Bank of America Reports Second-Quarter 2016
Financial Results
1
Financial Highlights1,2 Business Segment Highlights1
Consumer Banking
Global Wealth and Investment
Management
Global Banking
Global Markets
CEO Commentary
Effective April 1, 2016, to align the company's business segments to how it now manages the business, Bank of America eliminated the Legacy Assets and Servicing segment and now reports results under the
following business segments: Consumer Banking, Global Wealth and Investment Management, Global Banking and Global Markets, with the remaining operations recorded in All Other. Prior results have been
reclassified to conform to this presentation. For more information, see the the Company's 8-K filed on July 12.
1 Financial Highlights and Business Segment Highlights compare to the year-ago quarter unless noted. Loan and deposit balances are shown on an end-of-period basis.
2 Fully taxable-equivalent (FTE) basis for the Corporation is a non-GAAP financial measure. See endnote (A) for more information.
3 Combined consumer credit/debit spending, including GWIM, excludes the impact of portfolio divestitures. Including divestitures, combined spending was up 2%.
• Loans up $14.9 billion, deposits up $45.3
billion1
• Brokerage assets up 8%
• Mobile banking active users up 15% to
20.2 million
• Total credit/debit card spending up 4%3
• Revenue, net of interest expense, $20.6 billion
(FTE basis),(A) compared to $22.2 billion; reported
revenue $20.4 billion, compared to $22.0 billion
– Excluding market-related net interest income
(NII) adjustments and net debit valuation
adjustments (DVA), revenue (FTE) was $21.8
billion, compared to $21.7 billion(A)
• NII of $9.2 billion compared to $10.5 billion
– Excluding market-related adjustments, NII (FTE)
increased to $10.4 billion from $10.0 billion(A)
• Noninterest income of $11.2 billion, compared to
$11.5 billion
• Provision for credit losses of $976 million,
compared to $780 million; net charge-offs
declined to $985 million from $1.1 billion
• Noninterest expense declined $465 million, or
3%, to $13.5 billion
• Net income of $4.2 billion and EPS of $0.36,
compared to $5.1 billion and $0.43
– Q2-16 includes after-tax negative impacts of
$0.6 billion, or $0.05 per share, for market-
related NII adjustments, and $0.1 billion, or
$0.01 per share, for net DVA
– Q2-15 includes $0.4 billion, or $0.04 per share,
after-tax positive impact for market-related NII
adjustments and $0.1 billion, or $0.01 per
share, negative after-tax impact for net DVA
Key Performance Metrics
• Return on average assets 0.78%; return on
average common equity 6.5%; return on average
tangible common equity 9.2%(D)
– Excluding NII adjustments and net DVA, return
on average assets 0.91%, and return on
average tangible common equity 10.9%(D)
• Book value per share increased 8% to $23.67;
tangible book value per share(E) increased 11% to
$16.68
• Repurchased $1.4 billion in common stock and
paid $0.5 billion in common stock dividends
• Total client balances of $2.4 trillion
• Loans up $9.1 billion, deposits up $13.4
billion1
• Pretax margin improved to 26%
• Long-term AUM flows of $10 billion
• Loans up $29.2 billion; deposits up $12.3
billion1
• Ranked No. 3 Global Investment Bank
with 6.5% market share(B)
• Participated in 9 of 10 top debt and
equity underwriting deals(B)
• Sales and trading revenue up 14%
– Fixed income up 27%
– Equities down 8%
• Excluding net DVA, sales and trading
revenue up 12%(C)
– Fixed income up 22%(C)
– Equities down 8%(C)
Bank of America Reports Q2-16 Net Income of $4.2 Billion, EPS of $0.36
Results Include $0.6 Billion (After Tax), or $0.05 per Share, in Negative Market-Related NII Adjustments and
$0.1 Billion (After Tax), or $0.01 per Share, in Negative Net Debit Valuation Adjustments
“We had another solid quarter in a challenging environment. Our responsible
growth strategy led to improved customer and client activity, and each of our
four business segments reported higher earnings than the year-ago
quarter. We also moved closer to our longer-term performance targets. We
continued to invest in core growth areas and to manage expenses, which were
down 3 percent year over year to a level not seen since 2008.”
— Brian Moynihan, Chief Executive Officer
Balance Sheet Highlights ($ in billions, at end of period) June 30, 2016 March 31, 2016 June 30, 2015
Total assets $2,186.6 $2,185.5 $2,149.0
Total loans and leases 903.2 901.1 881.2
Total deposits 1,216.1 1,217.3 1,149.6
Global Excess Liquidity Sources(F) 515 525 484
Common equity tier 1 capital (transition) 166.2 162.7 158.3
Common equity tier 1 capital (fully phased-in)(G) 161.8 157.5 148.3
Bank of America Reports Second-Quarter 2016
Financial Results
2
CFO Commentary
Consumer Banking
Three months ended
Financial Results1 ($ in millions) 6/30/2016 3/31/2016 6/30/2015
Net interest income (FTE) $ 5,276 $ 5,272 $ 5,043
Noninterest income 2,588 2,529 2,714
Total revenue (FTE)2 7,864 7,801 7,757
Provision for credit losses 726 531 470
Noninterest expense 4,416 4,538 4,637
Net income $ 1,718 $ 1,729 $ 1,662
1 Comparisons are to the year-ago quarter unless noted.
2 Revenue, net of interest expense.
Three months ended
Business Highlights1,2 ($ in billions) 6/30/2016 3/31/2016 06/30/2015
Average deposits $ 596.5 $ 578.2 $ 553.0
Average loans and leases 242.9 237.9 230.7
Brokerage assets (EOP) 131.7 126.9 122.0
Total mortgage production4 $ 20.6 $ 16.4 $ 19.2
Mobile banking active users
(MM)
20.2 19.6 17.6
Number of financial centers 4,681 4,689 4,789
Efficiency ratio (FTE) 56% 58% 60%
Return on average allocated
capital
20 20 20
Total U.S. Consumer Credit Card2
New card accounts (MM) 1.31 1.21 1.30
Risk-adjusted margin 8.79% 9.05% 8.89%
1 Comparisons are to the year-ago quarter unless noted.
2 The U.S. consumer card portfolio includes Consumer Banking and GWIM.
3 Source: SNL branch data, U.S. retail deposit market share based on June 2015 FDIC deposit
data, adjusted to remove commercial balances.
4 Total mortgage production includes first mortgage and home equity originations in Consumer
Banking and GWIM. Amounts represent the unpaid principal balance of loans and in the case
of home equity, the principal amount of the total line of credit.
"We increased adjusted net interest income year over year in a difficult rate environment by growing deposits and loans within our
risk and customer frameworks. That, coupled with a relentless focus on costs, drove improved operating leverage across all four of
our business segments. Also, we increased book value per share by 8 percent and tangible book value per share by 11 percent,
returned nearly $2 billion in capital to common shareholders this quarter, and announced plans to return more capital through both
share repurchases and dividends over the next four quarters."
— Paul Donofrio, Chief Financial Officer
• Revenue up $107 million to $7.9 billion
– NII increased $233 million, reflecting higher
deposit and loan balances
– Noninterest income decreased due to lower
mortgage banking income, lower service charges,
and the impact of certain divestitures
• Provision for credit losses increased $256 million,
driven by a slower pace of portfolio improvement
• Noninterest expense down $221 million, due
primarily to lower operating expenses; efficiency ratio
improved to 56% from 60%
• Net income up 3% to $1.7 billion as higher revenue
from increased customer activity combined with
lower expenses to create positive operating leverage
• No. 1 retail deposit market share3
• Average deposit balances grew $43.5 billion, or 8%,
and average loan balances grew $12.2 billion, or 5%
• Total mortgage and home equity production4 grew
$1.4 billion, or 8%, to $20.6 billion
• Client brokerage assets grew $9.7 billion, or 8%, to
$131.7 billion, driven by new accounts and flows,
partially offset by lower market valuations. The
number of Merrill Edge households grew 10% to 1.6
million households
• Highest level of U.S. consumer credit cards issued
since 2008
• 20.2 million mobile banking active users, up 15%
• 4,681 financial centers, including 7 new openings
during the quarter
Bank of America Reports Second-Quarter 2016
Financial Results
3
Global Wealth and Investment Management
Three months ended
Financial Results1 ($ in millions) 6/30/2016 3/31/2016 6/30/2015
Net interest income (FTE) $ 1,434 $ 1,488 $ 1,352
Noninterest income 3,022 2,956 3,215
Total revenue (FTE)2 4,456 4,444 4,567
Provision for credit losses 14 25 15
Noninterest expense 3,288 3,275 3,485
Net income $ 722 $ 724 $ 669
1 Comparisons are to the year-ago quarter unless noted.
2 Revenue, net of interest expense.
Three months ended
Business Highlights1 ($ in billions) 6/30/2016 3/31/2016 6/30/2015
Average deposits $ 254.8 $ 260.5 $ 240.0
Average loans and leases 141.2 139.1 131.4
Total client balances 2,419.5 2,466.2 2,522.8
Long-term AUM flows 10.1 (0.6) 8.6
Pretax margin 26% 26% 23%
Efficiency ratio (FTE) 74 74 76
Return on average allocated
capital
22 22 22
1 Comparisons are to the year-ago quarter unless noted.
2 Includes financial advisors in Consumer Banking of 2,248 and 2,048 in Q2-16 and Q2-15.
• Revenue down $111 million to $4.5 billion
– NII up $82 million, reflecting higher deposit and
loan balances
– Noninterest income down $193 million, driven by
lower market valuations and lower transactional
revenue, partially offset by a modest gain on the
sale of BofA Global Capital Management's assets
under management (AUM)
• Noninterest expense down $197 million, or 6%, due
to the expiration of fully amortized advisor retention
awards and lower revenue-related incentives
• Net income up 8% to $722 million as lower expenses
more than offset lower revenue to create positive
operating leverage
• Average deposit balances grew $14.8 billion, or 6%
• Average loans and leases grew $9.8 billion, or 7%
• Total client balances declined $103.3 billion, or 4%,
to $2.4 trillion, driven by the sale of approximately
$80 billion in BofA Global Capital Management AUM
and lower market valuations, partially offset by
positive client balance flows
• Long-term AUM flows of $10 billion in Q2-16
• Pretax margin increased to 26% from 23%
• Number of wealth advisors increased 2% to 18,1592
Bank of America Reports Second-Quarter 2016
Financial Results
4
Global Banking
Three months ended
Financial Results1 ($ in millions) 6/30/2016 3/31/2016 6/30/2015
Net interest income (FTE) $ 2,421 $ 2,481 $ 2,170
Noninterest income2 2,269 1,909 2,066
Total revenue (FTE)2,3 4,690 4,390 4,236
Provision for credit losses 203 553 177
Noninterest expense 2,126 2,171 2,086
Net income $ 1,491 $ 1,054 $ 1,236
1 Comparisons are to the year-ago quarter unless noted.
2 Global Banking and Global Markets share in certain deal economics from investment banking
and loan origination activities.
3 Revenue, net of interest expense.
Three months ended
Business Highlights1,2 ($ in billions) 6/30/2016 3/31/2016 6/30/2015
Average deposits $ 298.8 $ 297.1 $ 288.1
Average loans and leases 330.3 324.5 295.4
Total Corp. IB fees (excl. self-
led)2 1.4 1.2 1.5
Global Banking IB fees2 0.8 0.6 0.8
Business Lending revenue 2.2 2.1 1.9
Global Transaction Services
revenue 1.6 1.6 1.5
Efficiency ratio (FTE) 45% 49% 49%
Return on average allocated
capital
16 11 14
1 Comparisons are to the year-ago quarter unless noted.
2 Global Banking and Global Markets share in certain deal economics from investment banking
and loan origination activities.
• Revenue increased 11% to $4.7 billion
– NII was higher primarily due to increased loan and
leasing-related balances
– Noninterest income increased 10% due to the
impact from loans and related loan hedging
activities in the fair value option portfolio, higher
leasing and treasury-related revenues, as well as
higher advisory fees
• Provision for credit losses increased $26 million
• Noninterest expense increased modestly due to
investments in client-facing professionals in
Commercial and Business Banking
• Net income increased $255 million to $1.5 billion, as
solid revenue growth and continued expense
discipline created positive operating leverage
• Average loans and leases grew $34.9 billion, or 12%
• Average deposit balances grew $10.7 billion, or 4%
• Total Corporation investment banking fees of $1.4
billion (excluding self-led deals) declined 8%, driven
by lower equity issuance activity, partly offset by
higher advisory fees
– Ranked No. 3 globally in net investment banking
fees with 6.5% market share(B)
– Ranked among top 3 globally by volume in high-
yield corporate debt, leveraged loans, mortgage-
backed securities, asset-backed securities,
investment grade corporate debt, syndicated loans,
U.S. municipal bonds, announced mergers and
acquisitions, and debt capital markets(B)
• Return on average allocated capital increased to 16%
• Efficiency ratio improved to 45%
Bank of America Reports Second-Quarter 2016
Financial Results
5
Global Markets
Three months ended
Financial Results1 ($ in millions) 6/30/2016 3/31/2016 6/30/2015
Net interest income (FTE) $ 1,093 $ 1,180 $ 988
Noninterest income2 3,220 2,767 2,962
Total revenue (FTE)2,3 4,313 3,947 3,950
Net DVA4 (164) 154 (199)
Total revenue
(excl. net DVA) (FTE)2,3,4 4,477 3,793 4,149
Provision for credit losses (5) 9 6
Noninterest expense 2,582 2,450 2,748
Net income $ 1,116 $ 970 $ 786
Three months ended
Business Highlights1,2 ($ in billions) 6/30/2016 3/31/2016 6/30/2015
Average trading-related
assets $ 411.3 $ 407.7 $ 442.2
Average loans and leases 69.6 69.3 61.8
Sales and trading revenue 3.5 3.4 3.1
Sales and trading revenue
(excl. net DVA)(C) 3.7 3.3 3.3
Global Markets IB fees 0.6 0.5 0.7
Efficiency ratio (FTE) 60% 62% 70%
Return on average allocated
capital
12 11 9
1 Comparisons are to the year-ago quarter unless noted.
2 Global Banking and Global Markets share in certain deal economics from investment banking
and loan origination activities.
• Revenue up $363 million to $4.3 billion; excluding net
DVA4, revenue increased $328 million to $4.5 billion,
driven by higher sales and trading results, partially
offset by lower equity capital markets investment
banking fees
• Noninterest expense declined $166 million, or 6%,
driven by reduced operating and support costs
• Net income increased 42% to $1.1 billion from $786
million, driven by strong sales and trading revenues
and continued expense management; excluding net
DVA, net income was $1.2 billion, compared to $909
million4
• Sales and trading revenue up $422 million, or 14%, to
$3.5 billion
• Excluding net DVA, sales and trading revenue up 12%
to $3.7 billion, the highest second quarter in five
years(C)
– FICC increased 22%, due to stronger performance
globally across rates and currencies products,
higher secondary trading in loans and securitized
products as a result of improved credit market
conditions, as well as solid performance in
municipal bonds from strong retail demand(C)
– Equities down 8%, driven by a decline in client
activity in Asia, compared to a strong year-ago
quarter, which benefited from increased volumes
related to stock market rallies in the region(C)
• Return on average allocated capital increased to 12%;
excluding net DVA, return on average allocated capital
increased to 13%
1 Comparisons are to the year-ago quarter unless noted.
2 Global Banking and Global Markets share in certain deal economics from investment banking
and loan origination activities.
3 Revenue, net of interest expense.
4 Revenue, excluding net DVA, is a non-GAAP financial measure. See endnote C for more
information.
Bank of America Reports Second-Quarter 2016
Financial Results
6
All Other
Three months ended
Financial Results1 ($ in millions) 6/30/2016 3/31/2016 6/30/2015
Net interest income (FTE) $ (788) $ (1,035) $ 1,131
Noninterest income 86 180 538
Total revenue (FTE)2 (702) (855) 1,669
Provision for credit losses 38 (121) 112
Noninterest expense 1,081 2,382 1,002
Net income (loss) $ (815) $ (1,797) $ 781
1 Comparisons are to the year-ago quarter unless noted.
2 Revenue, net of interest expense.
Note: All Other consists of ALM activities, equity investments, the international consumer card
business, non-core mortgage loans and servicing activities, liquidating businesses, residual
expense allocations and other. ALM activities encompass certain residential mortgages, debt
securities, interest rate and foreign currency risk management activities, the impact of certain
allocation methodologies and accounting hedge ineffectiveness. The results of certain ALM
activities are allocated to our business segments. Equity investments include our merchant
services joint venture as well as Global Principal Investments, which is comprised of a portfolio
of equity, real estate and other alternative investments.
• Revenue declined $2.4 billion, driven by negative
market-related NII adjustments versus a positive
adjustment in Q2-15 and, to a lesser extent, lower
gains on the sale of consumer real estate loans, as
well as the absence of a benefit in the
representations and warranties provision
• Provision for credit losses decreased $74 million to
$38 million, driven by continued portfolio
improvement
• Noninterest expense increased $79 million, due
primarily to higher litigation expense
• The decline in revenue noted above led to a net loss
of $815 million in Q2-16, compared to net income of
$781 million in Q2-15
Bank of America Reports Second-Quarter 2016
Financial Results
7
Credit Quality
Three months ended
Highlights1 ($ in millions) 6/30/2016 3/31/2016 6/30/2015
Provision for credit losses $ 976 $ 997 $ 780
Net charge-offs 985 1,068 1,068
Net charge-off ratio2 0.44% 0.48% 0.49%
At period-end
Nonperforming loans, leases
and foreclosed properties
$ 8,799 $ 9,281 $ 11,565
Nonperforming loans, leases
and foreclosed properties
ratio3
0.98% 1.04% 1.32%
Allowance for loan and lease
losses
$ 11,837 $ 12,069 $ 13,068
Allowance for loan and lease
losses ratio4
1.32% 1.35% 1.50%
1 Comparisons are to the year-ago quarter unless noted.
2 Net charge-off ratio is calculated as annualized net charge-offs divided by average
outstanding loans and leases during the period.
3 Nonperforming loans, leases and foreclosed properties ratio is calculated as nonperforming
loans, leases and foreclosed properties divided by outstanding loans, leases and foreclosed
properties at the end of the period.
4 Allowance for loan and lease losses ratio is calculated as allowance for loan and lease losses
divided by loans and leases outstanding at the end of the period.
Note: Ratios do not include loans accounted for under the fair value option.
• Overall credit quality remained strong. Compared to
the first quarter of 2016, consumer portfolios
continued to improve, and commercial portfolios saw
lower net charge-offs and lower energy-related losses
• Total net charge-offs declined to $985 million from
$1.1 billion in both Q1-16 and Q2-15
– Excluding losses associated with the U.S.
Department of Justice settlement and
nonperforming loan sales in prior periods, net
charge-offs were $1.0 billion in Q2-16, $1.0
billion in Q1-16 and $0.9 billion in Q2-15(H)
• The net charge-off ratio decreased to 0.44% from
0.48% in Q1-16 and 0.49% in Q2-15
– Excluding the items noted above, the net charge-
off ratio was 0.44% in Q2-16, down from 0.46%
in Q1-16 and up from 0.43% in Q2-15
• The provision for credit losses increased to $976
million from $780 million in Q2-15, due to a slower
pace of improvement in the consumer portfolio.
Compared to the prior quarter, provision for credit
losses was down slightly
• Net reserve release was $9 million, compared to $71
million in the prior quarter and $288 million in Q2-15,
as reserve releases in consumer were mostly offset
by increased commercial reserves
• Reservable criticized commercial exposures were
$18.1 billion in Q2-16, compared to $18.6 billion in
Q1-16 and $12.9 billion in Q2-15. The decline from
Q1-16 was due to improvements across several
industries while energy remained flat. The year-over-
year change was due to increases in the energy
sector
Energy Exposure
• Utilized energy exposure declined 3% from the prior quarter and 6%
from the year-ago quarter to $21.2 billion, driven mainly by decreases
in the lower-risk subsectors
– Exposure of $7.6 billion to higher-risk subsectors (Exploration
and Production and Oilfield Services) declined 1% and
represents less than 1% of total corporation loans and leases
• 57% of this utilized exposure is criticized
• Energy reserves were unchanged from the prior quarter at $1.0 billion
Bank of America Reports Second-Quarter 2016
Financial Results
8
Balance Sheet, Liquidity and Capital Highlights ($ in billions unless noted)
Balance Sheet (end of period) Three months ended
6/30/2016 3/31/2016 6/30/2015
Total assets $ 2,186.6 $ 2,185.5 $ 2,149.0
Total loans and leases 903.2 901.1 881.2
Total deposits 1,216.1 1,217.3 1,149.6
Funding and Liquidity
Long-term debt $ 229.6 $ 232.8 $ 243.4
Global Excess Liquidity Sources(F) 515 525 484
Time to required funding (months)(F) 35 36 40
Equity
Common shareholders’ equity $ 241.8 $ 238.4 $ 229.4
Common equity ratio 11.1% 10.9% 10.7%
Tangible common shareholders’ equity1 $ 170.4 $ 166.8 $ 157.2
Tangible common equity ratio1 8.1% 7.9% 7.6%
Per Share Data
Common shares outstanding (in billions) 10.22 10.31 10.47
Book value per common share $ 23.67 $ 23.12 $ 21.91
Tangible book value per common share(E) 16.68 16.17 15.02
Regulatory Capital
Basel 3 Transition (as reported)2,3
Common equity tier 1 (CET1) capital $ 166.2 $ 162.7 $ 158.3
Risk-weighted assets 1,563 1,587 1,408
CET1 ratio 10.6% 10.3% 11.2%
Basel 3 Fully Phased-in2,4
CET1 capital $ 161.8 $ 157.5 $ 148.3
Standardized approach
Risk-weighted assets $ 1,416 $ 1,426 $ 1,433
CET1 ratio 11.4% 11.0% 10.3%
Advanced approaches5
Risk-weighted assets $ 1,544 $ 1,557 $ 1,427
CET1 ratio 10.5% 10.1% 10.4%
Supplementary leverage(I)
Bank holding company supplementary leverage ratio (SLR) 6.9% 6.8% 6.3%
Bank SLR 7.4 7.4 7.0
Notes:
1 Represents a non-GAAP financial measure. For reconciliation, see pages 17-18 of this press release.
2 Regulatory capital ratios are preliminary. Common equity tier 1 (CET1) capital, risk-weighted assets (RWA) and CET1 ratio as shown on a fully phased-in basis are non-
GAAP financial measures. For a reconciliation of CET1 to fully phased-in, see page 13 of this press release.
3 Bank of America received approval to begin using the Advanced approaches capital framework to determine risk-based capital requirements in the fourth quarter of
2015. With the approval to exit parallel run, Bank of America is now required to report regulatory capital under both the Standardized and Advanced approaches. The
approach that yields the lower ratio is to be used to assess capital adequacy, therefore we used the Advanced approaches at June 30, 2016 and March 31, 2016. Prior
to exiting parallel run, we were required to report regulatory capital under the Standardized approach only.
4 As previously disclosed, with the approval to exit parallel run, U.S. banking regulators requested modifications to certain internal analytical models including the
wholesale (e.g., commercial) credit models, which increased our risk-weighted assets beginning in the fourth quarter of 2015.
5 Basel 3 fully phased-in Advanced approaches estimates assume approval by U.S. banking regulators of our internal analytical models, including approval of the internal
models methodology (IMM). As of June 30, 2016, BAC did not have regulatory approval for the IMM model.
Bank of America Reports Second-Quarter 2016
Financial Results
9
Endnotes
A
B
C
D
E
F
G
H
I
Fully taxable-equivalent (FTE) basis for the Corporation is a non-GAAP financial measure. For reconciliation to GAAP financial measures, refer to pages 17-18 of
this press release. Net interest income on an FTE basis, excluding market-related adjustments, represents a non-GAAP financial measure. Market-related
adjustments of premium amortization expense and hedge ineffectiveness were $(974) million and $669 million for the three months ended June 30, 2016 and
2015. Net DVA losses were $164 million and $199 million for the three months ended June 30, 2016 and 2015.
Fully phased-in estimates are non-GAAP financial measures. For reconciliation to GAAP financial measures, refer to page 13 of this press release. Bank of
America received approval to begin using the Advanced approaches capital framework to determine risk-based capital requirements in the fourth quarter of
2015. As previously disclosed, with the approval to exit parallel run, U.S. banking regulators requested modifications to certain internal analytical models
including the wholesale (e.g., commercial) credit models, which increased our risk-weighted assets beginning in the fourth quarter of 2015. Basel 3 Advanced
approaches estimates on a fully phased-in basis assume approval by U.S. banking regulators of our internal analytical models, including approval of the internal
models methodology (IMM). As of June 30, 2016, BAC did not have regulatory approval for the IMM model.
Global Excess Liquidity Sources includes cash and high-quality, liquid, unencumbered securities, limited to U.S. government securities, U.S. agency securities, U.S.
agency MBS, and a select group of non-U.S. government and supranational securities, and are readily available to meet funding requirements as they arise. It
does not include Federal Reserve Discount Window or Federal Home Loan Bank borrowing capacity. Transfers of liquidity from the bank or other regulated
entities are subject to certain regulatory restrictions. Time to required funding is a debt coverage measure and is expressed as the number of months unsecured
holding company obligations of Bank of America Corporation can be met using only the parent company’s Global Excess Liquidity Sources without issuing debt or
sourcing additional liquidity. We define unsecured contractual obligations for purposes of this metric as maturities of senior or subordinated debt issued or
guaranteed by Bank of America Corporation. For the period shown in 2015, we have included in the amount of unsecured contractual obligations the liability,
including estimated costs, for the previously announced BNY Mellon private-label securitization settlement. The settlement payment of $8.5 billion was made in
the first quarter of 2016.
Tangible book value per share of common stock is a non-GAAP financial measure. For more information, refer to pages 17-18 of this press release.
Return on average tangible common equity and return on average tangible common equity excluding the negative impact of the market-related adjustments are
non-GAAP financial measures. Market-related adjustments for premium amortization expense and hedge ineffectiveness were $(974) million for the three
months ended June 30, 2016. For more information, refer to pages 17-18 of this press release.
Rankings per Dealogic as of July 1, 2016 for the quarter ended June 30, 2016. Excluding self-led. U.S. municipal bonds ranking per Thomson Reuters as of July 1,
2016.
The numerator of the SLR is quarter-end Basel 3 Tier 1 capital reflective of Basel 3 numerator calculated under Basel 3 on a fully phased-in basis. The
denominator is total leverage exposure based on the daily average of the sum of on-balance sheet exposures less permitted Tier 1 deductions, as well as the
simple average of certain off-balance sheet exposures, as of the end of each month in a quarter. Off-balance sheet exposures primarily include undrawn lending
commitments, letters of credit, potential future derivative exposures and repo-style transactions.
Global Markets revenue, excluding net DVA, and sales and trading revenue, excluding net DVA, are non-GAAP financial measures. Net DVA gains (losses) were
$(164) million, $154 million and $(199) million for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively. FICC net DVA gains
(losses) were $(160) million and $(200) million for the three months ended June 30, 2016 and 2015. Equities net DVA gains (losses) were $(4) million and $1
million for the three months ended June 30, 2016 and 2015.
Represents a non-GAAP financial measure. Adjusted net charge-offs exclude Department of Justice (DoJ) settlement impacts of $0, $(9) million and $(166)
million for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015, respectively, and recoveries/(charge-offs) from nonperforming loan
(NPL) sales and other recoveries of $(5) million $(40) million, and $27 million for for the three months ended June 30, 2016, March 31, 2016 and June 30,
2015, respectively.
Bank of America Reports Second-Quarter 2016
Financial Results
10
Contact Information and Investor Conference Call Invitation
Note: Chief Executive Officer Brian Moynihan and Chief Financial Officer Paul Donofrio will discuss second-
quarter 2016 financial results in a conference call at 8:30 a.m. ET today. The presentation and supporting
materials can be accessed on the Bank of America Investor Relations website at
http://investor.bankofamerica.com.
For a listen-only connection to the conference call, dial 1.877.200.4456 (U.S.) or 1.785.424.1732
(international), and the conference ID is 79795. Please dial in 10 minutes prior to the start of the call. A replay
will also be available beginning at noon ET on July 18 through midnight, July 25 by telephone at
1.800.934.4850 (U.S.) or 1.402.220.1178 (international).
Investor Call
Information
Investors May Contact:
Lee McEntire, Bank of America, 1.980.388.6780
Jonathan Blum, Bank of America (Fixed Income), 1.212.449.3112
Reporters May Contact:
Jerry Dubrowski, Bank of America, 1.980.388.2840
jerome.f.dubrowski@bankofamerica.com
About Bank of America
Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses
and large corporations with a full range of banking, investing, asset management and other financial and risk management products
and services. The company provides unmatched convenience in the United States, serving approximately 47 million consumer and
small business relationships with approximately 4,700 retail financial centers, approximately 16,000 ATMs, and award-winning online
banking with approximately 33 million active accounts and more than 20 million mobile active users. Bank of America is a global
leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving
corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to
approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company
serves clients through operations in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and more than 35
countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
Forward-Looking Statements
Bank of America 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 Bank of America's current expectations, plans or
forecasts of its future results and revenues, 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 Bank of America's control. Actual outcomes and results may differ
materially from those expressed in, or implied by, any of these forward-looking statements.
Bank of America Reports Second-Quarter 2016
Financial Results
11
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 Bank of America's 2015 Annual Report on Form
10-K, and in any of Bank of America's subsequent Securities and Exchange Commission filings: the Company's ability to resolve
representations and warranties repurchase and related claims, including claims brought by investors or trustees seeking to distinguish
certain aspects of the ACE Securities Corp. v. DB Structured Products, Inc. (ACE) decision or to assert other claims seeking to avoid
the impact of the ACE decision; the possibility that the Company could face increased servicing, securities, fraud, indemnity,
contribution or other claims from one or more counterparties, including trustees, purchasers of loans, underwriters, issuers, other
parties involved in securitizations, monolines or private-label and other investors; the possibility that future representations and
warranties losses may occur in excess of the Company’s recorded liability and estimated range of possible loss for its representations
and warranties exposures; the possibility that the Company may not collect mortgage insurance claims; potential claims, damages,
penalties, fines and reputational damage resulting from pending or future litigation and regulatory proceedings, including the
possibility that amounts may be in excess of the Company’s recorded liability and estimated range of possible loss for litigation
exposures; the possible outcome of LIBOR, other reference rate and foreign exchange inquiries and investigations; 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 Company’s exposures to such risks,
including direct, indirect and operational; the impact of U.S. and global interest rates, (including negative interest rates), currency
exchange rates and economic conditions; the possibility that future credit losses may be higher than currently expected due to
changes in economic assumptions, customer behavior and other uncertainties; the impact on the Company’s business, financial
condition and results of operations of a potential higher interest rate environment; the impact on the Company’s business, financial
condition and results of operations from a protracted period of lower oil prices; or ongoing volatility with respect to oil prices; our
ability to achieve anticipated cost savings; adverse changes to the Company’s credit ratings from the major credit rating agencies;
estimates of the fair value of certain of the Company’s assets and liabilities; uncertainty regarding the content, timing and impact of
regulatory capital and liquidity requirements, including the potential adoption of total loss-absorbing capacity requirements; the
potential for payment protection insurance exposure to increase as a result of Financial Conduct Authority actions; the impact of
recently proposed U.K. tax law changes including a further limitation on how much net operating losses can offset annual profits and
a reduction to the U.K. corporate tax rate which, if enacted, will result in a tax charge upon enactment; the possible impact of Federal
Reserve actions on the Company’s capital plans; the possible impact of regulatory determinations regarding the Company’s failure to
remediate deficiencies identified by banking regulators in the Corporation's Recovery and Resolution plans; the impact of
implementation and compliance with new and evolving U.S. and international regulations, including, but not limited to, recovery and
resolution planning requirements, the Volcker Rule and derivatives regulations; a failure in or breach of the Company’s operational or
security systems or infrastructure, or those of third parties, including as a result of cyber attacks; the impact on the Company's
business, financial condition and results of operations from the potential exit of the United Kingdom from the European Union; and
other similar matters.
Forward-looking statements speak only as of the date they are made, and Bank of America 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.
BofA Global Capital Management Group, LLC (BofA Global Capital Management) is an asset management division of Bank of America
Corporation. BofA Global Capital Management entities furnish investment management services and products for institutional and
individual investors.
Bank of America Merrill Lynch is the marketing name for the Global Banking and Global Markets businesses of Bank of America
Corporation. Lending, derivatives and other commercial banking activities are performed by banking affiliates of Bank of America
Corporation, including Bank of America, N.A., member FDIC. Securities, financial advisory and other investment banking activities are
performed by investment banking affiliates of Bank of America Corporation (Investment Banking Affiliates), including Merrill Lynch,
Pierce, Fenner & Smith Incorporated, which are registered broker-dealers and members of FINRA and SIPC. Investment products
offered by Investment Banking Affiliates: Are Not FDIC Insured * May Lose Value * Are Not Bank Guaranteed. Bank of America
Corporation's broker-dealers are not banks and are separate legal entities from their bank affiliates. The obligations of the broker-
dealers are not obligations of their bank affiliates (unless explicitly stated otherwise), and these bank affiliates are not responsible for
securities sold, offered or recommended by the broker-dealers. The foregoing also applies to other non-bank affiliates.
For more Bank of America news, visit the Bank of America newsroom at http://newsroom.bankofamerica.com.
www.bankofamerica.com
This information is preliminary and based on company data available at the time of the presentation.
12
Bank of America Corporation and Subsidiaries
Selected Financial Data
(Dollars in millions, except per share data; shares in thousands)
Summary Income Statement
Six Months Ended
June 30
Second
Quarter
2016
First
Quarter
2016
Second
Quarter
20152016 2015
Net interest income $ 18,384 $ 19,872 $ 9,213 $ 9,171 $ 10,461
Noninterest income 21,526 22,998 11,185 10,341 11,495
Total revenue, net of interest expense 39,910 42,870 20,398 19,512 21,956
Provision for credit losses 1,973 1,545 976 997 780
Noninterest expense 28,309 29,785 13,493 14,816 13,958
Income before income taxes 9,628 11,540 5,929 3,699 7,218
Income tax expense 2,716 3,309 1,697 1,019 2,084
Net income $ 6,912 $ 8,231 $ 4,232 $ 2,680 $ 5,134
Preferred stock dividends 818 712 361 457 330
Net income applicable to common shareholders $ 6,094 $ 7,519 $ 3,871 $ 2,223 $ 4,804
Common shares issued 5,021 3,947 85 4,936 88
Average common shares issued and outstanding 10,296,652 10,503,379 10,253,573 10,339,731 10,488,137
Average diluted common shares issued and outstanding 11,079,939 11,252,417 11,059,167 11,100,067 11,238,060
Summary Average Balance Sheet
Total debt securities $ 409,279 $ 384,747 $ 418,748 $ 399,809 $ 386,357
Total loans and leases 896,327 871,699 899,670 892,984 876,178
Total earning assets 1,856,192 1,804,947 1,867,734 1,844,650 1,810,655
Total assets 2,180,763 2,145,307 2,187,909 2,173,618 2,151,966
Total deposits 1,205,873 1,138,801 1,213,291 1,198,455 1,146,789
Common shareholders’ equity 238,645 227,078 240,166 237,123 228,780
Total shareholders’ equity 262,731 248,413 265,144 260,317 251,054
Performance Ratios
Return on average assets 0.64% 0.77% 0.78% 0.50% 0.96%
Return on average common shareholders' equity 5.14 6.68 6.48 3.77 8.42
Return on average tangible common shareholders’ equity (1) 7.34 9.79 9.24 5.41 12.31
Per common share information
Earnings $ 0.59 $ 0.72 $ 0.38 $ 0.21 $ 0.46
Diluted earnings 0.56 0.68 0.36 0.21 0.43
Dividends paid 0.10 0.10 0.05 0.05 0.05
Book value 23.67 21.91 23.67 23.12 21.91
Tangible book value (1) 16.68 15.02 16.68 16.17 15.02
June 30
2016
March 31
2016
June 30
2015
Summary Period-End Balance Sheet
Total debt securities $ 411,949 $ 400,311 $ 392,379
Total loans and leases 903,153 901,113 881,196
Total earning assets 1,860,557 1,861,868 1,801,859
Total assets 2,186,609 2,185,498 2,149,034
Total deposits 1,216,091 1,217,261 1,149,560
Common shareholders’ equity 241,849 238,434 229,386
Total shareholders’ equity 267,069 262,776 251,659
Common shares issued and outstanding 10,216,781 10,312,660 10,471,837
Credit Quality
Six Months Ended
June 30
Second
Quarter
2016
First
Quarter
2016
Second
Quarter
20152016 2015
Total net charge-offs $ 2,053 $ 2,262 $ 985 $ 1,068 $ 1,068
Net charge-offs as a percentage of average loans and leases outstanding (2) 0.46% 0.53% 0.44% 0.48% 0.49%
Provision for credit losses $ 1,973 $ 1,545 $ 976 $ 997 $ 780
June 30
2016
March 31
2016
June 30
2015
Total nonperforming loans, leases and foreclosed properties (3) $ 8,799 $ 9,281 $ 11,565
Nonperforming loans, leases and foreclosed properties as a percentage of total loans, leases
and foreclosed properties (2) 0.98% 1.04% 1.32%
Allowance for loan and lease losses $ 11,837 $ 12,069 $ 13,068
Allowance for loan and lease losses as a percentage of total loans and leases outstanding (2) 1.32% 1.35% 1.50%
For footnotes see page 13.
This information is preliminary and based on company data available at the time of the presentation.
13
Bank of America Corporation and Subsidiaries
Selected Financial Data (continued)
(Dollars in millions)
Basel 3 Transition
Capital Management June 30
2016
March 31
2016
June 30
2015
Risk-based capital metrics (4, 5):
Common equity tier 1 capital $ 166,173 $ 162,732 $ 158,326
Common equity tier 1 capital ratio 10.6% 10.3% 11.2%
Tier 1 leverage ratio 8.9 8.7 8.5
Tangible equity ratio (6) 9.2 9.0 8.6
Tangible common equity ratio (6) 8.1 7.9 7.6
Regulatory Capital Reconciliations (4, 5, 7) June 30
2016
March 31
2016
June 30
2015
Regulatory capital – Basel 3 transition to fully phased-in
Common equity tier 1 capital (transition) $ 166,173 $ 162,732 $ 158,326
Deferred tax assets arising from net operating loss and tax credit carryforwards phased in during transition (3,496) (3,764) (5,706)
Accumulated OCI phased in during transition 359 (117) (1,884)
Intangibles phased in during transition (907) (983) (1,751)
Defined benefit pension fund assets phased in during transition (378) (381) (476)
DVA related to liabilities and derivatives phased in during transition 104 76 384
Other adjustments and deductions phased in during transition (24) (54) (587)
Common equity tier 1 capital (fully phased-in) $ 161,831 $ 157,509 $ 148,306
Risk-weighted assets – As reported to Basel 3 (fully phased-in)
Basel 3 Standardized approach risk-weighted assets as reported $ 1,398,610 $ 1,405,748 $ 1,407,891
Changes in risk-weighted assets from reported to fully phased-in 17,689 20,104 25,460
Basel 3 Standardized approach risk-weighted assets (fully phased-in) $ 1,416,299 $ 1,425,852 $ 1,433,351
Basel 3 Advanced approaches risk-weighted assets as reported $ 1,563,481 $ 1,586,993 n/a
Changes in risk-weighted assets from reported to fully phased-in (19,600) (29,710) n/a
Basel 3 Advanced approaches risk-weighted assets (fully phased-in) (8) $ 1,543,881 $ 1,557,283 $ 1,427,388
Regulatory capital ratios
Basel 3 Standardized approach common equity tier 1 (transition) 11.9% 11.6% 11.2%
Basel 3 Advanced approaches common equity tier 1 (transition) 10.6 10.3 n/a
Basel 3 Standardized approach common equity tier 1 (fully phased-in) 11.4 11.0 10.3
Basel 3 Advanced approaches common equity tier 1 (fully phased-in) (8) 10.5 10.1 10.4
(1) Return on average tangible common shareholders' equity and tangible book value per share of common stock are non-GAAP financial measures. We believe the use of these non-GAAP
financial measures provides additional clarity in assessing the results of the Corporation. Other companies may define or calculate non-GAAP financial measures differently. See
Reconciliations to GAAP Financial Measures on pages 17-18.
(2) Ratios do not include loans accounted for under the fair value option. Charge-off ratios are annualized for the quarterly presentation.
(3) Balances do not include past due consumer credit card, consumer loans secured by real estate where repayments are insured by the Federal Housing Administration and individually
insured long-term stand-by agreements (fully-insured home loans), and in general, other consumer and commercial loans not secured by real estate; purchased credit-impaired loans
even though the customer may be contractually past due, nonperforming loans held-for-sale, nonperforming loans accounted for under the fair value option and nonaccruing troubled
debt restructured loans removed from the purchased credit-impaired portfolio prior to January 1, 2010.
(4) Regulatory capital ratios are preliminary.
(5) Bank of America received approval to begin using the Advanced approaches capital framework to determine risk-based capital requirements in the fourth quarter of 2015. With the
approval to exit parallel run, Bank of America is required to report regulatory capital risk-weighted assets and ratios under both the Standardized and Advanced approaches. The approach
that yields the lower ratio is to be used to assess capital adequacy; therefore, we used the Advanced approaches at June 30, 2016 and March 31, 2016. Prior to exiting parallel run, we
were required to report regulatory capital under the Standardized approach only.
(6) Tangible equity ratio equals period-end tangible shareholders' equity divided by period-end tangible assets. Tangible common equity ratio equals period-end tangible common shareholders'
equity divided by period-end tangible assets. Tangible shareholders' equity and tangible assets are non-GAAP financial measures. We believe the use of these non-GAAP financial
measures provides additional clarity in assessing the results of the Corporation. Other companies may define or calculate non-GAAP financial measures differently. See Reconciliations
to GAAP Financial Measures on pages 17-18.
(7) Fully phased-in estimates are non-GAAP financial measures. For reconciliations to GAAP financial measures, see above.
(8) Basel 3 fully phased-in Advanced approaches estimates assume approval by U.S. banking regulators of our internal analytical models, including approval of the internal models methodology
(IMM). As of June 30, 2016, the Corporation did not have regulatory approval for the IMM model.
n/a = not applicable
Certain prior period amounts have been reclassified to conform to current period presentation.
This information is preliminary and based on company data available at the time of the presentation.
14
Bank of America Corporation and Subsidiaries
Quarterly Results by Business Segment and All Other
(Dollars in millions)
Second Quarter 2016
Consumer
Banking GWIM
Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 7,864 $ 4,456 $ 4,690 $ 4,313 $ (702)
Provision for credit losses 726 14 203 (5) 38
Noninterest expense 4,416 3,288 2,126 2,582 1,081
Net income (loss) 1,718 722 1,491 1,116 (815)
Return on average allocated capital (2) 20% 22% 16% 12% n/m
Balance Sheet
Average
Total loans and leases $ 242,921 $ 141,181 $ 330,273 $ 69,620 $ 115,675
Total deposits 596,474 254,804 298,805 34,518 28,690
Allocated capital (2) 34,000 13,000 37,000 37,000 n/m
Period end
Total loans and leases $ 247,122 $ 142,633 $ 330,709 $ 70,766 $ 111,923
Total deposits 599,457 250,976 304,577 33,506 27,575
First Quarter 2016
Consumer
Banking GWIM
Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 7,801 $ 4,444 $ 4,390 $ 3,947 $ (855)
Provision for credit losses 531 25 553 9 (121)
Noninterest expense 4,538 3,275 2,171 2,450 2,382
Net income (loss) 1,729 724 1,054 970 (1,797)
Return on average allocated capital (2) 20% 22% 11% 11% n/m
Balance Sheet
Average
Total loans and leases $ 237,908 $ 139,099 $ 324,531 $ 69,283 $ 122,163
Total deposits 578,196 260,482 297,134 35,886 26,757
Allocated capital (2) 34,000 13,000 37,000 37,000 n/m
Period end
Total loans and leases $ 240,591 $ 139,690 $ 329,485 $ 73,446 $ 117,901
Total deposits 597,800 260,565 298,072 34,403 26,421
Second Quarter 2015
Consumer
Banking GWIM
Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 7,757 $ 4,567 $ 4,236 $ 3,950 $ 1,669
Provision for credit losses 470 15 177 6 112
Noninterest expense 4,637 3,485 2,086 2,748 1,002
Net income 1,662 669 1,236 786 781
Return on average allocated capital (2) 20% 22% 14% 9% n/m
Balance Sheet
Average
Total loans and leases $ 230,704 $ 131,364 $ 295,405 $ 61,819 $ 156,886
Total deposits 552,973 239,974 288,117 39,051 26,674
Allocated capital (2) 33,000 12,000 35,000 35,000 n/m
Period end
Total loans and leases $ 232,271 $ 133,499 $ 301,558 $ 65,962 $ 147,906
Total deposits 554,204 237,624 292,261 38,751 26,720
(1) Fully taxable-equivalent (FTE) basis is a performance measure used by management in operating the business that management believes provides investors with a more accurate picture
of the interest margin for comparative purposes.
(2) Return on average allocated capital is calculated as net income, adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average allocated
capital. Other companies may define or calculate these measures differently.
n/m = not meaningful
Certain prior period amounts have been reclassified among the segments to conform to current period presentation.
This information is preliminary and based on company data available at the time of the presentation.
15
Bank of America Corporation and Subsidiaries
Year-to-Date Results by Business Segment and All Other
(Dollars in millions)
Six Months Ended June 30, 2016
Consumer
Banking GWIM
Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 15,665 $ 8,900 $ 9,080 $ 8,260 $ (1,557)
Provision for credit losses 1,257 39 756 4 (83)
Noninterest expense 8,954 6,563 4,297 5,032 3,463
Net income (loss) 3,447 1,446 2,545 2,086 (2,612)
Return on average allocated capital (2) 20% 22% 14% 11% n/m
Balance Sheet
Average
Total loans and leases $ 240,414 $ 140,140 $ 327,402 $ 69,452 $ 118,919
Total deposits 587,335 257,643 297,969 35,202 27,724
Allocated capital (2) 34,000 13,000 37,000 37,000 n/m
Period end
Total loans and leases $ 247,122 $ 142,633 $ 330,709 $ 70,766 $ 111,923
Total deposits 599,457 250,976 304,577 33,506 27,575
Six Months Ended June 30, 2015
Consumer
Banking GWIM
Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 15,472 $ 9,077 $ 8,622 $ 8,141 $ 1,996
Provision for credit losses 1,139 38 273 27 68
Noninterest expense 9,369 6,974 4,235 5,909 3,298
Net income (loss) 3,118 1,297 2,583 1,450 (217)
Return on average allocated capital (2) 19% 22% 15% 8% n/m
Balance Sheet
Average
Total loans and leases $ 230,533 $ 129,275 $ 289,876 $ 59,224 $ 162,791
Total deposits 545,770 241,758 287,280 39,169 24,824
Allocated capital (2) 33,000 12,000 35,000 35,000 n/m
Period end
Total loans and leases $ 232,271 $ 133,499 $ 301,558 $ 65,962 $ 147,906
Total deposits 554,204 237,624 292,261 38,751 26,720
(1) Fully taxable-equivalent (FTE) basis is a performance measure used by management in operating the business that management believes provides investors with a more accurate picture
of the interest margin for comparative purposes.
(2) Return on average allocated capital is calculated as net income, adjusted for cost of funds and earnings credits and certain expenses related to intangibles, divided by average allocated
capital. Other companies may define or calculate these measures differently.
n/m = not meaningful
Certain prior period amounts have been reclassified among the segments to conform to current period presentation.
This information is preliminary and based on company data available at the time of the presentation.
16
Bank of America Corporation and Subsidiaries
Supplemental Financial Data
(Dollars in millions)
Fully taxable-equivalent (FTE) basis data (1)
Six Months Ended
June 30 SecondQuarter
2016
First
Quarter
2016
Second
Quarter
20152016 2015
Net interest income $ 18,822 $ 20,310 $ 9,436 $ 9,386 $ 10,684
Total revenue, net of interest expense 40,348 43,308 20,621 19,727 22,179
Net interest yield 2.04% 2.27% 2.03% 2.05% 2.37%
Efficiency ratio 70.16 68.77 65.43 75.11 62.93
Other Data
June 30
2016
March 31
2016
June 30
2015
Number of financial centers - U.S. 4,681 4,689 4,789
Number of branded ATMs - U.S. 15,998 16,003 15,992
Ending full-time equivalent employees 210,516 213,183 216,679
(1) FTE basis is a non-GAAP financial measure. FTE basis is a performance measure used by management in operating the business that management believes provides investors with a
more accurate picture of the interest margin for comparative purposes. See Reconciliations to GAAP Financial Measures on pages 17-18.
Certain prior period amounts have been reclassified to conform to current period presentation.
This information is preliminary and based on company data available at the time of the presentation.
17
Bank of America Corporation and Subsidiaries
Reconciliations to GAAP Financial Measures
(Dollars in millions)
The Corporation evaluates its business based on a fully taxable-equivalent basis, a non-GAAP financial measure. The Corporation believes managing the business with net interest income
on a fully taxable-equivalent basis provides a more meaningful picture of the interest margin for comparative purposes. Total revenue, net of interest expense, includes net interest income
on a fully taxable-equivalent basis and noninterest income. The Corporation views related ratios and analyses (i.e., efficiency ratios and net interest yield) on a fully taxable-equivalent
basis. To derive the fully taxable-equivalent 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, the Corporation uses the federal statutory tax rate of 35 percent. This measure ensures comparability of net interest income arising from
taxable and tax-exempt sources. The efficiency ratio measures the costs expended to generate a dollar of revenue, and net interest yield measures the basis points the Corporation earns
over the cost of funds.
The Corporation may present certain key performance indicators and ratios excluding certain items (e.g., market-related adjustments on net interest income, debit valuation adjustments,
charge-offs related to the settlement with the DoJ) which result in non-GAAP financial measures. The Corporation believes the use of these non-GAAP financial measures provides additional
clarity in understanding its results of operations and trends.
The Corporation also evaluates its business based on the following ratios that utilize tangible equity, a non-GAAP financial measure. Tangible equity represents an adjusted shareholders'
equity or common shareholders' equity amount which has been reduced by goodwill and intangible assets (excluding mortgage servicing rights), net of related deferred tax liabilities.
Return on average tangible common shareholders' equity measures the Corporation's earnings contribution as a percentage of adjusted average common shareholders' equity. The tangible
common equity ratio represents adjusted ending common shareholders' equity divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of
related deferred tax liabilities. Return on average tangible shareholders' equity measures the Corporation's earnings contribution as a percentage of adjusted average total shareholders'
equity. The tangible equity ratio represents adjusted ending shareholders' equity divided by total assets less goodwill and intangible assets (excluding mortgage servicing rights), net of
related deferred tax liabilities. Tangible book value per common share represents adjusted ending common shareholders' equity divided by ending common shares outstanding. These
measures are used to evaluate the Corporation's use of equity. In addition, profitability, relationship and investment models all use return on average tangible shareholders' equity as key
measures to support our overall growth goals.
See the tables below and on page 18 for reconciliations of these non-GAAP financial measures to financial measures defined by GAAP for the six months ended June 30, 2016 and 2015
and the three months ended June 30, 2016, March 31, 2016 and June 30, 2015. The Corporation believes the use of these non-GAAP financial measures provides additional clarity in
assessing the results of the Corporation. Other companies may define or calculate supplemental financial data differently.
Six Months Ended
June 30
Second
Quarter
2016
First
Quarter
2016
Second
Quarter
20152016 2015
Reconciliation of net interest income to net interest income on a fully taxable-equivalent basis
Net interest income $ 18,384 $ 19,872 $ 9,213 $ 9,171 $ 10,461
Fully taxable-equivalent adjustment 438 438 223 215 223
Net interest income on a fully taxable-equivalent basis $ 18,822 $ 20,310 $ 9,436 $ 9,386 $ 10,684
Reconciliation of total revenue, net of interest expense to total revenue, net of interest expense on a fully taxable-equivalent basis
Total revenue, net of interest expense $ 39,910 $ 42,870 $ 20,398 $ 19,512 $ 21,956
Fully taxable-equivalent adjustment 438 438 223 215 223
Total revenue, net of interest expense on a fully taxable-equivalent basis $ 40,348 $ 43,308 $ 20,621 $ 19,727 $ 22,179
Reconciliation of income tax expense to income tax expense on a fully taxable-equivalent basis
Income tax expense $ 2,716 $ 3,309 $ 1,697 $ 1,019 $ 2,084
Fully taxable-equivalent adjustment 438 438 223 215 223
Income tax expense on a fully taxable-equivalent basis $ 3,154 $ 3,747 $ 1,920 $ 1,234 $ 2,307
Reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity
Common shareholders’ equity $ 238,645 $ 227,078 $ 240,166 $ 237,123 $ 228,780
Goodwill (69,756) (69,776) (69,751) (69,761) (69,775)
Intangible assets (excluding mortgage servicing rights) (3,584) (4,412) (3,480) (3,687) (4,307)
Related deferred tax liabilities 1,684 1,922 1,662 1,707 1,885
Tangible common shareholders’ equity $ 166,989 $ 154,812 $ 168,597 $ 165,382 $ 156,583
Reconciliation of average shareholders’ equity to average tangible shareholders’ equity
Shareholders’ equity $ 262,731 $ 248,413 $ 265,144 $ 260,317 $ 251,054
Goodwill (69,756) (69,776) (69,751) (69,761) (69,775)
Intangible assets (excluding mortgage servicing rights) (3,584) (4,412) (3,480) (3,687) (4,307)
Related deferred tax liabilities 1,684 1,922 1,662 1,707 1,885
Tangible shareholders’ equity $ 191,075 $ 176,147 $ 193,575 $ 188,576 $ 178,857
Certain prior period amounts have been reclassified to conform to current period presentation.
This information is preliminary and based on company data available at the time of the presentation.
18
Bank of America Corporation and Subsidiaries
Reconciliations to GAAP Financial Measures (continued)
(Dollars in millions)
Six Months Ended
June 30
Second
Quarter
2016
First
Quarter
2016
Second
Quarter
20152016 2015
Reconciliation of period-end common shareholders’ equity to period-end tangible common shareholders’ equity
Common shareholders’ equity $ 241,849 $ 229,386 $ 241,849 $ 238,434 $ 229,386
Goodwill (69,744) (69,775) (69,744) (69,761) (69,775)
Intangible assets (excluding mortgage servicing rights) (3,352) (4,188) (3,352) (3,578) (4,188)
Related deferred tax liabilities 1,637 1,813 1,637 1,667 1,813
Tangible common shareholders’ equity $ 170,390 $ 157,236 $ 170,390 $ 166,762 $ 157,236
Reconciliation of period-end shareholders’ equity to period-end tangible shareholders’ equity
Shareholders’ equity $ 267,069 $ 251,659 $ 267,069 $ 262,776 $ 251,659
Goodwill (69,744) (69,775) (69,744) (69,761) (69,775)
Intangible assets (excluding mortgage servicing rights) (3,352) (4,188) (3,352) (3,578) (4,188)
Related deferred tax liabilities 1,637 1,813 1,637 1,667 1,813
Tangible shareholders’ equity $ 195,610 $ 179,509 $ 195,610 $ 191,104 $ 179,509
Reconciliation of period-end assets to period-end tangible assets
Assets $ 2,186,609 $ 2,149,034 $ 2,186,609 $ 2,185,498 $ 2,149,034
Goodwill (69,744) (69,775) (69,744) (69,761) (69,775)
Intangible assets (excluding mortgage servicing rights) (3,352) (4,188) (3,352) (3,578) (4,188)
Related deferred tax liabilities 1,637 1,813 1,637 1,667 1,813
Tangible assets $ 2,115,150 $ 2,076,884 $ 2,115,150 $ 2,113,826 $ 2,076,884
Book value per share of common stock
Common shareholders’ equity $ 241,849 $ 229,386 $ 241,849 $ 238,434 $ 229,386
Ending common shares issued and outstanding 10,216,781 10,471,837 10,216,781 10,312,660 10,471,837
Book value per share of common stock $ 23.67 $ 21.91 $ 23.67 $ 23.12 $ 21.91
Tangible book value per share of common stock
Tangible common shareholders’ equity $ 170,390 $ 157,236 $ 170,390 $ 166,762 $ 157,236
Ending common shares issued and outstanding 10,216,781 10,471,837 10,216,781 10,312,660 10,471,837
Tangible book value per share of common stock $ 16.68 $ 15.02 $ 16.68 $ 16.17 $ 15.02
Certain prior period amounts have been reclassified to conform to current period presentation.
