Bank of America Reports Third-Quarter 2016
Financial Results
1
Financial Highlights1 Business Segment Highlights1
Consumer Banking
Global Wealth and Investment
Management
Global Banking
Global Markets
CEO Commentary
Effective July 1, 2016, Bank of America changed its accounting method for the amortization of premiums and accretion of discounts related to certain debt securities carried at fair value and held-to-maturity under
FASB Accounting Standards Codification (ASC) 310-20, Nonrefundable fees and other costs (formerly known as SFAS 91), from the prepayment method (also referred to as the retrospective method) to the
contractual method. All periods presented have been updated to reflect this change in accounting method.
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 Combined consumer credit/debit spending, including GWIM, excludes the impact of portfolio divestitures. Including divestitures, combined spending was up 2%.
• Loans up $16.1 billion; deposits up $60.4
billion
• Brokerage assets up 18%
• Mobile banking active users up 16% to
21.3 million
• Total credit/debit card spending up 5%2
• Revenue, net of interest expense, increased 3% to
$21.6 billion from $21.0 billion
– Net interest income (NII) increased 3% to
$10.2 billion from $9.9 billion (GAAP basis)(A)
– Noninterest income increased 3% to $11.4
billion from $11.1 billion
• Provision for credit losses of $850 million,
compared to $806 million; net charge-offs
declined to $888 million from $932 million
• Noninterest expense declined 3%, or $458
million, to $13.5 billion
• Pretax earnings up 17% to $7.3 billion
• Net income increased 7% to $5.0 billion and EPS
increased 8% to $0.41, compared to $4.6 billion
and $0.38, respectively
• Loan balances up $23 billion, or 3%, to $905
billion
• Deposit balances up $71 billion, or 6%, to $1.23
trillion
Key Performance Metrics
• Return on average assets 0.90%; return on
average common equity 7.3%; return on average
tangible common equity 10.3%(D)
• Book value per share increased 8% to $24.19;
tangible book value per share(D) increased 11% to
$17.14
• Repurchased $1.4 billion in common stock and
paid $0.8 billion in common stock dividends
• Total client balances of nearly $2.5
trillion
• Loans up $9.2 billion; deposits up $6.8
billion
• Pretax margin improved to 25%
• Long-term AUM flows of $10.2 billion
• Loans up $20.5 billion; deposits up $3.4
billion
• Total Corporate Investment Banking fees
up 13% to $1.5 billion
• Participated in all of the top 10 debt
underwriting deals(B)
• Sales and trading revenue up 14%
– Fixed income up 32%
– Equities down 17%
• Excluding net DVA, sales and trading
revenue up 18%(C)
– Fixed income up 39%(C)
– Equities down 17%(C)
Bank of America Reports Q3-16 Net Income of $5.0 Billion, EPS of $0.41
Revenue Increased 3% to $21.6 billion; Noninterest Expense Declined 3% to $13.5 billion
“We delivered strong results this quarter by staying true to our strategy of
responsible growth and focusing on the quality of the relationships with our
customers and clients. We grew revenue, reduced expenses and continued to
manage risk, resulting in a 17 percent increase in pretax earnings. Our
investments in innovation, including industry-leading digital banking
capabilities, continue to transform how we serve our customers. This
innovation across our businesses is benefiting customers and shareholders.”
— Brian Moynihan, Chief Executive Officer
Balance Sheet Highlights ($ in billions, at end of period) September 30, 2016 June 30, 2016 September 30, 2015
Total assets $2,195.3 $2,187.0 $2,153.0
Total loans and leases 905.0 903.2 882.1
Total deposits 1,232.9 1,216.1 1,162.0
Global Liquidity Sources(E) 522.0 515.0 499.0
Common equity tier 1 (CET1) ratio (transition) 11.0% 10.6% 11.6%
CET1 ratio (fully phased-in)(F) 10.9% 10.5% 11.0%
Bank of America Reports Third-Quarter 2016
Financial Results
2
CFO Commentary
Consumer Banking
Three months ended
Financial Results1 ($ in millions) 9/30/2016 6/30/2016 9/30/2015
Net interest income (FTE) $5,290 $5,207 $5,093
Noninterest income 2,678 2,588 2,888
Total revenue (FTE)2 7,968 7,795 7,981
Provision for credit losses 698 726 523
Noninterest expense 4,371 4,414 4,711
Net income $1,813 $1,677 $1,757
1 Comparisons are to the year-ago quarter unless noted.
2 Revenue, net of interest expense.
Three months ended
Business Highlights1,2 ($ in billions) 9/30/2016 6/30/2016 09/30/2015
Average deposits $605.7 $596.5 $556.0
Average loans and leases 248.7 242.9 233.1
Brokerage assets (EOP) 138.0 131.7 117.2
Total mortgage production4 $20.4 $20.6 $16.9
Mobile banking active users
(MM)
21.3 20.2 18.4
Number of financial centers 4,629 4,681 4,741
Efficiency ratio (FTE) 55% 57% 59%
Return on average allocated
capital
21 20 21
Total U.S. Consumer Credit Card2
New card accounts (MM) 1.32 1.31 1.26
Risk-adjusted margin 9.11% 8.79% 9.51%
1 Comparisons are to the year-ago quarter unless noted.
2 The U.S. consumer card portfolio includes Consumer Banking and GWIM.
3 Source: Preliminary estimate based on June 2016 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.
"Strong client activity and good expense discipline combined to drive positive operating leverage as we continue to optimize and
strengthen our balance sheet. With near-record levels of capital and liquidity, as well as robust underwriting standards, Bank of
America is stronger, safer and better prepared to deliver for customers and clients than probably at any time in our history. We remain
focused on delivering long-term value to shareholders. This quarter, we increased tangible book value per share by 11% while
returning nearly $2.2 billion in capital to common shareholders."
— Paul M. Donofrio, Chief Financial Officer
• Net income up 3% to $1.8 billion as higher NII and
lower expenses offset lower fee-based income,
producing positive operating leverage
• Pretax, pre-provision net revenue up 10% to $3.6
billion(H)
• Revenue was relatively flat at $8.0 billion
– NII increased $197 million, driven primarily by
strong deposit growth
– Noninterest income decreased $210 million, due
primarily to the absence of one-time gains on
divestitures recognized in the year-ago quarter
• Provision for credit losses increased $175 million,
with reserve releases of $12 million, compared to
$186 million
• Noninterest expense down $340 million, driven by
improved operating efficiencies and lower fraud
costs, partially offset by higher FDIC expense
• No. 1 retail deposit market share3
• Total client balances up 11% to a record $1.0 trillion
– Average deposit balances grew $49.7 billion, or 9%;
average loan balances grew $15.6 billion, or 7%
– Client brokerage assets grew $20.8 billion, or 18%,
to $138.0 billion, driven by underlying client flows
and strong market performance
• Total mortgage production4 grew $3.6 billion, or 21%,
to $20.4 billion
• More than 1.3 million U.S. consumer credit cards
issued
• 4,629 financial centers, including 25 new openings
during the past 12 months
• 21.3 million mobile banking active users, up 16%
• Digital sales represented 18% of total sales
– 25% of digital sales through mobile devices
• Efficiency ratio improved to 55% from 59%
Bank of America Reports Third-Quarter 2016
Financial Results
3
Global Wealth and Investment Management
Three months ended
Financial Results1 ($ in millions) 9/30/2016 6/30/2016 9/30/2015
Net interest income (FTE) $1,394 $1,403 $1,360
Noninterest income 2,985 3,022 3,093
Total revenue (FTE)2 4,379 4,425 4,453
Provision for credit losses 7 14 (2)
Noninterest expense 3,257 3,288 3,470
Net income $697 $703 $632
1 Comparisons are to the year-ago quarter unless noted.
2 Revenue, net of interest expense.
Three months ended
Business Highlights1 ($ in billions) 9/30/2016 6/30/2016 9/30/2015
Average deposits $253.8 $254.8 $244.0
Average loans and leases 143.2 141.2 134.3
Total client balances 2,490.2 2,419.5 2,397.7
Long-term AUM flows $10.2 $10.1 $4.4
Pretax margin 25% 25% 22%
Efficiency ratio (FTE) 74 74 78
Return on average allocated
capital
21 22 21
1 Comparisons are to the year-ago quarter unless noted.
2 Includes financial advisors in Consumer Banking of 2,179 and 2,050 in Q3-16 and Q3-15.
• Net income up 10% to $697 million as lower
expenses more than offset lower revenue to create
positive operating leverage
• Revenue down $74 million to $4.4 billion
– NII up $34 million, reflecting higher loan and
deposit balances
– Noninterest income down $108 million, driven by
lower transactional revenue
• Noninterest expense down $213 million, or 6%, due
to the expiration of fully amortized advisor retention
awards and lower operating and support costs,
partially offset by higher FDIC expense
• Average deposit balances grew $9.8 billion, or 4%
• Average loans and leases grew $8.9 billion, or 7%
• Total client balances increased $92.6 billion, or 4%, to
nearly $2.5 trillion, driven by higher market valuations
and positive long-term assets under management
(AUM) flows
– Excluding the impact of the transfer of BofA Global
Capital Management's AUM in Q2-16, client
balances grew 7% from Q3-15
• Long-term AUM flows of $10.2 billion in Q3-16
• Pretax margin increased to 25% from 22%
• Number of wealth advisors increased 2% to 18,2482
Bank of America Reports Third-Quarter 2016
Financial Results
4
Global Banking
Three months ended
Financial Results1 ($ in millions) 9/30/2016 6/30/2016 9/30/2015
Net interest income (FTE) $2,470 $2,424 $2,315
Noninterest income2 2,278 2,270 2,021
Total revenue (FTE)2,3 4,748 4,694 4,336
Provision for credit losses 118 199 181
Noninterest expense 2,151 2,126 2,161
Net income $1,553 $1,496 $1,278
1 Comparisons are to the year-ago quarter unless noted.
2 Global Banking and Global Markets share in certain deal economics from investment banking
and loan origination activities.
3 Revenue, net of interest expense.
Three months ended
Business Highlights1,2 ($ in billions) 9/30/2016 6/30/2016 9/30/2015
Average deposits $306.2 $298.8 $296.3
Average loans and leases 334.4 334.4 308.7
Total Corp. IB fees (excl. self-
led)2 1.5 1.4 1.3
Global Banking IB fees2 0.8 0.8 0.8
Business Lending revenue 2.3 2.2 2.1
Global Transaction Services
revenue $1.6 $1.6 $1.6
Efficiency ratio (FTE) 45% 45% 50%
Return on average allocated
capital
17 16 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.
• Net income increased $275 million to $1.6 billion,
reflecting solid revenue growth and continued
expense discipline
• Revenue increased 10% to $4.7 billion
– NII was higher, primarily due to increased loan and
leasing-related balances
– Noninterest income increased 13%, due to the
impact from loans and related loan hedging
activities in the fair value option portfolio, higher
investment banking fees and higher treasury-
related revenues
• Provision for credit losses decreased $63 million to
$118 million
• Noninterest expense decreased modestly, as lower
operating and support costs were partially offset by
higher revenue-related incentive compensation and
FDIC expense
• Average loans and leases grew $25.7 billion, or 8%
• Average deposit balances grew $9.9 billion, or 3%
• Total Corporation Investment Banking fees of $1.5
billion (excluding self-led deals) increased 13%,
driven by higher debt and equity issuance activity,
partly offset by lower advisory fees
– Best third quarter since Merrill Lynch merger
– Ranked No. 3 globally in net investment banking
fees(B)
– Strong leadership position across broad range of
products
▪ Ranked among top 3 globally by volumes in
high-yield corporate debt, leveraged loans,
asset-backed securities, investment grade
corporate debt, syndicated loans and debt
capital markets(B)
• Return on average allocated capital increased to 17%
• Efficiency ratio improved to 45% from 50%
Bank of America Reports Third-Quarter 2016
Financial Results
5
Global Markets
Three months ended
Financial Results1 ($ in millions) 9/30/2016 6/30/2016 9/30/2015
Net interest income (FTE) $1,119 $1,088 $1,094
Noninterest income2 3,240 3,220 2,656
Total revenue (FTE)2,3 4,359 4,308 3,750
Net DVA4 (127) (164) 12
Total revenue
(excl. net DVA) (FTE)2,3,4 4,486 4,472 3,738
Provision for credit losses 19 (5) 42
Noninterest expense 2,658 2,581 2,697
Net income $1,074 $1,113 $800
Three months ended
Business Highlights1,2 ($ in billions) 9/30/2016 6/30/2016 9/30/2015
Average trading-related
assets $415.4 $411.3 $431.2
Average loans and leases 69.0 69.6 66.3
Sales and trading revenue 3.6 3.5 3.2
Sales and trading revenue
(excl. net DVA)(C) 3.7 3.7 3.1
Global Markets IB fees 0.6 0.6 0.5
Efficiency ratio (FTE) 61% 60% 72%
Return on average allocated
capital
12 12 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.
• Net income increased 34% to $1.1 billion from $800
million, driven by strong FICC sales and trading
revenues and continued expense management
• Revenue up $609 million to $4.4 billion; excluding net
DVA4, revenue increased $748 million to $4.5 billion,
driven by higher sales and trading results and higher
capital markets investment banking fees
• Noninterest expense declined $39 million, or 1%, as
increases in revenue-related incentives were more
than offset by lower operating and support costs
• Sales and trading revenue up $442 million, or 14%, to
$3.6 billion
• Excluding net DVA, sales and trading revenue up 18%
to $3.7 billion, the highest third quarter in five years(C)
– FICC increased 39%, due to stronger performance
globally across credit products, led by mortgages,
and continued strength in rates products and client
financing(C)
– Equities down 17%, due to lower levels of client
activity in cash and derivatives, reflecting lower
market volatility(C)
• Return on average allocated capital increased to 12%
1 Comparisons are to the year-ago quarter unless noted.
2 Global Banking and Global Markets share in certain deal economics from investment banking
and loan origination activities.
3 Revenue, net of interest expense.
4 Revenue, excluding net DVA, is a non-GAAP financial measure. See endnote C for more
information.
Bank of America Reports Third-Quarter 2016
Financial Results
6
All Other
Three months ended
Financial Results1 ($ in millions) 9/30/2016 6/30/2016 9/30/2015
Net interest income (FTE) $156 $219 $265
Noninterest income 253 68 434
Total revenue (FTE)2 409 287 699
Provision for credit losses 8 42 62
Noninterest expense 1,044 1,084 900
Net income (loss) $(182) $(206) $152
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.
• Net loss of $182 million, compared to net income of
$152 million. Results for Q3-16 include a charge of
approximately $350 million for revaluing the
company's U.K. deferred tax assets following
enactment of the previously announced reduction of
the U.K. corporate income tax rate
• Revenue declined $290 million, driven by lower gains
on sales of debt securities and lower net interest
income, partially offset by higher valuations of
mortgage servicing rights
• Provision for credit losses decreased $54 million to
$8 million, driven by lower loan balances from
continued run-off of non-core mortgages
• Noninterest expense increased $144 million, driven
by litigation expense
Bank of America Reports Third-Quarter 2016
Financial Results
7
Credit Quality
Three months ended
Highlights1 ($ in millions) 9/30/2016 6/30/2016 9/30/2015
Provision for credit losses $850 $976 $806
Net charge-offs 888 985 932
Net charge-off ratio2 0.40% 0.44% 0.43%
At period-end
Nonperforming loans, leases
and foreclosed properties
$8,737 $8,799 $10,336
Nonperforming loans, leases
and foreclosed properties
ratio3
0.97% 0.98% 1.18%
Allowance for loan and lease
losses
$11,692 $11,837 $12,657
Allowance for loan and lease
losses ratio4
1.30% 1.32% 1.45%
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
Q2-16, both the consumer and commercial portfolios
improved
• Total net charge-offs declined to $888 million from
$985 million in Q2-16 and $932 million in Q3-15
– The decline from the prior quarter and year-ago
quarter was driven by lower charge-offs in the
Consumer Real Estate and Credit Card portfolios
– Energy-related net charge-offs declined $34 million
from the prior quarter and increased $33 million
from the year-ago quarter to $45 million
• The net charge-off ratio decreased to 0.40% from
0.44% in Q2-16 and 0.43% in Q3-15
• The provision for credit losses decreased $126
million from the prior quarter to $850 million, driven
by improved asset quality in both the Commercial and
Consumer portfolios. Compared to the year-ago
quarter, the provision for credit losses increased $44
million due to lower reserve releases
• Net reserve release was $38 million, compared to $9
million in the prior quarter and $126 million in Q3-15,
as reserve releases in consumer were mostly offset
by increased commercial reserves
• Reservable criticized commercial exposures were
$16.9 billion in Q3-16, compared to $18.1 billion in
Q2-16 and $13.0 billion in Q3-15. The decline from
Q2-16 was due to improvements across several
industries. The year-over-year change was due to
increases in the energy sector
Bank of America Reports Third-Quarter 2016
Financial Results
8
Balance Sheet, Liquidity and Capital Highlights ($ in billions unless noted)
Balance Sheet (end of period) Three months ended
9/30/2016 6/30/2016 9/30/2015
Total assets $2,195.3 $2,187.0 $2,153.0
Total loans and leases 905.0 903.2 882.1
Total deposits 1,232.9 1,216.1 1,162.0
Funding and Liquidity
Long-term debt $225.1 $229.6 $237.3
Global Liquidity Sources(E) 522 515 499
Time-to-required funding (months)(E) 38 35 42
Equity
Common shareholders’ equity $244.9 $242.2 $233.6
Common equity ratio 11.2% 11.1% 10.8%
Tangible common shareholders’ equity1 $173.5 $170.7 $161.6
Tangible common equity ratio1 8.2% 8.1% 7.8%
Per Share Data
Common shares outstanding (in billions) 10.12 10.22 10.43
Book value per common share $24.19 $23.71 $22.40
Tangible book value per common share(D) 17.14 16.71 15.50
Regulatory Capital
Basel 3 Transition (as reported)2,3
Common equity tier 1 (CET1) capital $169.9 $166.2 $161.6
Risk-weighted assets 1,546 1,562 1,392
CET1 ratio 11.0% 10.6% 11.6%
Basel 3 Fully Phased-in2,4
CET1 capital $165.9 $161.8 $153.1
Standardized approach
Risk-weighted assets $1,409 $1,414 $1,415
CET1 ratio 11.8% 11.4% 10.8%
Advanced approaches5
Risk-weighted assets $1,522 $1,542 $1,398
CET1 ratio 10.9% 10.5% 11.0%
Supplementary leverage(G)
Bank holding company supplementary leverage ratio (SLR) 7.1% 6.9% 6.4%
Bank SLR 7.5 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. Under the applicable bank regulatory rules, the Corporation is not required to and, accordingly, will not restate previously-
filed capital ratios in connection with the change in accounting method related to certain debt securities. The cumulative impact of this change would have resulted in
an insignificant proforma change of the Corporation's capital ratios. 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 Prior to the fourth quarter of 2015, Bank of America was required to report regulatory capital using the Standardized approach. In connection with its exit from
parallel run in the fourth quarter of 2015, Bank of America began to report regulatory capital ratios under both the Standardized and Advanced approaches. The
approach that yields the lower ratio is used to assess capital adequacy.
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 September 30, 2016, BAC did not have regulatory approval for the IMM model.
Bank of America Reports Third-Quarter 2016
Financial Results
9
Endnotes
A
B
C
D
E
F
G
H
The Corporation also measures net interest income on an FTE basis, which is a non-GAAP financial measure. FTE basis is a performance measure used in
operating the business that management believes provides investors with a more accurate picture of the interest margin for comparative purposes. The
Corporation believes that this presentation allows for comparison of amounts from both taxable and tax-exempt sources and is consistent with industry
practices. Net interest income on an FTE basis was $10.4 billion and $10.1 billion for the three months ended September 30, 2016 and 2015. For reconciliation
to GAAP financial measures, refer to pages 17-18 of this press release.
Fully phased-in estimates are non-GAAP financial measures. For reconciliation to GAAP financial measures, refer to page 13 of this press release. Prior to the
fourth quarter of 2015, Bank of America was required to report regulatory capital using the Standardized approach. In connection with its exit from parallel run
in the fourth quarter of 2015, Bank of America began to report regulatory capital ratios under both the Standardized and Advanced approaches. The approach
that yields the lower ratio is used to assess capital adequacy. 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 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 September 30, 2016, BAC did not have regulatory approval for the IMM model.
Global Liquidity Sources (GLS) include 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 among legal entities may be subject to
certain regulatory and other restrictions. Prior to the third quarter of 2016, GLS were referred to as “Global Excess Liquidity Sources. Time to required funding
(TTF) 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 Global Liquidity Sources held at the BAC parent company and NB Holdings without the BAC parent company 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. Prior to the third quarter of 2016, the TTF metric incorporated only the GLS of the BAC parent company. Effective September 30, 2016,
the TTF metric was expanded to include the GLS of NB Holdings, following changes in the Corporation’s liquidity management practices, initiated in connection
with the Corporation’s resolution planning activities, that include maintaining at NB Holdings GLS previously held at the BAC parent company. 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. In Q1-16, settlement payment was made for $8.5B.
Return on average tangible common shareholders' equity and tangible book value per share of common stock are non-GAAP financial measures. For more
information, refer to pages 17-18 of this press release.
Rankings per Dealogic as of October 3, 2016 for the quarter ended September 30, 2016.
The numerator of the SLR is quarter-end Basel 3 Tier 1 capital calculated 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 Debit Valuation Adjustments (DVA), and sales and trading revenue, excluding net DVA, are non-GAAP financial measures.
Net DVA gains (losses) were $(127) million, $(164) million and $12 million for the three months ended September 30, 2016, June 30, 2016 and September 30,
2015, respectively. FICC net DVA gains (losses) were $(121) million and $18 million for the three months ended September 30, 2016 and 2015. Equities net DVA
gains (losses) were $(6) million and $(6) million for the three months ended September 30, 2016 and 2015.
Pretax, pre-provision net revenue (PPNR) is a non-GAAP financial measure. PPNR is total revenue, net of interest expense (on an FTE basis), less noninterest
expense. Consumer Banking total revenue, net of interest expense (on an FTE basis) was $8.0 billion for both the three months ended September 30, 2016
and 2015. Noninterest expense was $4.4 billion and $4.7 billion for the three months ended September 30, 2016 and 2015.
Bank of America Reports Third-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 third-
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 October 17 through midnight, October 24 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 4,600 retail financial centers, approximately 16,000 ATMs, and award-winning online
banking with approximately 34 million active accounts and more than 21 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, revenues, expenses, efficiency ratio, capital measures, 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 Third-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 New York Court of Appeals' 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; 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, financial instrument and foreign exchange inquiries, investigations and litigation; 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 or continued low 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 our expense targets; 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 possible
impact of Federal Reserve actions on the Company’s capital plans; the possible impact of 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 U.S. and international laws, regulations and regulatory interpretations, including, but not limited to, recovery and
resolution planning requirements, FDIC assessments, the Volcker Rule, fiduciary standards 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.
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
Nine Months Ended
September 30
Third
Quarter
2016
Second
Quarter
2016
Third
Quarter
20152016 2015
Net interest income $ 30,804 $ 29,272 $ 10,201 $ 10,118 $ 9,900
Noninterest income 32,907 34,111 11,434 11,168 11,092
Total revenue, net of interest expense 63,711 63,383 21,635 21,286 20,992
Provision for credit losses 2,823 2,351 850 976 806
Noninterest expense 41,790 43,724 13,481 13,493 13,939
Income before income taxes 19,098 17,308 7,304 6,817 6,247
Income tax expense 5,888 4,756 2,349 2,034 1,628
Net income $ 13,210 $ 12,552 $ 4,955 $ 4,783 $ 4,619
Preferred stock dividends 1,321 1,153 503 361 441
Net income applicable to common shareholders $ 11,889 $ 11,399 $ 4,452 $ 4,422 $ 4,178
Common stock issued under employee plans and related tax effects 5,082 3,983 61 85 36
Average common shares issued and outstanding 10,312,878 10,483,466 10,250,124 10,328,424 10,444,291
Average diluted common shares issued and outstanding 11,046,807 11,234,125 11,000,473 11,059,167 11,197,203
Summary Average Balance Sheet
Total debt securities $ 414,115 $ 387,988 $ 423,182 $ 419,085 $ 394,265
Total loans and leases 897,760 873,630 900,594 899,670 877,429
Total earning assets 1,861,019 1,817,437 1,870,062 1,868,073 1,841,830
Total assets 2,183,905 2,153,353 2,189,490 2,188,241 2,168,930
Total deposits 1,213,029 1,145,686 1,227,186 1,213,291 1,159,231
Common shareholders’ equity 240,440 228,614 243,679 240,376 231,524
Total shareholders’ equity 264,907 250,265 268,899 265,354 253,798
Performance Ratios
Return on average assets 0.81% 0.78% 0.90% 0.88% 0.84%
Return on average common shareholders' equity 6.61 6.67 7.27 7.40 7.16
Return on average tangible common shareholders’ equity (1) 9.40 9.74 10.28 10.54 10.40
Per common share information
Earnings $ 1.15 $ 1.09 $ 0.43 $ 0.43 $ 0.40
Diluted earnings 1.10 1.03 0.41 0.41 0.38
Dividends paid 0.175 0.15 0.075 0.05 0.05
Book value 24.19 22.40 24.19 23.71 22.40
Tangible book value (1) 17.14 15.50 17.14 16.71 15.50
September 30
2016
June 30
2016
September 30
2015
Summary Period-End Balance Sheet
Total debt securities $ 434,914 $ 412,569 $ 391,608
Total loans and leases 905,008 903,153 882,076
Total earning assets 1,877,928 1,861,134 1,820,627
Total assets 2,195,314 2,186,966 2,152,962
Total deposits 1,232,895 1,216,091 1,162,009
Common shareholders’ equity 244,863 242,206 233,588
Total shareholders’ equity 270,083 267,426 255,861
Common shares issued and outstanding 10,123,845 10,216,781 10,427,305
Credit Quality
Nine Months Ended
September 30
Third
Quarter
2016
Second
Quarter
2016
Third
Quarter
20152016 2015
Total net charge-offs $ 2,941 $ 3,194 $ 888 $ 985 $ 932
Net charge-offs as a percentage of average loans and leases outstanding (2) 0.44% 0.49% 0.40% 0.44% 0.43%
Provision for credit losses $ 2,823 $ 2,351 $ 850 $ 976 $ 806
September 30
2016
June 30
2016
September 30
2015
Total nonperforming loans, leases and foreclosed properties (3) $ 8,737 $ 8,799 $ 10,336
Nonperforming loans, leases and foreclosed properties as a percentage of total loans,
leases and foreclosed properties (2) 0.97% 0.98% 1.18%
Allowance for loan and lease losses $ 11,692 $ 11,837 $ 12,657
Allowance for loan and lease losses as a percentage of total loans and leases outstanding (2) 1.30% 1.32% 1.45%
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 September 30
2016
June 30
2016
September 30
2015
Risk-based capital metrics (4, 5):
Common equity tier 1 capital $ 169,925 $ 166,173 $ 161,649
Common equity tier 1 capital ratio 11.0% 10.6% 11.6%
Tier 1 leverage ratio 9.1 8.9 8.5
Tangible equity ratio (6) 9.4 9.3 8.8
Tangible common equity ratio (6) 8.2 8.1 7.8
Regulatory Capital Reconciliations (4, 5, 7) September 30
2016
June 30
2016
September 30
2015
Regulatory capital – Basel 3 transition to fully phased-in
Common equity tier 1 capital (transition) $ 169,925 $ 166,173 $ 161,649
Deferred tax assets arising from net operating loss and tax credit carryforwards phased in during transition (3,143) (3,496) (5,554)
Accumulated OCI phased in during transition 188 359 (1,018)
Intangibles phased in during transition (853) (907) (1,654)
Defined benefit pension fund assets phased in during transition (375) (378) (470)
DVA related to liabilities and derivatives phased in during transition 168 104 228
Other adjustments and deductions phased in during transition (35) (24) (92)
Common equity tier 1 capital (fully phased-in) $ 165,875 $ 161,831 $ 153,089
Risk-weighted assets – As reported to Basel 3 (fully phased-in)
Basel 3 Standardized approach risk-weighted assets as reported $ 1,393,630 $ 1,396,277 $ 1,391,672
Changes in risk-weighted assets from reported to fully phased-in 15,587 17,689 22,989
Basel 3 Standardized approach risk-weighted assets (fully phased-in) $ 1,409,217 $ 1,413,966 $ 1,414,661
Basel 3 Advanced approaches risk-weighted assets as reported $ 1,545,984 $ 1,561,567 n/a
Changes in risk-weighted assets from reported to fully phased-in (23,501) (19,600) n/a
Basel 3 Advanced approaches risk-weighted assets (fully phased-in) (8) $ 1,522,483 $ 1,541,967 $ 1,397,504
Regulatory capital ratios
Basel 3 Standardized approach common equity tier 1 (transition) 12.2% 11.9% 11.6%
Basel 3 Advanced approaches common equity tier 1 (transition) 11.0 10.6 n/a
Basel 3 Standardized approach common equity tier 1 (fully phased-in) 11.8 11.4 10.8
Basel 3 Advanced approaches common equity tier 1 (fully phased-in) (8) 10.9 10.5 11.0
(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 ratios that utilize
tangible equity provides additional useful information because they present measures of those assets that can generate income. Tangible book value per share provides additional
useful information about the level of tangible assets in relation to outstanding shares of common stock. 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. Under the applicable bank regulatory rules, the Corporation is not required to and, accordingly, will not restate previously-filed capital ratios
in connection with the change in accounting method related to certain debt securities. The cumulative impact of this change would have resulted in an insignificant pro forma change
of the Corporation's capital ratios. 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.
(5) Prior to the fourth quarter of 2015, Bank of America was required to report regulatory capital using the Standardized approach. In connection with its exit from parallel run in the fourth
quarter of 2015, Bank of America began to report regulatory capital ratios under both the Standardized and Advanced approaches. The approach that yields the lower ratio is used to
assess capital adequacy.
(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 ratios that utilize tangible equity
provides additional useful information because they present measures of those assets that can generate income. 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 September 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)
Third Quarter 2016
Consumer
Banking GWIM
Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 7,968 $ 4,379 $ 4,748 $ 4,359 $ 409
Provision for credit losses 698 7 118 19 8
Noninterest expense 4,371 3,257 2,151 2,658 1,044
Net income (loss) 1,813 697 1,553 1,074 (182)
Return on average allocated capital (2) 21% 21% 17% 12% n/m
Balance Sheet
Average
Total loans and leases $ 248,683 $ 143,207 $ 334,363 $ 69,043 $ 105,298
Total deposits 605,708 253,812 306,198 32,840 28,628
Allocated capital (2) 34,000 13,000 37,000 37,000 n/m
Period end
Total loans and leases $ 251,125 $ 144,980 $ 334,120 $ 72,144 $ 102,639
Total deposits 618,030 252,962 301,061 31,692 29,150
Second Quarter 2016
Consumer
Banking GWIM
Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 7,795 $ 4,425 $ 4,694 $ 4,308 $ 287
Provision for credit losses 726 14 199 (5) 42
Noninterest expense 4,414 3,288 2,126 2,581 1,084
Net income (loss) 1,677 703 1,496 1,113 (206)
Return on average allocated capital (2) 20% 22% 16% 12% n/m
Balance Sheet
Average
Total loans and leases $ 242,921 $ 141,181 $ 334,396 $ 69,620 $ 111,552
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 $ 334,838 $ 70,766 $ 107,794
Total deposits 599,457 250,976 304,577 33,506 27,575
Third Quarter 2015
Consumer
Banking GWIM
Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 7,981 $ 4,453 $ 4,336 $ 3,750 $ 699
Provision for credit losses 523 (2) 181 42 62
Noninterest expense 4,711 3,470 2,161 2,697 900
Net income 1,757 632 1,278 800 152
Return on average allocated capital (2) 21% 21% 14% 9% n/m
Balance Sheet
Average
Total loans and leases $ 233,103 $ 134,319 $ 308,710 $ 66,349 $ 134,948
Total deposits 555,987 243,980 296,321 36,818 26,125
Allocated capital (2) 33,000 12,000 35,000 35,000 n/m
Period end
Total loans and leases $ 234,995 $ 135,805 $ 313,596 $ 70,159 $ 127,521
Total deposits 557,626 246,172 297,644 35,943 24,624
(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. The Corporation believes that this presentation allows for comparison of amounts from both taxable and tax-exempt sources and is
consistent with industry practices.
(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)
Nine Months Ended September 30, 2016
Consumer
Banking GWIM
Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 23,620 $ 13,273 $ 13,896 $ 12,618 $ 970
Provision for credit losses 1,955 46 870 23 (71)
Noninterest expense 13,324 9,822 6,449 7,690 4,505
Net income (loss) 5,253 2,138 4,142 3,159 (1,482)
Return on average allocated capital (2) 21% 22% 15% 11% n/m
Balance Sheet
Average
Total loans and leases $ 243,191 $ 141,169 $ 332,474 $ 69,315 $ 111,611
Total deposits 593,504 256,356 300,732 34,409 28,028
Allocated capital (2) 34,000 13,000 37,000 37,000 n/m
Period end
Total loans and leases $ 251,125 $ 144,980 $ 334,120 $ 72,144 $ 102,639
Total deposits 618,030 252,962 301,061 31,692 29,150
Nine Months Ended September 30, 2015
Consumer
Banking GWIM
Global
Banking
Global
Markets
All
Other
Total revenue, net of interest expense (FTE basis) (1) $ 23,513 $ 13,556 $ 13,060 $ 11,896 $ 2,022
Provision for credit losses 1,662 36 454 69 130
Noninterest expense 14,079 10,446 6,396 8,606 4,197
Net income (loss) 4,913 1,944 3,924 2,253 (482)
Return on average allocated capital (2) 20% 22% 15% 9% n/m
Balance Sheet
Average
Total loans and leases $ 231,399 $ 130,975 $ 298,923 $ 61,625 $ 150,708
Total deposits 549,213 242,507 290,327 38,376 25,263
Allocated capital (2) 33,000 12,000 35,000 35,000 n/m
Period end
Total loans and leases $ 234,995 $ 135,805 $ 313,596 $ 70,159 $ 127,521
Total deposits 557,626 246,172 297,644 35,943 24,624
(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. The Corporation believes that this presentation allows for comparison of amounts from both taxable and tax-exempt sources and is
consistent with industry practices.
(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)
Nine Months Ended
September 30 ThirdQuarter
2016
Second
Quarter
2016
Third
Quarter
20152016 2015
Net interest income $ 31,470 $ 29,936 $ 10,429 $ 10,341 $ 10,127
Total revenue, net of interest expense 64,377 64,047 21,863 21,509 21,219
Net interest yield 2.26% 2.20% 2.23% 2.23% 2.19%
Efficiency ratio 64.91 68.27 61.66 62.73 65.70
Other Data
September 30
2016
June 30
2016
September 30
2015
Number of financial centers - U.S. 4,629 4,681 4,741
Number of branded ATMs - U.S. 15,959 15,998 16,062
Ending full-time equivalent employees 209,009 210,516 215,193
(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. The Corporation believes that this presentation allows for comparison of amounts from both taxable and tax-
exempt sources and is consistent with industry practices. 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. Total revenue, net of interest expense, on a fully taxable-equivalent basis
includes net interest income on a fully taxable-equivalent basis and noninterest income. The Corporation believes that this presentation allows for comparison of amounts from both
taxable and tax-exempt sources and is consistent with industry practices. The Corporation presents 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. 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 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 nine months ended September 30, 2016
and 2015 and the three months ended September 30, 2016, June 30, 2016 and September 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.
Nine Months Ended
September 30
Third
Quarter
2016
Second
Quarter
2016
Third
Quarter
20152016 2015
Reconciliation of net interest income to net interest income on a fully taxable-equivalent basis
Net interest income $ 30,804 $ 29,272 $ 10,201 $ 10,118 $ 9,900
Fully taxable-equivalent adjustment 666 664 228 223 227
Net interest income on a fully taxable-equivalent basis $ 31,470 $ 29,936 $ 10,429 $ 10,341 $ 10,127
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 $ 63,711 $ 63,383 $ 21,635 $ 21,286 $ 20,992
Fully taxable-equivalent adjustment 666 664 228 223 227
Total revenue, net of interest expense on a fully taxable-equivalent basis $ 64,377 $ 64,047 $ 21,863 $ 21,509 $ 21,219
Reconciliation of income tax expense to income tax expense on a fully taxable-equivalent basis
Income tax expense $ 5,888 $ 4,756 $ 2,349 $ 2,034 $ 1,628
Fully taxable-equivalent adjustment 666 664 228 223 227
Income tax expense on a fully taxable-equivalent basis $ 6,554 $ 5,420 $ 2,577 $ 2,257 $ 1,855
Reconciliation of average common shareholders’ equity to average tangible common shareholders’ equity
Common shareholders’ equity $ 240,440 $ 228,614 $ 243,679 $ 240,376 $ 231,524
Goodwill (69,752) (69,775) (69,744) (69,751) (69,774)
Intangible assets (excluding mortgage servicing rights) (3,480) (4,307) (3,276) (3,480) (4,099)
Related deferred tax liabilities 1,666 1,885 1,628 1,662 1,811
Tangible common shareholders’ equity $ 168,874 $ 156,417 $ 172,287 $ 168,807 $ 159,462
Reconciliation of average shareholders’ equity to average tangible shareholders’ equity
Shareholders’ equity $ 264,907 $ 250,265 $ 268,899 $ 265,354 $ 253,798
Goodwill (69,752) (69,775) (69,744) (69,751) (69,774)
Intangible assets (excluding mortgage servicing rights) (3,480) (4,307) (3,276) (3,480) (4,099)
Related deferred tax liabilities 1,666 1,885 1,628 1,662 1,811
Tangible shareholders’ equity $ 193,341 $ 178,068 $ 197,507 $ 193,785 $ 181,736
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)
Nine Months Ended
September 30
Third
Quarter
2016
Second
Quarter
2016
Third
Quarter
20152016 2015
Reconciliation of period-end common shareholders’ equity to period-end tangible common shareholders’ equity
Common shareholders’ equity $ 244,863 $ 233,588 $ 244,863 $ 242,206 $ 233,588
Goodwill (69,744) (69,761) (69,744) (69,744) (69,761)
Intangible assets (excluding mortgage servicing rights) (3,168) (3,973) (3,168) (3,352) (3,973)
Related deferred tax liabilities 1,588 1,762 1,588 1,637 1,762
Tangible common shareholders’ equity $ 173,539 $ 161,616 $ 173,539 $ 170,747 $ 161,616
Reconciliation of period-end shareholders’ equity to period-end tangible shareholders’ equity
Shareholders’ equity $ 270,083 $ 255,861 $ 270,083 $ 267,426 $ 255,861
Goodwill (69,744) (69,761) (69,744) (69,744) (69,761)
Intangible assets (excluding mortgage servicing rights) (3,168) (3,973) (3,168) (3,352) (3,973)
Related deferred tax liabilities 1,588 1,762 1,588 1,637 1,762
Tangible shareholders’ equity $ 198,759 $ 183,889 $ 198,759 $ 195,967 $ 183,889
Reconciliation of period-end assets to period-end tangible assets
Assets $ 2,195,314 $ 2,152,962 $ 2,195,314 $ 2,186,966 $ 2,152,962
Goodwill (69,744) (69,761) (69,744) (69,744) (69,761)
Intangible assets (excluding mortgage servicing rights) (3,168) (3,973) (3,168) (3,352) (3,973)
Related deferred tax liabilities 1,588 1,762 1,588 1,637 1,762
Tangible assets $ 2,123,990 $ 2,080,990 $ 2,123,990 $ 2,115,507 $ 2,080,990
Book value per share of common stock
Common shareholders’ equity $ 244,863 $ 233,588 $ 244,863 $ 242,206 $ 233,588
Ending common shares issued and outstanding 10,123,845 10,427,305 10,123,845 10,216,781 10,427,305
Book value per share of common stock $ 24.19 $ 22.40 $ 24.19 $ 23.71 $ 22.40
Tangible book value per share of common stock
Tangible common shareholders’ equity $ 173,539 $ 161,616 $ 173,539 $ 170,747 $ 161,616
Ending common shares issued and outstanding 10,123,845 10,427,305 10,123,845 10,216,781 10,427,305
Tangible book value per share of common stock $ 17.14 $ 15.50 $ 17.14 $ 16.71 $ 15.50
Certain prior period amounts have been reclassified to conform to current period presentation.
