFS were $3.3 billion and $2.4 billion for the three months ended March 31, 2024 and 2023. Cash used for originations and purchases of LHFS totaled $5.8 billion and $2.3 billion for the three months ended March 31, 2024 and 2023. Also included were non-cash net transfers into LHFS of $0 and $459 million during the three months ended March 31, 2024 and 2023.
Accrued Interest Receivable
Accrued interest receivable for loans and leases and loans held-for-sale was $4.5 billion at both March 31, 2024 and December 31, 2023 and is reported in customer and other receivables on the Consolidated Balance Sheet.
Outstanding credit card loan balances include unpaid principal, interest and fees. Credit card loans are not classified as nonperforming but are charged off no later than the end of the month in which the account becomes 180 days past due, within 60 days after receipt of notification of death or bankruptcy, or upon confirmation of fraud. During the three months ended March 31, 2024 and 2023, the Corporation reversed $205 million and $118 million of interest and fee income against the income statement line item in which it was originally recorded upon charge-off of the principal balance of the loan.
For the outstanding residential mortgage, home equity, direct/indirect consumer and commercial loan balances classified as nonperforming during the three months ended March 31, 2024 and 2023, interest and fee income reversed at the time the loans were classified as nonperforming was not significant. For more information on the Corporation's nonperforming loan policies, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Allowance for Credit Losses
The allowance for credit losses is estimated using quantitative and qualitative methods that consider a variety of factors, such as historical loss experience, the current credit quality of the portfolio and an economic outlook over the life of the loan.
Qualitative reserves cover losses that are expected but, in the Corporation's assessment, may not be adequately reflected in the quantitative methods or the economic assumptions. The Corporation incorporates forward-looking information through the use of several macroeconomic scenarios in determining the weighted economic outlook over the forecasted life of the assets. These scenarios include key macroeconomic variables such as gross domestic product, unemployment rate, real estate prices and corporate bond spreads. The scenarios that are chosen each quarter and the weighting given to each scenario depend on a variety of factors including recent economic events, leading economic indicators, internal and third-party economist views, and industry trends. For more information on the Corporation's credit loss accounting policies including the allowance for credit losses, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
The March 31, 2024 estimate for allowance for credit losses was based on various economic scenarios, including a baseline scenario derived from consensus estimates, an adverse scenario reflecting an extended moderate recession, a downside scenario reflecting continued inflation and interest rates with minimal rate cuts, a tail risk scenario similar to the severely adverse scenario used in stress testing and an upside scenario that considers the potential for improvement above the baseline scenario. The overall weighted economic outlook of the above scenarios has improved compared to the weighted economic outlook estimated as of December 31, 2023. The weighted economic outlook assumes that the U.S. average unemployment rate will be just below five percent by the fourth quarter of 2024 and will remain near this level through the fourth quarter of 2025. The weighted economic outlook assumes sluggish growth in the first half of 2024 with U.S. real gross domestic product forecasted to grow at 0.6 percent and at 1.7 percent year-over-year in the fourth quarters of 2024 and 2025.
The allowance for credit losses decreased $180 million from December 31, 2023 to $14.4 billion at March 31, 2024, which included a $111 million reserve decrease related to the commercial portfolio and a $69 million reserve decrease related to the consumer portfolio. The reserve decrease was primarily driven by commercial due to an improved macroeconomic outlook. The change in the allowance for credit losses was comprised of a net decrease of $129 million in the allowance for loan and lease losses and a decrease of $51 million in the reserve for unfunded lending commitments. The decline in the allowance for credit losses was attributed to decreases in the commercial portfolio of $111 million, the consumer real estate
portfolio of $56 million, and the credit card and other consumer portfolios of $13 million. The provision for credit losses increased $388 million to $1.3 billion for the three months ended March 31, 2024 compared to the same period in 2023. The provision for credit losses for the three months ended March 31, 2024 was primarily driven by credit card loans and the commercial real estate office portfolio.
Outstanding loans and leases excluding loans accounted for under the fair value option decreased $3.9 billion during the
three months ended March 31, 2024 primarily driven by consumer loans, which decreased $5.7 billion driven by credit card, residential mortgage, and securities based lending. Commercial loans increased $1.7 billion driven by broad-based growth.
The changes in the allowance for credit losses, including net charge-offs and provision for loan and lease losses, are detailed in the table below.
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Consumer
Real Estate |
|
Credit Card and
Other Consumer |
|
Commercial |
|
Total |
| (Dollars in millions) |
Three Months Ended March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Allowance for loan and lease losses, January 1 |
$ |
386 |
|
|
$ |
8,134 |
|
|
$ |
4,822 |
|
|
$ |
13,342 |
|
| Loans and leases charged off |
(11) |
|
|
(1,225) |
|
|
(502) |
|
|
(1,738) |
|
| Recoveries of loans and leases previously charged off |
21 |
|
|
187 |
|
|
32 |
|
|
240 |
|
| Net charge-offs |
10 |
|
|
(1,038) |
|
|
(470) |
|
|
(1,498) |
|
|
|
|
|
|
|
|
|
| Provision for loan and lease losses |
(42) |
|
|
1,026 |
|
|
386 |
|
|
1,370 |
|
| Other |
1 |
|
|
(1) |
|
|
(1) |
|
|
(1) |
|
Allowance for loan and lease losses, March 31 |
355 |
|
|
8,121 |
|
|
4,737 |
|
|
13,213 |
|
| Reserve for unfunded lending commitments, January 1 |
82 |
|
|
— |
|
|
1,127 |
|
|
1,209 |
|
| Provision for unfunded lending commitments |
(25) |
|
|
— |
|
|
(26) |
|
|
(51) |
|
|
|
|
|
|
|
|
|
Reserve for unfunded lending commitments, March 31 |
57 |
|
|
— |
|
|
1,101 |
|
|
1,158 |
|
Allowance for credit losses, March 31 |
$ |
412 |
|
|
$ |
8,121 |
|
|
$ |
5,838 |
|
|
$ |
14,371 |
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|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2023 |
| Allowance for loan and lease losses, December 31 |
$ |
420 |
|
|
$ |
6,817 |
|
|
$ |
5,445 |
|
|
$ |
12,682 |
|
| January 1, 2023 adoption of credit loss standard |
(67) |
|
|
(109) |
|
|
(67) |
|
|
(243) |
|
| Allowance for loan and lease losses, January 1 |
353 |
|
|
6,708 |
|
|
5,378 |
|
|
12,439 |
|
| Loans and leases charged off |
(14) |
|
|
(861) |
|
|
(181) |
|
|
(1,056) |
|
| Recoveries of loans and leases previously charged off |
25 |
|
|
197 |
|
|
27 |
|
|
249 |
|
| Net charge-offs |
11 |
|
|
(664) |
|
|
(154) |
|
|
(807) |
|
|
|
|
|
|
|
|
|
| Provision for loan and lease losses |
34 |
|
|
913 |
|
|
(47) |
|
|
900 |
|
| Other |
5 |
|
|
1 |
|
|
(24) |
|
|
(18) |
|
Allowance for loan and lease losses, March 31 |
403 |
|
|
6,958 |
|
|
5,153 |
|
|
12,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Reserve for unfunded lending commitments, January 1 |
94 |
|
|
— |
|
|
1,446 |
|
|
1,540 |
|
| Provision for unfunded lending commitments |
(1) |
|
|
— |
|
|
(102) |
|
|
(103) |
|
|
|
|
|
|
|
|
|
Reserve for unfunded lending commitments, March 31 |
93 |
|
|
— |
|
|
1,344 |
|
|
1,437 |
|
Allowance for credit losses, March 31 |
$ |
496 |
|
|
$ |
6,958 |
|
|
$ |
6,497 |
|
|
$ |
13,951 |
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NOTE 6 Securitizations and Other Variable Interest Entities
The Corporation utilizes VIEs in the ordinary course of business to support its own and its customers’ financing and investing needs. The Corporation routinely securitizes loans and debt securities using VIEs as a source of funding for the Corporation and as a means of transferring the economic risk of the loans or debt securities to third parties. The assets are transferred into a trust or other securitization vehicle such that the assets are legally isolated from the creditors of the Corporation and are not available to satisfy its obligations. These assets can only be used to settle obligations of the trust or other securitization vehicle. The Corporation also administers, structures or invests in other VIEs including CDOs, investment vehicles and other entities. For more information on the Corporation’s use of VIEs, see Note 1 – Summary of Significant Accounting Principles and Note 6 – Securitizations and Other Variable Interest Entities to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
The tables in this Note present the assets and liabilities of consolidated and unconsolidated VIEs at March 31, 2024 and December 31, 2023 in situations where the Corporation has a loan or security interest and involvement with transferred assets or if the Corporation otherwise has an additional interest in the VIE. The tables also present the Corporation’s maximum loss exposure at March 31, 2024 and December 31, 2023 resulting from its involvement with consolidated VIEs and unconsolidated
VIEs. The Corporation’s maximum loss exposure is based on the unlikely event that all of the assets in the VIEs become worthless and incorporates not only potential losses associated with assets recorded on the Consolidated Balance Sheet but also potential losses associated with off-balance sheet commitments, such as unfunded liquidity commitments and other contractual arrangements. The Corporation’s maximum loss exposure does not include losses previously recognized through write-downs of assets.
The Corporation invests in ABS, CLOs and other similar investments issued by third-party VIEs with which it has no other form of involvement other than a loan or debt security issued by the VIE. In addition, the Corporation also enters into certain commercial lending arrangements that may utilize VIEs for activities secondary to the lending arrangement, for example to hold collateral. The Corporation’s maximum loss exposure to these VIEs is the investment balances. These securities and loans are included in Note 4 – Securities or Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses and are not included in the following tables.
The Corporation did not provide financial support to consolidated or unconsolidated VIEs during the three months ended March 31, 2024 or the year ended December 31, 2023 that it was not previously contractually required to provide, nor does it intend to do so.
The Corporation had liquidity commitments, including written put options and collateral value guarantees, with certain
unconsolidated VIEs of $961 million and $989 million at March 31, 2024 and December 31, 2023.
First-lien Mortgage Securitizations
As part of its mortgage banking activities, the Corporation securitizes a portion of the first-lien residential mortgage loans it originates or purchases from third parties, generally in the form of residential mortgage-backed securities (RMBS) guaranteed by government-sponsored enterprises, FNMA and FHLMC (collectively the GSEs), or the Government National Mortgage Association (GNMA) primarily in the case of FHA-insured and U.S. Department of Veterans Affairs (VA)-guaranteed mortgage loans. Securitization usually occurs in conjunction with or shortly after origination or purchase, and the Corporation may also securitize loans held in its residential
mortgage portfolio. In addition, the Corporation may, from time to time, securitize commercial mortgages it originates or purchases from other entities. The Corporation typically services the loans it securitizes. Further, the Corporation may retain beneficial interests in the securitization trusts including senior and subordinate securities and equity tranches issued by the trusts. Except as described in Note 10 – Commitments and Contingencies, the Corporation does not provide guarantees or recourse to the securitization trusts other than standard representations and warranties.
The table below summarizes select information related to first-lien mortgage securitizations for the three months ended March 31, 2024 and 2023.
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| First-lien Mortgage Securitizations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgage - Agency |
|
|
|
Commercial Mortgage |
|
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|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
2024 |
|
2023 |
|
|
|
|
|
2024 |
|
2023 |
|
|
|
|
Proceeds from loan sales (1) |
$ |
1,209 |
|
|
$ |
1,347 |
|
|
|
|
|
|
$ |
1,309 |
|
|
$ |
142 |
|
|
|
|
|
Gains (losses) on securitizations (2) |
— |
|
|
(5) |
|
|
|
|
|
|
19 |
|
|
3 |
|
|
|
|
|
Repurchases from securitization trusts (3) |
8 |
|
|
9 |
|
|
|
|
|
|
— |
|
|
— |
|
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(1)The Corporation transfers residential mortgage loans to securitizations sponsored primarily by the GSEs or GNMA in the normal course of business and primarily receives residential mortgage-backed securities in exchange. Substantially all of these securities are classified as Level 2 within the fair value hierarchy and are typically sold shortly after receipt.
(2)A majority of the first-lien residential mortgage loans securitized are initially classified as LHFS and accounted for under the fair value option. Gains recognized on these LHFS prior to securitization, which totaled $5 million and $10 million, net of hedges, during the three months ended March 31, 2024 and 2023, are not included in the table above.
(3)The Corporation may have the option to repurchase delinquent loans out of securitization trusts, which reduces the amount of servicing advances it is required to make. The Corporation may also repurchase loans from securitization trusts to perform modifications. Repurchased loans include FHA-insured mortgages collateralizing GNMA securities.
The Corporation recognizes consumer MSRs from the sale or securitization of consumer real estate loans. The unpaid principal balance of loans serviced for investors, including residential mortgage and home equity loans, totaled $90.5 billion and $98.3 billion at March 31, 2024 and 2023. Servicing fee and ancillary fee income on serviced loans was $62 million and $69 million during the three months ended March 31, 2024 and 2023. Servicing advances on serviced loans, including loans serviced for others and loans held for investment, were $1.2 billion and $1.3 billion at March 31, 2024 and December 31, 2023. For more information on MSRs, see Note 14 – Fair Value Measurements.
Home Equity Loans
The Corporation retains interests, primarily senior securities, in home equity securitization trusts to which it transferred home equity loans. In addition, the Corporation may be obligated to
provide subordinate funding to the trusts during a rapid amortization event. This obligation is included in the maximum loss exposure in the preceding table. The charges that will ultimately be recorded as a result of the rapid amortization events depend on the undrawn portion of the home equity lines of credit, performance of the loans, the amount of subsequent draws and the timing of related cash flows.
Mortgage and Home Equity Securitizations
During the three months ended March 31, 2024 and 2023, the Corporation deconsolidated agency residential mortgage securitization trusts with total assets of $793 million and $328 million.
The following table summarizes select information related to mortgage and home equity securitization trusts in which the Corporation held a variable interest and had continuing involvement at March 31, 2024 and December 31, 2023.
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| Mortgage and Home Equity Securitizations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Mortgage |
|
|
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| |
|
|
|
Non-agency |
|
|
|
| |
Agency |
|
Prime and Alt-A |
|
Subprime |
|
Home Equity (3) |
|
Commercial Mortgage |
|
|
| (Dollars in millions) |
March 31
2024 |
December 31
2023 |
|
March 31
2024 |
December 31
2023 |
|
March 31
2024 |
December 31
2023 |
|
March 31
2024 |
December 31
2023 |
|
March 31
2024 |
December 31
2023 |
| Unconsolidated VIEs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum loss exposure (1) |
$ |
7,945 |
|
$ |
8,190 |
|
|
$ |
87 |
|
$ |
92 |
|
|
$ |
612 |
|
$ |
657 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
1,460 |
|
$ |
1,558 |
|
On-balance sheet assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading account assets |
$ |
187 |
|
$ |
235 |
|
|
$ |
10 |
|
$ |
13 |
|
|
$ |
20 |
|
$ |
20 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
22 |
|
$ |
70 |
|
Debt securities carried at fair value |
2,433 |
|
2,541 |
|
|
— |
|
— |
|
|
299 |
|
341 |
|
|
— |
|
— |
|
|
— |
|
— |
|
Held-to-maturity securities |
5,325 |
|
5,414 |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
1,301 |
|
1,287 |
|
| All other assets |
— |
|
— |
|
|
3 |
|
4 |
|
|
22 |
|
23 |
|
|
— |
|
— |
|
|
47 |
|
79 |
|
Total retained positions |
$ |
7,945 |
|
$ |
8,190 |
|
|
$ |
13 |
|
$ |
17 |
|
|
$ |
341 |
|
$ |
384 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
1,370 |
|
$ |
1,436 |
|
Principal balance outstanding (2) |
$ |
74,377 |
|
$ |
76,134 |
|
|
$ |
13,700 |
|
$ |
13,963 |
|
|
$ |
4,398 |
|
$ |
4,508 |
|
|
$ |
221 |
|
$ |
252 |
|
|
$ |
77,079 |
|
$ |
80,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated VIEs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maximum loss exposure (1) |
$ |
1,367 |
|
$ |
1,164 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
12 |
|
$ |
12 |
|
|
$ |
— |
|
$ |
— |
|
On-balance sheet assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading account assets |
$ |
1,367 |
|
$ |
1,171 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
| Loans and leases |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
29 |
|
31 |
|
|
— |
|
— |
|
Allowance for loan and lease
losses |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
7 |
|
7 |
|
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| All other assets |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
1 |
|
1 |
|
|
— |
|
— |
|
| Total assets |
$ |
1,367 |
|
$ |
1,171 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
37 |
|
$ |
39 |
|
|
$ |
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total liabilities |
$ |
— |
|
$ |
7 |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
25 |
|
$ |
27 |
|
|
$ |
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Maximum loss exposure includes obligations under loss-sharing reinsurance and other arrangements for non-agency residential mortgage and commercial mortgage securitizations, but excludes the reserve for representations and warranties obligations and corporate guarantees and also excludes servicing advances and other servicing rights and obligations. For more information, see Note 10 – Commitments and Contingencies and Note 14 – Fair Value Measurements.
(2)Principal balance outstanding includes loans where the Corporation was the transferor to securitization VIEs with which it has continuing involvement, which may include servicing the loans.
(3)For unconsolidated home equity loan VIEs, the maximum loss exposure includes outstanding trust certificates issued by trusts in rapid amortization, net of recorded reserves. For both consolidated and unconsolidated home equity loan VIEs, the maximum loss exposure excludes the reserve for representations and warranties obligations and corporate guarantees. For more information, see Note 10 – Commitments and Contingencies.
Other Asset-backed Securitizations
The following paragraphs summarize select information related to other asset-backed VIEs in which the Corporation had a variable interest at March 31, 2024 and December 31, 2023.
Credit Card and Automobile Loan Securitizations
The Corporation securitizes originated and purchased credit card and automobile loans as a source of financing. The loans are sold on a non-recourse basis to consolidated trusts. The securitizations are ongoing, whereas additional receivables will be funded into the trusts by either loan repayments or proceeds from securities issued to third parties, depending on the securitization structure. The Corporation’s continuing involvement with the securitization trusts includes servicing the receivables and holding various subordinated interests, including an undivided seller’s interest in the credit card receivables and owning certain retained interests.
At March 31, 2024 and December 31, 2023, the carrying values of the receivables in the trusts totaled $18.0 billion and $16.6 billion, which are included in loans and leases, and the carrying values of senior debt securities that were issued to third-party investors from the trusts totaled $7.6 billion and $7.8 billion, which are included in long-term debt.
Resecuritization Trusts
The Corporation transfers securities, typically MBS, into resecuritization VIEs generally at the request of customers seeking securities with specific characteristics. Generally, there are no significant ongoing activities performed in a resecuritization trust, and no single investor has the unilateral ability to liquidate the trust.
The Corporation resecuritized $2.8 billion and $1.6 billion of securities during the three months ended March 31, 2024 and 2023. Securities transferred into resecuritization VIEs were
measured at fair value with changes in fair value recorded in market making and similar activities prior to the resecuritization and, accordingly, no gain or loss on sale was recorded. During the three months ended March 31, 2024 and 2023, resecuritization proceeds included securities with an initial fair value of $88 million and $586 million, of which substantially all of the securities were classified as trading account assets for both periods. Substantially all of the trading account securities carried at fair value were categorized as Level 2 within the fair value hierarchy.
Customer VIEs
Customer VIEs include credit-linked, equity-linked and commodity-linked note VIEs, repackaging VIEs and asset acquisition VIEs, which are typically created on behalf of customers who wish to obtain market or credit exposure to a specific company, index, commodity or financial instrument.
The Corporation’s involvement in the VIE is limited to its loss exposure. The Corporation’s maximum loss exposure to consolidated and unconsolidated customer VIEs totaled $913 million and $952 million at March 31, 2024 and December 31, 2023, including the notional amount of derivatives to which the Corporation is a counterparty, net of losses previously recorded, and the Corporation’s investment, if any, in securities issued by the VIEs.
Municipal Bond Trusts
The Corporation administers municipal bond trusts that hold highly-rated, long-term, fixed-rate municipal bonds. The trusts obtain financing by issuing floating-rate trust certificates that reprice on a weekly or other short-term basis to third-party investors.
The Corporation’s liquidity commitments to unconsolidated municipal bond trusts, including those for which the Corporation
was transferor, totaled $1.8 billion and $1.7 billion at March 31, 2024 and December 31, 2023. The weighted-average remaining life of bonds held in the trusts at March 31, 2024 was 12.2 years. There were no significant write-downs or downgrades of assets or issuers during the three months ended March 31, 2024 and 2023.
Collateralized Debt Obligation VIEs
The Corporation receives fees for structuring CDO VIEs, which hold diversified pools of fixed-income securities, typically corporate debt or ABS, which the CDO VIEs fund by issuing multiple tranches of debt and equity securities. CDOs are generally managed by third-party portfolio managers. The Corporation typically transfers assets to these CDOs, holds securities issued by the CDOs and may be a derivative counterparty to the CDOs. The Corporation’s maximum loss exposure to consolidated and unconsolidated CDOs totaled $86 million and $80 million at March 31, 2024 and December 31, 2023.
Investment VIEs
The Corporation sponsors, invests in or provides financing, which may be in connection with the sale of assets, to a variety of investment VIEs that hold loans, real estate, debt securities or other financial instruments and are designed to provide the desired investment profile to investors or the Corporation. At
March 31, 2024 and December 31, 2023, the Corporation’s consolidated investment VIEs had total assets of $99 million and $472 million. The Corporation also held investments in unconsolidated VIEs with total assets of $20.7 billion and $18.4 billion at March 31, 2024 and December 31, 2023. The Corporation’s maximum loss exposure associated with both consolidated and unconsolidated investment VIEs totaled $2.2 billion and $2.6 billion at March 31, 2024 and December 31, 2023 comprised primarily of on-balance sheet assets less non-recourse liabilities.
Leveraged Lease Trusts
The Corporation’s net investment in consolidated leveraged lease trusts totaled $1.1 billion at both March 31, 2024 and December 31, 2023. The trusts hold long-lived equipment such as rail cars, power generation and distribution equipment, and commercial aircraft. The Corporation structures the trusts and holds a significant residual interest. The net investment represents the Corporation’s maximum loss exposure to the trusts in the unlikely event that the leveraged lease investments become worthless. Debt issued by the leveraged lease trusts is non-recourse to the Corporation.
The table below summarizes the maximum loss exposure and assets held by the Corporation that related to other asset-backed VIEs at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other Asset-backed VIEs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Credit Card and Automobile (1) |
|
Resecuritization Trusts and Customer VIEs |
|
Municipal Bond Trusts
and CDOs |
|
Investment VIEs and Leveraged Lease Trusts |
|
|
|
|
|
|
|
| (Dollars in millions) |
March 31
2024 |
December 31
2023 |
|
March 31
2024 |
December 31
2023 |
|
March 31
2024 |
December 31
2023 |
|
March 31
2024 |
December 31
2023 |
| Unconsolidated VIEs |
|
|
|
|
|
|
|
|
|
|
|
| Maximum loss exposure |
$ |
— |
|
$ |
— |
|
|
$ |
4,254 |
|
$ |
4,494 |
|
|
$ |
1,852 |
|
$ |
1,787 |
|
|
$ |
2,092 |
|
$ |
2,197 |
|
| On-balance sheet assets |
|
|
|
|
|
|
|
|
|
|
|
Securities (2): |
|
|
|
|
|
|
|
|
|
|
|
| Trading account assets |
$ |
— |
|
$ |
— |
|
|
$ |
484 |
|
$ |
626 |
|
|
$ |
29 |
|
$ |
23 |
|
|
$ |
322 |
|
$ |
469 |
|
Debt securities carried at fair value |
— |
|
— |
|
|
882 |
|
920 |
|
|
— |
|
— |
|
|
5 |
|
4 |
|
| Held-to-maturity securities |
— |
|
— |
|
|
2,177 |
|
2,237 |
|
|
— |
|
— |
|
|
— |
|
— |
|
| Loans and leases |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
92 |
|
90 |
|
| Allowance for loan and lease losses |
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
(11) |
|
(12) |
|
| All other assets |
— |
|
— |
|
|
711 |
|
711 |
|
|
6 |
|
7 |
|
|
1,188 |
|
1,168 |
|
| Total retained positions |
$ |
— |
|
$ |
— |
|
|
$ |
4,254 |
|
$ |
4,494 |
|
|
$ |
35 |
|
$ |
30 |
|
|
$ |
1,596 |
|
$ |
1,719 |
|
| Total assets of VIEs |
$ |
— |
|
$ |
— |
|
|
$ |
14,285 |
|
$ |
15,862 |
|
|
$ |
8,615 |
|
$ |
9,279 |
|
|
$ |
20,747 |
|
$ |
18,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Consolidated VIEs |
|
|
|
|
|
|
|
|
|
|
|
| Maximum loss exposure |
$ |
9,662 |
|
$ |
8,127 |
|
|
$ |
401 |
|
$ |
1,240 |
|
|
$ |
3,575 |
|
$ |
3,136 |
|
|
$ |
1,209 |
|
$ |
1,596 |
|
| On-balance sheet assets |
|
|
|
|
|
|
|
|
|
|
|
| Trading account assets |
$ |
— |
|
$ |
— |
|
|
$ |
922 |
|
$ |
1,798 |
|
|
$ |
3,547 |
|
$ |
3,084 |
|
|
$ |
2 |
|
$ |
1 |
|
| Debt securities carried at fair value |
— |
|
— |
|
|
— |
|
— |
|
|
28 |
|
52 |
|
|
— |
|
— |
|
| Loans and leases |
18,002 |
|
16,640 |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
1,219 |
|
1,605 |
|
Allowance for loan and lease losses |
(926) |
|
(832) |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
(1) |
|
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| All other assets |
175 |
|
163 |
|
|
38 |
|
38 |
|
|
— |
|
— |
|
|
14 |
|
15 |
|
| Total assets |
$ |
17,251 |
|
$ |
15,971 |
|
|
$ |
960 |
|
$ |
1,836 |
|
|
$ |
3,575 |
|
$ |
3,136 |
|
|
$ |
1,234 |
|
$ |
1,620 |
|
| On-balance sheet liabilities |
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings |
$ |
— |
|
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
|
$ |
3,364 |
|
$ |
2,934 |
|
|
$ |
23 |
|
$ |
23 |
|
| Long-term debt |
7,571 |
|
7,825 |
|
|
559 |
|
596 |
|
|
— |
|
— |
|
|
2 |
|
1 |
|
| All other liabilities |
18 |
|
19 |
|
|
— |
|
— |
|
|
— |
|
— |
|
|
— |
|
— |
|
| Total liabilities |
$ |
7,589 |
|
$ |
7,844 |
|
|
$ |
559 |
|
$ |
596 |
|
|
$ |
3,364 |
|
$ |
2,934 |
|
|
$ |
25 |
|
$ |
24 |
|
(1)At March 31, 2024 and December 31, 2023 loans and leases in the consolidated credit card trust included $4.8 billion and $3.2 billion of seller’s interest.
(2)The retained senior securities were valued using quoted market prices or observable market inputs (Level 2 of the fair value hierarchy).
Tax Credit VIEs
The Corporation holds equity investments in unconsolidated limited partnerships and similar entities that construct, own and operate affordable housing, renewable energy and certain other projects. The total assets of these unconsolidated tax credit VIEs were $82.7 billion and $84.1 billion as of March 31, 2024 and December 31, 2023. An unrelated third party is typically the general partner or managing member and has control over the significant activities of the VIE. As an investor, tax credits
associated with the investments in these entities are allocated to the Corporation, as provided by the U.S. Internal Revenue Code and related regulations, and are recognized as income tax benefits in the Corporation’s Consolidated Statement of Income in the year they are earned, which varies based on the type of investments. Tax credits from investments in affordable housing are recognized ratably over a term of up to 10 years, and tax credits from renewable energy investments are recognized either at inception for transactions electing Investment Tax Credits
(ITCs) or as energy is produced for transactions electing Production Tax Credits (PTCs), which is generally up to a 10-year time period. The volume and types of investments held by the Corporation will influence the amount of tax credits recognized each period.
The Corporation’s equity investments in affordable housing and other projects totaled $15.8 billion at both March 31, 2024 and December 31, 2023, which included unfunded capital contributions of $7.1 billion and $7.2 billion that are probable to be paid over the next five years. The Corporation may be asked to invest additional amounts to support a troubled affordable housing project. Such additional investments have not been and are not expected to be significant. During the three months ended March 31, 2024 and 2023, the Corporation recognized tax credits and other tax benefits related to affordable housing equity investments of $576 million and $527 million and reported pretax losses in other income of $412 million and $372 million. The Corporation’s equity investments in renewable energy totaled $13.7 billion and $14.2 billion at March 31, 2024 and December 31, 2023. In addition, the Corporation had unfunded capital contributions for renewable energy investments of $5.9 billion and $6.2 billion at March 31, 2024 and December 31, 2023, which are contingent on various conditions precedent to funding over the next two years. The Corporation’s risk of loss is generally mitigated by policies requiring the project to qualify for the expected tax credits prior to making its investment. During the three months ended March 31, 2024 and 2023, the Corporation recognized tax credits and other tax benefits related to renewable energy equity investments of $1.0 billion and $996 million and reported pretax losses in other income of $664 million and $561 million. The Corporation may also enter into power purchase agreements with renewable energy tax credit entities.
The table below summarizes select information related to unconsolidated tax credit VIEs in which the Corporation held a variable interest at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unconsolidated Tax Credit VIEs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
|
|
March 31
2024 |
|
|
|
December 31
2023 |
| Maximum loss exposure |
|
|
$ |
29,506 |
|
|
|
|
|
|
$ |
30,040 |
|
|
|
| On-balance sheet assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| All other assets |
|
|
29,506 |
|
|
|
|
|
|
$ |
30,040 |
|
|
|
| Total |
|
|
$ |
29,506 |
|
|
|
|
|
|
$ |
30,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| On-balance sheet liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| All other liabilities |
|
|
7,140 |
|
|
|
|
|
|
$ |
7,254 |
|
|
|
| Total |
|
|
$ |
7,140 |
|
|
|
|
|
|
$ |
7,254 |
|
|
|
| Total assets of VIEs |
|
|
$ |
82,651 |
|
|
|
|
|
|
$ |
84,148 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 7 Goodwill and Intangible Assets
Goodwill
The following table presents goodwill balances by business segment at March 31, 2024 and December 31, 2023. The reporting units utilized for goodwill impairment testing are the operating segments or one level below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
March 31 2024 |
|
December 31 2023 |
|
|
|
|
|
|
|
|
| Consumer Banking |
$ |
30,137 |
|
|
$ |
30,137 |
|
|
|
|
|
|
|
|
|
| Global Wealth & Investment Management |
9,677 |
|
|
9,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Global Banking |
24,026 |
|
|
24,026 |
|
| Global Markets |
5,181 |
|
|
5,181 |
|
|
|
|
|
| Total goodwill |
$ |
69,021 |
|
|
$ |
69,021 |
|
Intangible Assets
At both March 31, 2024 and December 31, 2023, the net carrying value of intangible assets was $2.0 billion. At both March 31, 2024 and December 31, 2023, intangible assets included $1.6 billion of intangible assets associated with trade names, substantially all of which had an indefinite life and, accordingly, are not being amortized. Amortization of intangibles expense was $20 million for both the three months ended March 31, 2024 and 2023.
NOTE 8 Leases
The Corporation enters into both lessor and lessee arrangements. For more information on lease accounting, see Note 1 – Summary of Significant Accounting Principles and Note 8 – Leases to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. For more information on lease financing receivables, see Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses.
Lessor Arrangements
The Corporation’s lessor arrangements primarily consist of operating, sales-type and direct financing leases for equipment. Lease agreements may include options to renew and for the lessee to purchase the leased equipment at the end of the lease term.
The table below presents the net investment in sales-type and direct financing leases at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Investment (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
|
|
|
|
March 31
2024 |
|
December 31
2023 |
|
|
|
|
| Lease receivables |
|
|
|
|
$ |
16,685 |
|
|
$ |
16,565 |
|
|
|
|
|
| Unguaranteed residuals |
|
|
|
|
2,427 |
|
|
2,485 |
|
|
|
|
|
Total net investment in sales-type and direct
financing leases |
|
|
|
|
$ |
19,112 |
|
|
$ |
19,050 |
|
|
|
|
|
(1)In certain cases, the Corporation obtains third-party residual value insurance to reduce its residual asset risk. The carrying value of residual assets with third-party residual value insurance for at least a portion of the asset value was $6.9 billion and $6.8 billion at March 31, 2024 and December 31, 2023.
The table below presents lease income for the three months ended March 31, 2024 and 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Lease Income |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
| Sales-type and direct financing leases |
|
|
|
|
$ |
250 |
|
|
$ |
172 |
|
| Operating leases |
|
|
|
|
227 |
|
|
238 |
|
| Total lease income |
|
|
|
|
$ |
477 |
|
|
$ |
410 |
|
|
|
|
|
|
|
|
|
Lessee Arrangements
The Corporation's lessee arrangements predominantly consist of operating leases for premises and equipment; the Corporation's financing leases are not significant.
The table below provides information on the right-of-use assets and lease liabilities at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Lessee Arrangements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (Dollars in millions) |
March 31
2024 |
|
December 31
2023 |
| Right-of-use assets |
$ |
8,988 |
|
|
$ |
9,150 |
|
|
|
|
|
| Lease liabilities |
9,592 |
|
|
9,782 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
NOTE 9 Securities Financing Agreements, Collateral and Restricted Cash
The Corporation enters into securities financing agreements which include securities borrowed or purchased under agreements to resell and securities loaned or sold under agreements to repurchase. These financing agreements (also referred to as “matched-book transactions”) are to accommodate customers, obtain securities to cover short positions and finance inventory positions. The Corporation
elects to account for certain securities financing agreements under the fair value option. For more information on the fair value option, see Note 15 – Fair Value Option.
Offsetting of Securities Financing Agreements
The Securities Financing Agreements table presents securities financing agreements included on the Consolidated Balance Sheet in federal funds sold and securities borrowed or purchased under agreements to resell, and in federal funds purchased and securities loaned or sold under agreements to repurchase at March 31, 2024 and December 31, 2023. Balances are presented on a gross basis, prior to the application of counterparty netting. Gross assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of legally enforceable master netting agreements. For more information on the offsetting of derivatives, see Note 3 – Derivatives. For more information on the securities financing agreements and the offsetting of securities financing transactions, see Note 10 – Securities Financing Agreements, Short-term Borrowings, Collateral and Restricted Cash to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Securities Financing Agreements |
|
|
|
|
|
|
|
|
|
|
|
Gross Assets/Liabilities (1) |
|
Amounts Offset |
|
Net Balance Sheet Amount |
|
Financial Instruments (2) |
|
Net Assets/Liabilities |
| (Dollars in millions) |
March 31, 2024 |
Securities borrowed or purchased under agreements to resell (3) |
$ |
737,496 |
|
|
$ |
(421,403) |
|
|
$ |
316,093 |
|
|
$ |
(289,161) |
|
|
$ |
26,932 |
|
|
|
|
|
|
|
|
|
|
|
| Securities loaned or sold under agreements to repurchase |
$ |
751,061 |
|
|
$ |
(421,403) |
|
|
$ |
329,658 |
|
|
$ |
(315,535) |
|
|
$ |
14,123 |
|
Other (4) |
12,144 |
|
|
— |
|
|
12,144 |
|
|
(12,144) |
|
|
— |
|
| Total |
$ |
763,205 |
|
|
$ |
(421,403) |
|
|
$ |
341,802 |
|
|
$ |
(327,679) |
|
|
$ |
14,123 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
Securities borrowed or purchased under agreements to resell (3) |
$ |
703,641 |
|
|
$ |
(423,017) |
|
|
$ |
280,624 |
|
|
$ |
(257,541) |
|
|
$ |
23,083 |
|
|
|
|
|
|
|
|
|
|
|
| Securities loaned or sold under agreements to repurchase |
$ |
706,904 |
|
|
$ |
(423,017) |
|
|
$ |
283,887 |
|
|
$ |
(272,285) |
|
|
$ |
11,602 |
|
Other (4) |
10,066 |
|
|
— |
|
|
10,066 |
|
|
(10,066) |
|
|
— |
|
| Total |
$ |
716,970 |
|
|
$ |
(423,017) |
|
|
$ |
293,953 |
|
|
$ |
(282,351) |
|
|
$ |
11,602 |
|
(1)Includes activity where uncertainty exists as to the enforceability of certain master netting agreements under bankruptcy laws in some countries or industries.
(2)Includes securities collateral received or pledged under repurchase or securities lending agreements where there is a legally enforceable master netting agreement. These amounts are not offset on the Consolidated Balance Sheet, but are shown as a reduction to derive a net asset or liability. Securities collateral received or pledged where the legal enforceability of the master netting agreements is uncertain is excluded from the table.
(3)Excludes repurchase activity of $9.4 billion and $8.7 billion reported in loans and leases on the Consolidated Balance Sheet for March 31, 2024 and December 31, 2023.
(4)Balance is reported in accrued expenses and other liabilities on the Consolidated Balance Sheet and relates to transactions where the Corporation acts as the lender in a securities lending agreement and receives securities that can be pledged as collateral or sold. In these transactions, the Corporation recognizes an asset at fair value, representing the securities received, and a liability, representing the obligation to return those securities.
Repurchase Agreements and Securities Loaned Transactions Accounted for as Secured Borrowings
The following tables present securities sold under agreements to repurchase and securities loaned by remaining contractual term to maturity and class of collateral pledged. Included in “Other” are transactions where the Corporation acts as the lender in a securities lending agreement and receives securities that can be pledged as collateral or sold. Certain agreements contain a right to substitute collateral and/or terminate the
agreement prior to maturity at the option of the Corporation or the counterparty. Such agreements are included in the table below based on the remaining contractual term to maturity. For more information on collateral requirements, see Note 10 – Securities Financing Agreements, Short-term Borrowings, Collateral and Restricted Cash to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Remaining Contractual Maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Overnight and Continuous |
|
30 Days or Less |
|
After 30 Days Through 90 Days |
|
Greater than
90 Days (1)
|
|
Total |
| (Dollars in millions) |
March 31, 2024 |
| Securities sold under agreements to repurchase |
$ |
199,560 |
|
|
$ |
291,231 |
|
|
$ |
93,539 |
|
|
$ |
80,974 |
|
|
$ |
665,304 |
|
| Securities loaned |
78,199 |
|
|
157 |
|
|
932 |
|
|
6,469 |
|
|
85,757 |
|
| Other |
12,144 |
|
|
— |
|
|
— |
|
|
— |
|
|
12,144 |
|
| Total |
$ |
289,903 |
|
|
$ |
291,388 |
|
|
$ |
94,471 |
|
|
$ |
87,443 |
|
|
$ |
763,205 |
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
| Securities sold under agreements to repurchase |
$ |
234,974 |
|
|
$ |
228,627 |
|
|
$ |
85,176 |
|
|
$ |
75,020 |
|
|
$ |
623,797 |
|
| Securities loaned |
76,580 |
|
|
139 |
|
|
618 |
|
|
5,770 |
|
|
83,107 |
|
| Other |
10,066 |
|
|
— |
|
|
— |
|
|
— |
|
|
10,066 |
|
| Total |
$ |
321,620 |
|
|
$ |
228,766 |
|
|
$ |
85,794 |
|
|
$ |
80,790 |
|
|
$ |
716,970 |
|
(1)No agreements have maturities greater than four years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Class of Collateral Pledged |
|
|
|
|
|
|
|
|
|
|
|
Securities Sold Under Agreements to Repurchase |
|
Securities
Loaned |
|
Other |
|
Total |
| (Dollars in millions) |
March 31, 2024 |
| U.S. government and agency securities |
$ |
346,161 |
|
|
$ |
98 |
|
|
$ |
49 |
|
|
$ |
346,308 |
|
| Corporate securities, trading loans and other |
27,699 |
|
|
1,698 |
|
|
369 |
|
|
29,766 |
|
| Equity securities |
24,625 |
|
|
83,783 |
|
|
11,726 |
|
|
120,134 |
|
| Non-U.S. sovereign debt |
261,602 |
|
|
178 |
|
|
— |
|
|
261,780 |
|
| Mortgage trading loans and ABS |
5,217 |
|
|
— |
|
|
— |
|
|
5,217 |
|
| Total |
$ |
665,304 |
|
|
$ |
85,757 |
|
|
$ |
12,144 |
|
|
$ |
763,205 |
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
| U.S. government and agency securities |
$ |
352,950 |
|
|
$ |
34 |
|
|
$ |
38 |
|
|
$ |
353,022 |
|
| Corporate securities, trading loans and other |
23,242 |
|
|
1,805 |
|
|
661 |
|
|
25,708 |
|
| Equity securities |
11,517 |
|
|
81,266 |
|
|
9,367 |
|
|
102,150 |
|
| Non-U.S. sovereign debt |
231,140 |
|
|
2 |
|
|
— |
|
|
231,142 |
|
| Mortgage trading loans and ABS |
4,948 |
|
|
— |
|
|
— |
|
|
4,948 |
|
| Total |
$ |
623,797 |
|
|
$ |
83,107 |
|
|
$ |
10,066 |
|
|
$ |
716,970 |
|
Collateral
The Corporation accepts securities and loans as collateral that it is permitted by contract or practice to sell or repledge. At March 31, 2024 and December 31, 2023, the fair value of this collateral was $978.3 billion and $911.3 billion, of which $941.8 billion and $870.9 billion were sold or repledged. The primary source of this collateral is securities borrowed or purchased under agreements to resell. For more information on collateral, see Note 10 – Securities Financing Agreements, Short-term Borrowings, Collateral and Restricted Cash to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Restricted Cash
At March 31, 2024 and December 31, 2023, the Corporation held restricted cash included within cash and cash equivalents on the Consolidated Balance Sheet of $5.3 billion and $5.6 billion, predominantly related to cash segregated in compliance with securities regulations and cash held on deposit with central banks to meet reserve requirements.
NOTE 10 Commitments and Contingencies
In the normal course of business, the Corporation enters into a number of off-balance sheet commitments. These commitments expose the Corporation to varying degrees of credit and market risk and are subject to the same credit and market risk
limitation reviews as those instruments recorded on the Consolidated Balance Sheet. For more information on commitments and contingencies, see Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Credit Extension Commitments
The Corporation enters into commitments to extend credit such as loan commitments, standby letters of credit (SBLCs) and commercial letters of credit to meet the financing needs of its customers. The following table 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 $9.9 billion and $10.3 billion at March 31, 2024 and December 31, 2023. The carrying value of the Corporation’s credit extension commitments at both March 31, 2024 and December 31, 2023, excluding commitments accounted for under the fair value option, was $1.2 billion, which predominantly related to the reserve for unfunded lending commitments. The carrying value of these commitments is classified in accrued expenses and other liabilities on the Consolidated Balance Sheet.
Legally binding commitments to extend credit generally have specified rates and maturities. Certain of these commitments have adverse change clauses that help to protect the Corporation against deterioration in the borrower’s ability to pay.
The table below includes the notional amount of commitments of $3.1 billion and $2.6 billion at March 31, 2024 and December 31, 2023 that are accounted for under the fair value option. However, the table excludes the cumulative net fair value for these commitments of $78 million and $67 million
at March 31, 2024 and December 31, 2023, which is classified in accrued expenses and other liabilities. For more information regarding the Corporation’s loan commitments accounted for under the fair value option, see Note 15 – Fair Value Option.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Credit Extension Commitments |
|
|
|
|
|
|
|
|
|
|
|
|
Expire in One
Year or Less |
|
Expire After One
Year Through
Three Years |
|
Expire After Three Years Through
Five Years |
|
Expire After
Five Years |
|
Total |
| (Dollars in millions) |
March 31, 2024 |
| Notional amount of credit extension commitments |
|
|
|
|
|
|
|
|
|
Loan commitments (1) |
$ |
126,573 |
|
|
$ |
204,468 |
|
|
$ |
186,416 |
|
|
$ |
18,739 |
|
|
$ |
536,196 |
|
| Home equity lines of credit |
3,197 |
|
|
9,591 |
|
|
10,738 |
|
|
22,019 |
|
|
45,545 |
|
Standby letters of credit and financial guarantees (2) |
21,663 |
|
|
8,933 |
|
|
2,935 |
|
|
521 |
|
|
34,052 |
|
| Letters of credit |
958 |
|
|
202 |
|
|
79 |
|
|
52 |
|
|
1,291 |
|
Other commitments (3) |
17 |
|
|
36 |
|
|
112 |
|
|
1,051 |
|
|
1,216 |
|
| Legally binding commitments |
152,408 |
|
|
223,230 |
|
|
200,280 |
|
|
42,382 |
|
|
618,300 |
|
Credit card lines (4) |
451,123 |
|
|
— |
|
|
— |
|
|
— |
|
|
451,123 |
|
| Total credit extension commitments |
$ |
603,531 |
|
|
$ |
223,230 |
|
|
$ |
200,280 |
|
|
$ |
42,382 |
|
|
$ |
1,069,423 |
|
|
|
|
|
|
|
|
|
|
|
| |
December 31, 2023 |
| Notional amount of credit extension commitments |
|
|
|
|
|
|
|
|
|
Loan commitments (1) |
$ |
124,298 |
|
|
$ |
198,818 |
|
|
$ |
193,878 |
|
|
$ |
15,386 |
|
|
$ |
532,380 |
|
| Home equity lines of credit |
2,775 |
|
|
9,182 |
|
|
11,195 |
|
|
21,975 |
|
|
45,127 |
|
Standby letters of credit and financial guarantees (2) |
21,067 |
|
|
9,633 |
|
|
2,693 |
|
|
652 |
|
|
34,045 |
|
| Letters of credit |
873 |
|
|
207 |
|
|
66 |
|
|
29 |
|
|
1,175 |
|
Other commitments (3) |
17 |
|
|
50 |
|
|
108 |
|
|
1,035 |
|
|
1,210 |
|
| Legally binding commitments |
149,030 |
|
|
217,890 |
|
|
207,940 |
|
|
39,077 |
|
|
613,937 |
|
Credit card lines (4) |
440,328 |
|
|
— |
|
|
— |
|
|
— |
|
|
440,328 |
|
| Total credit extension commitments |
$ |
589,358 |
|
|
$ |
217,890 |
|
|
$ |
207,940 |
|
|
$ |
39,077 |
|
|
$ |
1,054,265 |
|
(1) At March 31, 2024 and December 31, 2023, $4.3 billion and $3.1 billion of these loan commitments were held in the form of a security.
(2) The notional amounts of SBLCs and financial guarantees classified as investment grade and non-investment grade based on the credit quality of the underlying reference name within the instrument were $24.0 billion and $9.3 billion at March 31, 2024, and $23.6 billion and $9.7 billion at December 31, 2023. Amounts in the table include consumer SBLCs of $795 million and $744 million at March 31, 2024 and December 31, 2023.
(3) Primarily includes second-loss positions on lease-end residual value guarantees.
(4) Includes business card unused lines of credit.
Other Commitments
At March 31, 2024 and December 31, 2023, the Corporation had commitments to purchase loans (e.g., residential mortgage and commercial real estate) of $432 million and $822 million, which upon settlement will be included in trading account assets, loans or LHFS, and commitments to purchase commercial loans of $1.2 billion and $420 million, which upon settlement will be included in trading account assets.
At March 31, 2024 and December 31, 2023, the Corporation had commitments to enter into resale and forward-dated resale and securities borrowing agreements of $142.9 billion and $117.0 billion, and commitments to enter into forward-dated repurchase and securities lending agreements of $121.9 billion and $63.0 billion. A significant portion of these commitments will expire within the next 12 months.
At both March 31, 2024 and December 31, 2023, the Corporation had a commitment to originate or purchase up to $4.0 billion on a rolling 12-month basis, of auto loans and leases from a strategic partner. This commitment extends through November 2026 and can be terminated with 12 months prior notice.
At March 31, 2024 and December 31, 2023, the Corporation had unfunded equity investment commitments of $473 million and $477 million.
As a Federal Reserve member bank, the Corporation is required to subscribe to a certain amount of shares issued by its Federal Reserve district bank, which pays cumulative dividends at a prescribed rate. At both March 31, 2024 and December 31, 2023, the Corporation had paid $5.4 billion for half of its subscribed shares, with the remaining half subject to
call by the Federal Reserve district bank board, which the Corporation believes is remote.
Other Guarantees
Bank-owned Life Insurance Book Value Protection
The Corporation sells products that offer book value protection to insurance carriers who offer group life insurance policies to corporations, primarily banks. At March 31, 2024 and December 31, 2023, the notional amount of these guarantees totaled $3.5 billion and $3.8 billion. At March 31, 2024 and December 31, 2023, the Corporation’s maximum exposure related to these guarantees totaled $527 million and $577 million, with estimated maturity dates between 2033 and 2037.
Merchant Services
The Corporation in its role as merchant acquirer or as a sponsor of other merchant acquirers may be held liable for any reversed charges that cannot be collected from the merchants due to, among other things, merchant fraud or insolvency. If charges are properly reversed after a purchase and cannot be collected from either the merchants or merchant acquirers, the Corporation may be held liable for these reversed charges. The ability to reverse a charge is primarily governed by the applicable payment network rules and regulations, which include, but are not limited to, the type of charge, type of payment used and time limits. The total amount of transactions subject to reversal under payment network rules and regulations processed for the preceding six-month period, which was approximately $324 billion, is an estimate of the Corporation’s maximum potential exposure as of March 31, 2024. The Corporation’s risk in this
area primarily relates to circumstances where a cardholder has purchased goods or services for future delivery. The Corporation mitigates this risk by requiring cash deposits, guarantees, letters of credit or other types of collateral from certain merchants. The Corporation’s reserves for contingent losses, and the losses incurred related to the merchant processing activity were not significant.
Representations and Warranties Obligations and Corporate Guarantees
For more information on representations and warranties obligations and corporate guarantees, see Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
The reserve for representations and warranties obligations and corporate guarantees was $305 million and $604 million at March 31, 2024 and December 31, 2023 and is included in accrued expenses and other liabilities on the Consolidated Balance Sheet, and the related provision is included in other income in the Consolidated Statement of Income. The representations and warranties reserve represents the Corporation’s best estimate of incurred losses, is based on its experience in previous negotiations, and is subject to judgment, a variety of assumptions and known or unknown uncertainties. Future representations and warranties losses may occur in excess of the amounts recorded for these exposures; however, the Corporation does not expect such amounts to be material to the Corporation's financial condition and liquidity. See Litigation and Regulatory Matters below for the Corporation's combined range of possible loss in excess of the reserve for representations and warranties and the accrued liability for litigation.
Fixed Income Clearing Corporation Sponsored Member Repo Program
The Corporation acts as a sponsoring member in a repo program whereby the Corporation clears certain eligible resale and repurchase agreements through the Government Securities Division of the Fixed Income Clearing Corporation on behalf of clients that are sponsored members in accordance with the Fixed Income Clearing Corporation’s rules. As part of this program, the Corporation guarantees the payment and performance of its sponsored members to the Fixed Income Clearing Corporation. The Corporation’s guarantee obligation is secured by a security interest in cash or high-quality securities collateral placed by clients with the clearinghouse and therefore, the potential for the Corporation to incur significant losses under this arrangement is remote. The Corporation’s maximum potential exposure, without taking into consideration the related collateral, was $104.2 billion and $132.5 billion at March 31, 2024 and December 31, 2023.
Other Guarantees
In the normal course of business, the Corporation periodically guarantees the obligations of its affiliates in a variety of transactions including ISDA-related transactions and non-ISDA related transactions such as commodities trading, repurchase agreements, prime brokerage agreements and other transactions.
Guarantees of Certain Long-term Debt
The Corporation, as the parent company, fully and unconditionally guarantees the securities issued by BofA Finance LLC, a consolidated finance subsidiary of the Corporation, and effectively provides for the full and
unconditional guarantee of trust securities and capital securities issued by certain statutory trust companies that are 100 percent owned finance subsidiaries of the Corporation.
Other Contingencies
During the first quarter of 2024, the Federal Deposit Insurance Corporation (FDIC) increased its estimate of the loss to the Deposit Insurance Fund (DIF) arising from the closures of Silicon Valley Bank and Signature Bank. The estimated loss to the DIF will be recovered through the collection of a special assessment from certain insured depository institutions. Accordingly, the Corporation recorded a pretax charge of $700 million in other general operating expenses to increase its accrual to $2.8 billion for the Corporation’s estimated share of the FDIC special assessment. The Corporation’s share of the special assessment will remain subject to change as new information or updates to the estimated loss to the DIF become available.
Litigation and Regulatory Matters
The following disclosures supplement the disclosure in Note 12 – Commitments and Contingencies to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K (the prior commitments and contingencies disclosure).
In the ordinary course of business, the Corporation and its subsidiaries are routinely defendants in or parties to many pending and threatened legal, regulatory and governmental actions and proceedings. In view of the inherent difficulty of predicting the outcome of such matters, particularly where the claimants seek very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, the Corporation generally cannot predict the eventual outcome of the pending matters, timing of the ultimate resolution of these matters, or eventual loss, fines or penalties related to each pending matter.
As a matter develops, the Corporation, in conjunction with any outside counsel handling the matter, evaluates whether such matter presents a loss contingency that is probable and estimable, and, for the matters disclosed in the prior commitments and contingencies disclosure, whether a loss in excess of any accrued liability is reasonably possible in future periods. Once the loss contingency is deemed to be both probable and estimable, the Corporation will establish an accrued liability and record a corresponding amount of litigation-related expense. The Corporation continues to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established. Excluding expenses of internal and external legal service providers, litigation and regulatory investigation-related expense of $97 million and $89 million was recognized for the three months ended March 31, 2024 and 2023.
For any matter disclosed in the prior commitments and contingencies disclosure for which a loss in future periods is reasonably possible and estimable (whether in excess of an accrued liability or where there is no accrued liability) and for representations and warranties exposures, the Corporation’s estimated range of possible loss is $0 to $0.8 billion in excess of the accrued liability, if any, as of March 31, 2024.
The accrued liability and estimated range of possible loss are based upon currently available information and subject to significant judgment, a variety of assumptions and known and unknown uncertainties. The matters underlying the accrued liability and estimated range of possible loss are unpredictable and may change from time to time, and actual losses may vary significantly from the current estimate and accrual. The
estimated range of possible loss does not represent the Corporation’s maximum loss exposure.
Information is provided in the prior commitments and contingencies disclosure regarding the nature of the litigation and, where specified, associated claimed damages. Based on current knowledge, and taking into account accrued liabilities, management does not believe that loss contingencies arising from pending matters, including the matters described in the prior commitments and contingencies disclosure, will have a material adverse effect on the consolidated financial condition or liquidity of the Corporation. However, in light of the significant judgment, variety of assumptions and uncertainties involved in those matters, some of which are beyond the Corporation’s control, and the very large or indeterminate damages sought in some of those matters, an adverse outcome in one or more of those matters could be material to the Corporation’s business or results of operations for any particular reporting period, or cause significant reputational harm.
NOTE 11 Shareholders’ Equity
Common Stock
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Declared Quarterly Cash Dividends on Common Stock (1) |
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| Declaration Date |
|
Record Date |
|
Payment Date |
|
Dividend Per Share |
| April 25, 2024 |
|
June 7, 2024 |
|
June 28, 2024 |
|
$ |
0.24 |
|
| January 31, 2024 |
|
March 1, 2024 |
|
March 29, 2024 |
|
0.24 |
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(1) In 2024, and through April 30, 2024.
During the three months ended March 31, 2024, the Corporation repurchased and retired 73 million shares of common stock, which reduced shareholders’ equity by $2.5 billion.
During the three months ended March 31, 2024, in connection with employee stock plans, the Corporation issued 70 million shares of its common stock and, to satisfy tax withholding obligations, repurchased 26 million shares of common stock. At March 31, 2024, the Corporation had reserved 429 million unissued shares of common stock for future issuances under employee stock plans, convertible notes and preferred stock.
On April 25, 2024, the Board of Directors declared a quarterly common stock dividend of $0.24 per share.
Preferred Stock
During the three months ended March 31, 2024, the Corporation declared $532 million of cash dividends on preferred stock. For more information on the Corporation’s preferred stock, including liquidation preference, dividend requirements and redemption period, see Note 13 – Shareholders’ Equity to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
NOTE 12 Accumulated Other Comprehensive Income (Loss)
The table below presents the changes in accumulated OCI after-tax for the three months ended March 31, 2024 and 2023.
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| (Dollars in millions) |
Debt Securities |
|
Debit Valuation Adjustments |
|
Derivatives |
|
Employee
Benefit Plans
|
|
Foreign
Currency
|
|
Total |
| Balance, December 31, 2022 |
$ |
(2,983) |
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|
$ |
(881) |
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$ |
(11,935) |
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$ |
(4,309) |
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$ |
(1,048) |
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$ |
(21,156) |
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| Net change |
555 |
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|
10 |
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|
2,042 |
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|
10 |
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|
12 |
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|
2,629 |
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| Balance, March 31, 2023 |
$ |
(2,428) |
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$ |
(871) |
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$ |
(9,893) |
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$ |
(4,299) |
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$ |
(1,036) |
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$ |
(18,527) |
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| Balance, December 31, 2023 |
$ |
(2,410) |
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|
$ |
(1,567) |
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|
$ |
(8,016) |
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|
$ |
(4,748) |
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$ |
(1,047) |
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$ |
(17,788) |
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| Net change |
332 |
|
|
(188) |
|
|
(416) |
|
|
23 |
|
|
(20) |
|
|
(269) |
|
| Balance, March 31, 2024 |
$ |
(2,078) |
|
|
$ |
(1,755) |
|
|
$ |
(8,432) |
|
|
$ |
(4,725) |
|
|
$ |
(1,067) |
|
|
$ |
(18,057) |
|
The following table presents the net change in fair value recorded in accumulated OCI, net realized gains and losses reclassified into earnings and other changes for each component of OCI pre- and after-tax for the three months ended March 31, 2024 and 2023.
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Pretax |
|
Tax
effect |
|
After-
tax |
|
Pretax |
|
Tax
effect |
|
After-
tax |
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|
Three Months Ended March 31 |
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| (Dollars in millions) |
2024 |
|
2023 |
|
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| Debt securities: |
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| Net increase (decrease) in fair value |
$ |
457 |
|
|
$ |
(117) |
|
|
$ |
340 |
|
|
$ |
521 |
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|
$ |
(123) |
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|
$ |
398 |
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|
Net realized (gains) losses reclassified into earnings (1) |
(10) |
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|
2 |
|
|
(8) |
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|
210 |
|
|
(53) |
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|
157 |
|
|
|
|
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| Net change |
447 |
|
|
(115) |
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|
332 |
|
|
731 |
|
|
(176) |
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|
555 |
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| Debit valuation adjustments: |
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| Net increase (decrease) in fair value |
(257) |
|
|
64 |
|
|
(193) |
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|
9 |
|
|
(2) |
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|
7 |
|
|
|
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|
|
Net realized (gains) losses reclassified into earnings (1) |
7 |
|
|
(2) |
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|
5 |
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|
4 |
|
|
(1) |
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|
3 |
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|
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|
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| Net change |
(250) |
|
|
62 |
|
|
(188) |
|
|
13 |
|
|
(3) |
|
|
10 |
|
|
|
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|
|
|
| Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net increase (decrease) in fair value |
(1,065) |
|
|
268 |
|
|
(797) |
|
|
2,568 |
|
|
(643) |
|
|
1,925 |
|
|
|
|
|
|
|
Reclassifications into earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income |
458 |
|
|
(115) |
|
|
343 |
|
|
161 |
|
|
(40) |
|
|
121 |
|
|
|
|
|
|
|
| Market making and similar activities |
59 |
|
|
(14) |
|
|
45 |
|
|
— |
|
|
— |
|
|
— |
|
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|
|
| Compensation and benefits expense |
(9) |
|
|
2 |
|
|
(7) |
|
|
(5) |
|
|
1 |
|
|
(4) |
|
|
|
|
|
|
|
| Net realized (gains) losses reclassified into earnings |
508 |
|
|
(127) |
|
|
381 |
|
|
156 |
|
|
(39) |
|
|
117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net change |
(557) |
|
|
141 |
|
|
(416) |
|
|
2,724 |
|
|
(682) |
|
|
2,042 |
|
|
|
|
|
|
|
| Employee benefit plans: |
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
|
|
|
|
|
|
|
Net actuarial losses and other reclassified into earnings (2) |
30 |
|
|
(7) |
|
|
23 |
|
|
13 |
|
|
(3) |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net change |
30 |
|
|
(7) |
|
|
23 |
|
|
13 |
|
|
(3) |
|
|
10 |
|
|
|
|
|
|
|
| Foreign currency: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net increase (decrease) in fair value |
166 |
|
|
(186) |
|
|
(20) |
|
|
(77) |
|
|
89 |
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net change |
166 |
|
|
(186) |
|
|
(20) |
|
|
(77) |
|
|
89 |
|
|
12 |
|
|
|
|
|
|
|
| Total other comprehensive income (loss) |
$ |
(164) |
|
|
$ |
(105) |
|
|
$ |
(269) |
|
|
$ |
3,404 |
|
|
$ |
(775) |
|
|
$ |
2,629 |
|
|
|
|
|
|
|
(1) Reclassifications of pretax debt securities, DVA and foreign currency (gains) losses are recorded in other income in the Consolidated Statement of Income.
(2) Reclassifications of pretax employee benefit plan costs are recorded in other general operating expense in the Consolidated Statement of Income.
NOTE 13 Earnings Per Common Share
The calculation of earnings per common share (EPS) and diluted EPS for the three months ended March 31, 2024 and 2023 is presented below. For more information on the calculation of EPS, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
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|
Three Months Ended March 31 |
|
|
|
|
|
|
| (In millions, except per share information) |
2024 |
|
2023 |
|
|
|
|
|
|
|
|
| Earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
| Net income |
$ |
6,674 |
|
|
$ |
8,161 |
|
|
|
|
|
|
|
|
|
| Preferred stock dividends |
(532) |
|
|
(505) |
|
|
|
|
|
|
|
|
|
| Net income applicable to common shareholders |
$ |
6,142 |
|
|
$ |
7,656 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average common shares issued and outstanding |
7,968.2 |
|
|
8,065.9 |
|
|
|
|
|
|
|
|
|
| Earnings per common share |
$ |
0.77 |
|
|
$ |
0.95 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Diluted earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net income applicable to common shareholders |
$ |
6,142 |
|
|
$ |
7,656 |
|
|
|
|
|
|
|
|
|
| Add preferred stock dividends due to assumed conversions |
— |
|
|
56 |
|
|
|
|
|
|
|
|
|
| Net income allocated to common shareholders |
$ |
6,142 |
|
|
$ |
7,712 |
|
|
|
|
|
|
|
|
|
| Average common shares issued and outstanding |
7,968.2 |
|
|
8,065.9 |
|
|
|
|
|
|
|
|
|
Dilutive potential common shares (1) |
63.2 |
|
|
116.4 |
|
|
|
|
|
|
|
|
|
| Total diluted average common shares issued and outstanding |
8,031.4 |
|
|
8,182.3 |
|
|
|
|
|
|
|
|
|
| Diluted earnings per common share |
$ |
0.76 |
|
|
$ |
0.94 |
|
|
|
|
|
|
|
|
|
(1)Includes incremental dilutive shares from preferred stock, restricted stock units, restricted stock and warrants.
For the three months ended March 31, 2024, 62 million average dilutive potential common shares associated with the Series L preferred stock were antidilutive, whereas they were included in the diluted share count under the “if-converted” method for the three months ended March 31, 2023.
NOTE 14 Fair Value Measurements
Under applicable accounting standards, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. The Corporation determines the fair values of its financial instruments under applicable accounting standards and conducts a review of fair value hierarchy classifications on a quarterly basis. Transfers into or out of fair value hierarchy classifications are made if the significant inputs used in the financial models measuring the fair values of the assets and liabilities become unobservable or observable in the current marketplace. During the three months ended March 31, 2024, there were no changes to valuation approaches or techniques that had, or are expected to have, a material impact on the Corporation’s consolidated financial position or results of operations.
For more information regarding the fair value hierarchy, how the Corporation measures fair value and valuation techniques, see Note 1 – Summary of Significant Accounting Principles and Note 20 – Fair Value Measurements to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. The Corporation accounts for certain financial instruments under the fair value option. For more information, see Note 15 – Fair Value Option.
Recurring Fair Value
Assets and liabilities carried at fair value on a recurring basis at March 31, 2024 and December 31, 2023, including financial instruments that the Corporation accounts for under the fair value option, are summarized in the following tables.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
March 31, 2024 |
| |
Fair Value Measurements |
|
|
|
|
| (Dollars in millions) |
Level 1 |
|
Level 2 |
|
Level 3 |
|
Netting Adjustments (1) |
|
Assets/Liabilities at Fair Value |
| Assets |
|
|
|
|
|
|
|
|
|
Time deposits placed and other short-term investments |
$ |
1,494 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,494 |
|
Federal funds sold and securities borrowed or purchased under agreements to resell |
— |
|
|
474,932 |
|
|
— |
|
|
(316,651) |
|
|
158,281 |
|
| Trading account assets: |
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
65,085 |
|
|
833 |
|
|
— |
|
|
— |
|
|
65,918 |
|
| Corporate securities, trading loans and other |
— |
|
|
43,969 |
|
|
1,582 |
|
|
— |
|
|
45,551 |
|
| Equity securities |
68,592 |
|
|
43,673 |
|
|
214 |
|
|
— |
|
|
112,479 |
|
| Non-U.S. sovereign debt |
10,547 |
|
|
34,338 |
|
|
394 |
|
|
— |
|
|
45,279 |
|
| Mortgage trading loans, MBS and ABS: |
|
|
|
|
|
|
|
|
|
| U.S. government-sponsored agency guaranteed |
— |
|
|
39,383 |
|
|
1 |
|
|
— |
|
|
39,384 |
|
| Mortgage trading loans, ABS and other MBS |
— |
|
|
8,696 |
|
|
1,057 |
|
|
— |
|
|
9,753 |
|
Total trading account assets (2) |
144,224 |
|
|
170,892 |
|
|
3,248 |
|
|
— |
|
|
318,364 |
|
| Derivative assets |
20,783 |
|
|
259,096 |
|
|
3,834 |
|
|
(247,477) |
|
|
36,236 |
|
| AFS debt securities: |
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
227,956 |
|
|
883 |
|
|
— |
|
|
— |
|
|
228,839 |
|
| Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
| Agency |
— |
|
|
36,512 |
|
|
— |
|
|
— |
|
|
36,512 |
|
| Agency-collateralized mortgage obligations |
— |
|
|
2,450 |
|
|
— |
|
|
— |
|
|
2,450 |
|
| Non-agency residential |
— |
|
|
47 |
|
|
251 |
|
|
— |
|
|
298 |
|
| Commercial |
— |
|
|
10,575 |
|
|
— |
|
|
— |
|
|
10,575 |
|
| Non-U.S. securities |
1,271 |
|
|
19,889 |
|
|
91 |
|
|
— |
|
|
21,251 |
|
|
|
|
|
|
|
|
|
|
|
| Other taxable securities |
— |
|
|
3,238 |
|
|
— |
|
|
— |
|
|
3,238 |
|
| Tax-exempt securities |
— |
|
|
9,910 |
|
|
— |
|
|
— |
|
|
9,910 |
|
| Total AFS debt securities |
229,227 |
|
|
83,504 |
|
|
342 |
|
|
— |
|
|
313,073 |
|
| Other debt securities carried at fair value: |
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
1,895 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-agency residential MBS |
— |
|
|
192 |
|
|
71 |
|
|
— |
|
|
263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-U.S. and other securities |
921 |
|
|
6,967 |
|
|
— |
|
|
— |
|
|
7,888 |
|
| Total other debt securities carried at fair value |
2,816 |
|
|
7,159 |
|
|
71 |
|
|
— |
|
|
10,046 |
|
| Loans and leases |
— |
|
|
2,848 |
|
|
90 |
|
|
— |
|
|
2,938 |
|
| Loans held-for-sale |
— |
|
|
1,921 |
|
|
149 |
|
|
— |
|
|
2,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other assets (3) |
9,419 |
|
|
2,848 |
|
|
1,668 |
|
|
— |
|
|
13,935 |
|
|
|
|
|
|
|
|
|
|
|
Total assets (4) |
$ |
407,963 |
|
|
$ |
1,003,200 |
|
|
$ |
9,402 |
|
|
$ |
(564,128) |
|
|
$ |
856,437 |
|
|
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
|
|
|
| Interest-bearing deposits in U.S. offices |
$ |
— |
|
|
$ |
341 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
341 |
|
Federal funds purchased and securities loaned or sold under agreements to repurchase |
— |
|
|
523,518 |
|
|
— |
|
|
(316,651) |
|
|
206,867 |
|
| Trading account liabilities: |
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
17,709 |
|
|
— |
|
|
— |
|
|
— |
|
|
17,709 |
|
| Equity securities |
52,745 |
|
|
5,387 |
|
|
28 |
|
|
— |
|
|
58,160 |
|
| Non-U.S. sovereign debt |
15,128 |
|
|
11,487 |
|
|
— |
|
|
— |
|
|
26,615 |
|
| Corporate securities and other |
— |
|
|
11,696 |
|
|
43 |
|
|
— |
|
|
11,739 |
|
| Mortgage trading loans and ABS |
— |
|
|
103 |
|
|
— |
|
|
— |
|
|
103 |
|
| Total trading account liabilities |
85,582 |
|
|
28,673 |
|
|
71 |
|
|
— |
|
|
114,326 |
|
| Derivative liabilities |
23,123 |
|
|
262,672 |
|
|
6,502 |
|
|
(251,896) |
|
|
40,401 |
|
| Short-term borrowings |
— |
|
|
6,602 |
|
|
9 |
|
|
— |
|
|
6,611 |
|
| Accrued expenses and other liabilities |
11,063 |
|
|
3,523 |
|
|
19 |
|
|
— |
|
|
14,605 |
|
| Long-term debt |
— |
|
|
43,364 |
|
|
611 |
|
|
— |
|
|
43,975 |
|
Total liabilities (4) |
$ |
119,768 |
|
|
$ |
868,693 |
|
|
$ |
7,212 |
|
|
$ |
(568,547) |
|
|
$ |
427,126 |
|
|
|
|
|
|
|
|
|
|
|
(1)Amounts represent the impact of legally enforceable master netting agreements and also cash collateral held or placed with the same counterparties.
(2)Includes securities with a fair value of $18.8 billion that were segregated in compliance with securities regulations or deposited with clearing organizations. This amount is included in the parenthetical disclosure on the Consolidated Balance Sheet. Trading account assets also includes certain commodities inventory of $71 million that is accounted for at the lower of cost or net realizable value, which is the current selling price less any costs to sell.
(3)Includes MSRs, which are classified as Level 3 assets, of $995 million.
(4)Total recurring Level 3 assets were 0.29 percent of total consolidated assets, and total recurring Level 3 liabilities were 0.24 percent of total consolidated liabilities.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
|
Fair Value Measurements |
|
|
|
|
| (Dollars in millions) |
Level 1 |
|
Level 2 |
|
Level 3 |
|
Netting Adjustments (1) |
|
Assets/Liabilities at Fair Value |
| Assets |
|
|
|
|
|
|
|
|
|
Time deposits placed and other short-term investments |
$ |
1,181 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1,181 |
|
| Federal funds sold and securities borrowed or purchased under agreements to resell |
— |
|
|
436,340 |
|
|
— |
|
|
(303,287) |
|
|
133,053 |
|
| Trading account assets: |
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
65,160 |
|
|
1,963 |
|
|
— |
|
|
— |
|
|
67,123 |
|
| Corporate securities, trading loans and other |
— |
|
|
41,462 |
|
|
1,689 |
|
|
— |
|
|
43,151 |
|
| Equity securities |
47,431 |
|
|
41,380 |
|
|
187 |
|
|
— |
|
|
88,998 |
|
| Non-U.S. sovereign debt |
5,517 |
|
|
21,195 |
|
|
396 |
|
|
— |
|
|
27,108 |
|
| Mortgage trading loans, MBS and ABS: |
|
|
|
|
|
|
|
|
|
| U.S. government-sponsored agency guaranteed |
— |
|
|
38,802 |
|
|
2 |
|
|
— |
|
|
38,804 |
|
| Mortgage trading loans, ABS and other MBS |
— |
|
|
10,955 |
|
|
1,215 |
|
|
— |
|
|
12,170 |
|
Total trading account assets (2) |
118,108 |
|
|
155,757 |
|
|
3,489 |
|
|
— |
|
|
277,354 |
|
| Derivative assets |
14,676 |
|
|
272,244 |
|
|
3,422 |
|
|
(251,019) |
|
|
39,323 |
|
| AFS debt securities: |
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
176,764 |
|
|
902 |
|
|
— |
|
|
— |
|
|
177,666 |
|
| Mortgage-backed securities: |
|
|
|
|
|
|
|
|
|
| Agency |
— |
|
|
37,812 |
|
|
— |
|
|
— |
|
|
37,812 |
|
| Agency-collateralized mortgage obligations |
— |
|
|
2,544 |
|
|
— |
|
|
— |
|
|
2,544 |
|
| Non-agency residential |
— |
|
|
109 |
|
|
273 |
|
|
— |
|
|
382 |
|
| Commercial |
— |
|
|
10,435 |
|
|
— |
|
|
— |
|
|
10,435 |
|
| Non-U.S. securities |
1,093 |
|
|
21,679 |
|
|
103 |
|
|
— |
|
|
22,875 |
|
|
|
|
|
|
|
|
|
|
|
| Other taxable securities |
— |
|
|
4,835 |
|
|
— |
|
|
— |
|
|
4,835 |
|
| Tax-exempt securities |
— |
|
|
10,100 |
|
|
— |
|
|
— |
|
|
10,100 |
|
| Total AFS debt securities |
177,857 |
|
|
88,416 |
|
|
376 |
|
|
— |
|
|
266,649 |
|
| Other debt securities carried at fair value: |
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
1,690 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-agency residential MBS |
— |
|
|
211 |
|
|
69 |
|
|
— |
|
|
280 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-U.S. and other securities |
1,786 |
|
|
6,447 |
|
|
— |
|
|
— |
|
|
8,233 |
|
| Total other debt securities carried at fair value |
3,476 |
|
|
6,658 |
|
|
69 |
|
|
— |
|
|
10,203 |
|
| Loans and leases |
— |
|
|
3,476 |
|
|
93 |
|
|
— |
|
|
3,569 |
|
| Loans held-for-sale |
— |
|
|
1,895 |
|
|
164 |
|
|
— |
|
|
2,059 |
|
Other assets (3) |
8,052 |
|
|
2,152 |
|
|
1,657 |
|
|
— |
|
|
11,861 |
|
|
|
|
|
|
|
|
|
|
|
Total assets (4) |
$ |
323,350 |
|
|
$ |
966,938 |
|
|
$ |
9,270 |
|
|
$ |
(554,306) |
|
|
$ |
745,252 |
|
|
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
|
|
|
| Interest-bearing deposits in U.S. offices |
$ |
— |
|
|
$ |
284 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
284 |
|
| Federal funds purchased and securities loaned or sold under agreements to repurchase |
— |
|
|
481,896 |
|
|
— |
|
|
(303,287) |
|
|
178,609 |
|
| Trading account liabilities: |
|
|
|
|
|
|
|
|
|
| U.S. Treasury and government agencies |
14,908 |
|
|
65 |
|
|
— |
|
|
— |
|
|
14,973 |
|
| Equity securities |
51,772 |
|
|
4,710 |
|
|
12 |
|
|
— |
|
|
56,494 |
|
| Non-U.S. sovereign debt |
9,390 |
|
|
6,997 |
|
|
— |
|
|
— |
|
|
16,387 |
|
| Corporate securities and other |
— |
|
|
7,637 |
|
|
39 |
|
|
— |
|
|
7,676 |
|
| Total trading account liabilities |
76,070 |
|
|
19,409 |
|
|
51 |
|
|
— |
|
|
95,530 |
|
| Derivative liabilities |
14,375 |
|
|
280,908 |
|
|
5,916 |
|
|
(257,767) |
|
|
43,432 |
|
| Short-term borrowings |
— |
|
|
4,680 |
|
|
10 |
|
|
— |
|
|
4,690 |
|
| Accrued expenses and other liabilities |
8,969 |
|
|
2,483 |
|
|
21 |
|
|
— |
|
|
11,473 |
|
| Long-term debt |
— |
|
|
42,195 |
|
|
614 |
|
|
— |
|
|
42,809 |
|
Total liabilities (4) |
$ |
99,414 |
|
|
$ |
831,855 |
|
|
$ |
6,612 |
|
|
$ |
(561,054) |
|
|
$ |
376,827 |
|
|
|
|
|
|
|
|
|
|
|
(1)Amounts represent the impact of legally enforceable derivative master netting agreements and also cash collateral held or placed with the same counterparties.
(2)Includes securities with a fair value of $18.0 billion that were segregated in compliance with securities regulations or deposited with clearing organizations. This amount is included in the parenthetical disclosure on the Consolidated Balance Sheet. Trading account assets also includes certain commodities inventory of $42 million that is accounted for at the lower of cost or net realizable value, which is the current selling price less any costs to sell.
(3)Includes MSRs, which are classified as Level 3 assets, of $970 million.
(4)Total recurring Level 3 assets were 0.29 percent of total consolidated assets, and total recurring Level 3 liabilities were 0.23 percent of total consolidated liabilities.
The following tables present a reconciliation of all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months ended March 31, 2024 and 2023, including net realized and unrealized gains (losses) included in earnings and accumulated OCI. Transfers into Level 3 occur primarily due to
decreased price observability, and transfers out of Level 3 occur primarily due to increased price observability. Transfers occur on a regular basis for long-term debt instruments due to changes in the impact of unobservable inputs on the value of the embedded derivative in relation to the instrument as a whole.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 3 – Fair Value Measurements (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance January 1 |
|
Total
Realized/Unrealized Gains
(Losses) in Net
Income (2)
|
Gains
(Losses)
in OCI (3) |
Gross |
Gross
Transfers
into
Level 3 |
Gross
Transfers
out of
Level 3 |
Balance March 31 |
Change in Unrealized Gains (Losses) in Net Income Related to Financial Instruments Still Held (2) |
| (Dollars in millions) |
|
Purchases |
Sales |
Issuances |
Settlements |
| Three Months Ended March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Trading account assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate securities, trading loans and other |
$ |
1,689 |
|
|
$ |
7 |
|
$ |
(1) |
|
$ |
106 |
|
$ |
(57) |
|
$ |
3 |
|
$ |
(324) |
|
$ |
198 |
|
$ |
(39) |
|
$ |
1,582 |
|
$ |
(21) |
|
| Equity securities |
187 |
|
|
4 |
|
— |
|
38 |
|
(22) |
|
— |
|
(3) |
|
11 |
|
(1) |
|
214 |
|
(2) |
|
| Non-U.S. sovereign debt |
396 |
|
|
14 |
|
(9) |
|
11 |
|
(1) |
|
— |
|
(17) |
|
— |
|
— |
|
394 |
|
14 |
|
| Mortgage trading loans, MBS and ABS |
1,217 |
|
|
— |
|
— |
|
136 |
|
(284) |
|
— |
|
(27) |
|
72 |
|
(56) |
|
1,058 |
|
(24) |
|
| Total trading account assets |
3,489 |
|
|
25 |
|
(10) |
|
291 |
|
(364) |
|
3 |
|
(371) |
|
281 |
|
(96) |
|
3,248 |
|
(33) |
|
Net derivative assets (liabilities) (4) |
(2,494) |
|
|
29 |
|
— |
|
185 |
|
(336) |
|
— |
|
(248) |
|
(141) |
|
337 |
|
(2,668) |
|
(6) |
|
| AFS debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-agency residential MBS |
273 |
|
|
8 |
|
47 |
|
— |
|
— |
|
— |
|
(139) |
|
62 |
|
— |
|
251 |
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-U.S. and other taxable securities |
103 |
|
|
1 |
|
— |
|
— |
|
— |
|
— |
|
(12) |
|
— |
|
(1) |
|
91 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total AFS debt securities |
376 |
|
|
9 |
|
47 |
|
— |
|
— |
|
— |
|
(151) |
|
62 |
|
(1) |
|
342 |
|
8 |
|
Other debt securities carried at fair value – Non-agency residential MBS |
69 |
|
|
5 |
|
— |
|
— |
|
— |
|
— |
|
(20) |
|
17 |
|
— |
|
71 |
|
5 |
|
Loans and leases (5,6) |
93 |
|
|
— |
|
— |
|
— |
|
— |
|
1 |
|
(4) |
|
— |
|
— |
|
90 |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held-for-sale (5) |
164 |
|
|
(2) |
|
(1) |
|
— |
|
— |
|
— |
|
(12) |
|
— |
|
— |
|
149 |
|
(3) |
|
Other assets (6,7) |
1,657 |
|
|
55 |
|
(11) |
|
2 |
|
— |
|
46 |
|
(82) |
|
1 |
|
— |
|
1,668 |
|
34 |
|
Trading account liabilities – Equity securities |
(12) |
|
|
— |
|
— |
|
— |
|
(4) |
|
— |
|
— |
|
(14) |
|
2 |
|
(28) |
|
— |
|
|
Trading account liabilities – Corporate securities
and other
|
(39) |
|
|
(3) |
|
— |
|
(2) |
|
— |
|
(1) |
|
8 |
|
(6) |
|
— |
|
(43) |
|
(3) |
|
Short-term borrowings (5) |
(10) |
|
|
(1) |
|
— |
|
— |
|
— |
|
— |
|
2 |
|
— |
|
— |
|
(9) |
|
(1) |
|
Accrued expenses and other liabilities (5) |
(21) |
|
|
2 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(19) |
|
2 |
|
Long-term debt (5) |
(614) |
|
|
13 |
|
(15) |
|
— |
|
— |
|
— |
|
6 |
|
(1) |
|
— |
|
(611) |
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
| Trading account assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate securities, trading loans and other |
$ |
2,384 |
|
|
$ |
27 |
|
$ |
1 |
|
$ |
126 |
|
$ |
(120) |
|
$ |
14 |
|
$ |
(144) |
|
$ |
148 |
|
$ |
(114) |
|
$ |
2,322 |
|
$ |
3 |
|
| Equity securities |
145 |
|
|
(4) |
|
— |
|
6 |
|
(12) |
|
— |
|
— |
|
77 |
|
— |
|
212 |
|
(4) |
|
| Non-U.S. sovereign debt |
518 |
|
|
26 |
|
16 |
|
3 |
|
(6) |
|
— |
|
(16) |
|
— |
|
— |
|
541 |
|
26 |
|
| Mortgage trading loans, MBS and ABS |
1,552 |
|
|
(9) |
|
— |
|
74 |
|
(150) |
|
— |
|
(116) |
|
87 |
|
(138) |
|
1,300 |
|
(25) |
|
| Total trading account assets |
4,599 |
|
|
40 |
|
17 |
|
209 |
|
(288) |
|
14 |
|
(276) |
|
312 |
|
(252) |
|
4,375 |
|
— |
|
Net derivative assets (liabilities) (4) |
(2,893) |
|
|
69 |
|
— |
|
249 |
|
(268) |
|
— |
|
(315) |
|
321 |
|
58 |
|
(2,779) |
|
154 |
|
| AFS debt securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-agency residential MBS |
258 |
|
|
3 |
|
34 |
|
— |
|
— |
|
— |
|
(2) |
|
— |
|
— |
|
293 |
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Non-U.S. and other taxable securities |
195 |
|
|
— |
|
3 |
|
— |
|
— |
|
— |
|
(8) |
|
— |
|
(3) |
|
187 |
|
— |
|
| Tax-exempt securities |
51 |
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
51 |
|
— |
|
| Total AFS debt securities |
504 |
|
|
3 |
|
37 |
|
— |
|
— |
|
— |
|
(10) |
|
— |
|
(3) |
|
531 |
|
3 |
|
Other debt securities carried at fair value – Non-agency residential MBS |
119 |
|
|
(2) |
|
— |
|
— |
|
(19) |
|
— |
|
(2) |
|
— |
|
(2) |
|
94 |
|
(2) |
|
Loans and leases (5) |
253 |
|
|
2 |
|
— |
|
9 |
|
— |
|
— |
|
(37) |
|
16 |
|
— |
|
243 |
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held-for-sale (5) |
232 |
|
|
12 |
|
2 |
|
— |
|
(16) |
|
— |
|
(24) |
|
— |
|
— |
|
206 |
|
12 |
|
Other assets (6,7) |
1,799 |
|
|
10 |
|
1 |
|
6 |
|
— |
|
27 |
|
(76) |
|
2 |
|
— |
|
1,769 |
|
(17) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trading account liabilities – Corporate securities
and other
|
(58) |
|
|
— |
|
— |
|
— |
|
(2) |
|
(1) |
|
— |
|
(4) |
|
1 |
|
(64) |
|
— |
|
Short-term borrowings (5) |
(14) |
|
|
— |
|
— |
|
— |
|
(3) |
|
(1) |
|
9 |
|
— |
|
— |
|
(9) |
|
— |
|
Accrued expenses and other liabilities (5) |
(32) |
|
|
24 |
|
— |
|
(12) |
|
— |
|
— |
|
— |
|
— |
|
— |
|
(20) |
|
24 |
|
Long-term debt (5) |
(862) |
|
|
87 |
|
(6) |
|
(9) |
|
— |
|
— |
|
11 |
|
— |
|
7 |
|
(772) |
|
87 |
|
(1)Assets (liabilities). For assets, increase (decrease) to Level 3 and for liabilities, (increase) decrease to Level 3.
(2)Includes gains (losses) reported in earnings in the following income statement line items: Trading account assets/liabilities - market making and similar activities and other income; Net derivative assets (liabilities) - market making and similar activities and other income; AFS debt securities - other income; Other debt securities carried at fair value - other income; Loans and leases - other income; Loans held-for-sale - market making and similar activities and other income; Other assets - market making and similar activities and other income related to MSRs; Short-term borrowings - market making and similar activities; Accrued expenses and other liabilities - other income; Long-term debt - market making and similar activities.
(3)Includes unrealized gains (losses) in OCI on AFS debt securities, foreign currency translation adjustments, derivatives designated in cash flow hedges and the impact of changes in the Corporation’s credit spreads on long-term debt accounted for under the fair value option. Amounts include net unrealized gains of $11 million and $50 million related to financial instruments still held at March 31, 2024 and 2023.
(4)Net derivative assets (liabilities) include derivative assets of $3.8 billion and $3.6 billion and derivative liabilities of $6.5 billion and $6.3 billion at March 31, 2024 and 2023.
(5)Amounts represent instruments that are accounted for under the fair value option.
(6)Issuances represent loan originations and MSRs recognized following securitizations or whole-loan sales.
(7)Settlements primarily represent the net change in fair value of the MSR asset due to the recognition of modeled cash flows and the passage of time.
The following tables present information about significant unobservable inputs related to the Corporation’s material categories of Level 3 financial assets and liabilities at March 31, 2024 and December 31, 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quantitative Information about Level 3 Fair Value Measurements at March 31, 2024 |
|
|
|
|
|
|
| (Dollars in millions) |
|
|
Inputs |
| Financial Instrument |
Fair
Value |
Valuation
Technique |
Significant Unobservable
Inputs |
Ranges of
Inputs |
Weighted Average (1) |
Loans and Securities (2) |
|
|
|
|
|
| Instruments backed by residential real estate assets |
$ |
553 |
|
Discounted cash flow, Market comparables |
Yield |
0% to 15% |
9 |
% |
| Trading account assets – Mortgage trading loans, MBS and ABS |
147 |
|
Prepayment speed |
0% to 44% CPR |
9% CPR |
| Loans and leases |
84 |
|
Default rate |
0% to 6% CDR |
5% CDR |
|
|
|
|
|
| AFS debt securities – Non-agency residential |
251 |
|
Price |
$0 to $115 |
$77 |
|
|
|
|
|
| Other debt securities carried at fair value – Non-agency residential |
71 |
|
Loss severity |
0% to 73% |
29 |
% |
| Instruments backed by commercial real estate assets |
$ |
344 |
|
Discounted cash
flow |
Yield |
0% to 25% |
12 |
% |
| Trading account assets – Corporate securities, trading loans and other |
284 |
|
Price |
$0 to $100 |
$74 |
| Trading account assets – Mortgage trading loans, MBS and ABS |
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial loans, debt securities and other |
$ |
2,789 |
|
Discounted cash flow, Market comparables |
Yield |
5% to 38% |
13 |
% |
Trading account assets – Corporate securities, trading loans and other |
1,298 |
|
Prepayment speed |
10% to 20% |
16 |
% |
| Trading account assets – Non-U.S. sovereign debt |
394 |
|
Default rate |
3% to 4% |
4 |
% |
| Trading account assets – Mortgage trading loans, MBS and ABS |
851 |
|
Loss severity |
35% to 40% |
37 |
% |
|
|
|
|
|
| AFS debt securities – Non-U.S. and other taxable securities |
91 |
|
Price |
$0 to $157 |
$68 |
| Loans and leases |
6 |
|
|
|
|
| Loans held-for-sale |
149 |
|
|
|
|
|
|
|
|
|
|
| Other assets, primarily auction rate securities |
$ |
673 |
|
Discounted cash flow, Market comparables |
Price |
$10 to $95 |
$85 |
|
|
Discount rate |
11 |
% |
n/a |
|
|
|
|
|
|
|
|
|
|
| MSRs |
$ |
995 |
|
Discounted cash
flow |
Weighted-average life, fixed rate (5) |
0 to 12 years |
6 years |
|
|
Weighted-average life, variable rate (5) |
0 to 11 years |
3 years |
|
|
Option-adjusted spread, fixed rate |
7% to 14% |
9 |
% |
|
|
Option-adjusted spread, variable rate |
9% to 15% |
11 |
% |
| Structured liabilities |
|
|
|
|
|
| Long-term debt |
$ |
(611) |
|
Discounted cash flow, Market comparables, Industry standard derivative pricing (3) |
Yield |
15% to 31% |
18 |
% |
|
|
Price |
$0 to $100 |
$90 |
|
|
|
|
|
|
|
Natural gas forward price |
$1/MMBtu to $8/MMBtu |
$3 /MMBtu |
|
|
|
|
|
| Net derivative assets (liabilities) |
|
|
|
|
|
|
|
|
|
|
|
| Credit derivatives |
$ |
23 |
|
Discounted cash flow, Stochastic recovery correlation model |
Credit spreads |
1 to 76 bps |
55 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepayment speed |
15% CPR |
n/a |
|
|
Default rate |
2% CDR |
n/a |
|
|
Credit correlation |
21% to 63% |
58 |
% |
|
|
Price |
$0 to $94 |
$87 |
| Equity derivatives |
$ |
(1,462) |
|
Industry standard derivative pricing (3) |
Equity correlation |
0% to 100% |
65 |
% |
|
|
Long-dated equity volatilities |
1% to 150% |
41 |
% |
| Commodity derivatives |
$ |
(652) |
|
Discounted cash flow, Industry standard derivative pricing (3) |
Natural gas forward price |
$1/MMBtu to $8/MMBtu |
$3 /MMBtu |
|
|
|
|
|
|
|
Power forward price |
$22 to $93 |
$44 |
|
|
|
|
|
|
|
|
|
|
|
| Interest rate derivatives |
$ |
(577) |
|
Industry standard derivative pricing (4) |
Correlation (IR/IR) |
(35)% to 70% |
50 |
% |
|
|
Correlation (FX/IR) |
(25)% to 58% |
31 |
% |
|
|
Long-dated inflation rates |
(1)% to 11% |
0 |
% |
|
|
Long-dated inflation volatilities |
0% to 5% |
2 |
% |
|
|
Interest rate volatilities |
0% to 1% |
1 |
% |
|
|
|
|
|
| Total net derivative assets (liabilities) |
$ |
(2,668) |
|
|
|
|
|
(1)For loans and securities, structured liabilities and net derivative assets (liabilities), the weighted average is calculated based upon the absolute fair value of the instruments.
(2)The categories are aggregated based upon product type, which differs from financial statement classification. The following is a reconciliation to the line items in the table on page 80: Trading account assets – Corporate securities, trading loans and other of $1.6 billion, Trading account assets – Non-U.S. sovereign debt of $394 million, Trading account assets – Mortgage trading loans, MBS and ABS of $1.1 billion, AFS debt securities of $342 million, Other debt securities carried at fair value - Non-agency residential of $71 million, Other assets, including MSRs, of $1.7 billion, Loans and leases of $90 million and LHFS of $149 million.
(3)Includes models such as Monte Carlo simulation and Black-Scholes.
(4)Includes models such as Monte Carlo simulation, Black-Scholes and other methods that model the joint dynamics of interest, inflation and foreign exchange rates.
(5)The weighted-average life is a product of changes in market rates of interest, prepayment rates and other model and cash flow assumptions.
CPR = Constant Prepayment Rate
CDR = Constant Default Rate
MMBtu = Million British thermal units
IR = Interest Rate
FX = Foreign Exchange
n/a = not applicable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Quantitative Information about Level 3 Fair Value Measurements at December 31, 2023 |
|
|
|
|
|
| (Dollars in millions) |
|
|
Inputs |
| Financial Instrument |
Fair
Value |
Valuation
Technique |
Significant Unobservable
Inputs |
Ranges of
Inputs |
Weighted Average (1) |
Loans and Securities (2) |
|
|
|
|
|
| Instruments backed by residential real estate assets |
$ |
538 |
|
Discounted cash
flow, Market comparables |
Yield |
0% to 22% |
9 |
% |
| Trading account assets – Mortgage trading loans, MBS and ABS |
109 |
|
Prepayment speed |
1% to 42% CPR |
10% CPR |
| Loans and leases |
87 |
|
Default rate |
0% to 3% CDR |
1% CDR |
| AFS debt securities - Non-agency residential |
273 |
|
Price |
$0 to $115 |
$70 |
| Other debt securities carried at fair value - Non-agency residential |
69 |
|
Loss severity |
0% to 100% |
27 |
% |
| Instruments backed by commercial real estate assets |
$ |
363 |
|
Discounted cash
flow |
Yield |
0% to 25% |
12 |
% |
| Trading account assets – Corporate securities, trading loans and other |
301 |
|
Price |
$0 to $100 |
$75 |
| Trading account assets – Mortgage trading loans, MBS and ABS |
62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial loans, debt securities and other |
$ |
3,103 |
|
Discounted cash flow, Market comparables |
Yield |
5% to 59% |
13 |
% |
Trading account assets – Corporate securities, trading loans and other |
1,388 |
|
Prepayment speed |
10% to 20% |
16 |
% |
| Trading account assets – Non-U.S. sovereign debt |
396 |
|
Default rate |
3% to 4% |
4 |
% |
| Trading account assets – Mortgage trading loans, MBS and ABS |
1,046 |
|
Loss severity |
35% to 40% |
37 |
% |
|
|
|
|
|
| AFS debt securities – Non-U.S. and other taxable securities |
103 |
|
Price |
$0 to $157 |
$70 |
| Loans and leases |
6 |
|
|
|
|
| Loans held-for-sale |
164 |
|
|
|
|
| Other assets, primarily auction rate securities |
$ |
687 |
|
Discounted cash flow, Market comparables |
Price |
$10 to $95 |
$85 |
|
|
Discount rate |
10% |
n/a |
|
|
|
|
|
| MSRs |
$ |
970 |
|
Discounted cash
flow |
Weighted-average life, fixed rate (5) |
0 to 14 years |
6 years |
|
|
Weighted-average life, variable rate (5) |
0 to 11 years |
3 years |
|
|
Option-adjusted spread, fixed rate |
7% to 14% |
9 |
% |
|
|
Option-adjusted spread, variable rate |
9% to 15% |
12 |
% |
| Structured liabilities |
|
|
|
|
|
| Long-term debt |
$ |
(614) |
|
Discounted cash flow, Market comparables, Industry standard derivative pricing (3) |
Yield |
58% |
n/a |
|
|
Equity correlation |
5% to 97% |
25 |
% |
|
|
Price |
$0 to $100 |
$90 |
|
|
Natural gas forward price |
$1/MMBtu to $7/MMBtu |
$4/MMBtu |
| Net derivative assets (liabilities) |
|
|
|
|
|
Credit derivatives |
$ |
9 |
|
Discounted cash flow, Stochastic recovery correlation model |
Credit spreads |
2 to 79 bps |
59 bps |
|
|
|
|
|
|
|
|
|
|
|
|
Prepayment speed |
15% CPR |
n/a |
|
|
Default rate |
2% CDR |
n/a |
|
|
Credit correlation |
22% to 62% |
58 |
% |
|
|
Price |
$0 to $94 |
$87 |
Equity derivatives |
$ |
(1,386) |
|
Industry standard derivative pricing (3) |
Equity correlation |
0% to 99% |
67 |
% |
|
|
Long-dated equity volatilities |
4% to 102% |
34 |
% |
Commodity derivatives |
$ |
(633) |
|
Discounted cash flow, Industry standard derivative pricing (3) |
Natural gas forward price |
$1/MMBtu to $7/MMBtu |
$4/MMBtu |
|
|
Power forward price |
$21 to $91 |
$42 |
|
|
|
|
|
Interest rate derivatives |
$ |
(484) |
|
Industry standard derivative pricing (4) |
Correlation (IR/IR) |
(35)% to 89% |
65 |
% |
|
|
Correlation (FX/IR) |
(25)% to 58% |
35 |
% |
|
|
Long-dated inflation rates |
G(1)% to 11% |
0 |
% |
|
|
Long-dated inflation volatilities |
0% to 5% |
2 |
% |
|
|
Interest rates volatilities |
0% to 2% |
1 |
% |
| Total net derivative assets (liabilities) |
$ |
(2,494) |
|
|
|
|
|
(1)For loans and securities, structured liabilities and net derivative assets (liabilities), the weighted average is calculated based upon the absolute fair value of the instruments.
(2)The categories are aggregated based upon product type, which differs from financial statement classification. The following is a reconciliation to the line items in the table on page 81: Trading account assets – Corporate securities, trading loans and other of $1.7 billion, Trading account assets – Non-U.S. sovereign debt of $396 million, Trading account assets – Mortgage trading loans, MBS and ABS of $1.2 billion, AFS debt securities of $376 million, Other debt securities carried at fair value - Non-agency residential of $69 million, Other assets, including MSRs, of $1.7 billion, Loans and leases of $93 million and LHFS of $164 million.
(3)Includes models such as Monte Carlo simulation and Black-Scholes.
(4)Includes models such as Monte Carlo simulation, Black-Scholes and other methods that model the joint dynamics of interest, inflation and foreign exchange rates.
(5)The weighted-average life is a product of changes in market rates of interest, prepayment rates and other model and cash flow assumptions.
CPR = Constant Prepayment Rate
CDR = Constant Default Rate
MMBtu = Million British thermal units
IR = Interest Rate
FX = Foreign Exchange
n/a = not applicable
Uncertainty of Fair Value Measurements from Unobservable Inputs
For information on the types of instruments, valuation approaches and the impact of changes in unobservable inputs used in Level 3 measurements, see Note 20 – Fair Value Measurements to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Nonrecurring Fair Value
The Corporation holds certain assets that are measured at fair value only in certain situations (e.g., the impairment of an asset), and these measurements are referred to herein as nonrecurring. The amounts below represent assets still held as of the reporting date for which a nonrecurring fair value adjustment was recorded during the three months ended March 31, 2024 and 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets Measured at Fair Value on a Nonrecurring Basis |
|
|
|
|
|
March 31, 2024 |
|
Three Months Ended March 31, 2024 |
|
|
|
(Dollars in millions)
|
Level 2 |
|
Level 3 |
|
Gains (Losses) |
|
|
|
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
| Loans held-for-sale |
$ |
35 |
|
|
$ |
2,687 |
|
|
$ |
(56) |
|
|
|
|
|
|
Loans and leases (1) |
— |
|
|
45 |
|
|
(10) |
|
|
|
|
|
|
Foreclosed properties (2, 3) |
— |
|
|
44 |
|
|
(4) |
|
|
|
|
|
|
Other assets (4) |
— |
|
|
10 |
|
|
(13) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
March 31, 2023 |
|
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assets |
|
|
|
|
|
|
|
|
|
|
| Loans held-for-sale |
$ |
715 |
|
|
$ |
3,428 |
|
|
$ |
(34) |
|
|
|
|
|
|
Loans and leases (1) |
— |
|
|
57 |
|
|
(11) |
|
|
|
|
|
|
Foreclosed properties (2, 3) |
— |
|
|
4 |
|
|
(1) |
|
|
|
|
|
|
| Other assets |
— |
|
|
30 |
|
|
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
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|
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|
|
|
(1)Includes $3 million of losses on loans that were written down to a collateral value of zero during both the three months ended March 31, 2024 and 2023.
(2)Amounts are included in other assets on the Consolidated Balance Sheet and represent the carrying value of foreclosed properties that were written down subsequent to their initial classification as foreclosed properties. Losses on foreclosed properties include losses recorded during the first 90 days after transfer of a loan to foreclosed properties.
(3)Excludes $28 million and $60 million of properties acquired upon foreclosure of certain government-guaranteed loans (principally FHA-insured loans) at March 31, 2024 and 2023.
(4)Represents the fair value of certain impaired renewable energy investments.
The table below presents information about significant unobservable inputs utilized in the Corporation's nonrecurring Level 3 fair value measurements during the three months ended March 31, 2024 and the year ended December 31, 2023.
|
|
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|
Quantitative Information about Nonrecurring Level 3 Fair Value Measurements |
|
|
|
|
|
|
|
|
|
Inputs |
| Financial Instrument |
Fair Value |
Valuation
Technique |
Significant Unobservable
Inputs |
Ranges of
Inputs |
Weighted
Average (1)
|
| (Dollars in millions) |
Three Months Ended March 31, 2024 |
| Loans held-for-sale |
$ |
2,687 |
|
Pricing model |
Implied yield |
7% to 23% |
n/a |
Loans and leases (2) |
45 |
|
Market comparables |
OREO discount |
10% to 66% |
26 |
% |
|
|
|
Costs to sell |
8% to 24% |
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2023 |
|
|
|
|
|
|
| Loans held-for-sale |
$ |
2,793 |
|
Pricing model |
Implied yield |
7% to 23% |
n/a |
Loans and leases (2) |
153 |
|
Market comparables |
OREO discount |
10% to 66% |
26 |
% |
|
|
|
Costs to sell |
8% to 24% |
9 |
% |
Other assets (3) |
898 |
Discounted cash flow |
Discount rate |
7 |
% |
n/a |
(1)The weighted average is calculated based upon the fair value of the loans.
(2)Represents residential mortgages where the loan has been written down to the fair value of the underlying collateral.
(3)Represents the fair value of certain impaired renewable energy investments.
n/a = not applicable
NOTE 15 Fair Value Option
The Corporation elects to account for certain financial instruments under the fair value option. For more information on the primary financial instruments for which the fair value option elections have been made, see Note 21 – Fair Value Option to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K. The following tables provide information about the fair value carrying amount and the
contractual principal outstanding of assets and liabilities accounted for under the fair value option at March 31, 2024 and December 31, 2023, and information about where changes in the fair value of assets and liabilities accounted for under the fair value option are included in the Consolidated Statement of Income for the three months ended March 31, 2024 and 2023.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Option Elections |
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2024 |
|
December 31, 2023 |
(Dollars in millions) |
Fair Value
Carrying
Amount |
|
Contractual
Principal
Outstanding |
|
Fair Value
Carrying
Amount Less
Unpaid Principal |
|
Fair Value
Carrying
Amount |
|
Contractual
Principal
Outstanding |
|
Fair Value
Carrying
Amount Less
Unpaid Principal |
Federal funds sold and securities borrowed or purchased under agreements to resell |
$ |
158,281 |
|
|
$ |
158,257 |
|
|
$ |
24 |
|
|
$ |
133,053 |
|
|
$ |
133,001 |
|
|
$ |
52 |
|
Loans reported as trading account assets (1) |
7,778 |
|
|
14,978 |
|
|
(7,200) |
|
|
8,377 |
|
|
15,580 |
|
|
(7,203) |
|
| Trading inventory – other |
28,194 |
|
|
n/a |
|
n/a |
|
25,282 |
|
|
n/a |
|
n/a |
| Consumer and commercial loans |
2,938 |
|
|
2,993 |
|
|
(55) |
|
|
3,569 |
|
|
3,618 |
|
|
(49) |
|
Loans held-for-sale (1) |
2,070 |
|
|
2,780 |
|
|
(710) |
|
|
2,059 |
|
|
2,873 |
|
|
(814) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other assets |
2,664 |
|
|
n/a |
|
n/a |
|
1,986 |
|
|
n/a |
|
n/a |
| Long-term deposits |
341 |
|
|
414 |
|
|
(73) |
|
|
284 |
|
|
267 |
|
|
17 |
|
Federal funds purchased and securities loaned or sold under agreements to repurchase |
206,867 |
|
|
206,911 |
|
|
(44) |
|
|
178,609 |
|
|
178,634 |
|
|
(25) |
|
| Short-term borrowings |
6,611 |
|
|
6,619 |
|
|
(8) |
|
|
4,690 |
|
|
4,694 |
|
|
(4) |
|
| Unfunded loan commitments |
78 |
|
|
n/a |
|
n/a |
|
67 |
|
|
n/a |
|
n/a |
| Accrued expenses and other liabilities |
2,438 |
|
|
2,464 |
|
|
(26) |
|
|
1,341 |
|
|
1,347 |
|
|
(6) |
|
| Long-term debt |
43,975 |
|
|
47,667 |
|
|
(3,692) |
|
|
42,809 |
|
|
46,707 |
|
|
(3,898) |
|
(1)A significant portion of the loans reported as trading account assets and LHFS are distressed loans that were purchased at a deep discount to par, and the remainder are loans with a fair value near contractual principal outstanding.
n/a = not applicable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gains (Losses) Related to Assets and Liabilities Accounted for Under the Fair Value Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
2024 |
|
2023 |
(Dollars in millions) |
Market making
and similar
activities |
|
Other
Income |
|
Total |
|
Market making
and similar
activities |
|
Other
Income |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loans reported as trading account assets |
$ |
(15) |
|
|
$ |
— |
|
|
$ |
(15) |
|
|
$ |
57 |
|
|
$ |
— |
|
|
$ |
57 |
|
Trading inventory – other (1) |
1,911 |
|
|
— |
|
|
1,911 |
|
|
1,728 |
|
|
— |
|
|
1,728 |
|
| Consumer and commercial loans |
20 |
|
|
5 |
|
|
25 |
|
|
(123) |
|
|
30 |
|
|
(93) |
|
Loans held-for-sale (2) |
— |
|
|
(10) |
|
|
(10) |
|
|
— |
|
|
20 |
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unfunded loan commitments |
— |
|
|
(14) |
|
|
(14) |
|
|
— |
|
|
(24) |
|
|
(24) |
|
| Accrued expenses and other liabilities |
161 |
|
|
— |
|
|
161 |
|
|
(12) |
|
|
— |
|
|
(12) |
|
Long-term debt (3) |
209 |
|
|
(13) |
|
|
196 |
|
|
(918) |
|
|
(16) |
|
|
(934) |
|
Other (4) |
20 |
|
|
(7) |
|
|
13 |
|
|
46 |
|
|
(9) |
|
|
37 |
|
| Total |
$ |
2,306 |
|
|
$ |
(39) |
|
|
$ |
2,267 |
|
|
$ |
778 |
|
|
$ |
1 |
|
|
$ |
779 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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|
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|
|
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|
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|
|
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|
|
|
|
|
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|
|
|
|
|
|
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|
|
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|
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|
|
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|
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|
|
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|
|
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|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
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|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The gains (losses) in market making and similar activities are primarily offset by (losses) gains on trading liabilities that hedge these assets.
(2) Includes the value of IRLCs on funded loans, including those sold during the period.
(3) The net gains (losses) in market making and similar activities relate to the embedded derivatives in structured liabilities and are typically offset by (losses) gains on derivatives and securities that hedge these liabilities. For the cumulative impact of changes in the Corporation’s own credit spreads and the amount recognized in accumulated OCI, see Note 12 – Accumulated Other Comprehensive Income (Loss). For more information on how the Corporation’s own credit spread is determined, see Note 20 – Fair Value Measurements to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
(4) Includes gains (losses) on federal funds sold and securities borrowed or purchased under agreements to resell, other assets, long-term deposits, short-term borrowings and federal funds purchased and securities loaned or sold under agreements to repurchase.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains (Losses) Related to Borrower-specific Credit Risk for Assets and Liabilities Accounted for Under the Fair Value Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
|
|
| (Dollars in millions) |
2024 |
|
2023 |
|
|
|
|
|
|
| Loans reported as trading account assets |
$ |
(32) |
|
|
$ |
40 |
|
|
|
|
|
|
|
| Consumer and commercial loans |
3 |
|
|
24 |
|
|
|
|
|
|
|
| Loans held-for-sale |
1 |
|
|
2 |
|
|
|
|
|
|
|
| Unfunded loan commitments |
(14) |
|
|
(24) |
|
|
|
|
|
|
|
| Long-term debt |
(3) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 16 Fair Value of Financial Instruments
The following disclosures include financial instruments that are not carried at fair value or only a portion of the ending balance is carried at fair value on the Consolidated Balance Sheet. Certain loans, deposits, long-term debt, unfunded lending commitments and other financial instruments are accounted for under the fair value option. For more information, see Note 21 – Fair Value Option to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Fair Value of Financial Instruments
The carrying values and fair values by fair value hierarchy of certain financial instruments where only a portion of the ending balance was carried at fair value at March 31, 2024 and December 31, 2023 are presented in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value of Financial Instruments |
|
|
|
|
|
|
|
Fair Value |
|
Carrying Value |
|
Level 2 |
|
Level 3 |
|
Total |
| (Dollars in millions) |
March 31, 2024 |
| Financial assets |
|
|
|
|
|
|
|
Loans |
$ |
1,015,776 |
|
|
$ |
48,886 |
|
|
$ |
947,776 |
|
|
$ |
996,662 |
|
| Loans held-for-sale |
8,571 |
|
|
5,649 |
|
|
2,922 |
|
|
8,571 |
|
| Financial liabilities |
|
|
|
|
|
|
|
Deposits (1) |
1,946,496 |
|
|
1,947,737 |
|
|
— |
|
|
1,947,737 |
|
| Long-term debt |
296,346 |
|
|
299,793 |
|
|
897 |
|
|
300,690 |
|
Commercial unfunded lending commitments (2) |
1,236 |
|
|
58 |
|
|
3,183 |
|
|
3,241 |
|
|
|
|
|
|
|
|
|
|
December 31, 2023 |
| Financial assets |
|
|
|
|
|
|
|
Loans |
$ |
1,020,281 |
|
|
$ |
49,311 |
|
|
$ |
949,977 |
|
|
$ |
999,288 |
|
| Loans held-for-sale |
6,002 |
|
|
3,024 |
|
|
2,979 |
|
|
6,003 |
|
| Financial liabilities |
|
|
|
|
|
|
|
Deposits (1) |
1,923,827 |
|
|
1,925,015 |
|
|
— |
|
|
1,925,015 |
|
| Long-term debt |
302,204 |
|
|
303,070 |
|
|
913 |
|
|
303,983 |
|
Commercial unfunded lending commitments (2) |
1,275 |
|
|
44 |
|
|
3,927 |
|
|
3,971 |
|
(1) Includes demand deposits of $898.8 billion and $897.3 billion with no stated maturities at March 31, 2024 and December 31, 2023.
(2) The carrying value of commercial unfunded lending commitments is included in accrued expenses and other liabilities on the Consolidated Balance Sheet. The Corporation does not estimate the fair value of consumer unfunded lending commitments because, in many instances, the Corporation can reduce or cancel these commitments by providing notice to the borrower. For more information on commitments, see Note 10 – Commitments and Contingencies.
NOTE 17 Business Segment Information
The Corporation reports its results of operations through the following four business segments: Consumer Banking, Global Wealth & Investment Management, Global Banking and Global Markets, with the remaining operations recorded in All Other. For more information, see Note 23 – Business Segment Information to the Consolidated Financial Statements of the Corporation’s
2023 Annual Report on Form 10-K. The following tables presents net income (loss) and the components thereto (with net interest income on an FTE basis for the business segments, All Other and the total Corporation) for the three months ended March 31, 2024 and 2023, and total assets at March 31, 2024 and 2023 for each business segment, as well as All Other.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Results of Business Segments and All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
At and for the three months ended March 31 |
|
|
Total Corporation (1) |
|
|
|
Consumer Banking |
|
|
|
Global Wealth & Investment Management |
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
|
|
|
2024 |
|
2023 |
|
|
|
2024 |
|
2023 |
|
|
| Net interest income |
|
|
|
|
$ |
14,190 |
|
|
$ |
14,582 |
|
|
|
|
$ |
8,197 |
|
|
$ |
8,593 |
|
|
|
|
$ |
1,814 |
|
|
$ |
1,876 |
|
|
|
| Noninterest income |
|
|
|
|
11,786 |
|
|
11,810 |
|
|
|
|
1,969 |
|
|
2,113 |
|
|
|
|
3,777 |
|
|
3,439 |
|
|
|
| Total revenue, net of interest expense |
|
|
|
|
25,976 |
|
|
26,392 |
|
|
|
|
10,166 |
|
|
10,706 |
|
|
|
|
5,591 |
|
|
5,315 |
|
|
|
| Provision for credit losses |
|
|
|
|
1,319 |
|
|
931 |
|
|
|
|
1,150 |
|
|
1,089 |
|
|
|
|
(13) |
|
|
25 |
|
|
|
| Noninterest expense |
|
|
|
|
17,237 |
|
|
16,238 |
|
|
|
|
5,475 |
|
|
5,473 |
|
|
|
|
4,264 |
|
|
4,067 |
|
|
|
| Income before income taxes |
|
|
|
|
7,420 |
|
|
9,223 |
|
|
|
|
3,541 |
|
|
4,144 |
|
|
|
|
1,340 |
|
|
1,223 |
|
|
|
| Income tax expense |
|
|
|
|
746 |
|
|
1,062 |
|
|
|
|
885 |
|
|
1,036 |
|
|
|
|
335 |
|
|
306 |
|
|
|
| Net income |
|
|
|
|
$ |
6,674 |
|
|
$ |
8,161 |
|
|
|
|
$ |
2,656 |
|
|
$ |
3,108 |
|
|
|
|
$ |
1,005 |
|
|
$ |
917 |
|
|
|
| Period-end total assets |
|
|
|
|
$ |
3,273,803 |
|
|
$ |
3,194,657 |
|
|
|
|
$ |
1,060,482 |
|
|
$ |
1,124,438 |
|
|
|
|
$ |
343,718 |
|
|
$ |
349,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Global Banking |
|
|
|
Global Markets |
|
|
|
All Other |
|
|
| |
|
|
|
|
2024 |
|
2023 |
|
|
|
2024 |
|
2023 |
|
|
|
2024 |
|
2023 |
|
|
| Net interest income |
|
|
|
|
$ |
3,460 |
|
|
$ |
3,907 |
|
|
|
|
$ |
681 |
|
|
$ |
109 |
|
|
|
|
$ |
38 |
|
|
$ |
97 |
|
|
|
| Noninterest income |
|
|
|
|
2,520 |
|
|
2,296 |
|
|
|
|
5,202 |
|
|
5,517 |
|
|
|
|
(1,682) |
|
|
(1,555) |
|
|
|
| Total revenue, net of interest expense |
|
|
|
|
5,980 |
|
|
6,203 |
|
|
|
|
5,883 |
|
|
5,626 |
|
|
|
|
(1,644) |
|
|
(1,458) |
|
|
|
| Provision for credit losses |
|
|
|
|
229 |
|
|
(237) |
|
|
|
|
(36) |
|
|
(53) |
|
|
|
|
(11) |
|
|
107 |
|
|
|
| Noninterest expense |
|
|
|
|
3,012 |
|
|
2,940 |
|
|
|
|
3,492 |
|
|
3,351 |
|
|
|
|
994 |
|
|
407 |
|
|
|
| Income (loss) before income taxes |
|
|
|
|
2,739 |
|
|
3,500 |
|
|
|
|
2,427 |
|
|
2,328 |
|
|
|
|
(2,627) |
|
|
(1,972) |
|
|
|
| Income tax expense (benefit) |
|
|
|
|
753 |
|
|
945 |
|
|
|
|
704 |
|
|
640 |
|
|
|
|
(1,931) |
|
|
(1,865) |
|
|
|
| Net income (loss) |
|
|
|
|
$ |
1,986 |
|
|
$ |
2,555 |
|
|
|
|
$ |
1,723 |
|
|
$ |
1,688 |
|
|
|
|
$ |
(696) |
|
|
$ |
(107) |
|
|
|
| Period-end total assets |
|
|
|
|
$ |
623,204 |
|
|
$ |
591,231 |
|
|
|
|
$ |
902,741 |
|
|
$ |
861,477 |
|
|
|
|
$ |
343,658 |
|
|
$ |
267,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
(1)There were no material intersegment revenues.
The table below presents noninterest income and the associated components for the three months ended March 31, 2024 and 2023 for each business segment, All Other and the total Corporation. For more information, see Note 2 – Net Interest Income and Noninterest Income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest Income by Business Segment and All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Corporation |
|
|
|
Consumer Banking |
|
|
|
Global Wealth &
Investment Management |
|
|
|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
2024 |
|
2023 |
|
|
|
2024 |
|
2023 |
|
|
|
2024 |
|
2023 |
|
|
| Fees and commissions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Card income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interchange fees |
$ |
931 |
|
|
$ |
956 |
|
|
|
|
$ |
732 |
|
|
$ |
753 |
|
|
|
|
$ |
(4) |
|
|
$ |
— |
|
|
|
| Other card income |
532 |
|
|
513 |
|
|
|
|
540 |
|
|
521 |
|
|
|
|
14 |
|
|
12 |
|
|
|
| Total card income |
1,463 |
|
|
1,469 |
|
|
|
|
1,272 |
|
|
1,274 |
|
|
|
|
10 |
|
|
12 |
|
|
|
| Service charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposit-related fees |
1,122 |
|
|
1,097 |
|
|
|
|
578 |
|
|
599 |
|
|
|
|
11 |
|
|
11 |
|
|
|
| Lending-related fees |
320 |
|
|
313 |
|
|
|
|
— |
|
|
— |
|
|
|
|
12 |
|
|
8 |
|
|
|
| Total service charges |
1,442 |
|
|
1,410 |
|
|
|
|
578 |
|
|
599 |
|
|
|
|
23 |
|
|
19 |
|
|
|
| Investment and brokerage services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset management fees |
3,270 |
|
|
2,918 |
|
|
|
|
55 |
|
|
47 |
|
|
|
|
3,219 |
|
|
2,873 |
|
|
|
| Brokerage fees |
917 |
|
|
934 |
|
|
|
|
23 |
|
|
27 |
|
|
|
|
381 |
|
|
365 |
|
|
|
Total investment and brokerage services |
4,187 |
|
|
3,852 |
|
|
|
|
78 |
|
|
74 |
|
|
|
|
3,600 |
|
|
3,238 |
|
|
|
| Investment banking fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Underwriting income |
901 |
|
|
569 |
|
|
|
|
— |
|
|
— |
|
|
|
|
63 |
|
|
39 |
|
|
|
| Syndication fees |
294 |
|
|
231 |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
| Financial advisory services |
373 |
|
|
363 |
|
|
|
|
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
| Total investment banking fees |
1,568 |
|
|
1,163 |
|
|
|
|
— |
|
|
— |
|
|
|
|
63 |
|
|
39 |
|
|
|
| Total fees and commissions |
8,660 |
|
|
7,894 |
|
|
|
|
1,928 |
|
|
1,947 |
|
|
|
|
3,696 |
|
|
3,308 |
|
|
|
| Market making and similar activities |
3,888 |
|
|
4,712 |
|
|
|
|
5 |
|
|
5 |
|
|
|
|
34 |
|
|
34 |
|
|
|
| Other income (loss) |
(762) |
|
|
(796) |
|
|
|
|
36 |
|
|
161 |
|
|
|
|
47 |
|
|
97 |
|
|
|
| Total noninterest income |
$ |
11,786 |
|
|
$ |
11,810 |
|
|
|
|
$ |
1,969 |
|
|
$ |
2,113 |
|
|
|
|
$ |
3,777 |
|
|
$ |
3,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Banking |
|
|
|
Global Markets |
|
|
|
All Other (1) |
|
Three Months Ended March 31 |
|
|
|
2024 |
|
2023 |
|
|
|
2024 |
|
2023 |
|
|
|
2024 |
|
2023 |
|
|
| Fees and commissions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Card income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interchange fees |
$ |
186 |
|
|
$ |
187 |
|
|
|
|
$ |
17 |
|
|
$ |
16 |
|
|
|
|
$ |
— |
|
|
$ |
— |
|
|
|
| Other card income |
2 |
|
|
3 |
|
|
|
|
— |
|
|
— |
|
|
|
|
(24) |
|
|
(23) |
|
|
|
| Total card income |
188 |
|
|
190 |
|
|
|
|
17 |
|
|
16 |
|
|
|
|
(24) |
|
|
(23) |
|
|
|
| Service charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Deposit-related fees |
509 |
|
|
467 |
|
|
|
|
23 |
|
|
20 |
|
|
|
|
1 |
|
|
— |
|
|
|
| Lending-related fees |
241 |
|
|
247 |
|
|
|
|
67 |
|
|
58 |
|
|
|
|
— |
|
|
— |
|
|
|
| Total service charges |
750 |
|
|
714 |
|
|
|
|
90 |
|
|
78 |
|
|
|
|
1 |
|
|
— |
|
|
|
| Investment and brokerage services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Asset management fees |
— |
|
|
— |
|
|
|
|
— |
|
|
— |
|
|
|
|
(4) |
|
|
(2) |
|
|
|
| Brokerage fees |
18 |
|
|
9 |
|
|
|
|
495 |
|
|
533 |
|
|
|
|
— |
|
|
— |
|
|
|
Total investment and brokerage services |
18 |
|
|
9 |
|
|
|
|
495 |
|
|
533 |
|
|
|
|
(4) |
|
|
(2) |
|
|
|
| Investment banking fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Underwriting income |
381 |
|
|
229 |
|
|
|
|
510 |
|
|
314 |
|
|
|
|
(53) |
|
|
(13) |
|
|
|
| Syndication fees |
152 |
|
|
126 |
|
|
|
|
142 |
|
|
105 |
|
|
|
|
— |
|
|
— |
|
|
|
| Financial advisory services |
317 |
|
|
313 |
|
|
|
|
56 |
|
|
50 |
|
|
|
|
— |
|
|
— |
|
|
|
| Total investment banking fees |
850 |
|
|
668 |
|
|
|
|
708 |
|
|
469 |
|
|
|
|
(53) |
|
|
(13) |
|
|
|
| Total fees and commissions |
1,806 |
|
|
1,581 |
|
|
|
|
1,310 |
|
|
1,096 |
|
|
|
|
(80) |
|
|
(38) |
|
|
|
| Market making and similar activities |
68 |
|
|
45 |
|
|
|
|
3,830 |
|
|
4,398 |
|
|
|
|
(49) |
|
|
230 |
|
|
|
| Other income (loss) |
646 |
|
|
670 |
|
|
|
|
62 |
|
|
23 |
|
|
|
|
(1,553) |
|
|
(1,747) |
|
|
|
| Total noninterest income |
$ |
2,520 |
|
|
$ |
2,296 |
|
|
|
|
$ |
5,202 |
|
|
$ |
5,517 |
|
|
|
|
$ |
(1,682) |
|
|
$ |
(1,555) |
|
|
|
(1)All Other includes eliminations of intercompany transactions.
The table below presents a reconciliation of the four business segments’ total revenue, net of interest expense, on an FTE basis, and net income to the Consolidated Statement of Income, and total assets to the Consolidated Balance Sheet.
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|
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|
|
|
|
|
|
|
|
|
|
|
| Business Segment Reconciliations |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31 |
|
|
| (Dollars in millions) |
|
|
|
|
2024 |
|
2023 |
|
|
| Segments’ total revenue, net of interest expense |
|
|
|
|
$ |
27,620 |
|
|
$ |
27,850 |
|
|
|
Adjustments (1): |
|
|
|
|
|
|
|
|
|
| Asset and liability management activities |
|
|
|
|
(72) |
|
|
(225) |
|
|
|
| Liquidating businesses, eliminations and other |
|
|
|
|
(1,572) |
|
|
(1,233) |
|
|
|
| FTE basis adjustment |
|
|
|
|
(158) |
|
|
(134) |
|
|
|
| Consolidated revenue, net of interest expense |
|
|
|
|
$ |
25,818 |
|
|
$ |
26,258 |
|
|
|
| Segments’ total net income |
|
|
|
|
7,370 |
|
|
8,268 |
|
|
|
Adjustments, net-of-tax (1): |
|
|
|
|
|
|
|
|
|
| Asset and liability management activities |
|
|
|
|
(56) |
|
|
(174) |
|
|
|
| Liquidating businesses, eliminations and other |
|
|
|
|
(640) |
|
|
67 |
|
|
|
| Consolidated net income |
|
|
|
|
$ |
6,674 |
|
|
$ |
8,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
|
|
|
|
2024 |
|
2023 |
|
|
| Segments’ total assets |
|
|
|
|
$ |
2,930,145 |
|
|
$ |
2,927,034 |
|
|
|
Adjustments (1): |
|
|
|
|
|
|
|
|
|
| Asset and liability management activities, including securities portfolio |
|
|
|
|
1,267,264 |
|
|
1,229,425 |
|
|
|
| Elimination of segment asset allocations to match liabilities |
|
|
|
|
(987,051) |
|
|
(1,024,196) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Other |
|
|
|
|
63,445 |
|
|
62,394 |
|
|
|
| Consolidated total assets |
|
|
|
|
$ |
3,273,803 |
|
|
$ |
3,194,657 |
|
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|
|
(1)Adjustments include consolidated income, expense and asset amounts not specifically allocated to individual business segments.
Glossary
Alt-A Mortgage – A type of U.S. mortgage that is considered riskier than A-paper, or “prime,” and less risky than “subprime,” the riskiest category. Typically, Alt-A mortgages are characterized by borrowers with less than full documentation, lower credit scores and higher LTVs.
Assets Under Management (AUM) – The total market value of assets under the investment advisory and/or discretion of GWIM which generate asset management fees based on a percentage of the assets’ market values. AUM reflects assets that are generally managed for institutional, high net worth and retail clients, and are distributed through various investment products including mutual funds, other commingled vehicles and separate accounts.
Banking Book – All on- and off-balance sheet financial instruments of the Corporation except for those positions that are held for trading purposes.
Brokerage and Other Assets – Non-discretionary client assets which are held in brokerage accounts or held for safekeeping.
Committed Credit Exposure – Any funded portion of a facility plus the unfunded portion of a facility on which the lender is legally bound to advance funds during a specified period under prescribed conditions.
Credit Derivatives – Contractual agreements that provide protection against a specified credit event on one or more referenced obligations.
Credit Valuation Adjustment (CVA) – A portfolio adjustment required to properly reflect the counterparty credit risk exposure as part of the fair value of derivative instruments.
Debit Valuation Adjustment (DVA) – A portfolio adjustment required to properly reflect the Corporation’s own credit risk exposure as part of the fair value of derivative instruments and/or structured liabilities.
Funding Valuation Adjustment (FVA) – A portfolio adjustment required to include funding costs on uncollateralized derivatives and derivatives where the Corporation is not permitted to use the collateral it receives.
Interest Rate Lock Commitment (IRLC) – Commitment with a loan applicant in which the loan terms are guaranteed for a designated period of time subject to credit approval.
Letter of Credit – A document issued on behalf of a customer to a third party promising to pay the third party upon presentation of specified documents. A letter of credit effectively substitutes the issuer’s credit for that of the customer.
Loan-to-value (LTV) – A commonly used credit quality metric. LTV is calculated as the outstanding carrying value of the loan divided by the estimated value of the property securing the loan.
Macro Products – Include currencies, interest rates and commodities products.
Margin Receivable – An extension of credit secured by eligible securities in certain brokerage accounts.
Matched Book – Repurchase and resale agreements or securities borrowed and loaned transactions where the overall asset and liability position is similar in size and/or maturity. Generally, these are entered into to accommodate customers where the Corporation earns the interest rate spread.
Mortgage Servicing Right (MSR) – The right to service a mortgage loan when the underlying loan is sold or securitized. Servicing includes collections for principal, interest and escrow payments from borrowers and accounting for and remitting principal and interest payments to investors.
Nonperforming Loans and Leases – Includes loans and leases that have been placed on nonaccrual status, including nonaccruing loans whose contractual terms have been restructured in a manner that grants a concession to a borrower experiencing financial difficulties.
Prompt Corrective Action (PCA) – A framework established by the U.S. banking regulators requiring banks to maintain certain levels of regulatory capital ratios, comprised of five categories of capitalization: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” Insured depository institutions that fail to meet certain of these capital levels are subject to increasingly strict limits on their activities, including their ability to make capital distributions, pay management compensation, grow assets and take other actions.
Subprime Loans – Although a standard industry definition for subprime loans (including subprime mortgage loans) does not exist, the Corporation defines subprime loans as specific product offerings for higher risk borrowers.
Value-at-Risk (VaR) – VaR is a model that simulates the value of a portfolio under a range of hypothetical scenarios in order to generate a distribution of potential gains and losses. VaR represents the loss the portfolio is expected to experience with a given confidence level based on historical data. A VaR model is an effective tool in estimating ranges of potential gains and losses on our trading portfolios.
Key Metrics
Active Digital Banking Users – Mobile and/or online active users over the past 90 days.
Active Mobile Banking Users – Mobile active users over the past 90 days.
Book Value – Ending common shareholders’ equity divided by ending common shares outstanding.
Common Equity Ratio - Ending common shareholders’ equity divided by ending total assets.
Deposit Spread – Annualized net interest income divided by average deposits.
Dividend Payout Ratio – Common dividends declared divided by net income applicable to common shareholders.
Efficiency Ratio – Noninterest expense divided by total revenue, net of interest expense.
Gross Interest Yield – Effective annual percentage rate divided by average loans.
Net Interest Yield – Net interest income divided by average total interest-earning assets.
Operating Margin – Income before income taxes divided by total revenue, net of interest expense.
Return on Average Allocated Capital – Adjusted net income divided by allocated capital.
Return on Average Assets – Net income divided by total average assets.
Return on Average Common Shareholders’ Equity – Net income applicable to common shareholders divided by average common shareholders’ equity.
Return on Average Shareholders’ Equity – Net income divided by average shareholders’ equity.
Risk-adjusted Margin – Difference between total revenue, net of interest expense, and net credit losses divided by average loans.
Acronyms
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|
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| ABS |
Asset-backed securities |
| AFS |
Available-for-sale |
|
|
| ALM |
Asset and liability management |
|
|
| AUM |
Assets under management |
|
|
|
|
| BANA |
Bank of America, National Association |
| BHC |
Bank holding company |
|
|
| BofAS |
BofA Securities, Inc. |
| BofASE |
BofA Securities Europe SA |
| bps |
Basis points |
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|
|
|
|
| CCAR |
Comprehensive Capital Analysis and Review |
|
|
|
|
| CDO |
Collateralized debt obligation |
|
|
| CECL |
Current expected credit losses |
| CET1 |
Common equity tier 1 |
|
|
| CFTC |
Commodity Futures Trading Commission |
|
|
| CLO |
Collateralized loan obligation |
| CLTV |
Combined loan-to-value |
|
|
|
|
| CVA |
Credit valuation adjustment |
| DIF |
Deposit Insurance Fund |
|
|
| DVA |
Debit valuation adjustment |
|
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|
|
| EPS |
Earnings per common share |
|
|
| ESG |
Environmental, social and governance |
|
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|
|
| FDIC |
Federal Deposit Insurance Corporation |
|
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|
|
| FHA |
Federal Housing Administration |
|
|
| FHLB |
Federal Home Loan Bank |
| FHLMC |
Freddie Mac |
| FICC |
Fixed income, currencies and commodities |
| FICO |
Fair Isaac Corporation (credit score) |
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|
|
| FNMA |
Fannie Mae |
| FTE |
Fully taxable-equivalent |
| FVA |
Funding valuation adjustment |
| GAAP |
Accounting principles generally accepted in the United States of America |
| GLS |
Global Liquidity Sources |
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| GNMA |
Government National Mortgage Association |
| G-SIB |
Global systemically important bank |
| GWIM |
Global Wealth & Investment Management |
| HELOC |
Home equity line of credit |
| HQLA |
High Quality Liquid Assets |
| HTM |
Held-to-maturity |
|
|
|
|
| IRLC |
Interest rate lock commitment |
|
|
| ISDA |
International Swaps and Derivatives Association, Inc. |
| LCR |
Liquidity Coverage Ratio |
|
|
| LHFS |
Loans held-for-sale |
|
|
| LTV |
Loan-to-value |
|
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|
|
| MBS |
Mortgage-backed securities |
| MD&A |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
|
| MLI |
Merrill Lynch International |
|
|
| MLPF&S |
Merrill Lynch, Pierce, Fenner & Smith Incorporated |
|
|
| MSA |
Metropolitan Statistical Area |
| MSR |
Mortgage servicing right |
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|
|
| NSFR |
Net Stable Funding Ratio |
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|
|
| OCI |
Other comprehensive income |
|
|
| OREO |
Other real estate owned |
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| PCA |
Prompt Corrective Action |
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|
|
| RWA |
Risk-weighted assets |
|
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|
|
| SBLC |
Standby letter of credit |
|
|
| SCB |
Stress capital buffer |
|
|
| SEC |
Securities and Exchange Commission |
|
|
| SLR |
Supplementary leverage ratio |
| SOFR |
Secured Overnight Financing Rate |
|
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|
|
|
|
| TLAC |
Total loss-absorbing capacity |
|
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|
|
|
| VA |
U.S. Department of Veterans Affairs |
| VaR |
Value-at-Risk |
| VIE |
Variable interest entity |
Part II. Other Information
Bank of America Corporation and Subsidiaries
Item 1. Legal Proceedings
See Litigation and Regulatory Matters in Note 10 – Commitments and Contingencies to the Consolidated Financial Statements, which is incorporated by reference in this Item 1, for litigation and regulatory disclosure that supplements the disclosure in Note 12 – Commitments and Contingencies to the
Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K.
Item 1A. Risk Factors
There are no material changes from the risk factors set forth under Part 1, Item 1A. Risk Factors of the Corporation’s 2023 Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The table below presents share repurchase activity for the three months ended March 31, 2024. The primary source of funds for cash distributions by the Corporation to its shareholders is dividends received from its banking subsidiaries. Each of the banking subsidiaries is subject to various regulatory policies and requirements relating to the payment of dividends, including requirements to maintain capital above regulatory minimums. All of the Corporation’s preferred stock outstanding has preference over the Corporation’s common stock with respect to payment of dividends.
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| (Dollars in millions, except per share information; shares in thousands) |
Total Common Shares Repurchased (1,2) |
|
Weighted-Average Per Share Price |
|
Total Shares
Purchased as
Part of Publicly
Announced Programs (2)
|
|
Remaining Buyback
Authority Amounts |
| January 1 - 31, 2024 |
13,259 |
|
|
$ |
32.68 |
|
|
12,110 |
|
|
$ |
12,347 |
|
| February 1 - 29, 2024 |
45,003 |
|
|
33.76 |
|
|
25,483 |
|
|
11,492 |
|
| March 1 - 31, 2024 |
40,360 |
|
|
35.61 |
|
|
34,957 |
|
|
10,242 |
|
| Three months ended March 31, 2024 |
98,622 |
|
|
34.38 |
|
|
72,550 |
|
|
|
(1)Includes 26 million shares of the Corporation’s common stock acquired by the Corporation in connection with satisfaction of tax withholding obligations on vested restricted stock or restricted stock units and certain forfeitures and terminations of employment-related awards and for potential re-issuance to certain employees under equity incentive plans.
(2)In October 2021, the Corporation’s Board of Directors (Board) authorized the repurchase of up to $25 billion of common stock over time (October 2021 Authorization). Additionally, the Board authorized repurchases to offset shares awarded under equity-based compensation plans. In September 2023, the Board modified the October 2021 Authorization, effective October 1, 2023, to include repurchases to offset shares awarded under equity-based compensation plans when determining the remaining repurchase authority. During the three months ended March 31, 2024, pursuant to the Board’s authorizations, the Corporation repurchased approximately 73 million shares, or $2.5 billion, of its common stock, including repurchases to offset shares awarded under equity-based compensation plans. For more information, see Capital Management – CCAR and Capital Planning in the MD&A on page 16 and Note 11 – Shareholders’ Equity to the Consolidated Financial Statements.
The Corporation did not have any unregistered sales of equity securities during the three months ended March 31, 2024.
Item 5. Other Information
Trading Arrangements
During the fiscal quarter ended March 31, 2024, none of the Corporation’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (in each case, as defined in Item 408 of Regulation S-K) for the purchase or sale of the Corporation’s securities.
Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934
Pursuant to Section 13(r) of the Exchange Act, an issuer is required to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with individuals or entities designated pursuant to certain Executive Orders. Disclosure may be required even where the
activities, transactions or dealings were conducted in compliance with applicable law. Except as set forth below, as of the date of this Quarterly Report on Form 10-Q, the Corporation is not aware of any other activity, transaction or dealing by any of its affiliates during the quarter ended March 31, 2024 that requires disclosure under Section 13(r) of the Exchange Act.
During the first quarter of 2024, Bank of America, National Association (BANA), a U.S. subsidiary of Bank of America Corporation, processed 14 authorized wire payments totaling $5,603,466 pursuant to a general license issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control regarding Afghanistan or governing institutions in Afghanistan. These payments for BANA clients were processed to Afghan state-owned banks, which are subject to Executive Order 13224. There was no measurable gross revenue or net profit to the Corporation relating to these transactions, except nominal fees received by BANA for processing payments. The Corporation may in the future engage in similar transactions for its clients to the extent permitted by U.S. law.
Item 6. Exhibits
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Incorporated by Reference |
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| Exhibit No. |
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Description |
Notes |
Form |
Exhibit |
Filing Date |
File No. |
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| 3.1 |
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|
10-Q |
3.1 |
4/29/22 |
1-6523 |
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| 3.2 |
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10-K |
3.2 |
2/22/23 |
1-6523 |
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| 4.1 |
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S-3 |
4.4 |
3/5/2024 |
333-277673 |
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| 4.2 |
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S-3 |
4.6 |
3/5/2024 |
333-277673 |
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| 10.1 |
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1, 2 |
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| 10.2 |
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1, 2 |
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| 10.3 |
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1, 2 |
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| 10.4 |
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1, 2 |
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| 10.5 |
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1, 2 |
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| 22 |
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10-K |
22 |
2/22/23 |
1-6523 |
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| 31.1 |
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1 |
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| 31.2 |
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| 32.1 |
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| 32.2 |
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| 101.INS |
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Inline XBRL Instance Document |
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| 101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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| 101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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| 101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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| 101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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| 101.DEF |
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Inline XBRL Taxonomy Extension Definitions Linkbase Document |
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| 104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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(1)Filed herewith.
(2)Exhibit is a management contract or compensatory plan or arrangement.
(3)Furnished herewith. This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
(4)The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Bank of America Corporation
Registrant
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| Date: |
April 30, 2024 |
/s/ Rudolf A. Bless |
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Rudolf A. Bless
Chief Accounting Officer |
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EX-10.1
2
bac-0331202410xqex101.htm
EX-10.1
Document
Form of Cash-Settled Restricted Stock Units Award Agreement
Award Agreement
This document contains your Award Agreement under the Bank of America Corporation Equity Plan.
Bank of America Corporation Equity Plan Restricted Stock Units Award Agreement
Granted to:
Grant date:
Grant type:
Grant code:
Number granted:
Note: The number of Restricted Stock Units is based on a “divisor price” of $[price], which is the ten (10)-day average closing price of Bank of America Corporation common stock for the ten (10) business days immediately preceding and including [date].
This Restricted Stock Units Award Agreement and all Exhibits hereto (the “Agreement”) is made between Bank of America Corporation, a Delaware corporation (“Bank of America”), and you, an employee of Bank of America or one of its Subsidiaries.
Bank of America sponsors the Bank of America Corporation Equity Plan (the “Stock Plan”). A Prospectus describing the Stock Plan has been delivered to you. The Stock Plan itself is available upon request, and its terms and provisions are incorporated herein by reference. When used herein, the terms which are defined in the Stock Plan shall have the meanings given to them in the Stock Plan, as modified herein (if applicable).
The Restricted Stock Units covered by this Agreement are being granted to you in connection with the Bank of America Corporation Executive Incentive Compensation Plan, subject to the following terms and provisions.
1. Subject to the terms and conditions of the Stock Plan and this Agreement, Bank of America grants to you the number of Restricted Stock Units shown above. Each Restricted Stock Unit shall have a value equal to the Fair Market Value of one (1) share of Bank of America common stock.
2. You acknowledge having read the Prospectus and agree to be bound by all the terms and conditions of the Stock Plan and this Agreement.
3. The Restricted Stock Units covered by this Award shall become earned by, and payable to, you in accordance with the terms and conditions of the Stock Plan and this Agreement in the amounts and on the dates shown on the enclosed Exhibit A.
4. If a cash dividend is paid with respect to Bank of America common stock, you shall not receive any dividend equivalents, additional full or fractional Restricted Stock Units or other cash payments with respect to such cash dividends.
5. You may designate a beneficiary to receive payment in connection with the Restricted Stock Units granted hereunder in the event of your death while in service with Bank of America or its Subsidiaries in accordance with Bank of America’s beneficiary designation procedures, as in effect from time to time. Any beneficiary designation in effect at the time of your termination of employment with Bank of America and its Subsidiaries (other than a termination of employment due to your death) will remain in effect following your termination of employment unless you change your beneficiary designation or it otherwise ceases to be enforceable and/or valid in accordance with Bank of America’s beneficiary designation procedures, as in effect from time to time. If you do not designate a beneficiary or if your designated beneficiary does not survive you, then your beneficiary will be your estate.
6. The existence of this Award shall not affect in any way the right or power of Bank of America or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in Bank of America’s capital structure or its business, or any merger or consolidation of Bank of America, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or otherwise affecting the Bank of America common stock or the rights thereof, or the dissolution or liquidation of Bank of America, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
7. Bank of America may, in its sole discretion, decide to deliver any documents related to this Award or future Awards that may be granted under the Stock Plan by electronic means or request your consent to participate in the Stock Plan by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, agree to participate in the Stock Plan through an online or electronic system established and maintained by Bank of America or a third party designated by Bank of America.
Any notice which either party hereto may be required or permitted to give to the other shall be in writing and may be delivered personally, by intraoffice mail, by fax, by electronic mail or other electronic means, or via a postal service, postage prepaid, to such electronic mail or postal address and directed to such person as Bank of America may notify you from time to time; and to you at your electronic mail or postal address as shown on the records of Bank of America from time to time or as otherwise determined appropriate by Bank of America, in its sole discretion, or at such other electronic mail or postal address as you, by notice to Bank of America, may designate in writing from time to time.
8. To the extent allowed by and consistent with applicable law and any applicable limitations period, if it is determined at any time that you have engaged in Detrimental Conduct or engaged in any hedging or derivative transactions involving Bank of America common stock in violation of the Bank of America Corporation Code of Conduct that would undermine the performance incentives created by the Award, Bank of America will be entitled to recover from you in its sole discretion some or all of the cash paid to you pursuant to this Agreement. You recognize that if you engage in Detrimental Conduct or any hedging or derivative transactions involving Bank of America common stock the losses to Bank of America and/or its Subsidiaries may amount to the full value of any cash paid to you pursuant to this Agreement. In addition, the Award is subject to the requirements of (i) Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations thereunder (the “Dodd-Frank clawback rules”), (ii) similar rules under the laws of any other jurisdiction and (iii) any policies adopted by Bank of America to implement such requirements, all to the extent determined by Bank of America in its discretion to be applicable to you. For the avoidance of doubt, if the Dodd-Frank clawback rules and any implementing policy apply to you, then (A) you will not be entitled to earn or retain any portion of this Award that is determined to be erroneously awarded compensation, and (B) Bank of America may take action against this Award or any proceeds you receive from it to recover any erroneously awarded compensation you may have received from Bank of America (whether related to this Award or otherwise), all in accordance with the Dodd-Frank clawback rules and the applicable implementing policy (including the Incentive Compensation Recoupment Policy) and subject to the requirements of applicable law.
9. You acknowledge that Bank of America has not provided you with any legal advice. You have the right to consult with, and should consult with, your personal legal advisor prior to accepting this Agreement.
10. You acknowledge that, regardless of any action taken by Bank of America or your employer, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (or, if applicable, your portion thereof) related to your participation in the Stock Plan (“Tax-Related Items”) is and remains your responsibility and may exceed the amount (if any) withheld by Bank of America or your employer. You further acknowledge that Bank of America and/or your employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including but not limited to the grant and vesting of the Restricted Stock Units, your satisfaction of any age and/or length of service criteria or payout of the Award, (ii) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the Restricted Stock Units to reduce or eliminate your liability for Tax-Related Items or
achieve any specific tax result and (iii) do not commit to and are under no obligation to use a withholding method for Tax-Related Items which results in the most favorable or any particular tax treatment for you. Further, if you have become subject to Tax-Related Items in more than one jurisdiction, you acknowledge that Bank of America or your employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
In the event Bank of America determines that it and/or your employer must withhold any Tax-Related Items, you agree as a condition of the grant of the Restricted Stock Units to make arrangements satisfactory to Bank of America and/or your employer to enable it to satisfy all withholding requirements by all legal means, including, but not limited to, withholding any applicable Tax-Related Items from the pay-out of the Restricted Stock Units. In addition, you authorize Bank of America and/or your employer to fulfill its withholding obligations by all legal means, including, but not limited to, withholding Tax-Related Items from your wages, salary or other cash compensation Bank of America or your employer pays to you. Bank of America may refuse to pay any earned Restricted Stock Units if you fail to comply with any obligations in connection with the Tax-Related Items.
11. The validity, construction and effect of this Agreement are governed by, and subject to, the laws of the State of Delaware and the laws of the United States, as provided in the Stock Plan, unless otherwise required by applicable law. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of North Carolina and agree that such litigation shall be conducted solely in the courts of Mecklenburg County, North Carolina or the federal courts for the United States for the Western District of North Carolina, where this Award is made and/or to be performed, and no other courts, unless otherwise required by applicable law.
12. In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included. This Agreement constitutes the final understanding between you and Bank of America regarding the Restricted Stock Units. Any prior agreements, commitments or negotiations concerning the Restricted Stock Units are superseded. Subject to the terms of the Stock Plan, this Agreement may only be amended by a written instrument signed by both parties.
13. If you move to any country outside of the United States during the term of your Award, additional terms and conditions may apply to your Award. Bank of America reserves the right to impose other requirements on the Award to the extent Bank of America determines it is necessary or advisable for legal or administrative reasons and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
IN WITNESS WHEREOF, Bank of America has caused this Agreement to be executed by its duly authorized officer, and you have hereunto set your hand, all effective as of the grant date listed above.
/s/ Brian T. Moynihan
Brian T. Moynihan
Chair and Chief Executive Officer
Exhibit A
Bank of America Corporation Equity Plan
PAYMENT OF RESTRICTED STOCK UNITS
(a) PAYMENT SCHEDULE. Subject to the provisions of paragraphs (b), (c) and (e) below, the Restricted Stock Units shall be earned and payable if you remain employed with Bank of America and its Subsidiaries through each of the payment dates as follows:
[schedule]
Payment shall be made as soon as administratively practicable, generally within thirty (30) days after each applicable Payment Date.
(b) IMPACT OF TERMINATION OF EMPLOYMENT ON PAYMENT OF RESTRICTED STOCK UNITS. If your employment with Bank of America and its Subsidiaries terminates prior to any of the above Payment Date(s), then any portion of the Restricted Stock Units that has not yet become earned and payable shall become earned and payable or be canceled depending on the reason for termination as follows.
(i) Death or Disability. Any unearned portion of the Restricted Stock Units shall become immediately earned and payable as of the date of your termination of employment if your termination is due to your death or Disability. Payment will be made as soon as administratively practicable, generally within thirty (30) days after notification of termination from the payroll system.
(ii) All Other Terminations. In the case of All Other Terminations, any portion of the Restricted Stock Units that was not already earned and payable pursuant to paragraph (a) above as of the date of termination of employment shall be canceled as of that date.
(c) COVENANTS.
(i) Detrimental Conduct. You agree that during any period in which the Restricted Stock Units remain payable, you will not engage in Detrimental Conduct.
(ii) Hedging or Derivative Transactions. You agree that during any period in which the Restricted Stock Units remain payable, you will not engage in any hedging or derivative transactions involving Bank of America common stock in violation of the Bank of America Corporation Code of Conduct that would undermine the performance incentives created by the Award.
(iii) Remedies. Payment of Restricted Stock Units in accordance with the schedule set forth in paragraph (a) above is specifically conditioned on the requirement that at all times prior to each Payment Date, you do not engage in Detrimental Conduct or hedging or derivative transactions involving Bank of America common stock, as described in paragraphs (c)(i) and (ii) during such period. If Bank of America determines in its reasonable business judgment that you have failed to satisfy the foregoing requirements, then any portion of the Restricted Stock Units that has not yet been paid as of the date of such determination shall be immediately canceled as of the date of such determination.
(d) FORM OF PAYMENT. Payment of Restricted Stock Units shall be made in the form of cash for each Restricted Stock Unit that is payable. The amount of the payment that you will receive with respect to the Restricted Stock Units shall be determined by multiplying the number of Restricted Stock Units by the Fair Market Value of one (1) share of Bank of America common stock on the Payment Date.
(e) RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION. If, immediately before a Payment Date otherwise provided by this Exhibit A, Bank of America or its Subsidiaries have been unable to recover from you erroneously awarded compensation that is required to be recovered under the Dodd-Frank clawback rules and any implementing policy, Bank of America may reduce the net, after-tax amount to be paid on your Award as of that Payment Date (after all applicable tax withholding requirements have been satisfied) by an amount up to the outstanding balance of erroneously awarded compensation to be recovered from you as of the Payment Date. For the avoidance of doubt, the full amount of the Award payable as of the Payment Date shall be included in income to you as of that Payment Date and nothing in this paragraph (e) shall result in any acceleration of the Payment Date.
(f) DEFINITIONS. For purposes hereof, the following terms shall have the following meanings.
All Other Terminations means any termination of your employment with Bank of America and its Subsidiaries, whether initiated by you or your employer, other than a termination due to your death or Disability.
Cause shall be defined as that term is defined in your offer letter or other applicable employment agreement; or, if there is no such definition, “Cause” means a termination of your employment with Bank of America and its Subsidiaries if it occurs in conjunction with a determination by your employer that you have (i) committed an act of fraud or dishonesty in the course of your employment; (ii) been convicted of (or plead no contest with respect to) a crime constituting a felony or a crime of comparable magnitude under applicable law (as determined by Bank of America in its sole discretion); (iii) committed an act or omission which causes you or Bank of America or its Subsidiaries to be in violation of federal or state securities laws, rules or regulations, and/or the rules of any exchange or association of which Bank of America or its Subsidiaries is a member, including statutory disqualification; (iv) failed to perform your job duties where such failure is injurious to Bank of America or any Subsidiary, or to Bank of America’s or such Subsidiary’s business interests or reputation; (v) materially breached any written policy applicable to your employment with Bank of America or any of its Subsidiaries including, but not limited to, the Bank of America Corporation Code of Conduct and General Policy on Insider Trading; or (vi) made an unauthorized disclosure of any confidential or proprietary information of Bank of America or its Subsidiaries or have committed any other material violation of Bank of America’s written policies regarding confidential and proprietary information.
Detrimental Conduct means your serious misconduct or unethical behavior, including any one of the following: (i) any conduct that would constitute Cause; (ii) the commission of a criminal act by you, whether or not performed in the workplace, that subjects, or if generally known, would subject Bank of America or its Subsidiaries to public ridicule or embarrassment, or other improper or intentional conduct causing reputational harm to Bank of America, its Subsidiaries, or a client of Bank of America or its Subsidiaries; (iii) the breach of a fiduciary duty owed to Bank of America or its Subsidiaries or a client or former client of Bank of America or its Subsidiaries; (iv) intentional violation, or grossly negligent disregard, of Bank of America’s or its Subsidiaries’ policies, rules and procedures, specifically including, but not limited to any of your obligations under the Bank of America Corporation Code of Conduct and workplace policies; or (v) you taking or maintaining trading positions that result in a need to restate financial results in a subsequent reporting period or that result in a significant financial loss to Bank of America or its Subsidiaries during or after the performance year.
Disability is as defined in the Stock Plan.
EX-10.2
3
bac-0331202410xqex102.htm
EX-10.2
Document
Form of Performance-Based Restricted Stock Units Award Agreement
Award Agreement
This document contains your Award Agreement under the Bank of America Corporation Equity Plan.
Bank of America Corporation Equity Plan Performance Restricted Stock Units Award Agreement
Granted to:
Grant date:
Grant type:
Grant code:
Number granted:
Note: The number of Restricted Stock Units is based on a “divisor price” of $[price], which is the ten (10)-day average closing price of Bank of America Corporation common stock for the ten (10) business days immediately preceding and including [date].
This Performance Restricted Stock Units Award Agreement and all Exhibits hereto (the “Agreement”) is made between Bank of America Corporation, a Delaware corporation (“Bank of America”), and you, an employee of Bank of America or one of its Subsidiaries.
Bank of America sponsors the Bank of America Corporation Equity Plan (the “Stock Plan”). A Prospectus describing the Stock Plan has been delivered to you. The Stock Plan itself is available upon request, and its terms and provisions are incorporated herein by reference. When used herein, the terms which are defined in the Stock Plan shall have the meanings given to them in the Stock Plan, as modified herein (if applicable).
The Restricted Stock Units covered by this Agreement are being granted to you in connection with your participation in the Performance Year [year] program, subject to the following terms and provisions.
1. Subject to the terms and conditions of the Stock Plan and this Agreement, Bank of America grants to you the number of Restricted Stock Units shown above. Each Restricted Stock Unit shall have a value equal to the Fair Market Value of one (1) share of Bank of America common stock.
2. You acknowledge having read the Prospectus and agree to be bound by all the terms and conditions of the Stock Plan and this Agreement.
3. The Restricted Stock Units covered by this Award shall become earned by, and payable to, you in accordance with the terms and conditions of the Stock Plan and this Agreement in the amounts and on the dates shown on the enclosed Exhibit A.
4. If a cash dividend is paid with respect to Bank of America common stock, a cash dividend equivalent equal to the total cash dividend you would have received had your Restricted Stock Units been actual Shares will be accumulated and paid in cash through payroll when the Restricted Stock Units become earned and payable. Dividend equivalents are credited with interest at the three (3)-year constant maturity Treasury rate in effect on the grant date noted above until the applicable payment date provided in Exhibit A.
5. To the extent that this Award is paid in Shares, you agree that you shall comply with (or provide adequate assurance as to future compliance with) all applicable securities laws, as determined by Bank of America, as a condition precedent to the delivery of any Shares pursuant to this Agreement. In addition, you agree that, upon request, you will furnish a letter agreement providing that you will (i) not distribute or resell any of said Shares in violation of the U.S. Securities Act of 1933, as amended, (ii) indemnify and hold Bank of America harmless against all liability for any such violation and (iii) accept all liability for any such violation.
6. To the extent allowed by and consistent with applicable law and any applicable limitations period, if it is determined at any time that you have engaged in Detrimental Conduct or engaged in any hedging or derivative transactions involving Bank of America common stock in violation of the Bank of America Corporation Code of Conduct that would undermine the long-term performance incentives created by the Award, Bank of America will be entitled to recover from you in its sole discretion some or all of the Shares or cash, as applicable, and any related dividend equivalents paid to you pursuant to this Agreement. You recognize that if you engage in Detrimental Conduct or any hedging or derivative transactions involving Bank of America common stock, the losses to Bank of America and/or its Subsidiaries may amount to the full value of any Shares or cash, as applicable, and any related dividend equivalents paid to you pursuant to this Agreement. In addition, the Award is subject to the requirements of (i) Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations thereunder (the “Dodd-Frank clawback rules”), (ii) similar rules under the laws of any other jurisdiction and (iii) any policies adopted by Bank of America to implement such requirements, all to the extent determined by Bank of America in its discretion to be applicable to you. For the avoidance of doubt, if the Dodd-Frank clawback rules and any implementing policy apply to you, then (A) you will not be entitled to earn or retain any portion of this Award that is determined to be erroneously awarded compensation, and (B) Bank of America may take action against this Award or any proceeds you receive from it to recover any erroneously awarded compensation you may have received from Bank of America (whether related to this Award or otherwise), all in accordance with the Dodd-Frank clawback rules and the applicable implementing policy (including the Incentive Compensation Recoupment Policy) and subject to the requirements of applicable law.
7. You may designate a beneficiary to receive payment in connection with the Restricted Stock Units granted hereunder in the event of your death while in service with Bank of America or its Subsidiaries in accordance with Bank of America’s beneficiary designation procedures, as in effect from time to time. Any beneficiary designation in effect at the time of your termination of employment with Bank of America and its Subsidiaries (other than a termination of employment due to your death) will remain in effect following your termination of employment unless you change your beneficiary designation or it otherwise ceases to be enforceable and/or valid in accordance with Bank of America’s beneficiary designation procedures, as in effect from time to time. If you do not designate a beneficiary or if your designated beneficiary does not survive you, then your beneficiary will be your estate.
8. The existence of this Award shall not affect in any way the right or power of Bank of America or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in Bank of America’s capital structure or its business, or any merger or consolidation of Bank of America, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or otherwise affecting the Bank of America common stock or the rights thereof, or the dissolution or liquidation of Bank of America, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
9. Bank of America may, in its sole discretion, decide to deliver any documents related to this Award or future Awards that may be granted under the Stock Plan by electronic means or request your consent to participate in the Stock Plan by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, agree to participate in the Stock Plan through an online or electronic system established and maintained by Bank of America or a third party designated by Bank of America.
Any notice which either party hereto may be required or permitted to give to the other shall be in writing and may be delivered personally, by intraoffice mail, by fax, by electronic mail or other electronic means, or via a postal service, postage prepaid, to such electronic mail or postal address and directed to such person as Bank of America may notify you from time to time; and to you at your electronic mail or postal address as shown on the records of Bank of America from time to time or as otherwise determined appropriate by Bank of America, in its sole discretion, or at such other electronic mail or postal address as you, by notice to Bank of America, may designate in writing from time to time.
10. You acknowledge that Bank of America has not provided you with any legal advice. You have the right to consult with, and should consult with, your personal legal advisor prior to accepting this Agreement.
11. You acknowledge that, regardless of any action taken by Bank of America or your employer, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (or, if applicable, your portion thereof) related to your participation in the Stock Plan (“Tax-Related Items”) is and remains your responsibility and may exceed the amount (if any) withheld by Bank of America or your employer. You further acknowledge that Bank of America and/or your employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including but not limited to the grant and vesting of the Restricted Stock Units, your satisfaction of any age and/or length of service criteria, the payment of any Restricted Stock Units, the subsequent sale of any Shares acquired upon the vesting of the Restricted Stock Units and the receipt of any dividends and/or dividend equivalents, (ii) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the Restricted Stock Units to reduce or eliminate your liability for Tax-Related Items or achieve any specific tax result and (iii) do not commit to and are under no obligation to use a withholding method for Tax-Related Items which results in the most favorable or any particular tax treatment for you. Further, if you have become subject to Tax-Related Items in more than one jurisdiction, you acknowledge that Bank of America or your employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
In the event Bank of America determines that it and/or your employer must withhold any Tax-Related Items, you agree as a condition of the grant of the Restricted Stock Units to make arrangements satisfactory to Bank of America and/or your employer to enable it to satisfy all withholding requirements by all legal means, including, but not limited to, withholding any applicable Tax-Related Items from the pay-out of the Restricted Stock Units. In addition, you authorize Bank of America and/or your employer to fulfill its withholding obligations by all legal means, including, but not limited to, withholding Tax-Related Items from your wages, salary or other cash compensation Bank of America or your employer pays to you, withholding Tax-Related Items from the cash proceeds, if any, received upon any sale of any Shares received in payment for your Restricted Stock Units and, at the time of payment, withholding Shares to meet withholding obligations for Tax-Related Items, in an amount which does not exceed the maximum statutory tax rates in the applicable jurisdictions. Bank of America may refuse to pay any earned Restricted Stock Units if you fail to comply with any obligations in connection with the Tax-Related Items.
12. The validity, construction and effect of this Agreement are governed by, and subject to, the laws of the State of Delaware and the laws of the United States, as provided in the Stock Plan, unless otherwise required by applicable law. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of North Carolina and agree that such litigation shall be conducted solely in the courts of Mecklenburg County, North Carolina or the federal courts for the United States for the Western District of North Carolina, where this Award is made and/or to be performed, and no other courts, unless otherwise required by applicable law.
13. In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included. This Agreement constitutes the final understanding between you and Bank of America regarding the Restricted Stock Units. Any prior agreements, commitments or negotiations concerning the Restricted Stock Units are superseded. Subject to the terms of the Stock Plan, this Agreement may only be amended by a written instrument signed by both parties.
14. If you move to any country outside of the United States during the term of your Award, additional terms and conditions may apply to your Award. Bank of America reserves the right to impose other requirements on the Award to the extent Bank of America determines it is necessary or advisable for legal or administrative reasons and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
IN WITNESS WHEREOF, Bank of America has caused this Agreement to be executed by its duly authorized officer, and you have hereunto set your hand, all effective as of the grant date listed above.
/s/ Brian T. Moynihan
Brian T. Moynihan
Chair and Chief Executive Officer
Exhibit A
Bank of America Corporation Equity Plan
PAYMENT OF PERFORMANCE RESTRICTED STOCK UNITS
(a) PERFORMANCE VESTING SCHEDULE AND SETTLEMENT DATE
(i) Performance Vesting Schedule and Settlement Date. Subject to the additional conditions set forth in paragraph (a)(iv) below, the number of Restricted Stock Units that are earned for the Performance Period with respect to each metric equals (A) the total number of Restricted Stock Units granted times (B) the applicable weighting times (C) the percentage earned in accordance with the following table, rounded down to the next whole unit.
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Three-year Average ROA (Tax-Normalized)
(50% Weighting)
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Three-year Average Growth in
Adjusted TBV
(50% Weighting)
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Standard
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% Earned
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Standard
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% Earned
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[standard]
[standard]
[standard]
[standard]
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[percentage earned]
[percentage earned]
[percentage earned]
[percentage earned]
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[standard]
[standard]
[standard]
[standard]
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[percentage earned]
[percentage earned]
[percentage earned]
[percentage earned]
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The Three-year Average ROA (Tax-Normalized) and the Three-year Average Growth in Adjusted TBV will be determined in accordance with conventional rounding principles to the nearest basis point (for Three-year Average ROA (Tax-Normalized)) and the nearest one-hundredth of a percent (for Three-year Average Growth in Adjusted TBV) (e.g., 50.4 bps will be rounded down to 50 bps for Three-year Average ROA (Tax-Normalized) and 5.256% will be rounded up to 5.26% for Three-year Average Growth in Adjusted TBV). The percentage earned for performance between levels at or above the threshold level (i.e., [bps] for Three-year Average ROA (Tax-Normalized) and [percentage]% for Three-year Average Growth in Adjusted TBV) shall be interpolated on a straight line basis and rounded to the nearest whole percentage. No interpolation shall apply for performance below the threshold level. In addition, results for Three-year Average ROA (Tax-Normalized) and Three-year Average Growth in Adjusted TBV will be calculated at the end of the Performance Period and, to the extent necessary, will be normalized to exclude the material effects of changes in the Internal Revenue Code of 1986 and related regulations adopted after the first day of the Performance Period.
(ii) Determination. The determination as to whether, and the extent to which, the performance vesting requirements of this paragraph (a) have been satisfied for the Performance Period shall be made as soon as practicable after the end of the Performance Period with an effective date of [date], and such results must be certified in writing by the Committee before settlement.
(iii) Settlement Date. The “Settlement Date” for any portion of the Award that satisfies the performance vesting requirements under this paragraph (a) shall be [date], provided, however, that in case of termination of employment due to your death as set forth in paragraph (b)(i) below, or in the case of your death following termination of employment as set forth in paragraph (b)(ii), (b)(iv) or (c) below, the “Settlement Date” shall be the date of your death. On the Settlement Date, to the extent earned, the Restricted Stock Units payable as of the Settlement Date shall be settled 100% in Shares; provided, however, that Bank of America may, in its sole discretion, determine before the Settlement Date to pay all or any portion of the Restricted Stock Units then payable in the form of cash rather than shares. In that case, the amount of the cash payment shall equal the Fair Market Value of the underlying shares of Bank of America common stock, determined as of the Settlement Date, for the portion of the Restricted Stock Units that Bank of America determines to pay in the form of cash rather than by issuance of shares. Settlement shall occur as soon as administratively practicable after the Settlement Date, generally within thirty (30) days.
(iv) Additional Conditions. For any portion of the Award payable as of the Settlement Date, you must remain employed with Bank of America and its Subsidiaries through the Settlement Date except as otherwise provided in paragraphs (b) and (c) below. In addition, payment as of the Settlement Date is subject to your complying with the covenants set forth in paragraph (d) below, subject to the additional performance-based cancellation provision set forth in paragraph (e) below and subject to the recovery of erroneously awarded compensation provision in paragraph (f) below.
(b) IMPACT OF TERMINATION OF EMPLOYMENT ON RESTRICTED STOCK UNITS. If your employment with Bank of America and its Subsidiaries terminates prior to the Settlement Date, then the Restricted Stock Units (together with any related dividend equivalents) shall become earned and payable or be canceled depending on the reason for termination as follows.
(i) Death. The Restricted Stock Units (and any related dividend equivalents) shall become immediately earned and payable as of the date of your termination of employment if your termination is due to your death. Payment will be made as soon as administratively practicable, generally within thirty (30) days after notification of termination from the payroll system.
(ii) Disability. If your employment is terminated by Bank of America or its Subsidiaries due to your Disability, then the Restricted Stock Units (and any related dividend equivalents) shall continue to become earned and payable in accordance with paragraph (a) above (without regard to whether you are employed by Bank of America or its Subsidiaries as of the Settlement Date), subject to your complying with the covenants set forth in paragraph (d) below and subject to the additional performance-based cancellation provision set forth in paragraph (e) below. Notwithstanding anything in this paragraph (b)(ii) to the contrary, upon your death following a termination of employment by Bank of America or its Subsidiaries due to your Disability, the Restricted Stock Units (and any related dividend equivalents) that are continuing to become earned and payable in accordance with the provisions of this paragraph (b)(ii), but have not yet become earned and payable, shall become immediately earned and payable as of the date of your death, and payment will be made as soon as administratively practicable following your death.
(iii) Termination by your Employer with Cause. If your employment is terminated by your employer with Cause, then the Restricted Stock Units (and any related dividend equivalents) shall be immediately canceled as of the date of your termination of employment.
(iv) Change in Control. Notwithstanding anything in this Agreement to the contrary, if (A) a Change in Control occurs and (B) on or after the Change in Control and on or before the second anniversary of the Change in Control either (1) your employment is terminated without Cause or (2) you terminate your employment with Bank of America or its Subsidiaries for Good Reason, then the Restricted Stock Units (and any related dividend equivalents) shall become immediately earned as of the date of such termination and shall be payable as of the Settlement Date, without regard to the covenants set forth in paragraph (d) below, but subject to the additional performance-based cancellation provision set forth in paragraph (e) below. Notwithstanding anything in this paragraph (b)(iv) to the contrary, upon your death following (A) a termination of your employment without Cause on or before the second anniversary of a Change in Control or (B) a termination of your employment with Bank of America or its Subsidiaries for Good Reason on or before the second anniversary of a Change in Control, the Restricted Stock Units (and any related dividend equivalents) that are continuing to become payable in accordance with the provisions of this paragraph (b)(iv), but have not yet become payable, shall become immediately payable as of the date of your death, and payment will be made as soon as administratively practicable following your death.
(v) All Other Terminations. In case of All Other Terminations, unless your termination of employment is a Qualifying Termination as described below, the Restricted Stock Units (and any related dividend equivalents) shall be immediately canceled as of the date of your termination of employment.
(c) QUALIFYING TERMINATION. If your employment terminates for any reason other than your death, your Disability, Cause or in connection with a Change in Control as described in paragraph (b)(iv) above and your termination of employment is a Qualifying Termination, then the Restricted Stock Units (and any related dividend equivalents) shall continue to become earned and payable in accordance with paragraph (a) above (without regard to whether you are employed by Bank of America and its Subsidiaries as of the Settlement Date), subject to the performance-based cancellation provision set forth in paragraph (e) below, provided that (i) to the extent permissible under applicable law, you do not engage in Competition during such period, (ii) you comply with the covenants described in paragraph (d) below and (iii) prior to March 1 of each year during which your Restricted Stock Units remain payable, you provide Bank of America with a certification that you have not engaged in Competition to the extent the Competition restriction in (i) above is applicable.
To be effective, such certification must be provided on such form, at such time and pursuant to such procedures as Bank of America shall establish from time to time. If Bank of America determines in its reasonable business judgment that you have failed to satisfy any of the foregoing requirements, then the Restricted Stock Units (and any related dividend equivalents) shall be immediately canceled as of the date of such determination. In addition, from time to time following your Qualifying Termination, Bank of America may require you to further certify that you are not engaging in Competition, and if you fail to fully cooperate with any such requirement Bank of America may determine that you are engaging in Competition. Notwithstanding anything in this paragraph (c) to the contrary, upon your death following a Qualifying Termination, the Restricted Stock Units (and any related dividend equivalents) that are continuing to become earned and payable in accordance with the provisions of this paragraph (c), but have not yet become earned and payable, shall become immediately earned and payable as of the date of your death, and payment will be made as soon as administratively practicable following your death. Notwithstanding anything in this Agreement to the contrary, if (1) you are a permanent resident of California or you are a tax resident of California who is assigned to perform services for Bank of America or any Subsidiary from an office located in California, the Competition restriction and the certification requirement described in this paragraph (c) will not apply to this Award and (2) you live or work in Massachusetts, the Competition restriction and the certification requirement described in this paragraph (c) will apply for no more than one year following the date of your termination of employment.
For the avoidance of doubt, the only available remedy under this Agreement for engaging in Competition (or for breach of the covenant in paragraph (d)(i) below) is the cancelation of the Restricted Stock Units (and any related dividend equivalents), and not, for example, enforcement of the restrictions through injunction or similar action. This limitation on remedies does not apply to any competition restrictions or covenants that may be applicable to you under any other written agreement with Bank of America except to the extent expressly provided for in such other written agreement.
(d) COVENANTS.
(i) Non-Solicitation. You agree that during any period in which Restricted Stock Units (and any related dividend equivalents) remain payable, to the maximum extent permissible under applicable law (A) you will not directly or indirectly solicit or recruit for employment or encourage to leave employment with Bank of America or its Subsidiaries, on your own behalf or on behalf of any other person or entity other than Bank of America or its Subsidiaries, any person who is an employee of Bank of America or its Subsidiaries and (B) you will not, directly or indirectly, on your own behalf or on behalf of any other person or entity other than Bank of America or its Subsidiaries, solicit any client or customer of Bank of America or its Subsidiaries which you actively solicited or with whom you worked or otherwise had material contact in the course of your employment with Bank of America and its Subsidiaries. Notwithstanding anything in this Agreement to the contrary, if you are a permanent resident of California or you are a tax resident of California who is assigned to perform services for Bank of America or any Subsidiary from an office located in California, the solicitation restrictions described in (A) and (B) above will not apply to this Award.
(ii) Detrimental Conduct. You agree that during any period in which Restricted Stock Units (and any related dividend equivalents) remain payable, you will not engage in Detrimental Conduct.
(iii) Hedging or Derivative Transactions. You agree that during any period in which Restricted Stock Units (and any related dividend equivalents) remain payable, you will not engage in any hedging or derivative transactions involving Bank of America common stock in violation of the Bank of America Corporation Code of Conduct that would undermine the long-term performance incentive created by the Restricted Stock Units.
(iv) Remedies. Payment of Restricted Stock Units (and any related dividend equivalents) on the Settlement Date is specifically conditioned on the requirement that at all times prior to such Settlement Date, you do not engage in solicitation, Detrimental Conduct or hedging or derivative transactions, as described in paragraphs (d)(i), (ii) and (iii), during such period. If Bank of America determines in its reasonable business judgment that you have failed to satisfy such requirements, then the Restricted Stock Units (and any related dividend equivalents) as of the date of such determination shall be canceled as of such date of determination.
(e) PERFORMANCE-BASED CANCELLATION PROVISION. In order to appropriately balance risk and reward, unpaid Restricted Stock Units (and any related dividend equivalents) may be canceled if a loss occurs outside of the ordinary course of business. For Bank of America or a line of business, a “loss” means a pre-tax loss for a fiscal year (as determined under U.S. generally accepted accounting principles in effect as of the close of such fiscal year). A loss in the “ordinary course of business” means a loss resulting from a planned winding down of a business or legacy position. A loss outside of the ordinary course includes (without limitation) losses such as those resulting from risk or compliance violations, deliberate or grossly negligent failures to perform your job duties, or any loss that materially impairs Bank of America’s solvency, liquidity, or capital distribution plans. If a loss outside of the ordinary course of business occurs:
(i) at Bank of America, if you are the Chief Executive Officer, Chief Financial Officer, any Chief Executive Officer direct report who does not lead a line of business, or are any employee who is (A) part of a staff function (such as global technology, global operations, global strategy and enterprise platforms, enterprise credit, sustainable finance and research, etc.), (B) part of a key control function (such as audit, compliance, human resources, legal, risk, finance, etc.) or (C) any other individual material risk taker who is not part of a line of business;
(ii) at Bank of America or your line of business, if you are a senior leader who leads a line of business (e.g., are president or head of such line of business); or
(iii) at your line of business, if you are an individual material risk taker who is part of a line of business other than a senior leader who leads a line of business;
then your accountability for such loss will be determined, taking into account such factors as (i) the magnitude of the loss (including positive or negative variance from plan); (ii) your degree of involvement (including such factors as your current or former leadership role within Bank of America or the line of business, and the degree to which you were involved in decisions that are determined to have contributed to the loss); (iii) your performance; and (iv) such other factors as deemed appropriate. For this purpose, a “line of business” means an organizational unit of Bank of America that conducts transactions as an organizational unit that could result in a loss outside of the ordinary course, all as determined by Bank of America in its sole discretion, and which, as of the grant date, includes the following business units: Retail Banking, Preferred Banking, Merrill, Private Bank, Business Banking, Global Commercial Banking, Global Corporate & Investment Banking and Global Markets. The Compensation and Human Capital Committee (for executive officers), Management Compensation Committee (for Band 1 employees) or other management team designated for such purpose, together with key control functions, will review the loss and your accountability. The Compensation and Human Capital Committee (for executive officers), Management Compensation Committee (for Band 1 employees) or other management team designated for such purpose will then make a final determination to either take no action or to cancel some or all of your Award. All such determinations will be final and binding.
(f) RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION. If, immediately before a Settlement Date otherwise provided by this Exhibit A, Bank of America or its Subsidiaries have been unable to recover from you erroneously awarded compensation that is required to be recovered under the Dodd-Frank clawback rules and any implementing policy, Bank of America may reduce the net, after-tax amount to be paid on your Award as of that Settlement Date (after all applicable tax withholding requirements have been satisfied) by an amount up to the outstanding balance of erroneously awarded compensation to be recovered from you as of the Settlement Date. For the avoidance of doubt, the full amount of the Award payable as of the Settlement Date shall be included in income to you as of such Settlement Date and nothing in this paragraph (g) shall result in any acceleration of the Settlement Date.
(g) DEFINITIONS. For purposes hereof, the following terms shall have the following meanings.
All Other Terminations means any termination of your employment with Bank of America and its Subsidiaries, whether initiated by you or your employer, other than (i) a Qualifying Termination; (ii) a termination due to your death or your Disability; (iii) a termination by your employer with Cause; and (iv) a termination in connection with a Change in Control as described in paragraph (b)(iv) above.
Cause shall be defined as that term is defined in your offer letter or other applicable employment agreement; or, if there is no such definition, “Cause” means a termination of your employment with Bank of America and its Subsidiaries if it occurs in conjunction with a determination by your employer that you have (i) committed an act of fraud or dishonesty in the course of your employment; (ii) been convicted of (or plead no contest with respect to) a crime constituting a felony or a crime of comparable magnitude under applicable law (as determined by Bank of America in its sole discretion); (iii) committed an act or omission which causes you or Bank of America or its Subsidiaries to be in violation of federal or state securities laws, rules or regulations, and/or the rules of any exchange or association of which Bank of America or its Subsidiaries is a member, including statutory disqualification; (iv) failed to perform your job duties where such failure is injurious to Bank of America or any Subsidiary, or to Bank of America’s or such Subsidiary’s business interests or reputation; (v) materially breached any written policy applicable to your employment with Bank of America or any of its Subsidiaries including, but not limited to, the Bank of America Corporation Code of Conduct and General Policy on Insider Trading; or (vi) made an unauthorized disclosure of any confidential or proprietary information of Bank of America or its Subsidiaries or have committed any other material violation of Bank of America’s written policies regarding confidential and proprietary information.
Competition means your being engaged, directly or indirectly, whether as a director, officer, employee, consultant, agent or otherwise, with a business entity that is or later becomes designated as a “Competitive Business” based on the criteria effective as of the date of your termination of employment. Notwithstanding anything in this Agreement to the contrary, the scope of Competition will only be as broad as allowed by applicable law. [For Mr. Demare: Competition means “Competition” as defined in your Letter Agreement.]
Detrimental Conduct means your serious misconduct or unethical behavior, including any one of the following: (i) any conduct that would constitute Cause; (ii) the commission of a criminal act by you, whether or not performed in the workplace, that subjects, or if generally known, would subject Bank of America or its Subsidiaries to public ridicule or embarrassment, or other improper or intentional conduct causing reputational harm to Bank of America, its Subsidiaries, or a client of Bank of America or its Subsidiaries; (iii) the breach of a fiduciary duty owed to Bank of America or its Subsidiaries or a client or former client of Bank of America or its Subsidiaries; (iv) intentional violation, or grossly negligent disregard, of Bank of America’s or its Subsidiaries’ policies, rules and procedures, specifically including, but not limited to any of your obligations under the Bank of America Corporation Code of Conduct and workplace policies; or (v) you taking or maintaining trading positions that result in a need to restate financial results in a subsequent reporting period or that result in a significant financial loss to Bank of America or its Subsidiaries during or after the performance year.
Disability is as defined in the Stock Plan.
Good Reason means, provided that you have complied with the Good Reason Process, the occurrence of any of the following events without your consent: (i) a material diminution in your responsibility, authority or duty; (ii) a material diminution in your base salary except for across-the-board salary reductions based on Bank of America and its Subsidiaries’ financial performance similarly affecting all or substantially all management employees of Bank of America and its Subsidiaries; or (iii) the relocation of the office at which you were principally employed immediately prior to a Change in Control to a location more than fifty (50) miles from the location of such office, or your being required to be based anywhere other than such office, except to the extent you were not previously assigned to a principal location and except for required travel on your employer’s business to an extent substantially consistent with your business travel obligations at the time of the Change in Control.
Good Reason Process means that (i) you reasonably determine in good faith that a Good Reason condition has occurred; (ii) you notify Bank of America and its Subsidiaries in writing of the occurrence of the Good Reason condition within sixty (60) days of such occurrence; (iii) you cooperate in good faith with Bank of America and its Subsidiaries’ efforts, for a period of not less than thirty (30) days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist following the Cure Period; and (v) you terminate your employment for Good Reason within sixty (60) days after the end of the Cure Period. If Bank of America or its Subsidiaries cures the Good Reason condition during the Cure Period, and you terminate your employment with Bank of America and its Subsidiaries due to such condition (notwithstanding its cure), then you will not be deemed to have terminated your employment for Good Reason.
[For Mr. Demare: Letter Agreement means your letter agreement with Bank of America dated November 9, 2021.]
Performance Period means the three (3) calendar year period beginning [date] and ending [date].
Qualifying Termination means your termination of employment with Bank of America and its Subsidiaries after you have (i) reached at least age sixty (60) or (ii) attained a length of service of at least ten (10) years and reached at least age fifty-five (55). Your length of service will be determined by Bank of America, in its sole discretion, and, in that regard if you participate in a tax-qualified 401(k) plan sponsored by Bank of America or its Subsidiaries, your length of service shall be your “Vesting Service” under the tax-qualified 401(k) plan in which you participate.
[For Mr. Demare: Notwithstanding the foregoing, your termination of employment shall be deemed a Qualifying Termination if (i) you are eligible for an equity protection guarantee with respect to your Award as described in your Letter Agreement and (ii) your termination of employment with Bank of America and its Subsidiaries occurs on or after the date specified in your Letter Agreement and in accordance with and subject to the terms and provisions of your Letter Agreement.]
[For Mr. Koder: Notwithstanding the foregoing, your termination of employment shall be deemed a Qualifying Termination if (i) you are eligible for an equity protection guarantee with respect to your Award as described in your offer letter or other applicable employment agreement and (ii) your termination of employment with Bank of America and its Subsidiaries occurs on or after the date specified in your offer letter or other applicable employment agreement and in accordance with and subject to the terms and provisions of your offer letter or other applicable employment agreement.]
Three-year Average Growth in Adjusted TBV means the average year-over-year percentage change in “adjusted tangible book value” for the three (3) calendar years in the Performance Period. For this purpose, “adjusted tangible book value” for each year will equal Bank of America’s total common shareholders’ equity, less (i) the cumulative impact of any capital actions approved by the Board and completed by Bank of America during the Performance Period, and less (ii) the sum of the carrying value of (A) goodwill and (B) intangible assets excluding mortgage servicing rights, adjusted for (C) deferred tax liabilities directly related to (A) and (B). Each year-over-year percentage change is measured after the conclusion of each calendar year using the beginning balance as of January 1 and the ending balance as of December 31 of that year and, to the extent necessary, will be normalized to exclude the material effects of changes in the Internal Revenue Code of 1986 and related regulations adopted after the first day of the Performance Period.
Three-year Average ROA (Tax-Normalized) means the average “return on assets” for the three (3) calendar years in the Performance Period. For this purpose, “return on assets” will be determined at the conclusion of each year based on the generally accepted accounting principles (“GAAP”) definition and, to the extent necessary, will be normalized to exclude the material effects of changes in the Internal Revenue Code of 1986 and related regulations adopted after the first day of the Performance Period.
EX-10.3
4
bac-0331202410xqex103.htm
EX-10.3
Document
Form of Time-Based Cash-Settled Restricted Stock Units Award Agreement
Award Agreement
This document contains your Award Agreement under the Bank of America Corporation Equity Plan.
Bank of America Corporation Equity Plan Restricted Stock Units Award Agreement
Granted to:
Grant date:
Grant type:
Grant code:
Number granted:
[Note: The number of Restricted Stock Units is based on a “divisor price” of $[price], which is the ten (10)-day average closing price of Bank of America Corporation common stock for the ten (10) business days immediately preceding and including [date].]
This Restricted Stock Units Award Agreement and all Exhibits hereto (the “Agreement”) is made between Bank of America Corporation, a Delaware corporation (“Bank of America”), and you, an employee of Bank of America or one of its Subsidiaries.
Bank of America sponsors the Bank of America Corporation Equity Plan (the “Stock Plan”). A Prospectus describing the Stock Plan has been delivered to you. The Stock Plan itself is available upon request, and its terms and provisions are incorporated herein by reference. When used herein, the terms which are defined in the Stock Plan shall have the meanings given to them in the Stock Plan, as modified herein (if applicable).
The Restricted Stock Units covered by this Agreement are being granted to you in connection with your participation in the Performance Year [year] program, subject to the following terms and provisions.
1. Subject to the terms and conditions of the Stock Plan and this Agreement, Bank of America grants to you the number of Restricted Stock Units shown above. Each Restricted Stock Unit shall have a value equal to the Fair Market Value of one (1) share of Bank of America common stock.
2. You acknowledge having read the Prospectus and agree to be bound by all the terms and conditions of the Stock Plan and this Agreement.
3. The Restricted Stock Units covered by this Award shall become earned by, and payable to, you in accordance with the terms and conditions of the Stock Plan and this Agreement in the amounts and on the dates shown on the enclosed Exhibit A.
4. If a cash dividend is paid with respect to Bank of America common stock, a cash dividend equivalent equal to the total cash dividend you would have received had your Restricted Stock Units been actual Shares will be accumulated and paid in cash through payroll when the Restricted Stock Units become earned and payable. Dividend equivalents are credited with interest at the three (3)-year constant maturity Treasury rate in effect on the grant date noted above until the applicable payment date provided in Exhibit A.
5. To the extent allowed by and consistent with applicable law and any applicable limitations period, if it is determined at any time that you have engaged in Detrimental Conduct or engaged in any hedging or derivative transactions involving Bank of America common stock in violation of the Bank of America Corporation Code of Conduct that would undermine the long-term performance incentives created by the Award, Bank of America will be entitled to recover from you in its sole discretion some or all of the cash (and any related dividend equivalents) paid to you pursuant to this Agreement. You recognize that if you engage in Detrimental Conduct or any hedging or derivative transactions involving Bank of America common stock, the losses to Bank of America and/or its Subsidiaries may amount to the full value of any cash (and any related dividend equivalents) paid to you pursuant to this Agreement. In addition, the Award is subject to the requirements of (i) Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations thereunder (the “Dodd-Frank clawback rules”), (ii) similar rules under the laws of any other jurisdiction and (iii) any policies adopted by Bank of America to implement such requirements, all to the extent determined by Bank of America in its discretion to be applicable to you. For the avoidance of doubt, if the Dodd-Frank clawback rules and any implementing policy apply to you, then (A) you will not be entitled to earn or retain any portion of this Award that is determined to be erroneously awarded compensation, and (B) Bank of America may take action against this Award or any proceeds you receive from it to recover any erroneously awarded compensation you may have received from Bank of America (whether related to this Award or otherwise), all in accordance with the Dodd-Frank clawback rules and the applicable implementing policy (including the Incentive Compensation Recoupment Policy) and subject to the requirements of applicable law.
6. You may designate a beneficiary to receive payment in connection with the Restricted Stock Units granted hereunder in the event of your death while in service with Bank of America or its Subsidiaries in accordance with Bank of America’s beneficiary designation procedures, as in effect from time to time. Any beneficiary designation in effect at the time of your termination of employment with Bank of America and its Subsidiaries (other than a termination of employment due to your death) will remain in effect following your termination of employment unless you change your beneficiary designation or it otherwise ceases to be enforceable and/or valid in accordance with Bank of America’s beneficiary designation procedures, as in effect from time to time. If you do not designate a beneficiary or if your designated beneficiary does not survive you, then your beneficiary will be your estate.
7. The existence of this Award shall not affect in any way the right or power of Bank of America or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in Bank of America’s capital structure or its business, or any merger or consolidation of Bank of America, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or otherwise affecting the Bank of America common stock or the rights thereof, or the dissolution or liquidation of Bank of America, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
8. Bank of America may, in its sole discretion, decide to deliver any documents related to this Award or future Awards that may be granted under the Stock Plan by electronic means or request your consent to participate in the Stock Plan by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, agree to participate in the Stock Plan through an online or electronic system established and maintained by Bank of America or a third party designated by Bank of America.
Any notice which either party hereto may be required or permitted to give to the other shall be in writing and may be delivered personally, by intraoffice mail, by fax, by electronic mail or other electronic means, or via a postal service, postage prepaid, to such electronic mail or postal address and directed to such person as Bank of America may notify you from time to time; and to you at your electronic mail or postal address as shown on the records of Bank of America from time to time or as otherwise determined appropriate by Bank of America, in its sole discretion, or at such other electronic mail or postal address as you, by notice to Bank of America, may designate in writing from time to time.
9. You acknowledge that Bank of America has not provided you with any legal advice. You have the right to consult with, and should consult with, your personal legal advisor prior to accepting this Agreement.
10. You acknowledge that, regardless of any action taken by Bank of America or your employer, the ultimate liability for all income tax, social insurance, payroll tax, fringe
benefits tax, payment on account or other tax-related items (or, if applicable, your portion thereof) related to your participation in the Stock Plan (“Tax-Related Items”) is and remains your responsibility and may exceed the amount (if any) withheld by Bank of America or your employer. You further acknowledge that Bank of America and/or your employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including but not limited to the grant and vesting of the Restricted Stock Units, your satisfaction of any age and/or length of service criteria, the payment of any Restricted Stock Units and the receipt of any dividends and/or dividend equivalents, (ii) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the Restricted Stock Units to reduce or eliminate your liability for Tax-Related Items or achieve any specific tax result and (iii) do not commit to and are under no obligation to use a withholding method for Tax-Related Items which results in the most favorable or any particular tax treatment for you. Further, if you have become subject to Tax-Related Items in more than one jurisdiction, you acknowledge that Bank of America or your employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
In the event Bank of America determines that it and/or your employer must withhold any Tax-Related Items, you agree as a condition of the grant of the Restricted Stock Units to make arrangements satisfactory to Bank of America and/or your employer to enable it to satisfy all withholding requirements by all legal means, including, but not limited to, withholding any applicable Tax-Related Items from the pay-out of the Restricted Stock Units. In addition, you authorize Bank of America and/or your employer to fulfill its withholding obligations by all legal means, including, but not limited to, withholding Tax-Related Items from your wages, salary or other cash compensation Bank of America or your employer pays to you. Bank of America may refuse to pay any earned Restricted Stock Units if you fail to comply with any obligations in connection with the Tax-Related Items.
11. The validity, construction and effect of this Agreement are governed by, and subject to, the laws of the State of Delaware and the laws of the United States, as provided in the Stock Plan, unless otherwise required by applicable law. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of North Carolina and agree that such litigation shall be conducted solely in the courts of Mecklenburg County, North Carolina or the federal courts for the United States for the Western District of North Carolina, where this Award is made and/or to be performed, and no other courts, unless otherwise required by applicable law.
12. In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included. This Agreement constitutes the final understanding between you and Bank of America regarding the Restricted Stock Units. Any prior agreements, commitments or negotiations concerning the Restricted Stock Units are superseded. Subject to the terms of the Stock Plan, this Agreement may only be amended by a written instrument signed by both parties.
13. If you move to any country outside of the United States during the term of your Award, additional terms and conditions may apply to your Award. Bank of America reserves the right to impose other requirements on the Award to the extent Bank of America determines it is necessary or advisable for legal or administrative reasons and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
IN WITNESS WHEREOF, Bank of America has caused this Agreement to be executed by its duly authorized officer, and you have hereunto set your hand, all effective as of the grant date listed above.
/s/ Brian T. Moynihan
Brian T. Moynihan
Chair and Chief Executive Officer
Exhibit A
Bank of America Corporation Equity Plan
PAYMENT OF RESTRICTED STOCK UNITS
(a) PAYMENT SCHEDULE. Subject to the provisions of paragraphs (b), (c), (d), (e) and (g) below, the Restricted Stock Units (and any related dividend equivalents) shall be earned and payable in four (4) equal annual installments if you remain employed with Bank of America and its Subsidiaries through each of the payment dates as follows.
[schedule]
*Payment will be made as soon as administratively practicable, generally within thirty (30) days after the applicable payment date.
(b) IMPACT OF TERMINATION OF EMPLOYMENT ON RESTRICTED STOCK UNITS. If your employment with Bank of America and its Subsidiaries terminates prior to any of the above payment dates, then any unearned Restricted Stock Units (and any related dividend equivalents) shall become earned and payable or be canceled depending on the reason for termination as follows.
(i) Death. Any unearned Restricted Stock Units (and any related dividend equivalents) shall become immediately earned and payable as of the date of your termination of employment if your termination is due to your death. Payment will be made as soon as administratively practicable, generally within thirty (30) days after notification of termination from the payroll system.
(ii) Disability. If your employment is terminated by your employer due to your Disability, then any unearned Restricted Stock Units (and any related dividend equivalents) shall continue to become earned and payable at such time as provided in the Payment Schedule described in paragraph (a) above (without regard to whether you are employed by Bank of America or its Subsidiaries), subject to your complying with the covenants set forth in paragraph (d) below and subject to the performance-based cancellation provision set forth in paragraph (e) below. Notwithstanding anything in this paragraph (b)(ii) to the contrary, upon your death following a termination of employment by your employer due to Disability, any unearned Restricted Stock Units (and any related dividend equivalents) that are continuing to become earned and payable in accordance with the provisions of this paragraph (b)(ii), but have not yet become earned and payable, shall become immediately earned and payable as of the date of your death, and payment will be made as soon as administratively practicable following your death.
(iii) Termination by your Employer with Cause. If your employment is terminated by your employer with Cause, then any Restricted Stock Units (and any related dividend equivalents) that were not already paid to you pursuant to paragraph (a) above as of the date of your termination of employment shall be canceled as of that date.
(iv) Change in Control. Notwithstanding anything in this Agreement to the contrary, if (A) a Change in Control occurs and (B) on or after the Change in Control and on or before the second anniversary of the Change in Control either (1) your employment is terminated without Cause
or (2) you terminate your employment with Bank of America or its Subsidiaries for Good Reason, then any unearned Restricted Stock Units (and any related dividend equivalents) shall become immediately earned as of the date of such termination and shall be payable at such time as provided in the Payment Schedule described in paragraph (a) above, without regard to the covenants set forth in paragraph (d) below or the performance-based cancellation provision set forth in paragraph (e) below. Notwithstanding anything in this paragraph (b)(iv) to the contrary, upon your death following (A) a termination of your employment without Cause on or before the second anniversary of a Change in Control or (B) a termination of your employment with Bank of America or its Subsidiaries for Good Reason on or before the second anniversary of a Change in Control, any Restricted Stock Units (and any related dividend equivalents) that are continuing to become payable in accordance with the provisions of this paragraph (b)(iv), but have not yet become payable, shall become immediately payable as of the date of your death, and payment will be made as soon as administratively practicable following your death.
(v) All Other Terminations. Unless your termination of employment is a Qualifying Termination as described below, in the case of All Other Terminations, any Restricted Stock Units (and any related dividend equivalents) that were not already earned and payable pursuant to paragraph (a) above as of the date of your termination of employment shall be canceled as of that date.
[Qualifying Termination:
(c) QUALIFYING TERMINATION. If your employment terminates for any reason other than your death, your Disability, Cause or in connection with a Change in Control as described in paragraph (b)(iv) above and your termination of employment is a Qualifying Termination, then any unearned Restricted Stock Units (and any related dividend equivalents) shall continue to become earned and payable in accordance with the Payment Schedule set forth in paragraph (a) above subject to the performance-based cancellation provision set forth in paragraph (e) below, provided that (i) to the extent permissible under applicable law, you do not engage in Competition during such period, (ii) you comply with the covenants described in paragraph (d) below and (iii) prior to each payment date, you provide Bank of America with a certification that you have not engaged in Competition to the extent the Competition restriction in (i) above is applicable.
To be effective, such certification must be provided on such form, at such time and pursuant to such procedures as Bank of America shall establish from time to time. If Bank of America determines in its reasonable business judgment that you have failed to satisfy any of the foregoing requirements, then any unearned Restricted Stock Units (and any related dividend equivalents) shall be immediately canceled as of the date of such determination. In addition, from time to time following your Qualifying Termination, Bank of America may require you to further certify that you are not engaging in Competition, and if you fail to fully cooperate with any such requirement Bank of America may determine that you are engaging in Competition. Notwithstanding anything in this paragraph (c) to the contrary, upon your death following a Qualifying Termination, any unearned Restricted Stock Units (and any related dividend equivalents) that are continuing to become earned and payable in accordance with the provisions of this paragraph (c), but have not yet become earned and payable, shall become immediately earned and payable as of the date of your death, and payment will be made as soon as administratively practicable following your death. Notwithstanding anything in this
Agreement to the contrary, if (1) you are a permanent resident of California or you are a tax resident of California who is assigned to perform services for Bank of America or any Subsidiary from an office located in California, the Competition restriction and the certification requirement described in this paragraph (c) will not apply to this Award and (2) you live or work in Massachusetts, the Competition restriction and the certification requirement described in this paragraph (c) will apply for no more than one year following the date of your termination of employment.
For the avoidance of doubt, the only available remedy under this Agreement for engaging in Competition (or for breach of the covenant in paragraph (d)(i) below) is the cancelation of any unearned Restricted Stock Units (and any related dividend equivalents), and not, for example, enforcement of the restrictions through injunction or similar action. This limitation on remedies does not apply to any competition restrictions or covenants that may be applicable to you under any other written agreement with Bank of America except to the extent expressly provided for in such other written agreement.]
(d) COVENANTS.
(i) Non-Solicitation. You agree that during any period in which Restricted Stock Units (and any related dividend equivalents) remain payable, to the maximum extent permissible under applicable law (A) you will not directly or indirectly solicit or recruit for employment or encourage to leave employment with Bank of America or its Subsidiaries, on your own behalf or on behalf of any other person or entity other than Bank of America or its Subsidiaries, any person who is an employee of Bank of America or its Subsidiaries and (B) you will not, directly or indirectly, on your own behalf or on behalf of any other person or entity other than Bank of America or its Subsidiaries, solicit any client or customer of Bank of America or its Subsidiaries which you actively solicited or with whom you worked or otherwise had material contact in the course of your employment with Bank of America and its Subsidiaries. Notwithstanding anything in this Agreement to the contrary, if you are a permanent resident of California or you are a tax resident of California who is assigned to perform services for Bank of America or any Subsidiary from an office located in California, the solicitation restrictions described in (A) and (B) above will not apply to this Award.
(ii) Detrimental Conduct. You agree that during any period in which Restricted Stock Units (and any related dividend equivalents) remain payable, you will not engage in Detrimental Conduct.
(iii) Hedging or Derivative Transactions. You agree that during any period in which Restricted Stock Units (and any related dividend equivalents) remain payable, you will not engage in any hedging or derivative transactions involving Bank of America common stock in violation of the Bank of America Corporation Code of Conduct that would undermine the long-term performance incentive created by the Restricted Stock Units.
(iv) Remedies. Payment of Restricted Stock Units (and any related dividend equivalents) in accordance with the Payment Schedule set forth in paragraph (a) above is specifically conditioned on the requirement that at all times prior to each payment, you do not engage in solicitation, Detrimental Conduct or hedging or derivative transactions, as described in paragraphs (d)(i), (ii) and (iii), during such period. If Bank of America determines in its reasonable business judgment that you have failed to satisfy such requirements, then any Restricted Stock Units (and any
related dividend equivalents) that have not yet been paid as of the date of such determination shall be canceled as of such date of determination.
[Performance-based cancellation provisions:
(e) PERFORMANCE-BASED CANCELLATION PROVISION. In order to appropriately balance risk
and reward, unpaid Restricted Stock Units may be canceled if a loss occurs outside of the ordinary course of business. For a line of business or sub-line of business, a “loss” means a pre-tax loss for a fiscal year (as determined under U.S. generally accepted accounting principles in effect as of the close of such fiscal year). For an individual, a “loss” means that the aggregate profit and loss attributable to your activities is negative. A loss in the “ordinary course of business” means a loss resulting from a planned winding down of a business or legacy position, or a loss that is de minimis (e.g., a loss from a short-dated trading position that is within desk strategy and risk limits and which, aggregated with losses across all positions, is less than $1 million). A loss outside of the ordinary course includes (without limitation) losses such as those resulting from complex or high-risk trading strategies, risk or compliance violations, deliberate or grossly negligent failures to perform your job duties, or any loss that materially impairs Bank of America’s solvency, liquidity, or capital distribution plans. If a loss outside of the ordinary course of business occurs:
(i) at Global Markets or Global Corporate and Investment Banking, if you are a senior business leader within the applicable group;
(ii) at a sub-line of business (e.g., FICC Trading, Investment Banking) within Global Markets or Global Corporate and Investment Banking, if you are a manager within the applicable sub-line of business; or
(iii) at your individual level;
then your accountability for such loss will be determined, taking into account such factors as (i) the magnitude of the loss (including positive or negative variance from plan); (ii) your degree of involvement (including such factors as your current or former leadership role within Global Markets or Global Corporate and Investment Banking, and the degree to which you were involved in decisions that are determined to have contributed to the loss); (iii) your performance; and (iv) such other factors as deemed appropriate. The management team designated for such purpose, together with key control functions, will review the loss and your accountability. The management team designated for such purpose will then make a final determination to either take no action or to cancel some or all of your Award. All such determinations will be final and binding.
(e) PERFORMANCE-BASED CANCELLATION PROVISION. In order to appropriately balance risk
and reward, unpaid Restricted Stock Units (and any related dividend equivalents) may be canceled if a loss occurs outside of the ordinary course of business. For Bank of America or a line of business, a “loss” means a pre-tax loss for a fiscal year (as determined under U.S. generally accepted accounting principles in effect as of the close of such fiscal year). A loss in the “ordinary course of business” means a loss resulting from a planned winding down of a business or legacy position. A loss outside of the ordinary course includes (without limitation) losses such as those resulting from risk or compliance violations, deliberate or grossly negligent failures to perform your job duties, or any loss
that materially impairs Bank of America’s solvency, liquidity, or capital distribution plans. If a loss outside of the ordinary course of business occurs:
(i) at Bank of America, if you are the Chief Executive Officer, Chief Financial Officer, any Chief Executive Officer direct report who does not lead a line of business, or are any employee who is (A) part of a staff function (such as global technology, global operations, global strategy and enterprise platforms, enterprise credit, sustainable finance and research, etc.), (B) part of a key control function (such as audit, compliance, human resources, legal, risk, finance, etc.) or (C) any other individual material risk taker who is not part of a line of business;
(ii) at Bank of America or your line of business, if you are a senior leader who leads a line of business (e.g., are president or head of such line of business); or
(iii) at your line of business, if you are an individual material risk taker who is part of a line of business other than a senior leader who leads a line of business;
then your accountability for such loss will be determined, taking into account such factors as (i) the magnitude of the loss (including positive or negative variance from plan); (ii) your degree of involvement (including such factors as your current or former leadership role within Bank of America or the line of business, and the degree to which you were involved in decisions that are determined to have contributed to the loss); (iii) your performance; and (iv) such other factors as deemed appropriate. For this purpose, a “line of business” means an organizational unit of Bank of America that conducts transactions as an organizational unit that could result in a loss outside of the ordinary course, all as determined by Bank of America in its sole discretion, and which, as of the grant date, includes the following business units: Retail Banking, Preferred Banking, Merrill, Private Bank, Business Banking, Global Commercial Banking, Global Corporate & Investment Banking and Global Markets. The Compensation and Human Capital Committee (for executive officers), Management Compensation Committee (for Band 1 employees) or other management team designated for such purpose, together with key control functions, will review the loss and your accountability. The Compensation and Human Capital Committee (for executive officers), Management Compensation Committee (for Band 1 employees) or other management team designated for such purpose will then make a final determination to either take no action or to cancel some or all of your Award. All such determinations will be final and binding.]
(f) FORM OF PAYMENT. Payment of Restricted Stock Units shall be made in the form of cash for each Restricted Stock Unit that is payable. The amount of the payment that you will receive with respect to the Award shall be determined by multiplying the number of Restricted Stock Units payable by the Fair Market Value of one (1) share of Bank of America common stock on the applicable payment date provided in paragraph (a) above.
(g) RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION. If, immediately before a payment date otherwise provided by this Exhibit A, Bank of America or its Subsidiaries have been unable to recover from you erroneously awarded compensation that is required to be recovered under the Dodd-Frank clawback rules and any implementing policy, Bank of America may reduce the net, after-tax amount to be paid on your Award as of that payment date (after all applicable tax withholding requirements have been satisfied) by an amount up to the outstanding balance of erroneously awarded compensation to be recovered from you as of the payment date. For the avoidance of doubt, the full amount of the Award payable as of the payment date shall be included in income to you as of that payment date and nothing in this paragraph (g) shall result in any acceleration of the payment date.
(h) DEFINITIONS. For purposes hereof, the following terms shall have the following meanings.
All Other Terminations means any termination of your employment with Bank of America and its Subsidiaries, whether initiated by you or your employer, other than (i) a Qualifying Termination; (ii) a termination due to your death or your Disability; (iii) a termination by your employer with Cause; and (iv) a termination in connection with a Change in Control as described in paragraph (b)(iv) above.
Cause shall be defined as that term is defined in your offer letter or other applicable employment agreement; or, if there is no such definition, “Cause” means a termination of your employment with Bank of America and its Subsidiaries if it occurs in conjunction with a determination by your employer that you have (i) committed an act of fraud or dishonesty in the course of your employment; (ii) been convicted of (or plead no contest with respect to) a crime constituting a felony or a crime of comparable magnitude under applicable law (as determined by Bank of America in its sole discretion); (iii) committed an act or omission which causes you or Bank of America or its Subsidiaries to be in violation of federal or state securities laws, rules or regulations, and/or the rules of any exchange or association of which Bank of America or its Subsidiaries is a member, including statutory disqualification; (iv) failed to perform your job duties where such failure is injurious to Bank of America or any Subsidiary, or to Bank of America’s or such Subsidiary’s business interests or reputation; (v) materially breached any written policy applicable to your employment with Bank of America or any of its Subsidiaries including, but not limited to, the Bank of America Corporation Code of Conduct and General Policy on Insider Trading; or (vi) made an unauthorized disclosure of any confidential or proprietary information of Bank of America or its Subsidiaries or have committed any other material violation of Bank of America’s written policies regarding confidential and proprietary information.
[Competition:
Competition means your being engaged, directly or indirectly, whether as a director, officer, employee, consultant, agent or otherwise, with a business entity that is or later becomes designated as a “Competitive Business” based on the criteria effective as of the date of your termination of employment. Notwithstanding anything in this Agreement to the contrary, the scope of Competition will only be as broad as allowed by applicable law.] [For Mr. Demare: Competition means “Competition” as defined in your Letter Agreement.]
Detrimental Conduct means your serious misconduct or unethical behavior, including any one of the following: (i) any conduct that would constitute Cause; (ii) the commission of a criminal act by you, whether or not performed in the workplace, that subjects, or if generally known, would subject Bank of America or its Subsidiaries to public ridicule or embarrassment, or other improper or intentional conduct causing reputational harm to Bank of America, its Subsidiaries, or a client of Bank of America or its Subsidiaries; (iii) the breach of a fiduciary duty owed to Bank of America or its Subsidiaries or a client or former client of Bank of America or its Subsidiaries; (iv) intentional violation, or grossly negligent disregard, of Bank of America’s or its Subsidiaries’ policies, rules and procedures, specifically including, but not limited to any of your obligations under the Bank of America Corporation Code of Conduct and workplace policies; or (v) you taking or maintaining trading positions that result in a need to restate financial results in a subsequent reporting period or that result in a significant financial loss to Bank of America or its Subsidiaries during or after the performance year.
Disability is as defined in the Stock Plan.
Good Reason means, provided that you have complied with the Good Reason Process, the occurrence of any of the following events without your consent: (i) a material diminution in your responsibility, authority or duty; (ii) a material diminution in your base salary except for across-the-board salary reductions based on Bank of America and its Subsidiaries’ financial performance similarly affecting all or substantially all management employees of Bank of America and its Subsidiaries; or (iii) the relocation of the office at which you were principally employed immediately prior to a Change in Control to a location more than fifty (50) miles from the location of such office, or your being required to be based anywhere other than such office, except to the extent you were not previously assigned to a principal location and except for required travel on your employer’s business to an extent substantially consistent with your business travel obligations at the time of the Change in Control.
Good Reason Process means that (i) you reasonably determine in good faith that a Good Reason condition has occurred; (ii) you notify Bank of America and its Subsidiaries in writing of the occurrence of the Good Reason condition within sixty (60) days of such occurrence; (iii) you cooperate in good faith with Bank of America and its Subsidiaries’ efforts, for a period of not less than thirty (30) days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist following the Cure Period; and (v) you terminate your employment for Good Reason within sixty (60) days after the end of the Cure Period. If Bank of America or its Subsidiaries cures the Good Reason condition during the Cure Period, and you terminate your employment with Bank of America and its Subsidiaries due to such condition (notwithstanding its cure), then you will not be deemed to have terminated your employment for Good Reason.
[For Mr. Demare: Letter Agreement means your letter agreement with Bank of America dated November 9, 2021.]
[Qualifying Termination:
Qualifying Termination means your termination of employment with Bank of America and its Subsidiaries after you have [(i) a length of service of at least ten (10) years and (ii) a combined age and length of service equal to at least sixty (60). Your length of service will be determined by Bank of America, in its sole discretion, and, in that regard if you participate in a tax-qualified 401(k) plan sponsored by Bank of America or its Subsidiaries, your length of service shall be your “Vesting Service” under the tax-qualified 401(k) plan in which you participate / (i) a length of service of at least ten (10) years and (ii) reached at least age fifty (50). Your length of service will be determined by Bank of America, in its sole discretion, and, in that regard if you participate in a tax-qualified 401(k) plan sponsored by Bank of America or its Subsidiaries, your length of service shall be your “Vesting Service” under the tax-qualified 401(k) plan in which you participate. / (i) reached at least age sixty (60) or (ii) attained a length of service of at least ten (10) years and reached at least age fifty-five (55).
Your length of service will be determined by Bank of America, in its sole discretion, and, in that regard if you participate in a tax-qualified 401(k) plan sponsored by Bank of America or its Subsidiaries, your length of service shall be your “Vesting Service” under the tax-qualified 401(k) plan in which you participate.]]
[For Mr. Demare: Notwithstanding the foregoing, your termination of employment shall be deemed a Qualifying Termination if (i) you are eligible for an equity protection guarantee with respect to your Award as described in your Letter Agreement and (ii) your termination of employment with Bank of America and its Subsidiaries occurs on or after the date specified in your Letter Agreement and in accordance with and subject to the terms and provisions of your Letter Agreement.]
[For Mr. Koder: Notwithstanding the foregoing, your termination of employment shall be deemed a Qualifying Termination if (i) you are eligible for an equity protection guarantee with respect to your Award as described in your offer letter or other applicable employment agreement and (ii) your termination of employment with Bank of America and its Subsidiaries occurs on or after the date specified in your offer letter or other applicable employment agreement and in accordance with and subject to the terms and provisions of your offer letter or other applicable employment agreement.]
EX-10.4
5
bac-0331202410xqex104.htm
EX-10.4
Document
Form of Time-Based Share-Settled Restricted Stock Units Award Agreement
Award Agreement
This document contains your Award Agreement under the Bank of America Corporation Equity Plan.
Bank of America Corporation Equity Plan Restricted Stock Units Award Agreement
Granted to:
Grant date:
Grant type:
Grant code:
Number granted:
[Note: The number of Restricted Stock Units is based on a “divisor price” of $[price], which is the ten (10)-day average closing price of Bank of America Corporation common stock for the ten (10) business days immediately preceding and including [date].]
This Restricted Stock Units Award Agreement and all Exhibits hereto (the “Agreement”) is made between Bank of America Corporation, a Delaware corporation (“Bank of America”), and you, an employee of Bank of America or one of its Subsidiaries.
Bank of America sponsors the Bank of America Corporation Equity Plan (the “Stock Plan”). A Prospectus describing the Stock Plan has been delivered to you. The Stock Plan itself is available upon request, and its terms and provisions are incorporated herein by reference. When used herein, the terms which are defined in the Stock Plan shall have the meanings given to them in the Stock Plan, as modified herein (if applicable).
The Restricted Stock Units covered by this Agreement are being granted to you in connection with your participation in the Performance Year [year] program, subject to the following terms and provisions.
1. Subject to the terms and conditions of the Stock Plan and this Agreement, Bank of America grants to you the number of Restricted Stock Units shown above. Each Restricted Stock Unit shall have a value equal to the Fair Market Value of one (1) share of Bank of America common stock.
2. You acknowledge having read the Prospectus and agree to be bound by all the terms and conditions of the Stock Plan and this Agreement.
3. The Restricted Stock Units covered by this Award shall become earned by, and payable to, you in accordance with the terms and conditions of the Stock Plan and this Agreement in the amounts and on the dates shown on the enclosed Exhibit A.
4. If a cash dividend is paid with respect to Bank of America common stock, a cash dividend equivalent equal to the total cash dividend you would have received had your Restricted Stock Units been actual Shares will be accumulated and paid in cash through payroll when the Restricted Stock Units become earned and payable. Dividend equivalents are credited with interest at the three (3)-year constant maturity Treasury rate in effect on the grant date noted above until the applicable payment date provided in Exhibit A.
5. To the extent that this Award is paid in Shares, you agree that you shall comply with (or provide adequate assurance as to future compliance with) all applicable securities laws, as determined by Bank of America, as a condition precedent to the delivery of any Shares pursuant to this Agreement. In addition, you agree that, upon request, you will furnish a letter agreement providing that you will (i) not distribute or resell any of said Shares in violation of the U.S. Securities Act of 1933, as amended, (ii) indemnify and hold Bank of America harmless against all liability for any such violation and (iii) accept all liability for any such violation.
6. To the extent allowed by and consistent with applicable law and any applicable limitations period, if it is determined at any time that you have engaged in Detrimental Conduct or engaged in any hedging or derivative transactions involving Bank of America common stock in violation of the Bank of America Corporation Code of Conduct that would undermine the long-term performance incentives created by the Award, Bank of America will be entitled to recover from you in its sole discretion some or all of the Shares or cash, as applicable, and any related dividend equivalents paid to you pursuant to this Agreement. You recognize that if you engage in Detrimental Conduct or any hedging or derivative transactions involving Bank of America common stock, the losses to Bank of America and/or its Subsidiaries may amount to the full value of any Shares or cash, as applicable, and any related dividend equivalents paid to you pursuant to this Agreement. In addition, the Award is subject to the requirements of (i) Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations thereunder (the “Dodd-Frank clawback rules”), (ii) similar rules under the laws of any other jurisdiction and (iii) any policies adopted by Bank of America to implement such requirements, all to the extent determined by Bank of America in its discretion to be applicable to you. For the avoidance of doubt, if the Dodd-Frank clawback rules and any implementing policy apply to you, then (A) you will not be entitled to earn or retain any portion of this Award that is determined to be erroneously awarded compensation, and (B) Bank of America may take action against this Award or any proceeds you receive from it to recover any erroneously awarded compensation you may have received from Bank of America (whether related to this Award or otherwise), all in accordance with the Dodd-Frank clawback rules and the applicable implementing policy (including the Incentive Compensation Recoupment Policy) and subject to the requirements of applicable law.
7. You may designate a beneficiary to receive payment in connection with the Restricted Stock Units granted hereunder in the event of your death while in service with Bank of America or its Subsidiaries in accordance with Bank of America’s beneficiary designation procedures, as in effect from time to time. Any beneficiary designation in effect at the time of your termination of employment with Bank of America and its Subsidiaries (other than a termination of employment due to your death) will remain in effect following your termination of employment unless you change your beneficiary designation or it otherwise ceases to be enforceable and/or valid in accordance with Bank of America’s beneficiary designation procedures, as in effect from time to time. If you do not designate a beneficiary or if your designated beneficiary does not survive you, then your beneficiary will be your estate.
8. The existence of this Award shall not affect in any way the right or power of Bank of America or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in Bank of America’s capital structure or its business, or any merger or consolidation of Bank of America, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or convertible into, or otherwise affecting the Bank of America common stock or the rights thereof, or the dissolution or liquidation of Bank of America, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
9. Bank of America may, in its sole discretion, decide to deliver any documents related to this Award or future Awards that may be granted under the Stock Plan by electronic means or request your consent to participate in the Stock Plan by electronic means. You hereby consent to receive such documents by electronic delivery and, if requested, agree to participate in the Stock Plan through an online or electronic system established and maintained by Bank of America or a third party designated by Bank of America.
Any notice which either party hereto may be required or permitted to give to the other shall be in writing and may be delivered personally, by intraoffice mail, by fax, by electronic mail or other electronic means, or via a postal service, postage prepaid, to such electronic mail or postal address and directed to such person as Bank of America may notify you from time to time; and to you at your electronic mail or postal address as shown on the records of Bank of America from time to time or as otherwise determined appropriate by Bank of America, in its sole discretion, or at such other electronic mail or postal address as you, by notice to Bank of America, may designate in writing from time to time.
10. You acknowledge that Bank of America has not provided you with any legal advice. You have the right to consult with, and should consult with, your personal legal advisor prior to accepting this Agreement.
11. You acknowledge that, regardless of any action taken by Bank of America or your employer, the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (or, if applicable, your portion thereof) related to your participation in the Stock Plan (“Tax-Related Items”) is and remains your responsibility and may exceed the amount (if any) withheld by Bank of America or your employer. You further acknowledge that Bank of America and/or your employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including but not limited to the grant and vesting of the Restricted Stock Units, your satisfaction of any age and/or length of service criteria, the payment of any Restricted Stock Units, the subsequent sale of any Shares acquired upon the vesting of the Restricted Stock Units and the receipt of any dividends and/or dividend equivalents, (ii) do not commit to and are under no obligation to structure the terms of the Award or any aspect of the Restricted Stock Units to reduce or eliminate your liability for Tax-Related Items or achieve any specific tax result and (iii) do not commit to and are under no obligation to use a withholding method for Tax-Related Items which results in the most favorable or any particular tax treatment for you. Further, if you have become subject to Tax-Related Items in more than one jurisdiction, you acknowledge that Bank of America or your employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
In the event Bank of America determines that it and/or your employer must withhold any Tax-Related Items, you agree as a condition of the grant of the Restricted Stock Units to make arrangements satisfactory to Bank of America and/or your employer to enable it to satisfy all withholding requirements by all legal means, including, but not limited to, withholding any applicable Tax-Related Items from the pay-out of the Restricted Stock Units. In addition, you authorize Bank of America and/or your employer to fulfill its withholding obligations by all legal means, including, but not limited to, withholding Tax-Related Items from your wages, salary or other cash compensation Bank of America or your employer pays to you, withholding Tax-Related Items from the cash proceeds, if any, received upon any sale of any Shares received in payment for your Restricted Stock Units and, at the time of payment, withholding Shares to meet withholding obligations for Tax-Related Items, in an amount which does not exceed the maximum statutory tax rates in the applicable jurisdictions. Bank of America may refuse to pay any earned Restricted Stock Units if you fail to comply with any obligations in connection with the Tax-Related Items.
12. The validity, construction and effect of this Agreement are governed by, and subject to, the laws of the State of Delaware and the laws of the United States, as provided in the Stock Plan, unless otherwise required by applicable law. For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Award or this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of North Carolina and agree that such litigation shall be conducted solely in the courts of Mecklenburg County, North Carolina or the federal courts for the United States for the Western District of North Carolina, where this Award is made and/or to be performed, and no other courts, unless otherwise required by applicable law.
13. In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included. This Agreement constitutes the final understanding between you and Bank of America regarding the Restricted Stock Units. Any prior agreements, commitments or negotiations concerning the Restricted Stock Units are superseded. Subject to the terms of the Stock Plan, this Agreement may only be amended by a written instrument signed by both parties.
14. If you move to any country outside of the United States during the term of your Award, additional terms and conditions may apply to your Award. Bank of America reserves the right to impose other requirements on the Award to the extent Bank of America determines it is necessary or advisable for legal or administrative reasons and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
IN WITNESS WHEREOF, Bank of America has caused this Agreement to be executed by its duly authorized officer, and you have hereunto set your hand, all effective as of the grant date listed above.
/s/ Brian T. Moynihan
Brian T. Moynihan
Chair and Chief Executive Officer
Exhibit A
Bank of America Corporation Equity Plan
PAYMENT OF RESTRICTED STOCK UNITS
(a) PAYMENT SCHEDULE. Subject to the provisions of paragraphs (b), (c), (d), (e) and (g) below, the Restricted Stock Units (and any related dividend equivalents) shall be earned and payable in four (4) equal annual installments if you remain employed with Bank of America and its Subsidiaries through each of the payment dates as follows.
[schedule]
*Payment will be made as soon as administratively practicable, generally within thirty (30) days after the applicable payment date.
(b) IMPACT OF TERMINATION OF EMPLOYMENT ON RESTRICTED STOCK UNITS. If your employment with Bank of America and its Subsidiaries terminates prior to any of the above payment dates, then any unearned Restricted Stock Units (and any related dividend equivalents) shall become earned and payable or be canceled depending on the reason for termination as follows.
(i) Death. Any unearned Restricted Stock Units (and any related dividend equivalents) shall become immediately earned and payable as of the date of your termination of employment if your termination is due to your death. Payment will be made as soon as administratively practicable, generally within thirty (30) days after notification of termination from the payroll system.
(ii) Disability. If your employment is terminated by your employer due to your Disability, then any unearned Restricted Stock Units (and any related dividend equivalents) shall continue to become earned and payable at such time as provided in the Payment Schedule described in paragraph (a) above (without regard to whether you are employed by Bank of America or its Subsidiaries), subject to your complying with the covenants set forth in paragraph (d) below and subject to the performance-based cancellation provision set forth in paragraph (e) below. Notwithstanding anything in this paragraph (b)(ii) to the contrary, upon your death following a termination of employment by your employer due to Disability, any unearned Restricted Stock Units (and any related dividend equivalents) that are continuing to become earned and payable in accordance with the provisions of this paragraph (b)(ii), but have not yet become earned and payable, shall become immediately earned and payable as of the date of your death, and payment will be made as soon as administratively practicable following your death.
(iii) Termination by your Employer with Cause. If your employment is terminated by your employer with Cause, then any Restricted Stock Units (and any related dividend equivalents) that were not already paid to you pursuant to paragraph (a) above as of the date of your termination of employment shall be canceled as of that date.
(iv) Change in Control. Notwithstanding anything in this Agreement to the contrary, if (A) a Change in Control occurs and (B) on or after the Change in Control and on or before the second anniversary of the Change in Control either (1) your employment is terminated without Cause
or (2) you terminate your employment with Bank of America or its Subsidiaries for Good Reason, then any unearned Restricted Stock Units (and any related dividend equivalents) shall become immediately earned as of the date of such termination and shall be payable at such time as provided in the Payment Schedule described in paragraph (a) above, without regard to the covenants set forth in paragraph (d) below or the performance-based cancellation provision set forth in paragraph (e) below. Notwithstanding anything in this paragraph (b)(iv) to the contrary, upon your death following (A) a termination of your employment without Cause on or before the second anniversary of a Change in Control or (B) a termination of your employment with Bank of America or its Subsidiaries for Good Reason on or before the second anniversary of a Change in Control, any Restricted Stock Units (and any related dividend equivalents) that are continuing to become payable in accordance with the provisions of this paragraph (b)(iv), but have not yet become payable, shall become immediately payable as of the date of your death, and payment will be made as soon as administratively practicable following your death.
(v) All Other Terminations. Unless your termination of employment is a Qualifying Termination as described below, in the case of All Other Terminations, any Restricted Stock Units (and any related dividend equivalents) that were not already earned and payable pursuant to paragraph (a) above as of the date of your termination of employment shall be canceled as of that date.
[Qualifying Termination:
(c) QUALIFYING TERMINATION. If your employment terminates for any reason other than your death, your Disability, Cause or in connection with a Change in Control as described in paragraph (b)(iv) above and your termination of employment is a Qualifying Termination, then any unearned Restricted Stock Units (and any related dividend equivalents) shall continue to become earned and payable in accordance with the Payment Schedule set forth in paragraph (a) above subject to the performance-based cancellation provision set forth in paragraph (e) below, provided that (i) to the extent permissible under applicable law, you do not engage in Competition during such period, (ii) you comply with the covenants described in paragraph (d) below and (iii) prior to each payment date, you provide Bank of America with a certification that you have not engaged in Competition to the extent the Competition restriction in (i) above is applicable.
To be effective, such certification must be provided on such form, at such time and pursuant to such procedures as Bank of America shall establish from time to time. If Bank of America determines in its reasonable business judgment that you have failed to satisfy any of the foregoing requirements, then any unearned Restricted Stock Units (and any related dividend equivalents) shall be immediately canceled as of the date of such determination. In addition, from time to time following your Qualifying Termination, Bank of America may require you to further certify that you are not engaging in Competition, and if you fail to fully cooperate with any such requirement Bank of America may determine that you are engaging in Competition. Notwithstanding anything in this paragraph (c) to the contrary, upon your death following a Qualifying Termination, any unearned Restricted Stock Units (and any related dividend equivalents) that are continuing to become earned and payable in accordance with the provisions of this paragraph (c), but have not yet become earned and payable, shall become immediately earned and payable as of the date of your death, and payment will be made as soon as administratively practicable following your death. Notwithstanding anything in this
Agreement to the contrary, if (1) you are a permanent resident of California or you are a tax resident of California who is assigned to perform services for Bank of America or any Subsidiary from an office located in California, the Competition restriction and the certification requirement described in this paragraph (c) will not apply to this Award and (2) you live or work in Massachusetts, the Competition restriction and the certification requirement described in this paragraph (c) will apply for no more than one year following the date of your termination of employment.
For the avoidance of doubt, the only available remedy under this Agreement for engaging in Competition (or for breach of the covenant in paragraph (d)(i) below) is the cancelation of any unearned Restricted Stock Units (and any related dividend equivalents), and not, for example, enforcement of the restrictions through injunction or similar action. This limitation on remedies does not apply to any competition restrictions or covenants that may be applicable to you under any other written agreement with Bank of America except to the extent expressly provided for in such other written agreement.]
(d) COVENANTS.
(i) Non-Solicitation. You agree that during any period in which Restricted Stock Units (and any related dividend equivalents) remain payable, to the maximum extent permissible under applicable law (A) you will not directly or indirectly solicit or recruit for employment or encourage to leave employment with Bank of America or its Subsidiaries, on your own behalf or on behalf of any other person or entity other than Bank of America or its Subsidiaries, any person who is an employee of Bank of America or its Subsidiaries and (B) you will not, directly or indirectly, on your own behalf or on behalf of any other person or entity other than Bank of America or its Subsidiaries, solicit any client or customer of Bank of America or its Subsidiaries which you actively solicited or with whom you worked or otherwise had material contact in the course of your employment with Bank of America and its Subsidiaries. Notwithstanding anything in this Agreement to the contrary, if you are a permanent resident of California or you are a tax resident of California who is assigned to perform services for Bank of America or any Subsidiary from an office located in California, the solicitation restrictions described in (A) and (B) above will not apply to this Award.
(ii) Detrimental Conduct. You agree that during any period in which Restricted Stock Units (and any related dividend equivalents) remain payable, you will not engage in Detrimental Conduct.
(iii) Hedging or Derivative Transactions. You agree that during any period in which Restricted Stock Units (and any related dividend equivalents) remain payable, you will not engage in any hedging or derivative transactions involving Bank of America common stock in violation of the Bank of America Corporation Code of Conduct that would undermine the long-term performance incentive created by the Restricted Stock Units.
(iv) Remedies. Payment of Restricted Stock Units (and any related dividend equivalents) in accordance with the Payment Schedule set forth in paragraph (a) above is specifically conditioned on the requirement that at all times prior to each payment, you do not engage in solicitation, Detrimental Conduct or hedging or derivative transactions, as described in paragraphs (d)(i), (ii) and (iii), during such period. If Bank of America determines in its reasonable business judgment that you have failed to satisfy such requirements, then any Restricted Stock Units (and any
related dividend equivalents) that have not yet been paid as of the date of such determination shall be canceled as of such date of determination.
[Performance-based cancellation provisions:
(e) PERFORMANCE-BASED CANCELLATION PROVISION. In order to appropriately balance risk
and reward, unpaid Restricted Stock Units may be canceled if a loss occurs outside of the ordinary course of business. For a line of business or sub-line of business, a “loss” means a pre-tax loss for a fiscal year (as determined under U.S. generally accepted accounting principles in effect as of the close of such fiscal year). For an individual, a “loss” means that the aggregate profit and loss attributable to your activities is negative. A loss in the “ordinary course of business” means a loss resulting from a planned winding down of a business or legacy position, or a loss that is de minimis (e.g., a loss from a short-dated trading position that is within desk strategy and risk limits and which, aggregated with losses across all positions, is less than $1 million). A loss outside of the ordinary course includes (without limitation) losses such as those resulting from complex or high-risk trading strategies, risk or compliance violations, deliberate or grossly negligent failures to perform your job duties, or any loss that materially impairs Bank of America’s solvency, liquidity, or capital distribution plans. If a loss outside of the ordinary course of business occurs:
(i) at Global Markets or Global Corporate and Investment Banking, if you are a senior business leader within the applicable group;
(ii) at a sub-line of business (e.g., FICC Trading, Investment Banking) within Global Markets or Global Corporate and Investment Banking, if you are a manager within the applicable sub-line of business; or
(iii) at your individual level;
then your accountability for such loss will be determined, taking into account such factors as (i) the magnitude of the loss (including positive or negative variance from plan); (ii) your degree of involvement (including such factors as your current or former leadership role within Global Markets or Global Corporate and Investment Banking, and the degree to which you were involved in decisions that are determined to have contributed to the loss); (iii) your performance; and (iv) such other factors as deemed appropriate. The management team designated for such purpose, together with key control functions, will review the loss and your accountability. The management team designated for such purpose will then make a final determination to either take no action or to cancel some or all of your Award. All such determinations will be final and binding.
(e) PERFORMANCE-BASED CANCELLATION PROVISION. In order to appropriately balance risk
and reward, unpaid Restricted Stock Units (and any related dividend equivalents) may be canceled if a loss occurs outside of the ordinary course of business. For Bank of America or a line of business, a “loss” means a pre-tax loss for a fiscal year (as determined under U.S. generally accepted accounting principles in effect as of the close of such fiscal year). A loss in the “ordinary course of business” means a loss resulting from a planned winding down of a business or legacy position. A loss outside of the ordinary course includes (without limitation) losses such as those resulting from risk or compliance violations, deliberate or grossly negligent failures to perform your job duties, or any loss
that materially impairs Bank of America’s solvency, liquidity, or capital distribution plans. If a loss outside of the ordinary course of business occurs:
(i) at Bank of America, if you are the Chief Executive Officer, Chief Financial Officer, any Chief Executive Officer direct report who does not lead a line of business, or are any employee who is (A) part of a staff function (such as global technology, global operations, global strategy and enterprise platforms, enterprise credit, sustainable finance and research, etc.), (B) part of a key control function (such as audit, compliance, human resources, legal, risk, finance, etc.) or (C) any other individual material risk taker who is not part of a line of business;
(ii) at Bank of America or your line of business, if you are a senior leader who leads a line of business (e.g., are president or head of such line of business); or
(iii) at your line of business, if you are an individual material risk taker who is part of a line of business other than a senior leader who leads a line of business;
then your accountability for such loss will be determined, taking into account such factors as (i) the magnitude of the loss (including positive or negative variance from plan); (ii) your degree of involvement (including such factors as your current or former leadership role within Bank of America or the line of business, and the degree to which you were involved in decisions that are determined to have contributed to the loss); (iii) your performance; and (iv) such other factors as deemed appropriate. For this purpose, a “line of business” means an organizational unit of Bank of America that conducts transactions as an organizational unit that could result in a loss outside of the ordinary course, all as determined by Bank of America in its sole discretion, and which, as of the grant date, includes the following business units: Retail Banking, Preferred Banking, Merrill, Private Bank, Business Banking, Global Commercial Banking, Global Corporate & Investment Banking and Global Markets. The Compensation and Human Capital Committee (for executive officers), Management Compensation Committee (for Band 1 employees) or other management team designated for such purpose, together with key control functions, will review the loss and your accountability. The Compensation and Human Capital Committee (for executive officers), Management Compensation Committee (for Band 1 employees) or other management team designated for such purpose will then make a final determination to either take no action or to cancel some or all of your Award. All such determinations will be final and binding.]
(f) FORM OF PAYMENT. Payment of Restricted Stock Units shall be made in the form of one (1) share of Bank of America common stock for each Restricted Stock Unit that is payable. Notwithstanding anything in this paragraph (f) to the contrary, Bank of America may, in its sole discretion, determine before a payment date to pay all or any portion of the Restricted Stock Units then payable in the form of cash rather than shares. In that case, the amount of the cash payment shall equal the Fair Market Value of the underlying shares of Bank of America common stock, determined as of the applicable payment date, for the portion of the Restricted Stock Units that Bank of America determines to pay in the form of cash rather than by issuance of shares.
(g) RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION. If, immediately before a payment date otherwise provided by this Exhibit A, Bank of America or its Subsidiaries have been unable to recover from you erroneously awarded compensation that is required to be recovered under the Dodd-Frank clawback rules and any implementing policy, Bank of America may reduce the net, after-tax amount to be paid on your Award as of that payment date (after all applicable tax withholding requirements have been satisfied) by an amount up to the outstanding balance of erroneously awarded compensation to be recovered from you as of the payment date. For the avoidance of doubt, the full amount of the Award payable as of the payment date shall be included in income to you as of that payment date and nothing in this paragraph (g) shall result in any acceleration of the payment date.
(h) DEFINITIONS. For purposes hereof, the following terms shall have the following meanings.
All Other Terminations means any termination of your employment with Bank of America and its Subsidiaries, whether initiated by you or your employer, other than (i) a Qualifying Termination; (ii) a termination due to your death or your Disability; (iii) a termination by your employer with Cause; and (iv) a termination in connection with a Change in Control as described in paragraph (b)(iv) above.
Cause shall be defined as that term is defined in your offer letter or other applicable employment agreement; or, if there is no such definition, “Cause” means a termination of your employment with Bank of America and its Subsidiaries if it occurs in conjunction with a determination by your employer that you have (i) committed an act of fraud or dishonesty in the course of your employment; (ii) been convicted of (or plead no contest with respect to) a crime constituting a felony or a crime of comparable magnitude under applicable law (as determined by Bank of America in its sole discretion); (iii) committed an act or omission which causes you or Bank of America or its Subsidiaries to be in violation of federal or state securities laws, rules or regulations, and/or the rules of any exchange or association of which Bank of America or its Subsidiaries is a member, including statutory disqualification; (iv) failed to perform your job duties where such failure is injurious to Bank of America or any Subsidiary, or to Bank of America’s or such Subsidiary’s business interests or reputation; (v) materially breached any written policy applicable to your employment with Bank of America or any of its Subsidiaries including, but not limited to, the Bank of America Corporation Code of Conduct and General Policy on Insider Trading; or (vi) made an unauthorized disclosure of any confidential or proprietary information of Bank of America or its Subsidiaries or have committed any other material violation of Bank of America’s written policies regarding confidential and proprietary information.
[Competition:
Competition means your being engaged, directly or indirectly, whether as a director, officer, employee, consultant, agent or otherwise, with a business entity that is or later becomes designated as a “Competitive Business” based on the criteria effective as of the date of your termination of employment. Notwithstanding anything in this Agreement to the contrary, the scope of Competition will only be as broad as allowed by applicable law. ] [For Mr. Demare: Competition means “Competition” as defined in your Letter Agreement.]
Detrimental Conduct means your serious misconduct or unethical behavior, including any one of the following: (i) any conduct that would constitute Cause; (ii) the commission of a criminal act by you, whether or not performed in the workplace, that subjects, or if generally known, would subject Bank of America or its Subsidiaries to public ridicule or embarrassment, or other improper or intentional conduct causing reputational harm to Bank of America, its Subsidiaries, or a client of Bank of America or its Subsidiaries; (iii) the breach of a fiduciary duty owed to Bank of America or its Subsidiaries or a client or former client of Bank of America or its Subsidiaries; (iv) intentional violation, or grossly negligent disregard, of Bank of America’s or its Subsidiaries’ policies, rules and procedures, specifically including, but not limited to any of your obligations under the Bank of America Corporation Code of Conduct and workplace policies; or (v) you taking or maintaining trading positions that result in a need to restate financial results in a subsequent reporting period or that result in a significant financial loss to Bank of America or its Subsidiaries during or after the performance year.
Disability is as defined in the Stock Plan.
Good Reason means, provided that you have complied with the Good Reason Process, the occurrence of any of the following events without your consent: (i) a material diminution in your responsibility, authority or duty; (ii) a material diminution in your base salary except for across-the-board salary reductions based on Bank of America and its Subsidiaries’ financial performance similarly affecting all or substantially all management employees of Bank of America and its Subsidiaries; or (iii) the relocation of the office at which you were principally employed immediately prior to a Change in Control to a location more than fifty (50) miles from the location of such office, or your being required to be based anywhere other than such office, except to the extent you were not previously assigned to a principal location and except for required travel on your employer’s business to an extent substantially consistent with your business travel obligations at the time of the Change in Control.
Good Reason Process means that (i) you reasonably determine in good faith that a Good Reason condition has occurred; (ii) you notify Bank of America and its Subsidiaries in writing of the occurrence of the Good Reason condition within sixty (60) days of such occurrence; (iii) you cooperate in good faith with Bank of America and its Subsidiaries’ efforts, for a period of not less than thirty (30) days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason condition continues to exist following the Cure Period; and (v) you terminate your employment for Good Reason within sixty (60) days after the end of the Cure Period. If Bank of America or its Subsidiaries cures the Good Reason condition during the Cure Period, and you terminate your employment with Bank of America and its Subsidiaries due to such condition (notwithstanding its cure), then you will not be deemed to have terminated your employment for Good Reason.
[For Mr. Demare: Letter Agreement means your letter agreement with Bank of America dated November 9, 2021.]
[Qualifying Termination:
Qualifying Termination means your termination of employment with Bank of America and its Subsidiaries after you have [(i) a length of service of at least ten (10) years and (ii) a combined age and length of service equal to at least sixty (60). Your length of service will be determined by Bank of America, in its sole discretion, and, in that regard if you participate in a tax-qualified 401(k) plan sponsored by Bank of America or its Subsidiaries, your length of service shall be your “Vesting Service” under the tax-qualified 401(k) plan in which you participate / (i) a length of service of at least ten (10) years and (ii) reached at least age fifty (50).
Your length of service will be determined by Bank of America, in its sole discretion, and, in that regard if you participate in a tax-qualified 401(k) plan sponsored by Bank of America or its Subsidiaries, your length of service shall be your “Vesting Service” under the tax-qualified 401(k) plan in which you participate. / (i) reached at least age sixty (60) or (ii) attained a length of service of at least ten (10) years and reached at least age fifty-five (55). Your length of service will be determined by Bank of America, in its sole discretion, and, in that regard if you participate in a tax-qualified 401(k) plan sponsored by Bank of America or its Subsidiaries, your length of service shall be your “Vesting Service” under the tax-qualified 401(k) plan in which you participate. ]]
[For Mr. Demare: Notwithstanding the foregoing, your termination of employment shall be deemed a Qualifying Termination if (i) you are eligible for an equity protection guarantee with respect to your Award as described in your Letter Agreement and (ii) your termination of employment with Bank of America and its Subsidiaries occurs on or after the date specified in your Letter Agreement and in accordance with and subject to the terms and provisions of your Letter Agreement.]
[For Mr. Koder: Notwithstanding the foregoing, your termination of employment shall be deemed a Qualifying Termination if (i) you are eligible for an equity protection guarantee with respect to your Award as described in your offer letter or other applicable employment agreement and (ii) your termination of employment with Bank of America and its Subsidiaries occurs on or after the date specified in your offer letter or other applicable employment agreement and in accordance with and subject to the terms and provisions of your offer letter or other applicable employment agreement.]
EX-10.5
6
bac-0331202410xqex105.htm
EX-10.5
Document
Form of Acknowledgement of and Agreement to the Incentive Compensation Recoupment Policy
PARTICIPANT DECLARATIONS
Bank of America Incentive Compensation Recoupment Policy Acknowledgement and Agreement
By checking the “Acknowledge and Agree” box below, I acknowledge and agree that I have received and reviewed this Acknowledgment and Agreement Form and the Bank of America Incentive Compensation Recoupment Policy (please review the Policy by clicking the “Bank of America Incentive Compensation Recoupment Policy” link below). Furthermore, by checking the “Acknowledge and Agree” box, I acknowledge and agree that I am fully bound by, and subject to, all of the terms and conditions of the Bank of America Incentive Compensation Recoupment Policy, as may be amended, restated, supplemented, or otherwise modified from time to time (the “Policy”).
I acknowledge and agree that my acceptance of this Acknowledgement and Agreement Form is in consideration of, and is a condition to, my continued employment and my receipt of future incentive awards from Bank of America, though nothing in this Acknowledgement and Agreement Form shall obligate Bank of America to make any award. In the event of any inconsistency between the Policy and the terms of any other agreement to which I am a party, or to the terms of any compensation plan, program, agreement or arrangement under which any compensation covered by the Policy is payable, the terms of this Policy shall govern and shall be deemed incorporated into all such plans, programs, agreements or arrangements, including and without limitation, any awards granted prior to the date hereof and those granted in the future.
In the event any compensation is subject to recoupment or recovery under the terms of the Policy, I agree to promptly take any action necessary to effectuate the recoupment or recovery of such compensation by Bank of America. Furthermore, if I fail to repay any compensation that is owed to Bank of America under the Policy, I agree to reimburse Bank of America for all expenses (including legal expenses) incurred by Bank of America in recovering such compensation.
Please note if you defer acceptance of this Acknowledgment and Agreement Form by checking the “Defer” box below, you will be required to return to Benefits Online later to finish its completion.
Bank of America Incentive Compensation Recoupment Policy [link]
EX-31.1
7
bac-0331202410xqex311.htm
EX-31.1
Document
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
FOR THE CHIEF EXECUTIVE OFFICER
I, Brian T. Moynihan, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Bank of America Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: April 30, 2024 |
/s/ Brian T. Moynihan
Brian T. Moynihan
Chief Executive Officer
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EX-31.2
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bac-0331202410xqex312.htm
EX-31.2
Document
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
FOR THE CHIEF FINANCIAL OFFICER
I, Alastair M. Borthwick, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of Bank of America Corporation;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: April 30, 2024 |
/s/ Alastair M. Borthwick
Alastair M. Borthwick
Chief Financial Officer
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EX-32.1
9
bac-0331202410xqex321.htm
EX-32.1
Document
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Brian T. Moynihan, state and attest that:
1.I am the Chief Executive Officer of Bank of America Corporation (the registrant).
2.I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
•the Quarterly Report on Form 10-Q of the registrant for the quarter ended March 31, 2024 (the periodic report) containing financial statements fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
•the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
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Date: April 30, 2024 |
/s/ Brian T. Moynihan
Brian T. Moynihan
Chief Executive Officer
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EX-32.2
10
bac-0331202410xqex322.htm
EX-32.2
Document
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Alastair M. Borthwick, state and attest that:
1.I am the Chief Financial Officer of Bank of America Corporation (the registrant).
2.I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
•the Quarterly Report on Form 10-Q of the registrant for the quarter ended March 31, 2024 (the periodic report) containing financial statements fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
•the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the registrant.
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Date: April 30, 2024 |
/s/ Alastair M. Borthwick
Alastair M. Borthwick
Chief Financial Officer
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