4Q23 10-K as filed with exhibits

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-K

(Mark One)

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

EXCHANGE ACT OF 1934

For the Fiscal Year Ended December31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from to

Commission file number:

1-6523

Exact name of registrant as specified in its charter:

Bank of America Corporation

State or other jurisdiction of incorporation or organization:

Delaware

IRS Employer Identification No.:

56-0906609

Address of principal executive offices:

Bank of America Corporate Center

100 N. Tryon Street

Charlotte, North Carolina 28255

Registrant’s telephone number, including area code:

(704) 386-5681

Securities registered pursuant to section12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common Stock, par value $0.01 per share BAC New York Stock Exchange

Depositary Shares, each representing a 1/1,000th interest in a share BAC PrE New York Stock Exchange

of Floating Rate Non-Cumulative Preferred Stock, Series E

Depositary Shares, each representing a 1/1,000th interest in a share BAC PrB New York Stock Exchange

of 6.000% Non-Cumulative Preferred Stock, Series GG

Depositary Shares, each representing a 1/1,000th interest in a share BAC PrK New York Stock Exchange

of 5.875% Non-Cumulative Preferred Stock, Series HH

7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series L BAC PrL New York Stock Exchange

Depositary Shares, each representing a 1/1,200th interest in a share

BML PrG New York Stock Exchange

of Bank of America Corporation Floating Rate

Non-Cumulative Preferred Stock, Series 1

Title of each class Trading Symbol(s) Name of each exchange on which registered

Depositary Shares, each representing a 1/1,200th interest in a share

BML PrH New York Stock Exchange

of Bank of America Corporation Floating Rate

Non-Cumulative Preferred Stock, Series 2

Depositary Shares, each representing a 1/1,200th interest in a share

BML PrJ New York Stock Exchange

of Bank of America Corporation Floating Rate

Non-Cumulative Preferred Stock, Series 4

Depositary Shares, each representing a 1/1,200th interest in a share

BML PrL New York Stock Exchange

of Bank of America Corporation Floating Rate

Non-Cumulative Preferred Stock, Series 5

Floating Rate Preferred Hybrid Income Term Securities of BAC Capital BAC/PF New York Stock Exchange

Trust XIII (and the guarantee related thereto)

5.63% Fixed to Floating Rate Preferred Hybrid Income Term Securities BAC/PG New York Stock Exchange

of BAC Capital Trust XIV (and the guarantee related thereto)

Income Capital Obligation Notes initially due December 15, 2066 of MER PrK New York Stock Exchange

Bank of America Corporation

Senior Medium-Term Notes, Series A, Step Up Callable Notes, due

BAC/31B New York Stock Exchange

November 28, 2031 of BofA Finance LLC (and the guarantee

of the Registrant with respect thereto)

Depositary Shares, each representing a 1/1,000th interest in a share BAC PrM New York Stock Exchange

of 5.375% Non-Cumulative Preferred Stock, Series KK

Depositary Shares, each representing a 1/1,000th interest in a share BAC PrN New York Stock Exchange

of 5.000% Non-Cumulative Preferred Stock, Series LL

Depositary Shares, each representing a 1/1,000th interest in a share BAC PrO New York Stock Exchange

of 4.375% Non-Cumulative Preferred Stock, Series NN

Depositary Shares, each representing a 1/1,000th interest in a share BAC PrP New York Stock Exchange

of 4.125% Non-Cumulative Preferred Stock, Series PP

Depositary Shares, each representing a 1/1,000th interest in a share BAC PrQ New York Stock Exchange

of 4.250% Non-Cumulative Preferred Stock, Series QQ

Depositary Shares, each representing a 1/1,000th interest in a share BAC PrS New York Stock Exchange

of 4.750% Non-Cumulative Preferred Stock, Series SS

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes☐ No ☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of

1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to

such filing requirements for the past 90 days.Yes☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405

of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit

such files).Yes☑No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or

an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth

company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any

new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its

internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm

that prepared or issued its audit report. ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in

the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes☐ No☑

As of June 30, 2023, the aggregate market value of the registrant’s common stock (Common Stock) held by non-affiliates was approximately

$228,187,725,798. At February16, 2024, there were 7,872,657,542 shares of Common Stock outstanding.

Documents incorporated by reference: Portions of the definitive proxy statement relating to the registrant’s 2024 annual meeting of shareholders are

incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III.

Table of Contents

Bank of America Corporation and Subsidiaries

PartI



Page

Item 1.

Business

Item 1A.

Risk Factors

Item 1B.

Unresolved Staff Comments

Item 1C.

Cybersecurity

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4.

Mine Safety Disclosures

PartII



Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity

Securities

Item 6.

[Reserved]

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

Item 8.

Financial Statements and Supplementary Data

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

172

Item 9A.

Controls and Procedures

172

Item 9B.

Other Information

172

Item 9C.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

172

PartIII



Item 10.

Directors, Executive Officers and Corporate Governance

172

Item 11.

Executive Compensation

173

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

174

Item 13.

Certain Relationships and Related Transactions, and Director Independence

174

Item 14.

Principal Accounting Fees and Services

174

PartIV



Item 15.

Exhibits, Financial Statement Schedules

175

Item 16.

Form 10-K Summary

178

1 Bank of America

PartI

Bank of America Corporation and Subsidiaries

Item 1. Business

Bank of America Corporation is a Delaware corporation, a bank

holding company (BHC) and a financial holding company. When

used in this report, “Bank of America,” “the Corporation,” “we,”

“us” and “our” may refer to Bank of America Corporation

individually, Bank of America Corporation and its subsidiaries, or

certain of Bank of America Corporation’s subsidiaries or

affiliates. As part of our efforts to streamline the Corporation’s

organizational structure and reduce complexity and costs, the

Corporation has reduced and intends to continue to reduce the

number of its corporate subsidiaries, including through

intercompany mergers.

Bank of America is one of the world’s largest financial

institutions, serving individual consumers, small- and middle-

market businesses, institutional investors, large corporations

and governments with a full range of banking, investing, asset

management and other financial and risk management products

and services. Our principal executive offices are located in the

Bank of America Corporate Center, 100 North Tryon Street,

Charlotte, North Carolina 28255.

Bank of America’s website is www.bankofamerica.com, and

the Investor Relations portion of our website is https://

investor.bankofamerica.com. We use our website to distribute

company information, including as a means of disclosing

material, non-public information and for complying with our

disclosure obligations under Regulation FD. We routinely post

and make accessible financial and other information, including

environmental, social and governance (ESG) information,

regarding the Corporation on our website. Investors should

monitor our website, including the Investor Relations portion of

our website, in addition to our press releases, U.S. Securities

and Exchange Commission (SEC) filings, public conference calls

and webcasts. Our Annual Reports on Form 10-K, Quarterly

Reports on Form 10-Q, Current Reports on Form 8-K and

amendments to those reports filed or furnished pursuant to

Section 13(a) or 15(d) of the Securities Exchange Act of 1934

(Exchange Act) are available on the Investor Relations portion of

our website as soon as reasonably practicable after we

electronically file such reports with, or furnish them to, the SEC

and at the SEC’s website, www.sec.gov. Notwithstanding the

foregoing, the information contained on our website as

referenced in this paragraph, or otherwise in this Annual Report

on Form 10-K, is not incorporated by reference into this Annual

Report on Form 10-K. Also, we make available on the Investor

Relations portion of our website: (i) our Code of Conduct; (ii) our

Corporate Governance Guidelines; and (iii) the charter of each

active committee of our Board of Directors (the Board). Our

Code of Conduct constitutes a “code of ethics” and a “code of

business conduct and ethics” that applies to the required

individuals associated with the Corporation for purposes of the

respective rules of the SEC and the New York Stock Exchange.

We also intend to disclose any amendments to our Code of

Conduct and waivers of our Code of Conduct required to be

disclosed by the rules of the SEC and the New York Stock

Exchange on the Investor Relations portion of our website. All of

these corporate governance materials are also available free of

charge in print to shareholders who request them in writing to:

Bank of America Corporation, Attention: Office of the Corporate

Secretary, Bank of America Corporate Center, 100 North Tryon

Street, NC1-007-56-06, Charlotte, North Carolina 28255.

Segments

Through our various bank and nonbank subsidiaries throughout

the U.S. and in international markets, we provide a diversified

range of banking and nonbank financial services and products

through four business segments: Consumer Banking, Global

Wealth & Investment Management (GWIM), Global Banking and

Global Markets, with the remaining operations recorded in All

Other. Additional information related to our business segments

and the products and services they provide is included in the

information set forth on pages 34 through 43 of Item 7.

Management’s Discussion and Analysis of Financial Condition

and Results of Operations (MD&A) and Note 23 – Business

Segment Information to the Consolidated Financial Statements.

Competition

We operate in a highly competitive environment. Our

competitors include banks, thrifts, credit unions, investment

banking firms, investment advisory firms, brokerage firms,

investment companies, insurance companies, mortgage banking

companies, credit card issuers, mutual fund companies, hedge

funds, private equity firms, and e-commerce and other internet-

based companies, including merchant banks and companies

providing nonbank financial services. We compete with some of

these competitors globally and with others on a regional or

product-specific basis. We are increasingly competing with firms

offering products solely over the internet and with nonfinancial

companies, including firms utilizing emerging technologies, such

as digital assets, rather than, or in addition to, traditional

banking products.

Competition is based on a number of factors including,

among others, customer service and convenience, the pricing,

quality and range of products and services offered, lending

limits, the quality and delivery of our technology and our

reputation, experience and relationships in relevant markets.

Our ability to continue to compete effectively also depends in

large part on our ability to attract new employees and develop,

retain and motivate our existing employees, while managing

compensation and other costs.

Human Capital Resources

We strive to make Bank of America a great place to work for our

employees. We value our employees and seek to establish and

maintain human resource policies that are consistent with our

core values and help to realize the power of our people. Our

Board and its Compensation and Human Capital Committee

provide oversight of our human capital management strategies,

programs, initiatives and practices. The Corporation’s senior

management provides regular briefings on human capital

matters to the Board and its Committees to facilitate the

Board’s oversight.

At December 31, 2023 and 2022, the Corporation employed

approximately 213,000 and 217,000 employees, of which 78

percent and 79 percent were located in the U.S. None of our

U.S. employees are subject to a collective bargaining

agreement. Additionally, in 2023 and 2022, the Corporation’s

compensation and benefits expense was $38.3 billion and

$36.4 billion, or 58 percent and 59 percent, of total noninterest

expense.

Bank of America 2

Diversity and Inclusion

The Corporation’s commitment to diversity and inclusion starts

at the top with oversight from our Board and Chief Executive

Officer (CEO). The Chief Human Resources Officer and Chief

Diversity & Inclusion Officer partner with our CEO and senior

management to drive our diversity and inclusion strategy,

programs, initiatives and policies. Our Global Diversity and

Inclusion Council, which has been in place for over 20 years, is

chaired by our CEO and consists of senior executives from every

line of business and region. The Council sponsors and supports

business, operating unit and regional diversity and inclusion

councils to align diversity and inclusion strategies and

aspirational goals across the enterprise.

Our practices and policies have resulted in strong

representation across the Corporation where our broad

employee population mirrors the clients and communities we

serve. Our Board and senior management team are 62 percent

and 55 percent racially, ethnically and gender diverse. The

following table presents diversity metrics for our global

employees who self-identified as women and our U.S.-based

employees who self-identified as people of color, including

those who self-identified as Asian, Black/African American and

Hispanic/Latino. These workforce diversity metrics are reported

regularly to the senior management team and Board.

Diversity Metrics as of December 31, 2023

Total

Employees

Top Three

Management

Levels

Managers at

All Levels

Global employees

Women 50 % 41 % 42 %

U.S.-based employees

People of color 51 27 43

Asian 14 11 14

Black/African American 15 8 10

Hispanic/Latino 19 7 16

We invest in our talent by offering a range of development

programs and resources that are designed to allow all

employees to develop and progress in their careers. We

reinforce our commitment to diversity and inclusion by investing

internally in our employee networks and by facilitating voluntary

enterprise-wide learning and conversations about various

diversity and inclusion topics. In addition, we have practices in

place for attracting diverse talent, including campus recruitment.

For example, in 2023, 44 percent of our global campus hires

were women and, in the U.S., 62 percent were people of color.

Employee Engagement and Talent Retention

As part of our ongoing efforts to make the Corporation a great

place to work, we conduct a confidential annual Employee

Engagement Survey (Survey) and have done so for nearly two

decades. The Survey results are reviewed by the Board and

senior management and used to assist in reviewing the

Corporation’s human capital strategies, programs, initiatives

and practices. In 2023, 88 percent of the Corporation’s

employees participated in the Survey, and our Employee

Engagement Index, an overall measure of employee satisfaction

with the Corporation, was 87 percent. Our turnover among

employees was eight percent in 2023 and 13 percent in 2022.

Additionally, the Corporation provides a variety of resources

to help employees grow in their current roles and build new

skills, including resources to help employees find new

opportunities, re-skill and seek leadership positions. The

learning and development strategy is grounded in the

development of horizontal skills delivered throughout the

organization. Senior leaders, managers and teammates are

onboarded and build both horizontal and role-specific skills, to

help drive high performance. This approach also helps facilitate

internal mobility and promotion of talent to build a bench of

qualified managers and leaders. In 2023, more than 5,000

employees found new roles within the Corporation, and we

delivered approximately 6.7 million hours of training and

development to our teammates through Bank of America

Academy. Additionally, our Board oversees CEO and senior

management succession planning, which is formally reviewed at

least annually.

Fair and Equitable Compensation

Our compensation philosophy is to pay for performance over the

long term, as well as on an annual basis. Our performance

considerations encompass both financial and nonfinancial

measures, including the manner in which results are achieved.

These considerations are designed to reinforce and promote our

Responsible Growth strategy and maintain alignment with our

Risk Framework.

The Corporation is committed to racial and gender pay equity

and strives to compensate all of our employees fairly and

equitably. We maintain robust policies and practices that

reinforce our commitment, including reviews conducted by a

third-party consultant with oversight from our Board and senior

management. In 2023, our review showed that compensation

received by women globally, on average, was greater than 99

percent of that received by men in comparable positions. In the

U.S., compensation received by people of color was, on

average, greater than 99 percent of that received by teammates

who are not people of color in comparable positions.

We pay our employees fairly based on market rates for their

roles, experience and how they perform. We regularly

benchmark against other companies both within and outside our

industry to confirm our pay is competitive. In 2021, the

Corporation announced it would increase its minimum hourly

wage for U.S. employees to $25 per hour by 2025. In October

2023, as a next step towards that goal, the Corporation

increased its hourly minimum wage for U.S. employees to $23

per hour. In addition, in January 2024, for the seventh year

since 2017, we announced that we recognized our teammates

with Sharing Success compensation awards for their efforts

during 2023. Approximately 97 percent of employees globally

will receive an award in the first quarter of 2024.

Health and Wellness – 2023 Focus

The Corporation is also committed to providing employees with

access to leading benefits and programs that help promote their

physical, emotional and financial wellness. Investments we

make in our teammates are designed to help them thrive, both

at work and at home, enabling them to better deliver for our

clients, communities and each other.

We continued our efforts to provide affordable access to

healthcare, including offering no-cost, 24/7 access to virtual

general medical and behavioral health resources to help our

enrolled U.S. teammates stay healthy. We kept U.S. health

insurance premiums unchanged for teammates earning less

than $50,000 for the eleventh year in a row and had nominal

premium increases for teammates earning from $50,000 up to

$100,000 for the seventh year in a row. We provided in-network

generic prescription medications at no cost for teammates

enrolled in a U.S. bank medical PPO or Consumer Direct plan,

and we continue to provide preventative care medications at no

cost for all teammates enrolled in U.S. medical plans. We also

3 Bank of America

continued to enhance access to care across the Corporation,

through near-site health centers, vaccination clinics and

wellness screenings in many of our U.S. locations, as we

believe primary and preventive care are important to our

teammates’ health and safety.

We offer an extensive benefit package and support work-life

balance for our teammates, which includes in the U.S., 16

weeks of paid parental leave for both primary and secondary

caregivers and 50 days per year of child and adult backup

dependent care. Globally, teammates and members of their

households can utilize our Employee Assistance Program for 12

free, in-person confidential counseling sessions, and unlimited

phone consultations. Beginning in 2023, teammates celebrating

at least 15 years of continuous service with the Corporation

may participate in its global Sabbatical Program.

For more information about our human capital management,

see the Corporation’s website and 2023 Annual Report to

shareholders that we expect to be available on the Investor

Relations portion of our website in March 2024 (the content of

which is not incorporated by reference into this Annual Report

on Form 10-K).

Government Supervision and Regulation

The following discussion describes, among other things,

elements of an extensive regulatory framework applicable to

BHCs, financial holding companies, banks and broker-dealers,

including specific information about Bank of America.

We are subject to an extensive regulatory framework

applicable to BHCs, financial holding companies and banks and

other financial services entities. U.S. federal regulation of

banks, BHCs and financial holding companies is intended

primarily for the protection of depositors and the Deposit

Insurance Fund (DIF) rather than for the protection of

shareholders and creditors.

As a registered financial holding company and BHC, the

Corporation is subject to the supervision of, and regular

inspection by, the Board of Governors of the Federal Reserve

System (Federal Reserve). Our U.S. bank subsidiaries (the

Banks), organized as national banking associations, are subject

to regulation, supervision and examination by the Office of the

Comptroller of the Currency (OCC), the Federal Deposit

Insurance Corporation (FDIC) and the Federal Reserve. In

addition, the Federal Reserve and the OCC have adopted

guidelines that establish minimum standards for the design,

implementation and board oversight of BHCs’ and national

banks’ risk governance frameworks. U.S. financial holding

companies, and the companies under their control, are

permitted to engage in activities considered “financial in nature”

as defined by the Gramm-Leach-Bliley Act and related Federal

Reserve interpretations. The Corporation's status as a financial

holding company is conditioned upon maintaining certain

eligibility requirements for both the Corporation and its U.S.

depository institution subsidiaries, including minimum capital

ratios, supervisory ratings and, in the case of the depository

institutions, at least satisfactory Community Reinvestment Act

ratings. Failure to be an eligible financial holding company could

result in the Federal Reserve limiting Bank of America's

activities, including potential acquisitions. Additionally, we are

subject to a significant number of laws, rules and regulations

that govern our businesses in the U.S. and in the other

jurisdictions in which we operate, including permissible

activities, minimum levels of capital and liquidity, compliance

risk management, consumer products and sales practices,

privacy, data protection and executive compensation, among

others.

The scope of the laws and regulations and the intensity of

the supervision to which we are subject have increased over the

past several years, beginning with the response to the 2008

financial crisis, as well as other factors such as technological

and market changes. In addition, the banking and financial

services sector is subject to substantial regulatory enforcement

and fines. Many of these changes have occurred as a result of

the 2010 Dodd-Frank Wall Street Reform and Consumer

Protection Act (the Financial Reform Act). We cannot assess

whether or not there will be any additional major changes in the

regulatory environment and expect that our business will remain

subject to continuing and extensive regulation and supervision.

We are also subject to various other laws and regulations,

as well as supervision and examination by other regulatory

agencies, all of which directly or indirectly affect our entities,

management and ability to make distributions to shareholders.

For instance, our broker-dealer subsidiaries are subject to both

U.S. and international regulation, including supervision by the

SEC, Financial Industry Regulatory Authority and New York Stock

Exchange, among others; our futures commission merchant

subsidiary supporting commodities and derivatives businesses

in the U.S. is subject to regulation by and supervision of the

U.S. Commodity Futures Trading Commission (CFTC), National

Futures Association, the Chicago Mercantile Exchange, and in

the case of the Banks, certain banking regulators; our insurance

activities are subject to licensing and regulation by state

insurance regulatory agencies; and our consumer financial

products and services are regulated by the Consumer Financial

Protection Bureau (CFPB). In addition, certain U.S. and foreign

subsidiaries are also registered with the CFTC as swap dealers,

and conditionally registered with the SEC as security-based

swap dealers.

Our non-U.S. businesses are also subject to extensive

regulation by various non-U.S. regulators, including

governments, securities exchanges, prudential regulators,

central banks and other regulatory bodies, in the jurisdictions in

which those businesses operate. For example, our financial

services entities in the United Kingdom (U.K.), Ireland and

France are subject to regulation by the Prudential Regulatory

Authority and Financial Conduct Authority, the European Central

Bank and Central Bank of Ireland, and the Autorité de Contrôle

Prudentiel et de Résolution and Autorité des Marchés

Financiers, respectively.

The Corporation is also subject to extensive laws, rules and

regulations in the U.S. and in the other jurisdictions in which it

operates regarding bribery and corruption, know-your-customer

requirements, anti-money laundering, embargo programs and

economic sanctions. For example, we are subject to the U.S.

Bank Secrecy Act (BSA), which contains anti-money laundering

and financial transparency laws designed to detect and deter

money laundering and the financing of terrorism, as well as

record-keeping, reporting, due diligence and customer

verification requirements, various sanctions programs

administered and enforced by the U.S. Department of the

Treasury’s Office of Foreign Assets Control (OFAC) and foreign

jurisdictions, which target entities or individuals that are, or are

located in countries that are, involved in activities, such as

terrorism, hostilities, drug trafficking or human rights violations

and the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K.

Bribery Act, relating to corrupt and illegal payments to

government officials and others.

Source of Strength

Under the Financial Reform Act and Federal Reserve policy,

BHCs are expected to act as a source of financial strength to

Bank of America 4

each subsidiary bank and to commit resources to support each

such subsidiary. Similarly, under the cross-guarantee provisions

of the Federal Deposit Insurance Corporation Improvement Act

of 1991 (FDICIA), in the event of a loss suffered or anticipated

by the FDIC, either as a result of default of a bank subsidiary or

related to FDIC assistance provided to such a subsidiary in

danger of default, the affiliate banks of such a subsidiary may

be assessed for the FDIC’s loss, subject to certain exceptions.

Transactions with Affiliates

Pursuant to Section 23A and 23B of the Federal Reserve Act, as

implemented by the Federal Reserve’s Regulation W, the Banks

are subject to restrictions that limit certain types of transactions

between the Banks and their nonbank affiliates. In general, U.S.

banks are subject to quantitative and qualitative limits on

extensions of credit, purchases of assets and certain other

transactions involving their nonbank affiliates. Additionally,

transactions between U.S. banks and their nonbank affiliates

are required to be on arm’s length terms and must be

consistent with standards of safety and soundness.

Deposit Insurance

Deposits placed at U.S. domiciled banks are insured by the

FDIC, subject to limits and conditions of applicable law and the

FDIC’s regulations. Pursuant to the Financial Reform Act, FDIC

insurance coverage limits are $250,000 per depositor, per

insured bank for each account ownership category. All insured

depository institutions are required to pay assessments to the

FDIC in order to fund the DIF.

The FDIC is required to maintain a statutory minimum ratio of

the DIF to insured deposits in the U.S. of at least 1.35 percent

and has established a long-term goal of a two percent DIF ratio.

As of the date of this report, the DIF is below the statutory

minimum ratio and the FDIC’s long-term goal. In October 2022,

the FDIC adopted a restoration plan that includes an increase in

deposit insurance assessments across the industry of two

basis points (bps). The FDIC has indicated that it intends to

maintain such assessment rates for the foreseeable future.

Deposit insurance assessment rates are subject to change by

the FDIC and will be impacted by the overall economy and the

stability of the banking industry as a whole. The FDIC also has

the authority to charge special assessments from time to time,

including in connection with systemic risk events. For example,

on November 16, 2023, the FDIC issued its final rule to impose

a special assessment to recover the loss to the DIF resulting

from the closure of Silicon Valley Bank and Signature Bank. For

more information on the impact to the Corporation of the FDIC

special assessment, see Executive Summary – Recent

Developments in the MD&A on page 26. For more information

regarding deposit insurance, see Item 1A. Risk Factors –

Regulatory, Compliance and Legal on page 17.

Capital, Liquidity and Operational Requirements

As a financial holding company, we and our bank subsidiaries

are subject to the regulatory capital and liquidity rules issued by

the Federal Reserve and other U.S. banking regulators, including

the OCC and the FDIC. These rules are complex and are evolving

as U.S. and international regulatory authorities propose and

enact amendments to these rules. The Corporation seeks to

manage its capital position to maintain sufficient capital to

satisfy these regulatory rules and to support our business

activities. These continually evolving rules are likely to influence

our planning processes and may require additional regulatory

capital and liquidity, as well as impose additional operational

and compliance costs on the Corporation.

For more information on regulatory capital rules, capital

composition and pending or proposed regulatory capital

changes, see Capital Management on page 47 and Note 16 –

Regulatory Requirements and Restrictions to the Consolidated

Financial Statements, which are incorporated by reference in

this Item 1.

Distributions

We are subject to various regulatory policies and requirements

relating to capital actions, including payment of dividends and

common stock repurchases. For instance, Federal Reserve

regulations require major U.S. BHCs to submit a capital plan as

part of an annual Comprehensive Capital Analysis and Review

(CCAR).

Our ability to pay dividends and make common stock

repurchases depends in part on our ability to maintain

regulatory capital levels above minimum requirements plus

buffers and non-capital standards established under the FDICIA.

To the extent that the Federal Reserve increases our stress

capital buffer (SCB), global systemically important bank (G-SIB)

surcharge or countercyclical capital buffer, our returns of capital

to shareholders, including dividends and common stock

repurchases, could decrease. As part of its CCAR, the Federal

Reserve conducts stress testing on parts of our business using

hypothetical economic scenarios prepared by the Federal

Reserve. Those scenarios may affect our CCAR stress test

results, which may impact the level of our SCB. For example,

based on the results of our 2023 CCAR stress test, the

Corporation’s SCB decreased to 2.5 percent. Additionally, the

Corporation’s G-SIB surcharge increased to 3.0 percent on

January 1, 2024. The Federal Reserve could also impose

limitations or prohibitions on taking capital actions such as

paying or increasing dividends or repurchasing common stock.

For example, as a result of the economic uncertainty resulting

from the COVID-19 pandemic, in the second half of 2020, the

Federal Reserve introduced certain limitations to capital

distributions for all large banks, including the Corporation, which

were removed effective July 1, 2021.

If the Federal Reserve finds that any of our Banks are not

“well-capitalized” or “well-managed,” we would be required to

enter into an agreement with the Federal Reserve to comply with

all applicable capital and management requirements, which may

contain additional limitations or conditions relating to our

activities. Additionally, the applicable federal regulatory authority

is authorized to determine, under certain circumstances relating

to the financial condition of a bank or BHC, that the payment of

dividends would be an unsafe or unsound practice and to

prohibit payment thereof.

Many of our subsidiaries, including our bank and broker-

dealer subsidiaries, are subject to laws that restrict dividend

payments, or authorize regulatory bodies to block or reduce the

flow of funds from those subsidiaries to the parent company or

other subsidiaries. The rights of the Corporation, our

shareholders and our creditors to participate in any distribution

of the assets or earnings of our subsidiaries are further subject

to the prior claims of creditors of the respective subsidiaries.

For more information regarding distributions, including the

minimum capital requirements, see Note 13 – Shareholders’

Equity and Note 16 – Regulatory Requirements and Restrictions

to the Consolidated Financial Statements.

5 Bank of America

Resolution Planning

As a BHC with greater than $250 billion of assets, the

Corporation is required by the Federal Reserve and the FDIC to

periodically submit a plan for a rapid and orderly resolution in

the event of material financial distress or failure.

Such resolution plan is intended to be a detailed roadmap

for the orderly resolution of the BHC, including the continued

operations or solvent wind down of its material entities,

pursuant to the U.S. Bankruptcy Code under one or more

hypothetical scenarios assuming no extraordinary government

assistance.

If both the Federal Reserve and the FDIC determine that the

BHC’s plan is not credible, the Federal Reserve and the FDIC

may jointly impose more stringent capital, leverage or liquidity

requirements or restrictions on growth, activities or operations.

A summary of our plan is available on the Federal Reserve and

FDIC websites.

The FDIC also requires the submission of a resolution plan

for Bank of America, National Association, which must describe

how the insured depository institution would be resolved under

the bank resolution provisions of the Federal Deposit Insurance

Act. A description of this plan is available on the FDIC’s website.

We continue to make substantial progress to enhance our

resolvability, which includes continued improvements to our

preparedness capabilities to implement our resolution plan,

both from a financial and operational standpoint.

Across international jurisdictions, resolution planning is the

responsibility of national resolution authorities (RA) and central

resolution authorities (CA). Among those, the jurisdictions with

the greatest impact to the Corporation’s subsidiaries are the

U.K., Ireland and France, where rules have been issued

requiring the submission of significant information about locally

incorporated subsidiaries as well as the Corporation’s banking

branches located in those jurisdictions that are deemed to be

material for resolution planning purposes. As a result of the

RA’s and CA's review of the submitted information, we could be

required to take certain actions over the next several years that

could increase operating costs and potentially result in the

restructuring of certain businesses and subsidiaries.

For more information regarding our resolution plan, see Item

1A. Risk Factors – Liquidity on page 9.

Insolvency and the Orderly Liquidation Authority

Under the Federal Deposit Insurance Act, the FDIC may be

appointed receiver of an insured depository institution if it is

insolvent or in certain other circumstances. In addition, under

the Financial Reform Act, when a systemically important

financial institution (SIFI) such as the Corporation is in default or

danger of default, the FDIC may be appointed receiver in order

to conduct an orderly liquidation of such institution. In the event

of such appointment, the FDIC could, among other things,

invoke the orderly liquidation authority, instead of the U.S.

Bankruptcy Code, if the Secretary of the Treasury makes certain

financial distress and systemic risk determinations. The orderly

liquidation authority is modeled in part on the Federal Deposit

Insurance Act, but also adopts certain concepts from the U.S.

Bankruptcy Code.

The orderly liquidation authority contains certain differences

from the U.S. Bankruptcy Code. For example, in certain

circumstances, the FDIC could permit payment of obligations it

determines to be systemically significant (e.g., short-term

creditors or operating creditors) in lieu of paying other

obligations (e.g., long-term creditors) without the need to obtain

creditors’ consent or prior court review. The insolvency and

resolution process could also lead to a large reduction or total

elimination of the value of a BHC’s outstanding equity, as well

as impairment or elimination of certain debt.

Under the FDIC’s “single point of entry” strategy for resolving

SIFIs, the FDIC could replace a distressed BHC with a bridge

holding company, which could continue operations and result in

an orderly resolution of the underlying bank, but whose equity is

held solely for the benefit of creditors of the original BHC.

Furthermore, the Federal Reserve requires that BHCs

maintain minimum levels of long-term debt required to provide

adequate loss absorbing capacity in the event of a resolution.

For more information regarding our resolution, see Item 1A.

Risk Factors – Liquidity on page 9.

Limitations on Acquisitions

The Riegle-Neal Interstate Banking and Branching Efficiency Act

of 1994 permits a BHC to acquire banks located in states other

than its home state without regard to state law, subject to

certain conditions, including the condition that the BHC, after

and as a result of the acquisition, controls no more than 10

percent of the total amount of deposits of insured depository

institutions in the U.S. and no more than 30 percent or such

lesser or greater amount set by state law of such deposits in

that state. At June 30, 2023, we held greater than 10 percent

of the total amount of deposits of insured depository

institutions in the U.S.

In addition, the Financial Reform Act restricts acquisitions by

a financial institution if, as a result of the acquisition, the total

liabilities of the financial institution would exceed 10 percent of

the total liabilities of all financial institutions in the U.S. At June

30, 2023, our liabilities did not exceed 10 percent of the total

liabilities of all financial institutions in the U.S.

The Volcker Rule

The Volcker Rule prohibits insured depository institutions and

companies affiliated with insured depository institutions

(collectively, banking entities) from engaging in short-term

proprietary trading of certain securities, derivatives, commodity

futures and options for their own account. The Volcker Rule also

imposes limits on banking entities’ investments in, and other

relationships with, hedge funds and private equity funds. The

Volcker Rule provides exemptions for certain activities, including

market making, underwriting, hedging, trading in government

obligations, insurance company activities and organizing and

offering hedge funds and private equity funds. The Volcker Rule

also clarifies that certain activities are not prohibited, including

acting as agent, broker or custodian. A banking entity with

significant trading operations, such as the Corporation, is

required to maintain a detailed compliance program to comply

with the restrictions of the Volcker Rule.

Derivatives

Our derivatives businesses are subject to extensive regulation

globally, including under the Financial Reform Act, the European

Union (EU) Markets in Financial Instruments Directive and

Regulation, the European Market Infrastructure Regulation,

analogous U.K. regulatory regimes and similar regulatory

regimes in other jurisdictions. These regulations, among other

things, require clearing and exchange trading of certain

derivatives, establish capital, margin, reporting, registration and

business conduct requirements for certain market participants,

set position limits on certain derivatives and set out derivatives

trading transparency requirements.

In addition, many G-20 jurisdictions, including the U.S., EU,

U.K., and Japan, have adopted resolution stay regulations to

address concerns that the close-out of derivatives and other

Bank of America 6

financial contracts could impede orderly resolution of G-SIBs,

and additional jurisdictions are expected to follow suit.

Generally, these regulations require amendment of certain

financial contracts to provide for contractual recognition of stays

of termination rights under various statutory resolution regimes

and a stay on the exercise of cross-default rights based on an

affiliate’s entry into insolvency proceedings. Resolution

regulations may also require contractual recognition by the

counterparty that amounts owed to them may be written down or

converted into equity as part of a bail in. As resolution stay

regulations of a particular jurisdiction applicable to us go into

effect, we amend impacted financial contracts in compliance

with such regulations either as a regulated entity or as a

counterparty facing a regulated entity in such jurisdiction.

Consumer Regulations

Our consumer businesses are subject to extensive regulation

and oversight by federal and state regulators. Certain federal

consumer finance laws to which we are subject, including the

Equal Credit Opportunity Act, Home Mortgage Disclosure Act,

Fair Housing Act, Electronic Fund Transfer Act (EFTA), Fair Credit

Reporting Act, Real Estate Settlement Procedures Act,

prohibitions on unfair, deceptive, or abusive acts or practices,

Truth in Lending Act and Truth in Savings Act, are enforced by

the CFPB. Other federal consumer finance laws, such as the

Servicemembers Civil Relief Act, are enforced by the OCC.

Privacy and Information Security

We are subject to many U.S. federal, state and international

laws and regulations governing requirements for maintaining

policies and procedures regarding the collection, disclosure, use

and protection of the non-public confidential information of our

customers and employees. The Gramm-Leach-Bliley Act requires

us to periodically disclose Bank of America’s privacy policies

and practices relating to sharing such information and enables

retail customers to opt out of our ability to share information

with unaffiliated third parties, under certain circumstances. The

Gramm-Leach-Bliley Act and other laws also require us to

implement a comprehensive information security program that

includes administrative, technical and physical safeguards to

provide the security and confidentiality of customer records and

information. Security and privacy policies and procedures for the

protection of personal and confidential information are in effect

across all businesses and geographic locations.

Other laws and regulations, at the international, federal and

state level, impact our ability to share certain information with

affiliates and non-affiliates for marketing and/or non-marketing

purposes, or contact customers with marketing offers and

establish certain rights of consumers in connection with their

personal information. For example, California’s Consumer

Privacy Act (CCPA), as modified by the California Privacy Rights

Act (CPRA), provides consumers with the right to know what

personal data is being collected, know whether their personal

data is sold or disclosed and to whom and opt out of the sale of

their personal data, among other rights. In addition, in the EU

and other countries around the world, similar laws, like the

General Data Protection Regulation (GDPR), afford those

countries’ residents with certain rights related to their

information and may impose additional obligations on financial

institutions. These laws’ impact on the Corporation was

assessed and addressed through comprehensive compliance

implementation programs. These existing and evolving legal

requirements in the U.S. and abroad, as well as court

proceedings and changing guidance from regulatory bodies,

including the validity of cross-border data transfer mechanisms

from the EU and other jurisdictions, continue to lend uncertainty

to privacy compliance globally.

Additionally, the Corporation is subject to evolving

information security (including cybersecurity) laws, rules and

regulations enacted by U.S. federal and state governments and

non-U.S. jurisdictions, including requirements to develop

cybersecurity programs, policies and frameworks, as well as

provide disclosure and/or notifications of certain cybersecurity

incidents and data breaches.

7 Bank of America

Item 1A. Risk Factors

The discussion below addresses our material risk factors of

which we are aware. Any risk factor, either by itself or together

with other risk factors, could materially and adversely affect our

businesses, results of operations, cash flows and/or financial

condition. References to third parties may include suppliers,

service providers, counterparties, financial market utilities,

exchanges and clearing houses, data aggregators and other

partners and their upstream and downstream service providers

(e.g., fourth parties, fifth parties) who may also contribute to our

risks. Other factors not currently known to us or that we

currently deem immaterial could also adversely affect our

businesses, results of operations, cash flows and/or financial

condition. Therefore, the risk factors below should not be

considered all of the potential risks that we may face. For more

information on how we manage risks, see Managing Risk in the

MD&A beginning on page 44. For more information about the

risks contained in this section, see Item 1. Business beginning

on page 2, MD&A beginning on page 25 and Notes to

Consolidated Financial Statements beginning on page 94.

Market

We may be adversely affected by the financial markets, fiscal,

monetary, and regulatory policies, and economic conditions.

General economic, political, social and health conditions in

the U.S. and abroad affect financial markets and our business.

In particular, global markets may be affected by the level and

volatility of interest rates, availability and market conditions of

financing, changes in gross domestic product (GDP), economic

growth or its sustainability, inflation, supply chain disruptions,

consumer spending, employment levels, labor shortages,

challenging labor market conditions, wage stagnation, federal

government shutdowns, energy prices, home prices, commercial

property values, bankruptcies and a default by a significant

market participant or class of counterparties, including

companies in emerging markets. Global markets also may be

affected by adverse developments impacting the U.S. or global

banking industry, including bank failures and liquidity concerns,

fluctuations or other significant changes in both debt and equity

capital markets and currencies, the transition of benchmark

rates, including the Bloomberg Short-Term Bank Yield Index

(BSBY), to alternative reference rates (ARRs), the impact of the

volatility of digital assets on the broader market, the rate of

growth of global trade and commerce, trade policies, the

availability and cost of capital and credit, disruption of

communication, transportation or energy infrastructure,

recessionary fears, investor sentiment and the U.S. and global

election cycles, including resulting changes to policy and the

geopolitical environment. Global markets, including energy and

commodity markets, may also be adversely affected by the

current or anticipated impact of climate change, acute and/or

chronic extreme weather events or natural disasters, the

emergence or continuation of widespread health emergencies or

pandemics, cyberattacks, military conflict, terrorism, or other

geopolitical events. Market fluctuations may impact our margin

requirements and affect our liquidity. Any sudden or prolonged

market downturn, as a result of the above factors or otherwise,

could result in a decline in net interest income and noninterest

income and adversely affect our results of operations and

financial condition, including capital and liquidity levels.

Elevated inflation and interest rate levels, monetary tightening

by central banks, and geopolitical developments, including the

Russia/Ukraine conflict and the conflict in the Middle East, have

adversely impacted and may continue to adversely impact

financial markets and macroeconomic conditions and could

result in additional market volatility and disruptions.

Global uncertainties regarding fiscal and monetary policies

present economic challenges. Actions taken by the Federal

Reserve or central banks in other jurisdictions, including

changes in target rates, balance sheet management and lending

facilities, are beyond our control and difficult to predict,

particularly in an elevated inflation environment. This can affect

interest rates and the value of financial instruments and other

assets, such as debt securities, and impact our borrowers and

potentially increase delinquency rates and may also raise

government debt levels, adversely affect businesses and

household incomes, adversely impact the banking sector

generally, and increase uncertainty surrounding monetary policy.

Monetary policy in response to high inflation has led to a

significant increase in market interest rates and a flattening

and/or inversion of the yield curve. This has resulted in and may

continue to result in volatility of equity and other markets,

further volatility of the U.S. dollar, a widening in credit spreads

and higher interest rates and recessionary concerns, and could

result in elevated unemployment, which could impact investor

risk appetite and our borrowers, potentially increasing

delinquency rates. Financial market volatility could also result

from uncertainty about the timing and extent of rate cuts by the

Federal Reserve in response to moderating inflation and/or

weakening economic conditions. Elevated inflation may limit the

scope of monetary support, including cuts to the federal funds

rate, in the event of an economic downturn, resulting in a more

protracted period of a flat and/or inverted yield curve.

Any future change in monetary policy by the Federal Reserve,

in an effort to stimulate the economy or otherwise, resulting in

lower interest rates would likely result in lower revenue through

lower net interest income, which could adversely affect our

results of operations. Additionally, changes to existing U.S. laws

and regulatory policies and evolving priorities, including those

related to financial regulation, taxation, international trade,

fiscal policy, climate change (including efforts to transition to a

low-carbon economy) and healthcare, may adversely impact U.S.

or global economic activity and our customers', our

counterparties' and our earnings and operations. Globally, many

central banks have simultaneously reduced monetary

accommodation through interest rate or balance sheet policy,

which has contributed and may continue to contribute to

elevated financial and capital market volatility and significant

changes to asset values. While higher interest rates have

positively impacted our net interest income, higher interest

rates have negatively impacted and could continue to negatively

impact investment securities, deposits, loan demand and

funding costs. In addition to higher interest rates, wider credit

spreads can negatively impact capital by reducing the value of

debt securities. High and rising federal debt levels and

uncertainty about the U.S. budget process could lead to higher

interest rates and financial market volatility, potentially

impacting broader economic activity. Further, if the U.S.

government’s debt ceiling limit is not raised in January 2025,

the ramifications could result in market volatility, ratings

downgrades and limit fiscal policy responses to recessionary

conditions. This could have a negative and potentially severe

impact on the U.S. and world economy and financial and capital

markets, including higher interest rates, higher volatility, lower

asset values, lower liquidity, downgrades to U.S. debt, and a

weakened U.S. dollar.

Changes to international trade and investment policies by

the U.S. could negatively impact financial markets. Escalation of

tensions between the U.S. and the People’s Republic of China

Bank of America 8

(China) could lead to further U.S. measures that adversely affect

financial markets, disrupt world trade and commerce and lead

to trade retaliation, including through the use of tariffs, foreign

exchange measures or the large-scale sale of U.S. Treasury

bonds. Any restrictions on the activities of businesses, could

also negatively affect financial markets.

These developments could adversely affect our businesses,

customers, securities and derivatives portfolios, including the

risk of lower re-investment rates within those portfolios, our

level of charge-offs and provision for credit losses, the carrying

value of our deferred tax assets, our capital levels, our liquidity

and our results of operations.

Increased market volatility and adverse changes in financial or

capital market conditions may increase our market risk.

Our liquidity, competitive position, business, results of

operations and financial condition are affected by market risks

such as changes in interest and currency exchange rates,

fluctuations in equity, commodity and futures prices, trading

volumes and prices of securitized products, the implied volatility

of interest rates and credit spreads and other economic and

business factors. These market risks may adversely affect,

among other things, the value of our securities, including our on-

and off-balance sheet securities, trading assets and other

financial instruments, the cost of debt capital and our access to

credit markets, the value of assets under management (AUM),

fee income relating to AUM, customer allocation of capital

among investment alternatives, the volume of client activity in

our trading operations, investment banking, underwriting and

other capital market fees, which have already been negatively

impacted, the general profitability and risk level of the

transactions in which we engage and our competitiveness with

respect to deposit pricing. The value of certain of our assets is

sensitive to changes in market interest rates. If the Federal

Reserve or a non-U.S. central bank changes or signals a change

in monetary policy, market interest rates or credit spreads could

be affected, which could adversely impact the value of such

assets. Changes to fiscal policy, including expansion of U.S.

federal deficit spending and resultant debt issuance, could also

affect market interest rates. If interest rates decrease, our

results of operations could be negatively impacted, including

future revenue and earnings growth.

Our models and strategies to assess and control our market

risk exposures are subject to inherent limitations. In times of

market stress or other unforeseen circumstances, previously

uncorrelated indicators may become correlated. Such changes

to the relationship between market parameters may limit the

effectiveness of our hedging strategies and cause us to incur

significant losses. Changes in correlation can be exacerbated

where market participants use risk or trading models with

assumptions or algorithms similar to ours. In these and other

cases, it may be difficult to reduce our risk positions due to

activity of other market participants or widespread market

dislocations, including circumstances where asset values are

declining significantly or no market exists. Where we own

securities that do not have an established liquid trading market

or are otherwise subject to restrictions on sale or hedging, or

where the degree of accessible liquidity declines significantly,

we may not be able to reduce our positions and risks

associated with such holdings, so we may suffer larger than

expected losses when adverse price movements take place.

This risk can be exacerbated where we hold a position that is

large relative to the available liquidity.

If asset values decline, we may incur losses and negative

impacts to capital and liquidity requirements.

We have a large portfolio of financial instruments, including

loans and loan commitments, securities financing agreements,

asset-backed secured financings, derivative assets and

liabilities, debt securities, marketable equity securities and

certain other assets and liabilities that we measure at fair value

and are subject to valuation and impairment assessments. We

determine these values based on applicable accounting

guidance, which, for financial instruments measured at fair

value, requires an entity to base fair value on exit price and to

maximize the use of observable inputs and minimize the use of

unobservable inputs in fair value measurements. The fair values

of these financial instruments include adjustments for market

liquidity, credit quality, funding impact on certain derivatives and

other transaction-specific factors, where appropriate.

Gains or losses on these instruments can have a direct

impact on our results of operations, unless we have effectively

mitigated the risk of our exposures. Increases in interest rates

may cause decreases in residential mortgage loan originations

and could impact the origination of corporate debt. In addition,

increases in interest rates or changes in spreads may continue

to adversely impact the fair value of our debt securities and,

accordingly, for debt securities classified as available-for-sale

(AFS), adversely affect accumulated other comprehensive

income and, thus, our capital levels. Increases in interest rates

could also adversely impact our regulatory liquidity position and

requirements, which include certain AFS debt securities and the

use of repurchase agreements against a portion of the held-to-

maturity (HTM) debt securities. As our liquidity is dependent on

the fair value of these assets, increases in market interest

rates, which have adversely impacted and may continue to

adversely impact the fair value of debt securities, could

adversely affect liquidity levels.

Fair values may be impacted by declining values of the

underlying assets or the prices at which observable market

transactions occur and the continued availability of these

transactions or indices. The financial strength of counterparties,

with whom we have economically hedged some of our exposure

to these assets, also will affect the fair value of these assets.

Sudden declines and volatility in the prices of assets may curtail

or eliminate trading activities in these assets, which may make

it difficult to sell, hedge or value these assets. The inability to

sell or effectively hedge assets reduces our ability to limit

losses in such positions, and the difficulty in valuing assets may

increase our risk-weighted assets (RWA), which requires us to

maintain additional capital and increases our funding costs.

Values of AUM also impact revenues in our wealth management

and related advisory businesses for asset-based management

and performance fees. Declines in values of AUM can result in

lower fees earned for managing such assets.

Liquidity

If we are unable to access the capital markets, have prolonged

net deposits outflows, or our borrowing costs increase, our

liquidity and competitive position will be negatively affected.

Liquidity is essential to our businesses. We fund our assets

primarily with globally sourced deposits in our bank entities, as

well as secured and unsecured liabilities transacted in the

capital markets. We rely on certain secured funding sources,

such as repo markets, which are typically short-term and credit-

sensitive. We also engage in asset securitization transactions,

including with the government-sponsored enterprises (GSEs), to

fund consumer lending activities. Our liquidity could be

adversely affected by any inability to access the capital markets,

illiquidity or volatility in the capital markets, the decrease in

value of eligible collateral or increased collateral requirements

(including as a result of credit concerns for short-term

9 Bank of America

borrowing), changes to our relationships with our funding

providers based on real or perceived changes in our risk profile,

prolonged federal government shutdowns, or changes in

regulations, guidance or GSE status that impact our funding.

Additionally, our liquidity or cost of funds may be negatively

impacted by the unwillingness or inability of the Federal Reserve

to act as lender of last resort, unexpected simultaneous draws

on lines of credit or deposits, slower customer payment rates,

restricted access to the assets of prime brokerage clients, the

withdrawal of or failure to attract customer deposits or invested

funds (which could result from attrition driven by customers

seeking higher yielding deposits or securities products,

customer desire to utilize an alternative financial institution

perceived to be safer, changes in customer spending behavior

due to inflation, decline in the economy or other drivers resulting

in an increased need for cash), increased regulatory liquidity,

capital and margin requirements for our U.S. or international

banks and their nonbank subsidiaries, which could result in the

inability to transfer liquidity internally and inefficient funding,

changes in patterns of intraday liquidity usage resulting from a

counterparty or technology failure or other idiosyncratic event or

failure or default by a significant market participant or third party

(including clearing agents, custodians, central banks or central

counterparty clearinghouses (CCPs)). These factors may

increase our borrowing costs and negatively impact our liquidity.

Several of these factors may arise due to circumstances

beyond our control, such as general market volatility, disruption,

shock or stress, the emergence or continuation of widespread

health emergencies or pandemics, and military conflicts

(including the Russia/Ukraine conflict and the conflict in the

Middle East). Federal Reserve policy decisions (including

fluctuations in interest rates or Federal Reserve balance sheet

composition), negative views or loss of confidence about us or

the financial services industry generally or due to a specific

news event, changes in the regulatory environment or

governmental fiscal or monetary policies, actions by credit rating

agencies or an operational problem that affects third parties or

us. The impact of these potentially sudden events, whether

within our control or not, could include an inability to sell assets

or redeem investments, unforeseen outflows of cash, the need

to draw on liquidity facilities, the reduction of financing balances

and the loss of equity secured funding, debt repurchases to

support the secondary market or meet client requests, the need

for additional funding for commitments and contingencies and

unexpected collateral calls, among other things, the result of

which could be increased costs, a liquidity shortfall and/or

impact on our liquidity coverage ratio.

Our liquidity and cost of obtaining funding may be directly

related to investor behavior and confidence, debt market

disruption, firm specific concerns or prevailing market

conditions, including changes in interest and currency exchange

rates, significant fluctuations in equity and futures prices, lower

trading volumes and prices of securitized products and our

credit spreads. Increases in interest rates and our credit

spreads can increase the cost of our funding and result in mark-

to-market or credit valuation adjustment exposures. Changes in

our credit spreads are market driven and may be influenced by

market perceptions of our creditworthiness, including changes

in our credit ratings or changes in broader financial market and

macroeconomic conditions. Changes to interest rates and our

credit spreads occur continuously and may be unpredictable and

highly volatile. We may also experience net interest margin

compression as a result of offering higher than expected

deposit rates in order to attract and maintain deposits.

Concentrations within our funding profile, such as maturities,

currencies or counterparties, can also reduce our funding

efficiency.

Reduction in our credit ratings could limit our access to funding

or the capital markets, increase borrowing costs or trigger

additional collateral or funding requirements.

Our borrowing costs and ability to raise funds are directly

impacted by our credit ratings. Credit ratings are also important

to investors, customers or counterparties when we compete in

certain markets and seek to engage in certain transactions,

including over-the-counter (OTC) derivatives. Our credit ratings

are subject to ongoing review by rating agencies, which consider

a number of financial and nonfinancial factors, including our

franchise, financial strength, performance and prospects,

management, governance, risk management practices, capital

adequacy, asset quality and operations, among other criteria, as

well as factors not under our control, such as regulatory

developments, the macroeconomic and geopolitical environment

and changes to the methodologies used to determine our

ratings.

Rating agencies could adjust our credit ratings at any time

and there can be no assurance as to whether or when a

downgrade could occur. Any reduction could result in a wider

credit spread and negatively affect our access to credit markets,

the related cost of funds, our businesses and certain trading

revenues, particularly in those businesses where counterparty

creditworthiness is critical. If the short-term credit ratings of our

parent company, bank or broker-dealer subsidiaries were

downgraded, we may experience loss of access to short-term

funding sources such as repo financing, and/or incur increased

cost of funds and increased collateral requirements. Under the

terms of certain OTC derivative contracts and other trading

agreements, if our or our subsidiaries’ credit ratings are

downgraded, the counterparties may require additional collateral

or terminate these contracts or agreements.

While certain potential impacts are contractual and

quantifiable, the full consequences of a credit rating downgrade

are inherently uncertain and depend upon numerous dynamic,

complex and inter-related factors and assumptions, including

the relationship between long-term and short-term credit ratings

and the behaviors of customers, investors and counterparties.

Bank of America Corporation is a holding company, is dependent

on its subsidiaries for liquidity and may be restricted from

transferring funds from subsidiaries.

Bank of America Corporation, as the parent company, is a

separate and distinct legal entity from our bank and nonbank

subsidiaries. We evaluate and manage liquidity on a legal entity

basis. Legal entity liquidity is an important consideration as

there are legal, regulatory, contractual and other limitations on

our ability to utilize liquidity from one legal entity to satisfy the

liquidity requirements of another, including the parent company,

which could result in adverse liquidity events. The parent

company depends on dividends, distributions, loans and other

payments from our bank and nonbank subsidiaries to fund

dividend payments on our preferred stock and common stock

and to fund all payments on our other obligations, including debt

obligations. Any inability of our subsidiaries to transfer funds,

pay dividends or make payments to us may adversely affect our

cash flow, liquidity and financial condition.

Many of our subsidiaries, including our bank and broker-

dealer subsidiaries, are subject to laws that restrict dividend

payments, or authorize regulatory bodies to block or reduce the

flow of funds from those subsidiaries to the parent company or

other subsidiaries. Our bank and broker-dealer subsidiaries are

subject to restrictions on their ability to lend or transact with

affiliates, minimum regulatory capital and liquidity requirements

Bank of America 10

and restrictions on their ability to use funds deposited with

them in bank or brokerage accounts to fund their businesses.

Intercompany arrangements we entered into in connection with

our resolution planning submissions could restrict the amount

of funding available to the parent company from our subsidiaries

under certain adverse conditions.

Additional restrictions on related party transactions,

increased capital and liquidity requirements and additional

limitations on the use of funds on deposit in bank or brokerage

accounts, as well as lower earnings, can reduce the amount of

funds available to meet the obligations of the parent company

and even require the parent company to provide additional

funding to such subsidiaries. Also, regulatory action that

requires additional liquidity at each of our subsidiaries could

impede access to funds we need to pay our obligations or pay

dividends. In addition, our right to participate in a distribution of

assets upon a subsidiary’s liquidation or reorganization is

subject to prior claims of the subsidiary’s creditors.

Bank of America Corporation’s liquidity and financial condition,

and the ability to pay dividends and obligations, could be

adversely affected in the event of a resolution.

Bank of America Corporation, our parent holding company, is

required to periodically submit a plan to the FDIC and Federal

Reserve describing its resolution strategy under the U.S.

Bankruptcy Code in the event of material financial distress or

failure. Bank of America Corporation’s preferred resolution

strategy is a “single point of entry” strategy, whereby only the

parent holding company would file for bankruptcy under the U.S.

Bankruptcy Code. Certain key operating subsidiaries would be

provided with sufficient capital and liquidity to operate through

severe stress and to enable such subsidiaries to continue

operating or be wound down in a solvent manner following a

bankruptcy of the parent holding company. Bank of America

Corporation has entered into intercompany arrangements

resulting in the contribution of most of its capital and liquidity to

key subsidiaries. Pursuant to these arrangements, if Bank of

America Corporation’s liquidity resources deteriorate so severely

that resolution becomes imminent, it will no longer be able to

draw liquidity from its key subsidiaries and will be required to

contribute its remaining financial assets to a wholly-owned

holding company subsidiary. This could adversely affect our

liquidity and financial condition, including the ability to meet our

payment obligations and the ability to return capital to

shareholders, including through the payment of dividends and

repurchase of the Corporation’s common stock.

If the FDIC and Federal Reserve jointly determine that Bank

of America Corporation’s resolution plan is not credible, they

could impose more stringent capital, leverage or liquidity

requirements or restrictions on our growth, activities or

operations. We could also be required to take certain actions

that could impose operating costs and result in the divestiture

of assets or restructuring of businesses and subsidiaries.

When a G-SIB such as Bank of America Corporation is in

default or danger of default, the FDIC may be appointed receiver

to conduct an orderly liquidation, and could, among other things,

invoke the orderly liquidation authority, instead of the U.S.

Bankruptcy Code, if the Secretary of the Treasury makes certain

financial distress and systemic risk determinations. Additionally,

the FDIC could replace Bank of America Corporation with a

bridge holding company, which could continue operations and

result in an orderly resolution of the underlying bank, but whose

equity would be held solely for the benefit of our creditors. The

FDIC’s “single point of entry” strategy may result in our security

holders suffering greater losses than would have been the case

under a bankruptcy proceeding or a different resolution strategy.

If the Corporation is resolved under the U.S. Bankruptcy

Code or the FDIC’s orderly liquidation authority, third-party

creditors of our subsidiaries may receive significant or full

recoveries on their claims, while security holders of Bank of

America Corporation could face significant or complete losses.

Credit

Economic or market disruptions and insufficient credit loss

reserves may result in a higher provision for credit losses.

A number of our products expose us to credit risk, including

loans, letters of credit, derivatives, debt securities, trading

account assets and assets held-for-sale. Deterioration in the

financial condition of our consumer and commercial borrowers,

counterparties or underlying collateral could adversely affect our

results of operations and financial condition.

Our credit portfolios may be impacted by U.S. and global

macroeconomic and market conditions, events and disruptions,

including declines in GDP, consumer spending or property

values, asset price corrections, increasing consumer and

corporate leverage, increases in corporate bond spreads,

government shutdowns or policies such as student loan debt

payment resumptions, tax changes, rising or elevated

unemployment levels, elevated inflation, fluctuations in foreign

exchange or interest rates, as well as the emergence or

continuation of widespread health emergencies or pandemics,

extreme weather events and the impacts of climate change,

including acute and/or chronic extreme weather events and

efforts to transition to a low-carbon economy. Significant

economic or market stresses and disruptions typically have a

negative impact on the business environment and financial

markets, which could impact the underlying credit quality of our

borrowers, counterparties and assets. Property value declines or

asset price corrections could increase the risk of borrowers or

counterparties defaulting or becoming delinquent in their

obligations to us, and could decrease the value of the collateral

we hold, which could increase credit losses. Credit risk could

also be magnified by lending to leveraged borrowers or declining

asset prices, including property or collateral values, unrelated to

macroeconomic stress. Simultaneous drawdowns on lines of

credit and/or an increase in a borrower’s leverage in a

weakening economic environment, or otherwise, could result in

deterioration in our credit portfolio, should borrowers be unable

to fulfill competing financial obligations. Increased delinquency

and default rates could adversely affect our credit portfolios,

including consumer credit card, home equity and residential

mortgage portfolios through increased charge-offs and

provisions for credit losses.

A recessionary environment and/or a rise in unemployment

could adversely impact the ability of our consumer and/or

commercial borrowers or counterparties to meet their financial

obligations and negatively impact our credit portfolio.

Consumers have been and may continue to be negatively

impacted by inflation, resulting in drawdowns of savings or

increases in household debt. Higher interest rates, which have

increased debt servicing costs for some businesses and

households, may adversely impact credit quality, particularly in a

recessionary environment. Certain sectors also remain at risk

(e.g., commercial real estate, particularly office) as a result of

shifts in demand and tighter financial and credit conditions.

Globally, conditions of slow growth or recession could further

contribute to weaker credit conditions. If the macroeconomic

environment or certain sectors worsen, our credit portfolio, net

charge-offs, provision and allowance for credit losses could be

adversely impacted.

11 Bank of America

We establish an allowance for credit losses, which includes

the allowance for loan and lease losses and the reserve for

unfunded lending commitments, based on management's best

estimate of lifetime expected credit losses (ECL) inherent in our

relevant financial assets. The process to determine the

allowance for credit losses uses models and assumptions that

require us to make difficult and complex judgments that are

often interrelated, including forecasting how borrowers or

counterparties may perform in changing economic conditions.

The ability of our borrowers or counterparties to repay their

obligations may be impacted by changes in future economic

conditions, which in turn could impact the accuracy of our loss

forecasts and allowance estimates. There is also the possibility

that we have failed or will fail to accurately identify the

appropriate economic indicators or accurately estimate their

impacts to our borrowers or counterparties, which could impact

the accuracy of our loss forecasts and allowance estimates.

If the models, estimates and assumptions we use to

establish reserves or the judgments we make in extending credit

to our borrowers or counterparties, which are more sensitive

due to the current uncertain macroeconomic and geopolitical

environment, prove inaccurate in predicting future events, we

may suffer losses in excess of our ECL. In addition, changes to

external factors can negatively impact our recognition of credit

losses in our portfolios and allowance for credit losses.

The allowance for credit losses is our best estimate of ECL;

however, there is no guarantee that it will be sufficient to

address credit losses, particularly if the economic outlook

deteriorates significantly, quickly, or unexpectedly. As

circumstances change, we may increase our allowance, which

would reduce our earnings. If economic conditions worsen,

impacting our consumer and commercial borrowers,

counterparties or underlying collateral, and credit losses are

worse than expected, we may increase our provision for credit

losses, which could adversely affect our results of operations

and financial condition.

Our concentrations of credit risk could adversely affect our credit

losses, results of operations and financial condition.

We may be subject to concentrations of credit risk because

of a common characteristic or common sensitivity to economic,

financial, public health or business developments.

Concentrations of credit risk may reside in a particular industry,

geography, product, asset class, counterparty or within any pool

of exposures with a common risk characteristic. A deterioration

in the financial condition or prospects of a particular industry,

geographic location, product or asset class, or a failure or

downgrade of, or default by, any particular entity or group of

entities could negatively affect our businesses, and it is

possible our limits and credit monitoring exposure controls will

not function as anticipated.

We execute a high volume of transactions and have

significant credit concentrations with respect to the financial

services industry, predominantly comprised of broker-dealers,

commercial banks, investment banks, insurance companies,

mutual funds, hedge funds, CCPs and other institutional clients.

Financial services institutions and other counterparties are inter-

related because of trading, funding, clearing or other

relationships. Defaults by one or more counterparties, or market

uncertainty about the financial stability of one or more financial

services institutions, or the financial services industry generally,

could lead to market-wide liquidity disruptions, losses, defaults

and related disputes and litigation.

Our credit risk may also be heightened by market risk when

the collateral held by us cannot be liquidated or is liquidated at

prices not sufficient to recover the full amount of the loan or

derivatives exposure due to us, which may occur as a result of

events that impact the value of the collateral, such as a sudden

change in asset price or fraud. Disputes with obligors as to the

valuation of collateral could increase in times of significant

market stress, volatility or illiquidity, and we could suffer losses

during such periods if we are unable to realize the fair value of

the collateral or manage declines in the value of collateral.

We have concentrations of credit risk, including with respect

to our consumer real estate and consumer credit card exposure,

as well as our commercial real estate and asset managers and

funds portfolios, which represent a significant percentage of our

overall credit portfolio. Declining home price valuations and

demand where we have large concentrations could result in

increased servicing advances and expenses, defaults,

delinquencies or credit losses. The impacts of earthquakes, as

well as climate change, such as rising average global

temperatures and sea levels, and the increasing frequency and

severity of extreme weather events and natural disasters,

including droughts, floods, wildfires and hurricanes, could

negatively impact collateral, the valuations of home or

commercial real estate or our customers’ ability and/or

willingness to pay fees, outstanding loans or afford new

products. This could also cause insurability risk and/or

increased insurance costs to customers.

Economic weaknesses, sustained elevated inflation, adverse

business conditions, market disruptions, adverse economic or

market events, rising interest or capitalization rates, declining

asset prices, greater volatility in areas where we have

concentrated credit risk or deterioration in real estate values or

household incomes may cause us to experience higher credit

losses in our portfolios or write down the value of certain

assets. We could also experience continued and long-term

negative impacts to our commercial credit exposure and an

increase in credit losses within those industries that may be

permanently impacted by a change in consumer preferences or

other industry disruptions.

We also enter into transactions with sovereign nations, U.S.

states and municipalities. Unfavorable economic or political

conditions, disruptions to capital markets, currency fluctuations,

changes in oil prices, social instability and changes in

government or monetary policies could adversely impact the

operating budgets or credit ratings of these government entities

and expose us to credit and liquidity risk.

Liquidity disruptions in the financial markets may result in

our inability to sell, syndicate or realize the value of our

positions, increasing concentrations, which could increase RWA

and the credit and market risk associated with our positions.

We may be adversely affected by weaknesses in the U.S. housing

market.

During 2023, the U.S. housing market continued to be

impacted by higher mortgage rates, including 30-year fixed-rate

mortgages that more than doubled from 2021. This has

negatively impacted the demand in some cases and underlying

collateral for many of our products. Additionally, our mortgage

loan production volume is generally influenced by the rate of

growth in residential mortgage debt outstanding and the size of

the residential mortgage market, both of which have slowed due

to higher interest rates and reduced affordability. A deeper

downturn in the condition of the U.S. housing market could

result in significant write-downs of asset values in several asset

classes, notably mortgage-backed securities (MBS). If the U.S.

housing market were to further weaken, the value of real estate

could decline, which could result in increased credit losses and

delinquent servicing expenses, negatively affect our

Bank of America 12

representations and warranties exposures, and adversely affect

our results of operations and financial condition.

Our derivatives businesses may expose us to unexpected risks,

which may result in losses and adversely affect liquidity.

We are party to a large number of derivatives transactions

that may expose us to unexpected market, credit and

operational risks that could cause us to suffer unexpected

losses. Fluctuations in asset values or rates or an unanticipated

credit event, including unforeseen circumstances that may

cause previously uncorrelated factors to become correlated,

may lead to losses resulting from risks not taken into account

or anticipated in the development, structuring or pricing of a

derivative instrument. Certain derivative contracts and other

trading agreements provide that upon the occurrence of certain

specified events, such as a change to our or our affiliates’

credit ratings, we may be required to provide additional

collateral or take other remedial actions, and we could

experience increased difficulty obtaining funding or hedging

risks. In some cases our counterparties may have the right to

terminate or otherwise diminish our rights under these contracts

or agreements upon the occurrence of such events.

We are also a member of various CCPs, which results in

credit risk exposure to those CCPs. In the event that one or

more members of a CCP default on their obligations, we may be

required to pay a portion of any losses incurred by the CCP as a

result of that default. A CCP may also, at its discretion, modify

the margin we are required to post, which could mean

unexpected and increased funding costs and exposure to that

CCP. As a clearing member, we are exposed to the risk of non-

performance by our clients for which we clear transactions,

which may not be covered by available collateral. Additionally,

default by a significant market participant may result in further

risk and potential losses.

Geopolitical

We are subject to numerous political, economic, market,

reputational, operational, compliance, legal, regulatory and other

risks in the jurisdictions in which we operate.

We do business throughout the world, including in emerging

markets. Economic or geopolitical stress in one or more

countries could have a negative impact regionally or globally,

resulting in, among other things, market volatility, reduced

market value and economic output. Our liquidity and credit risk

could be adversely impacted by, and our businesses and

revenues derived from non-U.S. jurisdictions are subject to, risk

of loss from financial, social or judicial instability, economic

sanctions, changes in government leadership, including as a

result of electoral outcomes or otherwise, changes in

governmental policies or policies of central banks, expropriation,

nationalization and/or confiscation of assets, price controls,

high inflation, natural disasters, the emergence or continuation

of widespread health emergencies or pandemics, capital

controls, currency re-denomination risk from a country exiting

the EU or otherwise, currency fluctuations, foreign exchange

controls or movements (caused by devaluation or de-pegging),

unfavorable political and diplomatic developments, oil price

fluctuations and changes in legislation. These risks are

especially elevated in emerging markets.

Continued tensions between the U.S. and important trading

partners, particularly China, may result in sanctions, further

tariff increases or other restrictive actions on cross-border trade,

investment and transfer of information technology, which could

reduce trade volumes, result in further supply chain disruptions,

increase costs for producers, and adversely affect our

businesses and revenues, as well as our customers and

counterparties, including their credit quality.

Slowing growth, recessionary conditions, adverse geopolitical

conditions and/or political or civil unrest, labor shortages, wage

pressures and elevated inflation in certain countries pose

challenges, including in the form of volatility in financial

markets. Foreign exchange rates against the U.S. dollar remain

an area of uncertainty and potential volatility, and depreciation

could increase our financial risks with clients that deal in non-

U.S. currencies but have U.S. dollar-denominated debt.

We invest or trade in the securities of corporations and

governments located in non-U.S. jurisdictions, including

emerging markets. Revenues from the trading of non-U.S.

securities may be subject to negative fluctuations as a result of

the above factors. Furthermore, the impact of these fluctuations

could be magnified because non-U.S. trading markets,

particularly in emerging markets, are generally smaller, less

liquid and more volatile than U.S. trading markets. Risks in one

nation can limit our opportunities for portfolio growth and

negatively affect our operations in other nations, including our

U.S. operations. Market and economic disruptions may affect

consumer confidence levels and spending, corporate investment

and job creation, bankruptcy rates, levels of incurrence and

default on consumer and corporate debt, economic growth rates

and asset values, among other factors.

Elevated government debt levels raise the risk of volatility,

significant valuation changes, political tensions among EU

members regarding fiscal policy or defaults on or devaluation of

sovereign debt, which could expose us to substantial losses.

Financial markets have been and may continue to be sensitive

to government plans to lower taxes or increase spending.

Our non-U.S. businesses are also subject to extensive

regulation by governments, securities exchanges and regulators,

central banks and other regulatory bodies. In many countries,

the laws and regulations applicable to the financial services and

securities industries are less predictable, prone to change and

uncertainty, and regularly evolving. Significant resources are

spent on determining, understanding and monitoring foreign

laws, rules and regulations, as well as managing our

relationships with multiple regulators in various jurisdictions.

Our inability to remain in compliance with local laws and

manage our relationships with regulators could result in

increased expenses, changes to our organizational structure

and adversely affect our businesses, reputation and results of

operations in that market.

We are also subject to complex and extensive U.S. and non-

U.S. laws, rules and regulations, which subject us to costs and

risks relating to bribery and corruption, know-your-customer

requirements, anti-money laundering, embargo programs and

economic sanctions, which can vary by jurisdiction and require

implementation of complex operational capabilities and

compliance programs. Non-compliance, including improper

implementation, and/or violations could result in an increase in

operational and compliance costs, and enforcement actions and

civil and criminal penalties against us and individual employees.

The increasing speed and novel ways in which funds circulate

could make it more challenging to track the movement of funds

and heighten financial crimes risk. Compliance with these

evolving regulatory regimes and legal requirements depends on

our ability to improve our processes, controls, surveillance,

detection and reporting and analytic capabilities.

In the U.S., the government’s debt ceiling and budget deficit

concerns have increased the possibility of U.S. government

defaults on its debt and/or further downgrades to its credit

ratings, and prolonged government shutdowns, which could

13 Bank of America

weaken the U.S. dollar, cause market volatility, negatively

impact the global economy and banking system and adversely

affect our financial condition, including our liquidity. Additionally,

changes in fiscal, monetary, regulatory and/or foreign policy,

including as a result of the election cycle, labor shortages, wage

pressures, supply chain disruptions and higher inflation, could

increase our compliance costs and adversely affect our

business operations, organizational structure and results of

operations. Emerging market currency values and monetary

policy settings are particularly sensitive to such changes in U.S.

monetary policy. Additionally, further restrictive U.S. monetary

policy, potentially including further rate increases, could result in

additional currency volatility and recessionary conditions in a

number of non-U.S. markets.

We are also subject to geopolitical risks, including economic

sanctions, acts or threats of international or domestic terrorism,

including responses by the U.S. or other governments thereto,

increased state-sponsored cyberattacks or campaigns, civil

unrest and/or military conflicts, including the escalation of

tensions between China and Taiwan, which could adversely

affect business, market trade and general economic conditions

abroad and in the U.S. The Russia/Ukraine conflict and the

conflict in the Middle East have magnified such risks and

resulted in regional instability and adversely impacted

commodity and other financial markets, as well as economic

conditions, especially in Europe. Widening regional conflicts

resulting in the involvement of neighboring countries and/or

North Atlantic Treaty Organization member countries could result

in additional economic disruptions, financial market volatility,

higher inflation and changes to asset valuations, which could

disrupt our operations and adversely affect our results of

operations.

Business Operations

A failure in or breach of our operations or information systems,

or those of third parties or the financial services industry, could

cause disruptions, adversely impact our businesses, results of

operations and financial condition, and cause legal or

reputational harm.

Operational risk exposure exists throughout our organization

and as a result of our extensive interactions with, and reliance

on, third parties and the financial services industry, including

the processing and reporting of a large number of transactions

in many currencies and jurisdictions. Our operations and

information systems, which comprise the hardware, software,

infrastructure, backup systems and other technology which we

own or use to collect, process, maintain, use, share,

disseminate or dispose of information, are integral to the

performance of our businesses.

Our operations and information systems and components

thereof, and those of our third parties, have been, and in the

future could be, ineffective or fail to operate properly or become

disabled or damaged as a result of a number of factors,

including events that are wholly or partially beyond our or such

third party’s control. Such events have adversely affected, and

in the future could adversely affect, physical site access of our

operations, our ability to process transactions, provide services

and perform other operations. Short-term or prolonged

disruptions to our critical business operations and customer

services are possible due to computer, telecommunications,

network, utility, electronic or physical infrastructure outages,

including from abuse or failure of our electronic trading and

algorithmic platforms, significant unplanned increases in

customer transactions, fraudulent transactions, newly identified

vulnerabilities in key hardware and software, failure of

infrastructure or manual processes, technology project

implementation challenges and supply chain disruptions.

Operational disruptions and prolonged operational outages

could also result from events arising from natural disasters,

including acute and chronic weather events, such as wildfires,

tornadoes, hurricanes and floods, some of which are happening

with more frequency and severity, and earthquakes, as well as

local or larger scale political or social matters, including civil

unrest, terrorist acts and military conflict.

We continue to have greater reliance on our and our third

parties’ remote access tools and technology, and employees’

personal systems and increased data utilization and

dependence upon our information systems to operate our

businesses remotely, including as a result of evolving customer

preferences, which has led to increased reliance on digital

banking and other digital services provided by our businesses.

Effective management of our business continuity increasingly

depends on the security, reliability and adequacy of such

systems.

We also rely on our employees, representatives and third

parties in our day-to-day operations, who may, due to illness,

unavailability, the emergence or continuation of health

emergencies or pandemics, human error, misconduct (including

errors in judgment, malice, fraud or illegal activity), malfeasance

or a failure or breach of information systems, cause disruptions

to our organization and expose us to operational losses,

regulatory risk and reputational harm. Our and our third parties’

inability to properly introduce, deploy and manage operational

changes, including with regard to internal financial and

governance processes, existing products, services and

technology, and new product innovations and technology, could

also result in additional operational and regulatory risk.

Regardless of the measures we have taken to implement

training, procedures, backup systems and other safeguards to

support our operations and bolster our operational resilience,

our ability to conduct business may be adversely affected by

significant disruptions to us or to third parties with whom we

interact or upon whom we rely, including localized or systemic

cyber events that result in information systems outages and

unavailability of part or all of the internet, cloud services and/or

the financial services industry infrastructure (including electronic

trading and algorithmic platforms and critical banking activities).

Our ability to implement backup systems and other safeguards

with respect to third-party systems and the financial services

industry infrastructure is more limited than with respect to our

systems. Weakness in our third parties’ processes or controls

could impact our ability to deliver products or services to our

clients and expose us to compliance and operational risks.

There can be no assurance that our business continuity and

information security response plans will effectively mitigate our

operational risks. Any backup systems or manual processes

may not process data accurately and/or as quickly or effectively

as our primary systems, and some data might not have been

backed up. Additionally, the speed in which we are able to

remediate any failure or disruption of our operations and/or

information systems may vary across jurisdictions. We regularly

update the information systems we rely on to support our

operations and growth as part of our efforts to comply with all

applicable laws, rules and regulations globally. This updating

entails significant costs and creates risks associated with

implementing new or modified information systems and

integrating them with existing information systems, including

business interruptions.

A failure or breach of our or our third parties’ operations or

information systems resulting in disruption to our critical

Bank of America 14

business operations and customer services, a failure to identify

or effectively respond to operational risks in a timely manner

and/or a failure to continue to deliver our services through an

operational disruption could impact the confidentiality, integrity

or availability of data and expose us to a number of risks,

including market abuse, customer attrition, regulatory, market,

privacy and liquidity risk, adversely impact our results of

operations and financial condition and cause legal, regulatory or

reputational harm.

The Corporation and third parties with whom we interact and/or

on whom we rely, are subject to cybersecurity incidents,

information and security breaches, and technology failures that

have and in the future could adversely affect our ability to

conduct our businesses, result in the misuse, destruction or

disclosure of information, damage our reputation, increase our

regulatory and legal risks, result in additional costs or financial

losses and/or otherwise adversely impact our businesses and

results of operations.

Our business is highly dependent on the security, controls

and efficacy of our information systems, and the information

systems of our customers, third parties, the financial services

industry and financial data aggregators with whom we interact,

on whom we rely or who have access to our customers'

personal or account information. We rely on effective access

management and the secure collection, processing,

maintenance, use, sharing, dissemination and disposition of

information in our and our third parties’ information systems.

Our cybersecurity risk and exposure remains heightened

because of, among other things, our prominent size and scale,

high-profile brand, geographic footprint and international

presence and role in the financial services industry and the

broader economy. The proliferation of third-party financial data

aggregators and emerging technologies, including our and our

third parties’ use of automation, artificial intelligence (AI) and

robotics, increases our cybersecurity risks and exposure.

We, our employees, customers, regulators and third parties

are ongoing targets of an increasing number of cybersecurity

threats and cyberattacks. The tactics, techniques and

procedures used in cyberattacks are pervasive, sophisticated

and designed to evade security measures, including computer

viruses, malicious or destructive code (such as ransomware),

social engineering (including phishing, vishing and smishing),

denial of service or information or other security breach tactics

that have and in the future could result in disruptions to our

businesses and operations and the loss of funds, including from

attempts to defraud us and/or our customers, and impact the

confidentiality, integrity or availability of our information,

including intellectual property, or that of our employees,

customers and third parties. Cyberattacks are carried out on a

worldwide scale and by a growing number of actors, including

organized crime groups, hackers, terrorist organizations,

extremist parties, hostile foreign governments, state-sponsored

actors, activists, disgruntled employees and other persons or

entities, including those involved in corporate espionage.

Cybersecurity threats and the tactics, techniques and

procedures used in cyberattacks change, develop and evolve

rapidly, including from emerging technologies, such as AI,

machine learning and quantum computing. Despite substantial

efforts to protect the integrity and resilience of our information

systems and implement controls, processes, policies, employee

training and other protective measures, we are not able to

anticipate and/or detect all cybersecurity threats and incidents

and/or develop or implement effective preventive or defensive

measures designed to prevent, respond to or mitigate all

cybersecurity threats and incidents. Internal access

management failures could impact the confidentiality, integrity

or availability of data. Additionally, the failure of our employees

to exercise sound judgment and vigilance when targeted with

social engineering or other cyberattacks increases our

vulnerability.

Our risk from and exposure to cybersecurity threats and

incidents, information and security breaches and technology

failures continues to increase due to the acceptance and use of

digital banking and other digital products and services, including

mobile banking products, and reliance on remote access tools

and technology, which have increased our reliance on virtual or

digital interactions and a larger number of access points to our

information systems that must be secured, and results in

greater amounts of information being available for access.

Greater demand on our information systems and security tools

and processes will likely continue.

We also face significant third-party technology, cybersecurity

and operational risks relating to the large number of customers

and third parties with whom we do business, the financial

services industry, upon whom we rely to facilitate or enable our

business activities or upon whom our customers rely, including

the secure collection, processing, maintenance, use, sharing,

dissemination and disposition of customer and other sensitive

information, providers of products and/or services, financial

counterparties, financial data aggregators, financial

intermediaries, such as clearing agents, exchanges and clearing

houses, regulators, providers of outsourced infrastructure, such

as internet access, cloud service providers and electrical power,

and retailers for whom we process transactions. Such third-party

information systems extend beyond our security and control

systems, and such third parties have varying levels of security

and cybersecurity resources, expertise, safeguards, controls

and capabilities. Threat actors may actively seek to exploit

security and cybersecurity weaknesses at our third parties and

the relationships of our third parties with us may increase the

risk that they are targeted by the same threats we face, and

such third parties may be less prepared for such threats. We

are also at additional risk resulting from critical third-party

information security and open-source software vulnerabilities.

We must rely on our third parties to adequately detect and

promptly report cybersecurity incidents, and their failure to do so

could adversely affect our ability to report or respond to

cybersecurity incidents effectively or timely.

Due to increasing consolidation, interdependence and

complexity of financial entities and technology and information

systems, a cybersecurity threat or incident, information or

security breach or technology failure that significantly exposes,

degrades, destroys or compromises the information systems or

information of one or more financial entities or third parties

could adversely impact us and increase the risk of operational

failure and loss, as disparate systems need to be integrated,

often on an accelerated basis. Similarly, any cybersecurity threat

or incident, information or security breach or technology failure

that significantly exposes, degrades, destroys or compromises

our information systems or information could adversely impact

third parties and the critical infrastructure of the financial

services industry, thereby creating additional risk for us.

Cybersecurity incidents or information or security breaches

could persist for an extended period of time before being

detected, and it often takes additional time to determine the

scope, extent, amount and type of impact, including information

altered, destroyed or otherwise compromised, following which

the measures to recover and restore to a business-as-usual

state may be difficult to assess. We have spent and expect to

continue to spend significant resources to modify and enhance

15 Bank of America

our protective measures, investigate and remediate software

and network vulnerabilities, and defend against, detect and

respond to cybersecurity threats and incidents whether specific

to us, a third party, the industry or businesses in general, and

enhance our capabilities to respond and recover.

While we and our third parties have experienced

cybersecurity incidents, information and security breaches and

technology failures, as well as adverse impacts from such

events, including as described in this risk factor, we have not

experienced material losses or other material consequences

relating to cybersecurity incidents, information or security

breaches or technology failures, whether directed at us or our

third parties. However, we expect to continue to experience

such events and impacts with increased frequency and severity

due to the evolving threat environment, and there can be no

assurance that future cybersecurity incidents, information and

security breaches and technology failures, including as a result

of cybersecurity incidents, information and security breaches

and technology failures experienced by our third parties, will not

have a material adverse impact on us, including our businesses,

results of operations and financial condition.

Any future cybersecurity incident, information or security

breach or technology failure suffered by us or our third parties

could result in disruption to our day-to-day business activities,

an inability to effect transactions, execute trades, service our

customers, manage our exposure to risk, expand our

businesses, detect and prevent fraudulent or unauthorized

transactions, including transactions impacting our customers,

maintain information systems access and business operations

and customer services, in the U.S. and/or globally. Additionally,

we could experience the loss of customers and business

opportunities, the withdrawal of customer deposits, the

misappropriation, alteration or destruction of our or our third

parties’ intellectual property or confidential information, the

unauthorized access to or temporary or permanent loss or theft

of personally identifiable information, including of our employees

and customers, significant lost revenue, losses and claims

brought by third parties, violations of applicable privacy,

cybersecurity and other laws, rules and regulations, litigation

exposure, economic sanctions, enforcement actions,

government fines, penalties or intervention and other negative

consequences. Although we maintain cyber insurance, there can

be no assurance that liabilities or losses we may incur will be

covered under such policies or that the amount of insurance will

be adequate. In addition, in the case of any cybersecurity

incident, information or security breach or technology failure

arising from third-party systems impacting us, any third-party

indemnification may not be applicable or sufficient to address

the impact of such cybersecurity incidents, information or

security breaches or technology failures, including monetary

losses of the Corporation. The occurrence of any of the events

described above could adversely impact our businesses, results

of operations, liquidity and financial condition, as well as cause

reputational harm, whether such events are actual or perceived.

Failure to satisfy our obligations as servicer for residential

mortgage securitizations, loans owned by other entities and

other related losses could adversely impact our reputation,

servicing costs or results of operations.

We service mortgage loans on behalf of third-party

securitization vehicles and other investors. If we commit a

material breach of our obligations as servicer or master

servicer, we may be subject to termination if the breach is not

cured within a specified period of time following notice, which

could cause us to lose servicing income. We may also have

liability for any failure by us, as a servicer or master servicer, for

any act or omission on our part that involves willful

misfeasance, bad faith, gross negligence or reckless disregard

of our duties. If any such breach was found to have occurred, it

may harm our reputation, increase our servicing costs or losses

due to potential indemnification obligations, result in litigation or

regulatory action or adversely impact our results of operations.

Additionally, foreclosures may result in costs, litigation or losses

due to irregularities in the underlying documentation, or if the

validity of a foreclosure action is challenged by a borrower or

overturned by a court because of errors or deficiencies in the

foreclosure process. We may also incur costs or losses relating

to delays or alleged deficiencies in processing documents

necessary to comply with state law governing foreclosure.

Changes in the structure of and relationship among the GSEs

could adversely impact our business.

We rely on the GSEs to guarantee or purchase mortgage

loans that meet their conforming loan requirements. During

2023, we sold approximately $3.1 billion of loans to GSEs,

primarily Freddie Mac (FHLMC). FHLMC and Fannie Mae (FNMA)

are currently in conservatorship, with the Federal Housing

Finance Agency (FHFA) acting as conservator. In 2019, the

Treasury Department published a proposal to recapitalize

FHLMC and FNMA and remove them from conservatorship and

reduce their role in the marketplace. In January 2021, the

Treasury Department further amended the agreement that

governs the conservatorship of FHLMC and FNMA and

delineated the continued objective to remove the GSEs from

conservatorship. However, we cannot predict the future

prospects of the GSEs, timing of the recapitalization or release

from conservatorship, or content of legislative or rulemaking

proposals regarding the future status of the GSEs in the housing

market. If the GSEs take a reduced role in the marketplace,

including by limiting the mortgage products they offer, we could

be required to seek alternative funding sources, retain

additional loans on our balance sheet, secure funding through

the Federal Home Loan Bank system, or securitize the loans

through Private Label Securitization, which could increase our

cost of funds related to the origination of new mortgage loans,

increase credit risk and/or impact our capacity to originate new

mortgage loans. Uncertainty regarding their future and the MBS

they guarantee continues to exist for the foreseeable future.

These developments could adversely affect our securities

portfolios, capital levels, liquidity and results of operations.

Our risk management framework may not be effective in

mitigating risk and reducing the potential for losses.

Our risk management framework is designed to minimize risk

and loss to us. We seek to effectively and consistently identify,

measure, monitor, report and control the key types of risk to

which we are subject, including strategic, credit, market,

liquidity, compliance, operational and reputational risks. Risks

also may span across multiple key risk types, including

cybersecurity risk, climate risk and legal risk. While we employ a

broad and diversified set of controls and risk mitigation

techniques, including modeling and forecasting, hedging

strategies and techniques that seek to balance our ability to

profit from trading positions with our exposure to potential

losses, our ability to control and mitigate risks that result in

losses is inherently limited by our ability to identify and measure

all risks, including emerging and unknown risks, anticipate the

timing and impact of risks, apply effective hedging strategies,

make correct assumptions, manage and aggregate data

correctly and efficiently, identify changes in markets or client

behaviors not yet inherent in historical data and develop risk

management models and forecasts to assess and control risk.

Bank of America 16

Our ability to manage risk is dependent on our ability to

consistently execute all elements of our risk management

program, develop and maintain a culture of managing risk well

throughout the Corporation and manage risks associated with

third parties, including providers of products and/or services, to

allow for effective risk management and help confirm that risks

are appropriately considered, evaluated and responded to in a

timely manner. Uncertain economic and geopolitical conditions,

health emergencies and pandemics, heightened legislative and

regulatory scrutiny of and change within the financial services

industry, the pace of technological changes, accounting, tax and

market developments, the failure of employees, representatives

and third parties to comply with our policies and Risk Framework

and the overall complexity of our operations, among other

developments, have in the past and may in the future result in a

heightened level of risk, including operational, reputational and

compliance risk. Our failure to manage evolving risks or properly

anticipate, manage, control or mitigate risks could result in

additional losses and adversely affect our results of operations.

Regulatory, Compliance and Legal

We are highly regulated and subject to evolving government

legislation and regulations and certain settlements, orders and

agreements with government authorities from time to time.

Our businesses are highly regulated and we are subject to

evolving and comprehensive regulation under federal and state

laws in the U.S. and the laws of the various foreign jurisdictions

in which we operate, including increasing and complex economic

sanctions regimes. These laws and regulations significantly

affect and have the potential to restrict the scope of our existing

businesses, require changes to our business strategies, limit

our ability to pursue certain business opportunities, including

the products and services we offer, reduce certain fees and

rates and/or make our products and services more expensive

for our clients. We are also required to file various financial and

nonfinancial regulatory reports to comply with laws, rules and

regulations in the jurisdictions in which we operate, which

results in additional compliance risk.

We continue to adjust our business and operations, legal

entity structure, disclosure and policies, processes, procedures

and controls, including with regard to capital and liquidity

management, risk management and data management, in an

effort to comply with laws, rules and regulations, as well as

evolving expectations, guidance and interpretation by regulatory

authorities, including the Department of Treasury (including the

Internal Revenue Service (IRS) and OFAC), Federal Reserve,

OCC, CFPB, Financial Stability Oversight Council, FDIC,

Department of Labor, SEC and CFTC in the U.S., foreign

regulators, other government authorities and self-regulatory

organizations. Further, we expect to become subject to future

laws, rules and regulations beyond those currently proposed,

adopted or contemplated in the U.S. or abroad, as well as

evolving interpretations of existing and future laws, rules and

regulations, which may include policies and rulemaking related

to FDIC assessments, loss allocations between financial

institutions and customers with regard to the use of our

products and services, including electronic payments, emerging

technologies, such as the development and use of AI and

machine learning, cybersecurity and data, and further climate

risk management and ESG reporting, including emissions and

sustainability disclosure. The cumulative effect of all of the

current and possible future legislation and regulations, as well

as related interpretations, on our litigation and regulatory

exposure, businesses, operations and profitability remains

uncertain and necessitates that we make certain assumptions

with respect to the scope and requirements of existing,

prospective and proposed laws, rules and regulations in our

business planning and strategies. If these assumptions prove

incorrect, we could be subject to increased regulatory, legal and

compliance risks and costs, as well as potential reputational

harm. Also, U.S. and regulatory initiatives abroad may overlap,

and non-U.S. regulation and initiatives may be inconsistent or

may conflict with current or proposed U.S. regulations, which

could lead to compliance risks and increased costs.

Our regulators’ prudential and supervisory authority gives

them broad power and discretion to direct our actions, and they

have assumed an active oversight, inspection and investigatory

role across the financial services industry. Regulatory focus is

not limited to laws, rules and regulations applicable to the

financial services industry, but includes other significant laws,

rules and regulations that apply across industries and

jurisdictions, including those related to anti-money laundering,

anti-bribery, anti-corruption know-your-customer requirements,

embargo programs and economic sanctions.

We are also subject to laws, rules and regulations in the

U.S. and abroad, including the GDPR and CCPA as modified by

the CPRA, and a number of additional jurisdictions enacting or

considering similar laws or amendments to existing laws,

regarding privacy and the disclosure, collection, use, sharing

and safeguarding of personally identifiable information, including

our employees, customers, suppliers, counterparties and other

third parties, the violation of which could result in litigation,

regulatory fines, enforcement actions and operational loss.

Additionally, we are and will continue to be subject to new and

evolving data privacy laws in the U.S. and abroad, which could

result in additional costs of compliance, litigation, regulatory

fines and enforcement actions. There remains complexity and

uncertainty, including potential suspension or prohibition,

regarding data transfer because of concerns over compliance

with laws, rules and regulations for cross-border flows and

transfers of personal data from the European Economic Area

(EEA) to the U.S. and other jurisdictions outside of the EEA,

resulting from judicial and regulatory guidance. To the extent

that a new EU-U.S. Data Privacy Framework leads to a relaxation

of applicable legislation and regulations, regardless of transfer

mechanism, challenges are expected from consumer advocacy

groups. Other jurisdictions, including China and India, have

commenced consultation efforts or enacted new legislation or

regulations to establish standards for personal data transfers. If

cross-border personal data transfers are suspended or

restricted or we are required to implement distinct processes for

each jurisdiction’s standards, this could result in operational

disruptions to our businesses, additional costs, increased

enforcement activity, new contract negotiations with third

parties, and/or modification of such data management.

As part of their enforcement authority, our regulators and

other government authorities have the authority to, among other

things, conduct investigations and assess significant civil or

criminal monetary fines, penalties or restitution, issue cease

and desist orders, suspend or withdraw licenses and

authorizations, initiate injunctive action, apply regulatory

sanctions or cause us to enter into consent orders. The

amounts paid by us and other financial institutions to settle

proceedings or investigations have, in some instances, been

substantial and may increase. In some cases, governmental

authorities have required criminal pleas or other extraordinary

terms as part of such resolutions, which could have significant

consequences, including reputational harm, loss of customers,

restrictions on the ability to access capital markets, and the

inability to operate certain businesses or offer certain products.

17 Bank of America

Our response to regulators and other government authorities

may be time-consuming, expensive and divert management

attention from our business. The outcome of any matter, which

may last years, may be difficult to predict or estimate.

The terms of settlements, orders and agreements that we

have entered into with government entities and regulatory

authorities have also imposed, or could impose, significant

operational and compliance costs on us with respect to

enhancements to our procedures and controls, losses with

respect to fraudulent transactions perpetrated against our

customers, expansion of our risk and control functions within

our lines of business, investment in technology and the hiring of

significant numbers of additional risk, control and compliance

personnel. If we fail to meet the requirements of the regulatory

settlements, orders or agreements to which we are subject, or,

more generally, fail to maintain risk and control procedures and

processes that meet the heightened standards established by

our regulators and other government authorities, we could be

required to enter into further settlements, orders or agreements

and pay additional fines, penalties or judgments, or accept

material regulatory restrictions on our businesses.

Improper actions, behaviors or practices by us, our

employees or representatives that are illegal, unethical or

contrary to our core values could harm us, our shareholders or

customers or damage the integrity of the financial markets, and

are subject to regulatory scrutiny across jurisdictions. The

complexity of the regulatory and enforcement regimes in the

U.S., coupled with the global scope of our operations and the

regulatory environment worldwide, also means that a single

event or practice or a series of related events or practices may

give rise to a significant number of overlapping investigations

and regulatory proceedings, either by multiple federal and state

agencies in the U.S. or by multiple regulators and other

governmental entities in different jurisdictions. Actions by other

members of the financial services industry related to business

activities in which we participate may result in investigations by

regulators or other government authorities.

While we believe that we have adopted appropriate risk

management and compliance programs, compliance risks will

continue to exist, particularly as we anticipate and adapt to new

and evolving laws, rules and regulations and evolving

interpretations. We also rely upon third parties who may expose

us to compliance and legal risk. Future legislative or regulatory

actions, and any required changes to our business or operations

or strategy, or those of third parties upon whom we rely,

resulting from such developments and actions could result in a

significant loss of revenue, impose additional compliance and

other costs or otherwise reduce our profitability, limit the

products and services that we offer or our ability to pursue

certain business opportunities, require us to dispose of certain

businesses or assets, require us to curtail certain businesses,

affect the value of assets that we hold, necessitate changes in

our compensation practices, require us to increase our prices

and therefore reduce demand for our products, or otherwise

adversely affect our businesses.

We are subject to significant financial and reputational risks

from potential liability arising from lawsuits and regulatory and

government action.

We face significant legal risks in our business, with a high

volume of claims against us and other financial institutions. The

amount of damages, penalties and fines that litigants and

regulators seek from us and other financial institutions

continues to be significant. This includes disputes with

consumers, customers and other counterparties.

Financial institutions, including us, continue to be the

subject of claims alleging anti-competitive conduct with respect

to various products and markets, including U.S. antitrust class

actions claiming joint and several liability for treble damages. As

disclosed in Note 12 – Commitments and Contingencies to the

Consolidated Financial Statements, we also face contractual

indemnification and loan-repurchase claims arising from alleged

breaches of representations and warranties in the sale of

residential mortgages by legacy companies, which may result in

a requirement that we repurchase the mortgage loans, or make

whole or provide other remedies to counterparties.

U.S. regulators and government agencies regularly pursue

enforcement claims against financial institutions, including us,

for alleged violations of law and customer harm, including under

the Financial Institutions Reform, Recovery, and Enforcement

Act, the federal securities laws, the False Claims Act, fair

lending laws and regulations (including the Equal Credit

Opportunity Act and the Fair Housing Act), the FCPA, the BSA,

regulations issued by OFAC, Home Mortgage Disclosure Act,

antitrust laws, and consumer protection laws and regulations

related to products and services such as overdraft and sales

practices, including prohibitions on unfair, deceptive, and/or

abusive acts and practices (UDAAP) under the Consumer

Financial Protection Act and the Federal Trade Commission Act,

and EFTA, as well as other enforcement action taken by

prudential regulators with respect to safety, soundness and

appropriateness of our business practices. Such claims may

carry significant penalties, restitution and, in certain cases,

treble damages, and the ultimate resolution of regulatory

inquiries, investigations and other proceedings which we are

subject to from time-to-time is difficult to predict.

There is also an increased focus on information security.

This includes cybersecurity incidents perpetrated against us, our

customers, providers of products and services, counterparties

and other third parties, the collection, use and sharing of data,

and safeguarding of personally identifiable information and

corporate data, as well as the development, implementation,

use and management of emerging technologies, including AI

and machine learning. Related litigation or government

enforcement, including with regard to compliance with U.S. and

global laws, rules and regulations, could subject us to fines,

judgments and/or settlements and involve reputational losses.

Additionally, misconduct by our employees and representatives,

including unethical, fraudulent, improper or illegal conduct, the

failure to fulfill fiduciary obligations, unfair, deceptive, abusive or

discriminatory business practices, or violations of policies,

procedures, laws, rules or regulations, including conduct that

affects compliance with books and records requirements, have

resulted and could result in further litigation and/or government

investigations and enforcement actions, and cause significant

reputational harm. In particular, we are the subject of litigation

and regulatory and government inquiries regarding our

processing of electronic payments, our efforts to detect, prevent

and address fraud perpetrated against our customers and/or

the handling of fraud-related disputes, which could result in

fines, judgments, and/or settlements, as well as adversely

affect our businesses and strategies due to the treatment of

loss allocations between customers and us, all of which could

also have an adverse impact on other similar products and

services. We are also subject to increasing scrutiny of

sustainability-related policies, goals, targets and disclosure,

which could result in litigation, regulatory investigations and

actions and reputational harm.

The global environment of extensive investigations,

regulation, regulatory compliance burdens, litigation and

Bank of America 18

regulatory enforcement, combined with uncertainty related to the

continually evolving regulatory environment, have affected and

will likely continue to affect operational and compliance costs

and risks, including the adaptation of business strategies and/

or limitation or cessation of our ability or feasibility to continue

providing certain products and services. Lawsuits and regulatory

actions have resulted in and will likely continue to result in

judgments, orders, settlements, penalties and fines adverse to

us. Further, we entered into orders with certain government

agencies regarding credit card sales and marketing practices

and the representment of non-sufficient fund fees, as well as

our participation in implementing government relief measures

related to the COVID-19 pandemic and other federal and state

government assistance programs, including the processing of

unemployment benefits for California and certain other states,

and continue to be involved in related litigation that may result

in judgments and/or settlements. Litigation and investigation

costs, substantial legal liability or significant regulatory or

government action against us could adversely affect our

businesses, financial condition, including liquidity, and results

of operations, and/or cause significant reputational harm.

U.S. federal banking agencies may require us to increase our

regulatory capital, total loss-absorbing capacity (TLAC), long-term

debt or liquidity requirements.

We are subject to U.S. regulatory capital and liquidity rules.

These rules, among other things, establish minimum

requirements to qualify as a well-capitalized institution. If any of

our subsidiary insured depository institutions fail to maintain

their status as well capitalized under the applicable regulatory

capital rules, the Federal Reserve will require us to agree to

bring the insured depository institution back to well-capitalized

status. For the duration of such an agreement, the Federal

Reserve may impose restrictions on our activities. If we were to

fail to enter into or comply with such an agreement, the Federal

Reserve may impose more severe restrictions on our activities,

including requiring us to cease and desist activities permitted

under the Bank Holding Company Act of 1956.

Capital and liquidity requirements are frequently introduced

and amended. Regulators may increase regulatory capital

requirements, including TLAC and long-term debt requirements,

change how regulatory capital or RWA is calculated or increase

liquidity requirements. In 2023, U.S. banking regulators issued

proposals to revise the calculation of the G-SIB surcharge and

TLAC and long-term debt requirements. Our ability to return

capital to our shareholders depends in part on our ability to

maintain regulatory capital levels above minimum requirements

plus buffers. To the extent that increases occur in our SCB, G-

SIB surcharge or countercyclical capital buffer, our returns of

capital to shareholders, including common stock dividends and

common stock repurchases, could decrease. For example, our

G-SIB surcharge increased by 50 bps to 3.0 percent on January

1, 2024. The Federal Reserve could also limit or prohibit capital

actions, such as paying or increasing dividends or repurchasing

common stock, as a result of economic disruptions or events.

As part of its annual CCAR, we are subject to extensive

regulatory evaluation of capital planning practices by the Federal

Reserve, including stress testing on parts of our business using

hypothetical economic scenarios prepared by the Federal

Reserve. Those scenarios may affect our CCAR stress test

results, which may impact our SCB level, requiring us to hold

additional capital or causing changes in required capital buffers.

A significant component of regulatory capital ratios is

calculating our RWA and our leverage exposure. In July 2023,

U.S. banking regulators issued a notice of proposed rulemaking

to revise several key methodologies for measuring RWA,

including a standardized approach for operational risk, revised

market risk and credit risk requirements and removal of the use

of certain internal models, which would increase our regulatory

capital requirements, if adopted as proposed. Economic

disruptions or events may also cause an increase in our balance

sheet, RWA or leverage exposures, increasing required

regulatory capital and liquidity amounts.

Changes to and compliance with the regulatory capital and

liquidity requirements may impact our operations by requiring us

to liquidate assets, increase borrowings, issue additional equity

or other securities, reduce the amount of common stock

repurchases or dividends, cease or alter certain operations,

pricing strategies and business activities or hold highly liquid

assets, which may adversely affect our results of operations.

Changes in accounting standards or assumptions in applying

accounting policies could adversely affect us.

Accounting policies and methods are fundamental to how we

record and report our financial condition and results of

operations. Some of these policies require the use of estimates

and assumptions that may affect the reported value of our

assets or liabilities and results of operations and are critical

because they require management to make difficult, subjective

and complex judgments about matters that are inherently

uncertain. If assumptions, estimates or judgments are

erroneously applied, we could be required to correct and restate

prior-period financial statements. Accounting standard-setters

and those who interpret the accounting standards, including the

SEC, banking regulators and our independent registered public

accounting firm may also amend or even reverse their previous

interpretations or positions on how various standards should be

applied. These changes may be difficult to predict and could

impact the preparation and reporting of our financial

statements, including the application of new or revised

standards retrospectively, resulting in revisions to prior-period

financial statements.

We may be adversely affected by changes in U.S. and non-U.S.

tax laws and regulations.

Governmental authorities in the U.S. and/or other countries

could further change tax laws in a way that would materially

adversely affect us, including changes to the Tax Cuts and Jobs

Act of 2017 and Inflation Reduction Act of 2022. Also, new

guidelines issued by the Organization for Economic Cooperation

and Development (OECD), which are currently being enacted into

law in some OECD countries in which we operate, are expected

to impose a 15 percent global minimum tax on a country-by-

country basis. Any implementation of and/or change in tax laws

and regulations or interpretations of current or future tax laws

and regulations could materially adversely affect our effective

tax rate, tax liabilities and results of operations. U.S. and

foreign tax laws are complex and our judgments, interpretations

or applications of such tax laws could differ from that of the

relevant governmental authority. This could result in additional

tax liabilities and interest, penalties, the reduction of certain tax

benefits and/or the requirement to make adjustments to

amounts recorded, which could be material.

Additionally, we have U.K. net deferred tax assets (DTA)

which consist primarily of net operating losses that are expected

to be realized by certain subsidiaries over an extended number

of years. Adverse developments with respect to tax laws or to

other material factors, such as prolonged worsening of Europe’s

capital markets or changes in the ability of our U.K. subsidiaries

to conduct business in the EU, could lead our management to

reassess and/or change its current conclusion that no valuation

allowance is necessary with respect to our U.K. net DTA.

19 Bank of America

Reputation

Damage to our reputation could harm our businesses, including

our competitive position and business prospects.

Our ability to attract and retain customers, clients, investors

and employees is impacted by our reputation. Harm to our

reputation can arise from various sources, including actual or

perceived activities of our officers, directors, employees, other

representatives, customers and third parties, including

counterparties, such as fraud, misconduct and unethical

behavior (such as employees’ sales practices), adequacy of our

ability to detect, prevent and/or respond to fraud perpetrated

against our customers, and the handling of related disputes

with regard to the use of our products and services, including

electronic payments, effectiveness of our internal controls, the

fees charged to our customers, including overdraft and non-

sufficient fund fees, compensation practices, lending practices,

suitability or reasonableness of particular trading or investment

strategies, the reliability of our research and models and

prohibiting clients from engaging in certain transactions.

Our reputation may also be harmed by actual or perceived

failure to deliver the products and standards of service and

quality expected by our customers, clients and the community,

including the overstatement or mislabeling of the environmental

benefits of our products, services or transactions, the failure to

protect our customers and/or recognize and address customer

complaints, compliance failures, technology changes, the

implementation, management and/or use of emerging

technologies, including quantum computing, AI and machine

learning, the failure to maintain effective data management,

cybersecurity incidents and information and security breaches

affecting us and our third parties, which have occurred and we

expect to continue to experience with increased frequency and

severity due to the evolving threat environment, prolonged or

repeated system outages, the Corporation’s privacy policies, the

unintended disclosure of or failure to safeguard personal,

proprietary or confidential information, the breach of the

Corporation’s fiduciary obligations and handling of the

emergence or continuation of health emergencies and

pandemics. Our reputation may be also be harmed by litigation

and/or regulatory matters and their outcomes, relating to the

topics discussed above or otherwise. For example, we entered

into orders with certain government agencies regarding credit

card sales and marketing practices and the representment of

non-sufficient fund fees, as well as our processing of

unemployment benefits for California and certain other states,

and continue to be involved in related litigation, which may

result in judgments and/or settlements. Challenges to our ESG

practices and disclosures, and those of our customers and third

parties, including from diverging views regarding ESG-related

practices and disclosures may also harm our reputation.

Increases in market interest rates have resulted in increased

focus on asset and liability management, including HTM and

AFS securities and related unrealized losses. Perceptions of our

liquidity and financial condition, actions by the financial services

industry generally, or by certain members or individuals in the

industry may harm our reputation. Adverse publicity or negative

information posted on social media by employees, the media or

otherwise, whether or not factually correct, may adversely

impact our business prospects and results of operations.

We are subject to complex and evolving laws, regulations

and interpretations regarding fair lending activity, UDAAP,

electronic funds transfers, know-your-customer requirements,

data protection and privacy, including the GDPR and the CCPA

as modified by the CPRA, cross-border data movement,

cybersecurity and other matters, as well as evolving and

expansive interpretations of these laws and regulations.

Principles concerning the appropriate scope of consumer and

commercial privacy vary considerably in different jurisdictions,

and regulatory and public expectations regarding the definition

and scope of consumer and commercial privacy may remain

fluid. These laws may be interpreted and applied by various

jurisdictions in a manner inconsistent with our current or future

practices, or with one another. If personal, confidential or

proprietary information of customers in our possession, or in the

possession of third parties or financial data aggregators, is

mishandled, misused or mismanaged, or if we do not timely or

adequately address such information, we may face regulatory,

legal and operational risks, which could adversely affect our

reputation, financial condition and results of operations.

We could suffer reputational harm if we fail to properly

identify and manage potential conflicts of interest. Management

of potential conflicts of interest has become increasingly

complex as we expand our business activities through more

numerous transactions, obligations and interests with and

among our clients. The actual or perceived failure to adequately

address conflicts of interest could affect the willingness of

clients to use our products and services, or result in litigation or

enforcement actions, which could adversely affect our business.

Our actual or perceived failure to address these and other

issues, such as operational risks, could give rise to reputational

risk that could harm us and our business prospects, including

the attraction and retention of customers and employees.

Failure to appropriately address any of these issues could also

give rise to additional regulatory restrictions, legal risks and

reputational harm, which could, among other consequences,

increase the size and number of litigation claims and damages

asserted or subject us to enforcement actions, fines and

penalties, and cause us to incur related costs and expenses.

Other

Reforms to benchmarks may adversely affect our reputation,

business, financial condition and results of operations.

Risks and challenges associated with reference rate reform,

including the potential replacement of benchmark rates with

ARRs (e.g., the expected cessation of BSBY), could expose us

to various financial, operational, supervisory, conduct and legal

risk.

Usage of ARRs for impacted benchmarks may vary across or

within categories of contracts, products and services, potentially

resulting in market fragmentation, decreased trading volumes

and liquidity, increased complexity and modeling and

operational risks. ARRs may have compositions and

characteristics that differ from replaced benchmarks, including

limited liquidity and less predictable performance over time. Any

mismatch between the adoption of ARRs in loans, securities

and derivatives markets may impact hedging or other financial

arrangements we have implemented, resulting in unanticipated

market exposures. Transition to ARRs may adversely affect the

yield on loans or securities held by us, amounts paid on our

securities and received and paid on derivatives we have entered

into, the value of such loans, securities or derivative

instruments, the trading market for such products and

contracts, and our effective use of hedging instruments to

manage risk. There is no assurance that impacted benchmarks

will transition to ARRs without delay or potential disputes.

The transition of any products using impacted benchmarks

(Impacted Products) that do not include fallback provisions or

adequate fallback mechanisms may require additional efforts to

modify their terms, and may be more challenging to modify if all

Bank of America 20

impacted parties are required to consent to such modification.

Litigation or other disputes may occur as a result of the

interpretation or application of any transition-related legislation

or regulations adopted in the U.S. and/or foreign jurisdictions,

including if the laws or regulations in jurisdictions overlap.

Impacted Products may contain language giving the

Corporation discretion to determine the successor rate

(including the applicable spread adjustment) to the existing

benchmark. We may face a risk of litigation, disputes or other

actions from customers, counterparties, investors or others

based on various claims, for example, that we incorrectly

interpreted or enforced contract provisions, failed to

appropriately communicate the transition effects of ARRs to

existing and future products, treated affected parties unfairly or

made inappropriate product recommendations to or investments

on behalf of our clients, engaged in anti-competitive behavior or

unlawfully manipulated markets or benchmarks.

ARR-based products that we develop, launch and/or support

may perform differently from Impacted Products during times of

economic stress, adverse or volatile market conditions and

across the credit and economic cycle, which may impact the

value, return on and profitability of our ARR-based assets. New

financial products linked to ARRs may have additional legal,

financial, accounting, tax, operational, market, compliance,

reputational, competitive or other risks to us, our customers

and other market participants. Scrutiny by banking regulators in

the U.S. and globally on transition plans, preparations and

readiness could result in regulatory action, litigation and/or the

need to change the products offered by our businesses.

We face significant and increasing competition in the financial

services industry.

We operate in a highly competitive environment and

experience intense competition from local and global bank and

nonbank financial institutions and new entrants in domestic and

foreign markets. There is increasing pressure to provide

products and services on more attractive terms, including lower

fees and higher interest rates on deposits, and lower cost

investment strategies, which may impact our ability to effectively

compete. The current and changing regulatory environment may

also create competitive disadvantages, including from more

stringent regulatory requirements applicable to the Corporation.

Emerging technologies and the growth of e-commerce have

lowered geographic and monetary barriers of other financial

institutions, made it easier for non-depository institutions to

offer traditional banking products and services and allowed non-

traditional financial service providers and technology companies

to compete with traditional financial service companies in

providing electronic and internet-based financial solutions and

services, including electronic securities trading with low or no

fees and commissions, marketplace lending, financial data

aggregation and payment processing services, including real-

time payment platforms. Further, clients may choose to conduct

business with other market participants who engage in business

or offer products in areas we deem speculative or risky as an

alternative to traditional banking products. Increased

competition may reduce our market share, net interest margin

and revenues from our fee-based products and services and

negatively affect our earnings, including by pressuring us to

lower pricing or credit standards, requiring additional investment

to improve the quality and delivery of our technology and/or

affecting the willingness of our clients to do business with us.

Our inability to adapt our business strategies, products and

services could harm our business.

We rely on a diversified mix of businesses that deliver a

broad range of financial products and services through multiple

distribution channels. Our success depends on our and our

third-party providers’ ability to timely adapt our business

strategies, products and services and their respective features,

including available payment processing services and technology

to rapidly evolving industry standards and consumer

preferences. Our strategies could be further impacted by

macroeconomic stress, widespread health emergencies or

pandemics, cyberattacks, and military conflicts or other

significant geopolitical events.

The widespread adoption and rapid evolution of emerging

technologies, including analytic capabilities, self-service digital

trading platforms and automated trading markets, internet

services, and digital assets, such as central bank digital

currencies, cryptocurrencies (including stablecoins), tokens and

other cryptoassets that utilize distributed ledger technology

(DLT), as well as payment, clearing and settlement processes

that use DLT, create additional strategic risks, could negatively

impact our ability to compete and require substantial

expenditures to the extent we were to modify or adapt our

existing products and services. As such new technologies evolve

and mature, our businesses and results of operations could be

adversely impacted, including as a result of the introduction of

new competitors to the payment ecosystem and increased

volatility in deposits and/or significant long-term reduction in

deposits (i.e., financial disintermediation). Also, we may not be

as timely or successful in accurately assessing the competitive

landscape and developing or introducing new products and

services, integrating new products or services into our existing

offerings, responding, managing or adapting to changes in

consumer behavior, preferences, spending, investing and/or

saving habits, achieving market acceptance of our products and

services, reducing costs in response to pressures to deliver

products and services at lower prices or sufficiently developing

and maintaining customers. Our or our third-party providers’

inability or resistance to timely innovate or adapt its operations,

products and services to evolving regulatory and market

environments, industry standards and consumer preferences

could result in service disruptions and harm our business and

adversely affect our results of operations and reputation.

We could suffer operational, reputational and financial harm if

our models fail to properly anticipate and manage risk.

We use models extensively to forecast losses, project

revenue and expenses, assess and control our operations and

financial condition, assist in capital planning, manage liquidity

and measure, forecast and assess capital and liquidity

requirements for credit, market, operational and strategic risks.

Under our Enterprise Model Risk Policy, Model Risk

Management is required to perform model oversight, including

independent validation before initial use, ongoing monitoring

reviews through outcomes analysis and benchmarking, and

periodic revalidation. However, models are subject to inherent

limitations from simplifying assumptions, uncertainty regarding

economic and financial outcomes, and emerging risks from

applications that rely on AI or machine learning.

Our models may not be sufficiently predictive of future

results due to limited historical patterns, extreme or

unanticipated market movements or customer behavior and

liquidity, especially during severe market downturns or stress

events (e.g., geopolitical or pandemic events), which could limit

their effectiveness and require timely recalibration. The models

that we use to assess and control our market risk exposures

also reflect assumptions about the degree of correlation among

prices of various asset classes or other market indicators,

which may not be representative of the next downturn and would

magnify the limitations inherent in using historical data to

21 Bank of America

manage risk. Market conditions in recent years have involved

unprecedented dislocations and highlight the limitations

inherent in using historical data to manage risk. Our models

may also be adversely impacted by human error and may not be

effective if we fail to properly oversee and review them at regular

intervals and detect their flaws during our review and monitoring

processes, they contain erroneous data, assumptions,

valuations, formulas or algorithms or our applications running

the models do not perform as expected. Regardless of the

steps we take to help confirm effective controls, governance,

monitoring and testing, and implement new technology and

automated processes, we could suffer operational, reputational

and financial harm, including funding or liquidity shortfalls, if

models fail to properly anticipate and manage risks.

Failure to properly manage data may result in our inability to

manage risk and business needs, errors in our operations, critical

reporting and strategic decision-making, inaccurate reporting and

non-compliance with laws, rules and regulations.

We rely on our ability to manage and process data in an

accurate, timely and complete manner, including capturing,

transporting, aggregating, using, transmitting data externally,

and retaining and protecting data appropriately. While we

continually update our policies, programs, processes and

practices and implement emerging technologies, such as

automation, AI, machine learning and robotics, our data

management processes may not be effective and are subject to

weaknesses and failures, including human error, data

limitations, process delays, system failure or failed controls.

Failure to properly manage data effectively in an accurate, timely

and complete manner may adversely impact its quality and

reliability and our ability to manage current and emerging risk,

produce accurate financial and/or nonfinancial, regulatory,

operational and ESG reporting, detect or surveil potential

misconduct or non-compliance with laws, rules and regulations,

and to manage changing business needs, strategic decision-

making, resolution strategy and operations. The failure to

establish and maintain effective, efficient and controlled data

management could adversely impact our ability to develop our

products and relationships with customers, increase regulatory

risk and operational losses, and damage our reputation.

Our operations, businesses and customers could be adversely

affected by the impacts related to climate change.

Climate change and related environmental sustainability

matters present short-term and long-term risks. The physical

risks include an increase in the frequency and severity of

extreme weather events and natural disasters, including floods,

wildfires, hurricanes and tornados, and chronic longer-term

shifts such as rising average global temperatures and sea

levels. Such disasters and effects could adversely impact our

facilities, employees and customers’ ability to repay outstanding

loans, disrupt the operations of us and our customers or third

parties, cause supply chain or distribution network disruptions,

damage collateral and/or result in market volatility, rapid

deposit outflows or drawdowns of credit facilities, the

deterioration of the value of collateral or insurance shortfalls.

There is also increasing risk related to the transition to a

low-carbon economy. Changes in consumer preferences or

financial condition of our customers and counterparties, market

pressures, advancements in technology and additional

legislation, regulatory, compliance and legal requirements could

alter our strategic planning and the scope of our existing

businesses, limit our ability to pursue certain business activities

and offer certain products and services, amplify credit and

market risks, negatively impact asset values, require capital

expenditures and changes in technology and markets, including

supply chain and insurance availability and cost, increase

expenses, impact capital requirements and adversely impact our

results of operations. In particular, there is an increasing global

regulatory focus, including state, federal and non-U.S.

jurisdictions, on climate change resulting in new or heightened

regulatory requirements, with potential jurisdictional divergence,

which is expected to increase our legal, compliance and public

disclosure risks and costs in the U.S. and globally.

Our climate change strategies, policies, and disclosures, our

ability to achieve our climate-related goals, targets and

commitments and/or the environmental or climate impacts

attributable to our products, services or transactions will likely

result in heightened legal and compliance risk and could result

in reputational harm as a result of negative public sentiment,

regulatory scrutiny, litigation and reduced investor and

stakeholder confidence. Due to divergent views of stakeholders,

we are at increased risk that any action, or lack thereof, by us

concerning our response to climate change will be perceived

negatively by some stakeholders, which could adversely impact

our reputation and businesses. Our ability to meet our climate-

related goals, targets and commitments, including our goal to

achieve certain greenhouse gas (GHG) emissions targets by

2030 and net zero GHG emissions in our financing activities,

operations and supply chain before 2050, is subject to risks

and uncertainties, many of which are outside of our control,

such as technological advances, clearly defined roadmaps for

industry sectors, public policies and better emissions data

reporting, and ongoing engagement with customers, suppliers,

investors, government officials and other stakeholders. Due to

the evolving nature of climate-related risks, which are expected

to increase over time, it is difficult to predict, identify, monitor

and effectively mitigate climate-related risks and uncertainties.

Furthermore, there are and will continue to be challenges

related to the availability and capturing, measuring, verifying,

analyzing and disclosing climate-related data, including data

obtained from third parties, which may result in legal,

compliance and/or reputational harm.

Our ability to attract, develop and retain qualified employees is

critical to our success, business prospects and competitive

position.

Our performance and competitive position is heavily

dependent on the talents, development and efforts of highly

skilled individuals. Competition for qualified personnel is

intense from within and outside the financial services industry.

Our competitors include global institutions and institutions

subject to different compensation and hiring regulations than

those imposed on U.S. institutions and financial institutions.

Also, our ability to attract, develop and retain employees could

be impacted by changing workforce concerns, expectations,

practices and preferences (including remote work), and

increasing labor shortages and competition for labor, which

could increase labor costs.

In order to attract and retain qualified personnel, we must

provide market-level compensation. As a large financial and

banking institution, we are and may become subject to

additional limitations on compensation practices by the Federal

Reserve, the OCC, the FDIC and other regulators globally, which

may or may not affect our competitors. Furthermore, because a

substantial portion of compensation paid to many of our

employees is long-term equity-based awards based on the value

of our common stock, declines in our profitability or outlook

could adversely affect the ability to attract and retain

employees. If we are unable to continue to attract, develop and

retain qualified individuals, our business prospects and

competitive position could be adversely affected.

Bank of America 22

Item 1B. Unresolved Staff Comments

None

Item 1C. Cybersecurity

See Compliance and Operational Risk Management in the MD&A beginning on page 79, which is incorporated herein by reference.

Item 2. Properties

As of December31, 2023, certain principal offices and other materially important properties consisted of the following:

Facility Name Location General Character of the Physical Property Primary Business Segment

Property

Status

Property

Square Feet

(1)

Bank of America Corporate

Center

Charlotte, NC 60 Story Building Principal Executive Offices Owned 1,212,177

Bank of America Tower at

One Bryant Park

New York, NY 55 Story Building

GWIM, Global Banking and

Global Markets

Leased

(2)

1,939,431

Bank of America Financial

Centre

London, UK 3 Building Campus Global Banking and Global Markets Leased 510,171

Cheung Kong Center

Hong Kong 62 Story Building Global Banking and Global Markets Leased 149,790

(1)

For leased properties, property square feet represents the square footage occupied by the Corporation.

(2)

The Corporation has a 49.9 percent joint venture interest in this property.

We own or lease approximately 65.9 million square feet in

over 20,000 facilities and ATM locations globally, including

approximately 60.3 million square feet in the U.S. (all 50 states

and the District of Columbia, the U.S. Virgin Islands, Puerto Rico

and Guam) and approximately 5.6 million square feet in more

than 35 countries.

We believe our owned and leased properties are adequate

for our business needs and are well maintained. We continue to

evaluate our owned and leased real estate and may determine

from time to time that certain of our premises and facilities, or

ownership structures, are no longer necessary for our

operations. In connection therewith, we regularly evaluate the

sale or sale/leaseback of certain properties, and we may incur

costs in connection with any such transactions.

Item 3. Legal Proceedings

See Litigation and Regulatory Matters in Note 12 –

Commitments and Contingencies to the Consolidated Financial

Statements, which is incorporated herein by reference.

Item 4. Mine Safety Disclosures

None

PartII

Bank of America Corporation and Subsidiaries

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases

of Equity Securities

The principal market on which our common stock is traded is

the New York Stock Exchange under the symbol “BAC.” As of

February 16, 2024, there were 137,369 registered

shareholders of common stock.

The table below presents common share repurchase activity

for the three months ended December 31, 2023. The primary

source of funds for cash distributions by the Corporation to its

shareholders is dividends received from its bank subsidiaries.

Each of the bank subsidiaries is subject to various regulatory

policies and requirements relating to the payment of dividends,

including requirements to maintain capital above regulatory

minimums. All of the Corporation’s preferred stock outstanding

has preference over the Corporation’s common stock with

respect to payment of dividends.

(Dollars in millions, except per share information; shares in thousands)

Total Common

Purchased

(1,2)

Weighted-

Average Per

Share Price

Total Shares

Purchased as

Part of Publicly

Announced

Programs

(2)

Remaining

Buyback

Authority

Amounts

October 1 - 31, 2023 10,251 $ 26.85 10,242 $ 13,278

November 1 - 30, 2023 9,413 28.15 9,275 13,017

December 1 - 31, 2023 8,676 31.79 8,650 12,742

Three months ended December 31, 2023 28,340 28.79 28,167

(1)

Includes 173 thousand shares of the Corporation's common stock acquired by the Corporation in connection with satisfaction of tax withholding obligations on vested restricted stock or restricted

stock units and certain forfeitures and terminations of employment-related awards and for potential re-issuance to certain employees under equity incentive plans.

(2)

In October 2021, the Corporation’s Board of Directors (Board) authorized the repurchase of up to $25 billion of common stock over time (October 2021 Authorization). Additionally, the Board

authorized repurchases to offset shares awarded under equity-based compensation plans. In September 2023, the Board modified the October 2021 Authorization, effective October 1, 2023, to

include repurchases to offset shares awarded under equity-based compensation plans when determining the remaining repurchase authority. During the three months ended December 31, 2023,

pursuant to the Board’s authorizations, the Corporation repurchased approximately 28 million shares, or $811 million, of its common stock, including repurchases to offset shares awarded under

equity-based compensation plans. For more information, see Capital Management - CCAR and Capital Planning in the MD&A on page 47 and Note 13 – Shareholders’ Equity to the Consolidated

Financial Statements.

The Corporation did not have any unregistered sales of equity securities during the three months ended December31, 2023.

Item 6. [Reserved]

23 Bank of America

Item 7. Bank of America Corporation and Subsidiaries

Management's Discussion and Analysis of Financial Condition and Results of Operations

Table of Contents

Page

Executive Summary 26

Recent Developments 26

Financial Highlights 26

Balance Sheet Overview 28

Supplemental Financial Data 29

Business Segment Operations 34

Consumer Banking 35

Global Wealth& Investment Management 37

Global Banking 39

Global Markets 41

All Other 43

Managing Risk 44

Strategic Risk Management 47

Capital Management 47

Liquidity Risk 52

Credit Risk Management 57

Consumer Portfolio Credit Risk Management 58

Commercial Portfolio Credit Risk Management 62

Non-U.S. Portfolio 68

Loan and Lease Contractual Maturities 70

Allowance for Credit Losses 71

Market Risk Management 73

Trading Risk Management 74

Interest Rate Risk Management for the Banking Book 77

Mortgage Banking Risk Management 79

Compliance and Operational Risk Management 79

Reputational Risk Management 80

Climate Risk Management 81

Complex Accounting Estimates 82

Non-GAAP Reconciliations 85

Bank of America 24

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Bank of America Corporation (the Corporation) and its

management may make certain statements that constitute

“forward-looking statements” within the meaning of the Private

Securities Litigation Reform Act of 1995. These statements can

be identified by the fact that they do not relate strictly to

historical or current facts. Forward-looking statements often use

words such as “anticipates,” “targets,” “expects,” “hopes,”

“estimates,” “intends,” “plans,” “goals,” “believes,” “continue” and

other similar expressions or future or conditional verbs such as

“will,” “may,” “might,” “should,” “would” and “could.” Forward-

looking statements represent the Corporation’s current

expectations, plans or forecasts of its future results, revenues,

liquidity, net interest income, provision for credit losses,

expenses, efficiency ratio, capital measures, strategy, deposits,

assets, and future business and economic conditions more

generally, and other future matters. These statements are not

guarantees of future results or performance and involve certain

known and unknown risks, uncertainties and assumptions that

are difficult to predict and are often beyond the Corporation’s

control. Actual outcomes and results may differ materially from

those expressed in, or implied by, any of these forward-looking

statements.

You should not place undue reliance on any forward-looking

statement and should consider the following uncertainties and

risks, as well as the risks and uncertainties more fully discussed

under Item 1A. Risk Factors of this Annual Report on Form 10-K:

and in any of the Corporation’s subsequent Securities and

Exchange Commission filings: the Corporation’s potential

judgments, orders, settlements, penalties, fines and reputational

damage resulting from pending or future litigation and regulatory

investigations, proceedings and enforcement actions, including as

a result of our participation in and execution of government

programs related to the Coronavirus Disease 2019 (COVID-19)

pandemic, such as the processing of unemployment benefits for

California and certain other states; the possibility that the

Corporation’s future liabilities may be in excess of its recorded

liability and estimated range of possible loss for litigation, and

regulatory and government actions; the possibility that the

Corporation could face increased claims from one or more parties

involved in mortgage securitizations; the Corporation’s ability to

resolve representations and warranties repurchase and related

claims; the risks related to the discontinuation of reference rates,

including increased expenses and litigation and the effectiveness

of hedging strategies; uncertainties about the financial stability

and growth rates of non-U.S. jurisdictions, the risk that those

jurisdictions may face difficulties servicing their sovereign debt,

and related stresses on financial markets, currencies and trade,

and the Corporation’s exposures to such risks, including direct,

indirect and operational; the impact of U.S. and global interest

rates, inflation, currency exchange rates, economic conditions,

trade policies and tensions, including tariffs, and potential

geopolitical instability; the impact of the interest rate,

inflationary, macroeconomic, banking and regulatory environment

on the Corporation’s assets, business, financial condition and

results of operations; the impact of adverse developments

affecting the U.S. or global banking industry, including bank

failures and liquidity concerns, resulting in worsening economic

and market volatility, and regulatory responses thereto; the

possibility that future credit losses may be higher than currently

expected due to changes in economic assumptions, customer

behavior, adverse developments with respect to U.S. or global

economic conditions and other uncertainties, including the

impact of supply chain disruptions, inflationary pressures and

labor shortages on economic conditions and our business;

potential losses related to the Corporation's concentration of

credit risk; the Corporation’s ability to achieve its expense targets

and expectations regarding revenue, net interest income,

provision for credit losses, net charge-offs, effective tax rate, loan

growth or other projections; adverse changes to the Corporation’s

credit ratings from the major credit rating agencies; an inability to

access capital markets or maintain deposits or borrowing costs;

estimates of the fair value and other accounting values, subject

to impairment assessments, of certain of the Corporation’s assets

and liabilities; the estimated or actual impact of changes in

accounting standards or assumptions in applying those

standards; uncertainty regarding the content, timing and impact

of regulatory capital and liquidity requirements; the impact of

adverse changes to total loss-absorbing capacity requirements,

stress capital buffer requirements and/or global systemically

important bank surcharges; the potential impact of actions of the

Board of Governors of the Federal Reserve System on the

Corporation’s capital plans; the effect of changes in or

interpretations of income tax laws and regulations; the impact of

implementation and compliance with U.S. and international laws,

regulations and regulatory interpretations, including, but not

limited to, recovery and resolution planning requirements, Federal

Deposit Insurance Corporation assessments, the Volcker Rule,

fiduciary standards, derivatives regulations and potential changes

to loss allocations between financial institutions and customers,

including for losses incurred from the use of our products and

services, including electronic payments and payment of checks,

that were authorized by the customer but induced by fraud; the

impact of failures or disruptions in or breaches of the

Corporation’s operations or information systems or those of third

parties, including as a result of cybersecurity incidents; the risks

related to the development, implementation, use and

management of emerging technologies, including artificial

intelligence and machine learning; the risks related to the

transition and physical impacts of climate change; our ability to

achieve environmental, social and governance goals and

commitments or the impact of any changes in the Corporation’s

sustainability strategy or commitments generally; the impact of

any future federal government shutdown and uncertainty

regarding the federal government’s debt limit or changes in fiscal,

monetary or regulatory policy; the emergence or continuation of

widespread health emergencies or pandemics; the impact of

natural disasters, extreme weather events, military conflicts

(including the Russia/Ukraine conflict, the conflict in the Middle

East, the possible expansion of such conflicts and potential

geopolitical consequences), terrorism or other geopolitical events;

and other matters.

Forward-looking statements speak only as of the date they are

made, and the Corporation undertakes no obligation to update

any forward-looking statement to reflect the impact of

circumstances or events that arise after the date the forward-

looking statement was made.

Notes to the Consolidated Financial Statements referred to

in the Management’s Discussion and Analysis of Financial

Condition and Results of Operations (MD&A) are incorporated by

reference into the MD&A. Certain prior-year amounts have been

reclassified to conform to current-year presentation. Throughout

the MD&A, the Corporation uses certain acronyms and

abbreviations which are defined in the Glossary.

25 Bank of America

Executive Summary

Business Overview

The Corporation is a Delaware corporation, a bank holding

company (BHC) and a financial holding company. When used in

this report, “Bank of America,” “the Corporation,” “we,” “us”

and “our” may refer to Bank of America Corporation individually,

Bank of America Corporation and its subsidiaries, or certain of

Bank of America Corporation’s subsidiaries or affiliates. Our

principal executive offices are located in Charlotte, North

Carolina. Through our various bank and nonbank subsidiaries

throughout the U.S. and in international markets, we provide a

diversified range of banking and nonbank financial services and

products through four business segments: Consumer Banking,

Global Wealth & Investment Management (GWIM), Global

Banking and Global Markets, with the remaining operations

recorded in All Other. We operate our banking activities primarily

under the Bank of America, National Association (Bank of

America, N.A. or BANA) charter. At December 31, 2023, the

Corporation had $3.2 trillion in assets and a headcount of

approximately 213,000 employees.

As of December 31, 2023, we served clients through

operations across the U.S., its territories and more than 35

countries. Our retail banking footprint covers all major markets

in the U.S., and we serve approximately 69 million consumer

and small business clients with approximately 3,800 retail

financial centers, approximately 15,000 ATMs, and leading

digital banking platforms (www.bankofamerica.com) with

approximately 46 million active users, including approximately

38 million active mobile users. We offer industry-leading support

to approximately four million small business households. Our

GWIM businesses, with client balances of $3.8 trillion, provide

tailored solutions to meet client needs through a full set of

investment management, brokerage, banking, trust and

retirement products. We are a global leader in corporate and

investment banking and trading across a broad range of asset

classes serving corporations, governments, institutions and

individuals around the world.

Recent Developments

Capital Management

On January 31, 2024, the Corporation’s Board of Directors (the

Board) declared a quarterly common stock dividend of $0.24

per share, payable on March 29, 2024 to shareholders of

record as of March 1, 2024.

For more information on our capital resources, see Capital

Management on page 47.

Impact of BSBY’s Future Cessation

In the fourth quarter of 2023, the Corporation recognized a net

non-cash, pretax charge of approximately $1.6 billion in market

making and similar activities as a result of the announcement of

Bloomberg Short-Term Bank Yield Index’s (BSBY) future

cessation. For more information, see Business Segment

Operations – All Other on page 43, Note 3 – Derivatives to the

Consolidated Financial Statements and the Corporation’s

Current Report on Form 8-K filed on January 8, 2024.

FDIC Special Assessment

On November 16, 2023, the Federal Deposit Insurance

Corporation (FDIC) issued its final rule to impose a special

assessment to recover the loss to the Deposit Insurance Fund

resulting from the closure of Silicon Valley Bank and Signature

Bank. Accordingly, in the fourth quarter of 2023, the Corporation

recorded noninterest expense of $2.1 billion for its estimated

assessment amount. For more information, see Note 12 –

Commitments and Contingencies to the Consolidated Financial

Statements.

Financial Highlights

Table 1 Summary Income Statement and Selected

Financial Data

(Dollars in millions, except per share information)

2023

2022

Income statement

Net interest income

$ 56,931

$ 52,462

Noninterest income

41,650

42,488

Total revenue, net of interest expense 98,581

94,950

Provision for credit losses

4,394

2,543

Noninterest expense

65,845

61,438

Incomebefore income taxes 28,342

30,969

Income tax expense

1,827

3,441

Net income 26,515

27,528

Preferred stock dividends and other

1,649

1,513

Net incomeapplicable to common

shareholders $ 24,866

$ 26,015

Per common share information 



Earnings

$ 3.10

$ 3.21

Diluted earnings

3.08

3.19

Dividends paid

0.92

0.86

Performance ratios

Return on average assets

(1)

0.84 %

0.88 %

Return on average common shareholders’

equity

(1)

9.75

10.75

Return on average tangible common

shareholders’ equity

(2)

13.46

15.15

Efficiency ratio

(1)

66.79

64.71

Balance sheet at year end



Total loans and leases

$ 1,053,732

$ 1,045,747

Total assets

3,180,151

3,051,375

Total deposits

1,923,827

1,930,341

Total liabilities

2,888,505

2,778,178

Total common shareholders’ equity

263,249

244,800

Total shareholders’ equity

291,646

273,197

(1)

For definitions, see Key Metrics on page 170.

(2)

Return on average tangible common shareholders’ equity is a non-GAAP financial measure.

For more information and a corresponding reconciliation to the most closely related financial

measures defined by accounting principles generally accepted in the United States of

America (GAAP), see Non-GAAP Reconciliations on page 85.

Net income was $26.5 billion, or $3.08 per diluted share in

2023 compared to $27.5 billion, or $3.19 per diluted share in

2022. The decrease in net income was primarily due to higher

noninterest expense and provision for credit losses, partially

offset by higher net interest income.

For discussion and analysis of our consolidated and

business segment results of operations for 2022 compared to

2021, see Financial Highlights and Business Segment

Operations sections in the MD&A of the Corporation’s 2022

Annual Report on Form 10-K.

Bank of America 26

Net Interest Income

Net interest income increased $4.5 billion to $56.9 billion in

2023 compared to 2022. Net interest yield on a fully taxable-

equivalent (FTE) basis increased 12 basis points (bps) to 2.08

percent for 2023. The increases were primarily driven by

benefits from higher interest rates and loan growth, partially

offset by higher funding costs, lower deposits and net interest

income related to Global Markets activity. For more information

on net interest yield and FTE basis, see Supplemental Financial

Data on page 29, and for more information on interest rate risk

management, see Interest Rate Risk Management for the

Banking Book on page 77.

Noninterest Income

Table 2 Noninterest Income

(Dollars in millions)

2023

2022

Fees and commissions:

Card income

$ 6,054

$ 6,083

Service charges

5,684

6,405

Investment and brokerage services

15,563

15,901

Investment banking fees

4,708

4,823

Total fees and commissions

32,009

33,212

Market making and similar activities

12,732

12,075

Other income

(3,091)

(2,799)

Total noninterest income $ 41,650

$ 42,488

Noninterest income decreased $838 million to $41.7 billion in

2023 compared to 2022. The following highlights the significant

changes.

● Service charges decreased $721 million primarily driven by

the impact of non-sufficient funds and overdraft policy

changes, as well as lower treasury service charges.

● Investment and brokerage services decreased $338 million

primarily due to lower transactional revenue and asset

management fees driven by declines in assets under

management (AUM) pricing, as well as lower average market

valuations, partially offset by the impact of positive AUM

flows.

● Investment banking fees decreased $115 million primarily

due to lower advisory and debt issuance fees, partially offset

by higher equity issuance fees.

● Market making and similar activities increased $657 million

primarily driven by improved trading in mortgage products in

Fixed Income, Currencies and Commodities (FICC) and by the

impact of higher interest rates on client financing activities in

Equities, partially offset by the net $1.6 billion impact of

BSBY’s future cessation.

● Other income decreased $292 million primarily due to higher

partnership losses on tax-advantaged investments and

losses on sales of available-for-sale (AFS) debt securities,

partially offset by certain negative valuation adjustments in

the prior year.

Provision for Credit Losses

The provision for credit losses increased $1.9 billion to $4.4

billion in 2023 compared to 2022. The provision for credit

losses for 2023 was driven by our consumer portfolio primarily

due to credit card loan growth and asset quality, partially offset

by improved macroeconomic conditions that primarily benefited

our commercial portfolio. For the same period in the prior year,

the provision for credit losses was primarily driven by loan

growth and a dampened macroeconomic outlook, partially offset

by a reduction in COVID-19 pandemic uncertainties. For more

information on the provision for credit losses, see Allowance for

Credit Losses on page 71.

Noninterest Expense

Table 3 Noninterest Expense

(Dollars in millions)

2023

2022

Compensation and benefits

$ 38,330

$ 36,447

Occupancy and equipment

7,164

7,071

Information processing and communications

6,707

6,279

Product delivery and transaction related

3,608

3,653

Marketing

1,927

1,825

Professional fees

2,159

2,142

Other general operating

5,950

4,021

Total noninterest expense $ 65,845

$ 61,438

Noninterest expense increased $4.4 billion to $65.8 billion in

2023 compared to 2022 primarily due to higher investments in

people and technology and higher FDIC expense, including $2.1

billion for the estimated special assessment amount arising

from the closure of Silicon Valley Bank and Signature Bank,

partially offset by lower litigation expense and revenue-related

compensation.

Income Tax Expense

Table 4 Income Tax Expense

(Dollars in millions)

2023

2022

Income before income taxes

$ 28,342

$ 30,969

Income tax expense

1,827

3,441

Effective tax rate

6.4 %

11.1 %

Income tax expense was $1.8 billion for 2023 compared to

$3.4 billion in 2022, resulting in an effective tax rate of 6.4

percent compared to 11.1 percent.

The effective tax rates for 2023 and 2022 were primarily

driven by our recurring tax preference benefits, which primarily

consisted of tax credits from investments in affordable housing

and renewable energy. Also included in the effective tax rate for

2023 were tax impacts from charges recorded in the fourth

quarter of 2023 related to the FDIC special assessment and the

impact of BSBY’s future cessation. For more information on

these charges, see Executive Summary – Recent Developments

on page 26. For more information on our recurring tax

preference benefits, see Note 19 – Income Taxes to the

Consolidated Financial Statements. Absent the tax credits

related to tax-advantaged investments and discrete tax benefits,

the effective tax rates would have been approximately 25

percent for both periods.

27 Bank of America

Balance Sheet Overview

Table 5 Selected Balance Sheet Data

 December 31

(Dollars in millions)

2023

2022 $ Change % Change

Assets 



Cash and cash equivalents

$ 333,073

$ 230,203 $ 102,870 45 %

Federal funds sold and securities borrowed or purchased under agreements to resell

280,624

267,574 13,050 5

Trading account assets

277,354

296,108 (18,754) (6)

Debt securities

871,407

862,819 8,588 1

Loans and leases

1,053,732

1,045,747 7,985 1

Allowance for loan and lease losses

(13,342)

(12,682) (660) 5

All other assets

377,303

361,606 15,697 4

Total assets $ 3,180,151

$ 3,051,375 $ 128,776 4

Liabilities

Deposits

$ 1,923,827

$ 1,930,341 $ (6,514) —

Federal funds purchased and securities loaned or sold under agreements to repurchase

283,887

195,635 88,252 45

Trading account liabilities

95,530

80,399 15,131 19

Short-term borrowings

32,098

26,932 5,166 19

Long-term debt

302,204

275,982 26,222 10

All other liabilities

250,959

268,889 (17,930) (7)

Total liabilities 2,888,505

2,778,178 110,327 4

Shareholders’ equity 291,646

273,197 18,449 7

Total liabilities and shareholders’ equity $ 3,180,151

$ 3,051,375 $ 128,776 4

Assets

At December 31, 2023, total assets were approximately $3.2

trillion, up $128.8 billion from December 31, 2022. The

increase in assets was primarily due to higher cash and cash

equivalents.

Cash and Cash Equivalents

Cash and cash equivalents increased $102.9 billion primarily

driven by increased funding to support balance sheet and

liquidity positioning.

Federal Funds Sold and Securities Borrowed or Purchased

Under Agreements to Resell

Federal funds transactions involve lending reserve balances on

a short-term basis. Securities borrowed or purchased under

agreements to resell are collateralized lending transactions

utilized to accommodate customer transactions, earn interest

rate spreads and obtain securities for settlement and for

collateral. Federal funds sold and securities borrowed or

purchased under agreements to resell increased $13.1 billion

primarily due to the investment of excess cash from higher

federal funds purchased and securities loaned or sold under

agreements to repurchase, short-term borrowings and long-term

debt, as well as client activity within Global Markets.

Trading Account Assets

Trading account assets consist primarily of long positions in

equity and fixed-income securities including U.S. government

and agency securities, corporate securities and non-U.S.

sovereign debt. Trading account assets decreased $18.8 billion

primarily due to a decline in inventory within Global Markets.

Debt Securities

Debt securities primarily include U.S. Treasury and agency

securities, mortgage-backed securities (MBS), principally agency

MBS, non-U.S. bonds, corporate bonds and municipal debt. We

reinvest cash in the debt securities portfolio primarily to manage

interest rate and liquidity risk. Debt securities increased $8.6

billion primarily due to investment of excess cash from higher

federal funds purchased and securities loaned or sold under

agreements to repurchase, short-term borrowings and long-term

debt. For more information on debt securities, see Note 4 –

Securities to the Consolidated Financial Statements.

Loans and Leases

Loans and leases increased $8.0 billion primarily driven by

higher credit card spending and growth in commercial loans. For

more information on the loan portfolio, see Credit Risk

Management on page 57.

Allowance for Loan and Lease Losses

The allowance for loan and lease losses increased $660 million

driven by the Corporation’s consumer portfolio primarily due to

credit card loan growth and asset quality, partially offset by a

reserve release in the Corporation’s commercial portfolio

primarily driven by improved macroeconomic conditions

applicable to the commercial portfolio. For more information,

see Allowance for Credit Losses on page 71.

All Other Assets

All other assets increased $15.7 billion primarily driven by

Global Markets activity.

Liabilities

At December31, 2023, total liabilities were approximately $2.9

trillion, up $110.3 billion from December 31, 2022, primarily

due to higher federal funds purchased and securities loaned or

sold under agreements to repurchase and long-term debt.

Deposits

Deposits decreased $6.5 billion primarily due to an increase in

customer spending and customers’ movement of balances to

higher yielding investment alternatives.

Federal Funds Purchased and Securities Loaned or Sold

Under Agreements to Repurchase

Federal funds transactions involve borrowing reserve balances

on a short-term basis. Securities loaned or sold under

agreements to repurchase are collateralized borrowing

transactions utilized to accommodate customer transactions,

earn interest rate spreads and finance assets on the balance

sheet. Federal funds purchased and securities loaned or sold

Bank of America 28

under agreements to repurchase increased $88.3 billion

primarily driven by an increase in repurchase agreements to

support liquidity.

Trading Account Liabilities

Trading account liabilities consist primarily of short positions in

equity and fixed-income securities including U.S. Treasury and

agency securities, non-U.S. sovereign debt and corporate

securities. Trading account liabilities increased $15.1 billion

primarily due to higher levels of short positions within Global

Markets.

Short-term Borrowings

Short-term borrowings provide an additional funding source and

primarily consist of Federal Home Loan Bank (FHLB) short-term

borrowings, notes payable and various other borrowings that

generally have maturities of one year or less. Short-term

borrowings increased $5.2 billion primarily due to an increase in

FHLB advances and commercial paper to manage liquidity

needs. For more information on short-term borrowings, see Note

10 – Securities Financing Agreements, Short-term Borrowings,

Collateral and Restricted Cash to the Consolidated Financial

Statements.

Long-term Debt

Long-term debt increased $26.2 billion primarily due to debt

issuances and valuation adjustments, partially offset by debt

maturities and redemptions. For more information on long-term

debt, see Note 11 – Long-term Debt to the Consolidated

Financial Statements.

All Other Liabilities

All other liabilities decreased $17.9 billion primarily driven by

Global Markets activity.

Shareholders’ Equity

Shareholders’ equity increased $18.4 billion primarily due to net

income and market value increases on derivatives, partially

offset by returns of capital to shareholders through common and

preferred stock dividends and common stock repurchases.

Cash Flows Overview

The Corporation’s operating assets and liabilities support our

global markets and lending activities. We believe that cash

flows from operations, available cash balances and our ability to

generate cash through short- and long-term debt are sufficient to

fund our operating liquidity needs. Our investing activities

primarily include the debt securities portfolio and loans and

leases. Our financing activities reflect cash flows primarily

related to customer deposits, securities financing agreements,

long-term debt and common and preferred stock. For more

information on liquidity, see Liquidity Risk on page 52.

Supplemental Financial Data

Non-GAAP Financial Measures

In this Form 10-K, we present certain non-GAAP financial

measures. Non-GAAP financial measures exclude certain items

or otherwise include components that differ from the most

directly comparable measures calculated in accordance with

GAAP. Non-GAAP financial measures are provided as additional

useful information to assess our financial condition, results of

operations (including period-to-period operating performance) or

compliance with prospective regulatory requirements. These

non-GAAP financial measures are not intended as a substitute

for GAAP financial measures and may not be defined or

calculated the same way as non-GAAP financial measures used

by other companies.

When presented on a consolidated basis, net interest

income on an FTE basis is a non-GAAP financial measure. To

derive the FTE basis, net interest income is adjusted to reflect

tax-exempt income on an equivalent before-tax basis with a

corresponding increase in income tax expense. For purposes of

this calculation, we use the federal statutory tax rate of 21

percent and a representative state tax rate. Net interest yield,

which measures the basis points we earn over the cost of

funds, utilizes net interest income on an FTE basis. We believe

that presentation of these items on an FTE basis allows for

comparison of amounts from both taxable and tax-exempt

sources and is consistent with industry practices.

We may present certain key performance indicators and

ratios excluding certain items (e.g., debit valuation adjustment

(DVA) gains (losses)), which result in non-GAAP financial

measures. We believe that the presentation of measures that

exclude these items is useful because such measures provide

additional information to assess the underlying operational

performance and trends of our businesses and to allow better

comparison of period-to-period operating performance.

We also evaluate our business based on certain ratios that

utilize tangible equity, a non-GAAP financial measure. Tangible

equity represents shareholders’ equity or common

shareholders’ equity reduced by goodwill and intangible assets

(excluding mortgage servicing rights (MSRs)), net of related

deferred tax liabilities (“adjusted” shareholders’ equity or

common shareholders’ equity). These measures are used to

evaluate our use of equity. In addition, profitability, relationship

and investment models use both return on average tangible

common shareholders’ equity and return on average tangible

shareholders’ equity as key measures to support our overall

growth objectives. These ratios are:

● Return on average tangible common shareholders’ equity

measures our net income applicable to common

shareholders as a percentage of adjusted average common

shareholders’ equity. The tangible common equity ratio

represents adjusted ending common shareholders’ equity

divided by total tangible assets.

● Return on average tangible shareholders’ equity measures

our net income as a percentage of adjusted average total

shareholders’ equity. The tangible equity ratio represents

adjusted ending shareholders’ equity divided by total

tangible assets.

● Tangible book value per common share represents adjusted

ending common shareholders’ equity divided by ending

common shares outstanding.

We believe ratios utilizing tangible equity provide additional

useful information because they present measures of those

assets that can generate income. Tangible book value per

common share provides additional useful information about the

level of tangible assets in relation to outstanding shares of

common stock.

The aforementioned supplemental data and performance

measures are presented in Tables 6 and 7.

For more information on the reconciliation of these non-GAAP

financial measures to the corresponding GAAP financial

measures, see Non-GAAP Reconciliations on page 85.

Key Performance Indicators

We present certain key financial and nonfinancial performance

indicators (key performance indicators) that management uses

when assessing our consolidated and/or segment results. We

believe they are useful to investors because they provide

additional information about our underlying operational

29 Bank of America

performance and trends. These key performance indicators

(KPIs) may not be defined or calculated in the same way as

similar KPIs used by other companies. For information on how

these metrics are defined, see Key Metrics on page 170.

Our consolidated key performance indicators, which include

various equity and credit metrics, are presented in Table 1 on

page 26, Table 6 on page 30 and Table 7 on page 31.

For information on key segment performance metrics, see

Business Segment Operations on page 34.

Table 6 Selected Annual Financial Data

(In millions, except per share information)

2023

2022 2021

Income statement



Net interest income

$ 56,931

$ 52,462 $ 42,934

Noninterest income

41,650

42,488 46,179

Total revenue, net of interest expense

98,581

94,950 89,113

Provision for credit losses

4,394

2,543 (4,594)

Noninterest expense

65,845

61,438 59,731

Income before income taxes

28,342

30,969 33,976

Income tax expense

1,827

3,441 1,998

Net income

26,515

27,528 31,978

Net income applicable to common shareholders

24,866

26,015 30,557

Average common shares issued and outstanding

8,028.6

8,113.7 8,493.3

Average diluted common shares issued and outstanding

8,080.5

8,167.5 8,558.4

Performance ratios 

 

Return on average assets

(1)

0.84 %

0.88 % 1.05 %

Return on average common shareholders’ equity

(1)

9.75

10.75 12.23

Return on average tangible common shareholders’ equity

(1, 2)

13.46

15.15 17.02

Return on average shareholders’ equity

(1)

9.36

10.18 11.68

Return on average tangible shareholders’ equity

(1, 2)

12.44

13.76 15.71

Total ending equity to total ending assets

9.17

8.95 8.52

Common equity ratio

(1)

8.28

8.02 7.74

Total average equity to total average assets

8.99

8.62 9.02

Dividend payout

(1)

29.65

26.77 21.51

Per common share data 

 

Earnings

$ 3.10

$ 3.21 $ 3.60

Diluted earnings

3.08

3.19 3.57

Dividends paid

0.92

0.86 0.78

Book value

(1)

33.34

30.61 30.37

Tangible book value

(2)

24.46

21.83 21.68

Market capitalization $ 265,840

$ 264,853 $ 359,383

Average balance sheet 

 

Total loans and leases

$ 1,046,256

$ 1,016,782 $ 920,401

Total assets

3,153,513

3,135,894 3,034,623

Total deposits

1,887,541

1,986,158 1,914,286

Long-term debt

248,853

246,479 237,703

Common shareholders’ equity

254,956

241,981 249,787

Total shareholders’ equity

283,353

270,299 273,757

Asset quality 

 

Allowance for credit losses

(3)

$ 14,551

$ 14,222 $ 13,843

Nonperforming loans, leases and foreclosed properties

(4)

5,630

3,978 4,697

Allowance for loan and lease losses as a percentage of total loans and leases outstanding

(4)

1.27 %

1.22 % 1.28 %

Allowance for loan and lease losses as a percentage of total nonperforming loans and leases

(4)

243

333 271

Net charge-offs

$ 3,799

$ 2,172 $ 2,243

Net charge-offs as a percentage of average loans and leases outstanding

(4)

0.36 %

0.21 % 0.25 %

Capital ratios at year end

(5)



 

Common equity tier 1 capital

11.8 %

11.2 % 10.6 %

Tier1 capital

13.5

13.0 12.1

Total capital

15.2

14.9 14.1

Tier1 leverage

7.1

7.0 6.4

Supplementary leverage ratio

6.1

5.9 5.5

Tangible equity

(2)

7.1

6.8 6.4

Tangible common equity

(2)

6.2

5.9 5.7

(1)

For definition, see Key Metrics on page 170.

(2)

Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. For more information on these ratios and corresponding reconciliations to GAAP

financial measures, see Supplemental Financial Data on page 29 and Non-GAAP Reconciliations on page 85.

(3)

Includes the allowance for loan and leases losses and the reserve for unfunded lending commitments.

(4)

Balances and ratios do not include loans accounted for under the fair value option. For additional exclusions from nonperforming loans, leases and foreclosed properties, see Consumer Portfolio

Credit Risk Management – Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity on page62 and corresponding Table 27 and Commercial Portfolio Credit Risk Management

– Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page66 and corresponding Table 33.

(5)

For more information, including which approach is used to assess capital adequacy, see Capital Management on page 47.

Bank of America 30

Table 7 Selected Quarterly Financial Data

2023 Quarters 2022 Quarters

(In millions, except per share information)

Fourth

Third Second First Fourth

Third Second First

Income statement

  

Net interest income

$ 13,946

$ 14,379 $ 14,158 $ 14,448 $ 14,681 $ 13,765 $ 12,444 $ 11,572

Noninterest income

8,013

10,788 11,039 11,810 9,851 10,737 10,244 11,656

Total revenue, net of interest expense

21,959

25,167 25,197 26,258 24,532 24,502 22,688 23,228

Provision for credit losses

1,104

1,234 1,125 931 1,092 898 523 30

Noninterest expense

17,731

15,838 16,038 16,238 15,543 15,303 15,273 15,319

Income before income taxes

3,124

8,095 8,034 9,089 7,897 8,301 6,892 7,879

Income tax expense

(20)

293 626 928 765 1,219 645 812

Net income

3,144

7,802 7,408 8,161 7,132 7,082 6,247 7,067

Net income applicable to common shareholders

2,838

7,270 7,102 7,656 6,904 6,579 5,932 6,600

Average common shares issued and outstanding

7,990.9

8,017.1 8,040.9 8,065.9 8,088.3 8,107.7 8,121.6 8,136.8

Average diluted common shares issued and outstanding

8,062.5

8,075.9 8,080.7 8,182.3 8,155.7 8,160.8 8,163.1 8,202.1

Performance ratios 

    

Return on average assets

(1)

0.39 %

0.99 % 0.94 % 1.07 % 0.92 % 0.90 % 0.79 % 0.89 %

Four-quarter trailing return on average assets

(2)

0.84

0.98 0.96 0.92 0.88 0.87 0.89 0.99

Return on average common shareholders’ equity

(1)

4.33

11.24 11.21 12.48 11.24 10.79 9.93 11.02

Return on average tangible common shareholders’ equity

(3)

5.92

15.47 15.49 17.38 15.79 15.21 14.05 15.51

Return on average shareholders’ equity

(1)

4.32

10.86 10.52 11.94 10.38 10.37 9.34 10.64

Return on average tangible shareholders’ equity

(3)

5.71

14.41 14.00 15.98 13.98 13.99 12.66 14.40

Total ending equity to total ending assets

9.17

9.10 9.07 8.77 8.95 8.77 8.65 8.23

Common equity ratio

(1)

8.28

8.20 8.16 7.88 8.02 7.82 7.71 7.40

Total average equity to total average assets

8.98

9.11 8.89 8.95 8.87 8.73 8.49 8.40

Dividend payout

(1)

67.42

26.39 24.88 23.17 25.71 27.06 28.68 25.86

Per common share data 

    

Earnings

$ 0.36

$ 0.91 $ 0.88 $ 0.95 $ 0.85 $ 0.81 $ 0.73 $ 0.81

Diluted earnings

0.35

0.90 0.88 0.94 0.85 0.81 0.73 0.80

Dividends paid

0.24

0.24 0.22 0.22 0.22 0.22 0.21 0.21

Book value

(1)

33.34

32.65 32.05 31.58 30.61 29.96 29.87 29.70

Tangible book value

(3)

24.46

23.79 23.23 22.78 21.83 21.21 21.13 20.99

Market capitalization $ 265,840

$ 216,942 $ 228,188 $ 228,012 $ 264,853 $ 242,338 $ 250,136 $ 332,320

Average balance sheet 

    

Total loans and leases

$ 1,050,705

$ 1,046,254 $ 1,046,608 $ 1,041,352 $ 1,039,247 $ 1,034,334 $ 1,014,886 $ 977,793

Total assets

3,213,159

3,128,466 3,175,358 3,096,058 3,074,289 3,105,546 3,157,855 3,207,702

Total deposits

1,905,011

1,876,153 1,875,353 1,893,649 1,925,544 1,962,775 2,012,079 2,045,811

Long-term debt

256,262

245,819 248,480 244,759 243,871 250,204 245,781 246,042

Common shareholders’ equity

260,221

256,578 254,028 248,855 243,647 241,882 239,523 242,865

Total shareholders’ equity

288,618

284,975 282,425 277,252 272,629 271,017 268,197 269,309

Asset quality 

   

Allowance for credit losses

(4)

$ 14,551

$ 14,640 $ 14,338 $ 13,951 $ 14,222 $ 13,817 $ 13,434 $ 13,483

Nonperforming loans, leases and foreclosed properties

(5)

5,630

4,993 4,274 4,083 3,978 4,156 4,326 4,778

Allowance for loan and lease losses as a percentage of total

loans and leases outstanding

(5)

1.27 %

1.27 % 1.24 % 1.20 % 1.22 % 1.20 % 1.17 % 1.23 %

Allowance for loan and lease losses as a percentage of total

nonperforming loans and leases

(5)

243

275 314 319 333 309 288 262

Net charge-offs

$ 1,192

$ 931 $ 869 $ 807 $ 689 $ 520 $ 571 $ 392

Annualized net charge-offs as a percentage of average loans

and leases outstanding

(5)

0.45 %

0.35 % 0.33 % 0.32 % 0.26 % 0.20 % 0.23 % 0.16 %

Capital ratios at period end

(6)



   

Common equity tier 1 capital

11.8 %

11.9 % 11.6 % 11.4 % 11.2 % 11.0 % 10.5 % 10.4 %

Tier1 capital

13.5

13.6 13.3 13.1 13.0 12.8 12.3 12.0

Total capital

15.2

15.4 15.1 15.0 14.9 14.7 14.2 14.0

Tier1 leverage

7.1

7.3 7.1 7.1 7.0 6.8 6.5 6.3

Supplementary leverage ratio

6.1

6.2 6.0 6.0 5.9 5.8 5.5 5.4

Tangible equity

(3)

7.1

7.0 7.0 6.7 6.8 6.6 6.5 6.2

Tangible common equity

(3)

6.2

6.1 6.1 5.8 5.9 5.7 5.6 5.3

Total loss-absorbing capacity and long-term debt metrics

Total loss-absorbing capacity to risk-weighted assets

29.0 %

29.3 % 28.8 % 28.8 % 29.0 % 28.9 % 27.8 % 27.2 %

Total loss-absorbing capacity to supplementary leverage

exposure

13.0

13.3 13.0 13.1 13.2 13.0 12.6 12.2

Eligible long-term debt to risk-weighted assets

14.5

14.8 14.6 14.8 15.2 15.2 14.7 14.4

Eligible long-term debt to supplementary leverage exposure

6.5

6.7 6.6 6.7 6.9 6.8 6.6 6.5

(1)

For definitions, see Key Metrics on page 170.

(2)

Calculated as total net income for four consecutive quarters divided by annualized average assets for four consecutive quarters.

(3)

Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. For more information on these ratios and corresponding reconciliations to GAAP

financial measures, see Supplemental Financial Data on page29 and Non-GAAP Reconciliations on page 85.

(4)

Includes the allowance for loan and lease losses and the reserve for unfunded lending commitments.

(5)

Balances and ratios do not include loans accounted for under the fair value option. For additional exclusions from nonperforming loans, leases and foreclosed properties, see Consumer Portfolio

Credit Risk Management – Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity on page62 and corresponding Table 27 and Commercial Portfolio Credit Risk Management

– Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page66 and corresponding Table 33.

(6)

For more information, including which approach is used to assess capital adequacy, see Capital Management on page 47.

31 Bank of America

Table 8 Average Balances and Interest Rates - FTE Basis

Average

Balance

Interest

Income/

Expense

(1)

Yield/

Rate

Average

Balance

Interest

Income/

Expense

(1)

Yield/

Rate

Average

Balance

Interest

Income/

Expense

(1)

Yield/

Rate

(Dollars in millions)

2023

2022 2021

Earning assets

  

Interest-bearing deposits with the Federal Reserve, non-

U.S. central banks and other banks

$ 324,389 $ 15,965 4.92 %

$ 195,564 $ 2,591 1.32 % $ 255,595 $ 172 0.07 %

Time deposits placed and other short-term investments

9,704 465 4.79

9,209 132 1.44 7,603 15 0.19

Federal funds sold and securities borrowed or purchased

under agreements to resell

(2)

291,669 18,679 6.40

292,799 4,560 1.56 267,257 (90) (0.03)

Trading account assets

189,263 8,849 4.68

158,102 5,586 3.53 147,891 3,823 2.58

Debt securities

794,192 20,332 2.55

922,730 17,207 1.86 905,169 12,433 1.38

Loans and leases

(3)

  

     

Residential mortgage

229,001 6,923 3.02

227,604 6,375 2.80 216,983 5,995 2.76

Home equity

25,969 1,471 5.67

27,364 959 3.50 31,014 1,066 3.44

Credit card

96,190 10,436 10.85

83,539 8,408 10.06 75,385 7,772 10.31

Direct/Indirect and other consumer

104,571 5,200 4.97

107,050 3,317 3.10 96,472 2,276 2.36

Total consumer

455,731 24,030 5.27

445,557 19,059 4.28 419,854 17,109 4.08

U.S. commercial

378,212 19,494 5.15

366,748 12,251 3.34 324,795 8,606 2.65

Non-U.S. commercial

125,486 8,023 6.39

125,222 3,702 2.96 99,584 1,752 1.76

Commercial real estate

(4)

72,981 5,162 7.07

65,421 2,595 3.97 60,303 1,496 2.48

Commercial lease financing

13,846 646 4.67

13,834 473 3.42 15,865 462 2.91

Total commercial

590,525 33,325 5.64

571,225 19,021 3.33 500,547 12,316 2.46

Total loans and leases

1,046,256 57,355 5.48

1,016,782 38,080 3.75 920,401 29,425 3.20

Other earning assets

98,127 9,184 9.36

105,674 4,847 4.59 112,512 2,321 2.06

Total earning assets 2,753,600 130,829 4.75

2,700,860 73,003 2.70 2,616,428 48,099 1.84

Cash and due from banks

26,076 

28,029  31,214 

Other assets, less allowance for loan and lease losses

373,837  

407,005   386,981  

Total assets $ 3,153,513  

$ 3,135,894   $ 3,034,623  

Interest-bearing liabilities

  

U.S. interest-bearing deposits:

  

Demand and money market deposits

952,736 15,527 1.63 %

987,247 3,145 0.32 % 925,970 314 0.03 %

Time and savings deposits

254,476 7,366 2.89

166,490 818 0.49 161,512 170 0.11

Total U.S. interest-bearing deposits

1,207,212 22,893 1.90

1,153,737 3,963 0.34 1,087,482 484 0.04

Non-U.S. interest-bearing deposits

96,845 3,270 3.38

80,951 755 0.93 82,769 53 0.06

Total interest-bearing deposits

1,304,057 26,163 2.01

1,234,688 4,718 0.38 1,170,251 537 0.05

Federal funds purchased, securities loaned or sold under

agreements to repurchase

301,015 20,583 6.84

214,369 4,117 1.92 210,848 461 0.22

Short-term borrowings and other interest-bearing

liabilities

(2)

152,548 9,970 6.54

137,277 2,861 2.08 106,975 (819) (0.77)

Trading account liabilities

46,083 2,043 4.43

51,208 1,538 3.00 54,107 1,128 2.08

Long-term debt

248,853 14,572 5.86

246,479 6,869 2.79 237,703 3,431 1.44

Total interest-bearing liabilities 2,052,556 73,331 3.57

1,884,021 20,103 1.07 1,779,884 4,738 0.27

Noninterest-bearing sources:

  

     

Noninterest-bearing deposits

583,484

751,470 744,035

Other liabilities

(5)

234,120

230,104 236,947

Shareholders’ equity

283,353

270,299 273,757

Total liabilities and shareholders’ equity $ 3,153,513  

$ 3,135,894   $ 3,034,623  

Net interest spread

  1.18 %

1.63 % 1.57 %

Impact of noninterest-bearing sources

  0.90

0.33 0.09

Net interest income/yield on earning assets

(6)



$ 57,498

2.08 %

 $ 52,900 1.96 %  $ 43,361 1.66 %

(1)

Includes the impact of interest rate risk management contracts. For more information, see Interest Rate Risk Management for the Banking Book on page77.

(2)

For more information on negative interest, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.

(3)

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

(4)

Includes U.S. commercial real estate loans of $67.2 billion, $61.1 billion and $56.5 billion, and non-U.S. commercial real estate loans of $5.8 billion, $4.3 billion and $3.8 billion for 2023, 2022

and 2021, respectively.

(5)

Includes $40.2 billion, $30.7 billion and $30.4 billion of structured notes and liabilities for 2023, 2022 and 2021, respectively.

(6)

Net interest income includes FTE adjustments of $567 million, $438 million and $427 million in 2023, 2022 and 2021, respectively.

Bank of America 32

Table 9 Analysis of Changes in Net Interest Income - FTE Basis

Due to Change in

(1)

Net Change

Due to Change in

(1)

Net Change

Volume Rate

(Dollars in millions)

From 2022 to 2023

From 2021 to 2022

Increase (decrease) in interest income

Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other

banks

$ 1,691 $ 11,683 $ 13,374

$ (35) $ 2,454 $ 2,419

Time deposits placed and other short-term investments

8 325 333

2 115 117

Federal funds sold and securities borrowed or purchased under agreements to resell

(10) 14,129 14,119

2 4,648 4,650

Trading account assets

1,095 2,168 3,263

256 1,507 1,763

Debt securities

(2,435) 5,560 3,125

301 4,473 4,774

Loans and leases

Residential mortgage

37 511 548

287 93 380

Home equity

(50) 562 512

(125) 18 (107)

Credit card

1,269 759 2,028

841 (205) 636

Direct/Indirect and other consumer

(75) 1,958 1,883

250 791 1,041

Total consumer

4,971

1,950

U.S. commercial

381 6,862 7,243

1,113 2,532 3,645

Non-U.S. commercial

12 4,309 4,321

452 1,498 1,950

Commercial real estate

302 2,265 2,567

126 973 1,099

Commercial lease financing

1 172 173

(59) 70 11

Total commercial

14,304

6,705

Total loans and leases

19,275

8,655

Other earning assets

(343) 4,680 4,337

(144) 2,670 2,526

Net increase (decrease) in interest income

$ 57,826

$ 24,904

Increase (decrease) in interest expense

U.S. interest-bearing deposits

Demand and money market deposit accounts

$ (96) $ 12,478 $ 12,382

$ (18) $ 2,849 $ 2,831

Time and savings deposits

429 6,119 6,548

13 635 648

Total U.S. interest-bearing deposits

18,930

3,479

Non-U.S. interest-bearing deposits

146 2,369 2,515

(4) 706 702

Total interest-bearing deposits

21,445

4,181

Federal funds purchased and securities loaned or sold under agreements to

repurchase

1,662 14,804 16,466

11 3,645 3,656

Short-term borrowings and other interest-bearing liabilities

312 6,797 7,109

(238) 3,918 3,680

Trading account liabilities

(156) 661 505

(63) 473 410

Long-term debt

74 7,629 7,703

118 3,320 3,438

Net increase (decrease) in interest expense

53,228

15,365

Net increase (decrease) in net interest income

(2)

$ 4,598

$ 9,539

(1)

The changes for each category of interest income and expense are divided between the portion of change attributable to the variance in volume and the portion of change attributable to the

variance in rate for that category. The unallocated change in rate or volume variance is allocated between the rate and volume variances.

(2)

Includes an increase in FTE basis adjustments of $129 million from 2022 to 2023 and $11 million from 2021 to 2022.

33 Bank of America

Business Segment Operations

Segment Description and Basis of Presentation

We report our results of operations through the following four business segments: Consumer Banking, GWIM, Global Banking and

Global Markets, with the remaining operations recorded in All Other. We manage our segments and report their results on an FTE

basis. The primary activities, products and businesses of the business segments and All Other are shown below.

We periodically review capital allocated to our businesses

and allocate capital annually during the strategic and capital

planning processes. We utilize a methodology that considers

the effect of regulatory capital requirements in addition to

internal risk-based capital models. Our internal risk-based

capital models use a risk-adjusted methodology incorporating

each segment’s credit, market, interest rate, business and

operational risk components. For more information on the

nature of these risks, see Managing Risk on page 44. The

capital allocated to the business segments is referred to as

allocated capital. Allocated equity in the reporting units is

comprised of allocated capital plus capital for the portion of

goodwill and intangibles specifically assigned to the reporting

unit. For more information, including the definition of a reporting

unit, see Note 7 – Goodwill and Intangible Assets to the

Consolidated Financial Statements.

For more information on our presentation of financial

information on an FTE basis, see Supplemental Financial Data

on page 29, and for reconciliations to consolidated total

revenue, net income and year-end total assets, see Note 23 –

Business Segment Information to the Consolidated Financial

Statements.

Key Performance Indicators

We present certain key financial and nonfinancial performance

indicators that management uses when evaluating segment

results. We believe they are useful to investors because they

provide additional information about our segments’ operational

performance, customer trends and business growth.

Bank of America 34

Consumer Banking

Deposits Consumer Lending Total Consumer Banking

(Dollars in millions)

2023

2022

2023

2022

2023

2022 % Change

Net interest income

$ 22,545

$ 19,254

$ 11,144

$ 10,791

$ 33,689

$ 30,045 12 %

Noninterest income:

Card income

(40)

(36)

5,304

5,205

5,264

5,169 2

Service charges

2,314

2,703

2,317

2,706 (14)

All other income

607

478

154

237

761

715 6

Total noninterest income

2,881

3,145

5,461

5,445

8,342

8,590 (3)

Total revenue, net of interest expense

25,426

22,399

16,605

16,236

42,031

38,635 9

Provision for credit losses

491

564

4,667

1,416

5,158

1,980 n/m

Noninterest expense

13,358

12,393

8,058

7,684

21,416

20,077 7

Income before income taxes

11,577

9,442

3,880

7,136

15,457

16,578 (7)

Income tax expense

2,894

2,314

970

1,748

3,864

4,062 (5)

Net income $ 8,683

$ 7,128

$ 2,910

$ 5,388

$ 11,593

$ 12,516 (7)

Effective tax rate

(1)

25.0 %

24.5 %

Net interest yield

2.28 %

1.82 %

3.66 %

3.72 %

3.26 %

2.73 %

Return on average allocated capital

Efficiency ratio

52.54

55.33

48.52

47.32

50.95

51.96

Balance Sheet

Average

Total loans and leases

$ 4,129

$ 4,161

$ 304,561

$ 288,205

$ 308,690

$ 292,366 6 %

Total earning assets

(2)

989,000

1,057,531

304,838

289,719

1,032,525

1,099,410 (6)

Total assets

(2)

1,022,361

1,090,692

310,805

296,499

1,071,853

1,139,351 (6)

Total deposits

987,675

1,056,783

5,075

5,778

992,750

1,062,561 (7)

Allocated capital

13,700

13,000

28,300

27,000

42,000

40,000 5

Year End

Total loans and leases

$ 4,218

$ 4,148

$ 310,901

$ 300,613

$ 315,119

$ 304,761 3 %

Total earning assets

(2)

965,088

1,043,049

311,008

300,787

1,009,360

1,085,079 (7)

Total assets

(2)

999,372

1,077,203

317,194

308,007

1,049,830

1,126,453 (7)

Total deposits

964,136

1,043,194

5,436

5,605 969,572 1,048,799 (8)

(1)

Estimated at the segment level only.

(2)

In segments and businesses where the total of liabilities and equity exceeds assets, we allocate assets from All Other to match the segments’ and businesses’ liabilities and allocated

shareholders’ equity. As a result, total earning assets and total assets of the businesses may not equal total Consumer Banking.

n/m = not meaningful

Consumer Banking, comprised of Deposits and Consumer

Lending, offers a diversified range of credit, banking and

investment products and services to consumers and small

businesses. Deposits and Consumer Lending include the net

impact of migrating customers and their related deposit,

brokerage asset and loan balances between Deposits,

Consumer Lending and GWIM, as well as other client-managed

businesses. Our customers and clients have access to a coast-

to-coast network including financial centers in 39 states and the

District of Columbia. As of December 31, 2023, our network

includes approximately 3,800 financial centers, approximately

15,000 ATMs, nationwide call centers and leading digital

banking platforms with more than 46 million active users,

including approximately 38 million active mobile users.

Consumer Banking Results

Net income for Consumer Banking decreased $923 million to

$11.6 billion due to an increase in provision for credit losses

and higher noninterest expense, partially offset by higher

revenue. Net interest income increased $3.6 billion to $33.7

billion primarily driven by higher interest rates and loan

balances, partially offset by lower deposit balances. Noninterest

income decreased $248 million to $8.3 billion primarily driven

by the impact of non-sufficient funds and overdraft policy

changes.

The provision for credit losses increased $3.2 billion to $5.2

billion primarily driven by credit card loan growth and asset

quality. Noninterest expense increased $1.3 billion to $21.4

billion primarily driven by continued investments in the

business, including people and technology, higher litigation

expense, including consumer regulatory matters, and higher

FDIC expense.

The return on average allocated capital was 28 percent,

down from 31 percent, due to an increase in allocated capital

and lower net income. For more information on capital allocated

to the business segments, see Business Segment Operations

on page 34.

Deposits

Deposits includes the results of consumer deposit activities

that consist of a comprehensive range of products provided to

consumers and small businesses. Our deposit products include

noninterest- and interest-bearing checking accounts, money

market savings accounts, traditional savings accounts, CDs and

IRAs, as well as investment accounts and products. Net interest

income is allocated to deposit products using our funds transfer

pricing process that matches assets and liabilities with similar

interest rate sensitivity and maturity characteristics. Deposits

generates fees such as account service fees and ATM fees, as

well as investment and brokerage fees from Consumer

Investment accounts. Consumer Investments serves investment

client relationships through the Merrill Edge integrated investing

and banking service platform, providing investment advice and

guidance, client brokerage asset services, self-directed online

investing and key banking capabilities including access to the

Corporation’s network of financial centers and ATMs.

35 Bank of America

Net income for Deposits increased $1.6 billion to $8.7

billion primarily due to higher revenue, partially offset by higher

noninterest expense. Net interest income increased $3.3 billion

to $22.5 billion primarily due to higher interest rates, partially

offset by lower deposit balances. Noninterest income decreased

$264 million to $2.9 billion primarily driven by the impact of

non-sufficient funds and overdraft policy changes.

Noninterest expense increased $965 million to $13.4 billion

primarily due to continued investments in the business,

including people and technology, higher litigation expense,

including consumer regulatory matters, and higher FDIC

expense.

Average deposits decreased $69.1 billion to $987.7 billion

primarily due to net outflows of $51.8 billion in money market

savings and $28.6 billion in checking, partially offset by growth

in time deposits of $19.9 billion.

The table below provides key performance indicators for

Deposits. Management uses these metrics, and we believe they

are useful to investors because they provide additional

information to evaluate our deposit profitability and digital/

mobile trends.

Key Statistics – Deposits

2023

2022

Total deposit spreads (excludes noninterest costs)

(1)

2.70 %

1.86 %

Year end

Consumer investment assets (in millions)

(2)

$ 424,410

$ 319,648

Active digital banking users (in thousands)

(3)

46,265

44,054

Active mobile banking users (in thousands)

(4)

37,927

35,452

Financial centers

3,845

3,913

ATMs

15,168

15,528

(1)

Includes deposits held in Consumer Lending.

(2)

Includes client brokerage assets, deposit sweep balances, Bank of America, N.A. brokered

CDs and AUM in Consumer Banking.

(3)

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

(4)

Represents mobile active users over the past 90 days.

Consumer investment assets increased $104.8 billion to

$424.4 billion driven by market performance and client flows.

Active mobile banking users increased approximately

twomillion, reflecting continuing changes in our clients’ banking

preferences. We had a net decrease of 68 financial centers and

360 ATMs as we continue to optimize our consumer banking

network.

Consumer Lending

Consumer Lending offers products to consumers and small

businesses across the U.S. The products offered include debit

and credit cards, residential mortgages and home equity loans,

and direct and indirect loans such as automotive, recreational

vehicle and consumer personal loans. In addition to earning net

interest spread revenue on its lending activities, Consumer

Lending generates interchange revenue from debit and credit

card transactions, late fees, cash advance fees, annual credit

card fees, mortgage banking fee income and other

miscellaneous fees. Consumer Lending products are available

to our customers through our retail network, direct telephone,

and online and mobile channels. Consumer Lending results also

include the impact of servicing residential mortgages and home

equity loans, including loans held on the balance sheet of

Consumer Lending and loans serviced for others.

Net income for Consumer Lending decreased $2.5 billion to

$2.9 billion primarily due to an increase in provision for credit

losses. Net interest income increased $353 million to $11.1

billion primarily due to higher loan balances. Noninterest income

increased $16 million to $5.5 billion, relatively unchanged from

the same period a year ago.

The provision for credit losses increased $3.3 billion to $4.7

billion primarily driven by credit card loan growth and asset

quality. Noninterest expense increased $374 million to $8.1

billion primarily driven by continued investments in the

business, including people and technology.

Average loans increased $16.4 billion to $304.6 billion

primarily driven by an increase in credit card loans.

The table below provides key performance indicators for

Consumer Lending. Management uses these metrics, and we

believe they are useful to investors because they provide

additional information about loan growth and profitability.

Key Statistics – Consumer Lending

(Dollars in millions)

2023

2022

Total credit card

(1)

Gross interest yield

(2)

11.88 %

10.42 %

Risk-adjusted margin

(3)

7.83

10.06

New accounts (in thousands)

4,275

4,397

Purchase volumes

$ 363,117

$ 356,588

Debit card purchase volumes $ 527,074

$ 503,583

(1)

Includes GWIM's credit card portfolio.

(2)

Calculated as the effective annual percentage rate divided by average loans.

(3)

Calculated as the difference between total revenue, net of interest expense, and net credit

losses divided by average loans.

During 2023, the total risk-adjusted margin decreased 223

bps primarily driven by higher net credit losses, lower net fee

income and lower interest margin. Total credit card purchase

volumes increased $6.5 billion to $363.1 billion and debit card

purchase volumes increased $23.5 billion to $527.1 billion,

reflecting higher levels of consumer spending.

Key Statistics – Loan Production

(1)

(Dollars in millions)

2023

2022

Consumer Banking:

First mortgage

$ 9,145

$ 20,981

Home equity

8,328

7,988

Total

(2)

First mortgage

$ 19,405

$ 44,765

Home equity

9,814

9,591

(1)

The loan production amounts represent the unpaid principal balance of loans and, in the

case of home equity, the principal amount of the total line of credit.

(2)

In addition to loan production in Consumer Banking, there is also first mortgage and home

equity loan production in GWIM.

First mortgage loan originations for Consumer Banking and

the total Corporation decreased $11.8 billion and $25.4 billion

during 2023 primarily driven by higher interest rates, resulting in

lower customer demand.

Home equity production in Consumer Banking and the total

Corporation increased $340 million and $223 million during

2023 primarily driven by higher demand.

Bank of America 36

Global Wealth & Investment Management

(Dollars in millions)

2023

2022 % Change

Net interest income

$ 7,147

$ 7,466 (4) %

Noninterest income:

Investment and brokerage services

13,213

13,561 (3)

All other income

745

721 3

Total noninterest income

13,958

14,282 (2)

Total revenue, net of interest expense

21,105

21,748 (3)

Provision for credit losses

66 (91)

Noninterest expense

15,836

15,490 2

Income before income taxes

5,263

6,192 (15)

Income tax expense

1,316

1,517 (13)

Net income $ 3,947

$ 4,675 (16)

Effective tax rate

25.0 %

24.5 %

Net interest yield

2.17

1.95

Return on average allocated capital

Efficiency ratio

75.04

71.23

Balance Sheet

Average

Total loans and leases

$ 219,503

$ 219,810 — %

Total earning assets

329,493

383,352 (14)

Total assets

342,531

396,167 (14)

Total deposits

298,335

351,329 (15)

Allocated capital

18,500

17,500 6

Year end

Total loans and leases

$ 219,657

$ 223,910 (2) %

Total earning assets

330,653

355,461 (7)

Total assets

344,626

368,893 (7)

Total deposits

299,657

323,899 (7)

GWIM consists of two primary businesses: Merrill Wealth

Management and Bank of America Private Bank.

Merrill Wealth Management’s advisory business provides a

high-touch client experience through a network of financial

advisors focused on clients with over $250,000 in total

investable assets. Merrill Wealth Management provides tailored

solutions to meet clients’ needs through a full set of investment

management, brokerage, banking and retirement products.

Bank of America Private Bank, together with Merrill Wealth

Management’s Private Wealth Management business, provides

comprehensive wealth management solutions targeted to high

net worth and ultra high net worth clients, as well as customized

solutions to meet clients’ wealth structuring, investment

management, trust and banking needs, including specialty asset

management services.

Net income for GWIM decreased $728 million to $3.9 billion

primarily due to lower revenue and higher noninterest expense.

The operating margin was 25 percent compared to 28 percent a

year ago.

Net interest income decreased $319 million to $7.1 billion

primarily driven by lower average deposit balances and a

portfolio mix shift to higher yielding deposit products.

Noninterest income, which primarily includes investment and

brokerage services income, decreased $324 million to $14.0

billion. The decrease was primarily driven by lower transactional

revenue and asset management fees driven by declines in AUM

pricing as well as lower average market valuations, partially

offset by the impact of positive AUM flows.

Noninterest expense increased $346 million to $15.8 billion

primarily due to continued investments in the business,

including strategic hiring and technology, as well as higher FDIC

expense, partially offset by lower revenue-related incentives.

The return on average allocated capital was 21 percent,

down from 27 percent, due to lower net income and, to a lesser

extent, a small increase in allocated capital.

Average loans totaled $219.5 billion, relatively unchanged

from the same period a year ago. Average deposits decreased

$53.0 billion to $298.3 billion primarily driven by clients moving

deposits to higher yielding investment cash alternatives,

including offerings on our investment and brokerage platforms.

Merrill Wealth Management revenue of $17.5 billion

decreased four percent primarily driven by lower net interest

income, lower transactional revenue and asset management

fees driven by declines in AUM pricing as well as lower average

market valuations, partially offset by the impact of positive AUM

flows.

Bank of America Private Bank revenue of $3.6 billion

increased one percent primarily driven by higher net interest

income as well as higher asset management fees driven by the

impact of positive AUM flows.

37 Bank of America

Key Indicators and Metrics

(Dollars in millions)

2023

2022

Revenue by Business

Merrill Wealth Management

$ 17,461

$ 18,135

Bank of America Private Bank

3,644

3,613

Total revenue, net of interest expense $ 21,105

$ 21,748

Client Balances by Business, at year end

Merrill Wealth Management

$ 3,182,735

$ 2,822,910

Bank of America Private Bank

606,639

563,931

Total client balances $ 3,789,374

$ 3,386,841

Client Balances by Type, at year end

Assets under management

$ 1,617,740

$ 1,401,474

Brokerage and other assets

1,688,923

1,482,025

Deposits

299,657

323,899

Loans and leases

(1)

222,287

226,973

Less: Managed deposits in assets under management

(39,233)

(47,530)

Total client balances $ 3,789,374

$ 3,386,841

Assets Under Management Rollforward

Assets under management, beginning of year

$ 1,401,474

$ 1,638,782

Net client flows

52,227

20,785

Market valuation/other

164,039

(258,093)

Total assets under management, end of year $ 1,617,740

$ 1,401,474

Total wealth advisors, at year end

(2)

18,916

19,273

(1)

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

(2)

Includes advisors across all wealth management businesses in GWIM and Consumer Banking.

Client Balances

Client balances managed under advisory and/or discretion of

GWIM are AUM and are typically held in diversified portfolios.

Fees earned on AUM are calculated as a percentage of clients’

AUM balances. The asset management fees charged to clients

per year depend on various factors but are commonly driven by

the breadth of the client’s relationship. The net client AUM flows

represent the net change in clients’ AUM balances over a

specified period of time, excluding market appreciation/

depreciation and other adjustments.

Client balances increased $402.5 billion, or 12 percent, to

$3.8 trillion at December31, 2023 compared to December31,

2022. The increase in client balances was primarily due to the

impact of higher end-of-period market valuations and positive

net client flows.

Bank of America 38

Global Banking

(Dollars in millions)

2023

2022 % Change

Net interest income

$ 14,645

$ 12,184 20 %

Noninterest income:

Service charges

2,952

3,293 (10)

Investment banking fees

2,819

3,004 (6)

All other income

4,380

3,748 17

Total noninterest income

10,151

10,045 1

Total revenue, net of interest expense

24,796

22,229 12

Provision for credit losses

(586)

641 n/m

Noninterest expense

11,344

10,966 3

Income before income taxes

14,038

10,622 32

Income tax expense

3,790

2,815 35

Net income $ 10,248

$ 7,807 31

Effective tax rate

27.0 %

26.5 %

Net interest yield

2.73

2.26

Return on average allocated capital

Efficiency ratio

45.75

49.34

Balance Sheet

Average

Total loans and leases

$ 378,762

$ 375,271 1 %

Total earning assets

535,500

539,032 (1)

Total assets

602,579

603,273 —

Total deposits

505,627

511,804 (1)

Allocated capital

49,250

44,500 11

Year end

Total loans and leases

$ 373,891

$ 379,107 (1) %

Total earning assets

552,453

522,539 6

Total assets

621,751

588,466 6

Total deposits

527,060

498,661 6

n/m = not meaningful

Global Banking, which includes Global Corporate Banking, Global

Commercial Banking, Business Banking and Global Investment

Banking, provides a wide range of lending-related products and

services, integrated working capital management and treasury

solutions, and underwriting and advisory services through our

network of offices and client relationship teams. Our lending

products and services include commercial loans, leases,

commitment facilities, trade finance, commercial real estate

lending and asset-based lending. Our treasury solutions

business includes treasury management, foreign exchange,

short-term investing options and merchant services. We also

provide investment banking services to our clients such as debt

and equity underwriting and distribution, and merger-related and

other advisory services. Underwriting debt and equity issuances,

fixed-income and equity research, and certain market-based

activities are executed through our global broker-dealer

affiliates, which are our primary dealers in several countries.

Within Global Banking, Global Corporate Banking clients

generally include large global corporations, financial institutions

and leasing clients. Global Commercial Banking clients generally

include middle-market companies, commercial real estate firms

and not-for-profit companies. Business Banking clients include

mid-sized U.S.-based businesses requiring customized and

integrated financial advice and solutions.

Net income for Global Banking increased $2.4 billion to

$10.2 billion driven by higher revenue and lower provision for

credit losses, partially offset by higher noninterest expense.

Net interest income increased $2.5 billion to $14.6 billion

primarily due to the benefit of higher interest rates.

Noninterest income increased $106 million to $10.2 billion

driven by negative valuation adjustments on leveraged loans in

the prior year and higher revenue from tax-advantaged

investment activities in the current year, partially offset by lower

treasury service charges and lower investment banking fees.

The provision for credit losses improved $1.2 billion to a

benefit of $586 million primarily due to an improved

macroeconomic outlook.

Noninterest expense increased $378 million to $11.3 billion

primarily due to continued investments in the business,

including technology and strategic hiring in 2022, and higher

FDIC expense, partially offset by expenses recognized for certain

regulatory matters in the prior-year period.

The return on average allocated capital was 21 percent, up

from 18 percent, due to higher net income, partially offset by

higher allocated capital.

Global Corporate, Global Commercial and Business

Banking

Global Corporate, Global Commercial and Business Banking

each include Business Lending and Global Transaction Services

activities. Business Lending includes various lending-related

products and services, and related hedging activities, including

commercial loans, leases, commitment facilities, trade finance,

real estate lending and asset-based lending. Global Transaction

Services includes deposits, treasury management, credit card,

foreign exchange and short-term investment products.

39 Bank of America

The following table and discussion present a summary of the results, which exclude certain investment banking and other

activities in Global Banking.

Global Corporate, Global Commercial and Business Banking

Global Corporate Banking Global Commercial Banking Business Banking Total

(Dollars in millions)

2023

2022

2023

2022

2023

2022

2023

2022

Revenue

Business Lending

$ 4,928

$ 4,325

$ 5,016

$ 4,316

$ 253

$ 251

$ 10,197

$ 8,892

Global Transaction Services

5,746

5,002

4,139

4,166

1,531

1,213

11,416

10,381

Total revenue, net of interest expense $ 10,674

$ 9,327

$ 9,155

$ 8,482

$ 1,784

$ 1,464

$ 21,613

$ 19,273

Balance Sheet

Average

Total loans and leases

$ 171,554

$ 174,052

$ 194,725

$ 187,597

$ 12,285

$ 12,743

$ 378,564

$ 374,392

Total deposits

272,964

250,648

181,905

204,893

50,759

56,263

505,628

511,804

Year end

Total loans and leases

$ 167,055

$ 174,905

$ 194,565

$ 191,051

$ 12,129

$ 12,683

$ 373,749

$ 378,639

Total deposits

289,961

262,033

188,141

186,112

48,951

50,516

527,053

498,661

Business Lending revenue increased $1.3 billion in 2023

compared to 2022 primarily driven by higher interest rates,

higher revenue from tax-advantaged investment activities and

the impact of higher average loan balances.

Global Transaction Services revenue increased $1.0 billion

in 2023 compared to 2022 primarily driven by higher interest

rates, partially offset by lower treasury service charges and the

impact of lower average deposit balances.

Average loans and leases increased one percent in 2023

compared to 2022 due to client demand. Average deposits

decreased one percent in 2023 compared to 2022 due to

declines in domestic balances.

Global Investment Banking

Client teams and product specialists underwrite and distribute

debt, equity and loan products, and provide advisory services

and tailored risk management solutions. The economics of

certain investment banking and underwriting activities are

shared primarily between Global Banking and Global Markets

under an internal revenue-sharing arrangement. Global Banking

originates certain deal-related transactions with our corporate

and commercial clients that are executed and distributed by

Global Markets. To provide a complete discussion of our

consolidated investment banking fees, the table below presents

total Corporation investment banking fees and the portion

attributable to Global Banking.

Investment Banking Fees

Global Banking Total Corporation

(Dollars in millions)

2023

2022

2023

2022

Products

Advisory

$ 1,392

$ 1,643

$ 1,575

$ 1,783

Debt issuance

1,073

1,099

2,403

2,523

Equity issuance

354

262

886

709

Gross investment

banking fees 2,819

3,004

4,864

5,015

Self-led deals

(43)

(78)

(156)

(192)

Total investment

banking fees $ 2,776

$ 2,926

$ 4,708

$ 4,823

Total Corporation investment banking fees, which exclude

self-led deals and are primarily included within Global Banking

and Global Markets, decreased two percent to $4.7 billion

primarily due to lower advisory and debt issuance fees, partially

offset by higher equity issuance fees.

Bank of America 40

Global Markets

(Dollars in millions)

2023

2022 % Change

Net interest income

$ 1,678

$ 3,088 (46) %

Noninterest income:

Investment and brokerage services

1,993

2,002 —

Investment banking fees

1,874

1,820 3

Market making and similar activities

13,430

11,406 18

All other income

552

(178) n/m

Total noninterest income

17,849

15,050 19

Total revenue, net of interest expense

19,527

18,138 8

Provision for credit losses

(131)

28 n/m

Noninterest expense

13,206

12,420 6

Income before income taxes

6,452

5,690 13

Income tax expense

1,774

1,508 18

Net income $ 4,678

$ 4,182 12

Effective tax rate

27.5 %

26.5 %

Return on average allocated capital

Efficiency ratio

67.63

68.48

Balance Sheet

Average

Trading-related assets:

Trading account securities

$ 318,443

$ 303,587 5 %

Reverse repurchases

133,735

126,324 6

Securities borrowed

121,547

116,764 4

Derivative assets

44,303

54,128 (18)

Total trading-related assets

618,028

600,803 3

Total loans and leases

129,657

116,652 11

Total earning assets

652,352

602,889 8

Total assets

869,756

857,637 1

Total deposits

33,278

40,382 (18)

Allocated capital

45,500

42,500 7

Year end

Total trading-related assets

$ 542,544

$ 564,769 (4) %

Total loans and leases

136,223

127,735 7

Total earning assets

637,955

587,772 9

Total assets

817,588

812,489 1

Total deposits

34,833

39,077 (11)

n/m = not meaningful

Global Markets offers sales and trading services and research

services to institutional clients across fixed-income, credit,

currency, commodity and equity businesses. Global Markets

product coverage includes securities and derivative products in

both the primary and secondary markets. Global Markets

provides market-making, financing, securities clearing,

settlement and custody services globally to our institutional

investor clients in support of their investing and trading

activities. We also work with our commercial and corporate

clients to provide risk management products using interest rate,

equity, credit, currency and commodity derivatives, foreign

exchange, fixed-income and mortgage-related products. As a

result of our market-making activities in these products, we may

be required to manage risk in a broad range of financial

products including government securities, equity and equity-

linked securities, high-grade and high-yield corporate debt

securities, syndicated loans, MBS, commodities and asset-

backed securities. The economics of certain investment banking

and underwriting activities are shared primarily between Global

Markets and Global Banking under an internal revenue-sharing

arrangement. Global Banking originates certain deal-related

transactions with our corporate and commercial clients that are

executed and distributed by Global Markets. For information on

investment banking fees on a consolidated basis, see page 40.

The following explanations for year-over-year changes in results

for Global Markets, including those disclosed under Sales and

Trading Revenue, are the same for amounts including and

excluding net DVA. Amounts excluding net DVA are a non-GAAP

financial measure. For more information on net DVA, see

Supplemental Financial Data on page 29.

Net income for Global Markets increased $496 million to

$4.7 billion in 2023 compared to 2022. Net DVA losses were

$236 million compared to gains of $20 million in 2022.

Excluding net DVA, net income increased $690 million to $4.9

billion. These increases were primarily driven by an increase in

revenue, partially offset by higher noninterest expense.

Revenue increased $1.4 billion to $19.5 billion primarily due

to higher sales and trading revenue in the current-year period

and negative valuation adjustments on leveraged loans in the

prior-year period. Sales and trading revenue increased $887

million, and excluding net DVA, increased $1.1 billion. These

increases were primarily driven by higher revenue in FICC.

Noninterest expense increased $786 million to $13.2 billion,

primarily driven by continued investments in the business,

including people and technology, partially offset by expenses

recognized for certain regulatory matters in the prior-year period.

Average total assets increased $12.1 billion to $869.8

billion, driven by higher levels of inventory, increased secured

41 Bank of America

financing activity and loan growth in FICC, partially offset by

lower levels of inventory in Equities. Year-end total assets

increased $5.1 billion to $817.6 billion driven by the same

factors as average assets.

The return on average allocated capital was 10 percent,

unchanged from the same period a year ago. For information on

capital allocated to the business segments, see Business

Segment Operations on page 34.

Sales and Trading Revenue

Sales and trading revenue includes unrealized and realized

gains and losses on trading and other assets which are

included in market making and similar activities, net interest

income, and fees primarily from commissions on equity

securities. Sales and trading revenue is segregated into fixed-

income (government debt obligations, investment and non-

investment grade corporate debt obligations, commercial MBS,

residential mortgage-backed securities, collateralized loan

obligations, interest rate and credit derivative contracts),

currencies (interest rate and foreign exchange contracts),

commodities (primarily futures, forwards, swaps and options)

and equities (equity-linked derivatives and cash equity activity).

The following table and related discussion present sales and

trading revenue, substantially all of which is in Global Markets,

with the remainder in Global Banking. In addition, the following

table and related discussion also present sales and trading

revenue, excluding net DVA, which is a non-GAAP financial

measure. For more information on net DVA, see Supplemental

Financial Data on page 29.

Sales and Trading Revenue

(1, 2, 3)

(Dollars in millions)

2023

2022

Sales and trading revenue

(2)

Fixed-income, currencies and commodities

$ 10,896

$ 9,917

Equities

6,480

6,572

Total sales and trading revenue $ 17,376

$ 16,489

Sales and trading revenue, excluding net DVA

(4)

Fixed-income, currencies and commodities

$ 11,122

$ 9,898

Equities

6,490

6,571

Total sales and trading revenue, excluding net DVA $ 17,612

$ 16,469

(1)

For more information on sales and trading revenue, see Note 3 – Derivatives to the

Consolidated Financial Statements.

(2)

Includes FTE adjustments of $546 million and $354 million for 2023 and 2022.

(3)

Includes Global Banking sales and trading revenue of $654 million and $1.0 billion for 2023

and 2022.

(4)

FICC and Equities sales and trading revenue, excluding net DVA, is a non-GAAP financial

measure. FICC net DVA gains (losses) were $(226) million and $19 million for 2023 and

2022. Equities net DVA gains (losses) were $(10) million and $1 million for 2023 and 2022.

Including and excluding net DVA, FICC revenue increased $979

million and $1.2 billion driven by an improved trading

environment for credit and mortgage products and an increase

in secured financing activity. Including and excluding net DVA,

Equities revenue decreased $92 million and $81 million driven

by weaker trading performance in derivatives, partially offset by

an increase in client financing activities.

Bank of America 42

All Other

(Dollars in millions)

2023

2022 % Change

Net interest income

$ 339

$ 117 n/m

Noninterest income (loss)

(8,650)

(5,479) 58 %

Total revenue, net of interest expense

(8,311)

(5,362) 55

Provision for credit losses

(53)

(172) (69)

Noninterest expense

4,043

2,485 63

Loss before income taxes

(12,301)

(7,675) 60

Income tax benefit

(8,350)

(6,023) 39

Net loss $ (3,951)

$ (1,652) 139

Balance Sheet

Average

Total loans and leases

$ 9,644

$ 12,683 (24) %

Total assets

(1)

266,794

139,466 91

Total deposits

57,551

20,082 n/m

Year end

Total loans and leases

$ 8,842

$ 10,234 (14) %

Total assets

(1)

346,356

155,074 123

Total deposits

92,705

19,905 n/m

(1)

In segments where the total of liabilities and equity exceeds assets, which are generally deposit-taking segments, we allocate assets from All Other to those segments to match liabilities (i.e.,

deposits) and allocated shareholders’ equity. Average allocated assets were $975.9 billion and $1.1 trillion for 2023 and 2022 and year-end allocated assets were $972.9 billion and $1.0 trillion

at December 31, 2023 and 2022.

n/m = not meaningful

All Other primarily consists of asset and liability management

(ALM) activities, liquidating businesses and certain expenses

not otherwise allocated to a business segment. ALM activities

encompass interest rate and foreign currency risk management

activities for which substantially all of the results are allocated

to our business segments. For more information on our ALM

activities, see Note 23 – Business Segment Information to the

Consolidated Financial Statements.

The net loss in All Other increased $2.3 billion to $4.0 billion

primarily due to lower noninterest income and higher noninterest

expense, partially offset by a higher income tax benefit.

Noninterest income decreased $3.2 billion primarily due to a

net charge incurred as a result of the impact of BSBY’s future

cessation, higher partnership losses for tax-advantaged

investments and losses on sales of AFS debt securities. The

announcement of BSBY’s future cessation resulted in a $1.6

billion net charge due to the Corporation’s determination that

certain forecasted BSBY-indexed interest payments, which had

been designated in cash flow hedges, were no longer expected

to occur beyond November 15, 2024 as they will transition to a

new reference rate. Accordingly, during the fourth quarter of

2023, the Corporation reclassified the fair value of the interest

rate swaps used in the cash flow hedges related to these

forecasted transactions from accumulated other comprehensive

income (OCI) into noninterest income. The Corporation also

recognized subsequent fair value changes of the interest rate

swaps into noninterest income until they were re-designated into

new cash flow hedges.

Noninterest expense increased $1.6 billion primarily due to

an accrual of $2.1 billion for the estimated amount of the FDIC

special assessment resulting from the closure of Silicon Valley

Bank and Signature Bank, as well as higher costs related to a

liquidating business activity in the current year, partially offset

by higher litigation expense in the prior year.

The income tax benefit was $8.4 billion in 2023 compared

to a benefit of $6.0 billion in 2022. The income tax benefit in All

Other resulted from both periods having income tax benefit

adjustments to allocate the FTE treatment of certain tax credits

to Global Banking and Global Markets. The increase in the

income tax benefit in 2023 was primarily due to the benefit

recorded against pretax charges for the FDIC special

assessment and impact of BSBY’s future cessation, as well as

higher income tax credits related to tax-advantaged investment

activity.

43 Bank of America

Managing Risk

Risk is inherent in all our business activities. Sound risk

management enables us to serve our customers and deliver for

our shareholders. If not managed well, risk can result in

financial loss, regulatory sanctions and penalties, and damage

to our reputation, each of which may adversely impact our ability

to execute our business strategies. We take a comprehensive

approach to risk management with a defined Risk Framework

and an articulated Risk Appetite Statement, which are approved

annually by the Enterprise Risk Committee (ERC) and the Board.

The seven key types of risk faced by the Corporation are

strategic, credit, market, liquidity, compliance, operational and

reputational.

● Strategic risk is the risk to current or projected financial

condition arising from incorrect assumptions about external

or internal factors, inappropriate business plans, ineffective

business strategy execution or failure to respond in a timely

manner to changes in the regulatory, macroeconomic or

competitive environments in the geographic locations in

which we operate.

● Credit risk is the risk of loss arising from the inability or

failure of a borrower or counterparty to meet its obligations.

● Market risk is the risk that changes in market conditions

adversely impact the value of assets or liabilities or

otherwise negatively impact earnings. Market risk is

composed of price risk and interest rate risk.

● Liquidity risk is the inability to meet expected or unexpected

cash flow and collateral needs while continuing to support

our businesses and customers under a range of economic

conditions.

● Compliance risk is the risk of legal or regulatory sanctions,

material financial loss or damage to the reputation of the

Corporation arising from the failure of the Corporation to

comply with the requirements of applicable laws, rules and

regulations and our internal policies and procedures.

● Operational risk is the risk of loss resulting from inadequate

or failed internal processes or systems, people or external

events.

● Reputational risk is the risk that negative perception of the

Corporation may adversely impact profitability or operations.

The following sections address in more detail the specific

procedures, measures and analyses of the major categories of

risk.

As set forth in our Risk Framework, a culture of managing

risk well is fundamental to our values and our purpose, and how

we drive Responsible Growth. It requires us to focus on risk in

all activities and encourages the necessary mindset and

behavior to enable effective risk management and promote

sound risk-taking within our risk appetite. Sustaining a culture of

managing risk well throughout the organization is critical to the

success of the Corporation and is a clear expectation of our

executive management team and the Board.

Our Risk Framework serves as the foundation for the

consistent and effective management of risks facing the

Corporation. The Risk Framework sets forth roles and

responsibilities for the management of risk and provides a

blueprint for how the Board, through delegation of authority to

committees and executive officers, establishes risk appetite

and associated limits for our activities.

Executive management assesses, with Board oversight, the

risk-adjusted returns of each business. Management reviews

and approves the strategic and financial operating plans, as well

as the capital plan and Risk Appetite Statement, and

recommends them annually to the Board for approval. Our

strategic plan takes into consideration return objectives and

financial resources, which must align with risk capacity and risk

appetite. Management sets financial objectives for each

business by allocating capital and setting a target for return on

capital for each business. Capital allocations are regularly

evaluated as part of our overall governance processes as the

businesses and the economic environment in which we operate

continue to evolve. For more information regarding capital

allocations, see Business Segment Operations on page 34.

The Corporation’s risk appetite indicates the amount of

capital, earnings or liquidity we are willing to put at risk to

achieve our strategic objectives and business plans, consistent

with applicable regulatory requirements. Our risk appetite

provides a common framework that includes a set of measures

to assist senior management and the Board in assessing the

Corporation’s risk profile across all risk types against our risk

appetite and risk capacity. Our risk appetite is formally

articulated in the Risk Appetite Statement, which includes both

qualitative statements and quantitative limits.

Our overall capacity to take risk is limited; therefore, we

prioritize the risks we take in order to maintain a strong and

flexible financial position so we can weather challenging

economic times and take advantage of organic growth

opportunities. Therefore, we set objectives and targets for

capital and liquidity that are intended to permit us to continue to

operate in a safe and sound manner at all times, including

during periods of stress. We also maintain operational risk

management and operational resiliency capabilities designed to

permit us to meet the expectations of our customers and clients

through a range of operating conditions.

Our lines of business operate with risk limits that align with

the Corporation’s risk appetite. Senior management is

responsible for tracking and reporting performance

measurements as well as any exceptions to risk appetite limits.

The Board, and its committees when appropriate, oversee

financial performance, execution of the strategic and financial

operating plans, adherence to risk appetite limits and the

adequacy of internal controls.

For a more detailed discussion of our risk management

activities, see the discussion below and pages 47 through 82.

Risk Management Governance

The Risk Framework describes delegations of authority whereby

the Board and its committees may delegate authority to

management-level committees or executive officers. Such

delegations may authorize certain decision-making and approval

functions, which may be evidenced in documents such as

committee charters, job descriptions, meeting minutes and

resolutions.

The chart below illustrates the interrelationship among the

Board, Board committees and management committees that

have the majority of risk oversight responsibilities for the

Corporation.

Bank of America 44

Board of Directors and Board Committees

The Board is composed of 15 directors, all but one of whom are

independent. The Board authorizes management to maintain an

effective Risk Framework and oversees compliance with safe

and sound banking practices. In addition, the Board or its

committees conduct inquiries of, and receive reports from

senior management on, risk-related matters to assess scope or

resource limitations that could impede the ability of Global Risk

Management (GRM) and/or Corporate Audit to execute its

responsibilities. The Board committees discussed below have

the principal responsibility for enterprise-wide oversight of our

risk management activities. Through these activities, the Board

and applicable committees are provided with information on our

risk profile and oversee senior management addressing key

risks we face. Other Board committees, as described below,

provide additional oversight of specific risks.

Each of the committees shown on the above chart regularly

reports to the Board on risk-related matters within the

committee’s responsibilities, which is intended to collectively

provide the Board with integrated insight about our management

of enterprise-wide risks.

Audit Committee

The Audit Committee oversees the qualifications, performance

and independence of the Independent Registered Public

Accounting Firm, the performance of our corporate audit

function, the integrity of our consolidated financial statements,

our compliance with legal and regulatory requirements, and

makes inquiries of senior management or the Chief Audit

Executive (CAE) to determine whether there are scope or

resource limitations that impede the ability of Corporate Audit to

execute its responsibilities. The Audit Committee is also

responsible for overseeing compliance risks pursuant to the

New York Stock Exchange listing standards.

Enterprise Risk Committee

The ERC oversees the Corporation’s Risk Framework, risk

appetite and senior management’s responsibilities for the

identification, measurement, monitoring and control of key risks

facing the Corporation. The ERC may consult with other Board

committees on risk-related matters.

Other Board Committees

Our Corporate Governance, ESG, and Sustainability Committee

oversees our Board’s governance processes, identifies and

reviews the qualifications of potential Board members, leads

Board and committee succession planning and their formal self-

evaluation, and reviews our ESG activities, shareholder input

and shareholder engagement process.

Our Compensation and Human Capital Committee oversees

establishing, maintaining and administering our compensation

programs and employee benefit plans, including approving and

recommending our Chief Executive Officer’s (CEO) compensation

to our Board for further approval by all independent directors;

reviewing and approving our executive officers’ compensation,

as well as compensation for non-management directors; and

reviewing certain other human capital management topics,

including pay equity.

Management Committees

Management committees receive their authority from the Board,

a Board committee, or another management committee. Our

primary management risk committee is the MRC. Subject to

Board oversight, the MRC is responsible for management

oversight of key risks facing the Corporation, including an

integrated evaluation of risk, earnings, capital and liquidity.

Lines of Defense

We have clear ownership and accountability for managing risk

across three lines of defense: Front Line Units (FLUs), GRM and

Corporate Audit. We also have control functions outside of FLUs

and GRM (e.g., Legal and Global Human Resources). The three

lines of defense are integrated into our management-level

governance structure. Each of these functional roles is further

described in this section.

Executive Officers

Executive officers lead various functions representing the

functional roles. Authority for functional roles may be delegated

to executive officers from the Board, Board committees or

management-level committees. Executive officers, in turn, may

further delegate responsibilities, as appropriate, to

management-level committees, management routines or

45 Bank of America

individuals. Executive officers review our activities for

consistency with our Risk Framework, risk appetite, and

applicable strategic, capital and financial operating plans, as

well as applicable policies and standards. Executive officers and

other employees make decisions individually on a day-to-day

basis, consistent with the authority they have been delegated.

Executive officers and other employees may also serve on

committees and participate in committee decisions.

Front Line Units

FLUs, which include the lines of business as well as Global

Technology and Global Operations, are responsible for

appropriately assessing and effectively managing all of the risks

associated with their activities.

Three organizational units that include FLU activities and

control function activities, but are not part of GRM are (1) the

Chief Financial Officer Group; (2) the Chief Administrative Officer

Group; and (3) Global Strategy and Enterprise Platforms.

Global Risk Management

GRM is part of our control functions and operates as our

independent risk management function. GRM, led by the Chief

Risk Officer (CRO), is responsible for independently assessing

and overseeing risks within FLUs and other control functions.

GRM establishes written enterprise policies and procedures

outlining how aggregate risks are identified, measured,

monitored and controlled.

The CRO has the stature, authority and independence needed

to develop and implement a meaningful risk management

framework and practices to guide the Corporation in managing

risk. The CRO has unrestricted access to the Board and reports

directly to both the ERC and the CEO. GRM is organized into

horizontal risk teams that cover a specific risk area and vertical

CRO teams that cover a particular FLU or control function. These

teams work collaboratively in executing their respective duties.

Corporate Audit

Corporate Audit and the CAE maintain their independence from

the FLUs, GRM and other control functions by reporting directly

to the Audit Committee. The CAE administratively reports to the

CEO. Corporate Audit provides independent assessment and

validation through testing of key processes and controls across

the Corporation. Corporate Audit includes Credit Review, which

provides an independent assessment of credit lending decisions

and the effectiveness of credit processes across the

Corporation’s credit platform through examinations and

monitoring.

Risk Management Processes

The Risk Framework requires that strong risk management

practices are integrated in key strategic, capital and financial

planning processes and in day-to-day business processes

across the Corporation, thereby ensuring risks are appropriately

considered, evaluated and responded to in a timely manner. We

employ an effective risk management process, referred to as

Identify, Measure, Monitor and Control, as part of our daily

activities.

Identify – To be effectively managed, risks must be proactively

identified and well understood. Proper risk identification

focuses on recognizing and understanding key risks inherent

in our business activities or key risks that may arise from

external factors. Each employee is expected to identify and

escalate risks promptly. Risk identification is an ongoing

process that incorporates input from FLUs and control

functions. It is designed to be forward-looking and to capture

relevant risk factors across all of our lines of business.

Measure – Once a risk is identified, it must be prioritized and

accurately measured through a systematic process including

qualitative statements and quantitative limits. Risk is

measured at various levels, including, but not limited to, risk

type, FLU and legal entity, and also on an aggregate basis.

This risk measurement process helps to capture changes in

our risk profile due to changes in strategic direction,

concentrations, portfolio quality and the overall economic

environment. Senior management considers how risk

exposures might evolve under a variety of stress scenarios.

Monitor – We monitor risk levels regularly to track adherence to

risk appetite, policies and standards. We also regularly

update risk assessments and review risk exposures. Through

our monitoring, we know our level of risk relative to limits and

can take action in a timely manner. We also know when risk

limits are breached and have processes to appropriately

report and escalate exceptions. This includes timely requests

for approval to managers and alerts to executive

management, management-level committees or the Board

(directly or through an appropriate committee).

Control – We establish and communicate risk limits and controls

through policies, standards, procedures and processes. The

limits and controls can be adjusted by senior management or

the Board when conditions or risk tolerances warrant. These

limits may be absolute (e.g., loan amount, trading volume,

operational loss) or relative (e.g., percentage of loan book in

higher-risk categories). Our FLUs are held accountable for

performing within the established limits.

The formal processes used to manage risk represent a part

of our overall risk management process. We instill a strong and

comprehensive culture of managing risk well through

communications, training, policies, procedures and

organizational roles and responsibilities. Establishing a culture

reflective of our purpose to help make our customers’ financial

lives better and delivering on Responsible Growth is also critical

to effective risk management. We are committed to the highest

principles of ethical and professional conduct. Conduct risk is

the risk of improper actions, behaviors or practices by the

Corporation, its employees or representatives that are illegal,

unethical and/or contrary to our core values that could result in

harm to the Corporation, our shareholders or our customers,

damage the integrity of the financial markets, or negatively

impact our reputation. We have established protocols and

structures so that conduct risk is governed and reported across

the Corporation appropriately. All employees are held

accountable for adhering to the Code of Conduct, operating

within our risk appetite and managing risk in their daily business

activities. In addition, our performance management and

compensation practices encourage responsible risk-taking that

is consistent with our Risk Framework and risk appetite.

Corporation-wide Stress Testing

Integral to our Capital Planning, Financial Planning and Strategic

Planning processes, we conduct capital scenario management

and stress forecasting on a regular basis to better understand

balance sheet, earnings and capital sensitivities to a wide range

of economic and business scenarios, including economic and

market conditions that are more severe than anticipated. These

stress forecasts provide an understanding of the potential

impacts from our risk profile on the balance sheet, earnings and

capital, and serve as a key component of our capital and risk

management practices. The intent of stress testing is to

Bank of America 46

develop a comprehensive understanding of potential impacts of

on- and off-balance sheet risks at the Corporation and certain

subsidiaries and how they impact financial resiliency, which

provides confidence to management, regulators and our

investors.

Contingency Planning

We have developed and maintain comprehensive contingency

plans that are designed to prepare us in advance to respond in

the event of potential adverse economic, operational, financial

or market stress conditions. These contingency plans include

our Financial Contingency and Recovery Plan, which provides

monitoring, escalation, actions and routines designed to enable

us to increase capital and/or liquidity, access funding sources

and reduce risk through consideration of potential options that

include asset sales, business sales, capital or debt issuances,

and other risk reducing strategies at various levels of capital or

liquidity depletion during a period of stress. We also maintain a

Resolution Plan to limit adverse systemic impacts that could be

associated with a potential resolution of Bank of America.

Strategic Risk Management

Strategic risk is embedded in every business and is one of the

major risk categories along with credit, market, liquidity,

compliance, operational and reputational risks. This risk results

from incorrect assumptions about external or internal factors,

inappropriate business plans, ineffective business strategy

execution, or failure to respond in a timely manner to changes in

the regulatory, macroeconomic or competitive environments in

the geographic locations in which we operate, such as

competitor actions, changing customer preferences, product

obsolescence and technology developments.

An aspect of strategic risk is the risk that the Corporation’s

capital levels are not adequate to meet minimum regulatory

requirements and support execution of business activities or

absorb losses from risks during normal or adverse economic

and market conditions. As such, capital risk is managed in

parallel to strategic risk.

We manage strategic risk through the Strategic Risk

Enterprise Policy and integration into the strategic planning

process, among other activities. Our strategic plan is consistent

with our risk appetite, capital plan and liquidity requirements,

and specifically addresses strategic risks impacting each

business.

On an annual basis, the Board reviews and approves the

strategic plan, capital plan, financial operating plan and Risk

Appetite Statement. With oversight by the Board, senior

management directs the lines of business to execute our

strategic plan consistent with our core operating principles and

risk appetite. The executive management team monitors

business performance throughout the year and provides the

Board with regular progress reports on whether strategic

objectives and timelines are being met, including reports on

strategic risks and if additional or alternative actions need to be

considered or implemented. The regular executive reviews focus

on assessing forecasted earnings and returns on capital, the

current risk profile, current capital and liquidity requirements,

staffing levels and changes required to support the strategic

plan, stress testing results, and other qualitative factors such

as market growth rates and peer analysis.

Significant strategic actions, such as capital actions,

material acquisitions or divestitures, and resolution plans are

reviewed and approved by the Board. At the business level,

processes are in place to discuss the strategic risk implications

of new, expanded or modified businesses, products or services,

regulatory change and other strategic initiatives, and to provide

formal review and approval where required. With oversight by the

Board and the ERC, executive management performs similar

analyses throughout the year, and evaluates changes to the

financial forecast or the risk, capital or liquidity positions as

deemed appropriate to balance and optimize achieving the

targeted risk appetite, shareholder returns and maintaining the

targeted financial strength. Proprietary models are used to

measure the capital requirements for credit, country, market,

operational and strategic risks. The allocated capital assigned

to each business is based on its unique risk profile. With

oversight by the Board, executive management assesses the

risk-adjusted returns of each business in approving strategic

and financial operating plans. The businesses use allocated

capital to define business strategies, and price products and

transactions.

Capital Management

The Corporation manages its capital position so that its capital

is more than adequate to support its business activities and

aligns with risk, risk appetite and strategic planning.

Additionally, we seek to maintain safety and soundness at all

times, even under adverse scenarios, take advantage of organic

growth opportunities, meet obligations to creditors and

counterparties, maintain ready access to financial markets,

continue to serve as a credit intermediary, remain a source of

strength for our subsidiaries, and satisfy current and future

regulatory capital requirements. Capital management is

integrated into our risk and governance processes, as capital is

a key consideration in the development of our strategic plan,

risk appetite and risk limits.

We conduct an Internal Capital Adequacy Assessment

Process (ICAAP) on a periodic basis. The ICAAP is a forward-

looking assessment of our projected capital needs and

resources, incorporating earnings, balance sheet and risk

forecasts under baseline and adverse economic and market

conditions. We utilize periodic stress tests to assess the

potential impacts to our balance sheet, earnings, regulatory

capital and liquidity under a variety of stress scenarios. We

perform qualitative risk assessments to identify and assess

material risks not fully captured in our forecasts or stress tests.

We assess the potential capital impacts of proposed changes to

regulatory capital requirements. Management assesses ICAAP

results and provides documented quarterly assessments of the

adequacy of our capital guidelines and capital position to the

Board or its committees.

We periodically review capital allocated to our businesses

and allocate capital annually during the strategic and capital

planning processes. For more information, see Business

Segment Operations on page 34.

CCAR and Capital Planning

The Federal Reserve requires BHCs to submit a capital plan and

planned capital actions on an annual basis, consistent with the

rules governing the Comprehensive Capital Analysis and Review

(CCAR) capital plan, which includes supervisory stress testing by

the Federal Reserve. Based on 2023 stress test results, our

stress capital buffer (SCB) is 2.5 percent effective October 1,

2023 through September 30, 2024.

In October 2021, the Board authorized the Corporation’s

$25 billion common stock repurchase program (October 2021

Authorization). Additionally, the Board authorized common stock

repurchases to offset shares awarded under the Corporation’s

equity-based compensation plans. In September 2023, the

Board modified the October 2021 Authorization, effective

47 Bank of America

October 1, 2023, to include repurchases to offset shares

awarded under equity-based compensation plans when

determining the remaining repurchase authority. Pursuant to the

Board’s authorizations, during 2023, we repurchased $4.6

billion of common stock, including repurchases to offset shares

awarded under equity-based compensation plans. As of

December 31, 2023, the remaining repurchase authority was

approximately $12.7 billion (including repurchases to offset

shares awarded under equity-based compensation plans).

The timing and amount of common stock repurchases are

subject to various factors, including the Corporation’s capital

position, liquidity, financial performance and alternative uses of

capital, stock trading price, regulatory requirements and general

market conditions, and may be suspended at any time. Such

repurchases may be effected through open market purchases or

privately negotiated transactions, including repurchase plans

that satisfy the conditions of Rule 10b5-1 of the Securities

Exchange Act of 1934, as amended (Exchange Act).

Regulatory Capital

As a BHC, we are subject to regulatory capital rules, including

Basel 3, issued by U.S. banking regulators. Basel 3 established

minimum capital ratios and buffer requirements and outlined

two methods of calculating risk-weighted assets (RWA), the

Standardized approach and the Advanced approaches. The

Standardized approach relies primarily on supervisory risk

weights based on exposure type, and the Advanced approaches

determine risk weights based on internal models.

The Corporation's depository institution subsidiaries are also

subject to the Prompt Corrective Action (PCA) framework. The

Corporation and its primary affiliated banking entity, BANA, are

Advanced approaches institutions under Basel 3 and are

required to report regulatory risk-based capital ratios and RWA

under both the Standardized and Advanced approaches. The

lower of the capital ratios under Standardized or Advanced

approaches compared to their respective regulatory capital ratio

requirements is used to assess capital adequacy, including

under the PCA framework. As of December 31, 2023, the

common equity tier 1 (CET1) capital, Tier 1 capital and Total

capital ratios under the Standardized approach were the binding

ratios.

Minimum Capital Requirements

In order to avoid restrictions on capital distributions and

discretionary bonus payments to executive officers, the

Corporation must meet risk-based capital ratio requirements

that include a capital conservation buffer of 2.5 percent (under

the Advanced approaches only), an SCB (under the Standardized

approach only), plus any applicable countercyclical capital buffer

and a global systemically important bank (G-SIB) surcharge. The

buffers and surcharge must be comprised solely of CET1

capital. For the period from October 1, 2022 through September

30, 2023, the Corporation's minimum CET1 capital ratio

requirements were 10.4 percent under the Standardized

approach and 9.5 percent under the Advanced approaches.

Effective October 1, 2023 through December 31, 2023, our

CET1 minimum requirement was 9.5 percent under both the

Standardized and Advanced approaches.

The Corporation is required to calculate its G-SIB surcharge

on an annual basis under two methods and is subject to the

higher of the resulting two surcharges. Method 1 is consistent

with the approach prescribed by the Basel Committee’s

assessment methodology and is calculated using specified

indicators of systemic importance. Method 2 modifies the

Method 1 approach by, among other factors, including a

measure of the Corporation’s reliance on short-term wholesale

funding. Effective January 1, 2024, the Corporation’s G-SIB

surcharge, which is higher under Method 2, increased 50 bps,

resulting in an increase in our minimum CET1 capital ratio

requirement to 10.0 percent from 9.5 percent. At December31,

2023, the Corporation’s CET1 capital ratio of 11.8 percent

under the Standardized approach exceeded its CET1 capital

ratio requirement as well as the new minimum requirement in

place as of January 1, 2024.

The Corporation is also required to maintain a minimum

supplementary leverage ratio (SLR) of 3.0 percent plus a

leverage buffer of 2.0 percent in order to avoid certain

restrictions on capital distributions and discretionary bonus

payments to executive officers. At December 31, 2023, our

insured depository institution subsidiaries exceeded their

requirement to maintain a minimum 6.0 percent SLR to be

considered well capitalized under the PCA framework. The

numerator of the SLR is quarter-end Basel 3 Tier 1 capital. The

denominator is total leverage exposure based on the daily

average of the sum of on-balance sheet exposures less

permitted deductions and the simple average of certain off-

balance sheet exposures, as of the end of each month in a

quarter.

Capital Composition and Ratios

Table 10 presents Bank of America Corporation’s capital ratios

and related information in accordance with Basel 3

Standardized and Advanced approaches as measured at

December 31, 2023 and 2022. For the periods presented

herein, the Corporation met the definition of well capitalized

under current regulatory requirements.

Bank of America 48

Table 10 Bank of America Corporation Regulatory Capital under Basel 3

Standardized

Approach

(1)

Advanced

Approaches

(1)

Regulatory

Minimum

(2)

(Dollars in millions, except as noted)

December 31, 2023

Risk-based capital metrics:

Common equity tier 1 capital

$ 194,928 $ 194,928

Tier 1 capital

223,323 223,323

Total capital

(3)

251,399 241,449

Risk-weighted assets (in billions)

1,651 1,459

Common equity tier 1 capital ratio

11.8 % 13.4 % 9.5 %

Tier 1 capital ratio

13.5 15.3 11.0

Total capital ratio

15.2 16.6 13.0

Leverage-based metrics:

Adjusted quarterly average assets (in billions)

(4)

$ 3,135 $ 3,135

Tier 1 leverage ratio

7.1 % 7.1 % 4.0

Supplementary leverage exposure (in billions)

$ 3,676

Supplementary leverage ratio

6.1 % 5.0

December 31, 2022

Risk-based capital metrics:

Common equity tier 1 capital

$ 180,060 $ 180,060

Tier 1 capital

208,446 208,446

Total capital

(3)

238,773 230,916

Risk-weighted assets (in billions)

1,605 1,411

Common equity tier 1 capital ratio

11.2 % 12.8 % 10.4 %

Tier 1 capital ratio

13.0 14.8 11.9

Total capital ratio

14.9 16.4 13.9

Leverage-based metrics:

Adjusted quarterly average assets (in billions)

(4)

$ 2,997 $ 2,997

Tier 1 leverage ratio

7.0 % 7.0 % 4.0

Supplementary leverage exposure (in billions)

$ 3,523

Supplementary leverage ratio 5.9 % 5.0

(1)

Capital ratios as of December31, 2023 and 2022 are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of the current expected credit

losses (CECL) accounting standard on January 1, 2020.

(2)

The CET1 capital regulatory minimum is the sum of the CET1 capital ratio minimum of 4.5 percent, our G-SIB surcharge of 2.5 percent and our capital conservation buffer of 2.5 percent (under the

Advanced approaches) or the SCB of 2.5 percent at December31, 2023 and 3.4 percent at December31, 2022 (under the Standardized approach), as applicable. The countercyclical capital

buffer was zero for both periods. The SLR regulatory minimum includes a leverage buffer of 2.0 percent.

(3)

Total capital under the Advanced approaches differs from the Standardized approach due to differences in the amount permitted in Tier 2 capital related to the qualifying allowance for credit

losses.

(4)

Reflects total average assets adjusted for certain Tier 1 capital deductions.

At December31, 2023, CET1 capital was $194.9 billion, an

increase of $14.9 billion from December 31, 2022, primarily

due to earnings, partially offset by capital distributions. Tier 1

capital increased $14.9 billion primarily driven by the same

factors as CET1 capital. Total capital under the Standardized

approach increased $12.6 billion primarily due to the same

factors driving the increase in Tier 1 capital and an increase in

the adjusted allowance for credit losses included in Tier 2

capital, partially offset by a decrease in subordinated debt. RWA

under the Standardized approach, which yielded the lower CET1

capital ratio at December 31, 2023, increased $46.4 billion

during 2023 to $1,651 billion primarily due to higher

counterparty and market risk exposures in Global Markets and

consumer loan growth. Supplementary leverage exposure at

December 31, 2023 increased $152.9 billion primarily due to

higher cash held at central banks, partially offset by lower debt

securities balances.

49 Bank of America

Table 11 shows the capital composition at December31, 2023 and 2022.

Table 11 Capital Composition under Basel 3

December 31

(Dollars in millions)

2023

2022

Total common shareholders’ equity

$ 263,249

$ 244,800

CECL transitional amount

(1)

1,254

1,881

Goodwill, net of related deferred tax liabilities

(68,648)

(68,644)

Deferred tax assets arising from net operating loss and tax credit carryforwards

(7,912)

(7,776)

Intangibles, other than mortgage servicing rights, net of related deferred tax liabilities

(1,496)

(1,554)

Defined benefit pension plan net assets

(764)

(867)

Cumulative unrealized net (gain) loss related to changes in fair value of financial liabilities attributable to own creditworthiness,

net-of-tax

1,342

496

Accumulated net (gain) loss on certain cash flow hedges

(2)

8,025

11,925

Other

(122)

(201)

Common equity tier 1 capital 194,928

180,060

Qualifying preferred stock, net of issuance cost

28,396

Other

(1)

(10)

Tier 1 capital 223,323

208,446

Tier 2 capital instruments

15,340

18,751

Qualifying allowance for credit losses

(3)

12,920

11,739

Other

(184)

(163)

Total capital under the Standardized approach 251,399

238,773

Adjustment in qualifying allowance for credit losses under the Advanced approaches

(3)

(9,950)

(7,857)

Total capital under the Advanced approaches $ 241,449

$ 230,916

(1)

December31, 2023 and 2022 include 50 percent and 75 percent of the CECL transition provision’s impact as of December 31, 2021.

(2)

Includes amounts in accumulated OCI related to the hedging of items that are not recognized at fair value on the Consolidated Balance Sheet.

(3)

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

Table 12 shows the components of RWA as measured under Basel 3 at December 31, 2023 and 2022.

Table 12 Risk-weighted Assets under Basel 3

Standardized

Approach

Advanced

Approaches

Standardized

Approach

Advanced

Approaches

December 31

(Dollars in billions)

2023

2022

Credit risk

$ 1,580 $ 983

$ 1,538 $ 939

Market risk

71 71

67 67

Operational risk

n/a 361

n/a 364

Risks related to credit valuation adjustments

n/a 44

n/a 41

Total risk-weighted assets $ 1,651 $ 1,459

$ 1,605 $ 1,411

n/a = not applicable

Bank of America, N.A. Regulatory Capital

Table 13 presents regulatory capital information for BANA in accordance with Basel 3 Standardized and Advanced approaches as

measured at December 31, 2023 and 2022. BANA met the definition of well capitalized under the PCA framework for both periods.

Bank of America 50

Table 13 Bank of America, N.A. Regulatory Capital under Basel 3

Standardized

Approach

(1)

Advanced

Approaches

(1)

Regulatory

Minimum

(2)

(Dollars in millions, except as noted)

December 31, 2023

Risk-based capital metrics:

Common equity tier 1 capital

$ 187,621 $ 187,621

Tier 1 capital

187,621 187,621

Total capital

(3)

201,932 192,175

Risk-weighted assets (in billions)

1,395 1,114

Common equity tier 1 capital ratio

13.5 % 16.8 % 7.0 %

Tier 1 capital ratio

13.5 16.8 8.5

Total capital ratio

14.5 17.2 10.5

Leverage-based metrics:

Adjusted quarterly average assets (in billions)

(4)

$ 2,471 $ 2,471

Tier 1 leverage ratio

7.6 % 7.6 % 5.0

Supplementary leverage exposure (in billions)

$ 2,910

Supplementary leverage ratio

6.4 % 6.0

December 31, 2022

Risk-based capital metrics:

Common equity tier 1 capital $ 181,089 $ 181,089

Tier 1 capital 181,089 181,089

Total capital

(3)

194,254 186,648

Risk-weighted assets (in billions) 1,386 1,087

Common equity tier 1 capital ratio 13.1 % 16.7 % 7.0 %

Tier 1 capital ratio 13.1 16.7 8.5

Total capital ratio 14.0 17.2 10.5

Leverage-based metrics:

Adjusted quarterly average assets (in billions)

(4)

$ 2,358 $ 2,358

Tier 1 leverage ratio 7.7 % 7.7 % 5.0

Supplementary leverage exposure (in billions)

$ 2,785

Supplementary leverage ratio 6.5 % 6.0

(1)

Capital ratios as of December31, 2023 and 2022 are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of the CECL accounting standard

on January 1, 2020.

(2)

Risk-based capital regulatory minimums at both December 31, 2023 and 2022 are the minimum ratios under Basel 3 including a capital conservation buffer of 2.5 percent. The regulatory

minimums for the leverage ratios as of both period ends are the percent required to be considered well capitalized under the PCA framework.

(3)

Total capital under the Advanced approaches differs from the Standardized approach due to differences in the amount permitted in Tier 2 capital related to the qualifying allowance for credit

losses.

(4)

Reflects total average assets adjusted for certain Tier 1 capital deductions.

Total Loss-Absorbing Capacity Requirements

Total loss-absorbing capacity (TLAC) consists of the

Corporation’s Tier 1 capital and eligible long-term debt issued

directly by the Corporation. Eligible long-term debt for TLAC

ratios is comprised of unsecured debt that has a remaining

maturity of at least one year and satisfies additional

requirements as prescribed in the TLAC final rule. As with the

risk-based capital ratios and SLR, the Corporation is required to

maintain TLAC ratios in excess of minimum requirements plus

applicable buffers to avoid restrictions on capital distributions

and discretionary bonus payments to executive officers. Table

14 presents the Corporation's TLAC and long-term debt ratios

and related information as of December 31, 2023 and 2022.

51 Bank of America

Table 14 Bank of America Corporation Total Loss-Absorbing Capacity and Long-Term Debt

TLAC

(1)

Regulatory

Minimum

(2)

Long-term

Debt

Regulatory

Minimum

(3)

(Dollars in millions)

December 31, 2023

Total eligible balance

$ 479,156 $ 239,892

Percentage of risk-weighted assets

(4)

29.0 % 22.0 % 14.5 % 8.5 %

Percentage of supplementary leverage exposure

13.0 9.5 6.5 4.5

December 31, 2022

Total eligible balance $ 465,451 $ 243,833

Percentage of risk-weighted assets

(4)

29.0 % 22.0 % 15.2 % 8.5 %

Percentage of supplementary leverage exposure 13.2 9.5 6.9 4.5

(1)

As of December31, 2023 and 2022, TLAC ratios are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of the CECL accounting standard

on January 1, 2020.

(2)

The TLAC RWA regulatory minimum consists of 18.0 percent plus a TLAC RWA buffer comprised of 2.5 percent plus the Method 1 G-SIB surcharge of 1.5 percent. The countercyclical buffer is zero

for both periods. The TLAC supplementary leverage exposure regulatory minimum consists of 7.5 percent plus a 2.0 percent TLAC leverage buffer. The TLAC RWA and leverage buffers must be

comprised solely of CET1 capital and Tier 1 capital, respectively.

(3)

The long-term debt RWA regulatory minimum is comprised of 6.0 percent plus an additional 2.5 percent requirement based on the Corporation’s Method 2 G-SIB surcharge. The long-term debt

leverage exposure regulatory minimum is 4.5 percent. Effective January 1, 2024, the Corporation’s G-SIB surcharge, which is higher under Method 2, increased 50 bps, resulting in an increase in

our long-term debt RWA regulatory minimum requirement to 9.0 percent from 8.5 percent.

(4)

The approach that yields the higher RWA is used to calculate TLAC and long-term debt ratios, which was the Standardized approach as of December31, 2023 and 2022.

Regulatory Developments

On July 27, 2023, U.S. banking regulators issued proposed

rules that would update future U.S. regulatory capital

requirements. Under the capital proposal, the Advanced

approaches would be replaced with a new standardized

approach, referred to as the expanded risk-based approach,

which would be phased in over a three-year period beginning July

1, 2025. U.S. banking regulators also issued proposed rules to

revise the risk-based capital surcharge for G-SIBs, which would

be effective two calendar quarters after finalization. On August

29, 2023, U.S. banking regulators issued proposed rules that

would change the criteria for debt instruments included in the

Corporation’s eligible long-term debt and TLAC. Any final rules

issued are subject to change from the current proposals. The

Corporation is evaluating the potential impact of the proposed

rules on its regulatory capital, eligible long-term debt and TLAC

requirements.

Regulatory Capital and Securities Regulation

The Corporation’s principal U.S. broker-dealer subsidiaries are

BofA Securities, Inc. (BofAS) and Merrill Lynch, Pierce, Fenner &

Smith Incorporated (MLPF&S). On August 13, 2023, Merrill

Lynch Professional Clearing Corp. (MLPCC) merged into its

immediate parent, BofAS. Prior to that date, MLPCC was a fully-

guaranteed subsidiary of BofAS and provided clearing and

settlement services as well as prime brokerage and arranged

financing services for institutional clients. Following the merger,

client services previously provided by MLPCC are now being

provided by or through BofAS.

The Corporation's principal European subsidiaries

undertaking broker-dealer activities are Merrill Lynch

International (MLI) and BofA Securities Europe SA (BofASE).

The U.S. broker-dealer subsidiaries are subject to the net

capital requirements of Rule 15c3-1 under the Exchange Act.

BofAS computes its capital requirements as an alternative net

capital broker-dealer under Rule 15c3-1e, and MLPF&S

computes its capital requirements in accordance with the

alternative standard under Rule 15c3-1. BofAS is registered as

a futures commission merchant and is subject to Commodity

Futures Trading Commission (CFTC) Regulation 1.17. The U.S.

broker-dealer subsidiaries are also registered with the Financial

Industry Regulatory Authority, Inc. (FINRA). Pursuant to FINRA

Rule 4110, FINRA may impose higher net capital requirements

than Rule 15c3-1 under the Exchange Act with respect to each

of the broker-dealers.

BofAS provides institutional services, and in accordance with

the alternative net capital requirements, is required to maintain

tentative net capital in excess of $5.0 billion and net capital in

excess of the greater of $1.0 billion or a certain percentage of

its reserve requirement in addition to a certain percentage of

securities-based swap risk margin. BofAS must also notify the

SEC in the event its tentative net capital is less than $6.0

billion. BofAS is also required to hold a certain percentage of its

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

CFTC minimum net capital requirement. At December31, 2023,

BofAS had tentative net capital of $21.4 billion. BofAS also had

regulatory net capital of $19.4 billion, which exceeded the

minimum requirement of $4.6 billion.

MLPF&S provides retail services. At December 31, 2023,

MLPF&S' regulatory net capital was $5.8 billion, which exceeded

the minimum requirement of $134 million.

Our European broker-dealers are subject to requirements

from U.S. and non-U.S. regulators. MLI, a U.K. investment firm,

is regulated by the Prudential Regulation Authority and the

Financial Conduct Authority and is subject to certain regulatory

capital requirements. At December 31, 2023, MLI’s capital

resources were $33.9 billion, which exceeded the minimum

Pillar 1 requirement of $11.4 billion.

BofASE, an authorized credit institution with its head office

located in France, is regulated by the Autorité de Contrôle

Prudentiel et de Résolution and the Autorité des Marchés

Financiers, and supervised under the Single Supervisory

Mechanism by the European Central Bank. At December 31,

2023, BofASE's capital resources were $9.6 billion, which

exceeded the minimum Pillar 1 requirement of $3.6 billion.

In addition, MLI and BofASE became conditionally registered

with the SEC as security-based swap dealers in the fourth

quarter of 2021, and maintained net liquid assets at

December 31, 2023 that exceeded the applicable minimum

requirements under the Exchange Act.

Liquidity Risk

Funding and Liquidity Risk Management

Our primary liquidity risk management objective is to meet

expected or unexpected cash flow and collateral requirements,

including payments under long-term debt agreements,

commitments to extend credit and customer deposit

withdrawals, while continuing to support our businesses and

Bank of America 52

customers under a range of economic conditions. To achieve

that objective, we analyze and monitor our liquidity risk under

expected and stressed conditions, maintain liquidity and access

to diverse funding sources, including our stable deposit base,

and seek to align liquidity-related incentives and risks. These

liquidity risk management practices have allowed us to

effectively manage the market stress from increased volatility

due to the failure of certain financial institutions in the first half

of 2023. Our practices have also allowed us to effectively

manage market fluctuations from the rising interest rate

environment, inflationary pressures and changes in the

macroeconomic environment.

We define liquidity as readily available assets, limited to

cash and high-quality, liquid, unencumbered securities that we

can use to meet our contractual and contingent financial

obligations as they arise. We manage our liquidity position

through line-of-business and ALM activities, as well as through

our legal entity funding strategy, on both a forward and current

(including intraday) basis under both expected and stressed

conditions. We believe that a centralized approach to funding

and liquidity management enhances our ability to monitor

liquidity requirements, maximizes access to funding sources,

minimizes borrowing costs and facilitates timely responses to

liquidity events.

The Board approves our liquidity risk policy and the Financial

Contingency and Recovery Plan. The ERC establishes our

liquidity risk tolerance levels. The MRC is responsible for

overseeing liquidity risks and directing management to maintain

exposures within the established tolerance levels. The MRC

reviews and monitors our liquidity position and stress testing

results, approves certain liquidity risk limits and reviews the

impact of strategic decisions on our liquidity. For more

information, see Managing Risk on page 44. Under this

governance framework, we developed certain funding and

liquidity risk management practices which include: maintaining

liquidity at Bank of America Corporation (Parent) and selected

subsidiaries, including our bank subsidiaries and other

regulated entities; determining what amounts of liquidity are

appropriate for these entities based on analysis of debt

maturities and other potential cash outflows, including those

that we may experience during stressed market conditions;

diversifying funding sources, considering our asset profile and

legal entity structure; and performing contingency planning.

NB Holdings Corporation

The Parent, which is a separate and distinct legal entity from our

bank and nonbank subsidiaries, has an intercompany

arrangement with our wholly-owned holding company subsidiary,

NB Holdings Corporation (NB Holdings). We have transferred,

and agreed to transfer, additional Parent assets not required to

satisfy anticipated near-term expenditures to NB Holdings. The

Parent is expected to continue to have access to the same flow

of dividends, interest and other amounts of cash necessary to

service its debt, pay dividends and perform other obligations as

it would have had it not entered into these arrangements and

transferred any assets. These arrangements support our

preferred single point of entry resolution strategy, under which

only the Parent would be resolved under the U.S. Bankruptcy

Code.

In consideration for the transfer of assets, NB Holdings

issued a subordinated note to the Parent in a principal amount

equal to the value of the transferred assets. The aggregate

principal amount of the note will increase by the amount of any

future asset transfers. NB Holdings also provided the Parent

with a committed line of credit that allows the Parent to draw

funds necessary to service near-term cash needs. These

arrangements support our preferred single point of entry

resolution strategy, under which only the Parent would be

resolved under the U.S. Bankruptcy Code. These arrangements

include provisions to terminate the line of credit, forgive the

subordinated note and require the Parent to transfer its

remaining financial assets to NB Holdings if our projected

liquidity resources deteriorate so severely that resolution of the

Parent becomes imminent.

Global Liquidity Sources and Other Unencumbered Assets

We maintain liquidity available to the Corporation, including the

Parent and selected subsidiaries, in the form of cash and high-

quality, liquid, unencumbered securities. Our liquidity buffer,

referred to as Global Liquidity Sources (GLS), is comprised of

assets that are readily available to the Parent and selected

subsidiaries, including holding company, bank and broker-dealer

subsidiaries, even during stressed market conditions. Our cash

is primarily on deposit with the Federal Reserve Bank and, to a

lesser extent, central banks outside of the U.S. We limit the

composition of high-quality, liquid, unencumbered securities to

U.S. government securities, U.S. agency securities, U.S. agency

MBS and other investment-grade securities, and a select group

of non-U.S. government securities. We can obtain cash for these

securities, even in stressed conditions, through repurchase

agreements or outright sales. We hold our GLS in legal entities

that allow us to meet the liquidity requirements of our global

businesses, and we consider the impact of potential regulatory,

tax, legal and other restrictions that could limit the

transferability of funds among entities.

Table 15 presents average GLS for the three months ended

December 31, 2023 and 2022.

Table 15 Average Global Liquidity Sources

Three Months Ended

December 31

(Dollars in billions)

2023

2022

Bank entities

$ 735

$ 694

Nonbank and other entities

(1)

162

174

Total Average Global Liquidity Sources

$ 897

$ 868

(1)

Nonbank includes Parent, NB Holdings and other regulated entities.

Our bank subsidiaries’ liquidity is primarily driven by deposit

and lending activity, as well as securities valuation and net debt

activity. Bank subsidiaries can also generate incremental

liquidity by pledging a range of unencumbered loans and

securities to certain FHLBs and the Federal Reserve Discount

Window. The cash we could have obtained by borrowing against

this pool of specifically-identified eligible assets was $312

billion and $348 billion at December 31, 2023 and 2022. We

have established operational procedures to enable us to borrow

against these assets, including regularly monitoring our total

pool of eligible loans and securities collateral. Eligibility is

defined in guidelines from the FHLBs and the Federal Reserve

and is subject to change at their discretion. Due to regulatory

restrictions, liquidity generated by the bank subsidiaries can

generally be used only to fund obligations within the bank

subsidiaries, and transfers to the Parent or nonbank

subsidiaries may be subject to prior regulatory approval.

Liquidity is also held in nonbank entities, including the

Parent, NB Holdings and other regulated entities. The Parent

and NB Holdings liquidity is typically in the form of cash

deposited at BANA, which is excluded from the liquidity at bank

subsidiaries, and high-quality, liquid, unencumbered securities.

Liquidity held in other regulated entities, comprised primarily of

53 Bank of America

broker-dealer subsidiaries, is primarily available to meet the

obligations of that entity, and transfers to the Parent or to any

other subsidiary may be subject to prior regulatory approval due

to regulatory restrictions and minimum requirements. Our other

regulated entities also hold unencumbered investment-grade

securities and equities that we believe could be used to

generate additional liquidity.

Table 16 presents the composition of average GLS for the

three months ended December 31, 2023 and 2022.

Table 16

Average Global Liquidity Sources Composition

Three Months Ended

December 31

(Dollars in billions)

2023

2022

Cash on deposit

$ 380

$ 174

U.S. Treasury securities

197

252

U.S. agency securities, mortgage-backed

securities, and other investment-grade securities

299

427

Non-U.S. government securities

Total Average Global Liquidity Sources $ 897

$ 868

Our GLS are substantially the same in composition to what

qualifies as High Quality Liquid Assets (HQLA) under the final

U.S. Liquidity Coverage Ratio (LCR) rules. However, HQLA for

purposes of calculating LCR is not reported at market value, but

at a lower value that incorporates regulatory deductions and the

exclusion of excess liquidity held at certain subsidiaries. The

LCR is calculated as the amount of a financial institution’s

unencumbered HQLA relative to the estimated net cash outflows

the institution could encounter over a 30-day period of

significant liquidity stress, expressed as a percentage. Our

average consolidated HQLA, on a net basis, was $590 billion

and $605 billion for the three months ended December 31,

2023 and 2022. For the same periods, the average

consolidated LCR was 115 percent and 120 percent. Our LCR

fluctuates due to normal business flows from customer activity.

Liquidity Stress Analysis

We utilize liquidity stress analysis to assist us in determining

the appropriate amounts of liquidity to maintain at the Parent

and our subsidiaries to meet contractual and contingent cash

outflows under a range of scenarios. The scenarios we consider

and utilize incorporate market-wide and Corporation-specific

events, including potential credit rating downgrades for the

Parent and our subsidiaries, and more severe events including

potential resolution scenarios. The scenarios are based on our

historical experience, experience of distressed and failed

financial institutions, regulatory guidance, and both expected

and unexpected future events.

The types of potential contractual and contingent cash

outflows we consider in our scenarios may include, but are not

limited to, upcoming contractual maturities of unsecured debt

and reductions in new debt issuances; diminished access to

secured financing markets; potential deposit withdrawals;

increased draws on loan commitments, liquidity facilities and

letters of credit; additional collateral that counterparties could

call if our credit ratings were downgraded; collateral and margin

requirements arising from market value changes; and potential

liquidity required to maintain businesses and finance customer

activities. Changes in certain market factors, including, but not

limited to, credit rating downgrades, could negatively impact

potential contractual and contingent outflows and the related

financial instruments, and in some cases these impacts could

be material to our financial results.

We consider all sources of funds that we could access

during each stress scenario and focus particularly on matching

available sources with corresponding liquidity requirements by

legal entity. We also use the stress modeling results to manage

our asset and liability profile and establish limits and guidelines

on certain funding sources and businesses.

Net Stable Funding Ratio

The Net Stable Funding Ratio (NSFR) is a liquidity requirement

for large banks to maintain a minimum level of stable funding

over a one-year period. The requirement is intended to support

the ability of banks to lend to households and businesses in

both normal and adverse economic conditions and is

complementary to the LCR, which focuses on short-term liquidity

risks. The U.S. NSFR applies to the Corporation on a

consolidated basis and to our insured depository institutions.

For the three months ended September 30, 2023 and

December31, 2023, the average consolidated NSFR was 119

percent and 120 percent.

Diversified Funding Sources

We fund our assets primarily with a mix of deposits, and

secured and unsecured liabilities through a centralized, globally

coordinated funding approach diversified across products,

programs, markets, currencies and investor groups.

The primary benefits of our centralized funding approach

include greater control, reduced funding costs, wider name

recognition by investors and greater flexibility to meet the

variable funding requirements of subsidiaries. Where

regulations, time zone differences or other business

considerations make Parent funding impractical, certain other

subsidiaries may issue their own debt.

We fund a substantial portion of our lending activities

through our deposits, which were $1.92 trillion and $1.93

trillion at December31, 2023 and 2022. Deposits are primarily

generated by our Consumer Banking, GWIM and Global Banking

segments. These deposits are diversified by clients, product

type and geography, and the majority of our U.S. deposits are

insured by the FDIC.

At December31, 2023, 50 percent of our deposits were in

Consumer Banking, 16 percent in GWIM and 27 percent in

Global Banking. As of the same period, approximately 68

percent of consumer and small business deposits and 79

percent of U.S. deposits in Global Banking were held by clients

who have had accounts with us for 10 or more years. In

addition, at December31, 2023 and 2022, 28 percent and 34

percent of our deposits were noninterest-bearing and included

operating accounts of our consumer and commercial clients.

We consider a substantial portion of our deposits to be a

stable, low-cost and consistent source of funding. We believe

this deposit funding is generally less sensitive to interest rate

changes, market volatility or changes in our credit ratings than

wholesale funding sources. Our lending activities may also be

financed through secured borrowings, including credit card

securitizations and securitizations with government-sponsored

enterprises (GSE), the Federal Housing Administration (FHA) and

private-label investors, as well as FHLB loans.

Our trading activities in other regulated entities are primarily

funded on a secured basis through securities lending and

repurchase agreements, and these amounts will vary based on

customer activity and market conditions. We believe funding

these activities in the secured financing markets is more cost-

efficient and less sensitive to changes in our credit ratings than

unsecured financing. Repurchase agreements are generally

short-term and often overnight. Disruptions in secured financing

Bank of America 54

markets for financial institutions have occurred in prior market

cycles which resulted in adverse changes in terms or significant

reductions in the availability of such financing. We manage the

liquidity risks arising from secured funding by sourcing funding

globally from a diverse group of counterparties, providing a

range of securities collateral and pursuing longer durations,

when appropriate. For more information on secured financing

agreements, see Note 10 – Securities Financing Agreements,

Short-term Borrowings, Collateral and Restricted Cash to the

Consolidated Financial Statements.

Total long-term debt increased $26.2 billion to $302.2

billion during 2023, primarily due to debt issuances and

valuation adjustments, partially offset by debt maturities and

redemptions. We may, from time to time, purchase outstanding

debt instruments in various transactions, depending on market

conditions, liquidity and other factors. Our other regulated

entities may also make markets in our debt instruments to

provide liquidity for investors.

During 2023, we issued $62.0 billion of long-term debt

consisting of $24.0 billion of notes issued by Bank of America

Corporation, substantially all of which were TLAC compliant,

$25.1 billion of notes issued by Bank of America, N.A. and

$12.9 billion of other debt. During 2022, we issued $66.0

billion of long-term debt consisting of $44.2 billion of notes

issued by Bank of America Corporation, substantially all of

which were TLAC compliant, $10.0 billion of notes issued by

Bank of America, N.A. and $11.8 billion of other debt.

During 2023, we had total long-term debt maturities and

redemptions in the aggregate of $42.7 billion consisting of

$25.3 billion for Bank of America Corporation, $10.5 billion for

Bank of America, N.A. and $6.9 billion of other debt. During

2022, we had total long-term debt maturities and redemptions

in the aggregate of $33.3 billion consisting of $19.8 billion for

Bank of America Corporation, $9.9 billion for Bank of America,

N.A. and $3.6 billion of other debt.

At December 31, 2023, Bank of America Corporation's

senior notes of $208.4 billion included $187.7 billion of

outstanding notes that are both TLAC eligible and callable at

least one year before their stated maturities. Of these senior

notes, $22.1 billion will be callable and become TLAC ineligible

during 2024, and $22.0 billion, $21.4 billion, $25.0 billion and

$19.9 billion will do so during each of 2025 through 2028,

respectively, and $77.3 billion thereafter.

We issue long-term unsecured debt in a variety of maturities

and currencies to achieve cost-efficient funding and to maintain

an appropriate maturity profile. While the cost and availability of

unsecured funding may be negatively impacted by general

market conditions or by matters specific to the financial

services industry or the Corporation, we seek to mitigate

refinancing risk by actively managing the amount of our

borrowings that we anticipate will mature within any month or

quarter. We may issue unsecured debt in the form of structured

notes for client purposes, certain of which qualify as TLAC-

eligible debt. During 2023, we issued $15.7 billion of structured

notes, which are debt obligations that pay investors returns

linked to other debt or equity securities, indices, currencies or

commodities. We typically hedge the returns we are obligated to

pay on these liabilities with derivatives and/or investments in

the underlying instruments, so that from a funding perspective,

the cost is similar to our other unsecured long-term debt. We

could be required to settle certain structured note obligations

for cash or other securities prior to maturity under certain

circumstances, which we consider for liquidity planning

purposes. We believe, however, that a portion of such

borrowings will remain outstanding beyond the earliest put or

redemption date.

Substantially all of our senior and subordinated debt

obligations contain no provisions that could trigger a

requirement for an early repayment, require additional collateral

support, result in changes to terms, accelerate maturity or

create additional financial obligations upon an adverse change

in our credit ratings, financial ratios, earnings, cash flows or

stock price. For more information on long-term debt funding,

including issuances and maturities and redemptions, see Note

11 – Long-term Debt to the Consolidated Financial Statements.

We use derivative transactions to manage the duration,

interest rate and currency risks of our borrowings, considering

the characteristics of the assets they are funding. For more

information on our ALM activities, see Interest Rate Risk

Management for the Banking Book on page 77.

Uninsured Deposits

The FDIC insures the Corporation’s U.S. deposits up to

$250,000 per depositor, per insured bank for each account

ownership category, and various country-specific funds insure

non-U.S. deposits up to specified limits. Deposits that exceed

insurance limits are uninsured. At December 31, 2023, the

Corporation’s deposits totaled $1.92 trillion, of which total

estimated uninsured U.S. and non-U.S. deposits were $606.8

billion and $116.6 billion. At December 31, 2022, the

Corporation’s deposits totaled $1.93 trillion, of which total

estimated uninsured U.S. and non-U.S. deposits were $617.6

billion and $102.8 billion. Deposit balances exclude $14.8

billion and $15.2 billion of collateral received on certain

derivative contracts that are netted against the derivative asset

in the Consolidated Balance Sheet at December31, 2023 and

2022. Estimated uninsured deposits presented in this section

reflect amounts disclosed in our regulatory reports, adjusted to

exclude related accrued interest and intercompany deposit

balances.

Table 17 presents information about the Corporation’s total

estimated uninsured time deposits. For more information on our

liquidity sources, see Global Liquidity Sources and Other

Unencumbered Assets, and for more information on deposits,

see Diversified Funding Sources in this section. For more

information on contractual time deposit maturities, see Note 9 –

Deposits to the Consolidated Financial Statements.

Table 17 Uninsured Time Deposits

(1)

December 31, 2023

(Dollars in millions)

U.S. Non-U.S. Total

Uninsured time deposits with a

maturity of:

3 months or less $ 8,797 $ 7,744

$ 16,541

Over 3 months through 6 months 6,154 1,629

7,783

Over 6 months through 12 months 7,885 280

8,165

Over 12 months 848 2,985

3,833

Total $ 23,684 $ 12,638 $ 36,322

(1)

Amounts are estimated based on the regulatory methodologies defined by each local

jurisdiction.

Contingency Planning

We maintain contingency funding plans that outline our potential

responses to liquidity stress events at various levels of severity.

These policies and plans are based on stress scenarios and

include potential funding strategies and communication and

notification procedures that we would implement in the event we

experienced stressed liquidity conditions. We periodically review

and test the contingency funding plans to validate efficacy and

55 Bank of America

assess readiness.

Our U.S. bank subsidiaries can access contingency funding

through the Federal Reserve Discount Window. Certain non-U.S.

subsidiaries have access to central bank facilities in the

jurisdictions in which they operate. While we do not rely on

these sources in our liquidity modeling, we maintain the

policies, procedures and governance processes that would

enable us to access these sources if necessary.

Credit Ratings

Our borrowing costs and ability to raise funds are impacted by

our credit ratings. In addition, credit ratings may be important to

customers or counterparties when we compete in certain

markets and when we seek to engage in certain transactions,

including over-the-counter (OTC) derivatives. Thus, it is our

objective to maintain high-quality credit ratings, and

management maintains an active dialogue with the major rating

agencies.

Credit ratings and outlooks are opinions expressed by rating

agencies on our creditworthiness and that of our obligations or

securities, including long-term debt, short-term borrowings,

preferred stock and other securities, including asset

securitizations. Our credit ratings are subject to ongoing review

by the rating agencies, and they consider a number of factors,

including our own financial strength, performance, prospects and

operations as well as factors not under our control. The rating

agencies could make adjustments to our ratings at any time,

and they provide no assurances that they will maintain our

ratings at current levels.

Other factors that influence our credit ratings include

changes to the rating agencies’ methodologies for our industry

or certain security types; the rating agencies’ assessment of the

general operating environment for financial services companies;

our relative positions in the markets in which we compete; our

various risk exposures and risk management policies and

activities; pending litigation and other contingencies or potential

tail risks; our reputation; our liquidity position, diversity of

funding sources and funding costs; the current and expected

level and volatility of our earnings; our capital position and

capital management practices; our corporate governance; the

sovereign credit ratings of the U.S. government; current or future

regulatory and legislative initiatives; and the agencies’ views on

whether the U.S. government would provide meaningful support

to the Corporation or its subsidiaries in a crisis.

On May 3, 2023, Moody’s Investors Service (Moody’s)

upgraded its long-term senior debt ratings of the Corporation by

one notch to A1 from A2, and also upgraded the long-term

senior debt ratings of BANA to Aa1 from Aa2. Moody’s

concurrently affirmed its Prime-1 short-term ratings of the

Corporation and BANA. Moody’s cited the Corporation’s

strengthened capital, improved earnings profile and ongoing

commitment to maintaining a restrained risk appetite as

rationale for the upgrade. These actions concluded the review

for upgrade that Moody’s initiated on January 23, 2023.

Separately, on November 13, 2023, Moody’s placed its ratings

for BANA on negative outlook, reflecting the agency’s recent

move to a negative outlook on its ratings for the government of

the United States of America and the potentially weaker

capacity for the government to support systemically important

U.S. banks. The Corporation’s ratings and stable outlook were

not affected by this action.

On March 31, 2023, Standard & Poor’s Global Ratings (S&P)

affirmed the current ratings of the Corporation and its

subsidiaries, while at the same time revising its rating outlook

to Stable from Positive. S&P concurrently changed its outlooks

on three other large U.S. bank holding companies to Stable from

Positive, noting that the agency has reduced its upside

expectations for bank ratings in the near term.

The ratings and outlooks from Fitch Ratings for the

Corporation and its subsidiaries have not changed during 2023.

Table 18 presents the Corporation’s current long-term/short-

term senior debt ratings and outlooks expressed by the rating

agencies.

Table 18 Senior Debt Ratings

Moody’s Investors Service Standard & Poor’s Global Ratings Fitch Ratings

Long-term Short-term Outlook Long-term Short-term Outlook Long-term Short-term Outlook

Bank of America Corporation

A1 P-1 Stable A- A-2 Stable AA- F1+ Stable

Bank of America, N.A.

Aa1 P-1 Negative A+ A-1 Stable AA F1+ Stable

Bank of America Europe Designated

Activity Company

NR NR NR A+ A-1 Stable AA F1+ Stable

Merrill Lynch, Pierce, Fenner & Smith

Incorporated

NR NR NR A+ A-1 Stable AA F1+ Stable

BofA Securities, Inc.

NR NR NR A+ A-1 Stable AA F1+ Stable

Merrill Lynch International

NR NR NR A+ A-1 Stable AA F1+ Stable

BofA Securities Europe SA

NR NR NR A+ A-1 Stable AA F1+ Stable

NR = not rated

A reduction in certain of our credit ratings or the ratings of

certain asset-backed securitizations may have a material

adverse effect on our liquidity, potential loss of access to credit

markets, the related cost of funds, our businesses and on

certain revenues, particularly in those businesses where

counterparty creditworthiness is critical. In addition, under the

terms of certain OTC derivative contracts and other trading

agreements, in the event of downgrades of our or our rated

subsidiaries’ credit ratings, the counterparties to those

agreements may require us to provide additional collateral, or to

terminate these contracts or agreements, which could cause us

to sustain losses and/or adversely impact our liquidity. If the

short-term credit ratings of our Parent, bank or broker-dealer

subsidiaries were downgraded by one or more levels, the

potential loss of access to short-term funding sources such as

repo financing and the effect on our incremental cost of funds

could be material.

While certain potential impacts are contractual and

quantifiable, the full scope of the consequences of a credit

rating downgrade to a financial institution is inherently

uncertain, as it depends upon numerous dynamic, complex and

inter-related factors and assumptions, including whether any

downgrade of a company’s long-term credit ratings precipitates

downgrades to its short-term credit ratings, and assumptions

about the potential behaviors of various customers, investors

and counterparties. For more information on potential impacts

Bank of America 56

of credit rating downgrades, see Liquidity Risk – Liquidity Stress

Analysis on page 54.

For more information on additional collateral and termination

payments that could be required in connection with certain over-

the-counter derivative contracts and other trading agreements in

the event of a credit rating downgrade, see Note 3 – Derivatives

to the Consolidated Financial Statements and Item 1A. Risk

Factors.

Common Stock Dividends

For a summary of our declared quarterly cash dividends on

common stock during 2023 and through February 20, 2024,

see Note 13 – Shareholders’ Equity to the Consolidated Financial

Statements.

Finance Subsidiary Issuers and Parent Guarantor

BofA Finance LLC, a Delaware limited liability company (BofA

Finance), is a consolidated finance subsidiary of the Corporation

that has issued and sold, and is expected to continue to issue

and sell, its senior unsecured debt securities (Guaranteed

Notes) that are fully and unconditionally guaranteed by the

Corporation. The Corporation guarantees the due and punctual

payment, on demand, of amounts payable on the Guaranteed

Notes if not paid by BofA Finance. In addition, each of BAC

Capital Trust XIII, BAC Capital Trust XIV and BAC Capital Trust

XV, Delaware statutory trusts (collectively, the Trusts) is a 100

percent owned finance subsidiary of the Corporation that has

issued and sold trust preferred securities (the Trust Preferred

Securities) or capital securities (the Capital Securities and,

together with the Guaranteed Notes and the Trust Preferred

Securities, the Guaranteed Securities), as applicable, that

remained outstanding at December 31, 2023. The Corporation

guarantees the payment of amounts and distributions with

respect to the Trust Preferred Securities and Capital Securities

if not paid by the Trusts, to the extent of funds held by the

Trusts. This guarantee, together with the Corporation’s other

obligations with respect to the Trust Preferred Securities and

Capital Securities, effectively constitutes a full and

unconditional guarantee of the Trusts’ payment obligations on

the Trust Preferred Securities or Capital Securities, as

applicable. No other subsidiary of the Corporation guarantees

the Guaranteed Securities.

BofA Finance and each of the Trusts are finance

subsidiaries, have no independent assets, revenues or

operations and are dependent upon the Corporation and/or the

Corporation’s other subsidiaries to meet their respective

obligations under the Guaranteed Securities in the ordinary

course. If holders of the Guaranteed Securities make claims on

their Guaranteed Securities in a bankruptcy, resolution or

similar proceeding, any recoveries on those claims will be

limited to those available under the applicable guarantee by the

Corporation, as described above.

The Corporation is a holding company and depends upon its

subsidiaries for liquidity. Applicable laws and regulations and

intercompany arrangements entered into in connection with the

Corporation’s resolution plan could restrict the availability of

funds from subsidiaries to the Corporation, which could

adversely affect the Corporation’s ability to make payments

under its guarantees. In addition, the obligations of the

Corporation under the guarantees of the Guaranteed Securities

will be structurally subordinated to all existing and future

liabilities of its subsidiaries, and claimants should look only to

assets of the Corporation for payments. If the Corporation, as

guarantor of the Guaranteed Notes, transfers all or substantially

all of its assets to one or more direct or indirect majority-owned

subsidiaries, under the indenture governing the Guaranteed

Notes, the subsidiary or subsidiaries will not be required to

assume the Corporation’s obligations under its guarantee of the

Guaranteed Notes.

For more information on factors that may affect payments to

holders of the Guaranteed Securities, see Liquidity Risk – NB

Holdings Corporation in this section, Item 1. Business –

Insolvency and the Orderly Liquidation Authority on page 6 and

Part I. Item 1A. Risk Factors – Liquidity on page 9.

Representations and Warranties Obligations

For information on representations and warranties obligations in

connection with the sale of mortgage loans, see Note 12 –

Commitments and Contingencies to the Consolidated Financial

Statements.

Credit Risk Management

Credit risk is the risk of loss arising from the inability or failure

of a borrower or counterparty to meet its obligations. Credit risk

can also arise from operational failures that result in an

erroneous advance, commitment or investment of funds. We

define the credit exposure to a borrower or counterparty as the

loss potential arising from all product classifications including

loans and leases, deposit overdrafts, derivatives, assets held-

for-sale and unfunded lending commitments, which include loan

commitments, letters of credit and financial guarantees.

Derivative positions are recorded at fair value, and assets held-

for-sale are recorded at either fair value or the lower of cost or

fair value. Certain loans and unfunded commitments are

accounted for under the fair value option. Credit risk for

categories of assets carried at fair value is not accounted for as

part of the allowance for credit losses but as part of the fair

value adjustments recorded in earnings. For derivative positions,

our credit risk is measured as the net cost in the event the

counterparties with contracts in which we are in a gain position

fail to perform under the terms of those contracts. We use the

current fair value to represent credit exposure without giving

consideration to future mark-to-market changes. The credit risk

amounts take into consideration the effects of legally

enforceable master netting agreements and cash collateral. Our

consumer and commercial credit extension and review

procedures encompass funded and unfunded credit exposures.

For more information on derivatives and credit extension

commitments, see Note 3 – Derivatives and Note 12 –

Commitments and Contingencies to the Consolidated Financial

Statements.

We manage credit risk based on the risk profile of the

borrower or counterparty, repayment sources, the nature of

underlying collateral and other support given current events,

conditions and expectations. We classify our portfolios as either

consumer or commercial and monitor credit risk in each as

discussed below.

We refine our underwriting and credit risk management

practices as well as credit standards to meet the changing

economic environment. To mitigate losses and enhance

customer support in our consumer businesses, we have in

place collection programs and loan modification and customer

assistance infrastructures. We utilize a number of actions to

mitigate losses in the commercial businesses including

increasing the frequency and intensity of portfolio monitoring,

hedging activity and our practice of transferring management of

deteriorating commercial exposures to independent special

asset officers as credits enter criticized categories.

For information on our credit risk management activities, see

the following: Consumer Portfolio Credit Risk Management on

57 Bank of America

page 58, Commercial Portfolio Credit Risk Management on page

62, Non-U.S. Portfolio on page 68, Allowance for Credit Losses

on page 71, and Note 5 – Outstanding Loans and Leases and

Allowance for Credit Losses to the Consolidated Financial

Statements. For information on the Corporation’s loan

modification programs, see Note 1 – Summary of Significant

Accounting Principles and Note 5 – Outstanding Loans and

Leases and Allowance for Credit Losses to the Consolidated

Financial Statements. For more information on the Corporation’s

credit risks, see the Credit section within Item 1A. Risk Factors

of this Annual Report on Form 10-K.

During 2023, our asset quality remained relatively stable.

Our net charge-off ratio increased primarily driven by credit card

loans, as delinquency trends continued to slowly increase off of

historic lows. Nonperforming loans increased compared to 2022

driven by the commercial real estate office property type, while

commercial reservable criticized exposure increased driven by

both office as well as other industries that have been impacted

by the current environment. Uncertainty remains regarding

broader economic impacts as a result of inflationary pressures,

elevated rates and the current geopolitical environment and

could lead to adverse impacts to credit quality metrics in future

periods.

Consumer Portfolio Credit Risk Management

Credit risk management for the consumer portfolio begins with

initial underwriting and continues throughout a borrower’s credit

cycle. Statistical techniques in conjunction with experiential

judgment are used in all aspects of portfolio management

including underwriting, product pricing, risk appetite, setting

credit limits, and establishing operating processes and metrics

to quantify and balance risks and returns. Statistical models are

built using detailed behavioral information from external

sources, such as credit bureaus, and/or internal historical

experience and are a component of our consumer credit risk

management process. These models are used in part to assist

in making both new and ongoing credit decisions as well as

portfolio management strategies, including authorizations and

line management, collection practices and strategies, and

determination of the allowance for loan and lease losses and

allocated capital for credit risk.

Consumer Credit Portfolio

During 2023, the U.S. unemployment rate remained relatively

stable and home prices increased compared to 2022. Net

charge-offs increased $1.2 billion to $3.1 billion in 2023

primarily due to late-stage delinquent credit card loans that were

charged off.

The consumer allowance for loan and lease losses increased

$1.3 billion during 2023 to $8.5 billion. For more information,

see Allowance for Credit Losses on page 71.

For more information on our accounting policies regarding

delinquencies, nonperforming status, charge-offs and loan

modifications for the consumer portfolio, see Note 1 – Summary

of Significant Accounting Principles and Note 5 – Outstanding

Loans and Leases and Allowance for Credit Losses to the

Consolidated Financial Statements.

Table 19 presents our outstanding consumer loans and

leases, consumer nonperforming loans and accruing consumer

loans past due 90 days or more.

Table 19 Consumer Credit Quality

Outstandings Nonperforming

Accruing Past Due

90 Days or More

December 31

(Dollars in millions)

2023

2022

2023

2022

2023

2022

Residential mortgage

(1)

$ 228,403

$ 229,670

$ 2,114

$ 2,167

$ 252

$ 368

Home equity

25,527

26,563

450

510

—

Credit card

102,200

93,421

n/a

1,224

717

Direct/Indirect consumer

(2)

103,468

106,236

148

Other consumer

124

156

—

Consumer loans excluding loans accounted for under the fair

value option $ 459,722

$ 456,046

$ 2,712

$ 2,754

$ 1,478

$ 1,087

Loans accounted for under the fair value option

(3)

243

339

Total consumer loans and leases $ 459,965

$ 456,385

Percentage of outstanding consumer loans and leases

(4)

n/a

0.59 %

0.60 %

0.32 %

0.24 %

Percentage of outstanding consumer loans and leases,

excluding fully-insured loan portfolios

(4)

n/a

0.60

0.62

0.27

0.16

(1)

Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At December31, 2023 and 2022, residential mortgage included $156 million and $260 million of loans on

which interest had been curtailed by the FHA, and therefore were no longer accruing interest, although principal was still insured, and $96 million and $108 million of loans on which interest was

still accruing.

(2)

Outstandings primarily includes auto and specialty lending loans and leases of $53.9 billion and $51.8 billion, U.S. securities-based lending loans of $46.0 billion and $50.4 billion at

December31, 2023 and 2022, and non-U.S. consumer loans of $2.8 billion and $3.0 billion at December31, 2023 and 2022.

(3)

For more information on the fair value option, see Note 21 – Fair Value Option to the Consolidated Financial Statements.

(4)

Excludes consumer loans accounted for under the fair value option. At December31, 2023 and 2022, $4 million and $7 million of loans accounted for under the fair value option were past due

90 days or more and not accruing interest.

n/a = not applicable

Bank of America 58

Table 20 presents net charge-offs and related ratios for consumer loans and leases.

Table 20

Consumer Net Charge-offs and Related Ratios

Net Charge-offs Net Charge-off Ratios

(1)

(Dollars in millions)

2023

2022

2023

2022

Residential mortgage

$ 16

$ 72

0.01 %

0.03 %

Home equity

(59)

(90)

(0.23)

(0.33)

Credit card

2,561

1,334

2.66

1.60

Direct/Indirect consumer

0.09

0.02

Other consumer

480

521 n/m n/m

Total $ 3,090

$ 1,855

0.68

0.42

(1)

Net charge-off ratios are calculated as net charge-offs divided by average outstanding loans and leases, excluding loans accounted for under the fair value option.

n/m = not meaningful

We believe that the presentation of information adjusted to

exclude the impact of the fully-insured loan portfolio and loans

accounted for under the fair value option is more representative

of the ongoing operations and credit quality of the business. As

a result, in the following tables and discussions of the

residential mortgage and home equity portfolios, we exclude

loans accounted for under the fair value option and provide

information that excludes the impact of the fully-insured loan

portfolio in certain credit quality statistics.

Residential Mortgage

The residential mortgage portfolio made up the largest

percentage of our consumer loan portfolio at 50 percent of

consumer loans and leases in 2023. Approximately 51 percent

of the residential mortgage portfolio was in Consumer Banking,

46 percent was in GWIM and the remaining portion was in All

Other.

Outstanding balances in the residential mortgage portfolio

decreased $1.3 billion in 2023, as paydowns and payoffs

outpaced new originations.

At December31, 2023 and 2022, the residential mortgage

portfolio included $11.0 billion and $11.7 billion of outstanding

fully-insured loans, of which $2.2 billion for both periods had

FHA insurance, with the remainder protected by Fannie Mae

long-term standby agreements.

Table 21 presents certain residential mortgage key credit

statistics on both a reported basis and excluding the fully-

insured loan portfolio. The following discussion presents the

residential mortgage portfolio excluding the fully-insured loan

portfolio.

Table 21 Residential Mortgage – Key Credit Statistics

Reported Basis

(1)

Excluding Fully-insured Loans

(1)

December 31

(Dollars in millions)

2023

2022

2023

2022

Outstandings

$ 228,403

$ 229,670

$ 217,439

$ 217,976

Accruing past due 30days or more

1,513

1,471

986

844

Accruing past due 90days or more

252

368

—

Nonperforming loans

(2)

2,114

2,167

2,114

2,167

Percent of portfolio 



Refreshed LTV greater than 90 but less than or equal to 100

1 %

Refreshed LTV greater than 100

—

Refreshed FICO below 620

(1)

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

(2)

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

Nonperforming outstanding balances in the residential

mortgage portfolio decreased $53 million in 2023 primarily due

to payoffs and paydowns, returns to performing and loan sales

outpacing new additions. Of the nonperforming residential

mortgage loans at December 31, 2023, $1.3 billion, or 62

percent, were current on contractual payments. Excluding fully-

insured loans, loans accruing past due 30 days or more

increased $142 million.

Of the $217.4 billion in total residential mortgage loans

outstanding at December 31, 2023, $63.1 billion, or 29

percent, of loans were originated as interest-only. The

outstanding balance of interest-only residential mortgage loans

that had entered the amortization period was $3.6 billion, or six

percent, at December 31, 2023. Residential mortgage loans

that have entered the amortization period generally experience a

higher rate of early stage delinquencies and nonperforming

status compared to the residential mortgage portfolio as a

whole. At December 31, 2023, $80 million, or two percent, of

outstanding interest-only residential mortgages that had entered

the amortization period were accruing past due 30 days or more

compared to $986 million, or less than one percent, for the

entire residential mortgage portfolio. In addition, at

December 31, 2023, $180 million, or five percent, of

outstanding interest-only residential mortgage loans that had

entered the amortization period were nonperforming, of which

$61 million were contractually current. Loans that have yet to

enter the amortization period in our interest-only residential

mortgage portfolio are primarily well-collateralized loans to our

wealth management clients and have an interest-only period of

three years to 10 years. Substantially all of these loans that

have yet to enter the amortization period will not be required to

make a fully-amortizing payment until 2025 or later.

59 Bank of America

Table 22 presents outstandings, nonperforming loans and net charge-offs by certain state concentrations for the residential

mortgage portfolio. In the New York area, the New York-Northern New Jersey-Long Island Metropolitan Statistical Area (MSA) made

up 15 percent of outstandings at both December31, 2023 and 2022. The Los Angeles-Long Beach-Santa Ana MSA within California

represented 14 percent of outstandings at both December31, 2023 and 2022.

Table 22 Residential Mortgage State Concentrations

Outstandings

(1)

Nonperforming

(1)

December 31 Net Charge-offs

(Dollars in millions)

December 31

2023

December 31

2022

December 31

2023

December 31

2022

2023

2022

California

$ 81,085

$ 80,878

$ 641

$ 656

$ 3

$ 37

New York

25,975

26,228

320

328

Florida

15,450

15,225

131

145

(2)

Texas

9,361

9,399

—

New Jersey

8,671

8,810

—

Other

76,897

77,436

837

854

Residential mortgage loans $ 217,439

$ 217,976

$ 2,114

$ 2,167

$ 16

$ 72

Fully-insured loan portfolio

10,964

11,694

Total residential mortgage loan portfolio $ 228,403

$ 229,670

(1)

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

Home Equity

At December 31, 2023, the home equity portfolio made up six

percent of the consumer portfolio and was comprised of home

equity lines of credit (HELOCs), home equity loans and reverse

mortgages. HELOCs generally have an initial draw period of 10

years, and after the initial draw period ends, the loans generally

convert to 15- or 20-year amortizing loans. We no longer

originate home equity loans or reverse mortgages.

At December 31, 2023, 84 percent of the home equity

portfolio was in Consumer Banking, seven percent was in All

Other and the remainder of the portfolio was primarily in GWIM.

Outstanding balances in the home equity portfolio decreased

$1.0 billion in 2023 primarily due to paydowns outpacing draws

on existing lines and new originations. Of the total home equity

portfolio at December 31, 2023 and 2022, $10.1 billion and

$11.1 billion, or 39 percent and 42 percent, were in first-lien

positions. At December31, 2023, outstanding balances in the

home equity portfolio that were in a second-lien or more junior-

lien position and where we also held the first-lien loan totaled

$4.4 billion, or 17 percent, of our total home equity portfolio.

Unused HELOCs totaled $45.1 billion and $42.4 billion at

December31, 2023 and 2022. The HELOC utilization rate was

35 percent and 38 percent at December31, 2023 and 2022.

Table 23 presents certain home equity portfolio key credit

statistics.

Table 23 Home Equity – Key Credit Statistics

(1)

December 31

(Dollars in millions)

2023

2022

Outstandings

$ 25,527

$ 26,563

Accruing past due 30 days or more

Nonperforming loans

(2)

450

510

Percent of portfolio

Refreshed CLTV greater than 90 but less than or equal to 100

—%

— %

Refreshed CLTV greater than 100

—

Refreshed FICO below 620

(1)

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

(2)

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

Nonperforming outstanding balances in the home equity

portfolio decreased $60 million to $450 million at

December31, 2023, primarily driven by loan sales, payoffs and

returns to performing status outpacing new additions. Of the

nonperforming home equity loans at December31, 2023, $256

million, or 57 percent, were current on contractual payments. In

addition, $113 million, or 25 percent, were 180 days or more

past due and had been written down to the estimated fair value

of the collateral, less costs to sell. Accruing loans that were 30

days or more past due remained relatively unchanged in 2023

compared to 2022.

Of the $25.5 billion in total home equity portfolio

outstandings at December31, 2023, as shown in Table 23, 11

percent require interest-only payments. The outstanding balance

of HELOCs that had reached the end of their draw period and

entered the amortization period was $4.0 billion at

December 31, 2023. The HELOCs that have entered the

amortization period have experienced a higher percentage of

early stage delinquencies and nonperforming status when

compared to the HELOC portfolio as a whole. At December31,

2023, $41 million, or one percent, of outstanding HELOCs that

had entered the amortization period were accruing past due 30

days or more. In addition, at December31, 2023, $283 million,

or seven percent, were nonperforming.

For our interest-only HELOC portfolio, we do not actively track

how many of our home equity customers pay only the minimum

amount due on their home equity loans and lines; however, we

can infer some of this information through a review of our

HELOC portfolio that we service and is still in its revolving

period. During 2023, 13 percent of these customers with an

outstanding balance did not pay any principal on their HELOCs.

Bank of America 60

Table 24 presents outstandings, nonperforming balances and net recoveries by certain state concentrations for the home equity

portfolio. In the New York area, the New York-Northern New Jersey-Long Island MSA made up 11 percent and 12 percent of the

outstanding home equity portfolio at December31, 2023 and 2022. The Los Angeles-Long Beach-Santa Ana MSA within California

made up 10 percent and 11 percent of the outstanding home equity portfolio at December31, 2023 and 2022.

Table 24 Home Equity State Concentrations

Outstandings

(1)

Nonperforming

(1)

December 31 Net Charge-offs

(Dollars in millions)

2023

2022

2023

2022

2023

2022

California

$ 6,966

$ 7,406

$ 109

$ 119

$ (6)

$ (20)

Florida

2,576

2,743

(12)

(21)

New Jersey

1,870

2,047

(5)

(3)

New York

1,590

1,806

(10)

(4)

Texas

1,410

1,284

—

Other

11,115

11,277

155

181

(26)

(42)

Total home equity loan portfolio $ 25,527

$ 26,563

$ 450

$ 510

$ (59)

$ (90)

(1)

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

Credit Card

At December31, 2023, 97 percent of the credit card portfolio

was managed in Consumer Banking with the remainder in GWIM.

Outstandings in the credit card portfolio increased $8.8 billion

during 2023 to $102.2 billion as purchase volume and card

transfers more than offset payments. Net charge-offs increased

$1.2billion to $2.6billion in 2023 compared to 2022, primarily

due to late-stage delinquent credit card loans that were charged

off. Credit card loans 30 days or more past due and still

accruing interest increased $914 million, and 90 days or more

past due and still accruing interest increased $507 million at

December31, 2023.

Unused lines of credit for credit card increased to $390.2

billion at December 31, 2023 from $370.1 billion at

December31, 2022.

Table 25 presents certain state concentrations for the credit

card portfolio.

Table 25 Credit Card State Concentrations

Outstandings

Accruing Past Due

90 Days or More

December 31 Net Charge-offs

(Dollars in millions)

2023

2022

2023

2022

2023

2022

California

$ 16,952

$ 15,363

$ 216

$ 126

$ 457

$ 232

Florida

10,521

9,512

168

100

343

183

Texas

8,978

8,125

125

245

123

New York

5,788

5,381

197

Washington

5,352

4,844

Other

54,609

50,196

590

342

1,242

661

Total credit card portfolio $ 102,200

$ 93,421

$ 1,224

$ 717

$ 2,561

$ 1,334

Direct/Indirect Consumer

At December 31, 2023, 52 percent of the direct/indirect

portfolio was included in Consumer Banking (consumer auto and

recreational vehicle lending) and 48 percent was included in

GWIM (principally securities-based lending loans). Outstandings

in the direct/indirect portfolio decreased $2.8 billion in 2023 to

$103.5 billion driven by declines in securities-based lending

stemming from higher paydown activity due to higher interest

rates, partially offset by growth in our auto portfolio.

Table 26 presents certain state concentrations for the

direct/indirect consumer loan portfolio.

Table 26 Direct/Indirect State Concentrations

Outstandings Nonperforming

December 31

Net Charge-offs

(Dollars in millions)

2023

2022

2023

2022

2023

2022

California

$ 15,416

$ 15,516

$ 27

$ 12

$ 21

$ 6

Florida

13,550

13,783

Texas

9,668

9,837

New York

7,335

7,891

New Jersey

4,376

4,456

Other

53,123

54,753

Total direct/indirect loan portfolio

$ 103,468

$ 106,236

$ 148

$ 77

$ 92

$ 18

61 Bank of America

Other Consumer

Other consumer primarily consists of deposit overdraft

balances. Net charge-offs decreased $41 million in 2023 to

$480 million, primarily driven by lower overdraft losses.

Nonperforming Consumer Loans, Leases and Foreclosed

Properties Activity

Table 27 presents nonperforming consumer loans, leases and

foreclosed properties activity during 2023 and 2022. During

2023, nonperforming consumer loans decreased $42 million to

$2.7 billion.

At December 31, 2023, $531 million, or 20 percent, of

nonperforming loans were 180days or more past due and had

been written down to their estimated property value less costs

to sell. In addition, at December31, 2023, $1.6 billion, or 60

percent, of nonperforming consumer loans were current and

classified as nonperforming loans in accordance with applicable

policies.

Foreclosed properties decreased $18 million in 2023 to

$103 million.

Table 27 Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity

(Dollars in millions)

2023

2022

Nonperforming loans and leases, January 1 $ 2,754

$ 2,989

Additions

1,055

1,453

Reductions:

Paydowns and payoffs

(480)

(535)

Sales

(63)

(402)

Returns to performing status

(1)

(475)

(661)

Charge-offs

(53)

(56)

Transfers to foreclosed properties

(26)

(34)

Total net reductions to nonperforming loans and leases

(42)

(235)

Total nonperforming loans and leases, December31 2,712

2,754

Foreclosed properties, December31 103

121

Nonperforming consumer loans, leases and foreclosed properties, December31

(2)

$ 2,815

$ 2,875

Nonperforming consumer loans and leases as a percentage of outstanding consumer loans and leases

(3)

0.59 %

0.60 %

Nonperforming consumer loans, leases and foreclosed properties as a percentage of outstanding consumer loans, leases and

foreclosed properties

(3)

0.61

0.63

(1)

Consumer loans may be returned to performing status when all principal and interest is current and full repayment of the remaining contractual principal and interest is expected, or when the loan

otherwise becomes well-secured and is in the process of collection.

(2)

Includes repossessed non-real estate assets of $20 million and $0 at December31, 2023 and 2022.

(3)

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

Commercial Portfolio Credit Risk Management

Credit risk management for the commercial portfolio begins with

an assessment of the credit risk profile of the borrower or

counterparty based on an analysis of its financial position. As

part of the overall credit risk assessment, our commercial credit

exposures are assigned a risk rating and are subject to approval

based on defined credit approval standards. Subsequent to loan

origination, risk ratings are monitored on an ongoing basis, and

if necessary, adjusted to reflect changes in the financial

condition, cash flow, risk profile or outlook of a borrower or

counterparty. In making credit decisions, we consider risk rating,

collateral, country, industry and single-name concentration limits

while also balancing these considerations with the total

borrower or counterparty relationship. We use a variety of tools

to continuously monitor the ability of a borrower or counterparty

to perform under its obligations. We use risk rating aggregations

to measure and evaluate concentrations within portfolios. In

addition, risk ratings are a factor in determining the level of

allocated capital and the allowance for credit losses.

As part of our ongoing risk mitigation initiatives, we attempt

to work with clients experiencing financial difficulty to modify

their loans to terms that better align with their current ability to

pay. For more information on our accounting policies regarding

delinquencies, nonperforming status and net charge-offs for the

commercial portfolio, see Note 1 – Summary of Significant

Accounting Principles to the Consolidated Financial Statements.

Management of Commercial Credit Risk

Concentrations

Commercial credit risk is evaluated and managed with the goal

that concentrations of credit exposure continue to be aligned

with our risk appetite. We review, measure and manage

concentrations of credit exposure by industry, product,

geography, customer relationship and loan size. We also review,

measure and manage commercial real estate loans by

geographic location and property type. In addition, within our

non-U.S. portfolio, we evaluate exposures by region and by

country. Tables 32, 34 and 37 summarize our concentrations.

We also utilize syndications of exposure to third parties, loan

sales, hedging and other risk mitigation techniques to manage

the size and risk profile of the commercial credit portfolio. For

more information on our industry concentrations, see Table 34

and Commercial Portfolio Credit Risk Management – Industry

Concentrations on page 66.

We account for certain large corporate loans and loan

commitments, including issued but unfunded letters of credit

which are considered utilized for credit risk management

purposes, that exceed our single-name credit risk concentration

guidelines under the fair value option. Lending commitments,

both funded and unfunded, are actively managed and

monitored, and as appropriate, credit risk for these lending

relationships may be mitigated through the use of credit

derivatives, with our credit view and market perspectives

determining the size and timing of the hedging activity. In

addition, we purchase credit protection to cover the funded

portion as well as the unfunded portion of certain other credit

exposures. To lessen the cost of obtaining our desired credit

protection levels, credit exposure may be added within an

industry, borrower or counterparty group by selling protection.

These credit derivatives do not meet the requirements for

treatment as accounting hedges. They are carried at fair value

with changes in fair value recorded in other income.

In addition, we are a member of various securities and

derivative exchanges and clearinghouses, both in the U.S. and

Bank of America 62

other countries. As a member, we may be required to pay a pro-

rata share of the losses incurred by some of these

organizations as a result of another member default and under

other loss scenarios. For more information, see Note 12 –

Commitments and Contingencies to the Consolidated Financial

Statements.

Commercial Credit Portfolio

Outstanding commercial loans and leases increased $4.4 billion

during 2023 due to growth in commercial real estate, primarily

in Global Banking, and U.S. small business commercial. During

2023, commercial credit quality deteriorated as nonperforming

commercial loans and reservable criticized utilized exposure

increased primarily driven by the commercial real estate office

property type; however, the commercial net charge-off ratio of

0.12 percent during 2023 remained low.

With the exception of the office property type, which is

further discussed in the Commercial Real Estate section herein,

credit quality of commercial real estate borrowers has remained

relatively stable since December 31, 2022; however, we are

closely monitoring emerging trends and borrower performance in

the increased rate environment and challenging capital markets.

Recent demand for office space has been stagnant, and future

demand for office space continues to be uncertain as

companies evaluate space needs with employment models that

utilize a mix of remote and conventional office use.

The commercial allowance for loan and lease losses

decreased $623 million during 2023 to $4.8 billion, primarily

driven by improved macroeconomic conditions. For more

information, see Allowance for Credit Losses on page 71.

Total commercial utilized credit exposure decreased $8.6

billion during 2023 to $696.3 billion primarily driven by lower

derivative assets. The utilization rate for loans and leases,

standby letters of credit (SBLCs) and financial guarantees, and

commercial letters of credit, in the aggregate, was 55 percent

and 56 percent at December31, 2023 and 2022.

Table 28 presents commercial credit exposure by type for

utilized, unfunded and total binding committed credit exposure.

Commercial utilized credit exposure includes SBLCs and

financial guarantees and commercial letters of credit that have

been issued and for which we are legally bound to advance

funds under prescribed conditions during a specified time

period, and excludes exposure related to trading account

assets. Although funds have not yet been advanced, these

exposure types are considered utilized for credit risk

management purposes.

Table 28 Commercial Credit Exposure by Type

Commercial Utilized

(1)

Commercial Unfunded

(2, 3, 4)

Total Commercial Committed

December 31

(Dollars in millions)

2023

2022

2023

2022

2023

2022

Loans and leases

$ 593,767

$ 589,362

$ 507,641

$ 487,772

$ 1,101,408

$ 1,077,134

Derivative assets

(5)

39,323

48,642

—

39,323

48,642

Standby letters of credit and financial guarantees

31,348

33,376

1,953

1,266

33,301

34,642

Debt securities and other investments

20,422

20,195

3,083

2,551

23,505

22,746

Loans held-for-sale

4,338

6,112

4,904

3,729

9,242

9,841

Operating leases

5,312

5,509

—

5,312

5,509

Commercial letters of credit

943

973

232

1,175

1,001

Other

846

698

—

846

698

Total $ 696,299

$ 704,867

$ 517,813

$ 495,346

$ 1,214,112

$ 1,200,213

(1)

Commercial utilized exposure includes loans of $3.3 billion and $5.4 billion accounted for under the fair value option at December31, 2023 and 2022.

(2)

Commercial unfunded exposure includes commitments accounted for under the fair value option with a notional amount of $2.6 billion and $3.0 billion at December31, 2023 and 2022.

(3)

Excludes unused business card lines, which are not legally binding.

(4)

Includes the notional amount of unfunded legally binding lending commitments, net of amounts distributed (i.e., syndicated or participated) to other financial institutions. The distributed amounts

were $10.3 billion and $10.4 billion at December31, 2023 and 2022.

(5)

Derivative assets are carried at fair value, reflect the effects of legally enforceable master netting agreements and have been reduced by cash collateral of $29.4 billion and $33.8 billion at

December31, 2023 and 2022. Not reflected in utilized and committed exposure is additional non-cash derivative collateral held of $56.1 billion and $51.6 billion at December31, 2023 and

2022, which consists primarily of other marketable securities.

Nonperforming commercial loans increased $1.7 billion during 2023, primarily in commercial real estate. Table 29 presents our

commercial loans and leases portfolio and related credit quality information at December31, 2023 and 2022.

63 Bank of America

Table 29 Commercial Credit Quality

Outstandings Nonperforming

Accruing Past Due

90Days or More

December 31

(Dollars in millions)

2023

2022

2023

2022

2023

2022

Commercial and industrial:

U.S. commercial

$ 358,931

$ 358,481

$ 636

$ 553

$ 51

$ 190

Non-U.S. commercial

124,581

124,479

175

212

Total commercial and industrial

483,512

482,960

811

765

215

Commercial real estate

72,878

69,766

1,927

271

Commercial lease financing

14,854

13,644

571,244

566,370

2,757

1,040

269

U.S. small business commercial

(1)

19,197

17,560

184

355

Commercial loans excluding loans accounted for under the fair

value option

$ 590,441

$ 583,930

$ 2,773

$ 1,054

$ 278

$ 624

Loans accounted for under the fair value option

(2)

3,326

5,432

Total commercial loans and leases $ 593,767

$ 589,362

(1)

Includes card-related products.

(2)

Commercial loans accounted for under the fair value option includes U.S. commercial of $2.2 billion and $2.9 billion and non-U.S. commercial of $1.2 billion and $2.5 billion at December31,

2023 and 2022. For more information on the fair value option, see Note 21 – Fair Value Option to the Consolidated Financial Statements.

Table 30 presents net charge-offs and related ratios for our commercial loans and leases for 2023 and 2022.

Table 30 Commercial Net Charge-offs and Related Ratios

Net Charge-offs Net Charge-off Ratios

(1)

(Dollars in millions)

2023

2022

2023

2022

Commercial and industrial:

U.S. commercial

$ 124

$ 71

0.03 %

0.02%

Non-U.S. commercial

0.02

Total commercial and industrial

143

0.03

0.02

Commercial real estate

245

0.34

0.10

Commercial lease financing

0.02

0.03

390

163

0.07

0.03

U.S. small business commercial

319

154

1.71

0.86

Total commercial $ 709

$ 317

0.12

0.06

(1)

Net charge-off ratios are calculated as net charge-offs divided by average outstanding loans and leases, excluding loans accounted for under the fair value option.

Table 31 presents commercial reservable criticized utilized

exposure by loan type. Criticized exposure corresponds to the

Special Mention, Substandard and Doubtful asset categories as

defined by regulatory authorities. Total commercial reservable

criticized utilized exposure increased $4.0 billion during 2023

driven by the commercial real estate office property type and

U.S. commercial, partially offset by non-U.S. commercial. At

December31, 2023 and 2022, 89 percent and 88 percent of

commercial reservable criticized utilized exposure was secured.

Table 31 Commercial Reservable Criticized Utilized Exposure

(1, 2)

December 31

(Dollars in millions)

2023

2022

Commercial and industrial:

U.S. commercial

$ 12,006 3.12 %

$ 10,724 2.78%

Non-U.S. commercial

1,787 1.37

2,665 2.04

Total commercial and industrial

13,793 2.68

13,389 2.59

Commercial real estate

8,749 11.80

5,201 7.30

Commercial lease financing

166 1.12

240 1.76

22,708 3.76

18,830 3.13

U.S. small business commercial

592 3.08

444 2.53

Total commercial reservable criticized utilized exposure $ 23,300 3.74

$ 19,274 3.12

(1)

Total commercial reservable criticized utilized exposure includes loans and leases of $22.5 billion and $18.5 billion and commercial letters of credit of $795 million and $817 million at

December31, 2023 and 2022.

(2)

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

Commercial and Industrial

Commercial and industrial loans include U.S. commercial and

non-U.S. commercial portfolios.

U.S. Commercial

At December31, 2023, 62 percent of the U.S. commercial loan

portfolio, excluding small business, was managed in Global

Banking, 22 percent in Global Markets, 14 percent in GWIM

(loans that provide financing for asset purchases, business

investments and other liquidity needs for high net worth clients)

and the remainder primarily in Consumer Banking. U.S.

commercial loans remained largely unchanged during 2023.

Reservable criticized utilized exposure increased $1.3 billion, or

12 percent, driven by a broad range of industries.

Bank of America 64

Non-U.S. Commercial

At December31, 2023, 62 percent of the non-U.S. commercial

loan portfolio was managed in Global Banking and 38 percent in

Global Markets. Non-U.S. commercial loans remained largely

unchanged during 2023. Reservable criticized utilized exposure

decreased $878 million, or 33 percent, due to upgrades and

sales of Russian exposure. For information on the non-U.S.

commercial portfolio, see Non-U.S. Portfolio on page 68.

Commercial Real Estate

Commercial real estate primarily includes commercial loans

secured by non-owner-occupied real estate and is dependent on

the sale or lease of the real estate as the primary source of

repayment. Outstanding loans increased $3.1 billion, or four

percent, during 2023 to $72.9 billion with increases across

multiple property types. The commercial real estate portfolio is

primarily managed in Global Banking and consists of loans

made primarily to public and private developers, and commercial

real estate firms. The portfolio remains diversified across

property types and geographic regions. California represented

the largest state concentration at 20 percent and 19 percent of

commercial real estate at December31, 2023 and 2022.

Reservable criticized utilized exposure increased $3.5 billion,

or 68 percent, during 2023, primarily driven by office loans.

Office loans represented the largest property type concentration

at 25 percent of the commercial real estate portfolio at

December 31, 2023, but only represented approximately two

percent of total loans for the Corporation. This property type is

roughly 75 percent Class A and had an origination loan-to-value

of approximately 55 percent. Although we have seen collateral

value declines in this property type, the majority of these loans

remained adequately secured as of December31, 2023.

Reservable criticized exposure for the office property type

was $5.5 billion at December 31, 2023, and approximately

$7.6 billion of office loans are scheduled to mature by the end

of 2024.

During 2023 and 2022, we continued to see relatively low

default rates. We use a number of proactive risk mitigation

initiatives to reduce adversely rated exposure in the commercial

real estate portfolio, including transfers of deteriorating

exposures for management by independent special asset

officers and the pursuit of loan restructurings or asset sales to

achieve the best results for our customers and the Corporation.

Table 32 presents outstanding commercial real estate loans

by geographic region, based on the geographic location of the

collateral, and by property type.

Table 32 Outstanding Commercial Real Estate Loans

December 31

(Dollars in millions)

2023

2022

By Geographic Region

Northeast

$ 15,920

$ 15,601

California

14,551

13,360

Southwest

9,318

8,723

Southeast

8,368

7,713

Florida

4,986

5,374

Illinois

3,361

3,327

Midwest

3,149

3,419

Midsouth

2,785

2,716

Northwest

2,095

1,959

Non-U.S.

6,052

5,518

Other

2,293

2,056

Total outstanding commercial real estate loans $ 72,878

$ 69,766

By Property Type 



Non-residential

Office

$ 17,976

$ 18,230

Industrial / Warehouse

14,746

13,775

Multi-family rental

10,606

10,412

Shopping centers / Retail

5,756

5,830

Hotel / Motels

5,665

5,696

Multi-use

2,681

2,403

Other

14,201

12,241

Total non-residential 71,631

68,587

Residential 1,247

1,179

Total outstanding commercial real estate loans $ 72,878

$ 69,766

65 Bank of America

U.S. Small Business Commercial

The U.S. small business commercial loan portfolio is comprised

of small business card loans and small business loans primarily

managed in Consumer Banking, and included $329 million and

$1.0 billion of Paycheck Protection Program (PPP) loans

outstanding at December 31, 2023 and 2022. PPP loans

decreased $679 million primarily due to repayment of the loans

by the Small Business Administration (SBA) under the terms of

the program. Excluding PPP, credit card-related products were

54 percent and 53 percent of the U.S. small business

commercial portfolio at December 31, 2023 and 2022 and

represented 99 percent of the net charge-offs compared to 100

percent for 2022. Accruing past due 90 days or more decreased

$171 million in 2023 driven by the repayment of PPP loans,

which are fully guaranteed by the SBA.

Nonperforming Commercial Loans, Leases and Foreclosed

Properties Activity

Table 33 presents the nonperforming commercial loans, leases

and foreclosed properties activity during 2023 and 2022.

Nonperforming loans do not include loans accounted for under

the fair value option. During 2023, nonperforming commercial

loans and leases increased $1.7 billion to $2.8 billion. At

December 31, 2023, 96 percent of commercial nonperforming

loans, leases and foreclosed properties were secured, and 62

percent were contractually current. Commercial nonperforming

loans were carried at 89 percent of their unpaid principal

balance, as the carrying value of these loans has been reduced

to the estimated collateral value less costs to sell.

Table 33 Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity

(1, 2)

(Dollars in millions)

2023

2022

Nonperforming loans and leases, January 1 $ 1,054

$ 1,578

Additions

2,863

952

Reductions: 

Paydowns

(517)

(825)

Sales

(4)

(57)

Returns to performing status

(3)

(106)

(334)

Charge-offs

(428)

(221)

Transfers to foreclosed properties

(23)

—

Transfers to loans held-for-sale

(66)

(39)

Total net additions / (reductions) to nonperforming loans and leases

1,719

(524)

Total nonperforming loans and leases, December 31 2,773

1,054

Foreclosed properties, December 31 42

Nonperforming commercial loans, leases and foreclosed properties, December 31 $ 2,815

$ 1,103

Nonperforming commercial loans and leases as a percentage of outstanding commercial loans and leases

(4)

0.47 %

0.18 %

Nonperforming commercial loans, leases and foreclosed properties as a percentage of outstanding commercial loans, leases and

foreclosed properties

(4)

0.48

0.19

(1)

Balances do not include nonperforming loans held-for-sale of $161 million and $219 million at December 31, 2023 and 2022.

(2)

Includes U.S. small business commercial activity. Small business card loans are excluded as they are not classified as nonperforming.

(3)

Commercial loans and leases may be returned to performing status when all principal and interest is current and full repayment of the remaining contractual principal and interest is expected,

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

(4)

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

Industry Concentrations

Table 34 presents commercial committed and utilized credit

exposure by industry. For information on net notional credit

protection purchased to hedge funded and unfunded exposures

for which we elected the fair value option, as well as certain

other credit exposures, see Commercial Portfolio Credit Risk

Management – Risk Mitigation.

Commercial credit exposure is diversified across a broad

range of industries. Total commercial committed exposure

increased $13.9 billion during 2023 to $1.2 trillion. The

increase in commercial committed exposure was concentrated

in Capital goods, Finance companies and Asset managers and

funds.

Industry limits are used internally to manage industry

concentrations and are based on committed exposure that is

determined on an industry-by-industry basis. A risk management

framework is in place to set and approve industry limits as well

as to provide ongoing monitoring.

Asset managers and funds, our largest industry

concentration with committed exposure of $169.3 billion,

increased $4.2 billion, primarily driven by exposure to the

Capital markets industry group during 2023.

Real estate, our second largest industry concentration with

committed exposure of $100.3 billion remained relatively

unchanged during 2023. For more information on the

commercial real estate and related portfolios, see Commercial

Portfolio Credit Risk Management – Commercial Real Estate on

page 65.

Capital goods, our third largest industry concentration with

committed exposure of $97.0 billion, increased $9.7 billion, or

11 percent, during 2023. The increase in committed exposure

occurred primarily as a result of increases in Trading companies

and distributors as well as Machinery, partially offset by a

decrease in Industrial conglomerates.

The impact of various macroeconomic challenges, including

geopolitical tensions, inflationary pressures and elevated

interest rates, may lead to uncertainty in the U.S. and global

economies, and may adversely impact a number of industries.

We continue to monitor all industries, particularly higher risk

industries that are experiencing or could experience a more

significant impact to their financial condition.

Bank of America 66

Table 34 Commercial Credit Exposure by Industry

(1)

Commercial

Utilized

Total Commercial

Committed

(2)

December 31

(Dollars in millions)

2023

2022

2023

2022

Asset managers and funds

$ 103,138

$ 106,842

$ 169,318

$ 165,087

Real estate

(3)

73,150

72,180

100,269

99,722

Capital goods

49,698

45,580

97,044

87,314

Finance companies

62,906

55,248

89,119

79,546

Healthcare equipment and services

35,037

33,554

61,766

58,761

Materials

25,223

26,304

55,296

55,589

Retailing

24,561

24,785

54,523

53,714

Food, beverage and tobacco

23,865

23,232

49,426

47,486

Consumer services

27,355

26,980

49,105

47,372

Government and public education

31,051

34,861

45,873

48,134

Individuals and trusts

32,481

34,897

43,938

45,572

Commercial services and supplies

22,642

23,628

41,473

41,596

Utilities

18,610

20,292

39,481

40,164

Energy

12,450

15,132

36,996

36,043

Transportation

24,200

22,273

36,267

33,858

Technology hardware and equipment

11,951

11,441

29,160

29,825

Global commercial banks

22,749

27,217

25,684

29,293

Media

13,033

14,781

24,908

28,216

Vehicle dealers

16,283

12,909

22,570

20,638

Software and services

9,830

12,961

22,381

25,633

Pharmaceuticals and biotechnology

6,852

7,547

22,169

26,208

Consumer durables and apparel

9,184

10,009

20,732

21,389

Insurance

9,371

10,224

19,322

19,444

Telecommunication services

9,224

9,679

17,269

17,349

Automobiles and components

7,049

8,774

16,459

16,911

Food and staples retailing

7,423

7,157

12,496

11,908

Financial markets infrastructure (clearinghouses)

4,229

3,913

6,503

8,752

Religious and social organizations

2,754

2,467

4,565

4,689

Total commercial credit exposure by industry $ 696,299

$ 704,867

$ 1,214,112

$ 1,200,213

(1)

Includes U.S. small business commercial exposure.

(2)

Includes the notional amount of unfunded legally binding lending commitments, net of amounts distributed (i.e., syndicated or participated) to other financial institutions. The distributed amounts

were $10.3 billion and $10.4 billion at December31, 2023 and 2022.

(3)

Industries are viewed from a variety of perspectives to best isolate the perceived risks. For purposes of this table, the real estate industry is defined based on the primary business activity of the

borrowers or counterparties using operating cash flows and primary source of repayment as key factors.

Risk Mitigation

We purchase credit protection to cover the funded portion as

well as the unfunded portion of certain credit exposures. To

lower the cost of obtaining our desired credit protection levels,

we may add credit exposure within an industry, borrower or

counterparty group by selling protection.

At December31, 2023 and 2022, net notional credit default

protection purchased in our credit derivatives portfolio to hedge

our funded and unfunded exposures for which we elected the

fair value option, as well as certain other credit exposures, was

$10.9 billion and $9.0 billion. We recorded net losses of $185

million in 2023 compared to net losses of $37 million in 2022.

The gains and losses on these instruments were largely offset

by gains and losses on the related exposures. The Value-at-Risk

(VaR) results for these exposures are included in the fair value

option portfolio information in Table 41. For more information,

see Trading Risk Management on page 74.

Tables 35 and 36 present the maturity profiles and the

credit exposure debt ratings of the net credit default protection

portfolio at December31, 2023 and 2022.

Table 35 Net Credit Default Protection by Maturity

December 31

2023

2022

Less than or equal to one year

36 %

14 %

Greater than one year and less than or equal

to five years

Greater than five years

—

Total net credit default protection 100 %

100 %

67 Bank of America

Table 36 Net Credit Default Protection by Credit

Exposure Debt Rating

Net

Notional

(1)

Percent of

Total

Net

Notional

(1)

Percent of

Total

December 31

(Dollars in millions)

2023

2022

Ratings

(2, 3)

 

AAA

$ (479) 4.4 %

$ (379) 4.0 %

(1,080) 9.9

(867) 10.0

(5,237) 48.2

(3,257) 36.0

BBB

(2,912) 26.8

(2,476) 28.0

(698) 6.4

(1,049) 12.0

(419) 3.9

(676) 7.0

CCC and below

(52) 0.5

(93) 1.0

NR

(4)

2 (0.1)

(182) 2.0

Total net credit

default protection $ (10,875) 100.0 %

$ (8,979) 100.0 %

(1)

Represents net credit default protection purchased.

(2)

Ratings are refreshed on a quarterly basis.

(3)

Ratings of BBB- or higher are considered to meet the definition of investment grade.

(4)

NR is comprised of index positions held and any names that have not been rated.

In addition to our net notional credit default protection

purchased to cover the funded and unfunded portion of certain

credit exposures, credit derivatives are used for market-making

activities for clients and establishing positions intended to profit

from directional or relative value changes. We execute the

majority of our credit derivative trades in the OTC market with

large, multinational financial institutions, including broker-

dealers and, to a lesser degree, with a variety of other

investors. Because these transactions are executed in the OTC

market, we are subject to settlement risk. We are also subject

to credit risk in the event that these counterparties fail to

perform under the terms of these contracts. In order to properly

reflect counterparty credit risk, we record counterparty credit risk

valuation adjustments on certain derivative assets, including our

purchased credit default protection. In most cases, credit

derivative transactions are executed on a daily margin basis.

Therefore, events such as a credit downgrade, depending on the

ultimate rating level, or a breach of credit covenants would

typically require an increase in the amount of collateral required

by the counterparty, where applicable, and/or allow us to take

additional protective measures such as early termination of all

trades. For more information on credit derivatives and

counterparty credit risk valuation adjustments, see Note 3 –

Derivatives to the Consolidated Financial Statements.

Non-U.S. Portfolio

Our non-U.S. credit and trading portfolios are subject to country

risk. We define country risk as the risk of loss from unfavorable

economic and political conditions, currency fluctuations, social

instability and changes in government policies. A risk

management framework is in place to measure, monitor and

manage non-U.S. risk and exposures. In addition to the direct

risk of doing business in a country, we also are exposed to

indirect country risks (e.g., related to the collateral received on

secured financing transactions or related to client clearing

activities). These indirect exposures are managed in the normal

course of business through credit, market and operational risk

governance rather than through country risk governance.

Table 37 presents our 20 largest non-U.S. country exposures

at December 31, 2023. These exposures accounted for 89

percent of our total non-U.S. exposure at December 31, 2023

and 2022. Net country exposure for these 20 countries

decreased $13.1 billion in 2023 primarily driven by decreases

in Germany and Japan.

Non-U.S. exposure is presented on an internal risk

management basis and includes sovereign and non-sovereign

credit exposure, securities and other investments issued by or

domiciled in countries other than the U.S.

Funded loans and loan equivalents include loans, leases,

and other extensions of credit and funds, including letters of

credit and due from placements. Unfunded commitments are

the undrawn portion of legally binding commitments related to

loans and loan equivalents. Net counterparty exposure includes

the fair value of derivatives, including the counterparty risk

associated with credit default swaps (CDS), and secured

financing transactions. Securities and other investments are

carried at fair value and long securities exposures are netted

against short exposures with the same underlying issuer to, but

not below, zero. Net country exposure represents country

exposure less hedges and credit default protection purchased,

net of credit default protection sold.

Bank of America 68

Table 37 Top 20 Non-U.S. Countries Exposure

(Dollars in millions)

Funded Loans

and Loan

Equivalents

Unfunded

Loan

Commitments

Net

Counterparty

Exposure

Securities/

Other

Investments

Country

Exposure at

December 31

2023

Hedges and

Credit Default

Protection

Net Country

Exposure at

December 31

2023

Increase

(Decrease)

from

December 31

2022

United Kingdom $ 28,805 $ 18,276 $ 5,416 $ 5,080 $ 57,577 $ (1,642)

$ 55,935

$ 590

Germany 24,051 10,098 2,105 2,013 38,267 (2,612)

35,655

(10,071)

Canada 11,653 10,079 1,280 5,490 28,502 (487)

28,015

2,442

France 13,997 8,429 1,111 2,585 26,122 (1,264)

24,858

(1,735)

Australia 14,179 4,654 383 2,358 21,574 (252)

21,322

1,105

Japan 9,553 1,895 1,194 5,124 17,766 (792)

16,974

(6,113)

Brazil 9,252 1,329 807 3,946 15,334 (51)

15,283

2,783

India 6,891 231 580 4,270 11,972 (47)

11,925

1,156

Singapore 4,955 505 125 5,303 10,888 (71)

10,817

1,210

Ireland 8,464 1,322 133 459 10,378 (45)

10,333

1,243

Switzerland 4,867 3,786 294 497 9,444 (215)

9,229

(1,459)

Mexico 5,499 1,652 489 1,332 8,972 (53)

8,919

1,527

China 5,299 334 331 2,781 8,745 (233)

8,512

(2,296)

South Korea 5,404 880 357 1,854 8,495 (35)

8,460

(666)

Netherlands 3,188 3,312 735 959 8,194 (1,045)

7,149

(2,134)

Italy 4,121 2,184 200 653 7,158 (543)

6,615

947

Hong Kong 3,722 556 464 1,137 5,879 (27)

5,852

(1,419)

Spain 2,893 2,035 163 902 5,993 (397)

5,596

(245)

Belgium 1,648 1,328 205 415 3,596 (149)

3,447

(416)

Sweden 1,223 1,857 155 152 3,387 (373)

3,014

410

Total top 20 non-U.S.

countries exposure

$ 169,664 $ 74,742 $ 16,527 $ 47,310 $ 308,243 $ (10,333)

$ 297,910

$ (13,141)

Our largest non-U.S. country exposure at December31, 2023 was the United Kingdom with net exposure of $55.9 billion, which

represents an increase of $590 million from December31, 2022. The increase was primarily driven by higher corporate exposure.

Our second largest non-U.S. country exposure was Germany with net exposure of $35.7 billion at December31, 2023, a decrease

of $10.1 billion from December31, 2022. The decrease was primarily driven by lower deposits with the central bank.

69 Bank of America

Loan and Lease Contractual Maturities

Table 38 disaggregates total outstanding loans and leases by remaining scheduled principal due dates and interest rates. The

amounts provided do not reflect prepayment assumptions or hedging activities related to the loan portfolio. For information on the

asset sensitivity of our total banking book balance sheet, see Interest Rate Risk Management for the Banking Book on page 77.

Table 38 Loan and Lease Contractual Maturities

(1)

 December 31, 2023

(Dollars in millions)

Due in One

Year or Less

Due After One

Year Through

Five Years

Due After Five

Years Through

15 Years

Due After 15

Years Total

Residential mortgage $ 5,675 $ 32,850 $ 95,399 $ 94,545

$ 228,469

Home equity 186 1,092 4,038 20,388

25,704

Credit card 102,200 — — —

102,200

Direct/Indirect consumer 61,888 35,663 4,941 976

103,468

Other consumer 124 — — —

124

Total consumer loans 170,073 69,605 104,378 115,909 459,965

U.S. commercial 105,690 233,802 19,659 1,935

361,086

Non-U.S. commercial 44,473 55,782 24,255 1,242

125,752

Commercial real estate 29,335 41,819 864 860

72,878

Commercial lease financing 3,234 9,112 1,052 1,456

14,854

U.S. small business commercial 11,764 4,459 2,878 96

19,197

Total commercial loans 194,496 344,974 48,708 5,589 593,767

Total loans and leases $ 364,569 $ 414,579 $ 153,086 $ 121,498 $ 1,053,732

Amount due in one year or less at: Amount due after one year at:

(Dollars in millions)

Variable Interest

Rates

Fixed Interest

Rates

Variable Interest

Rates

Fixed Interest

Rates Total

Residential mortgage $ 999 $ 4,676 $ 84,230 $ 138,564

$ 228,469

Home equity 161 25 21,871 3,647

25,704

Credit card 97,627 4,573 — —

102,200

Direct/Indirect consumer 42,832 19,056 2,321 39,259

103,468

Other consumer 2 122 — —

124

Total consumer loans 141,621 28,452 108,422 181,470 459,965

U.S. commercial 81,546 24,144 209,912 45,484

361,086

Non-U.S. commercial 34,632 9,841 79,019 2,260

125,752

Commercial real estate 26,836 2,499 42,226 1,317

72,878

Commercial lease financing 410 2,824 1,800 9,820

14,854

U.S. small business commercial 7,089 4,675 110 7,323

19,197

Total commercial loans 150,513 43,983 333,067 66,204 593,767

Total loans and leases $ 292,134 $ 72,435 $ 441,489 $ 247,674 $ 1,053,732

(1)

Includes loans accounted for under the fair value option.

Bank of America 70

Allowance for Credit Losses

The allowance for credit losses increased $329 million from

December 31, 2022 to $14.6 billion at December 31, 2023,

which included a $1.3 billion reserve increase related to the

consumer portfolio and a $942million reserve decrease related

to the commercial portfolio. The increase in the allowance

reflected a reserve build in our consumer portfolio primarily due

to credit card loan growth and asset quality, partially offset by a

reserve release in our commercial portfolio primarily driven by

improved macroeconomic conditions applicable to the

commercial portfolio. The allowance also includes the impact of

the accounting change to remove the recognition and

measurement guidance on troubled debt restructurings, which

reduced the allowance for credit losses by $243 million on

January 1, 2023. For more information on this change in

accounting guidance, see Note 1 – Summary of Significant

Accounting Principles to the Consolidated Financial Statements.

Table 39 presents an allocation of the allowance for credit

losses by product type at December31, 2023 and 2022.

Table 39 Allocation of the Allowance for Credit Losses by Product Type

Amount

Percent of

Total

Percent of

Loans and

Leases

Outstanding

(1)

Amount

Percent of

Total

Percent of

Loans and

Leases

Outstanding

(1)

(Dollars in millions)

December 31, 2023

December 31, 2022

Allowance for loan and lease losses

  

Residential mortgage

$ 339 2.54 % 0.15 %

$ 328 2.59 % 0.14 %

Home equity

47 0.35 0.19

92 0.73 0.35

Credit card

7,346 55.06 7.19

6,136 48.38 6.57

Direct/Indirect consumer

715 5.36 0.69

585 4.61 0.55

Other consumer

73 0.55 n/m

96 0.76 n/m

Total consumer 8,520 63.86 1.85

7,237 57.07 1.59

U.S. commercial

(2)

2,600 19.49 0.69

3,007 23.71 0.80

Non-U.S. commercial

842 6.31 0.68

1,194 9.41 0.96

Commercial real estate

1,342 10.06 1.84

1,192 9.40 1.71

Commercial lease financing

38 0.28 0.26

52 0.41 0.38

Total commercial 4,822 36.14 0.82

5,445 42.93 0.93

Allowance for loan and lease losses 13,342 100.00 % 1.27

12,682 100.00 % 1.22

Reserve for unfunded lending commitments 1,209

1,540 

Allowance for credit losses $ 14,551

$ 14,222

(1)

Ratios are calculated as allowance for loan and lease losses as a percentage of loans and leases outstanding excluding loans accounted for under the fair value option.

(2)

Includes allowance for loan and lease losses for U.S. small business commercial loans of $1.0 billion and $844 million at December31, 2023 and 2022.

n/m = not meaningful

Net charge-offs for 2023 were $3.8 billion compared to $2.2

billion in 2022 primarily due to late-stage delinquent credit card

loans that were charged off. The provision for credit losses

increased $1.9 billion to $4.4 billion during 2023 compared to

2022. The provision for credit losses in 2023 was driven by our

consumer portfolio primarily due to credit card loan growth and

asset quality, partially offset by improved macroeconomic

conditions that primarily benefited our commercial portfolio. The

provision for credit losses for the consumer portfolio, including

unfunded lending commitments, increased $2.5 billion to $4.5

billion during 2023 compared to 2022. The provision for credit

losses for the commercial portfolio, including unfunded lending

commitments, decreased $628 million to a $133 million benefit

for 2023 compared to 2022. The decline was due primarily to

an improved macroeconomic outlook.

Table 40 presents a rollforward of the allowance for credit

losses, including certain loan and allowance ratios for 2023 and

2022. For more information on the Corporation’s credit loss

accounting policies and activity related to the allowance for

credit losses, see Note 1 – Summary of Significant Accounting

Principles and Note 5 – Outstanding Loans and Leases and

Allowance for Credit Losses to the Consolidated Financial

Statements.

71 Bank of America

Table 40 Allowance for Credit Losses

(Dollars in millions)

2023

2022

Allowance for loan and lease losses, December 31 $ 12,682

$ 12,387

January 1, 2023 adoption of credit loss standard

(243)

n/a

Allowance for loan and lease losses, January 1 $ 12,439

$ 12,387

Loans and leases charged off

Residential mortgage

(67)

(161)

Home equity

(36)

(45)

Credit card

(3,133)

(1,985)

Direct/Indirect consumer

(233)

(232)

Other consumer

(504)

(538)

Total consumer charge-offs (3,973)

(2,961)

U.S. commercial

(1)

(551)

(354)

Non-U.S. commercial

(37)

(41)

Commercial real estate

(254)

(75)

Commercial lease financing

(2)

(8)

Total commercial charge-offs (844)

(478)

Total loans and leases charged off (4,817)

(3,439)

Recoveries of loans and leases previously charged off

Residential mortgage

Home equity

135

Credit card

572

651

Direct/Indirect consumer

141

214

Other consumer

Total consumer recoveries 883

1,106

U.S. commercial

(2)

108

129

Non-U.S. commercial

Commercial real estate

Commercial lease financing

—

Total commercial recoveries 135

161

Total recoveries of loans and leases previously charged off 1,018

1,267

Net charge-offs (3,799)

(2,172)

Provision for loan and lease losses

4,725

2,460

Other

(23)

Allowance for loan and lease losses, December 31 13,342

12,682

Reserve for unfunded lending commitments, January 1 1,540

1,456

Provision for unfunded lending commitments

(331)

Other

—

Reserve for unfunded lending commitments, December 31 1,209

1,540

Allowance for credit losses, December 31 $ 14,551

$ 14,222

Loan and allowance ratios

(3)

Loans and leases outstanding at December 31

$ 1,050,163

$ 1,039,976

Allowance for loan and lease losses as a percentage of total loans and leases outstanding at December 31

1.27 %

1.22 %

Consumer allowance for loan and lease losses as a percentage of total consumer loans and leases outstanding at December 31

1.85

1.59

Commercial allowance for loan and lease losses as a percentage of total commercial loans and leases outstanding at December 31

0.82

0.93

Average loans and leases outstanding

$ 1,041,824

$ 1,010,799

Net charge-offs as a percentage of average loans and leases outstanding

0.36 %

0.21 %

Allowance for loan and lease losses as a percentage of total nonperforming loans and leases at December 31

243

333

Ratio of the allowance for loan and lease losses at December 31 to net charge-offs

3.51

5.84

Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and

leases at December 31

(4)

$ 8,357

$ 6,998

Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the allowance for loan and

lease losses for loans and leases that are excluded from nonperforming loans and leases at December 31

(4)

91 %

149 %

(1)

Includes U.S. small business commercial charge-offs of $360 million in 2023 compared to $203 million in 2022.

(2)

Includes U.S. small business commercial recoveries of $41 million in 2023 compared to $49 million in 2022.

(3)

Ratios are calculated as allowance for loan and lease losses as a percentage of loans and leases outstanding excluding loans accounted for under the fair value option.

(4)

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

Bank of America 72

Market Risk Management

Market risk is the risk that changes in market conditions may

adversely impact the value of assets or liabilities, or otherwise

negatively impact earnings. This risk is inherent in the financial

instruments associated with our operations, primarily within our

Global Markets segment. We are also exposed to these risks in

other areas of the Corporation (e.g., our ALM activities). In the

event of market stress, these risks could have a material

impact on our results. For more information, see Interest Rate

Risk Management for the Banking Book on page 77.

Our traditional banking loan and deposit products are non-

trading positions and are generally reported at amortized cost

for assets or the amount owed for liabilities (historical cost).

However, these positions are still subject to changes in

economic value based on varying market conditions, with one of

the primary risks being changes in the levels of interest rates.

The risk of adverse changes in the economic value of our non-

trading positions arising from changes in interest rates is

managed through our ALM activities. We have elected to

account for certain assets and liabilities under the fair value

option.

Our trading positions are reported at fair value with changes

reflected in income. Trading positions are subject to various

changes in market-based risk factors. The majority of this risk is

generated by our activities in the interest rate, foreign exchange,

credit, equity and commodities markets. In addition, the values

of assets and liabilities could change due to market liquidity,

correlations across markets and expectations of market

volatility. We seek to manage these risk exposures by using a

variety of techniques that encompass a broad range of financial

instruments. The key risk management techniques are

discussed in more detail in the Trading Risk Management

section.

GRM is responsible for providing senior management with a

clear and comprehensive understanding of the trading risks to

which we are exposed. These responsibilities include ownership

of market risk policy, developing and maintaining quantitative

risk models, calculating aggregated risk measures, establishing

and monitoring position limits consistent with risk appetite,

conducting daily reviews and analysis of trading inventory,

approving material risk exposures and fulfilling regulatory

requirements. Market risks that impact businesses outside of

Global Markets are monitored and governed by their respective

governance functions.

Model risk is the potential for adverse consequences from

decisions based on incorrect or misused model outputs and

reports. Given that models are used across the Corporation,

model risk impacts all risk types including credit, market and

operational risks. The Enterprise Model Risk Policy defines

model risk standards, consistent with our Risk Framework and

risk appetite, prevailing regulatory guidance and industry best

practice. All models, including risk management, valuation and

regulatory capital models, must meet certain validation criteria,

including effective challenge of the conceptual soundness of the

model, independent model testing and ongoing monitoring

through outcomes analysis and benchmarking. The Enterprise

Model Risk Committee, a subcommittee of the MRC, oversees

that model standards are consistent with model risk

requirements and monitors the effective challenge in the model

validation process across the Corporation.

Interest Rate Risk

Interest rate risk represents exposures to instruments whose

values vary with the level or volatility of interest rates. These

instruments include, but are not limited to, loans, debt

securities, certain trading-related assets and liabilities,

deposits, borrowings and derivatives. Hedging instruments used

to mitigate these risks include derivatives such as options,

futures, forwards and swaps.

Foreign Exchange Risk

Foreign exchange risk represents exposures to changes in the

values of current holdings and future cash flows denominated in

currencies other than the U.S. dollar. The types of instruments

exposed to this risk include investments in non-U.S.

subsidiaries, foreign currency-denominated loans and securities,

future cash flows in foreign currencies arising from foreign

exchange transactions, foreign currency-denominated debt and

various foreign exchange derivatives whose values fluctuate with

changes in the level or volatility of currency exchange rates or

non-U.S. interest rates. Hedging instruments used to mitigate

this risk include foreign exchange options, currency swaps,

futures, forwards, and foreign currency-denominated debt and

deposits.

Mortgage Risk

Mortgage risk represents exposures to changes in the values of

mortgage-related instruments. The values of these instruments

are sensitive to prepayment rates, mortgage rates, agency debt

ratings, default, market liquidity, government participation and

interest rate volatility. Our exposure to these instruments takes

several forms. For example, we trade and engage in market-

making activities in a variety of mortgage securities including

whole loans, pass-through certificates, commercial mortgages

and collateralized mortgage obligations including collateralized

debt obligations using mortgages as underlying collateral. In

addition, we originate a variety of MBS, which involves the

accumulation of mortgage-related loans in anticipation of

eventual securitization, and we may hold positions in mortgage

securities and residential mortgage loans as part of the ALM

portfolio. We also record MSRs as part of our mortgage

origination activities. Hedging instruments used to mitigate this

risk include derivatives such as options, swaps, futures and

forwards as well as securities including MBS and U.S. Treasury

securities. For more information, see Mortgage Banking Risk

Management on page 79.

Equity Market Risk

Equity market risk represents exposures to securities that

represent an ownership interest in a corporation in the form of

domestic and foreign common stock or other equity-linked

instruments. Instruments that would lead to this exposure

include, but are not limited to, the following: common stock,

exchange-traded funds, American Depositary Receipts,

convertible bonds, listed equity options (puts and calls), OTC

equity options, equity total return swaps, equity index futures

and other equity derivative products. Hedging instruments used

to mitigate this risk include options, futures, swaps, convertible

bonds and cash positions.

Commodity Risk

Commodity risk represents exposures to instruments traded in

the petroleum, natural gas, power and metals markets. These

instruments consist primarily of futures, forwards, swaps and

options. Hedging instruments used to mitigate this risk include

options, futures and swaps in the same or similar commodity

product, as well as cash positions.

73 Bank of America

Issuer Credit Risk

Issuer credit risk represents exposures to changes in the

creditworthiness of individual issuers or groups of issuers. Our

portfolio is exposed to issuer credit risk where the value of an

asset may be adversely impacted by changes in the levels of

credit spreads, by credit migration or by defaults. Hedging

instruments used to mitigate this risk include bonds, CDS and

other credit fixed-income instruments.

Market Liquidity Risk

Market liquidity risk represents the risk that the level of

expected market activity changes dramatically and, in certain

cases, may even cease. This exposes us to the risk that we will

not be able to transact business and execute trades in an

orderly manner which may impact our results. This impact could

be further exacerbated if expected hedging or pricing

correlations are compromised by disproportionate demand or

lack of demand for certain instruments. We utilize various risk

mitigating techniques as discussed in more detail in Trading

Risk Management.

Trading Risk Management

To evaluate risks in our trading activities, we focus on the actual

and potential volatility of revenues generated by individual

positions as well as portfolios of positions. Various techniques

and procedures are utilized to enable the most complete

understanding of these risks. Quantitative measures of market

risk are evaluated on a daily basis from a single position to the

portfolio of the Corporation. These measures include

sensitivities of positions to various market risk factors, such as

the potential impact on revenue from a one basis point change

in interest rates, and statistical measures utilizing both actual

and hypothetical market moves, such as VaR and stress

testing. Periods of extreme market stress influence the

reliability of these techniques to varying degrees. Qualitative

evaluations of market risk utilize the suite of quantitative risk

measures while understanding each of their respective

limitations. Additionally, risk managers independently evaluate

the risk of the portfolios under the current market environment

and potential future environments.

VaR is a common statistic used to measure market risk as it

allows the aggregation of market risk factors, including the

effects of portfolio diversification. A VaR model simulates the

value of a portfolio under a range of scenarios in order to

generate a distribution of potential gains and losses. VaR

represents the loss a portfolio is not expected to exceed more

than a certain number of times per period, based on a specified

holding period, confidence level and window of historical data.

We use one VaR model consistently across the trading

portfolios and it uses a historical simulation approach based on

a three-year window of historical data. Our primary VaR statistic

is equivalent to a 99 percent confidence level, which means

that for a VaR with a one-day holding period, there should not be

losses in excess of VaR, on average, 99 out of 100 trading

days.

Within any VaR model, there are significant and numerous

assumptions that will differ from company to company. The

accuracy of a VaR model depends on the availability and quality

of historical data for each of the risk factors in the portfolio. A

VaR model may require additional modeling assumptions for

new products that do not have the necessary historical market

data or for less liquid positions for which accurate daily prices

are not consistently available. For positions with insufficient

historical data for the VaR calculation, the process for

establishing an appropriate proxy is based on fundamental and

statistical analysis of the new product or less liquid position.

This analysis identifies reasonable alternatives that replicate

both the expected volatility and correlation to other market risk

factors that the missing data would be expected to experience.

VaR may not be indicative of realized revenue volatility as

changes in market conditions or in the composition of the

portfolio can have a material impact on the results. In particular,

the historical data used for the VaR calculation might indicate

higher or lower levels of portfolio diversification than will be

experienced. In order for the VaR model to reflect current market

conditions, we update the historical data underlying our VaR

model on a weekly basis, or more frequently during periods of

market stress, and regularly review the assumptions underlying

the model. A minor portion of risks related to our trading

positions is not included in VaR. These risks are reviewed as

part of our ICAAP. For more information regarding ICAAP, see

Capital Management on page 47.

GRM continually reviews, evaluates and enhances our VaR

model so that it reflects the material risks in our trading

portfolio. Changes to the VaR model are reviewed and approved

prior to implementation and any material changes are reported

to management through the appropriate management

committees.

Trading limits on quantitative risk measures, including VaR,

are independently set by Global Markets Risk Management and

reviewed on a regular basis so that trading limits remain

relevant and within our overall risk appetite for market risks.

Trading limits are reviewed in the context of market liquidity,

volatility and strategic business priorities. Trading limits are set

at both a granular level to allow for extensive coverage of risks

as well as at aggregated portfolios to account for correlations

among risk factors. All trading limits are approved at least

annually. Approved trading limits are stored and tracked in a

centralized limits management system. Trading limit excesses

are communicated to management for review. Certain

quantitative market risk measures and corresponding limits

have been identified as critical in the Corporation’s Risk

Appetite Statement. These risk appetite limits are reported on a

daily basis and are approved at least annually by the ERC and

the Board.

In periods of market stress, Global Markets senior leadership

communicates daily to discuss losses, key risk positions and

any limit excesses. As a result of this process, the businesses

may selectively reduce risk.

Table 41 presents the total market-based portfolio VaR,

which is the combination of the total covered positions (and

less liquid trading positions) portfolio and the fair value option

portfolio. Covered positions are defined by regulatory standards

as trading assets and liabilities, both on- and off-balance sheet,

that meet a defined set of specifications. These specifications

identify the most liquid trading positions which are intended to

be held for a short-term horizon and where we are able to hedge

the material risk elements in a two-way market. Positions in less

liquid markets, or where there are restrictions on the ability to

trade the positions, typically do not qualify as covered positions.

Foreign exchange and commodity positions are always

considered covered positions, except for structural foreign

currency positions that are excluded with prior regulatory

approval.

In addition, Table 41 presents the VaR for the fair value

option portfolio, which includes substantially all of the funded

and unfunded exposures for which we elect the fair value option,

and their corresponding hedges. Market risk VaR for trading

activities, as presented in Table 41, differs from VaR used for

regulatory capital calculations due to the holding period used.

Bank of America 74

The holding period for VaR used for regulatory capital

calculations is 10 days, while for the market risk VaR presented

below, it is one day. Both measures utilize the same process

and methodology.

The total market-based portfolio VaR results in Table 41

include market risk to which we are exposed from all business

segments, excluding credit valuation adjustment (CVA), DVA and

related hedges. The majority of this portfolio is within the Global

Markets segment.

Table 41 presents year-end, average, high and low daily

trading VaR for 2023 and 2022 using a 99 percent confidence

level. The amounts disclosed in Table 41 and Table 42 align to

the view of covered positions used in the Basel 3 capital

calculations. Foreign exchange and commodity positions are

always considered covered positions, regardless of trading or

banking treatment for the trade, except for structural foreign

currency positions that are excluded with prior regulatory

approval.

The annual average of total covered positions and less liquid

trading positions portfolio VaR for 2023 decreased compared to

2022, primarily due to the roll off of March 2020 market

volatility from the window of historical data used in the

calibration of the VaR model.

Table 41 Market Risk VaR for Trading Activities

2023

2022

(Dollars in millions)

Year

End Average High

(1)

Low

(1)

Year

End Average High

(1)

Low

(1)

Foreign exchange

$ 29 $ 29 $ 43 $ 12

$ 38 $ 21 $ 39 $ 12

Interest rate

51 48 86 32

36 36 56 24

Credit

53 60 108 43

76 71 106 52

Equity

9 18 56 9

18 20 33 12

Commodities

9 9 14 6

8 13 27 7

Portfolio diversification

(90) (100)

n/a n/a (81) (91) n/a n/a

Total covered positions portfolio 61

92 41

95 70 140 42

Impact from less liquid exposures

(2)

12 20

n/a n/a 35 38 n/a n/a

Total covered positions and less liquid trading positions portfolio

73 84

149 52

130 108 236 61

Fair value option loans

16 25 49 14

48 51 65 37

Fair value option hedges

11 14 20 9

16 17 24 13

Fair value option portfolio diversification

(12) (23)

n/a n/a (38) (36) n/a n/a

Total fair value option portfolio

15 16

30 10

26 32 44 23

Portfolio diversification

(9) (8)

n/a n/a 9 (11) n/a n/a

Total market-based portfolio

$ 79 $ 92

173 58

$ 165 $ 129 287 70

(1)

The high and low for each portfolio may have occurred on different trading days than the high and low for the components. Therefore the impact from less liquid exposures and the amount of

portfolio diversification, which is the difference between the total portfolio and the sum of the individual components, is not relevant.

(2)

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

n/a = not applicable

The following graph presents the daily covered positions and less liquid trading positions portfolio VaR for 2023, corresponding to

the data in Table 41.

75 Bank of America

Additional VaR statistics produced within our single VaR model are provided in Table 42 at the same level of detail as in Table

41. Evaluating VaR with additional statistics allows for an increased understanding of the risks in the portfolio, as the historical

market data used in the VaR calculation does not necessarily follow a predefined statistical distribution. Table 42 presents average

trading VaR statistics at 99 percent and 95 percent confidence levels for 2023 and 2022.

Table 42 Average Market Risk VaR for Trading Activities – 99 percent and 95 percent VaR Statistics

December 31, 2023

December 31, 2022

(Dollars in millions)

99 percent 95 percent

Foreign exchange

$ 29 $ 19

$ 21 $ 12

Interest rate

48 26

36 17

Credit

60 30

71 28

Equity

18 8

20 11

Commodities

9 5

13 7

Portfolio diversification

(100) (54)

(91) (46)

Total covered positions portfolio 64 34

70 29

Impact from less liquid exposures

20 7

38 7

Total covered positions and less liquid trading positions portfolio 84 41

108 36

Fair value option loans

25 12

51 14

Fair value option hedges

14 9

17 10

Fair value option portfolio diversification

(23) (13)

(36) (13)

Total fair value option portfolio 16 8

32 11

Portfolio diversification

(8) (5)

(11) (7)

Total market-based portfolio $ 92 $ 44

$ 129 $ 40

Backtesting

The accuracy of the VaR methodology is evaluated by

backtesting, which compares the daily VaR results, utilizing a

one-day holding period, against a comparable subset of trading

revenue. A backtesting excess occurs when a trading loss

exceeds the VaR for the corresponding day. These excesses are

evaluated to understand the positions and market moves that

produced the trading loss with a goal to help confirm that the

VaR methodology accurately represents those losses. We

expect the frequency of trading losses in excess of VaR to be in

line with the confidence level of the VaR statistic being tested.

For example, with a 99 percent confidence level, we expect one

trading loss in excess of VaR every 100 days or between two to

three trading losses in excess of VaR over the course of a year.

The number of backtesting excesses observed can differ from

the statistically expected number of excesses if the current level

of market volatility is materially different than the level of market

volatility that existed during the three years of historical data

used in the VaR calculation.

The trading revenue used for backtesting is defined by

regulatory agencies in order to most closely align with the VaR

component of the regulatory capital calculation. This revenue

differs from total trading-related revenue in that it excludes

revenue from trading activities that either do not generate

market risk or the market risk cannot be included in VaR. Some

examples of the types of revenue excluded for backtesting are

fees, commissions, reserves, net interest income and intra-day

trading revenues.

We conduct daily backtesting on the VaR results used for

regulatory capital calculations as well as the VaR results for key

legal entities, regions and risk factors. These results are

reported to senior market risk management. Senior

management regularly reviews and evaluates the results of

these tests.

During 2023, there were no days where this subset of

trading revenue had losses that exceeded our total covered

portfolio VaR, utilizing a one-day holding period.

Total Trading-related Revenue

Total trading-related revenue, excluding brokerage fees, and

CVA, DVA and funding valuation adjustment gains (losses),

represents the total amount earned from trading positions,

including market-based net interest income, which are taken in

a diverse range of financial instruments and markets. For more

information on fair value, see Note 20 – Fair Value

Measurements to the Consolidated Financial Statements.

Trading-related revenue can be volatile and is largely driven by

general market conditions and customer demand. Also, trading-

related revenue is dependent on the volume and type of

transactions, the level of risk assumed, and the volatility of

price and rate movements at any given time within the ever-

changing market environment. Significant daily revenue by

business is monitored and the primary drivers of these are

reviewed.

The following histogram is a graphic depiction of trading

volatility and illustrates the daily level of trading-related revenue

for 2023 and 2022. During 2023, positive trading-related

revenue was recorded for 100 percent of the trading days, of

which 93 percent were daily trading gains of over $25 million.

This compares to 2022 where positive trading-related revenue

was recorded for 99 percent of the trading days, of which 90

percent were daily trading gains of over $25 million, and the

largest loss was $9 million.

Bank of America 76

Trading Portfolio Stress Testing

Because the very nature of a VaR model suggests results can

exceed our estimates and it is dependent on a limited historical

window, we also stress test our portfolio using scenario

analysis. This analysis estimates the change in the value of our

trading portfolio that may result from abnormal market

movements.

A set of scenarios, categorized as either historical or

hypothetical, are computed daily for the overall trading portfolio

and individual businesses. These scenarios include shocks to

underlying market risk factors that may be well beyond the

shocks found in the historical data used to calculate VaR.

Historical scenarios simulate the impact of the market moves

that occurred during a period of extended historical market

stress. Generally, a multi-week period representing the most

severe point during a crisis is selected for each historical

scenario. Hypothetical scenarios provide estimated portfolio

impacts from potential future market stress events. Scenarios

are reviewed and updated in response to changing positions

and new economic or political information. In addition, new or

ad hoc scenarios are developed to address specific potential

market events or particular vulnerabilities in the portfolio. The

stress tests are reviewed on a regular basis and the results are

presented to senior management.

Stress testing for the trading portfolio is integrated with

enterprise-wide stress testing and incorporated into the limits

framework. The macroeconomic scenarios used for enterprise-

wide stress testing purposes differ from the typical trading

portfolio scenarios in that they have a longer time horizon and

the results are forecasted over multiple periods for use in

consolidated capital and liquidity planning. For more

information, see Managing Risk on page 44.

Interest Rate Risk Management for the Banking

Book

The following discussion presents net interest income for

banking book activities.

Interest rate risk represents the most significant market risk

exposure to our banking book balance sheet. Interest rate risk

is measured as the potential change in net interest income

caused by movements in market interest rates. Client-facing

activities, primarily lending and deposit-taking, create interest

rate sensitive positions on our balance sheet.

We prepare forward-looking forecasts of net interest income.

The baseline forecast takes into consideration expected future

business growth, ALM positioning and the future direction of

interest rate movements as implied by market-based forward

curves.

We then measure and evaluate the impact that alternative

interest rate scenarios have on the baseline forecast in order to

assess interest rate sensitivity under varied conditions. The net

interest income forecast is frequently updated for changing

assumptions and differing outlooks based on economic trends,

market conditions and business strategies. Thus, we continually

monitor our banking book balance sheet position in order to

maintain an acceptable level of exposure to interest rate

changes.

The interest rate scenarios that we analyze incorporate

balance sheet assumptions such as loan and deposit growth

and pricing, changes in funding mix, product repricing, maturity

characteristics and investment securities premium amortization.

Our overall goal is to manage interest rate risk so that

movements in interest rates do not significantly adversely affect

earnings and capital.

Table 43 presents the spot and 12-month forward rates

used in our baseline forecasts at December 31, 2023 and

2022.

Table 43 Forward Rates

December 31, 2023

Federal

Funds SOFR

(1)

10-Year

SOFR

(1)

Spot rates

5.50 % 5.38 % 3.47 %

12-month forward rates

3.89 3.93 3.32

December 31, 2022

Federal

Funds

Three-month

LIBOR

10-Year

Swap

Spot rates 4.50 % 4.77 % 3.84 %

12-month forward rates 4.75 4.78 3.62

(1)

The Corporation uses SOFR in its baseline forecast as one of the primary alternative

reference rates used as a result of the cessation of LIBOR in 2023.

Table 44 shows the pretax impact to forecasted net interest

income over the next 12 months from December31, 2023 and

77 Bank of America

2022 resulting from instantaneous parallel and non-parallel

shocks to the market-based forward curve. Periodically, we

evaluate the scenarios presented so that they are meaningful in

the context of the current rate environment. The interest rate

scenarios also assume U.S. dollar interest rates are floored at

zero.

During 2023, the overall decrease in asset sensitivity of our

balance sheet to higher and lower rate scenarios was primarily

due to changes in deposit product mix and ALM portfolio

activity. We continue to be asset sensitive to a parallel upward

move in interest rates with the majority of that impact coming

from the short end of the yield curve. Additionally, higher

interest rates negatively impact the fair value of our debt

securities classified as available for sale and adversely affect

accumulated OCI and thus capital levels under the Basel 3

capital rules. Under instantaneous upward parallel shifts, the

near-term adverse impact to Basel 3 capital would be reduced

over time by offsetting positive impacts to net interest income

generated from the banking book activities. For more

information on Basel 3, see Capital Management – Regulatory

Capital on page 48.

Table 44

Estimated Banking Book Net Interest Income

Sensitivity to Curve Changes

Short

Rate

(bps)

Long

Rate

(bps)

December 31

(Dollars in millions)

2023

2022

Parallel Shifts

+100bps

instantaneous shift +100 +100

$ 3,476

$ 3,829

-100 bps

instantaneous shift -100 -100

(3,077)

(4,591)

Flatteners  

Short-end

instantaneous change +100 —

3,242

3,698

Long-end

instantaneous change — -100

(257)

(157)

Steepeners  

Short-end

instantaneous change -100 —

(2,773)

(4,420)

Long-end

instantaneous change — +100

272

131

The sensitivity analysis in Table 44 assumes that we take no

action in response to these rate shocks and does not assume

any change in other macroeconomic variables normally

correlated with changes in interest rates. As part of our ALM

activities, we use securities, certain residential mortgages, and

interest rate and foreign exchange derivatives in managing

interest rate sensitivity.

The behavior of our deposit portfolio in the baseline forecast

and in alternate interest rate scenarios is a key assumption in

our projected estimates of net interest income. The sensitivity

analysis in Table 44 assumes no change in deposit portfolio

size or mix from the baseline forecast in alternate rate

environments. In higher rate scenarios, the increase in net

interest income would be impacted by any customer activity

resulting in the replacement of low-cost or noninterest-bearing

deposits with higher yielding deposits or market-based funding,

as our benefit in those scenarios would be reduced. Conversely,

in lower-rate scenarios, any customer activity that results in the

replacement of higher yielding deposits or market-based funding

with low-cost or noninterest-bearing deposits would reduce our

exposure in those scenarios.

For interest rate scenarios larger than 100 bps shifts, it is

expected that the interest rate sensitivity will illustrate non-

linear behaviors as there are numerous estimates and

assumptions, which require a high degree of judgment and are

often interrelated, that could impact the outcome. Pertaining to

the mortgage-backed securities and residential mortgage

portfolio, if long-end interest rates were to significantly decrease

over the next twelve months, for example over 200 bps, there

would generally be an increase in customer prepayment

behaviors with an incremental reduction to net interest income,

noting that the extent of changes in customer prepayment

activity can be impacted by multiple factors and is not

necessarily limited to long-end interest rates. Conversely, if long-

end interest rates were to significantly increase over the next

twelve months, for example, over 200 bps, customer

prepayments would likely modestly decrease and result in an

incremental increase to net interest income. In addition, deposit

pricing will have non-linear impacts to larger short-end rate

movements. In decreasing interest rate scenarios, and

particularly where interest rates have decreased to small

amounts, the ability to further reduce rates paid is reduced as

customer rates near zero. In higher short-end rate scenarios,

deposit pricing will likely increase at a faster rate, leading to

incremental interest expense and reducing asset sensitivity.

While the impact related to the above assumptions used in the

asset sensitivity analysis can provide directional analysis on

how net interest income will be impacted in changing

environments, the ultimate impact is dependent upon the

interrelationship of the assumptions and factors, which vary in

different macroeconomic scenarios.

Interest Rate and Foreign Exchange Derivative

Contracts

We use interest rate and foreign exchange derivative contracts

in our ALM activities to manage our interest rate and foreign

exchange risks. Specifically, we use those derivatives to

manage both the variability in cash flows and changes in fair

value of various assets and liabilities arising from those risks.

Our interest rate derivative contracts are generally non-leveraged

swaps tied to various benchmark interest rates and foreign

exchange basis swaps, options, futures and forwards, and our

foreign exchange contracts include cross-currency interest rate

swaps, foreign currency futures contracts, foreign currency

forward contracts and options.

The derivatives used in our ALM activities can be split into

two broad categories: designated accounting hedges and other

risk management derivatives. Designated accounting hedges

are primarily used to manage our exposure to interest rates as

described in the Interest Rate Risk Management for the Banking

Book section and are included in the sensitivities presented in

Table 44. The Corporation also uses foreign currency derivatives

in accounting hedges to manage substantially all of the foreign

exchange risk of our foreign operations. By hedging the foreign

exchange risk of our foreign operations, the Corporation's

market risk exposure in this area is not significant.

Risk management derivatives are predominantly used to

hedge foreign exchange risks related to various foreign currency-

denominated assets and liabilities and eliminate substantially

all foreign currency exposures in the cash flows of the

Corporation’s non-trading foreign currency-denominated financial

instruments. These foreign exchange derivatives are sensitive to

other market risk exposures such as cross-currency basis

spreads and interest rate risk. However, as these features are

not a significant component of these foreign exchange

derivatives, the market risk related to this exposure is not

significant. For more information on the accounting for

derivatives, see Note 3 – Derivatives to the Consolidated

Financial Statements.

Bank of America 78

Mortgage Banking Risk Management

We originate, fund and service mortgage loans, which subject us

to credit, liquidity and interest rate risks, among others. We

determine whether loans will be held for investment or held for

sale at the time of commitment and manage credit and liquidity

risks by selling or securitizing a portion of the loans we

originate.

Interest rate risk and market risk can be substantial in the

mortgage business. Changes in interest rates and other market

factors impact the volume of mortgage originations. Changes in

interest rates also impact the value of interest rate lock

commitments (IRLCs) and the related residential first mortgage

loans held-for-sale between the date of the IRLC and the date

the loans are sold to the secondary market. An increase in

mortgage interest rates typically leads to a decrease in the

value of these instruments. Conversely, when there is an

increase in interest rates, the value of the MSRs will increase

driven by lower prepayment expectations. Because the interest

rate risks of these hedged items offset, we combine them into

one overall hedged item with one combined economic hedge

portfolio consisting of derivative contracts and securities.

During 2023, 2022, and 2021 we recorded gains of $127

million, $78 million and $39 million. For more information on

MSRs, see Note 20 – Fair Value Measurements to the

Consolidated Financial Statements.

Compliance and Operational Risk Management

Compliance risk is the risk of legal or regulatory sanctions,

material financial loss or damage to the reputation of the

Corporation arising from the failure of the Corporation to comply

with the requirements of applicable laws, rules, regulations and

our internal policies and procedures (collectively, applicable

laws, rules and regulations). We are subject to comprehensive

regulation under federal and state laws, rules and regulations in

the U.S. and the laws of the various jurisdictions in which we

operate, including those related to financial crimes and anti-

money laundering, market conduct, trading activities, fair

lending, privacy, data protection and unfair, deceptive or abusive

acts or practices.

Operational risk is the risk of loss resulting from inadequate

or failed processes or systems, people or external events, and

includes legal risk. Operational risk may occur anywhere in the

Corporation, including third-party business processes, and is not

limited to operations functions. The Corporation faces a number

of key operational risks including third-party risk, model risk,

conduct risk, technology risk, information security risk and data

risk. Operational risk can result in financial losses and

reputational impacts and is a component in the calculation of

total RWA used in the Basel 3 capital calculation. For more

information on Basel 3 calculations, see Capital Management

on page 47.

FLUs and control functions are first and foremost

responsible for managing all aspects of their businesses,

including their compliance and operational risk. FLUs and

control functions are required to understand their business

processes and related risks and controls, including third-party

dependencies and the related regulatory requirements, and

monitor and report on the effectiveness of the control

environment. In order to actively monitor and assess the

performance of their processes and controls, they must conduct

comprehensive quality assurance activities and identify issues

and risks to remediate control gaps and weaknesses. FLUs and

control functions must also adhere to compliance and

operational risk appetite limits to meet strategic, capital and

financial planning objectives. Finally, FLUs and control functions

are responsible for the proactive identification, management

and escalation of compliance and operational risks across the

Corporation. Collectively, these efforts are important to

strengthen their compliance and operational resiliency, which is

the ability to deliver critical operations through disruption.

Global Compliance and Operational Risk teams

independently assess compliance and operational risk, monitor

business activities and processes and evaluate FLUs and

control functions for adherence to applicable laws, rules and

regulations, including identifying issues and risks, and reporting

on the state of the control environment. Corporate Audit

provides an independent assessment and validation through

testing of key compliance and operational risk processes and

controls across the Corporation.

The Corporation's Global Compliance – Enterprise Policy and

Operational Risk Management – Enterprise Policy set the

requirements for reporting compliance and operational risk

information to executive management as well as the Board or

appropriate Board-level committees and reflect Global

Compliance and Operational Risk’s responsibilities for

conducting independent oversight of the Corporation’s

compliance and operational risk management activities. The

Board provides oversight of compliance risk through its Audit

Committee and the ERC, and operational risk through its ERC.

Cybersecurity

Risk Management and Strategy

Cybersecurity is a key operational risk facing the Corporation.

We, our employees, customers, regulators and third parties are

ongoing targets of an increasing number of cybersecurity threats

and cyberattacks and, accordingly, the Corporation devotes

considerable resources to the establishment and maintenance

of processes for assessing, identifying and managing

cybersecurity risk through its global workforce and 24/7 cyber

operations centers around the world. The Corporation takes a

cross-functional approach to addressing cybersecurity risk, with

our Global Technology, Global Risk Management, Legal and

Corporate Audit functions playing key roles. In addition, the

Corporation’s processes related to cybersecurity risk are an

element of and integrated with the Corporation’s comprehensive

risk program, including our risk framework. For more information

on the Corporation’s Cybersecurity risk, see Item 1A. Risk

Factors – Business Operations beginning on page 14. For more

information on our approach to risk management, including our

risk management governance framework, see Managing Risk on

page 44.

As part of the Corporation’s overall risk management

program, the Corporation’s Global Information Security (GIS)

Program is supported by three lines of defense. As the first line

of defense, the GIS team is responsible for the day-to-day

management of the GIS Program, which includes defining

policies and procedures designed to safeguard the

Corporation’s information systems and the information those

systems collect, process, maintain, use, share, disseminate

and dispose of. As the second line of defense, Global

Compliance and Operational Risk independently assesses,

monitors and tests cybersecurity risk across the Corporation, as

well as the effectiveness of the GIS Program. As the third line of

defense, Corporate Audit conducts additional independent

review and validation of the first-line and second-line processes

and functions.

The Corporation seeks to mitigate cybersecurity risk and

associated legal, financial, reputational, operational and/or

regulatory risks by employing a multi-faceted GIS Program,

79 Bank of America

through various policies, procedures and playbooks, that are

focused on governing, preparing for, identifying, preventing,

detecting, mitigating, responding to and recovering from

cybersecurity threats and cybersecurity incidents suffered by the

Corporation and its third-party service providers, as well as

effectively operating the Corporation’s processes. Our business

continuity policy, standards and procedures are designed to

maintain the availability of business functions and enable

impacted units within the Corporation and its third-party service

providers to achieve strategic objectives in the event of a

cybersecurity incident. In accordance with the Corporation’s

cyber incident response framework, GIS, including its incident

response team, tracks, documents, responds to and analyzes

cybersecurity threats and cybersecurity incidents, including

those experienced by the Corporation’s third-party service

providers that may impact the Corporation. Additionally, the

Corporation has a process for assembling multi-stakeholder

executive response teams to monitor and coordinate cross-

functional responses to certain cybersecurity incidents.

As part of the GIS Program, the Corporation leverages both

internal and external assessments and partnerships with

industry leaders. The Corporation engages third-party assessors,

consultants, auditors and other third-party professionals to

evaluate and test its cybersecurity program and provide

guidance on operating and improving the GIS Program, including

the design and operational effectiveness of the security and

resiliency of our information systems.

The Corporation focuses on and has processes to oversee

cybersecurity risk associated with its third-party service

providers. As part of its cybersecurity risk management

processes, the Corporation maintains an enterprise-wide

program that defines standards for the planning, sourcing,

management, and oversight of third-party relationships and

third-party access to its information system, facilities, and/or

confidential or proprietary data. The Corporation has established

security requirements applicable to third-party service providers,

and where permitted by contract, cybersecurity diligence is

conducted to assess the alignment of third-party service

providers’ cybersecurity programs with the Corporation’s

cybersecurity requirements.

While we and our third parties have experienced

cybersecurity incidents, as well as adverse impacts from such

incidents, we have not experienced material losses or other

material consequences relating to cybersecurity incidents

experienced by us or our third parties. However, we expect to

continue to experience cybersecurity incidents resulting in

adverse impacts with increased frequency and severity due to

the evolving threat environment, and there can be no assurance

that future cybersecurity incidents, including incidents

experienced by our third parties, will not have a material

adverse impact on the Corporation, including its business

strategy, results of operations and/or financial condition.

Governance

Through established governance structures, the Corporation has

policies, processes and practices to help facilitate oversight of

cybersecurity risk. In accordance with these policies, processes

and practices, the Corporation’s three lines of defense, and

management, strive to prepare for, identify, prevent, detect,

mitigate, respond to and recover from cybersecurity threats and

incidents, monitor performance, and escalate to executive

management, the committees of the Corporation’s Board and/

or to the Board, as appropriate. Additionally, GIS reports

cybersecurity incidents that meet certain criteria to the Legal

Department for further escalation and evaluation for materiality

and potential disclosure, which includes the consideration of

relevant quantitative and qualitative factors.

The Board is actively engaged in the oversight of the GIS

Program and devotes considerable time and attention to the

oversight and mitigation of cybersecurity risk. The Board, which

includes members with technology and cybersecurity

experience, oversees management’s approach to staffing,

policies, processes and practices to address cybersecurity risk.

The Board and its ERC, which is responsible for reviewing

cybersecurity risk, each receive regular presentations,

memoranda and reports throughout the year from our Chief

Technology and Information Officer (CTIO) and our Chief

Information Security Officer (CISO) on internal and external

cybersecurity developments, threats and risks. On a quarterly

basis, GIS sends the Board a memorandum highlighting relevant

cybersecurity developments and a document detailing the

performance metrics for the GIS Program.

The Board receives prompt and timely information from

management on cybersecurity incidents, including cybersecurity

incidents experienced by the Corporation’s third-party service

providers, that may pose significant risk to the Corporation, and

continues to receive regular reports on any such incidents until

their conclusion. Additionally, the Board receives quarterly

reports on the performance of the Corporation’s cybersecurity

risk appetite metrics, including metrics on vulnerabilities and

third-party cybersecurity risks and incidents and is notified

promptly if a Board-level cybersecurity risk limit is breached.

Our ERC also annually reviews and approves our GIS

Program and our Information Security Policy, which establish

administrative, technical, and physical safeguards designed to

protect the security, confidentiality and integrity of customer

records and information in accordance with the Gramm-Leach-

Bliley Act and the interagency guidelines issued thereunder, and

applicable laws globally.

Under the Board’s oversight, management works closely with

key stakeholders, including regulators, government agencies,

law enforcement, peer institutions and industry groups, and

develops and invests in talent and innovative technology in

order to better manage cybersecurity risk.

Our most senior cybersecurity employees are the CTIO and

CISO, who are primarily responsible for managing and assessing

cybersecurity risk. The CISO oversees a team of more than

3,000 information security professionals spanning the globe.

The CISO and the GIS senior leadership team of ten individuals

have deep cybersecurity expertise, with over 100 years of

collective experience working in the cybersecurity field, both at

the Corporation and other companies in various industries.

Additionally, certain members of the GIS leadership team hold

leadership roles in sector-specific information and infrastructure

security organizations, including the Financial Services

Information Sharing and Analysis Center and the Financial

Services Sector Coordinating Council. Employees across the

Corporation also play a role in protecting the Corporation from

cybersecurity threats and receive periodic training and education

on cybersecurity-related topics.

Reputational Risk Management

Reputational risk is the risk that negative perception of the

Corporation may adversely impact profitability or operations.

Reputational risk may result from many of the Corporation’s

activities, including those related to the management of

strategic, operational, compliance, liquidity, market (price and

interest rate) and credit risks.

The Corporation manages reputational risk through

established policies and controls embedded throughout its

Bank of America 80

business and risk management processes. We proactively

monitor and identify potential reputational risk events and have

processes established to mitigate reputational risks in a timely

manner. If reputational risk events occur, we focus on

remediating the underlying issue and taking action to minimize

damage to the Corporation’s reputation. The Corporation has

processes and procedures in place to respond to events that

give rise to reputational risk, including educating individuals and

organizations that influence public opinion, and implementing

communication strategies to mitigate the risk. The Corporation’s

organization and governance structure provides oversight of

reputational risks. Reputational risk reporting is provided

regularly and directly to senior management and the ERC, which

provides primary oversight of reputational risk. In addition, each

FLU has a committee, which includes representatives from Legal

and Risk, that is responsible for the oversight of reputational

risk, including approval for business activities that present

elevated levels of reputational risks.

Climate Risk

Climate Risk Management

Climate risk is the risk that climate change or actions taken to

mitigate climate change expose the Corporation to economic,

operational or reputational harm. Climate-related risks are

divided into two major categories, both of which span across the

seven key risk types discussed in Managing Risk on page 44:

(1) Physical Risk: risks related to the physical impacts of

climate change, driven by extreme weather events such as

hurricanes and floods, as well as chronic longer-term shifts such

as rising average global temperatures and sea levels, and (2)

Transition Risk: risks related to the transition to a low-carbon

economy, which may entail extensive policy, legal, technology

and market changes.

Physical risks of climate change, such as more frequent and

severe extreme weather events, can increase the Corporation’s

risks, including credit risk by diminishing borrowers’ repayment

capacity or collateral values, and operational risk by negatively

impacting the Corporation’s facilities, employees, or vendors.

Transition risks of climate change may amplify credit risks

through the financial impacts of changes in policy, technology or

the market on the Corporation or our counterparties.

Unanticipated market changes can lead to sudden price

adjustments and give rise to heightened market risk.

Reputational risk can arise if we do not meet our climate-related

commitments and/or goals, or are perceived to be inadequately

responsive to climate change or otherwise.

Our approach to managing climate risk is consistent with our

risk management governance structure, from senior

management to our Board and its committees, including the

ERC and the Corporate Governance, ESG and Sustainability

Committee (CGESC) of the Board, which regularly discuss

climate-related topics. The ERC oversees climate risk as set

forth in our Risk Framework and Risk Appetite Statement. The

CGESC is responsible for overseeing the Corporation’s

environmental and social sustainability-related activities and

practices, and regularly reviews the Corporation’s climate-

related work and policies. The Climate Risk Council consists of

leaders across risk, FLU and control functions, and meets

routinely to discuss our approach to managing climate-related

risks.

Our climate risk management efforts are overseen by an

officer who reports to the CRO. The Corporation has a Climate

and Environmental Risk Management function that is

responsible for overseeing climate risk management. They are

responsible for establishing the Climate Risk Framework and

governance structure, and providing independent assessment

and challenge of enterprise-wide climate risks.

Based on the Corporation’s Risk Framework, in 2023 we

created our internal Climate Risk Framework, which addresses

how the Corporation identifies, measures, monitors and controls

climate risk by enhancing existing risk management processes

and also includes examples of how it manifests across the

seven risk types. It details the roles and responsibilities for

climate risk management across our three lines of defense as

noted above.

For more information on our governance framework, see

Managing Risk on page 44. For more information on climate

risk, see Item 1A. Risk Factors on page 8.

Climate-related Goals and Targets

In 2021, the Corporation committed to achieving net zero

greenhouse gas emissions before 2050 in our financing

activities, operations and supply chain (Net Zero goal), and in

2022, we released our Approach to Zero

, a framework for how

we plan to achieve our Net Zero goal. In line with this approach,

we have set interim 2030 targets across our financing activities

(2030 Financing Activity Emissions Targets), operations and

supply chain, all of which are further supported and

complemented by our $1.5 trillion sustainable finance goal

(which is aligned with the 17 UN Sustainable Development

Goals) of which $1 trillion is dedicated to supporting the

transition toward a low-carbon economy, including capital

mobilized across clean energy sectors and tailored financial

solutions for emerging areas of the low-carbon economy. In

particular, we announced 2030 Financing Activity Emissions

Targets for auto manufacturing, aviation, cement, energy, and

power generation sectors and expect to continue to set targets

for other sectors that are significant contributors to global

greenhouse gas emissions and therefore prioritized by us.

Achieving our climate--related goals and targets, including

our Net Zero goal and 2030 Financing Activity Emissions

Targets, may require technological advances, clearly defined

roadmaps for industry sectors, better emissions data reporting,

new standards and public policies, including those that improve

the cost of capital for the transition to a low-carbon economy, as

well as strong and active engagement with customers,

suppliers, investors, government officials and other

stakeholders. Given the extended period of these and other

climate-related goals we have established, our initiatives have

not resulted in a significant effect on our results of operations

or financial position in the relevant periods presented herein.

For more information on climate-related matters and the

Corporation’s climate-related goals and commitments, including

plans to achieve its Net Zero goal and 2030 Financing Activity

Emissions Targets and progress on its sustainable finance

goals, see the Corporation’s website, including its 2023 Task

Force on Climate-related Financial Disclosures (TCFD) Report.

The contents of the Corporation’s website, including the 2023

TCFD Report is not incorporated by reference into this Annual

Report on Form 10-K.

The foregoing discussion and the statements on the

Corporations’ website, including in the 2023 TCFD Report

regarding its goals and commitments with respect to climate

risk management, such as environmental transition

considerations, contain “forward-looking statements” within the

meaning of the Private Securities Litigation Reform Act of 1995.

These statements are not guarantees of future results or

performance and involve certain known and unknown risks,

uncertainties and assumptions that are difficult to predict and

81 Bank of America

are often beyond the Corporation’s control. Actual outcomes

and results may differ materially from those expressed in, or

implied by, any of these forward-looking statements.

Complex Accounting Estimates

Our significant accounting principles, as described in Note 1 –

Summary of Significant Accounting Principles to the Consolidated

Financial Statements, are essential in understanding the MD&A.

Many of our significant accounting principles require complex

judgments to estimate the values of assets and liabilities. We

have procedures and processes in place to facilitate making

these judgments.

The more judgmental estimates are summarized in the

following discussion. We have identified and described the

development of the variables most important in the estimation

processes that involve mathematical models to derive the

estimates. In many cases, there are numerous alternative

judgments that could be used in the process of determining the

inputs to the models. Where alternatives exist, we have used

the factors that we believe represent the most reasonable value

in developing the inputs. Actual performance that differs from

our estimates of the key variables could materially impact our

results of operations. Separate from the possible future impact

to our results of operations from input and model variables, the

value of our lending portfolio and market-sensitive assets and

liabilities may change subsequent to the balance sheet date,

often significantly, due to the nature and magnitude of future

credit and market conditions. Such credit and market conditions

may change quickly and in unforeseen ways and the resulting

volatility could have a significant, negative effect on future

operating results. These fluctuations would not be indicative of

deficiencies in our models or inputs.

Allowance for Credit Losses

The allowance for credit losses includes the allowance for loan

and lease losses and the reserve for unfunded lending

commitments. Our process for determining the allowance for

credit losses is discussed in Note 1 – Summary of Significant

Accounting Principles and Note 5 – Outstanding Loans and

Leases and Allowance for Credit Losses to the Consolidated

Financial Statements.

The determination of the allowance for credit losses is

based on numerous estimates and assumptions, which require

a high degree of judgment and are often interrelated. A critical

judgment in the process is the weighting of our forward-looking

macroeconomic scenarios that are incorporated into our

quantitative models. As any one economic outlook is inherently

uncertain, the Corporation uses multiple macroeconomic

scenarios in its ECL calculation, which have included a baseline

scenario derived from consensus estimates, an adverse

scenario reflecting an extended moderate recession, a

downside scenario reflecting persistent inflation and interest

rates above the baseline scenario, a tail risk scenario similar to

the severely adverse scenario used in stress testing and an

upside scenario that considers the potential for improvement

above the baseline scenario. The overall economic outlook is

weighted towards a recessionary environment in the first half of

2024, with lower gross domestic product (GDP) growth and

higher unemployment rate expectations as compared to what we

experienced in the prior year. Generally, as the consensus

estimates improve or deteriorate, the allowance for credit

losses will change in a similar direction. There are multiple

variables that drive the macroeconomic scenarios with the key

variables including, but not limited to, U.S. GDP and

unemployment rates. As of December 31, 2022, the weighted

macroeconomic outlook for the U.S. average unemployment rate

was forecasted at 5.6 percent, 5.0 percent and 4.5 percent in

the fourth quarters of 2023, 2024 and 2025, respectively, and

the weighted macroeconomic outlook for U.S. GDP was

forecasted to contract 0.4 percent and grow 1.2 percent and

1.9 percent year-over-year in the fourth quarters of 2023, 2024

and 2025, respectively. As of December 31, 2023, the latest

consensus estimates for the U.S. average unemployment rate

for the fourth quarter of 2023 was 3.9 percent and U.S. GDP

was forecasted to grow 2.6 percent year-over-year in the fourth

quarter of 2023, reflecting a tighter labor market and healthy

growth compared to our macroeconomic outlook as of

December31, 2022, and were factored into our allowance for

credit losses estimate as of December 31, 2023. In addition,

as of December 31, 2023, the weighted macroeconomic

outlook for the U.S. average unemployment rate was forecasted

at 4.9 percent in the fourth quarters of both 2024 and 2025,

and the weighted macroeconomic outlook for U.S. GDP was

forecasted to grow 0.3 percent and 1.4 percent year-over-year in

the fourth quarters of 2024 and 2025.

In addition to the above judgments and estimates, the

allowance for credit losses can also be impacted by

unanticipated changes in asset quality of the portfolio, such as

increases or decreases in credit and/or internal risk ratings in

our commercial portfolio, improvement or deterioration in

borrower delinquencies or credit scores in our credit card

portfolio and increases or decreases in home prices, which is a

primary driver of LTVs, in our consumer real estate portfolio, all

of which have some degree of uncertainty. The allowance for

credit losses increased to $14.6 billion from $14.2 billion at

December31, 2022, primarily due to a reserve build in our

Bank of America 82

consumer portfolio driven by credit card loan growth and asset

quality, partially offset by a reserve release in our commercial

portfolio primarily driven by improved macroeconomic conditions

applicable to the commercial portfolio.

To provide an illustration of the sensitivity of the

macroeconomic scenarios and other assumptions on the

estimate of our allowance for credit losses, the Corporation

compared the December 31, 2023 modeled ECL from the

baseline scenario and our adverse scenario. Relative to the

baseline scenario, the adverse scenario assumed a peak U.S.

unemployment rate of over two percentage points higher than

the baseline scenario, a decline in U.S. GDP followed by a

prolonged recovery and a lower home price outlook with a

difference of approximately 16 percent at the trough. This

sensitivity analysis resulted in a hypothetical increase in the

allowance for credit losses of approximately $3.8 billion.

While the sensitivity analysis may be useful to understand

how changes in macroeconomic assumptions could impact our

modeled ECLs, it is not meant to forecast how our allowance for

credit losses is expected to change in a different

macroeconomic outlook. Importantly, the analysis does not

incorporate a variety of factors, including qualitative reserves

and the weighting of alternate scenarios, which could have

offsetting effects on the estimate. Considering the variety of

factors contemplated when developing and weighting

macroeconomic outlooks such as recent economic events,

leading economic indicators, views of internal and third-party

economists and industry trends, in addition to other qualitative

factors, the Corporation believes the allowance for credit losses

at December31, 2023 is appropriate.

Fair Value of Financial Instruments

Under applicable accounting standards, we are required to

maximize the use of observable inputs and minimize the use of

unobservable inputs in measuring fair value. We classify fair

value measurements of financial instruments and MSRs based

on the three-level fair value hierarchy in the accounting

standards.

The fair values of assets and liabilities may include

adjustments, such as market liquidity and credit quality, where

appropriate. Valuations of products using models or other

techniques are sensitive to assumptions used for the significant

inputs. Where market data is available, the inputs used for

valuation reflect that information as of our valuation date. Inputs

to valuation models are considered unobservable if they are

supported by little or no market activity. In periods of extreme

volatility, lessened liquidity or in illiquid markets, there may be

more variability in market pricing or a lack of market data to use

in the valuation process. In keeping with the prudent application

of estimates and management judgment in determining the fair

value of assets and liabilities, we have in place various

processes and controls that include: a model validation policy

that requires review and approval of quantitative models used

for deal pricing, financial statement fair value determination and

risk quantification; a trading product valuation policy that

requires verification of all traded product valuations; and a

periodic review and substantiation of daily profit and loss

reporting for all traded products. Primarily through validation

controls, we utilize both broker and pricing service inputs which

can and do include both market-observable and internally-

modeled values and/or valuation inputs. Our reliance on this

information is affected by our understanding of how the broker

and/or pricing service develops its data with a higher degree of

reliance applied to those that are more directly observable and

lesser reliance applied to those developed through their own

internal modeling. For example, broker quotes in less active

markets may only be indicative and therefore less reliable.

These processes and controls are performed independently of

the business. For more information, see Note 20 – Fair Value

Measurements and Note 21 – Fair Value Option to the

Consolidated Financial Statements.

Level 3 Assets and Liabilities

Financial assets and liabilities, and MSRs, where values are

based on valuation techniques that require inputs that are both

unobservable and are significant to the overall fair value

measurement are classified as Level 3 under the fair value

hierarchy established in applicable accounting standards. The

fair value of these Level 3 financial assets and liabilities and

MSRs is determined using pricing models, discounted cash flow

methodologies or similar techniques for which the determination

of fair value requires significant management judgment or

estimation.

Level 3 financial instruments may be hedged with derivatives

classified as Level 1 or 2; therefore, gains or losses associated

with Level 3 financial instruments may be offset by gains or

losses associated with financial instruments classified in other

levels of the fair value hierarchy. The Level 3 gains and losses

recorded in earnings did not have a significant impact on our

liquidity or capital. We conduct a review of our fair value

hierarchy classifications on a quarterly basis. Transfers into or

out of Level 3 are made if the significant inputs used in the

83 Bank of America

financial models measuring the fair values of the assets and

liabilities became unobservable or observable, respectively, in

the current marketplace. For more information on transfers into

and out of Level 3 during 2023, 2022 and 2021, see Note 20 –

Fair Value Measurements to the Consolidated Financial

Statements.

Accrued Income Taxes and Deferred Tax Assets

Accrued income taxes, reported as a component of either other

assets or accrued expenses and other liabilities on the

Consolidated Balance Sheet, represent the net amount of

current income taxes we expect to pay to or receive from various

taxing jurisdictions attributable to our operations to date. We

currently file income tax returns in more than 100 jurisdictions

and consider many factors, including statutory, judicial and

regulatory guidance, in estimating the appropriate accrued

income taxes for each jurisdiction.

Net deferred tax assets, reported as a component of other

assets on the Consolidated Balance Sheet, represent the net

decrease in taxes expected to be paid in the future because of

net operating loss (NOL) and tax credit carryforwards and

because of future reversals of temporary differences in the

bases of assets and liabilities as measured by tax laws and

their bases as reported in the financial statements. NOL and tax

credit carryforwards result in reductions to future tax liabilities,

and many of these attributes can expire if not utilized within

certain periods. We consider the need for valuation allowances

to reduce net deferred tax assets to the amounts that we

estimate are more likely than not to be realized.

Consistent with the applicable accounting guidance, we

monitor relevant tax authorities and change our estimates of

accrued income taxes and/or net deferred tax assets due to

changes in income tax laws and their interpretation by the

courts and regulatory authorities. These revisions of our

estimates, which also may result from our income tax planning

and from the resolution of income tax audit matters, may be

material to our operating results for any given period.

See Note 19 – Income Taxes to the Consolidated Financial

Statements for a table of significant tax attributes and

additional information. For more information, see page 17 under

Item 1A. Risk Factors – Regulatory, Compliance and Legal.

Goodwill and Intangible Assets

The nature of and accounting for goodwill and intangible assets

are discussed in Note 1 – Summary of Significant Accounting

Principles and Note 7 – Goodwill and Intangible Assets to the

Consolidated Financial Statements.

The Corporation tests its goodwill for impairment on June 30

of each year or more frequently if events or circumstances

indicate a potential impairment. We completed our annual

goodwill impairment test as of June 30, 2023, by performing a

quantitative assessment to compare the fair value of each

reporting unit to its carrying value as measured by allocated

equity. Based on our assessment, we have concluded that

goodwill was not impaired.

The Corporation chose to perform the quantitative

assessment as compared to a qualitative assessment that was

performed in the prior year due to the level of interest rates and

other market conditions existing at June 30, 2023. The

quantitative assessment used a combination of an income

approach (which utilizes the present value of cash flows to

estimate fair value) and a market multiplier approach (which

utilizes observable market prices and metrics of peer

companies to estimate fair value). The main assumptions used

in the income approach are the Corporation’s three-year internal

forecasts along with long-term terminal growth values. The main

assumptions used in the market multiplier approach are

primarily enterprise value and equity multiples from comparable

publicly traded companies in industries similar to the reporting

unit.

Certain Contingent Liabilities

For more information on the complex judgments associated with

certain contingent liabilities, see Note 12 – Commitments and

Contingencies to the Consolidated Financial Statements.

Bank of America 84

Non-GAAP Reconciliations

Tables 45 and 46 provide reconciliations of certain non-GAAP financial measures to GAAP financial measures.

Table 45 Annual Reconciliations to GAAP Financial Measures

(1)

(Dollars in millions, shares in thousands)

2023

2022 2021

Reconciliation of average shareholders’ equity to average tangible shareholders’ equity and average tangible common

shareholders’ equity



 

Shareholders’ equity

$ 283,353

$ 270,299 $ 273,757

Goodwill

(69,022)

(69,022) (69,005)

Intangible assets (excluding MSRs)

(2,039)

(2,117) (2,177)

Related deferred tax liabilities

893

922 916

Tangible shareholders’ equity

$ 213,185

$ 200,082 $ 203,491

Preferred stock

(28,397)

(28,318) (23,970)

Tangible common shareholders’ equity

$ 184,788

$ 171,764 $ 179,521

Reconciliation of year-end shareholders’ equity to year-end tangible shareholders’ equity and year-end tangible common

shareholders’ equity



Shareholders’ equity

$ 291,646

$ 273,197 $ 270,066

Goodwill

(69,021)

(69,022) (69,022)

Intangible assets (excluding MSRs)

(1,997)

(2,075) (2,153)

Related deferred tax liabilities

874

899 929

Tangible shareholders’ equity

$ 221,502

$ 202,999 $ 199,820

Preferred stock

(28,397)

(28,397) (24,708)

Tangible common shareholders’ equity

$ 193,105

$ 174,602 $ 175,112

Reconciliation of year-end assets to year-end tangible assets 



Assets

$ 3,180,151

$ 3,051,375 $ 3,169,495

Goodwill

(69,021)

(69,022) (69,022)

Intangible assets (excluding MSRs)

(1,997)

(2,075) (2,153)

Related deferred tax liabilities

874

899 929

Tangible assets

$ 3,110,007

$ 2,981,177 $ 3,099,249

(1)

Presents reconciliations of non-GAAP financial measures to GAAP financial measures. For more information on non-GAAP financial measures and ratios we use in assessing the results of the

Corporation, see Supplemental Financial Data on page 29.

Table 46 Quarterly Reconciliations to GAAP Financial Measures

(1)

2023 Quarters

2022 Quarters

(Dollars in millions)

Fourth

Third Second First Fourth Third Second First

Reconciliation of average shareholders’ equity to

average tangible shareholders’ equity and average

tangible common shareholders’ equity

       

Shareholders’ equity

$ 288,618

$ 284,975 $ 282,425 $ 277,252 $ 272,629 $ 271,017 $ 268,197 $ 269,309

Goodwill

(69,021)

(69,021) (69,022) (69,022) (69,022) (69,022) (69,022) (69,022)

Intangible assets (excluding MSRs)

(2,010)

(2,029) (2,049) (2,068) (2,088) (2,107) (2,127) (2,146)

Related deferred tax liabilities

886

890 895 899 914 920 926 929

Tangible shareholders’ equity $ 218,473

$ 214,815 $ 212,249 $ 207,061 $ 202,433 $ 200,808 $ 197,974 $ 199,070

Preferred stock

(28,397)

(28,397) (28,397) (28,397) (28,982) (29,134) (28,674) (26,444)

Tangible common shareholders’ equity $ 190,076

$ 186,418 $ 183,852 $ 178,664 $ 173,451 $ 171,674 $ 169,300 $ 172,626

Reconciliation of period-end shareholders’ equity to

period-end tangible shareholders’ equity and

period-end tangible common shareholders’ equity 

      

Shareholders’ equity

$ 291,646

$ 287,064 $ 283,319 $ 280,196 $ 273,197 $ 269,524 $ 269,118 $ 266,617

Goodwill

(69,021)

(69,021) (69,021) (69,022) (69,022) (69,022) (69,022) (69,022)

Intangible assets (excluding MSRs)

(1,997)

(2,016) (2,036) (2,055) (2,075) (2,094) (2,114) (2,133)

Related deferred tax liabilities

874

886 890 895 899 915 920 926

Tangible shareholders’ equity $ 221,502

$ 216,913 $ 213,152 $ 210,014 $ 202,999 $ 199,323 $ 198,902 $ 196,388

Preferred stock

(28,397)

(28,397) (28,397) (28,397) (28,397) (29,134) (29,134) (27,137)

Tangible common shareholders’ equity $ 193,105

$ 188,516 $ 184,755 $ 181,617 $ 174,602 $ 170,189 $ 169,768 $ 169,251

Reconciliation of period-end assets to period-end

tangible assets 

      

Assets

$ 3,180,151

$ 3,153,090 $ 3,123,198 $ 3,194,657 $ 3,051,375 $ 3,072,953 $ 3,111,606 $ 3,238,223

Goodwill

(69,021)

(69,021) (69,021) (69,022) (69,022) (69,022) (69,022) (69,022)

Intangible assets (excluding MSRs)

(1,997)

(2,016) (2,036) (2,055) (2,075) (2,094) (2,114) (2,133)

Related deferred tax liabilities

874

886 890 895 899 915 920 926

Tangible assets $ 3,110,007

$ 3,082,939 $ 3,053,031 $ 3,124,475 $ 2,981,177 $ 3,002,752 $ 3,041,390 $ 3,167,994

(1)

Presents reconciliations of non-GAAP financial measures to GAAP financial measures. For more information on non-GAAP financial measures and ratios we use in assessing the results of the

Corporation, see Supplemental Financial Data on page 29.

85 Bank of America

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

See Market Risk Management on page 73 in the MD&A and the sections referenced therein for Quantitative and Qualitative

Disclosures about Market Risk.

Item 8. Financial Statements and Supplementary Data

Table of Contents

Page

Consolidated Statement of Income 90

Consolidated Statement of Comprehensive Income 90

Consolidated Balance Sheet 91

Consolidated Statement of Changes in Shareholders’ Equity 92

Consolidated Statement of Cash Flows 93

Note 1 – Summary of Significant Accounting Principles 94

Note 2 – Net Interest Income and Noninterest Income 102

Note 3 – Derivatives 103

Note 4 – Securities 111

Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses 114

Note 6 – Securitizations and Other Variable Interest Entities 126

Note 7 – Goodwill and Intangible Assets 130

Note 8 – Leases

130

Note 9 – Deposits 131

Note 10 – Securities Financing Agreements, Short-term Borrowings, Collateral and Restricted Cash

132

Note 11 – Long-term Debt 134

Note 12 – Commitments and Contingencies 135

Note 13 – Shareholders’ Equity 140

Note 14 – Accumulated Other Comprehensive Income 142

Note 15 – Earnings Per Common Share 143

Note 16 – Regulatory Requirements and Restrictions 143

Note 17 – Employee Benefit Plans 145

Note 18 – Stock-based Compensation Plans 149

Note 19 – Income Taxes 149

Note 20 – Fair Value Measurements 151

Note 21 – Fair Value Option 160

Note 22 – Fair Value of Financial Instruments 162

Note 23 – Business Segment Information 163

Note 24 – Parent Company Information 166

Note 25 – Performance by Geographical Area 168

Glossary 169

Acronyms 171

Bank of America 86

Report of Management on Internal Control Over Financial Reporting

The management of Bank of America Corporation is responsible

for establishing and maintaining adequate internal control over

financial reporting.

The Corporation’s internal control over financial reporting is a

process designed to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of

financial statements for external purposes in accordance with

accounting principles generally accepted in the United States of

America. The Corporation’s internal control over financial

reporting includes those policies and procedures that (i) pertain

to the maintenance of records that, in reasonable detail,

accurately and fairly reflect the transactions and dispositions of

the assets of the Corporation; (ii) provide reasonable assurance

that transactions are recorded as necessary to permit

preparation of financial statements in accordance with

accounting principles generally accepted in the United States of

America, and that receipts and expenditures of the Corporation

are being made only in accordance with authorizations of

management and directors of the Corporation; and (iii) provide

reasonable assurance regarding prevention or timely detection

of unauthorized acquisition, use, or disposition of the

Corporation’s assets that could have a material effect on the

financial statements.

Because of its inherent limitations, internal control over

financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future

periods are subject to the risk that controls may become

inadequate because of changes in conditions, or that the

degree of compliance with the policies or procedures may

deteriorate.

Management assessed the effectiveness of the

Corporation’s internal control over financial reporting as of

December 31, 2023 based on the framework set forth by the

Committee of Sponsoring Organizations of the Treadway

Commission in Internal Control – Integrated Framework (2013).

Based on that assessment, management concluded that, as of

December 31, 2023, the Corporation’s internal control over

financial reporting is effective.

The Corporation’s internal control over financial reporting as

of December 31, 2023 has been audited by

PricewaterhouseCoopers, LLP, an independent registered public

accounting firm, as stated in their accompanying report which

expresses an unqualified opinion on the effectiveness of the

Corporation’s internal control over financial reporting as of

December31, 2023.

Brian T. Moynihan

Chair, Chief Executive Officer and President

Alastair M. Borthwick

Chief Financial Officer

87 Bank of America

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Bank

of America Corporation

Opinions on the Financial Statements and Internal

Control over Financial Reporting

We have audited the accompanying consolidated balance

sheets of Bank of America Corporation and its subsidiaries (the

“Corporation”) as of December 31, 2023 and 2022, and the

related consolidated statements of income, comprehensive

income, changes in shareholders’ equity and cash flows for

each of the three years in the period ended December 31,

2023, including the related notes (collectively referred to as the

“consolidated financial statements”). We also have audited the

Corporation's internal control over financial reporting as of

December 31, 2023, based on criteria established in Internal

Control - Integrated Framework (2013) issued by the Committee

of Sponsoring Organizations of the Treadway Commission

(COSO).

In our opinion, the consolidated financial statements

referred to above present fairly, in all material respects, the

financial position of the Corporation as of December31, 2023

and 2022, and the results of its operations and its cash flows

for each of the three years in the period ended December 31,

2023 in conformity with accounting principles generally

accepted in the United States of America. Also in our opinion,

the Corporation maintained, in all material respects, effective

internal control over financial reporting as of December 31,

2023, based on criteria established in Internal Control -

Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Corporation’s management is responsible for these

consolidated financial statements, for maintaining effective

internal control over financial reporting, and for its assessment

of the effectiveness of internal control over financial reporting,

included in the accompanying Report of Management on Internal

Control Over Financial Reporting. Our responsibility is to express

opinions on the Corporation’s consolidated financial statements

and on the Corporation's internal control over financial reporting

based on our audits. We are a public accounting firm registered

with the Public Company Accounting Oversight Board (United

States) (PCAOB) and are required to be independent with

respect to the Corporation in accordance with the U.S. federal

securities laws and the applicable rules and regulations of the

Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards

of the PCAOB. Those standards require that we plan and

perform the audits to obtain reasonable assurance about

whether the consolidated financial statements are free of

material misstatement, whether due to error or fraud, and

whether effective internal control over financial reporting was

maintained in all material respects. Our audits of the

consolidated financial statements included performing

procedures to assess the risks of material misstatement of the

consolidated financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated

financial statements. Our audits also included evaluating the

accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of

the consolidated financial statements. Our audit of internal

control over financial reporting included obtaining an

understanding of internal control over financial reporting,

assessing the risk that a material weakness exists, and testing

and evaluating the design and operating effectiveness of

internal control based on the assessed risk. Our audits also

included performing such other procedures as we considered

necessary in the circumstances. We believe that our audits

provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over

Financial Reporting

A company’s internal control over financial reporting is a

process designed to provide reasonable assurance regarding

the reliability of financial reporting and the preparation of

financial statements for external purposes in accordance with

generally accepted accounting principles. A company’s internal

control over financial reporting includes those policies and

procedures that (i) pertain to the maintenance of records that, in

reasonable detail, accurately and fairly reflect the transactions

and dispositions of the assets of the company; (ii) provide

reasonable assurance that transactions are recorded as

necessary to permit preparation of financial statements in

accordance with generally accepted accounting principles, and

that receipts and expenditures of the company are being made

only in accordance with authorizations of management and

directors of the company; and (iii) provide reasonable assurance

regarding prevention or timely detection of unauthorized

acquisition, use, or disposition of the company’s assets that

could have a material effect on the financial statements.

Because of its inherent limitations, internal control over

financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future

periods are subject to the risk that controls may become

inadequate because of changes in conditions, or that the

degree of compliance with the policies or procedures may

deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters

arising from the current period audit of the consolidated

financial statements that were communicated or required to be

communicated to the audit committee and that (i) relate to

accounts or disclosures that are material to the consolidated

financial statements and (ii) involved our especially challenging,

subjective, or complex judgments. The communication of critical

audit matters does not alter in any way our opinion on the

consolidated financial statements, taken as a whole, and we

are not, by communicating the critical audit matters below,

providing separate opinions on the critical audit matters or on

the accounts or disclosures to which they relate.

Allowance for Loan and Lease Losses - Commercial and

Consumer Card Loans

As described in Notes 1 and 5 to the consolidated financial

statements, the allowance for loan and lease losses represents

management’s estimate of the expected credit losses in the

Corporation’s loan and lease portfolio, excluding loans and

unfunded lending commitments accounted for under the fair

value option. As of December31, 2023, the allowance for loan

and lease losses was $13.3 billion on total loans and leases of

$1,050.2 billion, which excludes loans accounted for under the

fair value option. For commercial and consumer card loans, the

expected credit loss is typically estimated using quantitative

methods that consider a variety of factors such as historical

Bank of America 88

loss experience, the current credit quality of the portfolio as well

as an economic outlook over the life of the loan. In its loss

forecasting framework, the Corporation incorporates forward

looking information through the use of macroeconomic

scenarios applied over the forecasted life of the assets. These

macroeconomic scenarios include variables that have

historically been key drivers of increases and decreases in

credit losses. These variables include, but are not limited to,

unemployment rates, real estate prices, gross domestic product

levels and corporate bond spreads. The scenarios that are

chosen and the weighting given to each scenario depend on a

variety of factors including recent economic events, leading

economic indicators, views of internal as well as third-party

economists and industry trends. Also included in the allowance

for loan and lease losses are qualitative reserves to cover

losses that are expected but, in the Corporation's assessment,

may not be adequately reflected in the quantitative methods or

the economic assumptions. Factors that the Corporation

considers include changes in lending policies and procedures,

business conditions, the nature and size of the portfolio,

portfolio concentrations, the volume and severity of past due

loans and nonaccrual loans, the effect of external factors such

as competition, and legal and regulatory requirements, among

others. Further, the Corporation considers the inherent

uncertainty in quantitative models that are built on historical

data.

The principal considerations for our determination that

performing procedures relating to the allowance for loan and

lease losses for the commercial and consumer card portfolios is

a critical audit matter are (i) the significant judgment and

estimation by management in developing lifetime economic

forecast scenarios and related weightings to each scenario,

which in turn led to a high degree of auditor judgment,

subjectivity and effort in performing procedures and in

evaluating audit evidence obtained, and (ii) the audit effort

involved professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and

evaluating audit evidence in connection with forming our overall

opinion on the consolidated financial statements. These

procedures included testing the effectiveness of controls

relating to the allowance for loan and lease losses, including

controls over the evaluation and approval of models, forecast

scenarios and related weightings, and qualitative reserves.

These procedures also included, among others, testing

management’s process for estimating the allowance for loan

and lease losses, including (i) evaluating the appropriateness of

the loss forecast models and methodology, (ii) evaluating the

reasonableness of certain macroeconomic variables, (iii)

evaluating the reasonableness of management’s development,

selection and weighting of lifetime economic forecast scenarios

used in the loss forecast models, (iv) testing the completeness

and accuracy of data used in the estimate, and (v) evaluating

the reasonableness of certain qualitative reserves made to the

model output results to determine the overall allowance for loan

and lease losses. The procedures also included the involvement

of professionals with specialized skill and knowledge to assist

in evaluating the appropriateness of certain loss forecast

models, the reasonableness of economic forecast scenarios

and related weightings and the reasonableness of certain

qualitative reserves.

Valuation of Certain Level 3 Financial Instruments

As described in Notes 1 and 20 to the consolidated financial

statements, the Corporation carries certain financial

instruments at fair value, which includes $9.3 billion of assets

and $6.6 billion of liabilities classified as Level 3 fair value

measurements that are valued on a recurring basis and $3.9

billion of assets classified as Level 3 fair value measurements

that are valued on a nonrecurring basis, for which the

determination of fair value requires significant management

judgment or estimation. The Corporation determines the fair

value of Level 3 financial instruments using pricing models,

discounted cash flow methodologies, or similar techniques that

require inputs that are both unobservable and are significant to

the overall fair value measurement. Unobservable inputs, such

as volatility or implied yield, may be determined using

quantitative-based extrapolations, pricing models or other

internal methodologies which incorporate management

estimates and available market information.

The principal considerations for our determination that

performing procedures relating to the valuation of certain Level

3 financial instruments is a critical audit matter are the

significant judgment and estimation used by management to

determine the fair value of these financial instruments, which in

turn led to a high degree of auditor judgment, subjectivity and

effort in performing procedures and in evaluating audit evidence

obtained, including the involvement of professionals with

specialized skill and knowledge.

Addressing the matter involved performing procedures and

evaluating audit evidence in connection with forming our overall

opinion on the consolidated financial statements. These

procedures included testing the effectiveness of controls

relating to the valuation of financial instruments, including

controls related to valuation models, significant unobservable

inputs, and data. These procedures also included, among

others, the involvement of professionals with specialized skill

and knowledge to assist in developing an independent estimate

of fair value for a sample of these certain financial instruments

and comparison of management’s estimate to the

independently developed estimate of fair value. Developing the

independent estimate involved testing the completeness and

accuracy of data provided by management and evaluating the

reasonableness of management’s significant unobservable

inputs.

Charlotte, North Carolina

February20, 2024

We have served as the Corporation’s auditor since 1958.

89 Bank of America

Bank of America Corporation and Subsidiaries

Consolidated Statement of Income

(In millions, except per share information)

2023

2022 2021

Net interest income



Interest income

$ 130,262

$ 72,565 $ 47,672

Interest expense

73,331

20,103 4,738

Net interest income

56,931

52,462 42,934

Noninterest income



Fees and commissions

32,009

33,212 39,299

Market making and similar activities

12,732

12,075 8,691

Other income

(3,091)

(2,799) (1,811)

Total noninterest income

41,650

42,488 46,179

Total revenue, net of interest expense 98,581

94,950 89,113

Provision for credit losses 4,394

2,543 (4,594)

Noninterest expense

Compensation and benefits

38,330

36,447 36,140

Occupancy and equipment

7,164

7,071 7,138

Information processing and communications

6,707

6,279 5,769

Product delivery and transaction related

3,608

3,653 3,881

Professional fees

2,159

2,142 1,775

Marketing

1,927

1,825 1,939

Other general operating

5,950

4,021 3,089

Total noninterest expense

65,845

61,438 59,731

Income before income taxes 28,342

30,969 33,976

Income tax expense 1,827

3,441 1,998

Net income $ 26,515

$ 27,528 $ 31,978

Preferred stock dividends and other 1,649

1,513 1,421

Net income applicable to common shareholders $ 24,866

$ 26,015 $ 30,557

Per common share information



Earnings

$ 3.10

$ 3.21 $ 3.60

Diluted earnings

3.08

3.19 3.57

Average common shares issued and outstanding 8,028.6

8,113.7 8,493.3

Average diluted common shares issued and outstanding 8,080.5

8,167.5 8,558.4

Consolidated Statement of Comprehensive Income

(Dollars in millions)

2023

2022 2021

Net income $ 26,515

$ 27,528 $ 31,978

Other comprehensive income (loss), net-of-tax:

Net change in debt securities

573

(6,028) (2,077)

Net change in debit valuation adjustments

(686)

755 356

Net change in derivatives

3,919

(10,055) (2,306)

Employee benefit plan adjustments

(439)

(667) 624

Net change in foreign currency translation adjustments

(57) (45)

Other comprehensive income (loss) 3,368

(16,052) (3,448)

Comprehensive income (loss) $ 29,883

$ 11,476 $ 28,530

See accompanying Notes to Consolidated Financial Statements.

Bank of America 90

Bank of America Corporation and Subsidiaries

Consolidated Balance Sheet

December 31

(Dollars in millions)

2023

2022

Assets

Cash and due from banks

$ 27,892

$ 30,334

Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks

305,181

199,869

Cash and cash equivalents

333,073

230,203

Time deposits placed and other short-term investments

8,346

7,259

Federal funds sold and securities borrowed or purchased under agreements to resell

(includes $133,053 and $146,999 measured at fair value)

280,624

267,574

Trading account assets (includes $130,815 and $115,505 pledged as collateral)

277,354

296,108

Derivative assets

39,323

48,642

Debt securities:



Carried at fair value

276,852

229,994

Held-to-maturity, at cost (fair value $496,597 and $524,267)

594,555

632,825

Total debt securities

871,407

862,819

Loans and leases (includes $3,569 and $5,771 measured at fair value)

1,053,732

1,045,747

Allowance for loan and lease losses

(13,342)

(12,682)

Loans and leases, net of allowance

1,040,390

1,033,065

Premises and equipment, net

11,855

11,510

Goodwill

69,021

69,022

Loans held-for-sale (includes $2,059 and $1,115 measured at fair value)

6,002

6,871

Customer and other receivables

81,881

67,543

Other assets (includes $11,861 and $9,594 measured at fair value)

160,875

150,759

Total assets $ 3,180,151

$ 3,051,375

Liabilities  

Deposits in U.S. offices:

 

Noninterest-bearing

$ 530,619

$ 640,745

Interest-bearing (includes $284 and $311 measured at fair value)

1,273,904

1,182,590

Deposits in non-U.S. offices:

Noninterest-bearing

16,427

20,480

Interest-bearing

102,877

86,526

Total deposits

1,923,827

1,930,341

Federal funds purchased and securities loaned or sold under agreements to repurchase

(includes $178,609 and $151,708 measured at fair value)

283,887

195,635

Trading account liabilities

95,530

80,399

Derivative liabilities

43,432

44,816

Short-term borrowings (includes $4,690 and $832 measured at fair value)

32,098

26,932

Accrued expenses and other liabilities (includes $11,473 and $9,752 measured at fair value

and $1,209 and $1,540 of reserve for unfunded lending commitments)

207,527

224,073

Long-term debt (includes $42,809 and $33,070 measured at fair value)

302,204

275,982

Total liabilities 2,888,505

2,778,178

Commitments and contingencies (Note 6 – Securitizations and Other Variable Interest Entities

and Note 12 – Commitments and Contingencies)

Shareholders’ equity 

Preferred stock, $0.01 par value; authorized – 100,000,000 shares; issued and outstanding – 4,088,099 and 4,088,101 shares

28,397

Common stock and additional paid-in capital, $0.01 par value; authorized – 12,800,000,000shares;

issued and outstanding – 7,895,457,665 and 7,996,777,943 shares

56,365

58,953

Retained earnings

224,672

207,003

Accumulated other comprehensive income (loss)

(17,788)

(21,156)

Total shareholders’ equity 291,646

273,197

Total liabilities and shareholders’ equity $ 3,180,151

$ 3,051,375

Assets of consolidated variable interest entities included in total assets above (isolated to settle the liabilities of the variable interest entities)

Trading account assets

$ 6,054

$ 2,816

Loans and leases

18,276

16,738

Allowance for loan and lease losses

(826)

(797)

Loans and leases, net of allowance

17,450

15,941

All other assets

269

116

Total assets of consolidated variable interest entities $ 23,773

$ 18,873

Liabilities of consolidated variable interest entities included in total liabilities above 



Short-term borrowings (includes $23 and $42 of non-recourse short-term borrowings)

$ 2,957

$ 42

Long-term debt (includes $8,456 and $4,581 of non-recourse debt)

8,456

4,581

All other liabilities (includes $19 and $13 of non-recourse liabilities)

Total liabilities of consolidated variable interest entities $ 11,432

$ 4,636

See accompanying Notes to Consolidated Financial Statements.

91 Bank of America

Bank of America Corporation and Subsidiaries

Consolidated Statement of Changes in Shareholders’ Equity

Preferred

Stock

Common Stock and

Additional Paid-in Capital

Retained

Earnings

Accumulated

Other

Comprehensive

Income (Loss)

Total

Shareholders’

Equity

(In millions)

Shares Amount

Balance, December 31, 2020

$ 24,510 8,650.8 $ 85,982 $ 164,088 $ (1,656) $ 272,924

Net income 31,978 31,978

Net change in debt securities (2,077) (2,077)

Net change in debit valuation adjustments 356 356

Net change in derivatives (2,306) (2,306)

Employee benefit plan adjustments 624 624

Net change in foreign currency translation adjustments (45) (45)

Dividends declared:

Common (6,575) (6,575)

Preferred (1,421) (1,421)

Issuance of preferred stock 2,169 2,169

Redemption of preferred stock (1,971) (1,971)

Common stock issued under employee plans, net, and other 42.3 1,542 (6) 1,536

Common stock repurchased (615.3) (25,126) (25,126)

Balance, December 31, 2021

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

Net income 27,528 27,528

Net change in debt securities (6,028) (6,028)

Net change in debit valuation adjustments 755 755

Net change in derivatives (10,055) (10,055)

Employee benefit plan adjustments (667) (667)

Net change in foreign currency translation adjustments (57) (57)

Dividends declared:

Common (6,963) (6,963)

Preferred (1,596) (1,596)

Issuance of preferred stock 4,426 4,426

Redemption of preferred stock (737) 83 (654)

Common stock issued under employee plans, net, and other 44.9 1,545 (30) 1,515

Common stock repurchased (125.9) (5,073) (5,073)

Balance, December 31, 2022

$ 28,397 7,996.8 $ 58,953 $ 207,003 $ (21,156) $ 273,197

Cumulative adjustment for adoption of credit loss accounting

standard

184 184

Net income

26,515 26,515

Net change in debt securities

573 573

Net change in debit valuation adjustments

(686) (686)

Net change in derivatives

3,919 3,919

Employee benefit plan adjustments

(439) (439)

Net change in foreign currency translation adjustments

1 1

Dividends declared:

Common

(7,374) (7,374)

Preferred

(1,649) (1,649)

Common stock issued under employee plans, net, and other

45.4 1,988 (7) 1,981

Common stock repurchased

(146.7) (4,576) (4,576)

Balance, December 31, 2023 $ 28,397 7,895.5 $ 56,365 $ 224,672 $ (17,788) $ 291,646

See accompanying Notes to Consolidated Financial Statements.

Bank of America 92

Bank of America Corporation and Subsidiaries

Consolidated Statement of Cash Flows

(Dollars in millions)

2023

2022 2021

Operating activities 

 

Net income

$ 26,515

$ 27,528 $ 31,978

Adjustments to reconcile net income to net cash provided by operating activities:



 

Provision for credit losses

4,394

2,543 (4,594)

(Gains) losses on sales of debt securities

405

(32) (22)

Depreciation and amortization

2,057

1,978 1,898

Net amortization of premium/discount on debt securities

(397)

2,072 5,837

Deferred income taxes

(2,011)

739 (838)

Stock-based compensation

2,942

2,862 2,768

Loans held-for-sale:

Originations and purchases

(15,621)

(24,862) (43,635)

Proceeds from sales and paydowns of loans originally classified as held for sale and instruments

from related securitization activities

16,262

31,567 34,684

Net change in:

Trading and derivative assets/liabilities

44,391

(95,772) (22,104)

Other assets

(23,944)

20,799 (34,455)

Accrued expenses and other liabilities

(17,719)

23,029 16,639

Other operating activities, net

7,708

1,222 4,651

Net cash provided by (used in) operating activities

44,982

(6,327) (7,193)

Investing activities 

 

Net change in:

Time deposits placed and other short-term investments

(1,087)

(115) (598)

Federal funds sold and securities borrowed or purchased under agreements to resell

(13,050)

(16,854) 53,338

Debt securities carried at fair value:

Proceeds from sales

101,165

69,114

6,893

Proceeds from paydowns and maturities

148,699

110,195 159,616

Purchases

(290,959)

(134,962) (238,398)

Held-to-maturity debt securities:

Proceeds from paydowns and maturities

36,955

63,852 124,880

Purchases

(98)

(24,096) (362,736)

Loans and leases:

Proceeds from sales of loans originally classified as held for investment and instruments

from related securitization activities

11,081

26,757 10,396

Purchases

(5,351)

(5,798) (5,164)

Other changes in loans and leases, net

(17,484)

(86,010) (58,039)

Other investing activities, net

(5,258)

(4,612) (3,479)

Net cash used in investing activities

(35,387)

(2,529) (313,291)

Financing activities 

 

Net change in:

Deposits

(6,514)

(134,190) 268,966

Federal funds purchased and securities loaned or sold under agreements to repurchase

88,252

3,306 22,006

Short-term borrowings

5,162

3,179 4,432

Long-term debt:

Proceeds from issuance

65,396

65,910 76,675

Retirement

(44,571)

(34,055) (46,826)

Preferred stock:

Proceeds from issuance

—

4,426 2,169

Redemption

—

(654) (1,971)

Common stock repurchased

(4,576)

(5,073) (25,126)

Cash dividends paid

(9,087)

(8,576) (8,055)

Other financing activities, net

(717)

(312) (620)

Net cash provided by (used in) financing activities

93,345

(106,039) 291,650

Effect of exchange rate changes on cash and cash equivalents

(70)

(3,123) (3,408)

Net increase (decrease) in cash and cash equivalents

102,870

(118,018) (32,242)

Cash and cash equivalents at January 1

230,203

348,221 380,463

Cash and cash equivalents at December 31 $ 333,073

$ 230,203 $ 348,221

Supplemental cash flow disclosures

Interest paid

$ 69,604

$ 18,526 $ 4,506

Income taxes paid, net

3,405

2,288 2,760

See accompanying Notes to Consolidated Financial Statements.

93 Bank of America

Bank of America Corporation and Subsidiaries

Notes to Consolidated Financial Statements

NOTE 1 Summary of Significant Accounting

Principles

Bank of America Corporation, a bank holding company and a

financial holding company, provides a diverse range of financial

services and products throughout the U.S. and in certain

international markets. The term “the Corporation” as used

herein may refer to Bank of America Corporation, individually,

Bank of America Corporation and its subsidiaries, or certain of

Bank of America Corporation’s subsidiaries or affiliates.

Principles of Consolidation and Basis of Presentation

The Consolidated Financial Statements include the accounts of

the Corporation and its majority-owned subsidiaries and those

variable interest entities (VIEs) where the Corporation is the

primary beneficiary. Intercompany accounts and transactions

have been eliminated. Results of operations of acquired

companies are included from the dates of acquisition, and for

VIEs, from the dates that the Corporation became the primary

beneficiary. Assets held in an agency or fiduciary capacity are

not included in the Consolidated Financial Statements. The

Corporation accounts for investments in companies for which it

owns a voting interest and for which it has the ability to exercise

significant influence over operating and financing decisions

using the equity method of accounting. These investments,

which include the Corporation’s interests in affordable housing

and renewable energy partnerships, are recorded in other

assets. Equity method investments are subject to impairment

testing, and the Corporation’s proportionate share of income or

loss is included in other income.

The preparation of the Consolidated Financial Statements in

conformity with accounting principles generally accepted in the

United States of America requires management to make

estimates and assumptions that affect reported amounts and

disclosures. Actual results could materially differ from those

estimates and assumptions.

New Accounting Standards Issued

Segment Reporting

The FASB amended the segment reporting requirements to add

disclosures of incremental segment expense categories. The

amended disclosures are effective for the fiscal year December

31, 2024, and interim periods thereafter, on a retrospective

basis.

Income Taxes

The FASB expanded the income tax disclosure requirements

related to the rate reconciliation and income taxes paid

information. The amended disclosures are effective January 1,

2025, on a prospective basis.

New Accounting Standard Adopted

Financial Instruments – Credit Losses

On January 1, 2023, the Corporation adopted the new

accounting and disclosure requirements for expected credit

losses (ECL) that removed the recognition and measurement

guidance on troubled debt restructurings (TDRs) and added

disclosures on the financial effect and subsequent performance

of certain types of modifications made to borrowers

experiencing financial difficulties.

Upon adoption of the standard, the Corporation recorded a

reduction of $243million in the allowance for credit losses for

the impact of changes in the methodology used to estimate the

allowance for credit losses for non-collateral dependent

consumer and commercial TDRs. There was no impact to the

valuation of loans previously classified as collateral-dependent

TDRs. After adjusting for deferred taxes, the Corporation

recorded an increase of $184 million in retained earnings

through a cumulative-effect adjustment.

The additional disclosures are included in Note 5 –

Outstanding Loans and Leases and Allowance for Credit Losses

on a prospective basis and include loan modifications where the

contractual payment terms of the borrower’s loan agreement

were modified through a refinancing or restructuring.

Significant Accounting Principles

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, cash items in

the process of collection, cash segregated under federal and

other brokerage regulations, and amounts due from

correspondent banks, the Federal Reserve Bank and certain

non-U.S. central banks. Certain cash balances are restricted as

to withdrawal or usage by legally binding contractual agreements

or regulatory requirements.

Securities Financing Agreements

Securities borrowed or purchased under agreements to resell

and securities loaned or sold under agreements to repurchase

(securities financing agreements) are treated as collateralized

financing transactions except in instances where the transaction

is required to be accounted for as individual sale and purchase

transactions. Generally, these agreements are recorded at

acquisition or sale price plus accrued interest. In instances

where the interest is negative, the Corporation’s policy is to

present negative interest on financial assets as interest income

and negative interest on financial liabilities as interest expense.

For securities financing agreements that are accounted for

under the fair value option, the changes in the fair value of

these securities financing agreements are recorded in market

making and similar activities in the Consolidated Statement of

Income.

The Corporation’s policy is to monitor the market value of

the principal amount loaned under resale agreements and

obtain collateral from or return collateral pledged to

counterparties when appropriate. Securities financing

agreements do not create material credit risk due to these

collateral provisions; therefore, any allowance for loan losses is

insignificant.

In transactions where the Corporation acts as the lender in a

securities lending agreement and receives securities that can

be pledged or sold as collateral, it recognizes an asset on the

Consolidated Balance Sheet at fair value, representing the

securities received, and a liability, representing the obligation to

return those securities.

Trading Instruments

Financial instruments utilized in trading activities are carried at

fair value. Fair value is generally based on quoted market prices

for the same or similar assets and liabilities. If these market

prices are not available, fair values are estimated based on

dealer quotes, pricing models, discounted cash flow

methodologies, or similar techniques where the determination

of fair value may require significant management judgment or

estimation. Realized gains and losses are recorded on a trade-

Bank of America 94

date basis. Realized and unrealized gains and losses are

recognized in market making and similar activities.

Derivatives and Hedging Activities

Derivatives are entered into on behalf of customers, for trading

or to support risk management activities. Derivatives used in

risk management activities include derivatives that are both

designated in qualifying accounting hedge relationships and

derivatives used to hedge market risks in relationships that are

not designated in qualifying accounting hedge relationships

(referred to as other risk management activities). The

Corporation manages interest rate and foreign currency

exchange rate sensitivity predominantly through the use of

derivatives. Derivatives utilized by the Corporation include

swaps, futures and forward settlement contracts, and option

contracts.

All derivatives are recorded on the Consolidated Balance

Sheet at fair value, taking into consideration the effects of

legally enforceable master netting agreements that allow the

Corporation to settle positive and negative positions and offset

cash collateral held with the same counterparty on a net basis.

For exchange-traded contracts, fair value is based on quoted

market prices in active or inactive markets or is derived from

observable market-based pricing parameters, similar to those

applied to over-the-counter (OTC) derivatives. For non-exchange

traded contracts, fair value is based on dealer quotes, pricing

models, discounted cash flow methodologies or similar

techniques for which the determination of fair value may require

significant management judgment or estimation.

Valuations of derivative assets and liabilities reflect the

value of the instrument including counterparty credit risk. These

values also take into account the Corporation’s own credit

standing.

Trading Derivatives and Other Risk Management Activities

Derivatives held for trading purposes are included in derivative

assets or derivative liabilities on the Consolidated Balance

Sheet with changes in fair value included in market making and

similar activities.

Derivatives used for other risk management activities are

included in derivative assets or derivative liabilities. Derivatives

used in other risk management activities have not been

designated in qualifying accounting hedge relationships because

they did not qualify or the risk that is being mitigated pertains to

an item that is reported at fair value through earnings so that

the effect of measuring the derivative instrument and the asset

or liability to which the risk exposure pertains will offset in the

Consolidated Statement of Income to the extent effective. The

changes in the fair value of derivatives that serve to mitigate

certain risks associated with mortgage servicing rights (MSRs),

interest rate lock commitments (IRLCs) and first-lien mortgage

loans held-for-sale (LHFS) that are originated by the Corporation

are recorded in other income. Changes in the fair value of

derivatives that serve to mitigate interest rate risk and foreign

currency risk are included in market making and similar

activities. Credit derivatives are also used by the Corporation to

mitigate the risk associated with various credit exposures. The

changes in the fair value of these derivatives are included in

market making and similar activities and other income.

Derivatives Used For Hedge Accounting Purposes

(Accounting Hedges)

For accounting hedges, the Corporation formally documents at

inception all relationships between hedging instruments and

hedged items, as well as the risk management objectives and

strategies for undertaking various accounting hedges.

Additionally, the Corporation primarily uses regression analysis

at the inception of a hedge and for each reporting period

thereafter to assess whether the derivative used in an

accounting hedge transaction is expected to be and has been

highly effective in offsetting changes in the fair value or cash

flows of a hedged item or forecasted transaction. The

Corporation discontinues hedge accounting when it is

determined that a derivative is not expected to be or has

ceased to be highly effective as a hedge.

Fair value hedges are used to protect against changes in the

fair value of the Corporation’s assets and liabilities that are

attributable to interest rate or foreign exchange volatility.

Changes in the fair value of derivatives designated as fair value

hedges are recorded in earnings, together and in the same

income statement line item with changes in the fair value of the

related hedged item. If a derivative instrument in a fair value

hedge is terminated or the hedge designation removed, the

previous adjustments to the carrying value of the hedged asset

or liability are subsequently accounted for in the same manner

as other components of the carrying value of that asset or

liability. For interest-earning assets and interest-bearing

liabilities, such adjustments are amortized to earnings over the

remaining life of the respective asset or liability.

Cash flow hedges are used primarily to minimize the

variability in cash flows of assets and liabilities or forecasted

transactions caused by interest rate or foreign exchange rate

fluctuations. The Corporation also uses cash flow hedges to

hedge the price risk associated with deferred compensation.

Changes in the fair value of derivatives used in cash flow

hedges are recorded in accumulated other comprehensive

income (OCI) and are reclassified into the line item in the

income statement in which the hedged item is recorded in the

same period the hedged item affects earnings. Components of

a derivative that are excluded in assessing hedge effectiveness

are recorded in the same income statement line item as the

hedged item.

Net investment hedges are used to manage the foreign

exchange rate sensitivity arising from a net investment in a

foreign operation. Changes in the spot prices of derivatives that

are designated as net investment hedges of foreign operations

are recorded as a component of accumulated OCI. The

remaining components of these derivatives are excluded in

assessing hedge effectiveness and are recorded in market

making and similar activities.

Securities

Debt securities are reported on the Consolidated Balance Sheet

at their trade date. Their classification is dependent on the

purpose for which the securities were acquired. Debt securities

purchased for use in the Corporation’s trading activities are

reported in trading account assets at fair value with unrealized

gains and losses included in market making and similar

activities. Substantially all other debt securities purchased are

used in the Corporation’s asset and liability management (ALM)

activities and are reported on the Consolidated Balance Sheet

as either debt securities carried at fair value or as held-to-

maturity (HTM) debt securities. Debt securities carried at fair

value are either available-for-sale (AFS) securities with

unrealized gains and losses net-of-tax included in accumulated

OCI or carried at fair value with unrealized gains and losses

reported in market making and similar activities. HTM debt

securities are debt securities that management has the intent

and ability to hold to maturity and are reported at amortized

cost. If more than 85 percent of the principal has been collected

95 Bank of America

on level-payment mortgage-backed HTM debt securities since

their acquisition, the debt securities, if disposed, are treated as

matured for classification purposes.

The Corporation evaluates each AFS security where the value

has declined below amortized cost. If the Corporation intends to

sell or believes it is more likely than not that it will be required

to sell the debt security, it is written down to fair value through

earnings. For AFS debt securities the Corporation intends to

hold, the Corporation evaluates the debt securities for ECL,

except for debt securities that are guaranteed by the U.S.

Treasury, U.S. government agencies or sovereign entities of high

credit quality where the Corporation applies a zero credit loss

assumption. For the remaining AFS debt securities, the

Corporation considers qualitative parameters such as internal

and external credit ratings and the value of underlying collateral.

If an AFS debt security fails any of the qualitative parameters, a

discounted cash flow analysis is used by the Corporation to

determine if a portion of the unrealized loss is a result of an

ECL. The Corporation will then recognize either credit loss

expense or a reversal of credit loss expense in other income for

the amount necessary to adjust the debt securities valuation

allowance to its current estimate of expected credit losses.

Cash flows expected to be collected are estimated using all

relevant information available such as remaining payment

terms, prepayment speeds, the financial condition of the issuer,

expected defaults and the value of the underlying collateral. If

any of the decline in fair value is related to market factors, that

amount is recognized in accumulated OCI. In certain instances,

the credit loss may exceed the total decline in fair value, in

which case, the allowance recorded is limited to the difference

between the amortized cost and the fair value of the asset.

The Corporation separately evaluates its HTM debt securities

for any credit losses, of which substantially all qualify for the

zero loss assumption. For the remaining securities, the

Corporation performs a discounted cash flow analysis to

estimate any credit losses which are then recognized as part of

the allowance for credit losses.

Interest on debt securities, including amortization of

premiums and accretion of discounts, is included in interest

income. Premiums and discounts are amortized or accreted to

interest income at a constant effective yield over the contractual

lives of the securities. Realized gains and losses from the sales

or dispositions of debt securities are determined using the

specific identification method.

Equity securities with readily determinable fair values that

are not held for trading purposes are carried at fair value with

unrealized gains and losses included in other income. Equity

securities that do not have readily determinable fair values are

recorded at cost less impairment, if any, plus or minus

qualifying observable price changes. These securities are

reported in other assets.

Loans and Leases

Loans, with the exception of loans accounted for under the fair

value option, are measured at historical cost and reported at

their outstanding principal balances net of any unearned

income, charge-offs, unamortized deferred fees and costs on

originated loans, and for purchased loans, net of any

unamortized premiums or discounts. Loan origination fees and

certain direct origination costs are deferred and recognized as

adjustments to interest income over the lives of the related

loans. Unearned income, discounts and premiums are

amortized to interest income using a level yield methodology.

The Corporation elects to account for certain consumer and

commercial loans under the fair value option with interest

reported in interest income and changes in fair value reported in

market making and similar activities or other income.

Under applicable accounting guidance, for reporting

purposes, the loan and lease portfolio is categorized by portfolio

segment and, within each portfolio segment, by class of

financing receivable. A portfolio segment is defined as the level

at which an entity develops and documents a systematic

methodology to determine the allowance for credit losses, and a

class of financing receivable is defined as the level of

disaggregation of portfolio segments based on the initial

measurement attribute, risk characteristics and methods for

assessing risk. The Corporation’s three portfolio segments are

Consumer Real Estate, Credit Card and Other Consumer, and

Commercial. The classes within the Consumer Real Estate

portfolio segment are residential mortgage and home equity.

The classes within the Credit Card and Other Consumer portfolio

segment are credit card, direct/indirect consumer and other

consumer. The classes within the Commercial portfolio segment

are U.S. commercial, non-U.S. commercial, commercial real

estate, commercial lease financing and U.S. small business

commercial.

Leases

The Corporation provides equipment financing to its customers

through a variety of lessor arrangements. Direct financing

leases and sales-type leases are carried at the aggregate of

lease payments receivable plus the estimated residual value of

the leased property less unearned income, which is accreted to

interest income over the lease terms using methods that

approximate the interest method. Operating lease income is

recognized on a straight-line basis. The Corporation's lease

arrangements generally do not contain non-lease components.

Allowance for Credit Losses

The ECL on funded consumer and commercial loans and leases

is referred to as the allowance for loan and lease losses and is

reported separately as a contra-asset to loans and leases on

the Consolidated Balance Sheet. The ECL for unfunded lending

commitments, including home equity lines of credit (HELOCs),

standby letters of credit (SBLCs) and binding unfunded loan

commitments is reported on the Consolidated Balance Sheet in

accrued expenses and other liabilities. The provision for credit

losses related to the loan and lease portfolio and unfunded

lending commitments is reported in the Consolidated Statement

of Income at the amount necessary to adjust the allowance for

credit losses to the current estimate of ECL.

For loans and leases, the ECL is typically estimated using

quantitative methods that consider a variety of factors such as

historical loss experience, the current credit quality of the

portfolio as well as an economic outlook over the life of the

loan. The life of the loan for closed-ended products is based on

the contractual maturity of the loan adjusted for any expected

prepayments. The contractual maturity includes any extension

options that are at the sole discretion of the borrower. For open-

ended products (e.g., lines of credit), the ECL is determined

based on the maximum repayment term associated with future

draws from credit lines unless those lines of credit are

unconditionally cancellable (e.g., credit cards) in which case the

Corporation does not record any allowance.

In its loss forecasting framework, the Corporation

incorporates forward-looking information through the use of

macroeconomic scenarios applied over the forecasted life of the

assets. These macroeconomic scenarios include variables that

have historically been key drivers of increases and decreases in

credit losses. These variables include, but are not limited to,

Bank of America 96

unemployment rates, real estate prices, gross domestic product

levels and corporate bond spreads. As any one economic

outlook is inherently uncertain, the Corporation leverages

multiple scenarios. The scenarios that are chosen each quarter

and the weighting given to each scenario depend on a variety of

factors including recent economic events, leading economic

indicators, views of internal and third-party economists and

industry trends.

The estimate of credit losses includes expected recoveries

of amounts previously charged off (i.e., negative allowance). If a

loan has been charged off, the expected cash flows on the loan

are not limited by the current amortized cost balance. Instead,

expected cash flows can be assumed up to the unpaid principal

balance immediately prior to the charge-off.

Included in the allowance for loan and lease losses are

qualitative reserves to cover losses that are expected but, in the

Corporation's assessment, may not be adequately reflected in

the quantitative methods or the economic assumptions

described above. For example, factors that the Corporation

considers include changes in lending policies and procedures,

business conditions, the nature and size of the portfolio,

portfolio concentrations, the volume and severity of past due

loans and nonaccrual loans, the effect of external factors such

as competition, and legal and regulatory requirements, among

others. Further, the Corporation considers the inherent

uncertainty in quantitative models that are built on historical

data.

With the exception of the Corporation's credit card portfolio,

the Corporation does not include reserves for interest receivable

in the measurement of the allowance for credit losses as the

Corporation generally classifies consumer loans as

nonperforming at 90 days past due and reverses interest

income for these loans at that time. For credit card loans, the

Corporation reserves for interest and fees as part of the

allowance for loan and lease losses. Upon charge-off of a credit

card loan, the Corporation reverses the interest and fee income

against the income statement line item where it was originally

recorded.

The Corporation has identified the following three portfolio

segments and measures the allowance for credit losses using

the following methods.

Consumer Real Estate

To estimate ECL for consumer loans secured by residential real

estate, the Corporation estimates the number of loans that will

default over the life of the existing portfolio, after factoring in

estimated prepayments, using quantitative modeling

methodologies. The attributes that are most significant in

estimating the Corporation’s ECL include refreshed loan-to-value

(LTV) or, in the case of a subordinated lien, refreshed combined

LTV (CLTV), borrower credit score, months since origination and

geography, all of which are further broken down by present

collection status (whether the loan is current, delinquent, in

default, or in bankruptcy). The estimates are based on the

Corporation’s historical experience with the loan portfolio,

adjusted to reflect the economic outlook. The outlook on the

unemployment rate and consumer real estate prices are key

factors that impact the frequency and severity of loss estimates.

The Corporation does not reserve for credit losses on the

unpaid principal balance of loans insured by the Federal

Housing Administration (FHA) and long-term standby loans, as

these loans are fully insured. The Corporation records a reserve

for unfunded lending commitments for the ECL associated with

the undrawn portion of the Corporation’s HELOCs, which can

only be canceled by the Corporation if certain criteria are met.

The ECL associated with these unfunded lending commitments

is calculated using the same models and methodologies noted

above and incorporate utilization assumptions at time of

default.

For loans that are more than 180 days past due, the

Corporation bases the allowance on the estimated fair value of

the underlying collateral as of the reporting date less costs to

sell. The fair value of the collateral securing these loans is

generally determined using an automated valuation model (AVM)

that estimates the value of a property by reference to market

data including sales of comparable properties and price trends

specific to the Metropolitan Statistical Area in which the

property being valued is located. In the event that an AVM value

is not available, the Corporation utilizes publicized indices or if

these methods provide less reliable valuations, the Corporation

uses appraisals or broker price opinions to estimate the fair

value of the collateral. While there is inherent imprecision in

these valuations, the Corporation believes that they are

representative of this portfolio in the aggregate.

For loans that are more than 180 days past due, with the

exception of the Corporation’s fully insured portfolio, the

outstanding balance of loans that is in excess of the estimated

property value after adjusting for costs to sell is charged off. If

the estimated property value decreases in periods subsequent

to the initial charge-off, the Corporation will record an additional

charge-off; however, if the value increases in periods

subsequent to the charge-off, the Corporation will adjust the

allowance to account for the increase but not to a level above

the cumulative charge-off amount.

Credit Cards and Other Consumer

Credit cards are revolving lines of credit without a defined

maturity date. The estimated life of a credit card receivable is

determined by estimating the amount and timing of expected

future payments (e.g., borrowers making full payments,

minimum payments or somewhere in between) that it will take

for a receivable balance to pay off. The ECL on the future

payments incorporates the spending behavior of a borrower

through time using key borrower-specific factors and the

economic outlook described above. The Corporation applies all

expected payments in accordance with the Credit Card

Accountability Responsibility and Disclosure Act of 2009 (i.e.,

paying down the highest interest rate bucket first). Then

forecasted future payments are prioritized to pay off the oldest

balance until it is brought to zero or an expected charge-off

amount. Unemployment rate outlook, borrower credit score,

delinquency status and historical payment behavior are all key

inputs into the credit card receivable loss forecasting model.

Future draws on the credit card lines are excluded from the ECL

as they are unconditionally cancellable.

The ECL for the consumer vehicle lending portfolio is also

determined using quantitative methods supplemented with

qualitative analysis. The quantitative model estimates ECL

giving consideration to key borrower and loan characteristics

such as delinquency status, borrower credit score, LTV ratio,

underlying collateral type and collateral value.

Commercial

The ECL on commercial loans is forecasted using models that

estimate credit losses over the loan’s contractual life at an

individual loan level. The models use the contractual terms to

forecast future principal cash flows while also considering

expected prepayments. For open-ended commitments such as

revolving lines of credit, changes in funded balance are captured

by forecasting a borrower’s draw and payment behavior over the

97 Bank of America

remaining life of the commitment. For loans collateralized with

commercial real estate and for which the underlying asset is the

primary source of repayment, the loss forecasting models

consider key loan and customer attributes such as LTV ratio,

net operating income and debt service coverage, and captures

variations in behavior according to property type and region. The

outlook on the unemployment rate, gross domestic product, and

forecasted real estate prices are utilized to determine indicators

such as rent levels and vacancy rates, which impact the ECL

estimate. For all other commercial loans and leases, the loss

forecasting model determines the probabilities of transition to

different credit risk ratings or default at each point over the life

of the asset based on the borrower’s current credit risk rating,

industry sector, size of the exposure and the geographic market.

The severity of loss is determined based on the type of

collateral securing the exposure, the size of the exposure, the

borrower’s industry sector, any guarantors and the geographic

market. Assumptions of expected loss are conditioned to the

economic outlook, and the model considers key economic

variables such as unemployment rate, gross domestic product,

corporate bond spreads, real estate and other asset prices and

equity market returns.

In addition to the allowance for loan and lease losses, the

Corporation also estimates ECL related to unfunded lending

commitments such as letters of credit, financial guarantees,

unfunded bankers acceptances and binding loan commitments,

excluding commitments accounted for under the fair value

option. Reserves are estimated for the unfunded exposure using

the same models and methodologies as the funded exposure

and are reported as reserves for unfunded lending

commitments.

Nonperforming Loans and Leases, Charge-offs and

Delinquencies

Nonperforming loans and leases generally include loans and

leases that have been placed on nonaccrual status. Loans

accounted for under the fair value option and LHFS are not

reported as nonperforming. When a nonaccrual loan is deemed

uncollectible, it is charged off against the allowance for credit

losses. If the charged-off amount is later recovered, the amount

is reversed through the allowance for credit losses at the

recovery date. Charge-offs are reported net of recoveries (net

charge-offs). If recoveries for the period are greater than charge-

offs, net charge-offs are reported as a negative amount.

In accordance with the Corporation’s policies, consumer real

estate-secured loans, including residential mortgages and home

equity loans, are generally placed on nonaccrual status and

classified as nonperforming at 90 days past due unless

repayment of the loan is insured by the FHA or through

individually insured long-term standby agreements with Fannie

Mae (FNMA) or Freddie Mac (FHLMC) (the fully-insured portfolio).

Residential mortgage loans in the fully-insured portfolio are not

placed on nonaccrual status and, therefore, are not reported as

nonperforming. Junior-lien home equity loans are placed on

nonaccrual status and classified as nonperforming when the

underlying first-lien mortgage loan becomes 90 days past due

even if the junior-lien loan is current. The outstanding balance of

real estate-secured loans that is in excess of the estimated

property value less costs to sell is charged off no later than the

end of the month in which the loan becomes 180 days past due

unless the loan is fully insured, or for loans in bankruptcy, within

60 days of receipt of notification of filing, with the remaining

balance classified as nonperforming.

Credit card and other unsecured consumer loans are

charged off when the loan becomes 180 days past due, within

60 days after receipt of notification of death or bankruptcy or

upon confirmation of fraud. These loans continue to accrue

interest until they are charged off and, therefore, are not

reported as nonperforming loans. Consumer vehicle loans are

placed on nonaccrual status when they become 90 days past

due, within 60 days after receipt of notification of bankruptcy or

death or upon confirmation of fraud. These loans are charged

off to their collateral values when the loans become 120 days

past due, upon repossession of the collateral, within 60 days

after receipt of notification of bankruptcy or death or upon

confirmation of fraud. If repossession of the collateral is not

expected, the loans are fully charged off.

Commercial loans and leases, excluding business card

loans, that are past due 90 days or more as to principal or

interest, or where reasonable doubt exists as to timely

collection, including loans that are individually identified as

being impaired, are generally placed on nonaccrual status and

classified as nonperforming unless well-secured and in the

process of collection.

Business card loans are charged off in the same manner as

consumer credit card loans. Other commercial loans and leases

are generally charged off when all or a portion of the principal

amount is determined to be uncollectible.

The entire balance of a consumer loan or commercial loan or

lease is contractually delinquent if the minimum payment is not

received by the specified due date on the customer’s billing

statement. Interest and fees continue to accrue on past due

loans and leases until the date the loan is placed on nonaccrual

status, if applicable. Accrued interest receivable is reversed

when loans and leases are placed on nonaccrual status.

Interest collections on nonaccruing loans and leases for which

the ultimate collectability of principal is uncertain are applied as

principal reductions; otherwise, such collections are credited to

income when received. Loans and leases may be restored to

accrual status when all principal and interest is current and full

repayment of the remaining contractual principal and interest is

expected.

Loans Held-for-sale

Loans that the Corporation intends to sell in the foreseeable

future, including residential mortgages, loan syndications, and

to a lesser degree, commercial real estate, consumer finance

and other loans, are reported as LHFS and are carried at the

lower of aggregate cost or fair value. The Corporation accounts

for certain LHFS, including residential mortgage LHFS, under the

fair value option. Loan origination costs for LHFS carried at the

lower of cost or fair value are capitalized as part of the carrying

value of the loans and, upon the sale of a loan, are recognized

as part of the gain or loss in noninterest income. LHFS that are

on nonaccrual status and are reported as nonperforming, as

defined in the policy herein, are reported separately from

nonperforming loans and leases.

Premises and Equipment

Premises and equipment are carried at cost less accumulated

depreciation and amortization. Depreciation and amortization

are recognized using the straight-line method over the estimated

useful lives of the assets. Estimated lives range up to 40 years

for buildings, up to 12 years for furniture and equipment, and

the shorter of lease term or estimated useful life for leasehold

improvements.

Other Assets

For the Corporation’s financial assets that are measured at

amortized cost and are not included in debt securities or loans

Bank of America 98

and leases on the Consolidated Balance Sheet, the Corporation

evaluates these assets for ECL using various techniques. For

assets that are subject to collateral maintenance provisions,

including federal funds sold and securities borrowed or

purchased under agreements to resell, where the collateral

consists of daily margining of liquid and marketable assets

where the margining is expected to be maintained into the

foreseeable future, the expected losses are assumed to be

zero. For all other assets, the Corporation performs qualitative

analyses, including consideration of historical losses and

current economic conditions, to estimate any ECL which are

then included in a valuation account that is recorded as a

contra-asset against the amortized cost basis of the financial

asset.

Lessee Arrangements

Substantially all of the Corporation’s lessee arrangements are

operating leases. Under these arrangements, the Corporation

records right-of-use assets and lease liabilities at lease

commencement. Right-of-use assets are reported in other

assets on the Consolidated Balance Sheet, and the related

lease liabilities are reported in accrued expenses and other

liabilities. All leases are recorded on the Consolidated Balance

Sheet except leases with an initial term less than 12 months for

which the Corporation made the short-term lease election.

Lease expense is recognized on a straight-line basis over the

lease term and is recorded in occupancy and equipment

expense in the Consolidated Statement of Income.

The Corporation made an accounting policy election not to

separate lease and non-lease components of a contract that is

or contains a lease for its real estate and equipment leases. As

such, lease payments represent payments on both lease and

non-lease components. At lease commencement, lease

liabilities are recognized based on the present value of the

remaining lease payments and discounted using the

Corporation’s incremental borrowing rate. Right-of-use assets

initially equal the lease liability, adjusted for any lease payments

made prior to lease commencement and for any lease

incentives.

Goodwill and Intangible Assets

Goodwill is the purchase premium after adjusting for the fair

value of net assets acquired. Goodwill is not amortized but is

reviewed for potential impairment on an annual basis, or when

events or circumstances indicate a potential impairment, at the

reporting unit level. A reporting unit is a business segment or

one level below a business segment.

The Corporation assesses the fair value of each reporting

unit against its carrying value, including goodwill, as measured

by allocated equity. For purposes of goodwill impairment testing,

the Corporation utilizes allocated equity as a proxy for the

carrying value of its reporting units. Allocated equity in the

reporting units is comprised of allocated capital plus capital for

the portion of goodwill and intangibles specifically assigned to

the reporting unit.

In performing its goodwill impairment testing, the

Corporation first assesses qualitative factors to determine

whether it is more likely than not that the fair value of a

reporting unit is less than its carrying value. Qualitative factors

include, among other things, macroeconomic conditions,

industry and market considerations, financial performance of

the respective reporting unit and other relevant entity- and

reporting-unit specific considerations.

If the Corporation concludes it is more likely than not that

the fair value of a reporting unit is less than its carrying value, a

quantitative assessment is performed. The Corporation has an

unconditional option to bypass the qualitative assessment for

any reporting unit in any period and proceed directly to

performing the quantitative goodwill impairment test. The

Corporation may resume performing the qualitative assessment

in any subsequent period.

When performing the quantitative assessment, if the fair

value of the reporting unit exceeds its carrying value, goodwill of

the reporting unit would not be considered impaired. If the

carrying value of the reporting unit exceeds its fair value, a

goodwill impairment loss would be recognized for the amount by

which the reporting unit’s allocated equity exceeds its fair value.

An impairment loss recognized cannot exceed the amount of

goodwill assigned to a reporting unit. An impairment loss

establishes a new basis in the goodwill, and subsequent

reversals of goodwill impairment losses are not permitted under

applicable accounting guidance.

For intangible assets subject to amortization, an impairment

loss is recognized if the carrying value of the intangible asset is

not recoverable and exceeds fair value. The carrying value of the

intangible asset is considered not recoverable if it exceeds the

sum of the undiscounted cash flows expected to result from the

use of the asset. Intangible assets deemed to have indefinite

useful lives are not subject to amortization. An impairment loss

is recognized if the carrying value of the intangible asset with an

indefinite life exceeds its fair value.

Variable Interest Entities

A VIE is an entity that lacks equity investors or whose equity

investors do not have a controlling financial interest in the entity

through their equity investments. The Corporation consolidates

a VIE if it has both the power to direct the activities of the VIE

that most significantly impact the VIE’s economic performance

and an obligation to absorb losses or the right to receive

benefits that could potentially be significant to the VIE. On a

quarterly basis, the Corporation reassesses its involvement with

the VIE and evaluates the impact of changes in governing

documents and its financial interests in the VIE. The

consolidation status of the VIEs with which the Corporation is

involved may change as a result of such reassessments.

The Corporation primarily uses VIEs for its securitization

activities, in which the Corporation transfers whole loans or debt

securities into a trust or other vehicle. When the Corporation is

the servicer of whole loans held in a securitization trust,

including non-agency residential mortgages, home equity loans,

credit cards, and other loans, the Corporation has the power to

direct the most significant activities of the trust. The Corporation

generally does not have the power to direct the most significant

activities of a residential mortgage agency trust except in certain

circumstances in which the Corporation holds substantially all of

the issued securities and has the unilateral right to liquidate the

trust. The power to direct the most significant activities of a

commercial mortgage securitization trust is typically held by the

special servicer or by the party holding specific subordinate

securities which embody certain controlling rights. The

Corporation consolidates a whole-loan securitization trust if it

has the power to direct the most significant activities and also

holds securities issued by the trust or has other contractual

arrangements, other than standard representations and

warranties, that could potentially be significant to the trust.

The Corporation may also transfer trading account securities

and AFS securities into municipal bond or resecuritization

trusts. The Corporation consolidates a municipal bond or

resecuritization trust if it has control over the ongoing activities

of the trust such as the remarketing of the trust’s liabilities or, if

99 Bank of America

there are no ongoing activities, sole discretion over the design

of the trust, including the identification of securities to be

transferred in and the structure of securities to be issued, and

also retains securities or has liquidity or other commitments

that could potentially be significant to the trust. The Corporation

does not consolidate a municipal bond or resecuritization trust if

one or a limited number of third-party investors share

responsibility for the design of the trust or have control over the

significant activities of the trust through liquidation or other

substantive rights.

Other VIEs used by the Corporation include collateralized

debt obligations (CDOs), investment vehicles created on behalf

of customers and other investment vehicles. The Corporation

does not routinely serve as collateral manager for CDOs and,

therefore, does not typically have the power to direct the

activities that most significantly impact the economic

performance of a CDO. However, following an event of default, if

the Corporation is a majority holder of senior securities issued

by a CDO and acquires the power to manage its assets, the

Corporation consolidates the CDO.

The Corporation consolidates a customer or other

investment vehicle if it has control over the initial design of the

vehicle or manages the assets in the vehicle and also absorbs

potentially significant gains or losses through an investment in

the vehicle, derivative contracts or other arrangements. The

Corporation does not consolidate an investment vehicle if a

single investor controlled the initial design of the vehicle or

manages the assets in the vehicles or if the Corporation does

not have a variable interest that could potentially be significant

to the vehicle.

Retained interests in securitized assets are initially recorded

at fair value. In addition, the Corporation may invest in debt

securities issued by unconsolidated VIEs. Fair values of these

debt securities, which are classified as trading account assets,

debt securities carried at fair value or HTM securities, are based

primarily on quoted market prices in active or inactive markets.

Generally, quoted market prices for retained residual interests

are not available; therefore, the Corporation estimates fair

values based on the present value of the associated expected

future cash flows.

Fair Value

The Corporation measures the fair values of its assets and

liabilities, where applicable, in accordance with accounting

guidance that requires an entity to base fair value on exit price.

Under this guidance, an entity is required to maximize the use

of observable inputs and minimize the use of unobservable

inputs in measuring fair value. Under applicable accounting

standards, fair value measurements are categorized into one of

three levels based on the inputs to the valuation technique with

the highest priority given to unadjusted quoted prices in active

markets and the lowest priority given to unobservable inputs.

The Corporation categorizes its fair value measurements of

financial instruments based on this three-level hierarchy.

Level 1 Unadjusted quoted prices in active markets for

identical assets or liabilities. Level 1 assets and

liabilities include debt and equity securities and

derivative contracts that are traded in an active

exchange market, as well as certain U.S. Treasury

securities that are highly liquid and are actively traded

in OTC markets.

Level 2 Observable inputs other than Level 1 prices, such as

quoted prices for similar assets or liabilities, quoted

prices in markets that are not active, or other inputs

that are observable or can be corroborated by

observable market data for substantially the full term

of the assets or liabilities. Level 2 assets and

liabilities include debt securities with quoted prices

that are traded less frequently than exchange-traded

instruments and derivative contracts where fair value is

determined using a pricing model with inputs that are

observable in the market or can be derived principally

from or corroborated by observable market data. This

category generally includes U.S. government and

agency mortgage-backed (MBS) and asset-backed

securities (ABS), corporate debt securities, derivative

contracts, certain loans and LHFS.

Level 3 Unobservable inputs that are supported by little or no

market activity and that are significant to the overall

fair value of the assets or liabilities. Level 3 assets

and liabilities include financial instruments for which

the determination of fair value requires significant

management judgment or estimation. The fair value for

such assets and liabilities is generally determined

using pricing models, discounted cash flow

methodologies or similar techniques that incorporate

the assumptions a market participant would use in

pricing the asset or liability. This category generally

includes retained residual interests in securitizations,

consumer MSRs, certain ABS, highly structured,

complex or long-dated derivative contracts, certain

loans and LHFS, IRLCs and certain CDOs where

independent pricing information cannot be obtained for

a significant portion of the underlying assets.

Income Taxes

There are two components of income tax expense: current and

deferred. Current income tax expense reflects taxes to be paid

or refunded for the current period. Deferred income tax expense

results from changes in deferred tax assets and liabilities

between periods. These gross deferred tax assets and liabilities

represent decreases or increases in taxes expected to be paid

in the future because of future reversals of temporary

differences in the bases of assets and liabilities as measured

by tax laws and their bases as reported in the financial

statements. Deferred tax assets are also recognized for tax

attributes such as net operating loss carryforwards and tax

credit carryforwards. Valuation allowances are recorded to

reduce deferred tax assets to the amounts management

concludes are more likely than not to be realized.

Income tax benefits are recognized and measured based

upon a two-step model: first, a tax position must be more likely

than not to be sustained based solely on its technical merits in

order to be recognized, and second, the benefit is measured as

the largest dollar amount of that position that is more likely than

not to be sustained upon settlement. The difference between

the benefit recognized and the tax benefit claimed on a tax

return is referred to as an unrecognized tax benefit. The

Corporation records income tax-related interest and penalties, if

applicable, within income tax expense.

Revenue Recognition

The following summarizes the Corporation’s revenue recognition

accounting policies for certain noninterest income activities.

Card Income

Card income includes annual, late and over-limit fees as well as

interchange, cash advances and other miscellaneous items

from credit and debit card transactions and from processing

card transactions for merchants. Card income is presented net

Bank of America 100

of direct costs. Interchange fees are recognized upon

settlement of the credit and debit card payment transactions

and are generally determined on a percentage basis for credit

cards and fixed rates for debit cards based on the

corresponding payment network’s rates. Substantially all card

fees are recognized at the transaction date, except for certain

time-based fees such as annual fees, which are recognized over

12 months. Fees charged to cardholders and merchants that

are estimated to be uncollectible are reserved in the allowance

for loan and lease losses. Included in direct cost are rewards

and credit card partner payments. Rewards paid to cardholders

are related to points earned by the cardholder that can be

redeemed for a broad range of rewards including cash, travel

and gift cards. The points to be redeemed are estimated based

on past redemption behavior, card product type, account

transaction activity and other historical card performance. The

liability is reduced as the points are redeemed. The Corporation

also makes payments to credit card partners. The payments are

based on revenue-sharing agreements that are generally driven

by cardholder transactions and partner sales volumes. As part

of the revenue-sharing agreements, the credit card partner

provides the Corporation exclusive rights to market to the credit

card partner’s members or customers on behalf of the

Corporation.

Service Charges

Service charges include deposit and lending-related fees.

Deposit-related fees consist of fees earned on consumer and

commercial deposit activities and are generally recognized when

the transactions occur or as the service is performed. Consumer

fees are earned on consumer deposit accounts for account

maintenance and various transaction-based services, such as

ATM transactions, wire transfer activities, check and money

order processing and insufficient funds/overdraft transactions.

Commercial deposit-related fees are from the Corporation’s

Global Transaction Services business and consist of commercial

deposit and treasury management services, including account

maintenance and other services, such as payroll, sweep

account and other cash management services. Lending-related

fees generally represent transactional fees earned from certain

loan commitments, financial guarantees and SBLCs.

Investment and Brokerage Services

Investment and brokerage services consist of asset

management and brokerage fees. Asset management fees are

earned from the management of client assets under advisory

agreements or the full discretion of the Corporation’s financial

advisors (collectively referred to as assets under management

(AUM)). Asset management fees are earned as a percentage of

the client’s AUM and generally range from 50 basis points (bps)

to 150 bps of the AUM. In cases where a third party is used to

obtain a client’s investment allocation, the fee remitted to the

third party is recorded net and is not reflected in the transaction

price, as the Corporation is an agent for those services.

Brokerage fees include income earned from transaction-

based services that are performed as part of investment

management services and are based on a fixed price per unit or

as a percentage of the total transaction amount. Brokerage fees

also include distribution fees and sales commissions that are

primarily in the Global Wealth & Investment Management (GWIM)

segment and are earned over time. In addition, primarily in the

Global Markets segment, brokerage fees are earned when the

Corporation fills customer orders to buy or sell various financial

products or when it acknowledges, affirms, settles and clears

transactions and/or submits trade information to the

appropriate clearing broker. Certain customers pay brokerage,

clearing and/or exchange fees imposed by relevant regulatory

bodies or exchanges in order to execute or clear trades. These

fees are recorded net and are not reflected in the transaction

price, as the Corporation is an agent for those services.

Investment Banking Income

Investment banking income includes underwriting income and

financial advisory services income. Underwriting consists of fees

earned for the placement of a customer’s debt or equity

securities. The revenue is generally earned based on a

percentage of the fixed number of shares or principal placed.

Once the number of shares or notes is determined and the

service is completed, the underwriting fees are recognized. The

Corporation incurs certain out-of-pocket expenses, such as legal

costs, in performing these services. These expenses are

recovered through the revenue the Corporation earns from the

customer and are included in operating expenses. Syndication

fees represent fees earned as the agent or lead lender

responsible for structuring, arranging and administering a loan

syndication.

Financial advisory services consist of fees earned for

assisting clients with transactions related to mergers and

acquisitions and financial restructurings. Revenue varies

depending on the size of the transaction and scope of services

performed and is generally contingent on successful completion

of the transaction. Revenue is typically recognized once the

transaction is completed and all services have been rendered.

Additionally, the Corporation may earn a fixed fee in merger and

acquisition transactions to provide a fairness opinion, with the

fees recognized when the opinion is delivered to the client.

Other Revenue Measurement and Recognition Policies

The Corporation did not disclose the value of any open

performance obligations at December 31, 2023, as its

contracts with customers generally have a fixed term that is less

than one year, an open term with a cancellation period that is

less than one year, or provisions that allow the Corporation to

recognize revenue at the amount it has the right to invoice.

Earnings Per Common Share

Earnings per common share (EPS) is computed by dividing net

income allocated to common shareholders by the weighted-

average common shares outstanding, excluding unvested

common shares subject to repurchase or cancellation. Net

income allocated to common shareholders is net income

adjusted for preferred stock dividends including dividends

declared, accretion of discounts on preferred stock including

accelerated accretion when preferred stock is repaid early, and

cumulative dividends related to the current dividend period that

have not been declared as of period end, less income allocated

to participating securities. Diluted EPS is computed by dividing

income allocated to common shareholders plus dividends on

dilutive convertible preferred stock and preferred stock that can

be tendered to exercise warrants, by the weighted-average

common shares outstanding plus amounts representing the

dilutive effect of stock options outstanding, restricted stock,

restricted stock units (RSUs), outstanding warrants and the

dilution resulting from the conversion of convertible preferred

stock, if applicable.

101 Bank of America

Foreign Currency Translation

Assets, liabilities and operations of foreign branches and

subsidiaries are recorded based on the functional currency of

each entity. When the functional currency of a foreign operation

is the local currency, the assets, liabilities and operations are

translated, for consolidation purposes, from the local currency

to the U.S. dollar reporting currency at period-end rates for

assets and liabilities and generally at average rates for results

of operations. The resulting unrealized gains and losses are

reported as a component of accumulated OCI, net-of-tax. When

the foreign entity’s functional currency is the U.S. dollar, the

resulting remeasurement gains or losses on foreign currency-

denominated assets or liabilities are included in earnings.

NOTE 2 Net Interest Income and Noninterest Income

The table below presents the Corporation’s net interest income and noninterest income disaggregated by revenue source for 2023,

2022 and 2021. For more information, see Note 1 – Summary of Significant Accounting Principles. For a disaggregation of

noninterest income by business segment and All Other, see Note 23 – Business Segment Information.

(Dollars in millions)

2023

2022 2021

Net interest income

Interest income

Loans and leases

$ 57,124

$ 37,919 $ 29,282

Debt securities

20,226

17,127 12,376

Federal funds sold and securities borrowed or purchased under agreements to resell

(1)

18,679

4,560 (90)

Trading account assets

8,773

5,521 3,770

Other interest income

25,460

7,438 2,334

Total interest income

130,262

72,565 47,672

Interest expense

Deposits

26,163

4,718 537

Short-term borrowings

(1)

30,553

6,978 (358)

Trading account liabilities

2,043

1,538 1,128

Long-term debt

14,572

6,869 3,431

Total interest expense

73,331

20,103 4,738

Net interest income

$ 56,931

$ 52,462 $ 42,934

Noninterest income

Fees and commissions

Card income

Interchange fees

(2)

$ 3,983

$ 4,096 $ 4,560

Other card income

2,071

1,987 1,658

Total card income

6,054

6,083 6,218

Service charges

Deposit-related fees

4,382

5,190 6,271

Lending-related fees

1,302

1,215 1,233

Total service charges

5,684

6,405 7,504

Investment and brokerage services

Asset management fees

12,002

12,152 12,729

Brokerage fees

3,561

3,749 3,961

Total investment and brokerage services

15,563

15,901 16,690

Investment banking fees

Underwriting income

2,235

1,970 5,077

Syndication fees

898

1,070 1,499

Financial advisory services

1,575

1,783 2,311

Total investment banking fees

4,708

4,823 8,887

Total fees and commissions 32,009

33,212 39,299

Market making and similar activities 12,732

12,075 8,691

Other income (loss) (3,091)

(2,799) (1,811)

Total noninterest income $ 41,650

$ 42,488 $ 46,179

(1)

For more information on negative interest, see Note 1 – Summary of Significant Accounting Principles.

(2)

Gross interchange fees and merchant income were $13.3 billion, $12.9 billion and $11.5 billion for 2023, 2022 and 2021, respectively, and are presented net of $9.3 billion, $8.8 billion and

$6.9 billion of expenses for rewards and partner payments as well as certain other card costs for the same periods.

Bank of America 102

NOTE 3Derivatives

Derivative Balances

Derivatives are entered into on behalf of customers, for trading

or to support risk management activities. Derivatives used in

risk management activities include derivatives that may or may

not be designated in qualifying hedge accounting relationships.

Derivatives that are not designated in qualifying hedge

accounting relationships are referred to as other risk

management derivatives. For more information on the

Corporation’s derivatives and hedging activities, see Note 1 –

Summary of Significant Accounting Principles. The following

tables present derivative instruments included on the

Consolidated Balance Sheet in derivative assets and liabilities

at December 31, 2023 and 2022. Balances are presented on a

gross basis, prior to the application of counterparty and cash

collateral netting. Total derivative assets and liabilities are

adjusted on an aggregate basis to take into consideration the

effects of legally enforceable master netting agreements and

have been reduced by cash collateral received or paid.

December 31, 2023

Gross Derivative Assets Gross Derivative Liabilities

(Dollars in billions)

Contract/

Notional

(1)

Trading and

Other Risk

Management

Derivatives

Qualifying

Accounting

Hedges Total

Trading and

Other Risk

Management

Derivatives

Qualifying

Accounting

Hedges Total

Interest rate contracts       

Swaps

$ 15,715.2 $ 78.4 $ 7.9 $ 86.3 $ 66.6 $ 18.5 $ 85.1

Futures and forwards

2,803.8 5.1 — 5.1 7.0 — 7.0

Written options

(2)

1,807.7 — — — 31.7 — 31.7

Purchased options

(3)

1,714.9 32.9 — 32.9 — — —

Foreign exchange contracts 

Swaps

1,814.7 41.1 0.2 41.3 38.2 0.5 38.7

Spot, futures and forwards

3,561.7 37.2 6.1 43.3 40.3 6.2 46.5

Written options

(2)

462.8 — — — 6.8 — 6.8

Purchased options

(3)

405.3 6.2 — 6.2 — — —

Equity contracts 

Swaps

427.0 13.3 — 13.3 16.7 — 16.7

Futures and forwards

136.9 2.1 — 2.1 1.6 — 1.6

Written options

(2)

854.9 — — — 50.1 — 50.1

Purchased options

(3)

716.2 44.1 — 44.1 — — —

Commodity contracts  

Swaps

59.0 3.1 — 3.1 4.5 — 4.5

Futures and forwards

187.8 3.8 — 3.8 3.1 0.4 3.5

Written options

(2)

67.1 — — — 3.3 — 3.3

Purchased options

(3)

70.9 3.0 — 3.0 — — —

Credit derivatives

(4)

  

Purchased credit derivatives:

  

Credit default swaps

312.8 1.7 — 1.7 2.5 — 2.5

Total return swaps/options

69.4 0.8 — 0.8 1.3 — 1.3

Written credit derivatives:

 

Credit default swaps

289.1 2.2 — 2.2 1.6 — 1.6

Total return swaps/options

68.6 1.1 — 1.1 0.3 — 0.3

Gross derivative assets/liabilities

$ 276.1 $ 14.2 $ 290.3 $ 275.6 $ 25.6 $ 301.2

Less: Legally enforceable master netting agreements

  (221.6)   (221.6)

Less: Cash collateral received/paid

   (29.4)   (36.2)

Total derivative assets/liabilities    $ 39.3   $ 43.4

(1)

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

(2)

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

(3)

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

(4)

The net derivative asset (liability) and notional amount of written credit derivatives for which the Corporation held purchased credit derivatives with identical underlying referenced names were

$520 million and $266.5 billion at December31, 2023.

103 Bank of America

December 31, 2022

Gross Derivative Assets Gross Derivative Liabilities

(Dollars in billions)

Contract/

Notional

(1)

Trading and

Other Risk

Management

Derivatives

Qualifying

Accounting

Hedges Total

Trading and

Other Risk

Management

Derivatives

Qualifying

Accounting

Hedges Total

Interest rate contracts

      

Swaps $ 18,285.9 $ 138.2 $ 20.7 $ 158.9 $ 120.3 $ 36.7 $ 157.0

Futures and forwards 2,796.3 8.6 — 8.6 7.8 — 7.8

Written options

(2)

1,657.9 — — — 41.4 — 41.4

Purchased options

(3)

1,594.7 42.4 — 42.4 — — —

Foreign exchange contracts

     

Swaps 1,509.0 44.0 0.3 44.3 43.3 0.4 43.7

Spot, futures and forwards 4,159.3 59.9 0.1 60.0 62.1 0.6 62.7

Written options

(2)

392.2 — — — 8.1 — 8.1

Purchased options

(3)

362.6 8.3 — 8.3 — — —

Equity contracts

      

Swaps 394.0 10.8 — 10.8 12.2 — 12.2

Futures and forwards 114.6 3.3 — 3.3 1.0 — 1.0

Written options

(2)

746.8 — — — 45.0 — 45.0

Purchased options

(3)

671.6 40.9 — 40.9 — — —

Commodity contracts

      

Swaps 56.0 5.1 — 5.1 5.3 — 5.3

Futures and forwards 157.3 3.0 — 3.0 2.3 0.8 3.1

Written options

(2)

59.5 — — — 3.3 — 3.3

Purchased options

(3)

61.8 3.6 — 3.6 — — —

Credit derivatives

(4)

      

Purchased credit derivatives:       

Credit default swaps 319.9 2.8 — 2.8 1.6 — 1.6

Total return swaps/options 71.5 0.7 — 0.7 3.0 — 3.0

Written credit derivatives:      

Credit default swaps 295.2 1.2 — 1.2 2.4 — 2.4

Total return swaps/options 85.3 4.4 — 4.4 0.9 — 0.9

Gross derivative assets/liabilities  $ 377.2 $ 21.1 $ 398.3 $ 360.0 $ 38.5 $ 398.5

Less: Legally enforceable master netting agreements    (315.9)   (315.9)

Less: Cash collateral received/paid    (33.8)   (37.8)

Total derivative assets/liabilities

   $ 48.6   $ 44.8

(1)

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

(2)

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

(3)

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

(4)

The net derivative asset (liability) and notional amount of written credit derivatives for which the Corporation held purchased credit derivatives with identical underlying referenced names were

$(1.2) billion and $276.9 billion at December31, 2022.

Offsetting of Derivatives

The Corporation enters into International Swaps and Derivatives

Association, Inc. (ISDA) master netting agreements or similar

agreements with substantially all of the Corporation’s derivative

counterparties. Where legally enforceable, these master netting

agreements give the Corporation, in the event of default by the

counterparty, the right to liquidate securities held as collateral

and to offset receivables and payables with the same

counterparty. For purposes of the Consolidated Balance Sheet,

the Corporation offsets derivative assets and liabilities and cash

collateral held with the same counterparty where it has such a

legally enforceable master netting agreement.

The following table presents derivative instruments included

in derivative assets and liabilities on the Consolidated Balance

Sheet at December 31, 2023 and 2022 by primary risk (e.g.,

interest rate risk) and the platform, where applicable, on which

these derivatives are transacted. Balances are presented on a

gross basis, prior to the application of counterparty and cash

collateral netting. Total gross derivative assets and liabilities

are adjusted on an aggregate basis to take into consideration

the effects of legally enforceable master netting agreements,

which include reducing the balance for counterparty netting and

cash collateral received or paid.

For more information on offsetting of securities financing

agreements, see Note 10 – Securities Financing Agreements,

Short-term Borrowings, Collateral and Restricted Cash.

Bank of America 104

Offsetting of Derivatives

(1)

Derivative

Assets

Derivative

Liabilities

Derivative

Assets

Derivative

Liabilities

(Dollars in billions)

December 31, 2023

December 31, 2022

Interest rate contracts  

 

Over-the-counter

$ 119.2 $ 117.7

$ 138.4 $ 132.3

Exchange-traded

0.2 0.2

0.4 0.1

Over-the-counter cleared

4.4 3.3

71.4 71.1

Foreign exchange contracts

Over-the-counter

89.7 90.4

109.7 110.6

Over-the-counter cleared

0.2 0.2

1.3 1.2

Equity contracts

Over-the-counter

24.7 32.2

21.5 22.6

Exchange-traded

34.4 33.9

33.0 33.8

Commodity contracts

Over-the-counter

6.6 8.4

8.3 9.3

Exchange-traded

2.3 2.1

2.4 1.9

Over-the-counter cleared

0.4 0.5

0.3 0.3

Credit derivatives

Over-the-counter

5.7 5.6

8.9 7.5

Total gross derivative assets/liabilities, before netting

Over-the-counter

245.9 254.3

286.8 282.3

Exchange-traded

36.9 36.2

35.8 35.8

Over-the-counter cleared

5.0 4.0

73.0 72.6

Less: Legally enforceable master netting agreements and cash collateral received/paid

Over-the-counter

(212.1) (218.9)

(243.8) (248.2)

Exchange-traded

(35.4) (35.4)

(33.5) (33.5)

Over-the-counter cleared

(3.5) (3.5)

(72.4) (72.0)

Derivative assets/liabilities, after netting

36.8 36.7

45.9 37.0

Other gross derivative assets/liabilities

(2)

2.5 6.7

2.7 7.8

Total derivative assets/liabilities

39.3 43.4

48.6 44.8

Less: Financial instruments collateral

(3)

(15.5) (13.0)

(18.5) (7.4)

Total net derivative assets/liabilities $ 23.8 $ 30.4

$ 30.1 $ 37.4

(1)

Over-the-counter derivatives include bilateral transactions between the Corporation and a particular counterparty. Over-the-counter cleared derivatives include bilateral transactions between the

Corporation and a counterparty where the transaction is cleared through a clearinghouse. Exchange-traded derivatives include listed options transacted on an exchange.

(2)

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

(3)

Amounts are limited to the derivative asset/liability balance and, accordingly, do not include excess collateral received/pledged. Financial instruments collateral includes securities collateral

received or pledged and cash securities held and posted at third-party custodians that are not offset on the Consolidated Balance Sheet but shown as a reduction to derive net derivative assets

and liabilities.

ALM and Risk Management Derivatives

The Corporation’s ALM and risk management activities include

the use of derivatives to mitigate risk to the Corporation

including derivatives designated in qualifying hedge accounting

relationships and derivatives used in other risk management

activities. Interest rate, foreign exchange, equity, commodity

and credit contracts are utilized in the Corporation's ALM and

risk management activities.

The Corporation maintains an overall interest rate risk

management strategy that incorporates the use of interest rate

contracts, which are generally non-leveraged generic interest

rate and basis swaps, options, futures and forwards, to

minimize significant fluctuations in earnings caused by interest

rate volatility. The Corporation’s goal is to manage interest rate

sensitivity and volatility so that movements in interest rates do

not significantly adversely affect earnings or capital. As a result

of interest rate fluctuations, hedged fixed-rate assets and

liabilities appreciate or depreciate in fair value. Gains or losses

on the derivative instruments that are linked to the hedged

fixed-rate assets and liabilities are expected to substantially

offset this unrealized appreciation or depreciation.

Market risk, including interest rate risk, can be substantial in

the mortgage business. Market risk in the mortgage business is

the risk that values of mortgage assets or revenues will be

adversely affected by changes in market conditions such as

interest rate movements. To mitigate the interest rate risk in

mortgage banking production income, the Corporation utilizes

forward loan sale commitments and other derivative

instruments, including purchased options, and certain debt

securities. The Corporation also utilizes derivatives such as

interest rate options, interest rate swaps, forward settlement

contracts and eurodollar futures to hedge certain market risks

of MSRs.

The Corporation uses foreign exchange contracts to manage

the foreign exchange risk associated with certain foreign

currency-denominated assets and liabilities, as well as the

Corporation’s investments in non-U.S. subsidiaries. Exposure to

loss on these contracts will increase or decrease over their

respective lives as currency exchange and interest rates

fluctuate.

The Corporation purchases credit derivatives to manage

credit risk related to certain funded and unfunded credit

exposures. Credit derivatives include credit default swaps

(CDS), total return swaps and swaptions. These derivatives are

recorded on the Consolidated Balance Sheet at fair value with

changes in fair value recorded in other income.

Derivatives Designated as Accounting Hedges

The Corporation uses various types of interest rate and foreign

exchange derivative contracts to protect against changes in the

fair value of its assets and liabilities due to fluctuations in

interest rates and foreign exchange rates (fair value hedges).

The Corporation also uses these types of contracts to protect

against changes in the cash flows of its assets and liabilities,

and other forecasted transactions (cash flow hedges). The

Corporation hedges its net investment in consolidated non-U.S.

105 Bank of America

operations determined to have functional currencies other than

the U.S. dollar using forward exchange contracts and cross-

currency basis swaps, and by issuing foreign currency-

denominated debt (net investment hedges).

Fair Value Hedges

The table below summarizes information related to fair value

hedges for 2023, 2022 and 2021.

Gains and Losses on Derivatives Designated as Fair Value Hedges

Derivative Hedged Item

(Dollars in millions)

2023

2022 2021

2023

2022 2021

Interest rate risk on long-term debt

(1)

$ 3,594

$ (26,654) $ (7,018)

$ (3,652)

$ 26,825 $ 6,838

Interest rate and foreign currency risk

(2)

(17)

(120) (90)

119 79

Interest rate risk on available-for-sale securities

(3)

(3,518)

21,991 5,203

3,417

(22,280) (5,167)

Price risk on commodity inventory

(4)

674 —

(2)

(674) —

Total $ 61

$ (4,109) $ (1,905)

$ (210)

$ 3,990 $ 1,750

(1)

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

(2)

Represents cross-currency interest rate swaps related to available-for-sale debt securities and long-term debt. For 2023, 2022 and 2021, the derivative amount includes gains (losses) of $6

million, $0 and $0 in interest income, $13 million, $(37) million and $(73) million in interest expense, $(51) million, $(81) million and $0 in market making and similar activities, and $15 million,

$(2) million and $(17) million in accumulated OCI, respectively. Line item totals are in the Consolidated Statement of Income and on the Consolidated Balance Sheet.

(3)

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

(4)

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

The table below summarizes the carrying value of hedged assets and liabilities that are designated and qualifying in fair value

hedging relationships along with the cumulative amount of fair value hedging adjustments included in the carrying value that have

been recorded in the current hedging relationships. These fair value hedging adjustments are open basis adjustments that are not

subject to amortization as long as the hedging relationship remains designated.

Designated Fair Value Hedged Assets and Liabilities

December 31, 2023

December 31, 2022

(Dollars in millions)

Carrying Value

Cumulative

Fair Value

Adjustments

(1)

Carrying Value

Cumulative

Fair Value

Adjustments

(1)

Long-term debt

(2)

$ 203,986 $ (5,767)

$ 187,402 $ (21,372)

Available-for-sale debt securities

(2, 3, 4)

134,077 (1,793)

167,518 (18,190)

Trading account assets

(5)

7,475 414

16,119 146

(1)

Increase (decrease) to carrying value.

(2)

At December 31, 2023 and 2022, the cumulative fair value adjustments remaining on long-term debt and available-for-sale debt securities from discontinued hedging relationships resulted in a

decrease of $10.5 billion and an increase of $137 million in the related liability and a decrease in the related asset of $5.6 billion and $4.9 billion, which are being amortized over the remaining

contractual life of the de-designated hedged items.

(3)

These amounts include the amortized cost of the financial assets in closed portfolios used to designate hedging relationships in which the hedged item is a stated layer that is expected to be

remaining at the end of the hedging relationship (i.e. portfolio layer hedging relationship). At December 31, 2023 and 2022, the amortized cost of the closed portfolios used in these hedging

relationships was $39.1 billion and $21.4 billion, of which $22.5 billion and $9.2 billion were designated in a portfolio layer hedging relationship. At December 31, 2023 and 2022, the

cumulative adjustment associated with these hedging relationships was an increase of $48 million and a decrease of $451 million.

(4)

Carrying value represents amortized cost.

(5)

Represents hedging activities related to certain commodities inventory.

Cash Flow and Net Investment Hedges

The following table summarizes certain information related to

cash flow hedges and net investment hedges for 2023, 2022

and 2021. Of the $8.0 billion after-tax net loss ($10.7 billion

pretax) on derivatives in accumulated OCI at December 31,

2023, losses of $3.4 billion after-tax ($4.6 billion pretax)

related to both open and terminated cash flow hedges are

expected to be reclassified into earnings in the next 12 months.

These net losses reclassified into earnings are expected to

primarily decrease net interest income related to the respective

hedged items. For open cash flow hedges, the maximum length

of time over which forecasted transactions are hedged is

approximately ten years. For terminated cash flow hedges, the

time period over which the forecasted transactions will be

recognized in interest income is approximately five years, with

the aggregated amount beyond this time period being

insignificant.

On November 15, 2023, Bloomberg Index Services Limited

announced the permanent cessation of the Bloomberg Short-

Term Bank Yield Index (BSBY) and all its tenors effective after

final publication on November 15, 2024. The Corporation

determined that certain forecasted BSBY-indexed interest

payments, which had been designated in cash flow hedges,

were no longer expected to occur beyond November 15, 2024

as they will transition to a new reference rate. Accordingly,

during the fourth quarter of 2023, the Corporation reclassified

$2.0 billion of pretax loss from accumulated OCI into market

making and similar activities for the amount related to these

forecasted transactions.

Bank of America 106

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

Gains (Losses) Recognized in

Accumulated OCI on Derivatives

Gains (Losses) in Income

Reclassified from Accumulated OCI

(Dollars in millions, amounts pretax)

2023

2022 2021

2023

2022 2021

Cash flow hedges

Interest rate risk on variable-rate portfolios

(1)

$ 1,995

$ (13,492)

$ (2,686)

$ (3,176)

$ (338)

$ 148

Price risk on forecasted MBS purchases

(1)

(129) (249)

(2)

11 26

Price risk on certain compensation plans

(2)

(88) 93

29 55

Total $ 2,049

$ (13,709) $ (2,842)

$ (3,153)

$ (298) $ 229

Net investment hedges

Foreign exchange risk

(3)

$ (808)

$ 1,710 $ 1,451

$ 143

$ 3 $ 23

(1)

Amounts reclassified from accumulated OCI are recorded in interest income and market making and similar activities in the Consolidated Statement of Income.

(2)

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

(3)

Amounts reclassified from accumulated OCI are recorded in other income in the Consolidated Statement of Income. Amounts excluded from effectiveness testing and recognized in market making

and similar activities were gains of $195 million and losses of $38 million and $123 million in 2023, 2022 and 2021, respectively.

Other Risk Management Derivatives

Other risk management derivatives are used by the Corporation

to reduce certain risk exposures by economically hedging

various assets and liabilities. The table below presents gains

(losses) on these derivatives for 2023, 2022 and 2021. These

gains (losses) are largely offset by the income or expense

recorded on the hedged item.

Gains and Losses on Other Risk Management Derivatives

(Dollars in millions)

2023

2022 2021

Interest rate risk on mortgage activities

(1, 2)

$ 16

$ (326) $ (18)

Credit risk on loans

(2)

(70)

(37) (25)

Interest rate and foreign currency risk on

asset and liability management activities

(3)

777

4,713 1,757

Price risk on certain compensation plans

(4)

584

(1,073) 917

(1)

Includes hedges of interest rate risk on MSRs and IRLCs to originate mortgage loans that will

be held for sale.

(2)

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

(3)

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

2023, includes $447 million of positive fair value adjustments related to the interest rate

swaps that occurred after de-designation of BSBY hedges and prior to re-designation of the

interest rate swaps into new hedges.

(4)

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

Transfers of Financial Assets with Risk Retained

through Derivatives

The Corporation enters into certain transactions involving the

transfer of financial assets that are accounted for as sales

where substantially all of the economic exposure to the

transferred financial assets is retained through derivatives (e.g.,

interest rate and/or credit), but the Corporation does not retain

control over the assets transferred. At December 31, 2023 and

2022, the Corporation had transferred $4.1 billion and $4.8

billion of non-U.S. government-guaranteed mortgage-backed

securities to a third-party trust and retained economic exposure

to the transferred assets through derivative contracts. In

connection with these transfers, the Corporation received gross

cash proceeds of $4.2 billion and $4.9 billion at the transfer

dates. At December 31, 2023 and 2022, the fair value of the

transferred securities was $4.1 billion and $4.7 billion.

Sales and Trading Revenue

The Corporation enters into trading derivatives to facilitate client

transactions and to manage risk exposures arising from trading

account assets and liabilities. It is the Corporation’s policy to

include these derivative instruments in its trading activities,

which include derivatives and non-derivative cash instruments.

The resulting risk from these derivatives is managed on a

portfolio basis as part of the Corporation’s Global Markets

business segment. The related sales and trading revenue

generated within Global Markets is recorded in various income

statement line items, including market making and similar

activities and net interest income as well as other revenue

categories.

Sales and trading revenue includes changes in the fair value

and realized gains and losses on the sales of trading and other

assets, net interest income, and fees primarily from

commissions on equity securities. Revenue is generated by the

difference in the client price for an instrument and the price at

which the trading desk can execute the trade in the dealer

market. For equity securities, commissions related to purchases

and sales are recorded in the “Other” column in the Sales and

Trading Revenue table. Changes in the fair value of these

securities are included in market making and similar activities.

For debt securities, revenue, with the exception of interest

associated with the debt securities, is typically included in

market making and similar activities. Unlike commissions for

equity securities, the initial revenue related to broker-dealer

services for debt securities is typically included in the pricing of

the instrument rather than being charged through separate fee

arrangements. Therefore, this revenue is recorded in market

making and similar activities as part of the initial mark to fair

value. For derivatives, the majority of revenue is included in

market making and similar activities. In transactions where the

Corporation acts as agent, which include exchange-traded

futures and options, fees are recorded in other income.

The following table, which includes both derivatives and non-

derivative cash instruments, identifies the amounts in the

respective income statement line items attributable to the

Corporation’s sales and trading revenue in Global Markets,

categorized by primary risk, for 2023, 2022 and 2021. This

table includes debit valuation adjustment (DVA) and funding

valuation adjustment (FVA) gains (losses). Global Markets

results in Note 23 – Business Segment Information are

presented on a fully taxable-equivalent (FTE) basis. The following

table is not presented on an FTE basis.

107 Bank of America

Sales and Trading Revenue

Market

making

and similar

activities

Net

Interest

Income Other

(1)

Total

(Dollars in millions)

2023

Interest rate risk

$ 3,192 $ 366 $ 402 $ 3,960

Foreign exchange risk

1,800 149 87 2,036

Equity risk

6,628 (1,955) 1,774 6,447

Credit risk

1,205 2,462 340 4,007

Other risk

(2)

602 (155) (67) 380

Total sales and trading

revenue $ 13,427 $ 867 $ 2,536 $ 16,830

2022

Interest rate risk $ 1,919 $ 1,619 $ 392 $ 3,930

Foreign exchange risk 1,981 46 (44) 1,983

Equity risk 6,077 (1,288) 1,757 6,546

Credit risk 592 2,228 177 2,997

Other risk

(2)

835 (171) 15 679

Total sales and trading

revenue

$ 11,404 $ 2,434 $ 2,297 $ 16,135

2021

Interest rate risk $ 523 $ 1,794 $ 217 $ 2,534

Foreign exchange risk 1,505 (80) 14 1,439

Equity risk 4,581 (5) 1,834 6,410

Credit risk 1,390 1,684 556 3,630

Other risk

(2)

759 (128) 124 755

Total sales and trading

revenue

$ 8,758 $ 3,265 $ 2,745 $ 14,768

(1)

Represents amounts in investment and brokerage services and other income that are

recorded in Global Markets and included in the definition of sales and trading revenue.

Includes investment and brokerage services revenue of $2.0 billion, $2.0 billion and $1.9

billion in 2023, 2022 and 2021, respectively.

(2)

Includes commodity risk.

Credit Derivatives

The Corporation enters into credit derivatives primarily to

facilitate client transactions and to manage credit risk

exposures. Credit derivatives derive value based on an

underlying third-party referenced obligation or a portfolio of

referenced obligations and generally require the Corporation, as

the seller of credit protection, to make payments to a buyer

upon the occurrence of a predefined credit event. Such credit

events generally include bankruptcy of the referenced credit

entity and failure to pay under the obligation, as well as

acceleration of indebtedness and payment repudiation or

moratorium. For credit derivatives based on a portfolio of

referenced credits or credit indices, the Corporation may not be

required to make payment until a specified amount of loss has

occurred and/or may only be required to make payment up to a

specified amount.

Credit derivatives are classified as investment and non-

investment grade based on the credit quality of the underlying

referenced obligation. The Corporation considers ratings of BBB-

or higher as investment grade. Non-investment grade includes

non-rated credit derivative instruments. The Corporation

discloses internal categorizations of investment grade and non-

investment grade consistent with how risk is managed for these

instruments.

Credit derivative instruments where the Corporation is the

seller of credit protection and their expiration at December 31,

2023 and 2022 are summarized in the following table.

Bank of America 108

Credit Derivative Instruments

Less than

One Year

One to

Three Years

Three to

Five Years

Over Five

Years Total

December 31, 2023

(Dollars in millions)

Carrying Value

Credit default swaps:

    

Investment grade

$ — $ 11 $ 26 $ 20 $ 57

Non-investment grade

38 277 601 595 1,511

Total

38 288 627 615 1,568

Total return swaps/options:

    

Investment grade

59 — — — 59

Non-investment grade

149 69 56 5 279

Total

208 69 56 5 338

Total credit derivatives $ 246 $ 357 $ 683 $ 620 $ 1,906

Credit-related notes:

    

Investment grade

$ — $ — $ — $ 859 $ 859

Non-investment grade

— 5 16 1,103 1,124

Total credit-related notes $ — $ 5 $ 16 $ 1,962 $ 1,983

Maximum Payout/Notional

Credit default swaps:

    

Investment grade

$ 33,750 $ 65,015 $ 83,313 $ 17,023 $ 199,101

Non-investment grade

18,061 32,155 33,934 5,827 89,977

Total

51,811 97,170 117,247 22,850 289,078

Total return swaps/options:

    

Investment grade

40,515 1,503 1,561 23 43,602

Non-investment grade

20,694 1,414 1,907 988 25,003

Total

61,209 2,917 3,468 1,011 68,605

Total credit derivatives $ 113,020 $ 100,087 $ 120,715 $ 23,861 $ 357,683

December 31, 2022

Carrying Value

Credit default swaps:

Investment grade $ 2 $ 25 $ 133 $ 34 $ 194

Non-investment grade 120 516 870 697 2,203

Total 122 541 1,003 731 2,397

Total return swaps/options:     

Investment grade 55 336 — — 391

Non-investment grade 332 9 132 10 483

Total 387 345 132 10 874

Total credit derivatives

$ 509 $ 886 $ 1,135 $ 741 $ 3,271

Credit-related notes:     

Investment grade $ — $ — $ 19 $ 1,017 $ 1,036

Non-investment grade — 7 6 1,035 1,048

Total credit-related notes

$ — $ 7 $ 25 $ 2,052 $ 2,084

Maximum Payout/Notional

Credit default swaps:

Investment grade $ 34,670 $ 66,170 $ 93,237 $ 18,677 $ 212,754

Non-investment grade 15,229 29,629 30,891 6,662 82,411

Total 49,899 95,799 124,128 25,339 295,165

Total return swaps/options:     

Investment grade 38,722 10,407 — — 49,129

Non-investment grade 32,764 500 2,054 897 36,215

Total 71,486 10,907 2,054 897 85,344

Total credit derivatives

$ 121,385 $ 106,706 $ 126,182 $ 26,236 $ 380,509

The notional amount represents the maximum amount

payable by the Corporation for most credit derivatives. However,

the Corporation does not monitor its exposure to credit

derivatives based solely on the notional amount because this

measure does not take into consideration the probability of

occurrence. As such, the notional amount is not a reliable

indicator of the Corporation’s exposure to these contracts.

Instead, a risk framework is used to define risk tolerances and

establish limits so that certain credit risk-related losses occur

within acceptable, predefined limits.

Credit-related notes in the table above include investments

in securities issued by CDO, collateralized loan obligation (CLO)

and credit-linked note vehicles. These instruments are primarily

classified as trading securities. The carrying value of these

instruments equals the Corporation’s maximum exposure to

loss. The Corporation is not obligated to make any payments to

the entities under the terms of the securities owned.

Credit-related Contingent Features and Collateral

The Corporation executes the majority of its derivative contracts

in the OTC market with large, international financial institutions,

including broker-dealers and, to a lesser degree, with a variety

of nonfinancial companies. A significant majority of the

derivative transactions are executed on a daily margin basis.

Therefore, events such as a credit rating downgrade (depending

on the ultimate rating level) or a breach of credit covenants

would typically require an increase in the amount of collateral

109 Bank of America

required of the counterparty, where applicable, and/or allow the

Corporation to take additional protective measures such as

early termination of all trades. Further, as previously discussed

on page 105, the Corporation enters into legally enforceable

master netting agreements that reduce risk by permitting

closeout and netting of transactions with the same counterparty

upon the occurrence of certain events.

Certain of the Corporation’s derivative contracts contain

credit risk-related contingent features, primarily in the form of

ISDA master netting agreements and credit support

documentation that enhance the creditworthiness of these

instruments compared to other obligations of the respective

counterparty with whom the Corporation has transacted. These

contingent features may be for the benefit of the Corporation as

well as its counterparties with respect to changes in the

Corporation’s creditworthiness and the mark-to-market exposure

under the derivative transactions. At December 31, 2023 and

2022, the Corporation held cash and securities collateral of

$104.1 billion and $101.3 billion and posted cash and

securities collateral of $93.4 billion and $81.2 billion in the

normal course of business under derivative agreements,

excluding cross-product margining agreements where clients are

permitted to margin on a net basis for both derivative and

secured financing arrangements.

In connection with certain OTC derivative contracts and other

trading agreements, the Corporation can be required to provide

additional collateral or to terminate transactions with certain

counterparties in the event of a downgrade of the senior debt

ratings of the Corporation or certain subsidiaries. The amount of

additional collateral required depends on the contract and is

usually a fixed incremental amount and/or the market value of

the exposure.

At December31, 2023, the amount of collateral, calculated

based on the terms of the contracts, that the Corporation and

certain subsidiaries could be required to post to counterparties

but had not yet posted to counterparties was $2.5 billion,

including $1.1 billion for Bank of America, National Association

(BANA).

Some counterparties are currently able to unilaterally

terminate certain contracts, or the Corporation or certain

subsidiaries may be required to take other action such as find a

suitable replacement or obtain a guarantee. At December 31,

2023 and 2022, the liability recorded for these derivative

contracts was not significant.

The following table presents the amount of additional

collateral that would have been contractually required by

derivative contracts and other trading agreements at

December31, 2023 if the rating agencies had downgraded their

long-term senior debt ratings for the Corporation or certain

subsidiaries by one incremental notch and by an additional

second incremental notch. The table also presents derivative

liabilities that would be subject to unilateral termination by

counterparties upon downgrade of the Corporation's or certain

subsidiaries’ long-term senior debt ratings.

Additional Collateral Required to be Posted and Derivative

Liabilities Subject to Unilateral Termination Upon Downgrade

at December 31, 2023

(Dollars in millions)

One

Incremental

Notch

Second

Incremental

Notch

Additional collateral required to be posted

upon downgrade

Bank of America Corporation $ 134 $ 902

Bank of America, N.A. and subsidiaries

(1)

45 729

Derivative liabilities subject to unilateral

termination upon downgrade

Derivative liabilities $ 7 $ 36

Collateral posted 6 23

(1)

Included in Bank of America Corporation collateral requirements in this table.

Valuation Adjustments on Derivatives

The Corporation records credit risk valuation adjustments on

derivatives in order to properly reflect the credit quality of the

counterparties and its own credit quality. The Corporation

calculates valuation adjustments on derivatives based on a

modeled expected exposure that incorporates current market

risk factors. The exposure also takes into consideration credit

mitigants such as enforceable master netting agreements and

collateral. CDS spread data is used to estimate the default

probabilities and severities that are applied to the exposures.

Where no observable credit default data is available for

counterparties, the Corporation uses proxies and other market

data to estimate default probabilities and severity.

The table below presents credit valuation adjustment (CVA),

DVA and FVA gains (losses) on derivatives (excluding the effect

of any related hedge activities), which are recorded in market

making and similar activities, for 2023, 2022 and 2021. CVA

gains reduce the cumulative CVA thereby increasing the

derivative assets balance. DVA gains increase the cumulative

DVA thereby decreasing the derivative liabilities balance. CVA

and DVA losses have the opposite impact. FVA gains related to

derivative assets reduce the cumulative FVA thereby increasing

the derivative assets balance. FVA gains related to derivative

liabilities increase the cumulative FVA thereby decreasing the

derivative liabilities balance. FVA losses have the opposite

impact.

Valuation Adjustments Gains (Losses) on Derivatives

(1)

(Dollars in millions)

2023

2022 2021

Derivative assets (CVA)

$ 159

$ (80) $ 208

Derivative assets/liabilities (FVA)

(33)

125 (2)

Derivative liabilities (DVA)

(207)

194 3

(1)

At December 31, 2023, 2022 and 2021, cumulative CVA reduced the derivative assets

balance by $359 million, $518 million and $438 million, cumulative FVA reduced the net

derivative balance by $87 million, $54 million and $179 million, and cumulative DVA reduced

the derivative liabilities balance by $299 million, $506 million and $312 million, respectively.

Bank of America 110

NOTE 4 Securities

The table below presents the amortized cost, gross unrealized gains and losses, and fair value of AFS debt securities, other debt

securities carried at fair value and HTM debt securities at December31, 2023 and 2022.

Debt Securities

Amortized

Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Fair

Value

Amortized

Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Fair

Value

(Dollars in millions)

December 31, 2023

December 31, 2022

Available-for-sale debt securities

Mortgage-backed securities:

Agency

$ 39,195 $ 37 $ (1,420) $ 37,812

$ 25,204 $ 5 $ (1,767) $ 23,442

Agency-collateralized mortgage obligations

2,739 6 (201) 2,544

2,452 — (231) 2,221

Commercial

10,909 40 (514) 10,435

6,894 28 (515) 6,407

Non-agency residential

(1)

449 3 (70) 382

461 15 (90) 386

Total mortgage-backed securities

53,292 86 (2,205) 51,173

35,011 48 (2,603) 32,456

U.S. Treasury and government agencies

179,108 19 (1,461) 177,666

160,773 18 (1,769) 159,022

Non-U.S. securities

22,868 27 (20) 22,875

13,455 4 (52) 13,407

Other taxable securities

4,910 1 (76) 4,835

4,728 1 (84) 4,645

Tax-exempt securities

10,304 17 (221) 10,100

11,518 19 (279) 11,258

Total available-for-sale debt securities 270,482 150 (3,983) 266,649

225,485 90 (4,787) 220,788

Other debt securities carried at fair value

(2)

10,202 56 (55) 10,203

8,986 376 (156) 9,206

Total debt securities carried at fair value 280,684 206 (4,038) 276,852

234,471 466 (4,943) 229,994

Held-to-maturity debt securities

Agency mortgage-backed securities

465,456 — (78,930) 386,526

503,233 — (87,319) 415,914

U.S. Treasury and government agencies

121,645 — (17,963) 103,682

121,597 — (20,259) 101,338

Other taxable securities

7,490 — (1,101)

6,389

8,033 — (1,018) 7,015

Total held-to-maturity debt securities 594,591 — (97,994) 496,597

632,863 — (108,596) 524,267

Total debt securities

(3,4)

$ 875,275 $ 206 $ (102,032) $ 773,449

$ 867,334 $ 466 $ (113,539) $ 754,261

(1)

At both December31, 2023 and 2022, the underlying collateral type included approximately 17 percent prime and 83 percent subprime.

(2)

Primarily includes non-U.S. securities used to satisfy certain international regulatory requirements. Any changes in value are reported in market making and similar activities. For detail on the

components, see Note 20 – Fair Value Measurements.

(3)

Includes securities pledged as collateral of $204.9 billion and $104.5 billion at December31, 2023 and 2022.

(4)

The Corporation held debt securities from FNMA and FHLMC that each exceeded 10 percent of shareholders’ equity, with an amortized cost of $272.5 billion and $171.5 billion, and a fair value of

$226.4 billion and $142.3 billion at December31, 2023, and an amortized cost of $290.5 billion and $176.7 billion, and a fair value of $239.6 billion and $144.6 billion at December31, 2022.

At December31, 2023, the accumulated net unrealized loss

on AFS debt securities, excluding the amount related to debt

securities previously transferred to held to maturity, included in

accumulated OCI was $2.8 billion, net of the related income tax

benefit of $960 million. At December 31, 2023 and 2022,

nonperforming AFS debt securities held by the Corporation were

not significant.

At December 31, 2023 and 2022, $824.9 billion and

$826.5 billion of AFS and HTM debt securities, which were

predominantly U.S. agency and U.S. Treasury securities, have a

zero credit loss assumption. For the same periods, the ECL on

the remaining $40.2 billion and $31.8 billion of AFS and HTM

debt securities were insignificant. For more information on the

zero credit loss assumption, see Note 1 – Summary of

Significant Accounting Principles.

At December 31, 2023 and 2022, the Corporation held

equity securities at an aggregate fair value of $251 million and

$581 million and other equity securities, as valued under the

measurement alternative, at a carrying value of $377 million

and $340 million, both of which are included in other assets. At

December 31, 2023 and 2022, the Corporation also held

money market investments at a fair value of $1.2 billion and

$868 million, which are included in time deposits placed and

other short-term investments.

The gross realized gains and losses on sales of AFS debt

securities for 2023, 2022 and 2021 are presented in the table

below.

Gains and Losses on Sales of AFS Debt Securities

(Dollars in millions)

2023

2022 2021

Gross gains

$ 109

$ 1,251 $ 49

Gross losses

(514)

(1,219) (27)

Net gains (losses) on sales of AFS debt

securities $ (405)

$ 32 $ 22

Income tax expense (benefit) attributable to

realized net gains (losses) on sales of AFS

debt securities $ (101)

$ 8 $ 5

111 Bank of America

The table below presents the fair value and the associated gross unrealized losses on AFS debt securities and whether these

securities have had gross unrealized losses for less than 12 months or for 12 months or longer at December31, 2023 and 2022.

Total AFS Debt Securities in a Continuous Unrealized Loss Position

Less than Twelve Months Twelve Months or Longer Total

Fair

Value

Gross

Unrealized

Losses

Fair

Value

Gross

Unrealized

Losses

Fair

Value

Gross

Unrealized

Losses

(Dollars in millions)

December 31, 2023

Continuously unrealized loss-positioned AFS debt securities

Mortgage-backed securities:

  

Agency

$ 8,624 $ (21) $ 20,776 $ (1,399) $ 29,400 $ (1,420)

Agency-collateralized mortgage obligations

— — 1,701 (201) 1,701 (201)

Commercial

2,363 (27) 4,588 (487) 6,951 (514)

Non-agency residential

— — 370 (70) 370 (70)

Total mortgage-backed securities

10,987 (48) 27,435 (2,157) 38,422 (2,205)

U.S. Treasury and government agencies

14,907 (12) 69,669 (1,449) 84,576 (1,461)

Non-U.S. securities

7,702 (8) 1,524 (12) 9,226 (20)

Other taxable securities

3,269 (19) 1,437 (57) 4,706 (76)

Tax-exempt securities

466 (5) 2,106 (216) 2,572 (221)

Total AFS debt securities in a continuous

unrealized loss position $ 37,331 $ (92) $ 102,171 $ (3,891) $ 139,502 $ (3,983)

December 31, 2022

Continuously unrealized loss-positioned AFS debt securities

Mortgage-backed securities:

Agency $ 18,759 $ (1,118) $ 4,437 $ (649) $ 23,196 $ (1,767)

Agency-collateralized mortgage obligations 1,165 (96) 1,022 (135) 2,187 (231)

Commercial 3,273 (150) 2,258 (365) 5,531 (515)

Non-agency residential 264 (65) 97 (25) 361 (90)

Total mortgage-backed securities 23,461 (1,429) 7,814 (1,174) 31,275 (2,603)

U.S. Treasury and government agencies 36,730 (308) 118,636 (1,461) 155,366 (1,769)

Non-U.S. securities 9,399 (34) 756 (18) 10,155 (52)

Other taxable securities 2,036 (16) 1,580 (68) 3,616 (84)

Tax-exempt securities 607 (28) 2,849 (251) 3,456 (279)

Total AFS debt securities in a continuous

unrealized loss position

$ 72,233 $ (1,815) $ 131,635 $ (2,972) $ 203,868 $ (4,787)

Bank of America 112

The remaining contractual maturity distribution and yields of the Corporation’s debt securities carried at fair value and HTM debt

securities at December31, 2023 are summarized in the table below. Actual duration and yields may differ as prepayments on the

loans underlying the MBS or other ABS are passed through to the Corporation.

Maturities of Debt Securities Carried at Fair Value and Held-to-maturity Debt Securities

Due in One

Year or Less

Due after One Year

through Five Years

Due after Five Years

through Ten Years

Due after

Ten Years Total

(Dollars in millions)

Amount Yield

(1)

Amount Yield

(1)

Amount Yield

(1)

Amount Yield

(1)

Amount Yield

(1)

Amortized cost of debt securities carried at fair value

Mortgage-backed securities:          

Agency $ — — % $ 4 4.00 % $ 8 3.38 % $ 39,183 4.66 % $ 39,195 4.66 %

Agency-collateralized mortgage obligations — — — — — — 2,739 3.39 2,739 3.39

Commercial — — 1,759 6.18 7,475 4.59 1,688 2.61 10,922 4.54

Non-agency residential — — — — — — 732 10.48 732 10.48

Total mortgage-backed securities — — 1,763 6.17 7,483 4.59 44,342 4.60 53,588 4.65

U.S. Treasury and government agencies 79,257 5.29 86,631 3.39 14,868 2.72 42 3.90 180,798 4.17

Non-U.S. securities 19,138 3.96 6,546 1.82 4,203 5.49 1,197 5.07 31,084 3.76

Other taxable securities 422 6.09 3,995 6.14 377 4.30 116 3.27 4,910 5.93

Tax-exempt securities 1,801 4.53 3,698 3.62 873 3.11 3,932 4.17 10,304 3.94

Total amortized cost of debt securities carried at

fair value $ 100,618 5.03 $ 102,633 3.45 $ 27,804 3.68 $ 49,629 4.57 $ 280,684 4.24

Amortized cost of HTM debt securities

Agency mortgage-backed securities $ — — % $ — — % $ 12 2.67 % $ 465,444 2.12 % $ 465,456 2.12 %

U.S. Treasury and government agencies — — 4,563 1.80 117,082 1.38 — — 121,645 1.40

Other taxable securities 58 1.85 1,240 2.57 253 3.28 5,939 2.49 7,490 2.52

Total amortized cost of HTM debt securities $ 58 1.85 $ 5,803 1.96 $ 117,347 1.38 $ 471,383 2.12 $ 594,591 1.97

Debt securities carried at fair value          

Mortgage-backed securities:          

Agency $ —  $ 4  $ 8  $ 37,800  $ 37,812 

Agency-collateralized mortgage obligations —  —  —  2,544  2,544 

Commercial 1  1,720  7,260  1,465  10,446 

Non-agency residential —  2  —  660  662 

Total mortgage-backed securities 1 1,726 7,268 42,469 51,464

U.S. Treasury and government agencies 79,268 85,674 14,374 40 179,356

Non-U.S. securities 19,138  6,554  4,204  1,198  31,094 

Other taxable securities 419  3,966  346  107  4,838 

Tax-exempt securities 1,797  3,687  855  3,761  10,100 

Total debt securities carried at fair value $ 100,623  $ 101,607  $ 27,047  $ 47,575  $ 276,852 

Fair value of HTM debt securities

Agency mortgage-backed securities $ — $ — $ 11 $ 386,515 $ 386,526

U.S. Treasury and government agencies — 4,279 99,403 — 103,682

Other taxable securities 57 1,177 194 4,961 6,389

Total fair value of HTM debt securities $ 57 $ 5,456 $ 99,608 $ 391,476 $ 496,597

(1)

The weighted-average yield is computed based on a constant effective yield over the contractual life of each security. The yield considers the contractual coupon and the amortization of premiums

and accretion of discounts, excluding the effect of related hedging derivatives.

113 Bank of America

NOTE 5 Outstanding Loans and Leases and Allowance for Credit Losses

The following tables present total outstanding loans and leases and an aging analysis for the Consumer Real Estate, Credit Card

and Other Consumer, and Commercial portfolio segments, by class of financing receivables, at December31, 2023 and 2022.

30-59 Days

Past Due

(1)

60-89 Days

Past Due

(1)

90 Days or

Past Due

(1)

Total Past

Due 30 Days

or More

Total

Current or

Less Than

30 Days

Past Due

(1)

Loans

Accounted

for Under

the Fair

Value

Option

Total

Outstandings

(Dollars in millions)

December 31, 2023

Consumer real estate

Residential mortgage

$ 1,177 $ 302 $ 829

$ 2,308

$ 226,095

$ 228,403

Home equity

90 38 161

289 25,238 25,527

Credit card and other consumer

Credit card

680 515 1,224 2,419 99,781 102,200

Direct/Indirect consumer

(2)

306 99 91 496 102,972 103,468

Other consumer —

— — — 124 124

Total consumer

2,253 954 2,305 5,512 454,210 459,722

Consumer loans accounted for under the fair value

option

(3)

$ 243 243

Total consumer loans and leases 2,253 954 2,305 5,512 454,210 243 459,965

Commercial

U.S. commercial

477 96 225 798 358,133 358,931

Non-U.S. commercial

86 21 64 171 124,410 124,581

Commercial real estate

(4)

247 133 505 885 71,993 72,878

Commercial lease financing

44 8 24 76 14,778 14,854

U.S. small business commercial

(5)

166 89 184 439 18,758 19,197

Total commercial

1,020 347 1,002 2,369 588,072 590,441

Commercial loans accounted for under the fair value

option

(3)

3,326 3,326

Total commercial loans and leases 1,020 347 1,002 2,369 588,072 3,326 593,767

Total loans and leases

(6)

$ 3,273 $ 1,301 $ 3,307 $ 7,881 $ 1,042,282 $ 3,569 $ 1,053,732

Percentage of outstandings 0.31 % 0.12 % 0.32 % 0.75 % 98.91 % 0.34 % 100.00 %

(1)

Consumer real estate loans 30-59 days past due includes fully-insured loans of $198 million and nonperforming loans of $150 million. Consumer real estate loans 60-89 days past due includes

fully-insured loans of $77 million and nonperforming loans of $102 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $252 million and nonperforming

loans of $738 million. Consumer real estate loans current or less than 30 days past due includes $1.6 billion, and direct/indirect consumer includes $39 million of nonperforming loans.

(2)

Total outstandings primarily includes auto and specialty lending loans and leases of $53.9 billion, U.S. securities-based lending loans of $46.0 billion and non-U.S. consumer loans of $2.8 billion.

(3)

Consumer loans accounted for under the fair value option includes residential mortgage loans of $66 million and home equity loans of $177 million. Commercial loans accounted for under the

fair value option includes U.S. commercial loans of $2.2 billion and non-U.S. commercial loans of $1.2 billion. For more information, see Note 20 – Fair Value Measurements and Note 21 – Fair

Value Option.

(4)

Total outstandings includes U.S. commercial real estate loans of $66.8 billion and non-U.S. commercial real estate loans of $6.1 billion.

(5)

Includes Paycheck Protection Program loans.

(6)

Total outstandings includes loans and leases pledged as collateral of $33.7 billion. The Corporation also pledged $246.0 billion of loans with no related outstanding borrowings to secure

potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.

Bank of America 114

30-59 Days

Past Due

(1)

60-89 Days

Past Due

(1)

90 Days or

Past Due

(1)

Total Past

Due 30

Days

or More

Total

Current or

Less Than

30 Days

Past Due

(1)

Loans

Accounted

for Under

the Fair

Value Option

Total

Outstandings

(Dollars in millions)

December 31, 2022

Consumer real estate

Residential mortgage $ 1,077 $ 245 $ 945 $ 2,267 $ 227,403 $ 229,670

Home equity 88 32 211 331 26,232 26,563

Credit card and other consumer

    

Credit card 466 322 717 1,505 91,916  93,421

Direct/Indirect consumer

(2)

204 59 45 308 105,928  106,236

Other consumer — — — — 156  156

Total consumer 1,835 658 1,918 4,411 451,635 456,046

Consumer loans accounted for under the fair value

option

(3)

$ 339 339

Total consumer loans and leases

1,835 658 1,918 4,411 451,635 339 456,385

Commercial

      

U.S. commercial 827 288 330 1,445 357,036  358,481

Non-U.S. commercial 317 59 144 520 123,959  124,479

Commercial real estate

(4)

409 81 77 567 69,199  69,766

Commercial lease financing 49 9 11 69 13,575  13,644

U.S. small business commercial

(5)

107 63 356 526 17,034  17,560

Total commercial 1,709 500 918 3,127 580,803  583,930

Commercial loans accounted for under the fair value

option

(3)

5,432 5,432

Total commercial loans and leases

1,709 500 918 3,127 580,803 5,432 589,362

Total loans and leases

(6)

$ 3,544 $ 1,158 $ 2,836 $ 7,538 $ 1,032,438 $ 5,771 $ 1,045,747

Percentage of outstandings

0.34 % 0.11 % 0.27 % 0.72 % 98.73 % 0.55 % 100.00 %

(1)

Consumer real estate loans 30-59 days past due includes fully-insured loans of $184 million and nonperforming loans of $155 million. Consumer real estate loans 60-89 days past due includes

fully-insured loans of $75 million and nonperforming loans of $88 million. Consumer real estate loans 90 days or more past due includes fully-insured loans of $368 million and nonperforming

loans of $788 million. Consumer real estate loans current or less than 30 days past due includes $1.6 billion, and direct/indirect consumer includes $27 million of nonperforming loans.

(2)

Total outstandings primarily includes auto and specialty lending loans and leases of $51.8 billion, U.S. securities-based lending loans of $50.4 billion and non-U.S. consumer loans of $3.0 billion.

(3)

Consumer loans accounted for under the fair value option includes residential mortgage loans of $71 million and home equity loans of $268 million. Commercial loans accounted for under the

fair value option includes U.S. commercial loans of $2.9 billion and non-U.S. commercial loans of $2.5 billion. For more information, see Note 20 – Fair Value Measurements and Note 21 – Fair

Value Option.

(4)

Total outstandings includes U.S. commercial real estate loans of $64.9 billion and non-U.S. commercial real estate loans of $4.8 billion.

(5)

Includes Paycheck Protection Program loans.

(6)

Total outstandings includes loans and leases pledged as collateral of $18.5 billion. The Corporation also pledged $163.6 billion of loans with no related outstanding borrowings to secure

potential borrowing capacity with the Federal Reserve Bank and Federal Home Loan Bank.

The Corporation has entered into long-term credit protection

agreements with FNMA and FHLMC on loans totaling $8.7 billion

and $9.5 billion at December31, 2023 and 2022, providing full

credit protection on residential mortgage loans that become

severely delinquent. All of these loans are individually insured,

and therefore the Corporation does not record an allowance for

credit losses related to these loans.

Nonperforming Loans and Leases

Commercial nonperforming loans increased to $2.8 billion at

December31, 2023 from $1.1 billion at December 31, 2022,

driven by the commercial real estate property type. Consumer

nonperforming loans remained relatively unchanged at $2.7

billion at December31, 2023.

The following table presents the Corporation’s nonperforming

loans and leases and loans accruing past due 90days or more

at December 31, 2023 and 2022. Nonperforming LHFS are

excluded from nonperforming loans and leases as they are

recorded at either fair value or the lower of cost or fair value. For

more information on the criteria for classification as

nonperforming, see Note 1 – Summary of Significant Accounting

Principles.

115 Bank of America

Credit Quality

Nonperforming Loans

and Leases

Accruing Past Due

90 Days or More

December 31

(Dollars in millions)

2023

2022

2023

2022

Residential mortgage

(1)

$ 2,114

$ 2,167

$ 252

$ 368

With no related allowance

(2)

1,974

1,973

—

Home equity

(1)

450

510

—

With no related allowance

(2)

375

393

—

Credit Card

n/a

1,224

717

Direct/indirect consumer

148

Total consumer 2,712

2,754

1,478

1,087

U.S. commercial

636

553

190

Non-U.S. commercial

175

212

Commercial real estate

1,927

271

Commercial lease financing

U.S. small business commercial

184

355

Total commercial 2,773

1,054

278

624

Total nonperforming loans $ 5,485

$ 3,808

$ 1,756

$ 1,711

Percentage of outstanding loans and leases 0.52 %

0.37 %

0.17 %

0.16 %

(1)

Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At December31, 2023 and 2022 residential mortgage included $156 million and $260 million of loans on

which interest had been curtailed by the FHA, and therefore were no longer accruing interest, although principal was still insured, and $96 million and $108 million of loans on which interest was

still accruing.

(2)

Primarily relates to loans for which the estimated fair value of the underlying collateral less any costs to sell is greater than the amortized cost of the loans as of the reporting date.

n/a = not applicable

Credit Quality Indicators

The Corporation monitors credit quality within its Consumer Real

Estate, Credit Card and Other Consumer, and Commercial

portfolio segments based on primary credit quality indicators.

For more information on the portfolio segments, see Note 1 –

Summary of Significant Accounting Principles. Within the

Consumer Real Estate portfolio segment, the primary credit

quality indicators are refreshed LTV and refreshed Fair Isaac

Corporation (FICO) score. Refreshed LTV measures the carrying

value of the loan as a percentage of the value of the property

securing the loan, refreshed quarterly. Home equity loans are

evaluated using CLTV, which measures the carrying value of the

Corporation’s loan and available line of credit combined with any

outstanding senior liens against the property as a percentage of

the value of the property securing the loan, refreshed quarterly.

FICO score measures the creditworthiness of the borrower

based on the financial obligations of the borrower and the

borrower’s credit history. FICO scores are typically refreshed

quarterly or more frequently. Certain borrowers (e.g., borrowers

that have had debts discharged in a bankruptcy proceeding) may

not have their FICO scores updated. FICO scores are also a

primary credit quality indicator for the Credit Card and Other

Consumer portfolio segment and the business card portfolio

within U.S. small business commercial. Within the Commercial

portfolio segment, loans are evaluated using the internal

classifications of pass rated or reservable criticized as the

primary credit quality indicators. The term reservable criticized

refers to those commercial loans that are internally classified or

listed by the Corporation as Special Mention, Substandard or

Doubtful, which are asset quality categories defined by

regulatory authorities. These assets have an elevated level of

risk and may have a high probability of default or total loss.

Pass rated refers to all loans not considered reservable

criticized. In addition to these primary credit quality indicators,

the Corporation uses other credit quality indicators for certain

types of loans.

The following tables present certain credit quality indicators

and gross charge-offs for the Corporation's Consumer Real

Estate, Credit Card and Other Consumer, and Commercial

portfolio segments by year of origination, except for revolving

loans and revolving loans that were modified into term loans,

which are shown on an aggregate basis at December31, 2023.

Bank of America 116

Residential Mortgage – Credit Quality Indicators By Vintage

Term Loans by Origination Year

(Dollars in millions)

Total as of

December 31,

2023

2023 2022 2021 2020 2019 Prior

Residential Mortgage

Refreshed LTV

Less than or equal to 90percent

$ 214,661

$ 15,224 $ 38,225 $ 76,229 $ 35,072 $ 17,432 $ 32,479

Greater than 90percent but less than or equal to 100

percent

1,994

698 911 286 53 25 21

Greater than 100percent

785

264 342 100 31 14 34

Fully-insured loans

10,963

540 350 3,415 2,834 847 2,977

Total Residential Mortgage $ 228,403

$ 16,726 $ 39,828 $ 80,030 $ 37,990 $ 18,318 $ 35,511

Residential Mortgage

Refreshed FICO score

Less than 620

$ 2,335

$ 115 $ 471 $ 589 $ 402 $ 136 $ 622

Greater than or equal to 620 and less than 680

4,671

359 919 1,235 777 296 1,085

Greater than or equal to 680 and less than 740

23,357

1,934 4,652 6,988 3,742 1,836 4,205

Greater than or equal to 740

187,077

13,778 33,436 67,803 30,235 15,203 26,622

Fully-insured loans

10,963

540 350 3,415 2,834 847 2,977

Total Residential Mortgage $ 228,403

$ 16,726 $ 39,828 $ 80,030 $ 37,990 $ 18,318 $ 35,511

Gross charge-offs for the year ended December 31, 2023 $ 67

$ — $ 7 $ 12 $ 6 $ 2 $ 40

Home Equity - Credit Quality Indicators

Total

Home Equity Loans

and Reverse

Mortgages

(1)

Revolving Loans

Converted to Term

Loans

(Dollars in millions)

December 31, 2023

Home Equity

Refreshed LTV

Less than or equal to 90percent

$ 25,378 $ 1,051 $ 20,380 $ 3,947

Greater than 90percent but less than or equal to 100 percent

61 17 35 9

Greater than 100percent

88 35 36 17

Total Home Equity $ 25,527 $ 1,103 $ 20,451 $ 3,973

Home Equity

Refreshed FICO score

Less than 620

$ 654 $ 123 $ 253 $ 278

Greater than or equal to 620 and less than 680

1,107 118 589 400

Greater than or equal to 680 and less than 740

4,340 240 3,156 944

Greater than or equal to 740

19,426 622 16,453 2,351

Total Home Equity $ 25,527 $ 1,103 $ 20,451 $ 3,973

Gross charge-offs for the year ended December 31, 2023 $ 36 $ 4 $ 21 $ 11

(1)

Includes reverse mortgages of $763 million and home equity loans of $340 million, which are no longer originated.

Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage

Direct/Indirect

Term Loans by Origination Year Credit Card

(Dollars in millions)

Total Direct/

Indirect as of

December 31,

2023

Revolving

Loans 2023 2022 2021 2020 2019 Prior

Total Credit

Card as of

December 31,

2023

Revolving

Loans

Revolving

Loans

Converted

to Term

Loans

(1)

Refreshed FICO score

 

Less than 620

$ 1,246

$ 11 $ 292 $ 428 $ 336 $ 85 $ 55 $ 39

$ 5,338

$ 5,030 $ 308

Greater than or equal to 620 and

less than 680

2,506

11 937 799 501 121 73 64

11,623

11,345 278

Greater than or equal to 680 and

less than 740

8,629

48 3,451 2,582 1,641 462 244 201

34,777

34,538 239

Greater than or equal to 740

41,656

74 16,761 11,802 7,643 2,707 1,417 1,252

50,462

50,410 52

Other internal credit

metrics

(2,3)

49,431

48,764 106 183 110 53 57 158

—

— —

Total credit card and other

consumer $ 103,468

$ 48,908 $ 21,547 $ 15,794 $ 10,231 $ 3,428 $ 1,846 $ 1,714

$ 102,200

$ 101,323 $ 877

Gross charge-offs for the year

ended December 31, 2023 $ 233

$ 5 $ 32 $ 95 $ 53 $ 15 $ 10 $ 23

$ 3,133

$ 3,013 $ 120

(1)

Represents loans that were modified into term loans.

(2)

Other internal credit metrics may include delinquency status, geography or other factors.

(3)

Direct/indirect consumer includes $48.8 billion of securities-based lending, which is typically supported by highly liquid collateral with market value greater than or equal to the outstanding loan

balance and therefore has minimal credit risk at December31, 2023.

117 Bank of America

Commercial – Credit Quality Indicators By Vintage

(1)

Term Loans

Amortized Cost Basis by Origination Year

(Dollars in millions)

Total as of

December 31,

2023

2023 2022 2021 2020 2019 Prior

Revolving

Loans

U.S. Commercial

Risk ratings

   

Pass rated

$ 347,563

$ 41,842 $ 43,290 $ 27,738 $ 13,495 $ 11,772 $ 29,923 $ 179,503

Reservable criticized

11,368

278 1,316 708 363 537 1,342 6,824

Total U.S. Commercial $ 358,931

$ 42,120 $ 44,606 $ 28,446 $ 13,858 $ 12,309 $ 31,265 $ 186,327

Gross charge-offs for the year ended

December 31, 2023

$ 191

$ 5 $ 38 $ 29 $ 4 $ 2 $ 27 $ 86

Non-U.S. Commercial

Risk ratings

Pass rated

$ 122,931

$ 17,053 $ 15,810 $ 15,256 $ 2,405 $ 2,950 $ 5,485 $ 63,972

Reservable criticized

1,650

50 184 294 90 158 74 800

Total Non-U.S. Commercial $ 124,581

$ 17,103 $ 15,994 $ 15,550 $ 2,495 $ 3,108 $ 5,559 $ 64,772

Gross charge-offs for the year ended

December 31, 2023

$ 37

$ — $ — $ 8 $ 7 $ 1 $ — $ 21

Commercial Real Estate

Risk ratings

Pass rated

$ 64,150

$ 4,877 $ 16,147 $ 11,810 $ 4,026 $ 7,286 $ 10,127 $ 9,877

Reservable criticized

8,728

134 749 1,728 782 2,132 2,794 409

Total Commercial Real Estate $ 72,878

$ 5,011 $ 16,896 $ 13,538 $ 4,808 $ 9,418 $ 12,921 $ 10,286

Gross charge-offs for the year ended

December 31, 2023

$ 254

$ 2 $ — $ 4 $ — $ 59 $ 189 $ —

Commercial Lease Financing

Risk ratings

Pass rated

$ 14,688

$ 4,188 $ 3,077 $ 2,373 $ 1,349 $ 1,174 $ 2,527 $ —

Reservable criticized

166

9 22 46 16 32 41 —

Total Commercial Lease Financing $ 14,854

$ 4,197 $ 3,099 $ 2,419 $ 1,365 $ 1,206 $ 2,568 $ —

Gross charge-offs for the year ended

December 31, 2023

$ 2

$ — $ — $ 1 $ 1 $ — $ — $ —

U.S. Small Business Commercial

(2)

Risk ratings

Pass rated

$ 9,031

$ 1,886 $ 1,830 $ 1,550 $ 836 $ 721 $ 1,780 $ 428

Reservable criticized

384

6 64 95 40 63 113 3

Total U.S. Small Business Commercial $ 9,415

$ 1,892 $ 1,894 $ 1,645 $ 876 $ 784 $ 1,893 $ 431

Gross charge-offs for the year ended

December 31, 2023

$ 43

$ 1 $ 2 $ 2 $ 19 $ 3 $ 4 $ 12

Total $ 580,659

$ 70,323 $ 82,489 $ 61,598 $ 23,402 $ 26,825 $ 54,206 $ 261,816

Gross charge-offs for the year ended

December 31, 2023

$ 527

$ 8 $ 40 $ 44 $ 31 $ 65 $ 220 $ 119

(1)

Excludes $3.3billion of loans accounted for under the fair value option at December31, 2023.

(2)

Excludes U.S. Small Business Card loans of $9.8 billion. Refreshed FICO scores for this portfolio are $530 million for less than 620; $1.1 billion for greater than or equal to 620 and less than

680; $2.7 billion for greater than or equal to 680 and less than 740; and $5.5 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $317million.

Bank of America 118

The following tables present certain credit quality indicators for the Corporation's Consumer Real Estate, Credit Card and Other

Consumer, and Commercial portfolio segments by year of origination, except for revolving loans and revolving loans that were

modified into term loans, which are shown on an aggregate basis at December31, 2022.

Residential Mortgage – Credit Quality Indicators By Vintage

Term Loans by Origination Year

(Dollars in millions)

Total as of

December 31,

2022

2022 2021 2020 2019 2018 Prior

Residential Mortgage

Refreshed LTV

Less than or equal to 90percent $ 215,713 $ 39,625 $ 81,437 $ 37,228 $ 18,980 $ 5,734 $ 32,709

Greater than 90percent but less than or equal to 100

percent 1,615 950 530 93 15 8 19

Greater than 100percent 648 374 169 43 15 8 39

Fully-insured loans 11,694 580 3,667 3,102 949 156 3,240

Total Residential Mortgage

$ 229,670 $ 41,529 $ 85,803 $ 40,466 $ 19,959 $ 5,906 $ 36,007

Residential Mortgage

Refreshed FICO score

Less than 620 $ 2,156 $ 377 $ 518 $ 373 $ 124 $ 84 $ 680

Greater than or equal to 620 and less than 680 4,978 1,011 1,382 840 329 233 1,183

Greater than or equal to 680 and less than 740 25,444 5,411 8,290 4,369 2,187 830 4,357

Greater than or equal to 740 185,398 34,150 71,946 31,782 16,370 4,603 26,547

Fully-insured loans 11,694 580 3,667 3,102 949 156 3,240

Total Residential Mortgage

$ 229,670 $ 41,529 $ 85,803 $ 40,466 $ 19,959 $ 5,906 $ 36,007

Gross charge-offs for the year ended December 31, 2022

$ 161 $ — $ 6 $ 5 $ 6 $ 1 $ 143

Home Equity - Credit Quality Indicators

Total

Home Equity

Loans and

Reverse

Mortgages

(1)

Revolving

Loans

Revolving

Loans

Converted to

Term Loans

(Dollars in millions)

December 31, 2022

Home Equity

Refreshed LTV

Less than or equal to 90percent $ 26,395 $ 1,304 $ 19,960 $ 5,131

Greater than 90percent but less than or equal to 100 percent 62 20 24 18

Greater than 100percent 106 37 35 34

Total Home Equity

$ 26,563 $ 1,361 $ 20,019 $ 5,183

Home Equity

Refreshed FICO score

Less than 620 $ 683 $ 166 $ 189 $ 328

Greater than or equal to 620 and less than 680 1,190 152 507 531

Greater than or equal to 680 and less than 740 4,321 312 2,747 1,262

Greater than or equal to 740 20,369 731 16,576 3,062

Total Home Equity

$ 26,563 $ 1,361 $ 20,019 $ 5,183

Gross charge-offs for the year ended December 31, 2022

$ 45 $ 5 $ 24 $ 16

(1)

Includes reverse mortgages of $937 million and home equity loans of $424 million, which are no longer originated.

119 Bank of America

Credit Card and Direct/Indirect Consumer – Credit Quality Indicators By Vintage

Direct/Indirect

Term Loans by Origination Year Credit Card

(Dollars in millions)

Total Direct/

Indirect as of

December 31,

2022

Revolving

Loans 2022 2021 2020 2019 2018 Prior

Total Credit

Card as of

December 31,

2022

Revolving

Loans

Revolving

Loans

Converted

to Term

Loans

(1)

Refreshed FICO score

Less than 620 $ 847 $ 12 $ 237 $ 301 $ 113 $ 84 $ 43 $ 57 $ 4,056 $ 3,866 $ 190

Greater than or equal to 620

and less than 680 2,521 12 1,108 816 269 150 69 97 10,994 10,805 189

Greater than or equal to 680

and less than 740 8,895 52 4,091 2,730 992 520 214 296 32,186 32,017 169

Greater than or equal to 740 39,679 83 16,663 11,392 5,630 2,992 1,236 1,683 46,185 46,142 43

Other internal credit

metrics

(2, 3)

54,294 53,404 259 305 70 57 40 159 — — —

Total credit card and other

consumer

$ 106,236 $ 53,563 $ 22,358 $ 15,544 $ 7,074 $ 3,803 $ 1,602 $ 2,292 $ 93,421 $ 92,830 $ 591

Gross charge-offs for the year

ended December 31, 2022

$ 232 $ 7 $ 31 $ 79 $ 34 $ 27 $ 14 $ 40 $ 1,985 $ 1,909 $ 76

(1)

Represents TDRs that were modified into term loans.

(2)

Other internal credit metrics may include delinquency status, geography or other factors.

(3)

Direct/indirect consumer includes $53.4 billion of securities-based lending, which is typically supported by highly liquid collateral with market value greater than or equal to the outstanding loan

balance and therefore has minimal credit risk at December31, 2022.

Commercial – Credit Quality Indicators By Vintage

(1)

Term Loans

Amortized Cost Basis by Origination Year

(Dollars in millions)

Total as of

December 31,

2022

2022 2021 2020 2019 2018 Prior

Revolving

Loans

U.S. Commercial

Risk ratings    

Pass rated $ 348,447 $ 61,200 $ 39,717 $ 18,609 $ 16,566 $ 8,749 $ 30,282 $ 173,324

Reservable criticized 10,034 278 794 697 884 1,202 856 5,323

Total U.S. Commercial

$ 358,481 $ 61,478 $ 40,511 $ 19,306 $ 17,450 $ 9,951 $ 31,138 $ 178,647

Gross charge-offs for the year ended

December 31, 2022

$ 151 $ 2 $ 24 $ 24 $ 9 $ 6 $ 13 $ 73

Non-U.S. Commercial

Risk ratings

Pass rated $ 121,890 $ 24,839 $ 19,098 $ 5,183 $ 3,882 $ 2,423 $ 4,697 $ 61,768

Reservable criticized 2,589 45 395 331 325 98 475 920

Total Non-U.S. Commercial

$ 124,479 $ 24,884 $ 19,493 $ 5,514 $ 4,207 $ 2,521 $ 5,172 $ 62,688

Gross charge-offs for the year ended

December 31, 2022

$ 41 $ — $ 3 $ 1 $ — $ 37 $ — $ —

Commercial Real Estate

Risk ratings

Pass rated $ 64,619 $ 15,290 $ 13,089 $ 5,756 $ 9,013 $ 4,384 $ 8,606 $ 8,481

Reservable criticized 5,147 11 837 545 1,501 1,151 1,017 85

Total Commercial Real Estate

$ 69,766 $ 15,301 $ 13,926 $ 6,301 $ 10,514 $ 5,535 $ 9,623 $ 8,566

Gross charge-offs for the year ended

December 31, 2022

$ 75 $ — $ — $ 6 $ — $ 26 $ 43 $ —

Commercial Lease Financing

Risk ratings

Pass rated $ 13,404 $ 3,255 $ 2,757 $ 1,955 $ 1,578 $ 1,301 $ 2,558 $ —

Reservable criticized 240 9 35 12 71 50 63 —

Total Commercial Lease Financing

$ 13,644 $ 3,264 $ 2,792 $ 1,967 $ 1,649 $ 1,351 $ 2,621 $ —

Gross charge-offs for the year ended

December 31, 2022

$ 8 $ — $ 4 $ — $ 4 $ — $ — $ —

U.S. Small Business Commercial

(2)

Risk ratings

Pass rated $ 8,726 $ 1,825 $ 1,953 $ 1,408 $ 864 $ 624 $ 1,925 $ 127

Reservable criticized 329 11 35 48 76 51 105 3

Total U.S. Small Business Commercial

$ 9,055 $ 1,836 $ 1,988 $ 1,456 $ 940 $ 675 $ 2,030 $ 130

Gross charge-offs for the year ended

December 31, 2022

$ 31 $ — $ 1 $ 11 $ 4 $ 1 $ 6 $ 8

Total

$ 575,425 $ 106,763 $ 78,710 $ 34,544 $ 34,760 $ 20,033 $ 50,584 $ 250,031

Gross charge-offs for the year ended

December 31, 2022

$ 306 $ 2 $ 32 $ 42 $ 17 $ 70 $ 62 $ 81

(1)

Excludes $5.4 billion of loans accounted for under the fair value option at December31, 2022.

(2)

Excludes U.S. Small Business Card loans of $8.5 billion. Refreshed FICO scores for this portfolio are $297 million for less than 620; $859 million for greater than or equal to 620 and less than

680; $2.4 billion for greater than or equal to 680 and less than 740; and $5.0 billion greater than or equal to 740. Excludes U.S. Small Business Card loans gross charge-offs of $172million.

Bank of America 120

During 2023, commercial reservable criticized utilized

exposure increased to $23.3 billion at December31, 2023 from

$19.3 billion (to 3.74 percent from 3.12 percent of total

commercial reservable utilized exposure) at December 31,

2022, primarily driven by commercial real estate and U.S.

commercial.

Loan Modifications to Borrowers in Financial

Difficulty

As part of its credit risk management, the Corporation may

modify a loan agreement with a borrower experiencing financial

difficulties through a refinancing or restructuring of the

borrower’s loan agreement (modification programs).

The Corporation uses various indicators to identify borrowers

in financial difficulty. Generally, consumer loan borrowers that

are delinquent and commercial loan borrowers that are currently

nonperforming or are more-likely-than-not to become

nonperforming in the next six months at the modification date

are the primary criteria used to identify borrowers who are

experiencing financial difficulty.

If a borrower is experiencing financial difficulty and their loan

is modified, and they are current at the time of modification, the

loan generally remains a performing loan as long as there is

demonstrated performance prior to the modification and

payment in full under the modified terms is expected.

Otherwise, the loan is placed on nonaccrual status and reported

as nonperforming, excluding fully-insured consumer real estate

loans, until there is sustained repayment performance for a

reasonable period.

Modifications that do not impact the contractual payment

terms, such as covenant waivers, insignificant payment

deferrals, and any modifications made to loans carried at fair

value, LHFS and leases are not included in the disclosures.

Consumer Real Estate

The following modification programs are offered for consumer

real estate loans to borrowers experiencing financial difficulties.

These modifications represented 0.26 percent and 0.34 percent

of outstanding residential mortgage and home equity loans at

December31, 2023.

Forbearance and Other Payment Plans: Forbearance plans

generally consist of the Corporation suspending the borrower’s

payments for a defined period with those payments then due at

the conclusion of the forbearance period. The aging status of a

loan is generally frozen when it enters into a forbearance plan.

Alternatively, the Corporation may offer the borrower a payment

plan, which allows the borrower to repay past due amounts

through payments over a defined period. At December 31,

2023, the amortized cost of residential mortgage loans that

were modified through these plans was $429 million. The

amortized cost of home equity loans that were modified through

these plans during the same periods was $57 million. The

weighted-average duration of residential mortgage loan

modifications was approximately 8 months for 2023. The

weighted-average duration for home equity loan modifications

was approximately 9 months. The total forborne payments for

residential mortgage loan modifications was $19 million for

2023. For the same period, the total forborne payments for

home equity modifications was $6 million. If a borrower is

unable to fulfill their obligations under the forbearance plans,

they may be offered a trial or permanent modification.

Trial Modifications: Trial modification plans generally consist of

the Corporation offering a borrower modified loan terms that

reduce their contractual payments temporarily over a three-to-

four-month trial period. If the customer successfully makes the

modified payments during the trial period and formally accepts

the modified terms, the modified loan terms become

permanent. At December 31, 2023, the amortized cost of

residential mortgage loans entering trial modifications was

$116 million. The amortized cost of home equity loans entering

trial modifications during the same period was $34 million.

Permanent Modifications: Permanent modifications include

borrowers that have completed a trial modification and have had

their contractual payment terms permanently modified, as well

as borrowers that proceed directly to a permanent modification

without a trial period. In a permanent modification, the

borrower’s payment terms are typically modified in more than

one manner but generally include a term extension and an

interest rate reduction. At times, the permanent modification

may also include principal forgiveness and/or a deferral of past

due principal and interest amounts to the end of the loan term.

The combinations utilized are based on modifying the terms that

give the borrower an improved ability to meet the contractual

obligations. At December 31, 2023, the amortized cost of

residential mortgage loans that were granted a permanent

modification was $154 million. The amortized cost of home

equity loans that were granted a permanent modification was

$31 million. The term extensions granted for residential

mortgage and home equity permanent modifications vary widely

and can be up to 30 years, but are mostly in the range of 1 to

20 years for both residential mortgage and home equity loans.

The weighted-average term extension of permanent

modifications for residential mortgage loans was 9.9 years for

2023, while the weighted-average interest rate reduction was

1.41 percent. For the same period, the weighted-average term

extension of permanent modifications for home equity loans

was 17.7 years, while the weighted-average interest rate

reduction was 2.74 percent. Principal forgiveness and payment

deferrals were insignificant during 2023.

For consumer real estate borrowers in financial difficulty that

received a forbearance, trial or permanent modification, there

were no commitments to lend additional funds at December31,

2023. Borrowers with a home equity line of credit that received

a forbearance plan could have all or a portion of their lines

reinstated in the future if they cure their payment default and

meet certain Bank conditions.

Chapter 7 Discharges: If a borrower’s consumer real estate

obligation is discharged in a Chapter 7 bankruptcy proceeding,

the contractual payment terms of the loan are not modified,

although they can no longer be enforced against the individual

borrower. The Corporation’s ability to collect amounts due on

the loan is limited to enforcement against the property through

the foreclosure and sale of the collateral. The Corporation will

only pursue foreclosure upon default by the borrower, and

otherwise will recover pursuant to the loan terms or at the time

of a sale. Residential mortgage and home equity loans that

were granted a Chapter 7 discharge were insignificant for 2023.

The Corporation tracks the performance of modified loans to

assess effectiveness of modification programs. Defaults of

modified residential mortgage and home equity loans since

January 1, 2023 totaled $287 million during 2023. The

following table provides aging information as of December 31,

2023 for consumer real estate loans modified since January 1,

2023.

121 Bank of America

Consumer Real Estate - Payment Status of Modifications to Borrowers in Financial Difficulty

(1)

Current

30–89 Days

Past Due

90+ Days

Past Due Total

(Dollars in millions)

December 31, 2023

Residential mortgage

$ 334 $ 101 $ 148 $ 583

Home equity

58 5 25 88

Total $ 392 $ 106 $ 173 $ 671

(1)

Excludes trial modifications and Chapter 7 discharges

Consumer real estate foreclosed properties totaled $83

million and $121 million at December31, 2023 and 2022. The

carrying value of consumer real estate loans, including fully-

insured loans, for which formal foreclosure proceedings were in

process at December 31, 2023 and 2022 was $633 million

and $871 million. During 2023 and 2022, the Corporation

reclassified $106 million and $190 million of consumer real

estate loans to foreclosed properties or, for properties acquired

upon foreclosure of certain government-guaranteed loans

(principally FHA-insured loans), to other assets. The

reclassifications represent non-cash investing activities and,

accordingly, are not reflected in the Consolidated Statement of

Cash Flows.

Credit Card and Other Consumer

Credit card and other consumer loans are primarily modified by

placing the customer on a fixed payment plan with a significantly

reduced fixed interest rate, with terms ranging from 6 months to

72 months. As of December 31, 2023, substantially all

payment plans provided to customers had a 60-month term. In

certain circumstances, the Corporation will forgive a portion of

the outstanding balance if the borrower makes payments up to

a set amount. The Corporation makes modifications directly with

borrowers for loans held by the Corporation (internal programs)

as well as through third-party renegotiation agencies that

provide solutions to customers’ entire unsecured debt

structures (external programs). The December 31, 2023

amortized cost of credit card and other consumer loans that

were modified through these programs during 2023 was $598

million. The weighted-average interest rate reduction for the

modifications was 19.02 percent, and principal forgiveness was

$61million during 2023.

The Corporation tracks the performance of modified loans to

assess effectiveness of modification programs. During 2023,

defaults of modified credit card and other consumer loans since

January 1, 2023 were insignificant. Of the $598 million in

modified credit card and other consumer loans to borrowers

experiencing financial difficulty as of December 31, 2023,

$491 million were current, $59 million were 30-89 days past

due, and $48 million were greater than 90 days past due.

These modifications represented 0.29 percent of outstanding

credit card and other consumer loans at December31, 2023.

Commercial Loans

Modifications of loans to commercial borrowers experiencing

financial difficulty are designed to reduce the Corporation’s loss

exposure while providing borrowers with an opportunity to work

through financial difficulties, often to avoid foreclosure or

bankruptcy. Each modification is unique, reflects the borrower’s

individual circumstances and is designed to benefit the borrower

while mitigating the Corporation’s risk exposure. Commercial

modifications are primarily term extensions and payment

forbearances. Payment forbearances involve the Bank forbearing

its contractual right to collect certain payments or payment in

full (maturity forbearance) for a defined period of time.

Reductions in interest rates and principal forgiveness occur

infrequently for commercial borrowers. Principal forgiveness may

occur in connection with foreclosure, short sales or other

settlement agreements, leading to termination or sale of the

loan. The table below provides the ending amortized cost of

commercial loans modified during 2023.

Commercial Loans - Modifications to Borrowers in Financial Difficulty

Term Extension Forbearances

Interest Rate

Reduction Total

(Dollars in Millions)

Year ended December 31, 2023

U.S. commercial

$ 1,016 $ 30 $ — $ 1,046

Non-U.S. commercial

136 — 24 $ 160

Commercial real estate

1,656 416 — $ 2,072

Total $ 2,808 $ 446 $ 24 $ 3,278

Term extensions granted increased the weighted-average life

of the impacted loans by 1.6 years during 2023. The deferral

period for loan payments can vary, but are mostly in the range of

8 months to 24 months. The weighted-average interest rate

reduction was 0.57 percent in 2023. Modifications of loans to

troubled borrowers for Commercial Lease Financing and U.S.

Small Business Commercial were not significant during 2023.

The Corporation tracks the performance of modified loans to

assess effectiveness of modification programs. Defaults of

Commercial loans modified in 2023 were $159 million. The

following table provides aging information as of December 31,

2023 for commercial loans modified in 2023.

Bank of America 122

Commercial - Payment Status of Modified Loans to Borrowers in Financial Difficulty

Current

30–89 Days

Past Due

90+ Days

Past Due Total

% of Total Class of

Financing

Receivable

(Dollars in millions)

December 31, 2023

U.S. Commercial

$ 1,015 $ 3 $ 28 $ 1,046 0.29 %

Non-U.S. Commercial

157 3 — 160 0.13

Commercial Real Estate

1,608 122 342 2,072 2.84

Total $ 2,780 $ 128 $ 370 $ 3,278 0.59

For 2023, the Corporation had commitments to lend

$1.2 billion to commercial borrowers experiencing financial

difficulty whose loans were modified during the period.

Prior-period Troubled Debt Restructuring Disclosures

Prior to adopting the new accounting standard on loan

modifications, the Corporation accounted for modifications of

loans to borrowers experiencing financial difficulty as TDRs,

when the modification resulted in a concession. The following

discussion reflects loans that were considered TDRs prior to

January 1, 2023. For more information on TDR accounting

policies, see Note 1 – Summary of Significant Accounting

Principles.

Consumer Real Estate

The table below presents the December 31, 2022 unpaid

principal balance, carrying value, and average pre- and post-

modification interest rates of consumer real estate loans that

were modified in TDRs during 2022 and 2021. The following

Consumer Real Estate portfolio segment tables include loans

that were initially classified as TDRs during the period and also

loans that had previously been classified as TDRs and were

modified again during the period. Binding trial modifications are

classified as TDRs when the trial offer is made and continue to

be classified as TDRs regardless of whether the borrower enters

into a permanent modification.

At December 31, 2022, remaining commitments to lend

additional funds to debtors whose terms have been modified in

a consumer real estate TDR were not significant.

Consumer Real Estate – TDRs Entered into During 2022 and 2021

Unpaid

Principal

Balance

Carrying

Value

Pre-

Modification

Interest Rate

Post-

Modification

Interest Rate

(1)

(Dollars in millions)

December 31, 2022

Residential mortgage $ 1,144 $ 1,015 3.52 % 3.40 %

Home equity 238 191 4.61 4.65

Total

$ 1,382 $ 1,206 3.71 3.62

December 31, 2021

Residential mortgage $ 891 $ 788 3.48 % 3.38 %

Home equity 107 77 3.60 3.59

Total

$ 998 $ 865 3.49 3.41

(1)

The post-modification interest rate reflects the interest rate applicable only to permanently completed modifications, which exclude loans that are in a trial modification period.

The table below presents the December31, 2022 and 2021 carrying value for consumer real estate loans that were modified in

a TDR during 2022 and 2021, by type of modification.

Consumer Real Estate – Modification Programs

TDRs Entered into During

(Dollars in millions)

2022 2021

Modifications under government programs $ 2 $ 4

Modifications under proprietary programs 1,100 774

Loans discharged in Chapter 7 bankruptcy

(1)

14 33

Trial modifications 90 54

Total modifications

$ 1,206 $ 865

(1)

Includes loans discharged in Chapter 7 bankruptcy with no change in repayment terms that are classified as TDRs.

The table below presents the carrying value of consumer real estate loans that entered into payment default during 2022 and

2021 that were modified in a TDR during the 12 months preceding payment default. A payment default for consumer real estate

TDRs is recognized when a borrower has missed three monthly payments (not necessarily consecutively) since modification.

Consumer Real Estate – TDRs Entering Payment Default that were Modified During the Preceding 12 Months

(Dollars in millions)

2022 2021

Modifications under government programs $ — $ 4

Modifications under proprietary programs 189 128

Loans discharged in Chapter 7 bankruptcy

(1)

2 9

Trial modifications

(2)

25 19

Total modifications

$ 216 $ 160

(1)

Includes loans discharged in Chapter 7 bankruptcy with no change in repayment terms that are classified as TDRs.

(2)

Includes trial modification offers to which the customer did not respond.

123 Bank of America

Credit Card and Other Consumer

The table below provides information on the Corporation’s Credit Card and Other Consumer TDR portfolio including December31,

2022 and 2021 unpaid principal balance, carrying value, and average pre- and post-modification interest rates of loans that were

modified in TDRs during 2022 and 2021.

Credit Card and Other Consumer – TDRs Entered into During 2022 and 2021

Unpaid

Principal

Balance

Carrying

Value

(1)

Pre-

Modification

Interest Rate

Post-

Modification

Interest Rate

(Dollars in millions)

December 31, 2022

Credit card $ 284 $ 293 22.34 % 3.89 %

Direct/Indirect consumer 6 5 5.51 5.50

Total

$ 290 $ 298 22.06 3.92

December 31, 2021

Credit card $ 237 $ 248 18.45 % 4.09 %

Direct/Indirect consumer 23 16 5.88 5.88

Total

$ 260 $ 264 17.68 4.20

(1)

Includes accrued interest and fees.

The table below presents the December31, 2022 and 2021 carrying value for Credit Card and Other Consumer loans that were

modified in a TDR during 2022 and 2021 by program type.

Credit Card and Other Consumer – TDRs by Program Type

(1)

(Dollars in millions)

2022 2021

Internal programs $ 251 $ 214

External programs 44 44

Other 3 6

Total

$ 298 $ 264

(1)

Includes accrued interest and fees.

Credit card and other consumer loans are deemed to be in

payment default during the quarter in which a borrower misses

the second of two consecutive payments. Payment defaults are

one of the factors considered when projecting future cash flows

in the calculation of the allowance for loan and lease losses for

credit card and other consumer.

Commercial Loans

During 2022, the carrying value of the Corporation’s commercial

loans that were modified as TDRs was $1.9billion compared to

$1.3 billion in 2021. At December 31, 2022 and 2021, the

Corporation had commitments to lend $358 million and $283

million to commercial borrowers whose loans were classified as

TDRs. The balance of commercial TDRs in payment default was

$105 million and $262 million at December 31, 2022 and

2021.

Loans Held-for-sale

The Corporation had LHFS of $6.0 billion and $6.9 billion at

December 31, 2023 and 2022. Cash and non-cash proceeds

from sales and paydowns of loans originally classified as LHFS

were $16.3 billion, $32.0 billion and $43.6 billion for 2023,

2022 and 2021, respectively. Cash used for originations and

purchases of LHFS totaled $15.6 billion, $24.9 billion and

$37.3 billion for 2023, 2022 and 2021, respectively. Also

included were non-cash net transfers into LHFS of $632million

during 2023, $1.9 billion during 2022, primarily driven by the

transfer of a $1.6 billion affinity card loan portfolio to held for

sale that was sold in October 2022, and $808 million during

2021.

Accrued Interest Receivable

Accrued interest receivable for loans and leases and loans held-

for-sale at December31, 2023 and 2022 was $4.5 billion and

$3.8 billion and is reported in customer and other receivables

on the Consolidated Balance Sheet.

Outstanding credit card loan balances include unpaid

principal, interest and fees. Credit card loans are not classified

as nonperforming but are charged off no later than the end of

the month in which the account becomes 180 days past due,

within 60 days after receipt of notification of death or

bankruptcy, or upon confirmation of fraud. During 2023 and

2022, the Corporation reversed $584 million and $332million

of interest and fee income against the income statement line

item in which it was originally recorded upon charge-off of the

principal balance of the loan.

For the outstanding residential mortgage, home equity,

direct/indirect consumer and commercial loan balances

classified as nonperforming during 2023 and 2022, interest and

fee income reversed at the time the loans were classified as

nonperforming was not significant. For more information on the

Corporation's nonperforming loan policies, see Note 1 –

Summary of Significant Accounting Principles.

Allowance for Credit Losses

The allowance for credit losses is estimated using quantitative

and qualitative methods that consider a variety of factors, such

as historical loss experience, the current credit quality of the

portfolio and an economic outlook over the life of the loan.

Qualitative reserves cover losses that are expected but, in the

Corporation's assessment, may not be adequately reflected in

the quantitative methods or the economic assumptions. The

Corporation incorporates forward-looking information through the

use of several macroeconomic scenarios in determining the

Bank of America 124

weighted economic outlook over the forecasted life of the

assets. These scenarios include key macroeconomic variables

such as gross domestic product, unemployment rate, real

estate prices and corporate bond spreads. The scenarios that

are chosen each quarter and the weighting given to each

scenario depend on a variety of factors including recent

economic events, leading economic indicators, internal and

third-party economist views, and industry trends. For more

information on the Corporation's credit loss accounting policies

including the allowance for credit losses, see Note 1 – Summary

of Significant Accounting Principles.

The December 31, 2023 estimate for allowance for credit

losses was based on various economic scenarios, including a

baseline scenario derived from consensus estimates, an

adverse scenario reflecting an extended moderate recession, a

downside scenario reflecting persistent inflation and interest

rates above the baseline scenario, a tail risk scenario similar to

the severely adverse scenario used in stress testing and an

upside scenario that considers the potential for improvement

above the baseline scenario. The overall weighted economic

outlook of the above scenarios has improved compared to the

weighted economic outlook estimated as of December 31,

2022. The weighted economic outlook assumes that the U.S.

average unemployment rate will be just below five percent by

the fourth quarter of 2024 and will remain near this level

through the fourth quarter of 2025. The weighted economic

outlook assumes a mild recession in the first half of 2024 with

U.S. real gross domestic product forecasted to grow at 0.3

percent and at 1.4 percent year-over-year in the fourth quarters

of 2024 and 2025.

The allowance for credit losses increased $329 million from

December 31, 2022 to $14.6 billion at December 31, 2023,

which included a $1.3 billion reserve increase related to the

consumer portfolio and a $942million reserve decrease related

to the commercial portfolio. The increase in the allowance

reflected a reserve build in the Corporation’s consumer portfolio

primarily due to credit card loan growth and asset quality,

partially offset by a reserve release in the Corporation’s

commercial portfolio primarily driven by improved

macroeconomic conditions applicable to the commercial

portfolio. The allowance also includes the impact of the

accounting change to remove the recognition and measurement

guidance on TDRs, which reduced the allowance for credit

losses by $243 million on January 1, 2023. The change in the

allowance for credit losses was comprised of a net increase of

$660 million in the allowance for loan and lease losses and a

decrease of $331 million in the reserve for unfunded lending

commitments. The provision for credit losses increased $1.9

billion to an expense of $4.4 billion in 2023 compared to an

expense of $2.5 billion in 2022 and to a benefit of $4.6 billion

in 2021. The increase in provision for credit losses in 2023 was

driven by the Corporation’s consumer portfolio primarily due to

credit card loan growth and asset quality, partially offset by

improved macroeconomic conditions that primarily benefited the

Corporation’s commercial portfolio. The increase in the

provision for credit losses in 2022 was primarily driven by loan

growth and a dampened macroeconomic outlook, partially offset

by reduced COVID-19 pandemic uncertainties.

Outstanding loans and leases excluding loans accounted for

under the fair value option increased $10.2 billion in 2023

driven by consumer loans, which increased $3.7 billion driven by

credit card, partially offset by declines in securities-based

lending. Commercial loans increased $6.5 billion driven by

broad-based growth.

The changes in the allowance for credit losses, including net

charge-offs and provision for loan and lease losses, are detailed

in the following table.

125 Bank of America

Consumer

Real Estate

Credit Card and

Other Consumer Commercial Total

(Dollars in millions)

2023

Allowance for loan and lease losses, December 31 $ 420 $ 6,817 $ 5,445 $ 12,682

January 1, 2023 adoption of credit loss standard

(67) (109) (67) (243)

Allowance for loan and lease losses, January 1 $ 353 $ 6,708 $ 5,378 $ 12,439

Loans and leases charged off

(103) (3,870) (844) (4,817)

Recoveries of loans and leases previously charged off

146 737 135 1,018

Net charge-offs

43 (3,133) (709) (3,799)

Provision for loan and lease losses

(19) 4,558 186 4,725

Other

9 1 (33) (23)

Allowance for loan and lease losses, December 31 386 8,134 4,822 13,342

Reserve for unfunded lending commitments, January 1 94 — 1,446 1,540

Provision for unfunded lending commitments

(12) — (319) (331)

Reserve for unfunded lending commitments, December 31 82 — 1,127 1,209

Allowance for credit losses, December 31 $ 468 $ 8,134 $ 5,949 $ 14,551

2022

Allowance for loan and lease losses, January 1

$ 557 $ 6,476 $ 5,354 $ 12,387

Loans and leases charged off (206) (2,755) (478) (3,439)

Recoveries of loans and leases previously charged off 224 882 161 1,267

Net charge-offs 18 (1,873) (317) (2,172)

Provision for loan and lease losses (164) 2,215 409 2,460

Other 9 (1) (1) 7

Allowance for loan and lease losses, December 31

420 6,817 5,445 12,682

Reserve for unfunded lending commitments, January 1

96 — 1,360 1,456

Provision for unfunded lending commitments (3) — 86 83

Other 1 — — 1

Reserve for unfunded lending commitments, December 31

94 — 1,446 1,540

Allowance for credit losses, December 31

$ 514 $ 6,817 $ 6,891 $ 14,222

2021

Allowance for loan and lease losses, January 1

$ 858 $ 9,213 $ 8,731 $ 18,802

Loans and leases charged off (78) (3,000) (719) (3,797)

Recoveries of loans and leases previously charged off 225 1,006 323 1,554

Net charge-offs 147 (1,994) (396) (2,243)

Provision for loan and lease losses (449) (744) (2,980) (4,173)

Other 1 1 (1) 1

Allowance for loan and lease losses, December 31

557 6,476 5,354 12,387

Reserve for unfunded lending commitments, January 1

137 — 1,741 1,878

Provision for unfunded lending commitments (41) — (380) (421)

Other — — (1) (1)

Reserve for unfunded lending commitments, December 31

96 — 1,360 1,456

Allowance for credit losses, December 31

$ 653 $ 6,476 $ 6,714 $ 13,843

NOTE 6 Securitizations and Other Variable

Interest Entities

The Corporation utilizes VIEs in the ordinary course of business

to support its own and its customers’ financing and investing

needs. The Corporation routinely securitizes loans and debt

securities using VIEs as a source of funding for the Corporation

and as a means of transferring the economic risk of the loans or

debt securities to third parties. The assets are transferred into a

trust or other securitization vehicle such that the assets are

legally isolated from the creditors of the Corporation and are not

available to satisfy its obligations. These assets can only be

used to settle obligations of the trust or other securitization

vehicle. The Corporation also administers, structures or invests

in other VIEs including CDOs, investment vehicles and other

entities. For more information on the Corporation’s use of VIEs,

see Note 1 – Summary of Significant Accounting Principles.

The tables in this Note present the assets and liabilities of

consolidated and unconsolidated VIEs at December 31, 2023

and 2022 in situations where the Corporation has a loan or

security interest and involvement with transferred assets or if

the Corporation otherwise has an additional interest in the VIE.

The tables also present the Corporation’s maximum loss

exposure at December 31, 2023 and 2022 resulting from its

involvement with consolidated VIEs and unconsolidated VIEs.

The Corporation’s maximum loss exposure is based on the

unlikely event that all of the assets in the VIEs become

worthless and incorporates not only potential losses associated

with assets recorded on the Consolidated Balance Sheet but

also potential losses associated with off-balance sheet

commitments, such as unfunded liquidity commitments and

other contractual arrangements. The Corporation’s maximum

loss exposure does not include losses previously recognized

through write-downs of assets.

The Corporation invests in ABS, CLOs and other similar

investments issued by third-party VIEs with which it has no other

form of involvement other than a loan or debt security issued by

the VIE. In addition, the Corporation also enters into certain

commercial lending arrangements that may utilize VIEs for

activities secondary to the lending arrangement, for example to

hold collateral. The Corporation’s maximum loss exposure to

these VIEs is the investment balances. These securities and

loans are included in Note 4 – Securities or Note 5 – Outstanding

Loans and Leases and Allowance for Credit Losses and are not

included in the following tables.

The Corporation did not provide financial support to

consolidated or unconsolidated VIEs during 2023, 2022 and

Bank of America 126

2021 that it was not previously contractually required to provide,

nor does it intend to do so.

The Corporation had liquidity commitments, including written

put options and collateral value guarantees, with certain

unconsolidated VIEs of $989 million and $978 million at

December31, 2023 and 2022.

First-lien Mortgage Securitizations

As part of its mortgage banking activities, the Corporation

securitizes a portion of the first-lien residential mortgage loans

it originates or purchases from third parties, generally in the

form of residential mortgage-backed securities (RMBS)

guaranteed by government-sponsored enterprises, FNMA and

FHLMC (collectively the GSEs), or the Government National

Mortgage Association (GNMA) primarily in the case of FHA-

insured and U.S. Department of Veterans Affairs (VA)-

guaranteed mortgage loans. Securitization usually occurs in

conjunction with or shortly after origination or purchase, and the

Corporation may also securitize loans held in its residential

mortgage portfolio. In addition, the Corporation may, from time

to time, securitize commercial mortgages it originates or

purchases from other entities. The Corporation typically services

the loans it securitizes. Further, the Corporation may retain

beneficial interests in the securitization trusts including senior

and subordinate securities and equity tranches issued by the

trusts. Except as described in Note 12 – Commitments and

Contingencies, the Corporation does not provide guarantees or

recourse to the securitization trusts other than standard

representations and warranties.

The table below summarizes select information related to

first-lien mortgage securitizations for 2023, 2022 and 2021.

First-lien Mortgage Securitizations

Residential Mortgage - Agency Commercial Mortgage

(Dollars in millions)

2023

2022 2021

2023

2022 2021

Proceeds from loan sales

(1)

$ 4,513

$ 8,084 $ 6,664

$ 2,132

$ 5,853 $ 10,874

Gains (losses) on securitizations

(2)

(15)

8 9

46 156

Repurchases from securitization trusts

(3)

53 756

—

— —

(1)

The Corporation transfers residential mortgage loans to securitizations sponsored primarily by the GSEs or GNMA in the normal course of business and primarily receives residential mortgage-

backed securities in exchange. Substantially all of these securities are classified as Level 2 within the fair value hierarchy and are typically sold shortly after receipt.

(2)

A majority of the first-lien residential mortgage loans securitized are initially classified as LHFS and accounted for under the fair value option. Gains recognized on these LHFS prior to

securitization, which totaled $49 million, $41 million and $121 million net of hedges, during 2023, 2022 and 2021, respectively, are not included in the table above.

(3)

The Corporation may have the option to repurchase delinquent loans out of securitization trusts, which reduces the amount of servicing advances it is required to make. The Corporation may also

repurchase loans from securitization trusts to perform modifications. Repurchased loans include FHA-insured mortgages collateralizing GNMA securities.

The Corporation recognizes consumer MSRs from the sale or

securitization of consumer real estate loans. The unpaid

principal balance of loans serviced for investors, including

residential mortgage and home equity loans, totaled $92.7

billion and $100.1 billion at December 31, 2023 and 2022.

Servicing fee and ancillary fee income on serviced loans was

$248 million, $274 million and $392 million during 2023, 2022

and 2021, respectively. Servicing advances on serviced loans,

including loans serviced for others and loans held for

investment, were $1.3 billion and $1.6 billion at December31,

2023 and 2022. For more information on MSRs, see Note 20 –

Fair Value Measurements.

Home Equity Loans

The Corporation retains interests, primarily senior securities, in

home equity securitization trusts to which it transferred home

equity loans. In addition, the Corporation may be obligated to

provide subordinate funding to the trusts during a rapid

amortization event. This obligation is included in the maximum

loss exposure in the preceding table. The charges that will

ultimately be recorded as a result of the rapid amortization

events depend on the undrawn portion of the home equity lines

of credit, performance of the loans, the amount of subsequent

draws and the timing of related cash flows.

Mortgage and Home Equity Securitizations

During 2023 and 2022, the Corporation deconsolidated agency

residential mortgage securitization trusts with total assets of

$685 million and $784 million, with no significant

deconsolidations in 2021.

The following table summarizes select information related to

mortgage and home equity securitization trusts in which the

Corporation held a variable interest and had continuing

involvement at December31, 2023 and 2022.

127 Bank of America

Mortgage and Home Equity Securitizations

Residential Mortgage  

  Non-agency  

Agency Prime and Alt-A Subprime Home Equity

(3)

Commercial Mortgage

December 31

(Dollars in millions)

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

Unconsolidated VIEs 



Maximum loss exposure

(1)

$ 8,190

$ 9,112

$ 92

$ 119

$ 657

$ 735

$ —

$ 119

$ 1,558

$ 1,594

On-balance sheet assets



Senior securities:



Trading account assets

$ 235

$ 232

$ 13

$ 29

$ 20

$ 25

$ —

$ 70

$ 91

Debt securities carried at fair value

2,541

3,027

—

341

410

—

Held-to-maturity securities

5,414

5,853

—

1,287

1,268

All other assets

—

101

Total retained positions $ 8,190

$ 9,112

$ 17

$ 34

$ 384

$ 460

$ —

$ 1

$ 1,436

$ 1,460

Principal balance outstanding

(2)

$ 76,134

$ 81,644

$ 13,963

$ 15,541

$ 4,508

$ 5,034

$ 252

$ 326

$ 80,078

$ 85,101

Consolidated VIEs 



Maximum loss exposure

(1)

$ 1,164

$ 1,735

$ —

$ 78

$ 12

$ 32

$ —

On-balance sheet assets



Trading account assets

$ 1,171

$ 1,735

$ —

$ 78

$ —

Loans and leases

—

Allowance for loan and lease losses

—

All other assets

—

Total assets $ 1,171

$ 1,735

$ —

$ 78

$ 39

$ 111

$ —

Total liabilities $ 7

$ —

$ 27

$ 79

$ —

(1)

Maximum loss exposure includes obligations under loss-sharing reinsurance and other arrangements for non-agency residential mortgage and commercial mortgage securitizations, but excludes

the reserve for representations and warranties obligations and corporate guarantees and also excludes servicing advances and other servicing rights and obligations. For more information, see

Note 12 – Commitments and Contingencies and Note 20 – Fair Value Measurements.

(2)

Principal balance outstanding includes loans where the Corporation was the transferor to securitization VIEs with which it has continuing involvement, which may include servicing the loans.

(3)

For unconsolidated home equity loan VIEs, the maximum loss exposure includes outstanding trust certificates issued by trusts in rapid amortization, net of recorded reserves. For both

consolidated and unconsolidated home equity loan VIEs, the maximum loss exposure excludes the reserve for representations and warranties obligations and corporate guarantees. For more

information, see Note 12 – Commitments and Contingencies.

Other Asset-backed Securitizations

The following paragraphs summarize select information related

to other asset-backed VIEs in which the Corporation had a

variable interest at December31, 2023 and 2022.

Credit Card and Automobile Loan Securitizations

The Corporation securitizes originated and purchased credit card

and automobile loans as a source of financing. The loans are

sold on a non-recourse basis to consolidated trusts. The

securitizations are ongoing, whereas additional receivables will

be funded into the trusts by either loan repayments or proceeds

from securities issued to third parties, depending on the

securitization structure. The Corporation’s continuing

involvement with the securitization trusts includes servicing the

receivables and holding various subordinated interests,

including an undivided seller’s interest in the credit card

receivables and owning certain retained interests.

At December31, 2023 and 2022, the carrying values of the

receivables in the trusts totaled $16.6 billion and $14.6billion,

which are included in loans and leases, and the carrying values

of senior debt securities that were issued to third-party

investors from the trusts totaled $7.8 billion and $4.2 billion,

which are included in long-term debt.

Resecuritization Trusts

The Corporation transfers securities, typically MBS, into

resecuritization VIEs generally at the request of customers

seeking securities with specific characteristics. Generally, there

are no significant ongoing activities performed in a

resecuritization trust, and no single investor has the unilateral

ability to liquidate the trust.

The Corporation resecuritized $8.6 billion, $21.8 billion and

$28.9 billion of securities during 2023, 2022 and 2021,

respectively. Securities transferred into resecuritization VIEs

were measured at fair value with changes in fair value recorded

in market making and similar activities prior to the

resecuritization and, accordingly, no gain or loss on sale was

recorded. Securities received from the resecuritization VIEs were

recognized at their fair value of $2.4 billion, $2.4 billion and

$2.2 billion during 2023, 2022 and 2021, respectively. In

2023, 2022 and 2021, substantially all of the securities were

classified as trading account assets. Substantially all of the

trading account securities carried at fair value were categorized

as Level 2 within the fair value hierarchy.

Customer VIEs

Customer VIEs include credit-linked, equity-linked and

commodity-linked note VIEs, repackaging VIEs and asset

acquisition VIEs, which are typically created on behalf of

customers who wish to obtain market or credit exposure to a

specific company, index, commodity or financial instrument.

The Corporation’s involvement in the VIE is limited to its loss

exposure. The Corporation’s maximum loss exposure to

consolidated and unconsolidated customer VIEs totaled $952

million and $914 million at December 31, 2023 and 2022,

including the notional amount of derivatives to which the

Corporation is a counterparty, net of losses previously recorded,

and the Corporation’s investment, if any, in securities issued by

the VIEs.

Municipal Bond Trusts

The Corporation administers municipal bond trusts that hold

highly-rated, long-term, fixed-rate municipal bonds. The trusts

obtain financing by issuing floating-rate trust certificates that

reprice on a weekly or other short-term basis to third-party

investors.

The Corporation’s liquidity commitments to unconsolidated

municipal bond trusts, including those for which the Corporation

was transferor, totaled $1.7 billion and $2.5 billion at

December31, 2023 and 2022. The weighted-average remaining

Bank of America 128

life of bonds held in the trusts at December31, 2023 was 12.2

years. There were no significant write-downs or downgrades of

assets or issuers during 2023, 2022 and 2021.

Collateralized Debt Obligation VIEs

The Corporation receives fees for structuring CDO VIEs, which

hold diversified pools of fixed-income securities, typically

corporate debt or ABS, which the CDO VIEs fund by issuing

multiple tranches of debt and equity securities. CDOs are

generally managed by third-party portfolio managers. The

Corporation typically transfers assets to these CDOs, holds

securities issued by the CDOs and may be a derivative

counterparty to the CDOs. The Corporation maximum loss

exposure to consolidated and unconsolidated CDOs totaled

$80million and $197million at December31, 2023 and 2022.

Investment VIEs

The Corporation sponsors, invests in or provides financing,

which may be in connection with the sale of assets, to a variety

of investment VIEs that hold loans, real estate, debt securities

or other financial instruments and are designed to provide the

desired investment profile to investors or the Corporation. At

December31, 2023 and 2022, the Corporation’s consolidated

investment VIEs had total assets of $472 million and $854

million. The Corporation also held investments in

unconsolidated VIEs with total assets of $18.4 billion and

$14.8 billion at December 31, 2023 and 2022. The

Corporation’s maximum loss exposure associated with both

consolidated and unconsolidated investment VIEs totaled $2.6

billion and $3.0 billion at December 31, 2023 and 2022

comprised primarily of on-balance sheet assets less non-

recourse liabilities.

Leveraged Lease Trusts

The Corporation’s net investment in consolidated leveraged

lease trusts totaled $1.1 billion and $1.2 billion at

December 31, 2023 and 2022. The trusts hold long-lived

equipment such as rail cars, power generation and distribution

equipment, and commercial aircraft. The Corporation structures

the trusts and holds a significant residual interest. The net

investment represents the Corporation’s maximum loss

exposure to the trusts in the unlikely event that the leveraged

lease investments become worthless. Debt issued by the

leveraged lease trusts is non-recourse to the Corporation.

The table below summarizes the maximum loss exposure

and assets held by the Corporation that related to other asset-

backed VIEs at December31, 2023 and 2022.

Other Asset-backed VIEs

Credit Card and

Automobile

(1)

Resecuritization Trusts and

Customer VIEs

Municipal Bond Trusts

and CDOs

Investment VIEs and

Leveraged Lease Trusts

December 31

(Dollars in millions)

2023

2022

2023

2022

2023

2022

2023

2022

Unconsolidated VIEs 



Maximum loss exposure $ —

$ —

$ 4,494

$ 4,940

$ 1,787

$ 2,734

$ 2,197

$ 2,235

On-balance sheet assets



Securities

(2)



Trading account assets

$ —

$ 626

$ 456

$ 23

$ 183

$ 469

$ 455

Debt securities carried at fair value

—

920

1,259

—

Held-to-maturity securities

—

2,237

2,528

—

Loans and leases

—

Allowance for loan and lease losses

—

(12)

All other assets

—

711

697

1,168

1,230

Total retained positions $ —

$ —

$ 4,494

$ 4,940

$ 30

$ 201

$ 1,719

$ 1,768

Total assets of VIEs

$ —

$ 15,862

$ 13,385

$ 9,279

$ 13,595

$ 18,398

$ 14,771

Consolidated VIEs 



Maximum loss exposure $ 8,127

$ 9,555

$ 1,240

$ 768

$ 3,136

$ —

$ 1,596

$ 2,069

On-balance sheet assets



Trading account assets

$ —

$ 1,798

$ 1,002

$ 3,084

$ —

$ 1

Debt securities carried at fair value

—

Loans and leases

16,640

14,555

—

1,605

2,086

Allowance for loan and lease losses

(832)

(808)

—

(1)

All other assets

163

—

Total assets $ 15,971

$ 13,815

$ 1,836

$ 1,022

$ 3,136

$ —

$ 1,620

$ 2,112

On-balance sheet liabilities



Short-term borrowings

$ —

$ 2,934

$ —

$ 23

$ 42

Long-term debt

7,825

4,247

596

254

—

All other liabilities

—

Total liabilities $ 7,844

$ 4,260

$ 596

$ 254

$ 2,934

$ —

$ 24

$ 43

(1)

At December31, 2023 and 2022, loans and leases in the consolidated credit card trust included $3.2 billion and $3.3 billion of seller’s interest.

(2)

The retained senior securities were valued using quoted market prices or observable market inputs (Level 2 of the fair value hierarchy).

Tax Credit VIEs

The Corporation holds equity investments in unconsolidated

limited partnerships and similar entities that construct, own and

operate affordable housing, renewable energy and certain other

projects. The total assets of these unconsolidated tax credit

VIEs were $84.1 billion and $74.8 billion as of December 31,

2023 and 2022. An unrelated third party is typically the general

partner or managing member and has control over the

significant activities of the VIE. As an investor, tax credits

associated with the investments in these entities are allocated

to the Corporation, as provided by the U.S. Internal Revenue

Code and related regulations, and are recognized as income tax

benefits in the Corporation’s Consolidated Statement of Income

in the year they are earned, which varies based on the type of

investments. Tax credits from investments in affordable housing

are recognized ratably over a term of up to 10 years, and tax

credits from renewable energy investments are recognized either

at inception for transactions electing Investment Tax Credits

(ITCs) or as energy is produced for transactions electing

Production Tax Credits (PTCs), which is generally up to a 10-year

129 Bank of America

time period. The volume and types of investments held by the

Corporation will influence the amount of tax credits recognized

each period.

The Corporation’s equity investments in affordable housing

and other projects totaled $15.8 billion and $14.7 billion at

December31, 2023 and 2022, which included unfunded capital

contributions of $7.2 billion and $6.9 billion that are probable

to be paid over the next five years. The Corporation may be

asked to invest additional amounts to support a troubled

affordable housing project. Such additional investments have

not been and are not expected to be significant. During 2023,

2022 and 2021, the Corporation recognized tax credits and

other tax benefits related to affordable housing and other tax

credit equity investments of $1.9 billion, $1.5 billion and $1.3

billion, and reported pretax losses in other income of $1.5

billion, $1.2 billion and $1.1 billion. The Corporation’s equity

investments in renewable energy totaled $14.2 billion and

$13.9billion at December31, 2023 and 2022. In addition, the

Corporation had unfunded capital contributions for renewable

energy investments of $6.2 billion and $1.9 billion at

December31, 2023 and 2022, which are contingent on various

conditions precedent to funding over the next two years. The

Corporation’s risk of loss is generally mitigated by policies

requiring the project to qualify for the expected tax credits prior

to making its investment. During 2023, 2022 and 2021, the

Corporation recognized tax credits and other tax benefits related

to renewable energy equity investments of $4.0 billion, $2.9

billion and $3.1 billion and reported pretax losses in other

income of $3.1 billion, $2.1 billion and $2.2 billion. The

Corporation may also enter into power purchase agreements

with renewable energy tax credit entities.

The table below summarizes select information related to

unconsolidated tax credit VIEs in which the Corporation held a

variable interest at December31, 2023 and 2022.

Unconsolidated Tax Credit VIEs

December 31

(Dollars in millions)

2023

2022

Maximum loss exposure $ 30,040

$ 28,277

On-balance sheet assets



All other assets

30,040

$ 28,277

Total $ 30,040

$ 28,277

On-balance sheet liabilities



All other liabilities

7,254

$ 6,907

Total $ 7,254

$ 6,907

Total assets of VIEs $ 84,148

$ 74,791

NOTE 7 Goodwill and Intangible Assets

Goodwill

The table below presents goodwill balances by business

segment at December31, 2023 and 2022. The reporting units

utilized for goodwill impairment testing are the operating

segments or one level below.

Goodwill

December 31

(Dollars in millions)

2023

2022

Consumer Banking

$ 30,137

Global Wealth & Investment Management

9,677

Global Banking

24,026

Global Markets

5,181

5,182

Total goodwill $ 69,021

$ 69,022

During 2023, the Corporation completed its annual goodwill

impairment test as of June 30, 2023 using a quantitative

assessment for all applicable reporting units. Based on the

results of the annual goodwill impairment test, the Corporation

determined there was no impairment. For more information on

the use of quantitative assessments, see Note 1 – Summary of

Significant Accounting Principles.

Intangible Assets

At December 31, 2023 and 2022, the net carrying value of

intangible assets was $2.0 billion and $2.1 billion. At both

December31, 2023 and 2022, intangible assets included $1.6

billion of intangible assets associated with trade names,

substantially all of which had an indefinite life and, accordingly,

are not being amortized. Amortization of intangibles expense

was $78 million for both 2023 and 2022 and $76 million for

2021.

NOTE 8 Leases

The Corporation enters into both lessor and lessee

arrangements. For more information on lease accounting, see

Note 1 – Summary of Significant Accounting Principles and on

lease financing receivables, see Note 5 – Outstanding Loans and

Leases and Allowance for Credit Losses.

Lessor Arrangements

The Corporation’s lessor arrangements primarily consist of

operating, sales-type and direct financing leases for equipment.

Lease agreements may include options to renew and for the

lessee to purchase the leased equipment at the end of the

lease term.

The table below presents the net investment in sales-type

and direct financing leases at December31, 2023 and 2022.

Net Investment

(1)

December 31

(Dollars in millions)

2023

2022

Lease receivables

$ 16,565

$ 15,123

Unguaranteed residuals

2,485

2,143

Total net investment in sales-type and direct

financing leases $ 19,050

$ 17,266

(1)

In certain cases, the Corporation obtains third-party residual value insurance to reduce its

residual asset risk. The carrying value of residual assets with third-party residual value

insurance for at least a portion of the asset value was $6.8 billion and $6.5 billion at

December31, 2023 and 2022.

The table below presents lease income for 2023, 2022 and

2021.

Lease Income

(Dollars in millions)

2023

2022 2021

Sales-type and direct financing leases

$ 788

$ 589 $ 613

Operating leases

945

941 930

Total lease income $ 1,733

$ 1,530 $ 1,543

Lessee Arrangements

The Corporation's lessee arrangements predominantly consist

of operating leases for premises and equipment; the

Corporation's financing leases are not significant.

Lease terms may contain renewal and extension options and

early termination features. Generally, these options do not

impact the lease term because the Corporation is not

reasonably certain that it will exercise the options.

Bank of America 130

The table below provides information on the right-of-use

assets, lease liabilities and weighted-average discount rates

and lease terms at December31, 2023 and 2022.

Supplemental Information for Lessee Arrangements

December 31

(Dollars in millions)

2023

2022

Right-of-use assets

$ 9,150

$ 9,755

Lease liabilities

9,782

10,359

Weighted-average discount rate

used to calculate present

value of future minimum lease

payments

3.51 %

3.25 %

Weighted-average lease term

(in years)

8.2

8.6

Right-of-use assets obtained in

exchange for new operating

lease liabilities

(1)

$ 430

$ 824

2023

2022 2021

Operating cash flows from

operating leases

(2)

$ 1,975

$ 1,986 $ 1,964

Lease Cost and Supplemental

Information:

Operating lease cost

$ 1,981

$ 2,008 $ 2,025

Variable lease cost

(3)

460

464 462

Total lease cost

(4)

$ 2,441

$ 2,472 $ 2,487

(1)

Represents non-cash activity and, accordingly, is not reflected in the Consolidated Statement

of Cash Flows.

(2)

Represents cash paid for amounts included in the measurements of lease liabilities.

(3)

Primarily consists of payments for common area maintenance and property taxes.

(4)

Amounts are recorded in occupancy and equipment expense in the Consolidated Statement

of Income.

Maturity Analysis

The maturities of lessor and lessee arrangements outstanding

at December31, 2023 are presented in the table below based

on undiscounted cash flows.

Maturities of Lessor and Lessee Arrangements

Lessor Lessee

(1)

Operating

Leases

Sales-type and

Direct Financing

Leases

(2)

Operating

Leases

(Dollars in millions)

December 31, 2023

2024 $ 838 $ 5,248 $ 1,947

2025 647 4,137 1,734

2026 504 4,397 1,515

2027 393 1,588 1,308

2028 319 1,382 1,027

Thereafter 533 1,688 11,307

Total undiscounted

cash flows $ 3,234 18,440 18,838

Less: Net present

value adjustment 1,875 9,056

Total

(3)

$ 16,565 $ 9,782

(1)

Excludes $98 million in commitments under lessee arrangements that have not yet

commenced with lease terms that will begin in 2024.

(2)

Includes $11.3 billion in commercial lease financing receivables and $5.3 billion in direct/

indirect consumer lease financing receivables.

(3)

Represents lease receivables for lessor arrangements and lease liabilities for lessee

arrangements.

NOTE 9 Deposits

The scheduled contractual maturities for total time deposits at December31, 2023 are presented in the table below.

Contractual Maturities of Total Time Deposits

(Dollars in millions)

U.S. Non-U.S. Total

Due in 2024 $ 143,585 $ 9,667

$ 153,252

Due in 2025 8,239 55

8,294

Due in 2026 242 13

255

Due in 2027 121 17

138

Due in 2028 95 2,903

2,998

Thereafter 203 8

211

Total time deposits

$ 152,485 $ 12,663

$ 165,148

At December 31, 2023 and 2022, the Corporation had aggregate U.S. time deposits of $105.0 billion and $12.8 billion and non-

U.S. time deposits of $12.6 billion and $9.0 billion in denominations that met or exceeded insurance limits.

131 Bank of America

NOTE 10 Securities Financing Agreements,

Short-term Borrowings, Collateral and Restricted

Cash

The Corporation enters into securities financing agreements

which include securities borrowed or purchased under

agreements to resell and securities loaned or sold under

agreements to repurchase. These financing agreements (also

referred to as “matched-book transactions”) are to

accommodate customers, obtain securities to cover short

positions and finance inventory positions. The Corporation

elects to account for certain securities financing agreements

under the fair value option. For more information on the fair

value option, see Note 21 – Fair Value Option.

Offsetting of Securities Financing Agreements

Substantially all of the Corporation’s securities financing

activities are transacted under legally enforceable master

repurchase agreements or legally enforceable master securities

lending agreements that give the Corporation, in the event of

default by the counterparty, the right to liquidate securities held

and to offset receivables and payables with the same

counterparty. The Corporation offsets securities financing

transactions with the same counterparty on the Consolidated

Balance Sheet where it has such a legally enforceable master

netting agreement and the transactions have the same maturity

date.

The Securities Financing Agreements table presents

securities financing agreements included on the Consolidated

Balance Sheet in federal funds sold and securities borrowed or

purchased under agreements to resell, and in federal funds

purchased and securities loaned or sold under agreements to

repurchase at December 31, 2023 and 2022. Balances are

presented on a gross basis, prior to the application of

counterparty netting. Gross assets and liabilities are adjusted

on an aggregate basis to take into consideration the effects of

legally enforceable master netting agreements. For more

information on the offsetting of derivatives, see Note 3 –

Derivatives.

Securities Financing Agreements

Gross Assets/

Liabilities

(1)

Amounts Offset

Net Balance

Sheet Amount

Financial

Instruments

(2)

Net Assets/

Liabilities

(Dollars in millions)

December 31, 2023

Securities borrowed or purchased under agreements to resell

(3)

$ 703,641 $ (423,017) $ 280,624 $ (257,541) $ 23,083

Securities loaned or sold under agreements to repurchase

$ 706,904 $ (423,017) $ 283,887 $ (272,285) $ 11,602

Other

(4)

10,066 — 10,066 (10,066) —

Total $ 716,970 $ (423,017) $ 293,953 $ (282,351) $ 11,602

December 31, 2022

Securities borrowed or purchased under agreements to resell

(3)

$ 597,847 $ (330,273) $ 267,574 $ (240,120) $ 27,454

Securities loaned or sold under agreements to repurchase $ 525,908 $ (330,273) $ 195,635 $ (183,265) $ 12,370

Other

(4)

8,427 — 8,427 (8,427) —

Total

$ 534,335 $ (330,273) $ 204,062 $ (191,692) $ 12,370

(1)

Includes activity where uncertainty exists as to the enforceability of certain master netting agreements under bankruptcy laws in some countries or industries.

(2)

Includes securities collateral received or pledged under repurchase or securities lending agreements where there is a legally enforceable master netting agreement. These amounts are not offset

on the Consolidated Balance Sheet, but are shown as a reduction to derive a net asset or liability. Securities collateral received or pledged where the legal enforceability of the master netting

agreements is uncertain is excluded from the table.

(3)

Excludes repurchase activity of $8.7 billion reported in loans and leases on the Consolidated Balance Sheet for both December31, 2023 and 2022.

(4)

Balance is reported in accrued expenses and other liabilities on the Consolidated Balance Sheet and relates to transactions where the Corporation acts as the lender in a securities lending

agreement and receives securities that can be pledged as collateral or sold. In these transactions, the Corporation recognizes an asset at fair value, representing the securities received, and a

liability, representing the obligation to return those securities.

Repurchase Agreements and Securities Loaned

Transactions Accounted for as Secured Borrowings

The following tables present securities sold under agreements

to repurchase and securities loaned by remaining contractual

term to maturity and class of collateral pledged. Included in

“Other” are transactions where the Corporation acts as the

lender in a securities lending agreement and receives securities

that can be pledged as collateral or sold. Certain agreements

contain a right to substitute collateral and/or terminate the

agreement prior to maturity at the option of the Corporation or

the counterparty. Such agreements are included in the table

below based on the remaining contractual term to maturity.

Remaining Contractual Maturity

Overnight and

Continuous 30 Days or Less

After 30 Days

Through 90 Days

Greater than

90 Days

(1)

Total

(Dollars in millions)

December 31, 2023

Securities sold under agreements to repurchase

$ 234,974 $ 228,627 $ 85,176 $ 75,020 $ 623,797

Securities loaned

76,580 139 618 5,770 83,107

Other

10,066 — — — 10,066

Total $ 321,620 $ 228,766 $ 85,794 $ 80,790 $ 716,970

December 31, 2022

Securities sold under agreements to repurchase $ 200,087 $ 181,632 $ 41,666 $ 30,107 $ 453,492

Securities loaned 66,909 288 1,139 4,080 72,416

Other 8,427 — — — 8,427

Total

$ 275,423 $ 181,920 $ 42,805 $ 34,187 $ 534,335

(1)

No agreements have maturities greater than four years.

Bank of America 132

Class of Collateral Pledged

Securities Sold

Under Agreements

to Repurchase

Securities

Loaned Other Total

(Dollars in millions)

December 31, 2023

U.S. government and agency securities

$ 352,950 $ 34 $ 38 $ 353,022

Corporate securities, trading loans and other

23,242 1,805 661 25,708

Equity securities

11,517 81,266 9,367 102,150

Non-U.S. sovereign debt

231,140 2 — 231,142

Mortgage trading loans and ABS

4,948 — — 4,948

Total $ 623,797 $ 83,107 $ 10,066 $ 716,970

December 31, 2022

U.S. government and agency securities $ 193,005 $ 18 $ — $ 193,023

Corporate securities, trading loans and other 14,345 2,896 317 17,558

Equity securities 10,249 69,432 8,110 87,791

Non-U.S. sovereign debt 232,171 70 — 232,241

Mortgage trading loans and ABS 3,722 — — 3,722

Total

$ 453,492 $ 72,416 $ 8,427 $ 534,335

Under repurchase agreements, the Corporation is required to

post collateral with a market value equal to or in excess of the

principal amount borrowed. For securities loaned transactions,

the Corporation receives collateral in the form of cash, letters of

credit or other securities. To determine whether the market

value of the underlying collateral remains sufficient, collateral is

generally valued daily, and the Corporation may be required to

deposit additional collateral or may receive or return collateral

pledged when appropriate. Repurchase agreements and

securities loaned transactions are generally either overnight,

continuous (i.e., no stated term) or short-term. The Corporation

manages liquidity risks related to these agreements by sourcing

funding from a diverse group of counterparties, providing a

range of securities collateral and pursuing longer durations,

when appropriate.

Short-term Borrowings

The Corporation classifies borrowings with an original maturity of

less than one year as short-term borrowings on the

Consolidated Balance Sheet. At December31, 2023 and 2022,

the majority of short-term borrowings consisted of Federal Home

Loan Bank advances, which totaled $13.2 billion and

$9.2billion, and commercial paper, which totaled $13.1billion

and $9.9billion.

Collateral

The Corporation accepts securities and loans as collateral that

it is permitted by contract or practice to sell or repledge. At

December31, 2023 and 2022, the fair value of this collateral

was $911.3 billion and $827.6 billion, of which $870.9 billion

and $764.1 billion were sold or repledged. The primary source

of this collateral is securities borrowed or purchased under

agreements to resell.

The Corporation also pledges company-owned securities and

loans as collateral in transactions that include repurchase

agreements, securities loaned, public and trust deposits, U.S.

Treasury tax and loan notes, and short-term borrowings. This

collateral, which in some cases can be sold or repledged by the

counterparties to the transactions, is parenthetically disclosed

on the Consolidated Balance Sheet.

In certain cases, the Corporation has transferred assets to

consolidated VIEs where those restricted assets serve as

collateral for the interests issued by the VIEs. These assets are

included on the Consolidated Balance Sheet in Assets of

Consolidated VIEs.

In addition, the Corporation obtains collateral in connection

with its derivative contracts. Required collateral levels vary

depending on the credit risk rating and the type of counterparty.

Generally, the Corporation accepts collateral in the form of

cash, U.S. Treasury securities and other marketable securities.

Based on provisions contained in master netting agreements,

the Corporation nets cash collateral received against derivative

assets. The Corporation also pledges collateral on its own

derivative positions which can be applied against derivative

liabilities. For more information on the collateral of derivatives,

see Note 3 – Derivatives.

Restricted Cash

At December 31, 2023 and 2022, the Corporation held

restricted cash included within cash and cash equivalents on

the Consolidated Balance Sheet of $5.6 billion and $7.6 billion,

predominantly related to cash segregated in compliance with

securities regulations and cash held on deposit with central

banks to meet reserve requirements.

133 Bank of America

NOTE 11 Long-term Debt

Long-term debt consists of borrowings having an original maturity of one year or more. The table below presents the balance of long-

term debt at December 31, 2023 and 2022, and the related contractual rates and maturity dates as of December31, 2023.

Weighted-

average Rate

December 31

(Dollars in millions)

Interest Rates Maturity Dates 2023

2022

Notes issued by Bank of America Corporation

(1)



Senior notes:



Fixed

3.29 % 0.25 - 8.05 % 2024 - 2052 $ 194,388

$ 188,429

Floating

5.72 0.74 - 10.40 2024 - 2044 14,007

17,469

Senior structured notes

14,895

11,608

Subordinated notes:

Fixed

4.89 2.94 - 8.57 2024 - 2045 20,909

21,098

Floating

3.54 2.48 - 6.41 2026 - 2037 4,597

4,544

Junior subordinated notes:

Fixed

6.71 6.45 - 8.05 2027 - 2066 744

743

Floating

6.44 6.44 2056 1

Total notes issued by Bank of America Corporation

249,541

243,892

Notes issued by Bank of America, N.A.



Senior notes:



Fixed

5.58 5.25 - 5.82 2024 - 2028 5,076

—

Floating

5.82 5.26 - 6.42 2024 - 2028 3,517

2,600

Subordinated notes

6.00 6.00 2036 1,476

1,485

Advances from Federal Home Loan Banks:

Fixed

5.62 0.01 - 7.42 2024 - 2034 5,826

681

Securitizations and other BANA VIEs

(2)

7,892

4,300

Other

782

908

Total notes issued by Bank of America, N.A.

24,569

9,974

Other debt



Structured liabilities

(3)

27,471

21,835

Nonbank VIEs

(2)

564

281

Other

—

Total notes issued by nonbank and other entities

28,094

22,116

Total long-term debt

$ 302,204

$ 275,982

(1)

Includes total loss-absorbing capacity compliant debt.

(2)

Represents liabilities of consolidated VIEs included in total long-term debt on the Consolidated Balance Sheet. Long-term debt of VIEs is collateralized by the assets of the VIEs. At December31,

2023, amount includes debt predominantly from credit card and automobile securitizations and other VIEs of $7.8 billion and $204 million. For more information, see Note 6 – Securitizations and

Other Variable Interest Entities.

(3)

Includes debt outstanding of $10.0 billion and $8.0 billion at December 31, 2023 and 2022 that was issued by BofA Finance LLC, a consolidated finance subsidiary of Bank of America

Corporation, the parent company, and is fully and unconditionally guaranteed by the parent company.

During 2023, the Corporation issued $62.0 billion of long-

term debt consisting of $24.0 billion of notes issued by Bank of

America Corporation, $25.1 billion of notes issued by Bank of

America, N.A. and $12.9 billion of other debt. During 2022, the

Corporation issued $66.0 billion of long-term debt consisting of

$44.2 billion of notes issued by Bank of America Corporation,

$10.0 billion of notes issued by Bank of America, N.A. and

$11.8 billion of other debt.

During 2023, the Corporation had total long-term debt

maturities and redemptions in the aggregate of $42.7 billion

consisting of $25.3 billion for Bank of America Corporation,

$10.5 billion for Bank of America, N.A. and $6.9 billion of other

debt. During 2022, the Corporation had total long-term debt

maturities and redemptions in the aggregate of $33.3 billion

consisting of $19.8 billion for Bank of America Corporation,

$9.9 billion for Bank of America, N.A. and $3.6 billion of other

debt.

Bank of America Corporation and Bank of America, N.A.

maintain various U.S. and non-U.S. debt programs to offer both

senior and subordinated notes. The notes may be denominated

in U.S. dollars or foreign currencies. At December 31, 2023 and

2022, the amount of foreign currency-denominated debt

translated into U.S. dollars included in total long-term debt was

$49.8 billion and $46.7 billion. Foreign currency contracts may

be used to convert certain foreign currency-denominated debt

into U.S. dollars.

The weighted-average effective interest rates for total long-

term debt (excluding senior structured notes), total fixed-rate

debt and total floating-rate debt were 3.70 percent, 3.55

percent and 5.21 percent, respectively, at December31, 2023,

and 3.27 percent, 3.23 percent and 4.14 percent, respectively,

at December 31, 2022. The Corporation’s ALM activities

maintain an overall interest rate risk management strategy that

incorporates the use of interest rate contracts to manage

fluctuations in earnings caused by interest rate volatility. The

Corporation’s goal is to manage interest rate sensitivity so that

movements in interest rates do not have a significantly adverse

effect on earnings and capital. The weighted-average rates are

the contractual interest rates on the debt and do not reflect the

impacts of derivative transactions.

The following table shows the carrying value for aggregate

annual contractual maturities of long-term debt as of

December31, 2023. Included in the table are certain structured

notes issued by the Corporation that contain provisions whereby

the borrowings are redeemable at the option of the holder (put

options) at specified dates prior to maturity. Other structured

notes have coupon or repayment terms linked to the

performance of debt or equity securities, indices, currencies or

commodities, and the maturity may be accelerated based on the

value of a referenced index or security. In both cases, the

Corporation or a subsidiary may be required to settle the

obligation for cash or other securities prior to the contractual

maturity date. These borrowings are reflected in the table as

maturing at their contractual maturity date.

Bank of America 134

Long-term Debt by Maturity

(Dollars in millions)

2024 2025 2026 2027 2028 Thereafter Total

Bank of America Corporation

Senior notes

$ 7,650 $ 25,526 $ 24,743 $ 21,447 $ 27,986 $ 101,043

$ 208,395

Senior structured notes

719 698 1,177 627 1,056 10,618

14,895

Subordinated notes

3,136 5,137 4,904 2,118 940 9,271

25,506

Junior subordinated notes

— — — 190 — 555

745

Total Bank of America Corporation

11,505 31,361 30,824 24,382 29,982 121,487

249,541

Bank of America, N.A.

Senior notes

2,270 2,422 3,219 — 682 —

8,593

Subordinated notes

— — — — — 1,476

1,476

Advances from Federal Home Loan Banks

5,750 13 9 4 9 41

5,826

Securitizations and other Bank VIEs

(1)

1,215 2,249 3,364 — 866 198

7,892

Other

348 204 38 57 134 1

782

Total Bank of America, N.A.

9,583 4,888 6,630 61 1,691 1,716

24,569

Other debt

Structured Liabilities

5,603 3,046 3,726 2,048 2,042 11,006

27,471

Nonbank VIEs

(1)

6 — 7 — 7 544

564

Other

40 19 — — — —

Total other debt

5,649 3,065 3,733 2,048 2,049 11,550

28,094

Total long-term debt

$ 26,737 $ 39,314 $ 41,187 $ 26,491 $ 33,722 $ 134,753 $ 302,204

(1)

Represents liabilities of consolidated VIEs included in total long-term debt on the Consolidated Balance Sheet.

NOTE 12 Commitments and Contingencies

In the normal course of business, the Corporation enters into a

number of off-balance sheet commitments. These commitments

expose the Corporation to varying degrees of credit and market

risk and are subject to the same credit and market risk

limitation reviews as those instruments recorded on the

Consolidated Balance Sheet.

Credit Extension Commitments

The Corporation enters into commitments to extend credit such

as loan commitments, SBLCs and commercial letters of credit

to meet the financing needs of its customers. The following

table includes the notional amount of unfunded legally binding

lending commitments net of amounts distributed (i.e.,

syndicated or participated) to other financial institutions. The

distributed amounts were $10.3 billion and $10.4 billion at

December 31, 2023 and 2022. The carrying value of the

Corporation’s credit extension commitments at December 31,

2023 and 2022, excluding commitments accounted for under

the fair value option, was $1.2 billion and $1.6 billion, which

predominantly related to the reserve for unfunded lending

commitments. The carrying value of these commitments is

classified in accrued expenses and other liabilities on the

Consolidated Balance Sheet.

Legally binding commitments to extend credit generally have

specified rates and maturities. Certain of these commitments

have adverse change clauses that help to protect the

Corporation against deterioration in the borrower’s ability to pay.

The following table includes the notional amount of

commitments of $2.6billion and $3.0 billion at December 31,

2023 and 2022 that are accounted for under the fair value

option. However, the table excludes the cumulative net fair

value for these commitments of $67 million and $110 million at

December 31, 2023 and 2022, which is classified in accrued

expenses and other liabilities. For more information regarding

the Corporation’s loan commitments accounted for under the

fair value option, see Note 21 – Fair Value Option.

135 Bank of America

Credit Extension Commitments

Expire in One

Year or Less

Expire After One

Year Through

Three Years

Expire After Three

Years Through

Five Years

Expire After

Five Years Total

(Dollars in millions)

December 31, 2023

Notional amount of credit extension commitments     

Loan commitments

(1)

$ 124,298 $ 198,818 $ 193,878 $ 15,386 $ 532,380

Home equity lines of credit

2,775 9,182 11,195 21,975 45,127

Standby letters of credit and financial guarantees

(2)

21,067 9,633 2,693 652 34,045

Letters of credit

873 207 66 29 1,175

Other commitments

(3)

17 50 108 1,035 1,210

Legally binding commitments

149,030 217,890 207,940 39,077 613,937

Credit card lines

(4)

440,328 — — — 440,328

Total credit extension commitments $ 589,358 $ 217,890 $ 207,940 $ 39,077 $ 1,054,265

December 31, 2022

Notional amount of credit extension commitments

    

Loan commitments

(1)

$ 113,962 $ 162,890 $ 221,374 $ 13,667 $ 511,893

Home equity lines of credit 1,479 7,230 11,578 22,154 42,441

Standby letters of credit and financial guarantees

(2)

22,565 9,237 2,787 628 35,217

Letters of credit 853 46 52 49 1,000

Other commitments

(3)

5 93 71 1,103 1,272

Legally binding commitments 138,864 179,496 235,862 37,601 591,823

Credit card lines

(4)

419,144 — — — 419,144

Total credit extension commitments

$ 558,008 $ 179,496 $ 235,862 $ 37,601 $ 1,010,967

(1)

At December31, 2023 and 2022, $3.1 billion and $2.6 billion of these loan commitments were held in the form of a security.

(2)

The notional amounts of SBLCs and financial guarantees classified as investment grade and non-investment grade based on the credit quality of the underlying reference name within the

instrument were $23.6 billion and $9.7 billion at December31, 2023, and $25.1billion and $9.5billion at December31, 2022. Amounts in the table include consumer SBLCs of $744 million

and $575 million at December31, 2023 and 2022.

(3)

Primarily includes second-loss positions on lease-end residual value guarantees.

(4)

Includes business card unused lines of credit.

Other Commitments

At December 31, 2023 and 2022, the Corporation had

commitments to purchase loans (e.g., residential mortgage and

commercial real estate) of $822 million and $636 million, which

upon settlement will be included in trading account assets,

loans or LHFS, and commitments to purchase commercial loans

of $420 million and $294 million, which upon settlement will be

included in trading account assets.

At December 31, 2023 and 2022, the Corporation had

commitments to enter into resale and forward-dated resale and

securities borrowing agreements of $117.0 billion and $92.0

billion, and commitments to enter into forward-dated repurchase

and securities lending agreements of $63.0 billion and $57.8

billion. A significant portion of these commitments will expire

within the next 12 months.

At December 31, 2023 and 2022, the Corporation had a

commitment to originate or purchase up to $4.0 billion and

$3.7 billion on a rolling 12-month basis, of auto loans and

leases from a strategic partner. This commitment extends

through November 2026 and can be terminated with 12 months

prior notice.

At December 31, 2023 and 2022, the Corporation had

unfunded equity investment commitments of $477 million and

$571million.

As a Federal Reserve member bank, the Corporation is

required to subscribe to a certain amount of shares issued by

its Federal Reserve district bank, which pays cumulative

dividends at a prescribed rate. At both December31, 2023 and

2022, the Corporation paid $5.4billion for half of its subscribed

shares, with the remaining half subject to call by the Federal

Reserve district bank board, which the Corporation believes is

remote.

Other Guarantees

Bank-owned Life Insurance Book Value Protection

The Corporation sells products that offer book value protection

to insurance carriers who offer group life insurance policies to

corporations, primarily banks. At December 31, 2023 and

2022, the notional amount of these guarantees totaled $3.8

billion and $4.3 billion. At December31, 2023 and 2022, the

Corporation’s maximum exposure related to these guarantees

totaled $577 million and $632 million, with estimated maturity

dates between 2033 and 2037.

Indemnifications

In the ordinary course of business, the Corporation enters into

various agreements that contain indemnifications, such as tax

indemnifications, whereupon payment may become due if

certain external events occur, such as a change in tax law. The

indemnification clauses are often standard contractual terms

and were entered into in the normal course of business based

on an assessment that the risk of loss would be remote. These

agreements typically contain an early termination clause that

permits the Corporation to exit the agreement upon these

events. The maximum potential future payment under

indemnification agreements is difficult to assess for several

reasons, including the occurrence of an external event, the

inability to predict future changes in tax and other laws, the

difficulty in determining how such laws would apply to parties in

contracts, the absence of exposure limits contained in standard

contract language and the timing of any early termination

clauses. Historically, any payments made under these

guarantees have been de minimis. The Corporation has

assessed the probability of making such payments in the future

as remote.

Bank of America 136

Merchant Services

The Corporation in its role as merchant acquirer or as a sponsor

of other merchant acquirers may be held liable for any reversed

charges that cannot be collected from the merchants due to,

among other things, merchant fraud or insolvency. If charges are

properly reversed after a purchase and cannot be collected from

either the merchants or merchant acquirers, the Corporation

may be held liable for these reversed charges. The ability to

reverse a charge is primarily governed by the applicable

payment network rules and regulations, which include, but are

not limited to, the type of charge, type of payment used and

time limits. The total amount of transactions subject to reversal

under payment network rules and regulations processed for the

preceding six-month period, which was approximately $395

billion, is an estimate of the Corporation’s maximum potential

exposure as of December 31, 2023. The Corporation’s risk in

this area primarily relates to circumstances where a cardholder

has purchased goods or services for future delivery. The

Corporation mitigates this risk by requiring cash deposits,

guarantees, letters of credit or other types of collateral from

certain merchants. The Corporation’s reserves for contingent

losses, and the losses incurred related to the merchant

processing activity were not significant.

Exchange and Clearing House Member Guarantees

The Corporation is a member of various securities and derivative

exchanges and clearinghouses, both in the U.S. and other

countries. As a member, the Corporation may be required to pay

a pro-rata share of the losses incurred by some of these

organizations as a result of another member default and under

other loss scenarios. The Corporation’s potential obligations

may be limited to its membership interests in such exchanges

and clearinghouses, to the amount (or multiple) of the

Corporation’s contribution to the guarantee fund or, in limited

instances, to the full pro-rata share of the residual losses after

applying the guarantee fund. The Corporation’s maximum

potential exposure under these membership agreements is

difficult to estimate; however, the Corporation has assessed the

probability of making any such payments as remote.

Prime Brokerage and Securities Clearing Services

In connection with its prime brokerage and clearing businesses,

the Corporation performs securities clearance and settlement

services with other brokerage firms and clearinghouses on

behalf of its clients. Under these arrangements, the Corporation

stands ready to meet the obligations of its clients with respect

to securities transactions. The Corporation’s obligations in this

respect are secured by the assets in the clients’ accounts and

the accounts of their customers, as well as by any proceeds

received from the transactions cleared and settled by the

Corporation on behalf of clients or their customers. The

Corporation’s maximum potential exposure under these

arrangements is difficult to estimate; however, the potential for

the Corporation to incur material losses pursuant to these

arrangements is remote.

Fixed Income Clearing Corporation Sponsored Member

Repo Program

The Corporation acts as a sponsoring member in a repo

program whereby the Corporation clears certain eligible resale

and repurchase agreements through the Government Securities

Division of the Fixed Income Clearing Corporation on behalf of

clients that are sponsored members in accordance with the

Fixed Income Clearing Corporation’s rules. As part of this

program, the Corporation guarantees the payment and

performance of its sponsored members to the Fixed Income

Clearing Corporation. The Corporation’s guarantee obligation is

secured by a security interest in cash or high-quality securities

collateral placed by clients with the clearinghouse and therefore,

the potential for the Corporation to incur significant losses

under this arrangement is remote. The Corporation’s maximum

potential exposure, without taking into consideration the related

collateral, was $132.5 billion and $59.6 billion at

December31, 2023 and 2022.

Other Guarantees

In the normal course of business, the Corporation periodically

guarantees the obligations of its affiliates in a variety of

transactions including ISDA-related transactions and non-ISDA

related transactions such as commodities trading, repurchase

agreements, prime brokerage agreements and other

transactions.

Guarantees of Certain Long-term Debt

The Corporation, as the parent company, fully and

unconditionally guarantees the securities issued by BofA

Finance LLC, a consolidated finance subsidiary of the

Corporation, and effectively provides for the full and

unconditional guarantee of trust securities and capital securities

issued by certain statutory trust companies that are 100

percent owned finance subsidiaries of the Corporation.

Representations and Warranties Obligations and Corporate

Guarantees

The Corporation securitizes first-lien residential mortgage loans

generally in the form of RMBS guaranteed by the GSEs or by

GNMA in the case of FHA-insured, VA-guaranteed and Rural

Housing Service-guaranteed mortgage loans, and sells pools of

first-lien residential mortgage loans in the form of whole loans.

In addition, in prior years, legacy companies and certain

subsidiaries sold pools of first-lien residential mortgage loans

and home equity loans as private-label securitizations or in the

form of whole loans. In connection with these transactions, the

Corporation or certain of its subsidiaries or legacy companies

make and have made various representations and warranties.

Breaches of these representations and warranties have resulted

in and may continue to result in the requirement to repurchase

mortgage loans or to otherwise make whole or provide

indemnification or other remedies to sponsors, investors,

securitization trusts, guarantors, insurers or other parties

(collectively, repurchases).

Unresolved Repurchase Claims

Unresolved representations and warranties repurchase claims

represent the notional amount of repurchase claims made by

counterparties, typically the outstanding principal balance or the

unpaid principal balance at the time of default. In the case of

first-lien mortgages, the claim amount is often significantly

greater than the expected loss amount due to the benefit of

collateral and, in some cases, mortgage insurance or mortgage

guarantee payments.

The notional amount of unresolved repurchase claims at

December 31, 2023 and 2022 was $5.4 billion and $5.5

billion. These balances included $2.2 billion at both December

31, 2023 and 2022 of claims related to loans in specific

private-label securitization groups or tranches where the

Corporation owns substantially all of the outstanding securities

or will otherwise realize the benefit of any repurchase claims

paid.

137 Bank of America

During 2023, the Corporation received $254 million in new

repurchase claims that were not time-barred. During 2023,

$269 million in claims were resolved.

Reserve and Related Provision

The reserve for representations and warranties obligations and

corporate guarantees was $604 million and $612 million at

December 31, 2023 and 2022 and is included in accrued

expenses and other liabilities on the Consolidated Balance

Sheet, and the related provision is included in other income in

the Consolidated Statement of Income. The representations and

warranties reserve represents the Corporation’s best estimate

of probable incurred losses, is based on its experience in

previous negotiations, and is subject to judgment, a variety of

assumptions and known or unknown uncertainties. Future

representations and warranties losses may occur in excess of

the amounts recorded for these exposures; however, the

Corporation does not expect such amounts to be material to the

Corporation's financial condition and liquidity. See Litigation and

Regulatory Matters below for the Corporation's combined range

of possible loss in excess of the reserve for representations

and warranties and the accrued liability for litigation.

Other Contingencies

On November 16, 2023, the Federal Deposit Insurance

Corporation (FDIC) issued its final rule to impose a special

assessment to recover the loss to the Deposit Insurance Fund

(DIF) resulting from the closure of Silicon Valley Bank and

Signature Bank. The special assessment is based on uninsured

deposits as of December 31, 2022, adjusted to exclude the

first $5 billion. Accordingly, in the fourth quarter of 2023, the

Corporation recorded noninterest expense of $2.1 billion in

other general operating expenses for its estimated assessment

amount. The FDIC will collect the special assessment over eight

quarterly assessment periods. The special assessment is

subject to change for any updates made by the FDIC to the

estimated loss to the DIF, or if the assessments collected from

insured depository institutions change due to amendments

made to their uninsured deposits reported for the December 31,

2022 period. In the event of any such change resulting in an

increased assessment, the Corporation could recognize further

expense in future periods.

Litigation and Regulatory Matters

In the ordinary course of business, the Corporation and its

subsidiaries are routinely defendants in or parties to many

pending and threatened legal, regulatory and governmental

actions and proceedings. In view of the inherent difficulty of

predicting the outcome of such matters, particularly where the

claimants seek very large or indeterminate damages or where

the matters present novel legal theories or involve a large

number of parties, the Corporation generally cannot predict the

eventual outcome of the pending matters, timing of the ultimate

resolution of these matters, or eventual loss, fines or penalties

related to each pending matter.

As a matter develops, the Corporation, in conjunction with

any outside counsel handling the matter, evaluates whether

such matter presents a loss contingency that is probable and

estimable, and, for the matters below, whether a loss in excess

of any accrued liability is reasonably possible in future periods.

Once the loss contingency is deemed to be both probable and

estimable, the Corporation will establish an accrued liability and

record a corresponding amount of litigation-related expense. The

Corporation continues to monitor the matter for further

developments that could affect the amount of the accrued

liability that has been previously established. Excluding

expenses of internal and external legal service providers,

litigation and regulatory investigation-related expense of $519

million and $1.2 billion was recognized in 2023 and 2022.

For any matter disclosed in this Note for which a loss in

future periods is reasonably possible and estimable (whether in

excess of an accrued liability or where there is no accrued

liability) and for representations and warranties exposures, the

Corporation’s estimated range of possible loss is $0 to $0.8

billion in excess of the accrued liability, if any, as of

December31, 2023.

The accrued liability and estimated range of possible loss

are based upon currently available information and subject to

significant judgment, a variety of assumptions and known and

unknown uncertainties. The matters underlying the accrued

liability and estimated range of possible loss are unpredictable

and may change from time to time, and actual losses may vary

significantly from the current estimate and accrual. The

estimated range of possible loss does not represent the

Corporation’s maximum loss exposure.

Information is provided below regarding the nature of the

litigation and, where specified, associated claimed damages.

Based on current knowledge, and taking into account accrued

liabilities, management does not believe that loss contingencies

arising from pending matters, including the matters described

below will have a material adverse effect on the consolidated

financial condition or liquidity of the Corporation. However, in

light of the significant judgment, variety of assumptions and

uncertainties involved in those matters, some of which are

beyond the Corporation’s control, and the very large or

indeterminate damages sought in some of those matters, an

adverse outcome in one or more of those matters could be

material to the Corporation’s business or results of operations

for any particular reporting period, or cause significant

reputational harm.

Deposit Insurance Assessment

On January 9, 2017, the FDIC filed suit against BANA in the U.S.

District Court for the District of Columbia (District Court) alleging

failure to pay a December 15, 2016 invoice for additional

deposit insurance assessments and interest in the amount of

$542 million for the quarters ending June 30, 2013 through

December 31, 2014. On April 7, 2017, the FDIC amended its

complaint to add a claim for additional deposit insurance and

interest in the amount of $583 million for the quarters ending

March 31, 2012 through March 31, 2013. The FDIC asserts

these claims based on BANA’s alleged underreporting of

counterparty exposures that resulted in underpayment of

assessments for those quarters, and its Enforcement Section is

also conducting a parallel investigation related to the same

alleged reporting error. BANA disagrees with the FDIC’s

interpretation of the regulations as they existed during the

relevant time period and is defending itself against the FDIC’s

claims. Pending final resolution, BANA has pledged security

satisfactory to the FDIC related to the disputed additional

assessment amounts. On March 27, 2018, the District Court

denied BANA’s partial motion to dismiss certain of the FDIC’s

claims.

On April 10, 2023, the magistrate judge issued a report and

recommendation (Report) for resolving the parties’ pending

summary judgment motions. The Report recommends granting

the FDIC’s motion for summary judgment on BANA’s statutory

liability for the unpaid assessments, subject to BANA’s statute

of limitations defenses to assessments for the quarters ended

March 31, 2012 through March 31, 2013, on which the Report

Bank of America 138

recommends that relevant issues should be resolved at trial.

The Report also recommends denying BANA’s counterclaims

challenging the adoption of the relevant assessment regulations

and granting BANA’s motion for summary judgment on the

FDIC’s claims for unjust enrichment and disgorgement. The

Report has been submitted to the District Court judge for

consideration, and the parties have filed objections to the

recommendations in the Report.

LIBOR

The Corporation, BANA and certain Merrill Lynch entities have

been named as defendants along with most of the other LIBOR

panel banks in a number of individual and putative class actions

by persons alleging that they sustained losses on U.S. dollar

LIBOR-based financial instruments as a result of collusion or

manipulation by defendants regarding the setting of U.S. dollar

LIBOR. Plaintiffs assert a variety of claims, including antitrust,

Commodity Exchange Act, Racketeer Influenced and Corrupt

Organizations (RICO), Securities Exchange Act of 1934, common

law fraud and breach of contract claims, and seek

compensatory, treble and punitive damages, and injunctive

relief. All but one of the cases naming the Corporation and its

affiliates relating to U.S. dollar LIBOR are pending in the U.S.

District Court for the Southern District of New York (District

Court). The District Court has dismissed all RICO claims, and

dismissed all manipulation claims against Bank of America

entities based on alleged trader conduct. The District Court has

also substantially limited the scope of antitrust, Commodity

Exchange Act and various other claims, including by dismissing

in their entirety certain individual and putative class plaintiffs’

antitrust claims for lack of standing. On December 30, 2021,

the U.S. Court of Appeals for the Second Circuit affirmed the

dismissal of these antitrust claims for lack of standing. Certain

individual and putative class actions remain pending against the

Corporation, BANA and certain Merrill Lynch entities. On

February 28, 2018, the District Court granted certification of a

class of persons that purchased OTC swaps and notes that

referenced U.S. dollar LIBOR from one of the U.S. dollar LIBOR

panel banks, limited to claims under Section 1 of the Sherman

Act.

Unemployment Insurance Prepaid Cards

BANA has been named as a defendant in a number of putative

class action, mass action, and individual lawsuits in multiple

states related to its administration of prepaid debit cards to

distribute unemployment and other state benefits. These

lawsuits generally assert claims for monetary damages and

injunctive relief.

Class action and mass action lawsuits related to the

California program, the largest program administered by BANA

measured by total benefits and number of participants, have

been consolidated into a multidistrict litigation (MDL) in the U.S.

District Court for the Southern District of California. On May 25,

2023, the court dismissed certain of the claims in the MDL

while allowing others to proceed, and plaintiffs subsequently

filed an amended complaint. BANA filed a partial motion to

dismiss certain of the remaining claims in the amended

complaint in the MDL, which is currently pending.

139 Bank of America

NOTE 13 Shareholders’ Equity

Common Stock

Declared Quarterly Cash Dividends on Common Stock

(1)

Declaration Date Record Date Payment Date

Dividend

Per Share

January 31, 2024

March 1, 2024 March 29, 2024

$ 0.24

October 18, 2023

December 1, 2023 December 29, 2023

0.24

July 19, 2023 September 1, 2023 September 29, 2023

0.24

April26, 2023 June 2, 2023 June 30, 2023

0.22

February1, 2023 March 3, 2023 March 31, 2023

0.22

(1)

In 2023, and through February20, 2024.

The cash dividends paid per share of common stock were $0.92

$0.86 and $0.78 for 2023, 2022 and 2021, respectively.

The table below summarizes common stock repurchases

during 2023, 2022 and 2021.

Common Stock Repurchase Summary

(in millions)

2023

2022 2021

Total share repurchases, including CCAR

capital plan repurchases

147

126 615

Purchase price of shares repurchased and

retired

(1)

$ 4,576

$ 5,073 $ 25,126

(1)

Consists of repurchases pursuant to the Corporation’s CCAR capital plans.

During 2023, in connection with employee stock plans, the

Corporation issued 75 million shares of its common stock and,

to satisfy tax withholding obligations, repurchased 30 million

shares of common stock. At December 31, 2023, the

Corporation had reserved 497 million unissued shares of

common stock for future issuances under employee stock

plans, convertible notes and preferred stock.

Preferred Stock

The cash dividends declared on preferred stock were $1.6

billion in both 2023 and 2022 and $1.4 billion in 2021.

All series of preferred stock in the Preferred Stock Summary

table have a par value of $0.01 per share, are not subject to

the operation of a sinking fund, have no participation rights, and

with the exception of the Series L Preferred Stock, are not

convertible. The holders of the Series B Preferred Stock and

Series 1 through 5 Preferred Stock have general voting rights

and vote together with the common stock. The holders of the

other series included in the table have no general voting rights.

All outstanding series of preferred stock of the Corporation have

preference over the Corporation’s common stock with respect to

the payment of dividends and distribution of the Corporation’s

assets in the event of a liquidation or dissolution. With the

exception of the Series B, F and G Preferred Stock, if any

dividend payable on these series is in arrears for three or more

semi-annual or six or more quarterly dividend periods, as

applicable (whether consecutive or not), the holders of these

series and any other class or series of preferred stock ranking

equally as to payment of dividends and upon which equivalent

voting rights have been conferred and are exercisable (voting as

a single class) will be entitled to vote for the election of two

additional directors. These voting rights terminate when the

Corporation has paid in full dividends on these series for at

least two semi-annual or four quarterly dividend periods, as

applicable, following the dividend arrearage.

The 7.25% Non-Cumulative Perpetual Convertible Preferred

Stock, Series L (Series L Preferred Stock) does not have early

redemption/call rights. Each share of the Series L Preferred

Stock may be converted at any time, at the option of the holder,

into 20 shares of the Corporation’s common stock plus cash in

lieu of fractional shares. The Corporation may cause some or all

of the Series L Preferred Stock, at its option, at any time or from

time to time, to be converted into shares of common stock at

the then-applicable conversion rate if, for 20 trading days during

any period of 30 consecutive trading days, the closing price of

common stock exceeds 130 percent of the then-applicable

conversion price of the Series L Preferred Stock. If a conversion

of Series L Preferred Stock occurs at the option of the holder,

subsequent to a dividend record date but prior to the dividend

payment date, the Corporation will still pay any accrued

dividends payable.

Bank of America 140

The table below presents a summary of perpetual preferred stock outstanding at December31, 2023.

Preferred Stock Summary

(Dollars in millions, except as noted)

Series

Description

Initial

Issuance

Date

Total

Outstanding

Liquidation

Preference

per Share

(in dollars)

Carrying

Value

Per Annum

Dividend Rate

Dividend per

(in dollars)

(1)

Annual

Dividend Redemption Period

(2)

SeriesB

7.000% Cumulative

Redeemable

June

1997 7,076 $ 100 $ 1 7.00 % $ 7 $ — n/a

SeriesE

(3)

Floating Rate Non-

Cumulative

November

2006 12,317 25,000 308

3-mo. CME Term SOFR + 61.161

bps

(4)(5)

1.38 17

On or after

November 15, 2011

SeriesF

Floating Rate Non-

Cumulative

March

2012 1,409 100,000 141

3-mo. CME Term SOFR + 66.161

bps

(4)(5)

5,693.77 8

On or after

March 15, 2012

SeriesG

Adjustable Rate Non-

Cumulative

March

2012 4,925 100,000 492

3-mo. CME Term SOFR + 66.161

bps

(4)(5)

5,693.77 28

On or after

March 15, 2012

SeriesL

7.25% Non-Cumulative

Perpetual Convertible

January

2008 3,080,182 1,000 3,080 7.25 % 72.50 223 n/a

Series U

(7)

Fixed-to-Floating Rate

Non-Cumulative

May

2013 40,000 25,000 1,000

5.2% to, but excluding, 6/1/23;3-

mo. CME Term SOFR + 339.661

bps thereafter

(5)(6)

70.32 70

On or after

June 1, 2023

Series X

(7)

Fixed-to-Floating Rate

Non-Cumulative

September

2014 80,000 25,000 2,000

6.250% to, but excluding,

9/5/24; 3-mo. CME Term SOFR +

396.661 bps thereafter

(5)

62.50 125

On or after

September 5, 2024

Series Z

(7)

Fixed-to-Floating Rate

Non-Cumulative

October

2014 56,000 25,000 1,400

6.500% to, but excluding,

10/23/24; 3-mo. CME Term

SOFR + 443.561 bps thereafter

(5)

65.00 91

On or after

October 23, 2024

Series AA

(7)

Fixed-to-Floating Rate

Non-Cumulative

March

2015 76,000 25,000 1,900

6.100% to, but excluding,

3/17/25; 3-mo. CME Term SOFR

+ 415.961 bps thereafter

(5)

61.00 116

On or after

March 17, 2025

Series DD

(7)

Fixed-to-Floating Rate

Non-Cumulative

March

2016 40,000 25,000 1,000

6.300% to, but excluding,

3/10/26; 3-mo. CME Term SOFR

+ 481.461 bps thereafter

(5)

63.00 63

On or after

March 10, 2026

Series FF

(7)

Fixed-to-Floating Rate

Non-Cumulative

March

2018 90,833 25,000 2,271

5.875% to, but excluding,

3/15/28; 3-mo. CME Term SOFR

+ 319.261 bps thereafter

(5)

58.75 133

On or after

March 15, 2028

Series GG

(3)

6.000% Non-Cumulative

May

2018 54,000 25,000 1,350 6.000 % 1.50 81

On or after

May 16, 2023

Series HH

(3)

5.875% Non-Cumulative

July

2018 34,049 25,000 851 5.875 % 1.47 50

On or after

July 24, 2023

Series JJ

(7)

Fixed-to-Floating Rate

Non-Cumulative

June

2019 34,171 25,000 854

5.125% to, but excluding,

6/20/24; 3-mo. CME Term SOFR

+ 355.361 bps thereafter

(5)

51.25 44

On or after

June 20, 2024

Series KK

(3)

5.375% Non-Cumulative

June

2019 55,273 25,000 1,382 5.375 % 1.34 74

On or after

June 25, 2024

Series LL

(3)

5.000% Non-Cumulative

September

2019 52,045 25,000 1,301 5.000 % 1.25 65

On or after

September 17, 2024

Series MM

(7)

Fixed-to-Floating Rate

Non-Cumulative

January

2020 30,753 25,000 769

4.300% to, but excluding,

1/28/25; 3-mo. CME Term SOFR

+ 292.561 bps thereafter

(5)

43.00 33

On or after

January 28, 2025

Series NN

(3)

4.375% Non-Cumulative

October

2020 42,993 25,000 1,075 4.375 % 1.09 47

On or after

November 3, 2025

Series PP

(3)

4.125% Non-Cumulative

January

2021 36,500 25,000 912 4.125 % 1.03 38

On or after

February 2, 2026

Series QQ

(3)

4.250% Non-Cumulative

October

2021 51,879 25,000 1,297 4.250 % 1.06 55

On or after

November 17, 2026

Series RR

(8)

4.375% Fixed-Rate Reset

Non-Cumulative

January

2022 66,738 25,000 1,668

4.375% to, but excluding

1/27/27; 5-yr U.S. Treasury Rate

+ 276 bps thereafter 43.75 73

On or after

January 27, 2027

Series SS

(3)

4.750% Non-Cumulative

January

2022 27,463 25,000 687 4.750 % 1.19 33

On or after

February 17, 2027

Series TT

(8)

6.125% Fixed-Rate Reset

Non-Cumulative April 2022 80,000 25,000 2,000

6.125% to, but excluding,

4/27/27; 5-yr U.S. Treasury Rate

+ 323.1 bps thereafter 61.25 122

On or after

April 27, 2027

Series1

(9)

Floating Rate Non-

Cumulative

November

2004 3,185 30,000 96

3-mo. CME Term SOFR + 101.161

bps

(5)(10)

1.49 6

On or after

November 28, 2009

Series 2

(9)

Floating Rate Non-

Cumulative

March

2005 9,967 30,000 299

3-mo. CME Term SOFR +

91.161bps

(5)(10)

1.48 18

On or after

November 28, 2009

Series 4

(9)

Floating Rate Non-

Cumulative

November

2005 7,010 30,000 210

3-mo. CME Term SOFR + 101.161

bps

(4)(5)

1.51 13

On or after

November 28, 2010

Series5

(9)

Floating Rate Non-

Cumulative

March

2007 13,331 30,000 400

3-mo. CME Term SOFR + 76.161

bps

(4)(5)

1.43 23

On or after

May 21, 2012

Issuance costs and certain adjustments (347)

Total   4,088,099  $ 28,397

(1)

For all series of preferred stock other than Series B, Series F, Series G and Series L, “Dividend per Share” means the amount of dividends per depositary share of such series.

(2)

The Corporation may redeem series of preferred stock on or after the redemption date, in whole or in part, at its option, at the liquidation preference plus declared and unpaid dividends. Series B

and SeriesL Preferred Stock do not have early redemption/call rights.

(3)

Ownership is held in the form of depositary shares, each representing a 1/1,000th interest in a share of preferred stock, paying a quarterly cash dividend, if and when declared.

(4)

Subject to 4.00% minimum rate per annum.

(5)

The number of basis points to be added to 3-mo. Term SOFR is equal to the original basis point spread applicable to floating rate periods when the preferred stock was originally issued, plus a

tenor spread adjustment of 26.161 bps relating to the transition from 3-mo. LIBOR to 3-mo. Term SOFR.

(6)

Solely for the dividend period commencing 6/1/23, the per annum dividend rate for the Series U Preferred Stock was determined by reference to 3-mo. LIBOR + 313.5 bps.

(7)

Ownership is held in the form of depositary shares, each representing a 1/25th interest in a share of preferred stock, paying a semi-annual cash dividend, if and when declared, until the first

redemption date at which time, it adjusts to a quarterly cash dividend, if and when declared, thereafter.

(8)

Ownership is held in the form of depositary shares, each representing a 1/25th interest in a share of preferred stock, paying a quarterly cash dividend, if and when declared.

(9)

Ownership is held in the form of depositary shares, each representing a 1/1,200th interest in a share of preferred stock, paying a quarterly cash dividend, if and when declared.

(10)

Subject to 3.00% minimum rate per annum.

n/a=not applicable

141 Bank of America

NOTE 14 Accumulated Other Comprehensive Income (Loss)

The table below presents the changes in accumulated OCI after-tax for 2023, 2022 and 2021.

(Dollars in millions)

Debt Securities

Debit Valuation

Adjustments Derivatives

Employee

Benefit Plans

Foreign

Currency Total

Balance, December 31, 2020

$ 5,122 $ (1,992) $ 426 $ (4,266) $ (946) $ (1,656)

Net change (2,077) 356 (2,306) 624 (45) (3,448)

Balance, December 31, 2021

$ 3,045 $ (1,636) $ (1,880) $ (3,642) $ (991) $ (5,104)

Net change (6,028) 755 (10,055) (667) (57) (16,052)

Balance, December 31, 2022

$ (2,983) $ (881) $ (11,935) $ (4,309) $ (1,048) $ (21,156)

Net change

573 (686) 3,919 (439) 1 3,368

Balance, December 31, 2023 $ (2,410) $ (1,567) $ (8,016) $ (4,748) $ (1,047) $ (17,788)

The table below presents the net change in fair value recorded in accumulated OCI, net realized gains and losses reclassified

into earnings and other changes for each component of OCI pre- and after-tax for 2023, 2022 and 2021.

Pretax

Tax

effect

After-

tax

Pretax

Tax

effect

After-

tax Pretax

Tax

effect

After-

tax

(Dollars in millions)

2023

2022 2021

Debt securities:

Net increase (decrease) in fair value

$ 348 $ (79) $ 269

$ (7,995) $ 1,991 $ (6,004) $ (2,749) $ 689 $ (2,060)

Net realized (gains) losses reclassified into earnings

(1)

405 (101) 304

(32) 8 (24) (22) 5 (17)

Net change 753 (180) 573

(8,027) 1,999 (6,028) (2,771) 694 (2,077)

Debit valuation adjustments:

Net increase (decrease) in fair value

(917) 223 (694)

980 (237) 743 449 (103) 346

Net realized (gains) losses reclassified into earnings

(1)

11 (3) 8

16 (4) 12 13 (3) 10

Net change (906) 220 (686)

996 (241) 755 462 (106) 356

Derivatives:

Net increase (decrease) in fair value

2,064 (514) 1,550

(13,711) 3,430 (10,281) (2,849) 703 (2,146)

Reclassifications into earnings:

Net interest income

1,153 (288) 865

332 (84) 248 (166) 48 (118)

Market making and similar activities

2,031 (508) 1,523

— — — — — —

Compensation and benefits expense

(25) 6 (19)

(29) 7 (22) (55) 13 (42)

Net realized (gains) losses reclassified into earnings

3,159 (790) 2,369

303 (77) 226 (221) 61 (160)

Net change 5,223 (1,304) 3,919

(13,408) 3,353 (10,055) (3,070) 764 (2,306)

Employee benefit plans:

Net increase (decrease) in fair value

(642) 162 (480)

(1,103) 276 (827) 463 (72) 391

Net actuarial losses and other reclassified into earnings

(2)

56 (16) 40

198 (49) 149 295 (67) 228

Settlements, curtailments and other

1 — 1

11 — 11 5 — 5

Net change (585) 146 (439)

(894) 227 (667) 763 (139) 624

Foreign currency:

Net increase (decrease) in fair value

(177) 192 15

332 (390) (58) 296 (341) (45)

Net realized (gains) losses reclassified into earnings

(1)

(48) 34 (14)

— 1 1 (5) 5 —

Net change (225) 226 1

332 (389) (57) 291 (336) (45)

Total other comprehensive income (loss) $ 4,260 $ (892) $ 3,368

$ (21,001) $ 4,949 $ (16,052) $ (4,325) $ 877 $ (3,448)

(1)

Reclassifications of pretax debt securities, DVA and foreign currency (gains) losses are recorded in other income in the Consolidated Statement of Income.

(2)

Reclassifications of pretax employee benefit plan costs are recorded in other general operating expense in the Consolidated Statement of Income.

Bank of America 142

NOTE 15 Earnings Per Common Share

The calculation of EPS and diluted EPS for 2023, 2022 and 2021 is presented below. For more information on the calculation of

EPS, see Note 1 – Summary of Significant Accounting Principles.

(In millions, except per share information)

2023

2022 2021

Earnings per common share



Net income $ 26,515

$ 27,528 $ 31,978

Preferred stock dividends and other

(1,649)

(1,513) (1,421)

Net income applicable to common shareholders

$ 24,866

$ 26,015 $ 30,557

Average common shares issued and outstanding

8,028.6

8,113.7 8,493.3

Earnings per common share $ 3.10

$ 3.21 $ 3.60

Diluted earnings per common share 



Net income applicable to common shareholders

$ 24,866

$ 26,015 $ 30,557

Average common shares issued and outstanding

8,028.6

8,113.7 8,493.3

Dilutive potential common shares

(1)

51.9

53.8 65.1

Total diluted average common shares issued and outstanding

8,080.5

8,167.5 8,558.4

Diluted earnings per common share $ 3.08

$ 3.19 $ 3.57

(1)

Includes incremental dilutive shares from preferred stock, restricted stock units, restricted stock and warrants.

For 2023, 2022 and 2021, 62 million average dilutive

potential common shares associated with the Series L preferred

stock were not included in the diluted share count because the

result would have been antidilutive under the “if-converted”

method.

NOTE 16 Regulatory Requirements and

Restrictions

The Federal Reserve, Office of the Comptroller of the Currency

(OCC) and FDIC (collectively, U.S. banking regulators) jointly

establish regulatory capital adequacy rules, including Basel 3,

for U.S. banking organizations. As a financial holding company,

the Corporation is subject to capital adequacy rules issued by

the Federal Reserve. The Corporation’s banking entity affiliates

are subject to capital adequacy rules issued by the OCC.

The Corporation and its primary banking entity affiliate,

BANA, are Advanced approaches institutions under Basel 3. As

Advanced approaches institutions, the Corporation and its

banking entity affiliates are required to report regulatory risk-

based capital ratios and risk-weighted assets under both the

Standardized and Advanced approaches. The approach that

yields the lower ratio is used to assess capital adequacy,

including under the Prompt Corrective Action (PCA) framework.

The Corporation is required to maintain a minimum

supplementary leverage ratio (SLR) of 3.0 percent plus a

leverage buffer of 2.0 percent in order to avoid certain

restrictions on capital distributions and discretionary bonus

payments to executive officers. The Corporation’s insured

depository institution subsidiaries are required to maintain a

minimum 6.0 percent SLR to be considered well capitalized

under the PCA framework.

The following table presents capital ratios and related

information in accordance with Basel 3 Standardized and

Advanced approaches as measured at December31, 2023 and

2022 for the Corporation and BANA.

143 Bank of America

Regulatory Capital under Basel 3

Bank of America Corporation Bank of America, N.A.

Standardized

Approach

(1)

Advanced

Approaches

(1)

Regulatory

Minimum

(2)

Standardized

Approach

(1)

Advanced

Approaches

(1)

Regulatory

Minimum

(3)

(Dollars in millions, except as noted)

December 31, 2023

Risk-based capital metrics:

 

Common equity tier 1 capital

$ 194,928 $ 194,928 $ 187,621 $ 187,621

Tier 1 capital

223,323 223,323 187,621 187,621

Total capital

(4)

251,399 241,449 201,932 192,175

Risk-weighted assets (in billions)

1,651 1,459 1,395 1,114

Common equity tier 1 capital ratio

11.8 % 13.4 % 9.5 % 13.5 % 16.8 % 7.0 %

Tier 1 capital ratio

13.5 15.3 11.0 13.5 16.8 8.5

Total capital ratio

15.2 16.6 13.0 14.5 17.2 10.5

Leverage-based metrics:

Adjusted quarterly average assets (in billions)

(5)

$ 3,135 $ 3,135 $ 2,471 $ 2,471

Tier 1 leverage ratio

7.1 % 7.1 % 4.0 7.6 % 7.6 % 5.0

Supplementary leverage exposure (in billions)

$ 3,676 $ 2,910

Supplementary leverage ratio

6.1 % 5.0 6.4 % 6.0



December 31, 2022

Risk-based capital metrics:

   

Common equity tier 1 capital

$ 180,060 $ 180,060 $ 181,089 $ 181,089

Tier 1 capital

208,446 208,446 181,089 181,089

Total capital

(4)

238,773 230,916 194,254 186,648

Risk-weighted assets (in billions)

1,605 1,411 1,386 1,087

Common equity tier 1 capital ratio

11.2 % 12.8 % 10.4 % 13.1 % 16.7 % 7.0 %

Tier 1 capital ratio

13.0 14.8 11.9 13.1 16.7 8.5

Total capital ratio

14.9 16.4 13.9 14.0 17.2 10.5

Leverage-based metrics:

Adjusted quarterly average assets (in billions)

(5)

$ 2,997 $ 2,997 $ 2,358 $ 2,358

Tier 1 leverage ratio

7.0 % 7.0 % 4.0 7.7 % 7.7 % 5.0

Supplementary leverage exposure (in billions)

$ 3,523 $ 2,785

Supplementary leverage ratio

5.9 % 5.0 6.5 % 6.0

(1)

As of December31, 2023 and 2022, capital ratios are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of the current expected credit

losses accounting standard on January 1, 2020.

(2)

The common equity tier 1 (CET1) capital regulatory minimum is the sum of the CET1 capital ratio minimum of 4.5 percent, the Corporation’s G-SIB surcharge of 2.5 percent and the Corporation’s

capital conservation buffer of 2.5 percent (under the Advanced approaches) or the stress capital buffer of 2.5 percent at December31, 2023 and 3.4 percent at December31, 2022 (under the

Standardized approach), as applicable. The countercyclical capital buffer was zero for both periods. The SLR regulatory minimum includes a leverage buffer of 2.0 percent.

(3)

Risk-based capital regulatory minimums at both December 31, 2023 and 2022 are the minimum ratios under Basel 3 including a capital conservation buffer of 2.5 percent. The regulatory

minimums for the leverage ratios as of both period ends are the percent required to be considered well capitalized under the PCA framework.

(4)

Total capital under the Advanced approaches differs from the Standardized approach due to differences in the amount permitted in Tier 2 capital related to the qualifying allowance for credit

losses.

(5)

Reflects total average assets adjusted for certain Tier 1 capital deductions.

The capital adequacy rules issued by the U.S. banking

regulators require institutions to meet the established

minimums outlined in the table above. Failure to meet the

minimum requirements can lead to certain mandatory and

discretionary actions by regulators that could have a material

adverse impact on the Corporation’s financial position. At

December31, 2023 and 2022, the Corporation and its banking

entity affiliates were well capitalized.

Other Regulatory Matters

At December 31, 2023 and 2022, the Corporation had cash

and cash equivalents in the amount of $3.6 billion and $5.6

billion, and securities with a fair value of $18.0 billion and

$16.6 billion that were segregated in compliance with securities

regulations. Cash and cash equivalents segregated in

compliance with securities regulations are a component of

restricted cash. For more information, see Note 10 – Securities

Financing Agreements, Short-term Borrowings, Collateral and

Restricted Cash. In addition, at December31, 2023 and 2022,

the Corporation had cash deposited with clearing organizations

of $23.7 billion and $20.7 billion primarily recorded in other

assets on the Consolidated Balance Sheet.

Bank Subsidiary Distributions

The primary sources of funds for cash distributions by the

Corporation to its shareholders are capital distributions received

from its bank subsidiaries, BANA and Bank of America

California, N.A. In 2023, the Corporation received dividends of

$22.2 billion from BANA and $199 million from Bank of America

California, N.A.

The amount of dividends that a subsidiary bank may declare

in a calendar year without OCC approval is the subsidiary bank’s

net profits for that year combined with its retained net profits for

the preceding two years. Retained net profits, as defined by the

OCC, consist of net income less dividends declared during the

period. In 2024, BANA can declare and pay dividends of

approximately $12.0 billion to the Corporation plus an additional

amount equal to its retained net profits for 2024 up to the date

of any such dividend declaration. Bank of America California,

N.A. can pay dividends of $66 million in 2024 plus an additional

amount equal to its retained net profits for 2024 up to the date

of any such dividend declaration.

Bank of America 144

NOTE 17 Employee Benefit Plans

Pension and Postretirement Plans

The Corporation sponsors a qualified noncontributory trusteed

pension plan (Qualified Pension Plan), a number of

noncontributory nonqualified pension plans and postretirement

health and life plans that cover eligible employees. Non-U.S.

pension plans sponsored by the Corporation vary based on the

country and local practices.

The Qualified Pension Plan has a balance guarantee feature

for account balances with participant-selected investments,

applied at the time a benefit payment is made from the plan

that effectively provides principal protection for participant

balances transferred and certain compensation credits. The

Corporation is responsible for funding any shortfall on the

guarantee feature.

Benefits earned under the Qualified Pension Plan have been

frozen. Thereafter, the cash balance accounts continue to earn

investment credits or interest credits in accordance with the

terms of the plan document.

The Corporation has an annuity contract that guarantees the

payment of benefits vested under a terminated U.S. pension

plan (Other Pension Plan). The Corporation, under a

supplemental agreement, may be responsible for or benefit from

actual experience and investment performance of the annuity

assets. The Corporation made no contribution under this

agreement in 2023 or 2022. Contributions may be required in

the future under this agreement.

The Corporation’s noncontributory, nonqualified pension

plans are unfunded and provide supplemental defined pension

benefits to certain eligible employees.

In addition to retirement pension benefits, certain benefits-

eligible employees may become eligible to continue participation

as retirees in health care and/or life insurance plans sponsored

by the Corporation. These plans are referred to as the

Postretirement Health and Life Plans.

The Pension and Postretirement Plans table summarizes the

changes in the fair value of plan assets, changes in the

projected benefit obligation (PBO), the funded status of both the

accumulated benefit obligation (ABO) and the PBO, and the

weighted-average assumptions used to determine benefit

obligations for the pension plans and postretirement plans at

December 31, 2023 and 2022. The estimate of the

Corporation’s PBO associated with these plans considers

various actuarial assumptions, including assumptions for

mortality rates and discount rates. The discount rate

assumptions are derived from a cash flow matching technique

that utilizes rates that are based on Aa-rated corporate bonds

with cash flows that match estimated benefit payments of each

of the plans. The decreases in the weighted-average discount

rates in 2023 resulted in an increase to the PBO of $511

million at December 31, 2023. The increases in the weighted-

average discount rates in 2022 resulted in a decrease to the

PBO of approximately $5.3 billion at December 31, 2022.

Significant gains and losses related to changes in the PBO for

2023 and 2022 primarily resulted from changes in the discount

rate.

Pension and Postretirement Plans

(1)

Qualified

Pension Plan

Non-U.S.

Pension Plans

Nonqualified and Other

Pension Plans

Postretirement

Health and Life Plans

(Dollars in millions)

2023

2022

2023

2022

2023

2022

2023

2022

Fair value, January 1 $ 17,258

$ 22,078

$ 1,728

$ 3,031

$ 1,886

$ 2,585

$ 107

$ 117

Actual return on plan assets

1,436

(3,896)

(898)

103

(332)

Company contributions (withdrawals)

—

(135)

Plan participant contributions

—

102

104

Settlements and curtailments

—

(12)

(51)

—

(6)

—

Benefits paid

(1,062)

(924)

(80)

(62)

(220)

(226)

(159)

(161)

Federal subsidy on benefits paid

n/a

—

Foreign currency exchange rate changes

n/a

(323)

n/a

Fair value, December 31 $ 17,632

$ 17,258

$ 1,779

$ 1,728

$ 1,849

$ 1,886

$ 98

$ 107

Change in projected benefit obligation 



Projected benefit obligation, January 1 $ 11,580

$ 15,676

$ 1,752

$ 3,116

$ 2,109

$ 2,753

$ 700

$ 928

Service cost

—

Interest cost

616

438

111

Plan participant contributions

—

102

104

Plan amendments

—

Settlements and curtailments

—

(12)

(51)

—

(6)

—

Actuarial loss (gain)

635

(3,610)

121

(1,054)

(486)

(9)

(198)

Benefits paid

(1,062)

(924)

(80)

(62)

(220)

(226)

(160)

(161)

Federal subsidy on benefits paid

n/a

—

Foreign currency exchange rate changes

n/a

(283)

n/a

(2)

Projected benefit obligation, December 31 $ 11,769

$ 11,580

$ 1,974

$ 1,752

$ 2,092

$ 2,109

$ 672

$ 700

Amounts recognized on Consolidated Balance Sheet

Other assets

$ 5,863

$ 5,678

$ 235

$ 370

$ 452

$ 495

$ —

Accrued expenses and other liabilities

—

(430)

(394)

(695)

(718)

(574)

(593)

Net amount recognized, December 31 $ 5,863

$ 5,678

$ (195)

$ (24)

$ (243)

$ (223)

$ (574)

$ (593)

Funded status, December 31 



Accumulated benefit obligation

$ 11,769

$ 11,580

$ 1,903

$ 1,694

$ 2,091

$ 2,109

n/a

Overfunded (unfunded) status of ABO

5,863

5,678

(124)

(242)

(223)

n/a

Provision for future salaries

—

n/a

Projected benefit obligation

11,769

11,580

1,974

1,752

2,092

2,109

$ 672

$ 700

Weighted-average assumptions, December 31 



Discount rate

5.13 %

5.54 %

4.48 %

4.59 %

5.19 %

5.58 %

5.17 %

5.56 %

Rate of compensation increase

n/a

4.33

4.25

4.00

n/a

Interest-crediting rate

5.43 %

5.36 %

1.98

2.03

4.91

4.69

n/a

(1)

The measurement date for all of the above plans was December 31 of each year reported.

n/a = not applicable

145 Bank of America

The Corporation’s estimate of its contributions to be made

to the Non-U.S. Pension Plans, Nonqualified and Other Pension

Plans, and Postretirement Health and Life Plans in 2024 is $28

million, $82 million and $25 million, respectively. The

Corporation does not expect to make a contribution to the

Qualified Pension Plan in 2024. It is the policy of the

Corporation to fund no less than the minimum funding amount

required by the Employee Retirement Income Security Act of

1974 (ERISA).

Pension Plans with ABO and PBO in excess of plan assets as

of December 31, 2023 and 2022 are presented in the table

below. For these plans, funding strategies vary due to legal

requirements and local practices.

Plans with ABO and PBO in Excess of Plan Assets

Non-U.S.

Pension Plans

Nonqualified

and Other

Pension Plans

(Dollars in millions)

2023

2022

2023

2022

PBO

$ 499

$ 458

$ 695

$ 719

ABO

445

416

695

719

Fair value of plan assets

Components of Net Periodic Benefit Cost

Qualified Pension Plan Non-U.S. Pension Plans

(Dollars in millions)

2023

2022 2021

2023

2022 2021

Components of net periodic benefit cost (income)

Service cost

$ —

$ — $ —

$ 27

$ 29 $ 28

Interest cost

616

438 414

53 45

Expected return on plan assets

(1,191)

(1,204) (1,173)

(72)

(59) (70)

Amortization of actuarial loss (gain) and prior service cost

140 193

14 19

Other

—

— —

10 5

Net periodic benefit cost (income) $ (481)

$ (626) $ (566)

$ 47

$ 47 $ 27

Weighted-average assumptions used to determine net cost for years ended December 31 

 



 

Discount rate

5.54 %

2.86 % 2.57 %

4.59 %

1.85 % 1.35 %

Expected return on plan assets

6.50

5.75 5.75

4.17

2.17 2.30

Rate of compensation increase

n/a

n/a n/a

4.25

4.46 4.11

Nonqualified and

Other Pension Plans

Postretirement Health

and Life Plans

(Dollars in millions)

2023

2022 2021

2023

2022 2021

Components of net periodic benefit cost (income)

Service cost

$ —

$ — $ —

$ 2

$ 4 $ 5

Interest cost

111

74 67

25 24

Expected return on plan assets

(97)

(59) (49)

(2)

(2) (3)

Amortization of actuarial loss (gain) and prior service cost

54 63

(78)

(9) 20

Other

—

1 —

—

— —

Net periodic benefit cost (income) $ 43

$ 70 $ 81

$ (42)

$ 18 $ 46

Weighted-average assumptions used to determine net cost for years ended December31 

 



 

Discount rate

5.58 %

2.80 % 2.33 %

5.56 %

2.85 % 2.48 %

Expected return on plan assets

4.98

2.38 1.88

2.00

2.00 2.00

Rate of compensation increase

4.00

4.00 4.00

n/a

n/a n/a

n/a = not applicable

The asset valuation method used to calculate the expected

return on plan assets component of net periodic benefit cost for

the Qualified Pension Plan recognizes 60 percent of the prior

year’s market gains or losses at the next measurement date

with the remaining 40 percent spread equally over the

subsequent four years.

Gains and losses for all benefit plans except postretirement

health care are recognized in accordance with the standard

amortization provisions of the applicable accounting guidance.

Net periodic postretirement health and life expense was

determined using the “projected unit credit” actuarial method.

For the U.S. Postretirement Health and Life Plans, 50 percent of

the unrecognized gain or loss at the beginning of the year (or at

subsequent remeasurement) is recognized on a level basis

during the year.

Assumed health care cost trend rates affect the

postretirement benefit obligation and benefit cost reported for

the Postretirement Health and Life Plans. The assumed health

care cost trend rate used to measure the expected cost of

benefits covered by the U.S. Postretirement Health and Life

Plans is 6.50 percent for 2024, reducing in steps to 5.00

percent in 2028 and later years.

The Corporation’s net periodic benefit cost (income)

recognized for the plans is sensitive to the discount rate and

expected return on plan assets. For the Qualified Pension Plan,

Non-U.S. Pension Plans, Nonqualified and Other Pension Plans,

and Postretirement Health and Life Plans, a 25 bps decline in

discount rates and expected return on assets would not have

had a significant impact on the net periodic benefit cost for

2023.

Bank of America 146

Pretax Amounts included in Accumulated OCI and OCI

Qualified

Pension Plan

Non-U.S.

Pension Plans

Nonqualified

and Other

Pension Plans

Postretirement

Health and

Life Plans Total

(Dollars in millions)

2023

2022

2023

2022

2023

2022

2023

2022

2023

2022

Net actuarial loss (gain)

$ 5,072

$ 4,775

$ 478

$ 312

$ 852

$ 796

$ (125)

$ (187)

$ 6,277

$ 5,696

Prior service cost (credits)

—

(1)

Amounts recognized in accumulated OCI $ 5,072

$ 4,775

$ 524

$ 355

$ 852

$ 796

$ (125)

$ (188)

$ 6,323

$ 5,738

Current year actuarial loss (gain)

$ 391

$ 1,490

$ 177

$ (107)

$ 85

$ (95)

$ (15)

$ (198)

$ 638

$ 1,090

Amortization of actuarial gain (loss) and

prior service cost

(94)

(140)

(12)

(14)

(29)

(54)

(57)

(199)

Current year prior service cost (credit)

—

Amounts recognized in OCI $ 297

$ 1,350

$ 169

$ (118)

$ 56

$ (149)

$ 63

$ (189)

$ 585

$ 894

Plan Assets

The Qualified Pension Plan has been established as a

retirement vehicle for participants, and trusts have been

established to secure benefits promised under the Qualified

Pension Plan. The Corporation’s policy is to invest the trust

assets in a prudent manner for the exclusive purpose of

providing benefits to participants and defraying reasonable

expenses of administration. The Corporation’s investment

strategy is designed to provide a total return that, over the long

term, increases the ratio of assets to liabilities. The strategy

attempts to maximize the investment return on assets at a level

of risk deemed appropriate by the Corporation while complying

with ERISA and any applicable regulations and laws. The

investment strategy utilizes asset allocation as a principal

determinant for establishing the risk/return profile of the

assets. Asset allocation ranges are established, periodically

reviewed and adjusted as funding levels and liability

characteristics change. Active and passive investment

managers are employed to help enhance the risk/return profile

of the assets. An additional aspect of the investment strategy

used to minimize risk (part of the asset allocation plan) includes

matching the exposure of participant-selected investment

measures.

The assets of the Non-U.S. Pension Plans are primarily

attributable to a U.K. pension plan. This U.K. pension plan’s

assets are invested prudently so that the benefits promised to

members are provided with consideration given to the nature

and the duration of the plans’ liabilities. The selected asset

allocation strategy is designed to achieve a higher return than

the lowest risk strategy.

The expected rate of return on plan assets assumption was

developed through analysis of historical market returns,

historical asset class volatility and correlations, current market

conditions, anticipated future asset allocations, the funds’ past

experience and expectations on potential future market returns.

The expected return on plan assets assumption is determined

using the calculated market-related value for the Qualified

Pension Plan and the Other Pension Plan and the fair value for

the Non-U.S. Pension Plans and Postretirement Health and Life

Plans. The expected return on plan assets assumption

represents a long-term average view of the performance of the

assets in the Qualified Pension Plan, the Non-U.S. Pension

Plans, the Other Pension Plan, and Postretirement Health and

Life Plans, a return that may or may not be achieved during any

one calendar year. The Other Pension Plan is invested solely in

an annuity contract, which is primarily invested in fixed-income

securities structured such that asset maturities match the

duration of the plan’s obligations.

The target allocations for 2024 by asset category for the

Qualified Pension Plan, Non-U.S. Pension Plans, and

Nonqualified and Other Pension Plans are presented in the table

below. Equity securities for the Qualified Pension Plan include

common stock of the Corporation in the amounts of $299

million (1.69 percent of total plan assets) and $296 million

(1.72 percent of total plan assets) at December 31, 2023 and

2022.

2024 Target Allocation

Percentage

Asset Category

Qualified

Pension Plan

Non-U.S.

Pension Plans

Nonqualified

and Other

Pension Plans

Equity securities 15 - 45% 0 - 20% 0 - 5%

Debt securities 40 - 80% 40 - 75% 95 - 100%

Real estate 0 - 10% 0 - 15% 0 - 5%

Other 0 - 10% 10 - 40% 0 - 5%

Fair Value Measurements

For more information on fair value measurements, including descriptions of Level 1, 2 and 3 of the fair value hierarchy and the

valuation methods employed by the Corporation, see Note 1 – Summary of Significant Accounting Principles and Note 20 – Fair Value

Measurements. Combined plan investment assets measured at fair value by level and in total at December 31, 2023 and 2022 are

summarized in the Fair Value Measurements table.

147 Bank of America

Fair Value Measurements

Level 1 Level 2 Level 3 Total

(Dollars in millions)

December 31, 2023

December 31, 2022

Money market and interest-bearing cash

$ 1,013 $ — $ — $ 1,013

$ 1,329 $ — $ — $ 1,329

U.S. government and government agency obligations

3,692 729 4 4,425

3,313 704 5 4,022

Corporate debt

— 3,343 — 3,343

— 3,587 — 3,587

Non-U.S. debt securities

567 987 — 1,554

327 933 — 1,260

Asset-backed securities

— 1,464 — 1,464

— 1,273 — 1,273

Mutual and exchange-traded funds

953 — — 953

1,247 — — 1,247

Collective investment funds

— 2,350 — 2,350

— 1,988 — 1,988

Common and preferred stocks

4,027 — — 4,027

3,901 — — 3,901

Real estate investment trusts

45 — — 45

76 — — 76

Participant loans

— — 6 6

Other investments

(1)

1 47 427 475

1 23 410 434

Total plan investment assets, at fair value

(2)

$ 10,298 $ 8,920 $ 437 $ 19,655

$ 10,194 $ 8,508 $ 421 $ 19,123

(1)

Other investments includes insurance annuity contracts of $404 million and $390 million and other various investments of $71 million and $44 million at December 31, 2023 and 2022.

(2)

At December31, 2023 and 2022, excludes $1.7 billion and $1.9 billion of certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical

expedient and are not required to be classified in the fair value hierarchy.

The Level 3 Fair Value Measurements table presents a reconciliation of all plan investment assets measured at fair value using

significant unobservable inputs (Level3) during 2023, 2022 and 2021.

Level3 Fair Value Measurements

Balance

January1

Actual Return on

Plan Assets Still

Held at the

Reporting Date

Purchases, Sales

and Settlements

Balance

December31

(Dollars in millions)

2023

U.S. government and government agency obligations

$ 5 $ — $ (1) $ 4

Participant Loans

6 — — 6

Other investments

410 4 13 427

Total $ 421 $ 4 $ 12 $ 437

 2022

U.S. government and government agency obligations $ 6 $ — $ (1) $ 5

Participant Loans 7 — (1) 6

Other investments 630 (8) (212) 410

Total

$ 643 $ (8) $ (214) $ 421

2021

U.S. government and government agency obligations $ 7 $ — $ (1) $ 6

Participant loans 7 — — 7

Other investments 684 (5) (49) 630

Total

$ 698 $ (5) $ (50) $ 643

Projected Benefit Payments

Benefit payments projected to be made from the Qualified Pension Plan, Non-U.S. Pension Plans, Nonqualified and Other Pension

Plans, and Postretirement Health and Life Plans are presented in the table below.

Projected Benefit Payments

(Dollars in millions)

Qualified

Pension Plan

(1)

Non-U.S.

Pension Plans

(2)

Nonqualified

and Other

Pension Plans

(2)

Postretirement

Health and

LifePlans

(3)

2024

$ 877 $ 113 $ 227 $ 66

2025

901 121 231 63

2026

906 123 218 61

2027

894 122 210 59

2028

885 125 199 56

2029 - 2033

4,194 619 847 248

(1)

Benefit payments expected to be made from the plan’s assets.

(2)

Benefit payments expected to be made from a combination of the plans’ and the Corporation’s assets.

(3)

Benefit payments (net of retiree contributions) expected to be made from a combination of the plans’ and the Corporation’s assets.

Bank of America 148

Defined Contribution Plans

The Corporation maintains qualified and nonqualified defined

contribution retirement plans. The Corporation recorded expense

of $1.2 billion in 2023, 2022 and 2021 related to the qualified

defined contribution plans. At December 31, 2023 and 2022,

178 million and 179 million shares of the Corporation’s

common stock were held by these plans. Payments to the plans

for dividends on common stock were $166 million, $153 million

and $139 million in 2023, 2022 and 2021, respectively.

Certain non-U.S. employees are covered under defined

contribution pension plans that are separately administered in

accordance with local laws.

NOTE 18 Stock-based Compensation Plans

The Corporation administers a number of equity compensation

plans, with awards being granted predominantly from the Bank

of America Corporation Equity Plan (BACEP). Under this plan,

790 million shares of the Corporation’s common stock are

authorized to be used for grants of awards.

During 2023 and 2022, the Corporation granted 115 million

and 102 million RSUs to certain employees under the BACEP.

These RSUs were authorized to settle predominantly in shares

of common stock of the Corporation. Certain RSUs will be

settled in cash or contain settlement provisions that subject

these awards to variable accounting whereby compensation

expense is adjusted to fair value based on changes in the share

price of the Corporation’s common stock up to the settlement

date. The RSUs granted in 2023 and 2022 predominantly vest

over four years in one-fourth increments on each of the first four

anniversaries of the grant date, provided that the employee

remains continuously employed with the Corporation during that

time, and will be expensed ratably over the vesting period, net

of estimated forfeitures, for non-retirement eligible employees

based on the grant-date fair value of the shares. Of the RSUs

granted in 2023 and 2022, 42 million and 39 million do not

include retirement eligibility. For all other RSUs granted to

employees who are retirement eligible, they are deemed

authorized as of the beginning of the year preceding the grant

date when the incentive award plans are generally approved. As

a result, the estimated value is expensed ratably over the year

preceding the grant date. The compensation cost for the stock-

based plans was $3.1 billion, $2.9 billion and $3.0 billion, and

the related income tax benefit was $733 million, $697 million

and $723 million for 2023, 2022 and 2021, respectively. At

December 31, 2023, there was an estimated $4.0 billion of

total unrecognized compensation cost related to certain share-

based compensation awards that is expected to be recognized

generally over a period of up to four years, with a weighted-

average period of 2.5 years.

Restricted Stock and Restricted Stock Units

The total fair value of restricted stock and restricted stock units

vested in 2023, 2022 and 2021 was $2.6 billion, $3.4 billion

and $2.3 billion, respectively. The table below presents the

status at December 31, 2023 of the share-settled restricted

stock and restricted stock units and changes during 2023.

Stock-settled Restricted Stock and Restricted Stock Units

Shares/Units

Weighted-

average Grant

Date Fair Value

Outstanding at January 1, 2023 202,559,798 $ 38.60

Granted 112,616,369 33.88

Vested (72,958,812) 35.94

Canceled (8,707,200) 38.30

Outstanding at December 31, 2023 233,510,155 37.17

NOTE 19 Income Taxes

The components of income tax expense for 2023, 2022 and

2021 are presented in the table below.

Income Tax Expense

(Dollars in millions)

2023

2022 2021

Current income tax expense 

 

U.S. federal

$ 1,361

$ 1,157 $ 1,076

U.S. state and local

559

389 775

Non-U.S.

1,918

1,156 985

Total current expense

3,838

2,702 2,836

Deferred income tax expense 

 

U.S. federal

(2,241)

110 962

U.S. state and local

(53)

254 491

Non-U.S.

283

375 (2,291)

Total deferred expense

(2,011)

739 (838)

Total income tax expense $ 1,827

$ 3,441 $ 1,998

Total income tax expense does not reflect the tax effects of

items that are included in OCI each period. For more

information, see Note 14 – Accumulated Other Comprehensive

Income (Loss). Other tax effects included in OCI each period

resulted in an expense of $892 million in 2023 and a benefit of

$4.9 billion and $877 million in 2022 and 2021. The increase

in the federal deferred tax benefit was primarily driven by

increased tax attribute carryforwards related to the

Corporation’s tax-advantaged investments.

Income tax expense for 2023, 2022 and 2021 varied from

the amount computed by applying the statutory income tax rate

to income before income taxes. The Corporation’s federal

statutory tax rate was 21 percent for 2023, 2022 and 2021. A

reconciliation of the expected U.S. federal income tax expense,

calculated by applying the federal statutory tax rate, to the

Corporation’s actual income tax expense, and the effective tax

rates for 2023, 2022 and 2021 are presented in the following

table.

149 Bank of America

Reconciliation of Income Tax Expense

Amount Percent

Amount Percent Amount Percent

(Dollars in millions)

2023

2022 2021

Expected U.S. federal income tax expense

$ 5,952 21.0 %

$ 6,504 21.0 % $ 7,135 21.0 %

Increase (decrease) in taxes resulting from:

State tax expense, net of federal benefit

475 1.7

756 2.4 1,087 3.2

Affordable housing/energy/other credits

(4,920) (17.4)

(3,698) (11.9) (3,795) (11.2)

Tax-exempt income, including dividends

(373) (1.3)

(273) (0.9) (352) (1.0)

Tax law changes

(137) (0.5)

186 0.6 (2,050) (6.0)

Changes in prior-period UTBs, including interest

(26) (0.1)

(273) (0.9) (155) (0.5)

Rate differential on non-U.S. earnings

601 2.1

368 1.2 45 0.1

Nondeductible expenses

367 1.3

352 1.1 206 0.6

Other

(112) (0.4)

(481) (1.5) (123) (0.3)

Total income tax expense $ 1,827 6.4 %

$ 3,441 11.1 % $ 1,998 5.9 %

Tax Law changes reflect the impact of certain state

legislative enactments in 2023 of approximately $137 million

and the 2022 and 2021 U.K. enacted corporate income tax rate

changes, which resulted in a negative tax adjustment of

approximately $186 million in 2022 and a positive income tax

adjustment of approximately $2.0 billion in 2021, with

corresponding adjustments of U.K. net deferred tax assets. The

U.K. net deferred tax assets are primarily net operating losses

(NOLs), incurred by the Corporation’s U.K. broker-dealer entity in

historical periods, which do not expire under U.K. tax law and

are assessed regularly for impairment. If further U.K. tax law

changes are enacted, a corresponding income tax adjustment

will be made based on the amount of available net deferred tax

assets and applicable tax rate changes.

Tax credits originate from investments in affordable housing

and renewable energy partnerships and similar entities.

Significant increases in the tax credits recognized over the last

three annual periods have been primarily driven by the

Corporation’s continued growth in the volume of investments in

wind and solar energy production facilities, consistent with the

Corporation’s commitment to support the transition to a lower

carbon economy. For more information, see Note 6 –

Securitizations and Other Variable Interest Entities.

The reconciliation of the beginning unrecognized tax benefits

(UTB) balance to the ending balance is presented in the table

below.

Reconciliation of the Change in Unrecognized Tax

Benefits

(Dollars in millions)

2023

2022 2021

Balance, January 1 $ 1,056

$ 1,322 $ 1,340

Increases related to positions taken

during the current year

121 208

Increases related to positions taken

during prior years

(1)

139

167 265

Decreases related to positions

taken during prior years

(1)

(32)

(289) (413)

Settlements

(380)

(99) (23)

Expiration of statute of limitations

(48)

(166) (55)

Balance, December 31 $ 811

$ 1,056 $ 1,322

(1)

The sum of the positions taken during prior years differs from the $(26) million,

$(273)million and $(155)million in the Reconciliation of Income Tax Expense table due to

temporary items, state items and jurisdictional offsets, as well as the inclusion of interest in

the Reconciliation of Income Tax Expense table.

At December 31, 2023, 2022 and 2021, the balance of the

Corporation’s UTBs which would, if recognized, affect the

Corporation’s effective tax rate was $671 million, $709 million

and $959 million, respectively. Included in the UTB balance are

some items the recognition of which would not affect the

effective tax rate, such as the tax effect of certain temporary

differences, the portion of gross state UTBs that would be offset

by the tax benefit of the associated federal deduction and the

portion of gross non-U.S. UTBs that would be offset by tax

reductions in other jurisdictions.

It is reasonably possible that the UTB balance may decrease

by as much as $109 million during the next 12 months, since

resolved items will be removed from the balance whether their

resolution results in payment or recognition.

The Corporation recognized an interest expense of $35

million in 2023 and interest benefit of $50 million in 2022 and

interest expense of $32 million in 2021. At December 31, 2023

and 2022, the Corporation’s accrual for interest and penalties

that related to income taxes, net of taxes and remittances, was

$134 million and $107 million.

The Corporation files income tax returns in more than 100

states and non-U.S. jurisdictions each year. The IRS and other

tax authorities in countries and states in which the Corporation

has significant business operations examine tax returns

periodically (continuously in some jurisdictions). The table below

summarizes the status of examinations by major jurisdiction for

the Corporation and various subsidiaries at December 31,

2023.

Tax Examination Status

Years under

Examination

(1)

Status at

December 31, 2023

United States 2017-2021 Field Examination

California 2015-2017 Field Examination

California 2018-2021 To begin in 2024

New York 2019-2021 Field Examination

United Kingdom

(2)

2021 Field Examination

(1)

All tax years subsequent to the years shown remain subject to examination.

(2)

Field examination for tax year 2022 to begin in 2024.

Significant components of the Corporation’s net deferred tax

assets and liabilities at December 31, 2023 and 2022 are

presented in the following table.

Bank of America 150

Deferred Tax Assets and Liabilities

December 31

(Dollars in millions)

2023

2022

Deferred tax assets 



Tax attribute carryforwards

(1)

$ 11,084

$ 9,798

Security, loan and debt valuations

(2)

3,991

5,748

Allowance for credit losses

3,518

3,503

Lease liability

2,328

2,443

Employee compensation and retirement benefits

1,698

1,625

Accrued expenses

1,640

1,143

Other

1,475

1,371

Gross deferred tax assets

25,734

25,631

Valuation allowance

(2,108)

(2,133)

Total deferred tax assets, net of valuation

allowance

23,626

23,498



Deferred tax liabilities

Equipment lease financing

2,488

2,432

Right-of-use asset

2,180

2,303

Tax credit investments

1,884

1,759

Fixed Assets

789

1,200

Other

1,913

2,459

Gross deferred tax liabilities

9,254

10,153

Net deferred tax assets $ 14,372

$ 13,345

(1)

Includes both net operating loss and tax credit carryforwards.

(2)

Includes AFS debt securities.

The table below summarizes the deferred tax assets and related

valuation allowances recognized for the net operating loss (NOL)

and tax credit carryforwards at December31, 2023.

Net Operating Loss and Tax Credit Carryforward Deferred

Tax Assets

(Dollars in millions)

Deferred

Tax Asset

Valuation

Allowance

Net

Deferred

Tax Asset

First Year

Expiring

Net operating losses -

U.K.

(1)

$ 7,588 $ —

$ 7,588

None

Net operating losses-

other non-U.S. 235 (44)

191

Various

Net operating losses-

U.S. states

(2)

807 (471)

336

Various

General business

credits 1,557 —

1,557

Various

Foreign tax credits 897 (897)

—

After 2028

(1)

Represents U.K. broker-dealer net operating losses that may be carried forward indefinitely.

(2)

The net operating losses and related valuation allowances for U.S. states before considering

the benefit of federal deductions were $1.0 billion and $597 million.

Management concluded that no valuation allowance was

necessary to reduce the deferred tax assets related to the U.K.

NOL carryforwards and U.S. federal and certain state NOL

carryforwards since estimated future taxable income will be

sufficient to utilize these assets prior to their expiration. The

majority of the Corporation’s U.K. net deferred tax assets, which

consist primarily of NOLs, are expected to be realized by certain

subsidiaries over an extended number of years. Management’s

conclusion is supported by financial results, profit forecasts for

the relevant entities and the indefinite period to carry forward

NOLs. However, a material change in those estimates could

lead management to reassess such valuation allowance

conclusions.

At December 31, 2023, U.S. federal income taxes had not

been provided on approximately $5.0 billion of temporary

differences associated with investments in non-U.S.

subsidiaries that are essentially permanent in duration. If the

Corporation were to record the associated deferred tax liability,

the amount would be approximately $1.0 billion.

NOTE 20 Fair Value Measurements

Under applicable accounting standards, fair value is defined as

the exchange price that would be received for an asset or paid

to transfer a liability (an exit price) in the principal or most

advantageous market for the asset or liability in an orderly

transaction between market participants on the measurement

date. The Corporation determines the fair values of its financial

instruments under applicable accounting standards that require

an entity to maximize the use of observable inputs and minimize

the use of unobservable inputs. The Corporation categorizes its

financial instruments into three levels based on the established

fair value hierarchy and conducts a review of fair value hierarchy

classifications on a quarterly basis. Transfers into or out of fair

value hierarchy classifications are made if the significant inputs

used in the financial models measuring the fair values of the

assets and liabilities become unobservable or observable in the

current marketplace. For more information regarding the fair

value hierarchy and how the Corporation measures fair value,

see Note 1 – Summary of Significant Accounting Principles. The

Corporation accounts for certain financial instruments under the

fair value option. For more information, see Note 21 – Fair Value

Option.

Valuation Techniques

The following sections outline the valuation methodologies for

the Corporation’s assets and liabilities. While the Corporation

believes its valuation methods are appropriate and consistent

with other market participants, the use of different

methodologies or assumptions to determine the fair value of

certain financial instruments could result in a different estimate

of fair value at the reporting date.

During 2023, there were no significant changes to valuation

approaches or techniques that had, or are expected to have, a

material impact on the Corporation’s consolidated financial

position or results of operations.

Trading Account Assets and Liabilities and Debt Securities

The fair values of trading account assets and liabilities are

primarily based on actively traded markets where prices are

based on either direct market quotes or observed transactions.

The fair values of debt securities are generally based on quoted

market prices or market prices for similar assets. Liquidity is a

significant factor in the determination of the fair values of

trading account assets and liabilities and debt securities.

Market price quotes may not be readily available for some

positions such as positions within a market sector where

trading activity has slowed significantly or ceased. Some of

these instruments are valued using a discounted cash flow

model, which estimates the fair value of the securities using

internal credit risk, and interest rate and prepayment risk

models that incorporate management’s best estimate of current

key assumptions such as default rates, loss severity and

prepayment rates. Principal and interest cash flows are

discounted using an observable discount rate for similar

instruments with adjustments that management believes a

market participant would consider in determining fair value for

the specific security. Other instruments are valued using a net

asset value approach which considers the value of the

underlying securities. Underlying assets are valued using

external pricing services, where available, or matrix pricing

based on the vintages and ratings. Situations of illiquidity

generally are triggered by the market’s perception of credit

uncertainty regarding a single company or a specific market

sector. In these instances, fair value is determined based on

limited available market information and other factors,

151 Bank of America

principally from reviewing the issuer’s financial statements and

changes in credit ratings made by one or more rating agencies.

Derivative Assets and Liabilities

The fair values of derivative assets and liabilities traded in the

OTC market are determined using quantitative models that

utilize multiple market inputs including interest rates, prices and

indices to generate continuous yield or pricing curves and

volatility factors to value the position. The majority of market

inputs are actively quoted and can be validated through external

sources, including brokers, market transactions and third-party

pricing services. When third-party pricing services are used, the

methods and assumptions are reviewed by the Corporation.

Estimation risk is greater for derivative asset and liability

positions that are either option-based or have longer maturity

dates where observable market inputs are less readily available,

or are unobservable, in which case, quantitative-based

extrapolations of rate, price or index scenarios are used in

determining fair values. The fair values of derivative assets and

liabilities include adjustments for market liquidity, counterparty

credit quality and other instrument-specific factors, where

appropriate. In addition, the Corporation incorporates within its

fair value measurements of OTC derivatives a valuation

adjustment to reflect the credit risk associated with the net

position. Positions are netted by counterparty, and fair value for

net long exposures is adjusted for counterparty credit risk while

the fair value for net short exposures is adjusted for the

Corporation’s own credit risk. The Corporation also incorporates

FVA within its fair value measurements to include funding costs

on uncollateralized derivatives and derivatives where the

Corporation is not permitted to use the collateral it receives. An

estimate of severity of loss is also used in the determination of

fair value, primarily based on market data.

Loans and Loan Commitments

The fair values of loans and loan commitments are based on

market prices, where available, or discounted cash flow

analyses using market-based credit spreads of comparable debt

instruments or credit derivatives of the specific borrower or

comparable borrowers. Results of discounted cash flow

analyses may be adjusted, as appropriate, to reflect other

market conditions or the perceived credit risk of the borrower.

Mortgage Servicing Rights

The fair values of MSRs are primarily determined using an

option-adjusted spread valuation approach, which factors in

prepayment risk to determine the fair value of MSRs. This

approach consists of projecting servicing cash flows under

multiple interest rate scenarios and discounting these cash

flows using risk-adjusted discount rates.

Loans Held-for-sale

The fair values of LHFS are based on quoted market prices,

where available, or are determined by discounting estimated

cash flows using interest rates approximating the Corporation’s

current origination rates for similar loans adjusted to reflect the

inherent credit risk. The borrower-specific credit risk is

embedded within the quoted market prices or is implied by

considering loan performance when selecting comparables.

Short-term Borrowings and Long-term Debt

The Corporation issues structured liabilities that have coupons

or repayment terms linked to the performance of debt or equity

securities, interest rates, indices, currencies or commodities.

The fair values of these structured liabilities are estimated using

quantitative models for the combined derivative and debt

portions of the notes. These models incorporate observable

and, in some instances, unobservable inputs including security

prices, interest rate yield curves, option volatility, currency,

commodity or equity rates and correlations among these inputs.

The Corporation also considers the impact of its own credit

spread in determining the discount rate used to value these

liabilities. The credit spread is determined by reference to

observable spreads in the secondary bond market.

Securities Financing Agreements

The fair values of certain reverse repurchase agreements,

repurchase agreements and securities borrowed transactions

are determined using quantitative models, including discounted

cash flow models that require the use of multiple market inputs

including interest rates and spreads to generate continuous

yield or pricing curves, and volatility factors. The majority of

market inputs are actively quoted and can be validated through

external sources, including brokers, market transactions and

third-party pricing services.

Deposits

The fair values of deposits are determined using quantitative

models, including discounted cash flow models that require the

use of multiple market inputs including interest rates and

spreads to generate continuous yield or pricing curves, and

volatility factors. The majority of market inputs are actively

quoted and can be validated through external sources, including

brokers, market transactions and third-party pricing services.

The Corporation considers the impact of its own credit spread in

the valuation of these liabilities. The credit risk is determined by

reference to observable credit spreads in the secondary cash

market.

Asset-backed Secured Financings

The fair values of asset-backed secured financings are based on

external broker bids, where available, or are determined by

discounting estimated cash flows using interest rates

approximating the Corporation’s current origination rates for

similar loans, adjusted to reflect the inherent credit risk.

Bank of America 152

Recurring Fair Value

Assets and liabilities carried at fair value on a recurring basis at December31, 2023 and 2022, including financial instruments that

the Corporation accounts for under the fair value option, are summarized in the following tables.

December 31, 2023

Fair Value Measurements

(Dollars in millions)

Level 1 Level 2 Level 3

Netting

Adjustments

(1)

Assets/Liabilities

at Fair Value

Assets     

Time deposits placed and other short-term investments

$ 1,181 $ — $ — $ — $ 1,181

Federal funds sold and securities borrowed or purchased under

agreements to resell

— 436,340 — (303,287) 133,053

Trading account assets:

    

U.S. Treasury and government agencies

65,160 1,963 — — 67,123

Corporate securities, trading loans and other

— 41,462 1,689 — 43,151

Equity securities

47,431 41,380 187 — 88,998

Non-U.S. sovereign debt

5,517 21,195 396 — 27,108

Mortgage trading loans, MBS and ABS:

U.S. government-sponsored agency guaranteed

— 38,802 2 — 38,804

Mortgage trading loans, ABS and other MBS

— 10,955 1,215 — 12,170

Total trading account assets

(2)

118,108 155,757 3,489 — 277,354

Derivative assets

14,676 272,244 3,422 (251,019) 39,323

AFS debt securities:

    

U.S. Treasury and government agencies

176,764 902 — — 177,666

Mortgage-backed securities:

    

Agency

— 37,812 — — 37,812

Agency-collateralized mortgage obligations

— 2,544 — — 2,544

Non-agency residential

— 109 273 — 382

Commercial

— 10,435 — — 10,435

Non-U.S. securities

1,093 21,679 103 — 22,875

Other taxable securities

— 4,835 — — 4,835

Tax-exempt securities

— 10,100 — — 10,100

Total AFS debt securities

177,857 88,416 376 — 266,649

Other debt securities carried at fair value:

U.S. Treasury and government agencies

1,690 — — — 1,690

Non-agency residential MBS

— 211 69 — 280

Non-U.S. and other securities

1,786 6,447 — — 8,233

Total other debt securities carried at fair value

3,476 6,658 69 — 10,203

Loans and leases

— 3,476 93 — 3,569

Loans held-for-sale

— 1,895 164 — 2,059

Other assets

(3)

8,052 2,152 1,657 — 11,861

Total assets

(4)

$ 323,350 $ 966,938 $ 9,270 $ (554,306) $ 745,252

Liabilities     

Interest-bearing deposits in U.S. offices

$ — $ 284 $ — $ — $ 284

Federal funds purchased and securities loaned or sold under

agreements to repurchase

— 481,896 — (303,287) 178,609

Trading account liabilities:

   

U.S. Treasury and government agencies

14,908 65 — — 14,973

Equity securities

51,772 4,710 12 — 56,494

Non-U.S. sovereign debt

9,390 6,997 — — 16,387

Corporate securities and other

— 7,637 39 — 7,676

Total trading account liabilities

76,070 19,409 51 — 95,530

Derivative liabilities

14,375 280,908 5,916 (257,767) 43,432

Short-term borrowings

— 4,680 10 — 4,690

Accrued expenses and other liabilities

8,969 2,483 21 — 11,473

Long-term debt

— 42,195 614 — 42,809

Total liabilities

(4)

$ 99,414 $ 831,855 $ 6,612 $ (561,054) $ 376,827

(1)

Amounts represent the impact of legally enforceable master netting agreements and also cash collateral held or placed with the same counterparties.

(2)

Includes securities with a fair value of $18.0 billion that were segregated in compliance with securities regulations or deposited with clearing organizations. This amount is included in the

parenthetical disclosure on the Consolidated Balance Sheet. Trading account assets also includes certain commodities inventory of $42 million that is accounted for at the lower of cost or net

realizable value, which is the current selling price less any costs to sell.

(3)

Includes MSRs, which are classified as Level 3 assets, of $970 million.

(4)

Total recurring Level 3 assets were 0.29 percent of total consolidated assets, and total recurring Level 3 liabilities were 0.23 percent of total consolidated liabilities.

153 Bank of America

December 31, 2022

Fair Value Measurements

(Dollars in millions)

Level 1 Level 2 Level 3

Netting

Adjustments

(1)

Assets/Liabilities

at Fair Value

Assets

    

Time deposits placed and other short-term investments $ 868 $ — $ — $ — $ 868

Federal funds sold and securities borrowed or purchased under

agreements to resell

(2)

— 146,999 — — 146,999

Trading account assets:     

U.S. Treasury and government agencies 58,894 212 — — 59,106

Corporate securities, trading loans and other — 46,897 2,384 — 49,281

Equity securities 77,868 35,065 145 — 113,078

Non-U.S. sovereign debt 7,392 26,306 518 — 34,216

Mortgage trading loans, MBS and ABS:

U.S. government-sponsored agency guaranteed — 28,563 34 — 28,597

Mortgage trading loans, ABS and other MBS — 10,312 1,518 — 11,830

Total trading account assets

(3)

144,154 147,355 4,599 — 296,108

Derivative assets 14,775 380,380 3,213 (349,726) 48,642

AFS debt securities:     

U.S. Treasury and government agencies 158,102 920 — — 159,022

Mortgage-backed securities:     

Agency — 23,442 — — 23,442

Agency-collateralized mortgage obligations — 2,221 — — 2,221

Non-agency residential — 128 258 — 386

Commercial — 6,407 — — 6,407

Non-U.S. securities — 13,212 195 — 13,407

Other taxable securities — 4,645 — — 4,645

Tax-exempt securities — 11,207 51 — 11,258

Total AFS debt securities 158,102 62,182 504 — 220,788

Other debt securities carried at fair value:

U.S. Treasury and government agencies 561 — — — 561

Non-agency residential MBS — 248 119 — 367

Non-U.S. and other securities 3,027 5,251 — — 8,278

Total other debt securities carried at fair value 3,588 5,499 119 — 9,206

Loans and leases — 5,518 253 — 5,771

Loans held-for-sale — 883 232 — 1,115

Other assets

(4)

6,898 897 1,799 — 9,594

Total assets

(5)

$ 328,385 $ 749,713 $ 10,719 $ (349,726) $ 739,091

Liabilities

    

Interest-bearing deposits in U.S. offices $ — $ 311 $ — $ — $ 311

Federal funds purchased and securities loaned or sold under

agreements to repurchase

(2)

— 151,708 — — 151,708

Trading account liabilities:    

U.S. Treasury and government agencies 13,906 181 — — 14,087

Equity securities 36,937 4,825 — — 41,762

Non-U.S. sovereign debt 9,636 8,228 — — 17,864

Corporate securities and other — 6,628 58 — 6,686

Total trading account liabilities 60,479 19,862 58 — 80,399

Derivative liabilities 15,431 376,979 6,106 (353,700) 44,816

Short-term borrowings — 818 14 — 832

Accrued expenses and other liabilities 7,458 2,262 32 — 9,752

Long-term debt — 32,208 862 — 33,070

Total liabilities

(5)

$ 83,368 $ 584,148 $ 7,072 $ (353,700) $ 320,888

(1)

Amounts represent the impact of legally enforceable derivative master netting agreements and also cash collateral held or placed with the same counterparties.

(2)

Amounts have been netted by $221.7 billion to reflect the application of legally enforceable master netting agreements.

(3)

Includes securities with a fair value of $16.6 billion that were segregated in compliance with securities regulations or deposited with clearing organizations. This amount is included in the

parenthetical disclosure on the Consolidated Balance Sheet. Trading account assets also includes certain commodities inventory of $40 million that is accounted for at the lower of cost or net

realizable value, which is the current selling price less any costs to sell.

(4)

Includes MSRs, which are classified as Level 3 assets, of $1.0 billion.

(5)

Total recurring Level 3 assets were 0.35 percent of total consolidated assets, and total recurring Level 3 liabilities were 0.25 percent of total consolidated liabilities.

Bank of America 154

The following tables present a reconciliation of all assets

and liabilities measured at fair value on a recurring basis using

significant unobservable inputs (Level 3) during 2023, 2022 and

2021, including net realized and unrealized gains (losses)

included in earnings and accumulated OCI. Transfers into Level

3 occur primarily due to decreased price observability, and

transfers out of Level 3 occur primarily due to increased price

observability. Transfers occur on a regular basis for long-term

debt instruments due to changes in the impact of unobservable

inputs on the value of the embedded derivative in relation to the

instrument as a whole.

Level3– Fair Value Measurements

(1)

Balance

January 1

Total

Realized/

Unrealized

Gains

(Losses) in

Net

Income

(2)

Gains

(Losses)

in OCI

(3)

Gross

Transfers

into

Level 3

Gross

Transfers

out of

Level 3

Balance

December 31

Change in

Unrealized

Gains

(Losses) in

Net Income

Related to

Financial

Instruments

Still Held

(2)

Purchases Sales Issuances Settlements

Year Ended December 31, 2023

Federal funds sold and securities borrowed or

purchased under agreements to resell

$ —

$ — $ — $ — $ — $ — $ — $ 7 $ (7)

$ — $ —

Trading account assets:

      

Corporate securities, trading loans and other

2,384 144 2 453 (241) 20 (1,029) 385 (429) 1,689 50

Equity securities

145 44 — 39 (52) — (61) 153 (81) 187 (5)

Non-U.S. sovereign debt

518 68 30 64 (23) — (259) — (2) 396 70

Mortgage trading loans, MBS and ABS

1,552 (50) — 263 (417) — (241) 436 (326) 1,217 (71)

Total trading account assets

4,599 206 32 819 (733) 20 (1,590) 974 (838) 3,489 44

Net derivative assets(liabilities)

(4)

(2,893) 179 (375) 1,318 (1,281) — (1,575) (8) 2,141 (2,494) (857)

AFS debt securities:

         

Non-agency residential MBS

258 1 23 — — — (9) — — 273 2

Non-U.S. and other taxable securities

195 10 7 — — — (106) 4 (7) 103 2

Tax-exempt securities

51 1 — — — — (52) — — — —

Total AFS debt securities

504 12 30 — — — (167) 4 (7) 376 4

Other debt securities carried at fair value – Non-

agency residential MBS

119 (4) — — (19) — (6) — (21) 69 (3)

Loans and leases

(5,6)

253 (9) — 9 (54) — (100) 16 (22) 93 (13)

Loans held-for-sale

(5,6)

232 24 3 — (25) — (70) — — 164 13

Other assets

(6,7)

1,799 211 10 176 (326) 104 (319) 2 — 1,657 74

Trading account liabilities – Equity securities

— 1 — — — — 2 (15) — (12) 1

Trading account liabilities – Corporate securities

and other

(58) (3) — (3) (1) (1) 24 (35) 38 (39) (9)

Short-term borrowings

(5)

(14) 1 — — (13) (8) 24 — — (10) (1)

Accrued expenses and other liabilities

(5)

(32) 21 — (11) — — — — 1 (21) 4

Long-term debt

(5)

(862) 179 (26) (9) 50 — 47 — 7 (614) 183

Year Ended December 31, 2022

Trading account assets:     

Corporate securities, trading loans and other $ 2,110 $ (52) $ (2) $ 1,069 $ (384) $ — $ (606) $ 1,023 $ (774) $ 2,384 $ (78)

Equity securities 190 (3) — 45 (25) — (4) 38 (96) 145 (6)

Non-U.S. sovereign debt 396 59 16 54 (4) — (68) 75 (10) 518 56

Mortgage trading loans, MBS and ABS 1,527 (254) — 729 (665) — (112) 536 (209) 1,552 (152)

Total trading account assets 4,223 (250) 14 1,897 (1,078) — (790) 1,672 (1,089) 4,599 (180)

Net derivative assets (liabilities)

(4)

(2,662) 551 — 319 (830) — 294 (180) (385) (2,893) 259

AFS debt securities:       

Non-agency residential MBS 316 — (35) — (8) — (75) 73 (13) 258 —

Non-U.S. and other taxable securities 71 10 (10) 126 — — (22) 311 (291) 195 1

Tax-exempt securities 52 — 1 — — — (3) 1 — 51 —

Total AFS debt securities 439 10 (44) 126 (8) — (100) 385 (304) 504 1

Other debt securities carried at fair value – Non-

agency residential MBS 242 (19) — — — — (111) 30 (23) 119 14

Loans and leases

(5,6)

748 (45) — — (154) 82 (129) — (249) 253 (21)

Loans held-for-sale

(5,6)

317 9 4 171 (6) — (271) 8 — 232 19

Other assets

(6,7)

1,572 305 (21) 39 (35) 208 (271) 5 (3) 1,799 213

Trading account liabilities – Corporate securities

and other (11) 5 — (4) — — (2) (46) — (58) 1

Short-term borrowings

(5)

— 3 — — (17) — — (3) 3 (14) 2

Accrued expenses and other liabilities

(5)

— (23) — (9) — — — — — (32) (7)

Long-term debt

(5)

(1,075) (197) 82 — 14 (1) 57 (24) 282 (862) (200)

(1)

Assets (liabilities). For assets, increase (decrease) to Level3 and for liabilities, (increase) decrease to Level3.

(2)

Includes gains (losses) reported in earnings in the following income statement line items: Trading account assets/liabilities - market making and similar activities and other income; Net derivative

assets (liabilities) - market making and similar activities and other income; AFS debt securities - other income; Other debt securities carried at fair value - other income; Loans and leases - market

making and similar activities and other income; Loans held-for-sale - other income; Other assets - market making and similar activities and other income primarily related to MSRs; Short-term

borrowings - market making and similar activities; Accrued expenses and other liabilities - market making and similar activities and other income; Long-term debt - market making and similar

activities.

(3)

Includes unrealized gains (losses) in OCI on AFS debt securities, foreign currency translation adjustments, derivatives designated in cash flow hedges and the impact of changes in the

Corporation’s credit spreads on long-term debt accounted for under the fair value option. Amounts include net unrealized gains (losses) of $(324) million and $28 million related to financial

instruments still held at December 31, 2023 and 2022.

(4)

Net derivative assets (liabilities) include derivative assets of $3.4 billion and $3.2 billion and derivative liabilities of $5.9 billion and $6.1 billion at December 31, 2023 and 2022.

(5)

Amounts represent instruments that are accounted for under the fair value option.

(6)

Issuances represent loan originations and MSRs recognized following securitizations or whole-loan sales.

(7)

Settlements primarily represent the net change in fair value of the MSR asset due to the recognition of modeled cash flows and the passage of time.

155 Bank of America

Level3– Fair Value Measurements

(1)

(Dollars in millions)

Balance

January1

Total

Realized/

Unrealized

Gains

(Losses) in

Net

Income

(2)

Gains

(Losses)

in OCI

(3)

Gross

Transfers

into

Level 3

Gross

Transfers

out of

Level 3

Balance

December31

Change in

Unrealized

Gains

(Losses) in

Net Income

Related to

Financial

Instruments

Still Held

(2)

Purchases Sales Issuances Settlements

Year Ended December 31, 2021

Trading account assets:

     

Corporate securities, trading loans and other $ 1,359 $ (17) $ — $ 765 $ (437) $ — $ (327) $ 1,218 $ (451) $ 2,110 $ (79)

Equity securities 227 (18) — 103 (68) — — 112 (166) 190 (44)

Non-U.S. sovereign debt 354 31 (20) 18 — — (13) 26 — 396 34

Mortgage trading loans, MBS and ABS 1,440 (58) — 518 (721) 7 (167) 771 (263) 1,527 (91)

Total trading account assets 3,380 (62) (20) 1,404 (1,226) 7 (507) 2,127 (880) 4,223 (180)

Net derivative assets (liabilities)

(4)

(3,468) 927 — 521 (653) — 293 (74) (208) (2,662) 800

AFS debt securities:       

Non-agency residential MBS 378 (11) (111) — (98) — (45) 304 (101) 316 8

Non-U.S. and other taxable securities 89 (4) (7) 8 (10) — (4) — (1) 71 —

Tax-exempt securities 176 20 — — — — (2) — (142) 52 (19)

Total AFS debt securities 643 5 (118) 8 (108) — (51) 304 (244) 439 (11)

Other debt securities carried at fair value - Non-

agency residential MBS 267 1 — — (45) — (37) 101 (45) 242 10

Loans and leases

(5,6)

717 62 — 59 (13) 70 (180) 46 (13) 748 65

Loans held-for-sale

(5,6)

236 13 (6) 132 (1) — (79) 26 (4) 317 18

Other assets

(6,7)

1,970 7 3 26 (202) 144 (383) 9 (2) 1,572 3

Trading account liabilities – Corporate securities

and other (16) 6 — — — (1) — — — (11) —

Long-term debt

(5)

(1,164) (92) 13 (6) 15 (12) 98 (65) 138 (1,075) (113)

(1)

Assets (liabilities). For assets, increase (decrease) to Level3 and for liabilities, (increase) decrease to Level3.

(2)

Includes gains/losses reported in earnings in the following income statement line items: Trading account assets/liabilities - predominantly market making and similar activities; Net derivative

assets (liabilities) - market making and similar activities and other income; AFS debt securities - other income; Other debt securities carried at fair value - other income; Loans and leases - market

making and similar activities and other income; Loans held-for-sale - other income; Other assets - market making and similar activities and other income related to MSRs; Long-term debt - market

making and similar activities.

(3)

Includes unrealized losses in OCI on AFS debt securities, foreign currency translation adjustments and the impact of changes in the Corporation’s credit spreads on long-term debt accounted for

under the fair value option. Amounts include net unrealized losses of $19 million related to financial instruments still held at December 31, 2021.

(4)

Net derivative assets (liabilities) include derivative assets of $3.1 billion and derivative liabilities of $5.8 billion.

(5)

Amounts represent instruments that are accounted for under the fair value option.

(6)

Issuances represent loan originations and MSRs recognized following securitizations or whole-loan sales.

(7)

Settlements primarily represent the net change in fair value of the MSR asset due to the recognition of modeled cash flows and the passage of time.

Bank of America 156

The following tables present information about significant unobservable inputs related to the Corporation’s material categories of

Level 3 financial assets and liabilities at December31, 2023 and 2022.

Quantitative Information about Level 3 Fair Value Measurements at December 31, 2023

(Dollars in millions)

Inputs

Financial Instrument

Fair

Value

Valuation

Technique

Significant Unobservable

Inputs

Ranges of

Inputs

Weighted

Average

(1)

Loans and Securities

(2)

Instruments backed by residential real estate assets $ 538

Discounted cash

flow, Market

comparables

Yield 0% to 22% 9%

Trading account assets – Mortgage trading loans, MBS and ABS 109 Prepayment speed 1% to 42% CPR 10% CPR

Loans and leases 87 Default rate 0% to 3% CDR 1% CDR

AFS debt securities – Non-agency residential 273 Price $0 to $115 $70

Other debt securities carried at fair value – Non-agency residential 69 Loss severity 0% to 100% 27%

Instruments backed by commercial real estate assets $ 363

Discounted cash

flow

Yield 0% to 25% 12%

Trading account assets – Corporate securities, trading loans and other 301 Price $0 to $100 $75

Trading account assets – Mortgage trading loans, MBS and ABS 62

Commercial loans, debt securities and other $ 3,103

Discounted cash

flow, Market

comparables

Yield 5% to 59% 13%

Trading account assets – Corporate securities, trading loans and other 1,388 Prepayment speed 10% to 20% 16%

Trading account assets – Non-U.S. sovereign debt 396 Default rate 3% to 4% 4%

Trading account assets – Mortgage trading loans, MBS and ABS 1,046 Loss severity 35% to 40% 37%

AFS debt securities – Non-U.S. and other taxable securities 103 Price $0 to $157 $70

Loans and leases 6

Loans held-for-sale 164

Other assets, primarily auction rate securities $ 687

Discounted cash

flow, Market

comparables

Price $10 to $95 $85

Discount rate 10% n/a

MSRs $ 970

Discounted cash

flow

Weighted-average life, fixed rate

(5)

0 to 14 years 6 years

Weighted-average life, variable rate

(5)

0 to 11 years 3 years

Option-adjusted spread, fixed rate 7% to 14% 9%

Option-adjusted spread, variable rate 9% to 15% 12%

Structured liabilities

Long-term debt $ (614)

Discounted cash

flow, Market

comparables,

Industry standard

derivative pricing

(3)

Yield 58% n/a

Equity correlation 5% to 97% 25%

Price $0 to $100 $90

Natural gas forward price $1/MMBtu to $7/MMBtu $4 /MMBtu

Net derivative assets (liabilities)

Credit derivatives $ 9

Discounted cash

flow, Stochastic

recovery correlation

model

Credit spreads 2 to 79 bps 59 bps

Prepayment speed 15% CPR n/a

Default rate 2% CDR n/a

Credit correlation 22% to 62% 58%

Price $0 to $94 $87

Equity derivatives $ (1,386)

Industry standard

derivative pricing

(3)

Equity correlation 0% to 99% 67%

Long-dated equity volatilities 4% to 102% 34%

Commodity derivatives $ (633)

Discounted cash

flow, Industry

standard derivative

pricing

(3)

Natural gas forward price $1/MMBtu to $7/MMBtu $4 /MMBtu

Power forward price $21 to $91 $42

Interest rate derivatives $ (484)

Industry standard

derivative pricing

(4)

Correlation (IR/IR) (35)% to 89% 65%

Correlation (FX/IR) (25)% to 58% 35%

Long-dated inflation rates (1)% to 11% 0%

Long-dated inflation volatilities 0% to 5% 2%

Interest rate volatilities 0% to 2% 1%

Total net derivative assets (liabilities) $ (2,494)

(1)

For loans and securities, structured liabilities and net derivative assets (liabilities), the weighted average is calculated based upon the absolute fair value of the instruments.

(2)

The categories are aggregated based upon product type, which differs from financial statement classification. The following is a reconciliation to the line items in the table on page 153: Trading

account assets – Corporate securities, trading loans and other of $1.7 billion, Trading account assets – Non-U.S. sovereign debt of $396 million, Trading account assets – Mortgage trading loans,

MBS and ABS of $1.2 billion, AFS debt securities of $376 million, Other debt securities carried at fair value - Non-agency residential of $69 million, Other assets, including MSRs, of $1.7 billion,

Loans and leases of $93 million and LHFS of $164 million.

(3)

Includes models such as Monte Carlo simulation and Black-Scholes.

(4)

Includes models such as Monte Carlo simulation, Black-Scholes and other methods that model the joint dynamics of interest, inflation and foreign exchange rates.

(5)

The weighted-average life is a product of changes in market rates of interest, prepayment rates and other model and cash flow assumptions.

CPR = Constant Prepayment Rate

CDR = Constant Default Rate

MMBtu = Million British thermal units

IR = Interest Rate

FX = Foreign Exchange

n/a = not applicable

157 Bank of America

Quantitative Information about Level 3 Fair Value Measurements at December 31, 2022

(Dollars in millions)

Inputs

Financial Instrument

Fair

Value

Valuation

Technique

Significant Unobservable

Inputs

Ranges of

Inputs

Weighted

Average

(1)

Loans and Securities

(2)

Instruments backed by residential real estate assets $ 852

Discounted cash

flow, Market

comparables

Yield 0% to 25% 10%

Trading account assets – Mortgage trading loans, MBS and ABS 338 Prepayment speed 0% to 29% CPR 12% CPR

Loans and leases 137 Default rate 0% to 3% CDR 1% CDR

AFS debt securities - Non-agency residential 258 Price $0 to $111 $26

Other debt securities carried at fair value - Non-agency residential 119 Loss severity 0% to 100% 24%

Instruments backed by commercial real estate assets $ 362

Discounted cash

flow

Yield 0% to 25% 10%

Trading account assets – Corporate securities, trading loans and other 292 Price $0 to $100 $75

Trading account assets – Mortgage trading loans, MBS and ABS 66

Loans held-for-sale 4

Commercial loans, debt securities and other $ 4,348

Discounted cash

flow, Market

comparables

Yield 5% to 43% 15%

Trading account assets – Corporate securities, trading loans and other 2,092 Prepayment speed 10% to 20%

15%

Trading account assets – Non-U.S. sovereign debt 518 Default rate 3% to 4% 4%

Trading account assets – Mortgage trading loans, MBS and ABS 1,148 Loss severity 35% to 40% 38%

AFS debt securities – Tax-exempt securities 51 Price $0 to $157 $75

AFS debt securities – Non-U.S. and other taxable securities 195

Loans and leases 116

Loans held-for-sale 228

Other assets, primarily auction rate securities $ 779

Discounted cash

flow, Market

comparables

Price

$10 to $97 $94

Discount rate 11% n/a

MSRs $ 1,020

Discounted cash

flow

Weighted-average life, fixed rate

(5)

0 to 14 years 6 years

Weighted-average life, variable rate

(5)

0 to 12 years 4 years

Option-adjusted spread, fixed rate 7% to 14% 9%

Option-adjusted spread, variable rate 9% to 15% 12%

Structured liabilities

Long-term debt $ (862)

Discounted cash

flow, Market

comparables,

Industry standard

derivative pricing

(3)

Yield 22% to 43% 23%

Equity correlation 0% to 95% 69%

Price $0 to $119 $90

Natural gas forward price $3/MMBtu to $13/MMBtu $9/MMBtu

Net derivative assets (liabilities)

Credit derivatives $ (44)

Discounted cash

flow, Stochastic

recovery correlation

model

Credit spreads 3 to 63 bps 22 bps

Upfront points 0 to 100 points 83 points

Prepayment speed 15% CPR n/a

Default rate 2% CDR n/a

Credit correlation 18% to 53% 44%

Price $0 to $151 $63

Equity derivatives $ (1,534)

Industry standard

derivative pricing

(3)

Equity correlation 0% to 100% 73%

Long-dated equity volatilities 4% to 101% 44%

Commodity derivatives $ (291)

Discounted cash

flow, Industry

standard derivative

pricing

(3)

Natural gas forward price $3/MMBtu to $13/MMBtu $8/MMBtu

Power forward price $9 to $123 $43

Interest rate derivatives $ (1,024)

Industry standard

derivative pricing

(4)

Correlation (IR/IR) (35)% to 89% 67%

Correlation (FX/IR) 11% to 58% 43%

Long-dated inflation rates

G0% to 39%

Long-dated inflation volatilities 0% to 5% 2%

Interest rates volatilities 0% to 2% 1%

Total net derivative assets (liabilities)

$ (2,893)

(1)

For loans and securities, structured liabilities and net derivative assets (liabilities), the weighted average is calculated based upon the absolute fair value of the instruments.

(2)

The categories are aggregated based upon product type, which differs from financial statement classification. The following is a reconciliation to the line items in the table on page 154: Trading

account assets – Corporate securities, trading loans and other of $2.4 billion, Trading account assets – Non-U.S. sovereign debt of $518 million, Trading account assets – Mortgage trading loans,

MBS and ABS of $1.6 billion, AFS debt securities of $504 million, Other debt securities carried at fair value - Non-agency residential of $119 million, Other assets, including MSRs, of $1.8 billion,

Loans and leases of $253 million and LHFS of $232 million.

(3)

Includes models such as Monte Carlo simulation and Black-Scholes.

(4)

Includes models such as Monte Carlo simulation, Black-Scholes and other methods that model the joint dynamics of interest, inflation and foreign exchange rates.

(5)

The weighted-average life is a product of changes in market rates of interest, prepayment rates and other model and cash flow assumptions.

CPR = Constant Prepayment Rate

CDR = Constant Default Rate

MMBtu = Million British thermal units

IR = Interest Rate

FX = Foreign Exchange

n/a = not applicable

Bank of America 158

In the previous tables, instruments backed by residential and

commercial real estate assets include RMBS, commercial MBS,

whole loans and mortgage CDOs. Commercial loans, debt

securities and other include corporate CLOs and CDOs,

commercial loans and bonds, and securities backed by non-real

estate assets. Structured liabilities primarily include equity-

linked notes that are accounted for under the fair value option.

The Corporation uses multiple market approaches in valuing

certain of its Level 3 financial instruments. For example, market

comparables and discounted cash flows are used together. For

a given product, such as corporate debt securities, market

comparables may be used to estimate some of the

unobservable inputs, and then these inputs are incorporated

into a discounted cash flow model. Therefore, the balances

disclosed encompass both of these techniques.

The levels of aggregation and diversity within the products

disclosed in the tables result in certain ranges of inputs being

wide and unevenly distributed across asset and liability

categories.

Uncertainty of Fair Value Measurements from

Unobservable Inputs

Loans and Securities

A significant increase in market yields, default rates, loss

severities or duration would have resulted in a significantly lower

fair value for long positions. Short positions would have been

impacted in a directionally opposite way. The impact of changes

in prepayment speeds would have resulted in differing impacts

depending on the seniority of the instrument and, in the case of

CLOs, whether prepayments can be reinvested. A significant

increase in price would have resulted in a significantly higher

fair value for long positions, and short positions would have

been impacted in a directionally opposite way.

Structured Liabilities and Derivatives

For credit derivatives, a significant increase in market yield,

upfront points (i.e., a single upfront payment made by a

protection buyer at inception), credit spreads, default rates or

loss severities would have resulted in a significantly lower fair

value for protection sellers and higher fair value for protection

buyers. The impact of changes in prepayment speeds would

have resulted in differing impacts depending on the seniority of

the instrument.

Structured credit derivatives are impacted by credit

correlation. Default correlation is a parameter that describes the

degree of dependence among credit default rates within a credit

portfolio that underlies a credit derivative instrument. The

sensitivity of this input on the fair value varies depending on the

level of subordination of the tranche. For senior tranches that

are net purchases of protection, a significant increase in default

correlation would have resulted in a significantly higher fair

value. Net short protection positions would have been impacted

in a directionally opposite way.

For equity derivatives, commodity derivatives, interest rate

derivatives and structured liabilities, a significant change in

long-dated rates and volatilities and correlation inputs (i.e., the

degree of correlation between an equity security and an index,

between two different commodities, between two different

interest rates, or between interest rates and foreign exchange

rates) would have resulted in a significant impact to the fair

value; however, the magnitude and direction of the impact

depend on whether the Corporation is long or short the

exposure. For structured liabilities, a significant increase in yield

or decrease in price would have resulted in a significantly lower

fair value.

Nonrecurring Fair Value

The Corporation holds certain assets that are measured at fair

value only in certain situations (e.g., the impairment of an

asset), and these measurements are referred to herein as

nonrecurring. The amounts below represent assets still held as

of the reporting date for which a nonrecurring fair value

adjustment was recorded during 2023, 2022 and 2021.

Assets Measured at Fair Value on a Nonrecurring Basis

December 31, 2023

December 31, 2022

(Dollars in millions)



Level 2 Level 3

Assets   

Loans held-for-sale

$ 77 $ 2,793

$ 1,979 $ 3,079

Loans and leases

(1)

— 153

— 166

Foreclosed properties

(2, 3)

— 48

— 7

Other assets

(4)

31 898

88 165

Gains (Losses)

2023

2022 2021

Assets

  

Loans held-for-sale

$ (246)

$ (387) $ (44)

Loans and leases

(1)

(45)

(48) (60)

Foreclosed properties

(6)

(6) (2)

Other assets

(252)

(91) (492)

(1)

Includes $10 million, $15 million and $24 million of losses on loans that were written down to a collateral value of zero during 2023, 2022 and 2021, respectively.

(2)

Amounts are included in other assets on the Consolidated Balance Sheet and represent the carrying value of foreclosed properties that were written down subsequent to their initial classification

as foreclosed properties. Losses on foreclosed properties include losses recorded during the first 90 days after transfer of a loan to foreclosed properties.

(3)

Excludes $31 million and $60 million of properties acquired upon foreclosure of certain government-guaranteed loans (principally FHA-insured loans) at December 31, 2023 and 2022.

(4)

Represents the fair value of certain impaired renewable energy investments.

159 Bank of America

The table below presents information about significant unobservable inputs utilized in the Corporation's nonrecurring Level 3 fair

value measurements at December31, 2023 and 2022.

Quantitative Information about Nonrecurring Level 3 Fair Value Measurements

Inputs

Financial Instrument

Fair

Value

Valuation

Technique

Significant Unobservable

Inputs

Ranges of

Inputs

Weighted

Average

(1)

(Dollars in millions)

Year Ended December 31, 2023

Loans held-for-sale

$ 2,793

Pricing model Implied yield 7% to 23% n/a

Loans and leases

(2)

153

Market comparables OREO discount 10% to 66% 26%

Costs to sell 8% to 24% 9%

Other assets

(3)

898

Discounted cash flow Discount rate 7% n/a

Year Ended December 31, 2022

Loans held-for-sale

$ 3,079 Pricing model Implied yield 9% to 24% n/a

Loans and leases

(2)

166

Market comparables OREO discount 10% to 66% 26%

Costs to sell 8% to 24% 9%

Other assets

(3)

165 Discounted cash flow Discount rate 7% n/a

(1)

The weighted average is calculated based upon the fair value of the loans.

(2)

Represents residential mortgages where the loan has been written down to the fair value of the underlying collateral.

(3)

Represents the fair value of certain impaired renewable energy investments.

n/a = not applicable

NOTE 21 Fair Value Option

Loans and Loan Commitments

The Corporation elects to account for certain loans and loan

commitments that exceed the Corporation’s single-name credit

risk concentration guidelines under the fair value option.

Lending commitments are actively managed and, as

appropriate, credit risk for these lending relationships may be

mitigated through the use of credit derivatives, with the

Corporation’s public side credit view and market perspectives

determining the size and timing of the hedging activity. These

credit derivatives do not meet the requirements for designation

as accounting hedges and are carried at fair value. The fair

value option allows the Corporation to carry these loans and

loan commitments at fair value, which is more consistent with

management’s view of the underlying economics and the

manner in which they are managed. In addition, the fair value

option allows the Corporation to reduce the accounting volatility

that would otherwise result from the asymmetry created by

accounting for the financial instruments at historical cost and

the credit derivatives at fair value.

Loans Held-for-sale

The Corporation elects to account for residential mortgage

LHFS, commercial mortgage LHFS and certain other LHFS under

the fair value option. These loans are actively managed and

monitored and, as appropriate, certain market risks of the loans

may be mitigated through the use of derivatives. The

Corporation has elected not to designate the derivatives as

qualifying accounting hedges, and therefore, they are carried at

fair value. The changes in fair value of the loans are largely

offset by changes in the fair value of the derivatives. The fair

value option allows the Corporation to reduce the accounting

volatility that would otherwise result from the asymmetry created

by accounting for the financial instruments at the lower of cost

or fair value and the derivatives at fair value. The Corporation

has not elected to account for certain other LHFS under the fair

value option primarily because these loans are floating-rate

loans that are not hedged using derivative instruments.

Loans Reported as Trading Account Assets

The Corporation elects to account for certain loans that are held

for the purpose of trading and are risk-managed on a fair value

basis under the fair value option.

Other Assets

The Corporation elects to account for certain long-term fixed-rate

margin loans that are hedged with derivatives under the fair

value option. Election of the fair value option allows the

Corporation to reduce the accounting volatility that would

otherwise result from the asymmetry created by accounting for

the financial instruments at historical cost and the derivatives at

fair value.

Securities Financing Agreements

The Corporation elects to account for certain securities

financing agreements, including resale and repurchase

agreements, under the fair value option. These elections include

certain agreements collateralized by the U.S. government and

its agencies, which are generally short-dated and have minimal

interest rate risk.

Long-term Deposits

The Corporation elects to account for certain long-term fixed-rate

and rate-linked deposits that are hedged with derivatives that do

not qualify for hedge accounting. Election of the fair value option

allows the Corporation to reduce the accounting volatility that

would otherwise result from the asymmetry created by

accounting for the financial instruments at historical cost and

the derivatives at fair value. The Corporation has not elected to

carry other long-term deposits at fair value because they are not

hedged using derivatives.

Short-term Borrowings

The Corporation elects to account for certain short-term

borrowings, primarily short-term structured liabilities, under the

fair value option because this debt is risk-managed on a fair

value basis.

Bank of America 160

The Corporation also elects to account for certain asset-

backed secured financings, which are also classified in short-

term borrowings, under the fair value option. Election of the fair

value option allows the Corporation to reduce the accounting

volatility that would otherwise result from the asymmetry created

by accounting for the asset-backed secured financings at

historical cost and the corresponding mortgage LHFS securing

these financings at fair value.

Long-term Debt

The Corporation elects to account for certain long-term debt,

primarily structured liabilities, under the fair value option. This

long-term debt is either risk-managed on a fair value basis or

the related hedges do not qualify for hedge accounting.

Fair Value Option Elections

The following tables provide information about the fair value

carrying amount and the contractual principal outstanding of

assets and liabilities accounted for under the fair value option

at December 31, 2023 and 2022, and information about where

changes in the fair value of assets and liabilities accounted for

under the fair value option are included in the Consolidated

Statement of Income for 2023, 2022 and 2021.

Fair Value Option Elections

December 31, 2023

December 31, 2022

(Dollars in millions)

Fair Value

Carrying

Amount

Contractual

Principal

Outstanding

Fair Value

Carrying

Amount Less

Unpaid Principal

Fair Value

Carrying

Amount

Contractual

Principal

Outstanding

Fair Value

Carrying

Amount Less

Unpaid Principal

Federal funds sold and securities borrowed or

purchased under agreements to resell

$ 133,053 $ 133,001 $ 52

$ 146,999 $ 147,158 $ (159)

Loans reported as trading account assets

(1)

8,377 15,580 (7,203)

10,143 17,682 (7,539)

Trading inventory – other

25,282 n/a n/a

20,770 n/a n/a

Consumer and commercial loans

3,569 3,618 (49)

5,771 5,897 (126)

Loans held-for-sale

(1)

2,059 2,873 (814)

1,115 1,873 (758)

Other assets

1,986 n/a n/a

620 n/a n/a

Long-term deposits

284 267 17

311 381 (70)

Federal funds purchased and securities loaned

or sold under agreements to repurchase

178,609 178,634 (25)

151,708 151,885 (177)

Short-term borrowings

4,690 4,694 (4)

832 833 (1)

Unfunded loan commitments

67 n/a n/a

110 n/a n/a

Accrued expenses and other liabilities

1,341 1,347 (6)

1,217 1,161 56

Long-term debt

42,809 46,707 (3,898)

33,070 36,830 (3,760)

(1)

A significant portion of the loans reported as trading account assets and LHFS are distressed loans that were purchased at a deep discount to par, and the remainder are loans with a fair value

near contractual principal outstanding.

n/a = not applicable

161 Bank of America

Gains (Losses) Related to Assets and Liabilities Accounted for Under the Fair Value Option

Market making

and similar

activities

Other

Income Total

(Dollars in millions)

2023

Loans reported as trading account assets

$ 251 — $ 251

Trading inventory – other

(1)

5,121 — 5,121

Consumer and commercial loans

(174) 67 (107)

Loans held-for-sale

(2)

— 22 22

Short-term borrowings

7 — 7

Unfunded loan commitments

(1) 39 38

Accrued expenses and other liabilities

609 — 609

Long-term debt

(3)

(1,143) (35) (1,178)

Other

(4)

93 (23) 70

Total $ 4,763 $ 70 $ 4,833

2022

Loans reported as trading account assets $ (164) $ — $ (164)

Trading inventory – other

(1)

(1,159) — (1,159)

Consumer and commercial loans (58) (27) (85)

Loans held-for-sale

(2)

— (304) (304)

Short-term borrowings 639 — 639

Unfunded loan commitments — 8 8

Accrued expenses and other liabilities 11 — 11

Long-term debt

(3)

4,359 (46) 4,313

Other

(4)

74 30 104

Total

$ 3,702 $ (339) $ 3,363

2021

Loans reported as trading account assets $ 275 $ — $ 275

Trading inventory – other

(1)

(211) — (211)

Consumer and commercial loans 78 40 118

Loans held-for-sale

(2)

— 58 58

Short-term borrowings 883 — 883

Long-term debt

(3)

(604) (41) (645)

Other

(4)

18 (23) (5)

Total

$ 439 $ 34 $ 473

(1)

The gains (losses) in market making and similar activities are primarily offset by (losses) gains on trading liabilities that hedge these assets.

(2)

Includes the value of IRLCs on funded loans, including those sold during the period.

(3)

The net gains (losses) in market making and similar activities relate to the embedded derivatives in structured liabilities and are typically offset by (losses) gains on derivatives and securities that

hedge these liabilities. For the cumulative impact of changes in the Corporation’s own credit spreads and the amount recognized in accumulated OCI, see Note 14 – Accumulated Other

Comprehensive Income (Loss). For more information on how the Corporation’s own credit spread is determined, see Note 20 – Fair Value Measurements.

(4)

Includes gains (losses) on federal funds sold and securities borrowed or purchased under agreements to resell, other assets, long-term deposits, and federal funds purchased and securities

loaned or sold under agreements to repurchase.

Gains (Losses) Related to Borrower-specific Credit Risk for Assets and Liabilities Accounted for Under

the Fair Value Option

(Dollars in millions)

2023

2022 2021

Loans reported as trading account assets

$ (3)

$ (950) $ 128

Consumer and commercial loans

(51) 7

Loans held-for-sale

(15)

(23) 28

Unfunded loan commitments

8 (1)

NOTE 22 Fair Value of Financial Instruments

Financial instruments are classified within the fair value

hierarchy using the methodologies described in Note 20 – Fair

Value Measurements. Certain loans, deposits, long-term debt,

unfunded lending commitments and other financial instruments

are accounted for under the fair value option. For more

information, see Note 21 – Fair Value Option. The following

disclosures include financial instruments that are not carried at

fair value or only a portion of the ending balance is carried at

fair value on the Consolidated Balance Sheet.

Short-term Financial Instruments

The carrying value of short-term financial instruments, including

cash and cash equivalents, certain time deposits placed and

other short-term investments, federal funds sold and purchased,

certain resale and repurchase agreements and short-term

borrowings, approximates the fair value of these instruments.

These financial instruments generally expose the Corporation to

limited credit risk and have no stated maturities or have short-

term maturities and carry interest rates that approximate

market. The Corporation accounts for certain resale and

repurchase agreements under the fair value option.

Bank of America 162

Under the fair value hierarchy, cash and cash equivalents

are classified as Level 1. Time deposits placed and other short-

term investments, such as U.S. government securities and

short-term commercial paper, are classified as Level 1 or Level

2. Federal funds sold and purchased are classified as Level 2.

Resale and repurchase agreements are classified as Level 2

because they are generally short-dated and/or variable-rate

instruments collateralized by U.S. government or agency

securities. Short-term borrowings are generally classified as

Level 2.

Fair Value of Financial Instruments

The carrying values and fair values by fair value hierarchy of

certain financial instruments where only a portion of the ending

balance was carried at fair value at December 31, 2023 and

2022 are presented in the table below.

Fair Value of Financial Instruments

Fair Value

Carrying

Value Level 2 Level 3 Total

(Dollars in millions)

December 31, 2023

Financial assets

Loans

$ 1,020,281 $ 49,311 $ 949,977 $ 999,288

Loans held-for-sale

6,002 3,024 2,979 6,003

Financial liabilities

Deposits

(1)

1,923,827 1,925,015 — 1,925,015

Long-term debt

302,204 303,070 913 303,983

Commercial

unfunded lending

commitments

(2)

1,275 44 3,927 3,971

December 31, 2022

Financial assets

Loans $ 1,014,593 $ 50,194 $ 935,282 $ 985,476

Loans held-for-sale 6,871 3,417 3,455 6,872

Financial liabilities

Deposits

(1)

1,930,341 1,930,165 — 1,930,165

Long-term debt 275,982 271,993 1,136 273,129

Commercial

unfunded lending

commitments

(2)

1,650 77 6,596 6,673

(1)

Includes demand deposits of $897.3 billion and $918.9 billion with no stated maturities at

December31, 2023 and 2022.

(2)

The carrying value of commercial unfunded lending commitments is included in accrued

expenses and other liabilities on the Consolidated Balance Sheet. The Corporation does not

estimate the fair value of consumer unfunded lending commitments because, in many

instances, the Corporation can reduce or cancel these commitments by providing notice to

the borrower. For more information on commitments, see Note 12 – Commitments and

Contingencies.

NOTE 23 Business Segment Information

The Corporation reports its results of operations through the

following four business segments: Consumer Banking, Global

Wealth & Investment Management, Global Banking and Global

Markets, with the remaining operations recorded in All Other.

Consumer Banking

Consumer Banking offers a diversified range of credit, banking

and investment products and services to consumers and small

businesses. Consumer Banking product offerings include

traditional savings accounts, money market savings accounts,

CDs and IRAs, checking accounts, and investment accounts and

products, as well as credit and debit cards, residential

mortgages and home equity loans, and direct and indirect loans

to consumers and small businesses in the U.S. Consumer

Banking includes the impact of servicing residential mortgages

and home equity loans.

Global Wealth & Investment Management

GWIM provides a high-touch client experience through a network

of financial advisors focused on clients with over $250,000 in

total investable assets, including tailored solutions to meet

clients’ needs through a full set of investment management,

brokerage, banking and retirement products. GWIM also

provides comprehensive wealth management solutions targeted

to high net worth and ultra high net worth clients, as well as

customized solutions to meet clients’ wealth structuring,

investment management, trust and banking needs, including

specialty asset management services.

Global Banking

Global Banking provides a wide range of lending-related products

and services, integrated working capital management and

treasury solutions, and underwriting and advisory services

through the Corporation’s network of offices and client

relationship teams. Global Banking also provides investment

banking products to clients. The economics of certain

investment banking and underwriting activities are shared

primarily between Global Banking and Global Markets under an

internal revenue-sharing arrangement. Global Banking clients

generally include middle-market companies, commercial real

estate firms, not-for-profit companies, large global corporations,

financial institutions, leasing clients, and mid-sized U.S.-based

businesses requiring customized and integrated financial advice

and solutions.

Global Markets

Global Markets offers sales and trading services and research

services to institutional clients across fixed-income, credit,

currency, commodity and equity businesses. Global Markets

provides market-making, financing, securities clearing,

settlement and custody services globally to institutional investor

clients in support of their investing and trading activities. Global

Markets product coverage includes securities and derivative

products in both the primary and secondary markets. Global

Markets also works with commercial and corporate clients to

provide risk management products. As a result of market-

making activities, Global Markets may be required to manage

risk in a broad range of financial products. In addition, the

economics of certain investment banking and underwriting

activities are shared primarily between Global Markets and

Global Banking under an internal revenue-sharing arrangement.

All Other

All Other primarily consists of ALM activities, liquidating

businesses and certain expenses not otherwise allocated to a

business segment. ALM activities encompass interest rate and

foreign currency risk management activities for which

substantially all of the results are allocated to the business

segments.

Basis of Presentation

The management accounting and reporting process derives

segment and business results by utilizing allocation

methodologies for revenue and expense. The net income

derived for the businesses is dependent upon revenue and cost

allocations using an activity-based costing model, funds transfer

pricing, and other methodologies and assumptions management

believes are appropriate to reflect the results of the business.

Total revenue, net of interest expense, includes net interest

income on an FTE basis and noninterest income. The

adjustment of net interest income to an FTE basis results in a

corresponding increase in income tax expense. The segment

results also reflect certain revenue and expense methodologies

163 Bank of America

that are utilized to determine net income. The net interest

income of the businesses includes the results of a funds

transfer pricing process that matches assets and liabilities with

similar interest rate sensitivity and maturity characteristics. In

segments where the total of liabilities and equity exceeds

assets, which are generally deposit-taking segments, the

Corporation allocates assets to match liabilities. Net interest

income of the business segments also includes an allocation of

net interest income generated by certain of the Corporation’s

ALM activities.

The Corporation’s ALM activities include an overall interest

rate risk management strategy that incorporates the use of

various derivatives and cash instruments to manage

fluctuations in earnings and capital that are caused by interest

rate volatility. The Corporation’s goal is to manage interest rate

sensitivity so that movements in interest rates do not

significantly adversely affect earnings and capital. The results of

a majority of the Corporation’s ALM activities are allocated to

the business segments and fluctuate based on the performance

of the ALM activities. ALM activities include external product

pricing decisions including deposit pricing strategies, the effects

of the Corporation’s internal funds transfer pricing process and

the net effects of other ALM activities.

Certain expenses not directly attributable to a specific

business segment are allocated to the segments. The costs of

certain centralized or shared functions are allocated based on

methodologies that reflect utilization.

The table below presents net income (loss) and the

components thereto (with net interest income on an FTE basis

for the business segments, All Other and the total Corporation)

for 2023, 2022 and 2021, and total assets at December 31,

2023, 2022 and 2021 for each business segment, as well as

All Other.

Results of Business Segments and All Other

At and for the year ended December31 Total Corporation

(1)

Consumer Banking

(Dollars in millions)

2023

2022 2021

2023

2022 2021

Net interest income

$ 57,498

$ 52,900 $ 43,361

$ 33,689

$ 30,045 $ 24,929

Noninterest income

41,650

42,488 46,179

8,342

8,590 9,076

Total revenue, net of interest expense

99,148

95,388 89,540

42,031

38,635 34,005

Provision for credit losses

4,394

2,543 (4,594)

5,158

1,980 (1,035)

Noninterest expense

65,845

61,438 59,731

21,416

20,077 19,290

Income before income taxes

28,909

31,407 34,403

15,457

16,578 15,750

Income tax expense

2,394

3,879 2,425

3,864

4,062 3,859

Net income $ 26,515

$ 27,528 $ 31,978

$ 11,593

$ 12,516 $ 11,891

Year-end total assets $ 3,180,151

$ 3,051,375

$ 1,049,830

$ 1,126,453

Global Wealth & Investment Management Global Banking

2023

2022 2021

2023

2022 2021

Net interest income

$ 7,147

$ 7,466 $ 5,664

$ 14,645

$ 12,184 $ 8,511

Noninterest income

13,958

14,282 15,084

10,151

10,045 12,364

Total revenue, net of interest expense

21,105

21,748 20,748

24,796

22,229 20,875

Provision for credit losses

66 (241)

(586)

641 (3,201)

Noninterest expense

15,836

15,490 15,258

11,344

10,966 10,632

Income before income taxes

5,263

6,192 5,731

14,038

10,622 13,444

Income tax expense

1,316

1,517 1,404

3,790

2,815 3,630

Net income $ 3,947

$ 4,675 $ 4,327

$ 10,248

$ 7,807 $ 9,814

Year-end total assets $ 344,626

$ 368,893

$ 621,751

$ 588,466

Global Markets All Other

2023

2022 2021

2023

2022 2021

Net interest income

$ 1,678

$ 3,088 $ 4,011

$ 339

$ 117 $ 246

Noninterest income

17,849

15,050 15,244

(8,650)

(5,479) (5,589)

Total revenue, net of interest expense

19,527

18,138 19,255

(8,311)

(5,362) (5,343)

Provision for credit losses

(131)

28 65

(53)

(172) (182)

Noninterest expense

13,206

12,420 13,032

4,043

2,485 1,519

Income (loss) before income taxes

6,452

5,690 6,158

(12,301)

(7,675) (6,680)

Income tax expense (benefit)

1,774

1,508 1,601

(8,350)

(6,023) (8,069)

Net income (loss) $ 4,678

$ 4,182 $ 4,557

$ (3,951)

$ (1,652) $ 1,389

Year-end total assets $ 817,588

$ 812,489

$ 346,356

$ 155,074

(1)

There were no material intersegment revenues.

Bank of America 164

The table below presents noninterest income and the associated components for 2023, 2022, and 2021 for each business

segment, All Other and the total Corporation. For more information, see Note 2 – Net Interest Income and Noninterest Income.

Noninterest Income by Business Segment and All Other

Total Corporation Consumer Banking

Global Wealth &

Investment Management

(Dollars in millions)

2023

2022 2021

2023

2022 2021

2023

2022 2021

Fees and commissions:

Card income

Interchange fees

$ 3,983

$ 4,096 $ 4,560

$ 3,157

$ 3,239 $ 3,597

$ (12)

$ 20 $ 43

Other card income

2,071

1,987 1,658

2,107

1,930 1,575

50 42

Total card income

6,054

6,083 6,218

5,264

5,169 5,172

70 85

Service charges

Deposit-related fees

4,382

5,190 6,271

2,317

2,706 3,538

65 72

Lending-related fees

1,302

1,215 1,233

—

— —

8 —

Total service charges

5,684

6,405 7,504

2,317

2,706 3,538

73 72

Investment and brokerage services

Asset management fees

12,002

12,152 12,729

197

195 188

11,805

11,957 12,541

Brokerage fees

3,561

3,749 3,961

111

109 132

1,408

1,604 1,771

Total investment and brokerage services

15,563

15,901 16,690

308

304 320

13,213

13,561 14,312

Investment banking fees

Underwriting income

2,235

1,970 5,077

—

— —

171

189 388

Syndication fees

898

1,070 1,499

—

— —

—

— —

Financial advisory services

1,575

1,783 2,311

—

— —

—

— —

Total investment banking fees

4,708

4,823 8,887

—

— —

171

189 388

Total fees and commissions 32,009

33,212 39,299

7,889

8,179 9,030

13,507

13,893 14,857

Market making and similar activities 12,732

12,075 8,691

10 1

137

102 40

Other income (loss) (3,091)

(2,799) (1,811)

433

401 45

314

287 187

Total noninterest income $ 41,650

$ 42,488 $ 46,179

$ 8,342

$ 8,590 $ 9,076

$ 13,958

$ 14,282 $ 15,084

Global Banking Global Markets All Other

(1)

2023

2022 2021

2023

2022 2021

2023

2022 2021

Fees and commissions:

Card income

Interchange fees

$ 772

$ 767 $ 700

$ 66

$ 66 $ 220

$ —

$ 4 $ —

Other card income

7 13

—

— —

(102)

— 28

Total card income

781

774 713

66 220

(102)

4 28

Service charges

Deposit-related fees

1,943

2,310 2,508

101 146

8 7

Lending-related fees

1,009

983 1,015

256

224 218

—

— —

Total service charges

2,952

3,293 3,523

335

325 364

8 7

Investment and brokerage services

Brokerage fees

42 104

1,993

2,002 1,979

(8)

(8) (25)

Total investment and brokerage services

42 104

1,993

2,002 1,979

(8)

(8) (25)

Investment banking fees

Underwriting income

922

796 2,187

1,298

1,176 2,725

(156)

(191) (223)

Syndication fees

505

565 781

393

505 718

—

— —

Financial advisory services

1,392

1,643 2,139

183

139 173

—

1 (1)

Total investment banking fees

2,819

3,004 5,107

1,874

1,820 3,616

(156)

(190) (224)

Total fees and commissions 6,609

7,113 9,447

4,268

4,213 6,179

(264)

(186) (214)

Market making and similar activities 190

215 145

13,430

11,406 8,760

(1,045)

342 (255)

Other income (loss) 3,352

2,717 2,772

151

(569) 305

(7,341)

(5,635) (5,120)

Total noninterest income $ 10,151

$ 10,045 $ 12,364

$ 17,849

$ 15,050 $ 15,244

$ (8,650)

$ (5,479) $ (5,589)

(1)

All Other includes eliminations of intercompany transactions.

165 Bank of America

The table below presents a reconciliation of the four business segments’ total revenue, net of interest expense, on an FTE

basis, and net income to the Consolidated Statement of Income, and total assets to the Consolidated Balance Sheet.

Business Segment Reconciliations

(Dollars in millions)

2023

2022 2021

Segments’ total revenue, net of interest expense

$ 107,459

$ 100,750 $ 94,883

Adjustments

(1)



 

Asset and liability management activities

(2,011)

(164) (4)

Liquidating businesses, eliminations and other

(6,300)

(5,198) (5,339)

FTE basis adjustment

(567)

(438) (427)

Consolidated revenue, net of interest expense $ 98,581

$ 94,950 $ 89,113

Segments’ total net income

30,466

29,180 30,589

Adjustments, net-of-tax

(1)

:  

Asset and liability management activities

(1,550)

(122) 11

Liquidating businesses, eliminations and other

(2,401)

(1,530) 1,378

Consolidated net income $ 26,515

$ 27,528 $ 31,978

December 31

2023

2022

Segments’ total assets

$ 2,833,795

$ 2,896,301

Adjustments

(1)

Asset and liability management activities, including securities portfolio

1,255,241

1,133,375

Elimination of segment asset allocations to match liabilities

(972,925)

(1,041,793)

Other

64,040

63,492

Consolidated total assets $ 3,180,151

$ 3,051,375

(1)

Adjustments include consolidated income, expense and asset amounts not specifically allocated to individual business segments.

NOTE 24 Parent Company Information

The following tables present the Parent Company-only financial information.

Condensed Statement of Income

(Dollars in millions)

2023

2022 2021

Income 

 

Dividends from subsidiaries:



 

Bank holding companies and related subsidiaries

$ 22,384

$ 22,250 $ 15,621

Interest from subsidiaries

21,314

12,420 8,362

Other income (loss)

(1,012)

(201) (114)

Total income 42,686

34,469 23,869

Expense 

 

Interest on borrowed funds from subsidiaries

896

236 54

Other interest expense

14,119

7,041 3,383

Noninterest expense

1,699

1,322 1,531

Total expense 16,714

8,599 4,968

Income before income taxes and equity in undistributed earnings of subsidiaries 25,972

25,870 18,901

Income tax expense

838

683 886

Income before equity in undistributed earnings of subsidiaries

25,134

25,187 18,015

Equity in undistributed earnings (losses) of subsidiaries:



 

Bank holding companies and related subsidiaries

1,203

2,333 14,078

Nonbank companies and related subsidiaries

178

8 (115)

Total equity in undistributed earnings (losses) of subsidiaries 1,381

2,341 13,963

Net income $ 26,515

$ 27,528 $ 31,978

Bank of America 166

Condensed Balance Sheet

December 31

(Dollars in millions)

2023

2022

Assets 



Cash held at bank subsidiaries

$ 4,559

$ 9,609

Securities

644

617

Receivables from subsidiaries:

Bank holding companies and related subsidiaries

249,320

222,584

Banks and related subsidiaries

205

220

Nonbank companies and related subsidiaries

1,255

978

Investments in subsidiaries:

Bank holding companies and related subsidiaries

306,946

301,207

Nonbank companies and related subsidiaries

3,946

3,770

Other assets

6,799

7,156

Total assets $ 573,674

$ 546,141

Liabilities and shareholders’ equity 



Accrued expenses and other liabilities

$ 14,510

$ 14,193

Payables to subsidiaries:

Banks and related subsidiaries

207

260

Bank holding companies and related subsidiaries

Nonbank companies and related subsidiaries

17,756

14,578

Long-term debt

249,541

243,892

Total liabilities 282,028

272,944

Shareholders’ equity

291,646

273,197

Total liabilities and shareholders’ equity $ 573,674

$ 546,141

Condensed Statement of Cash Flows

(Dollars in millions)

2023

2022 2021

Operating activities 

 

Net income

$ 26,515

$ 27,528 $ 31,978

Reconciliation of net income (loss) to net cash provided by (used in) operating activities:



 

Equity in undistributed (earnings) losses of subsidiaries

(1,381)

(2,341) (13,963)

Other operating activities, net

3,395

(31,777) (7,144)

Net cash provided by (used in) operating activities

28,529

(6,590) 10,871

Investing activities 

 

Net sales (purchases) of securities

(15)

25 (14)

Net payments to subsidiaries

(21,267)

(6,044) (10,796)

Other investing activities, net

(43)

(34) (26)

Net cash used in investing activities

(21,325)

(6,053) (10,836)

Financing activities 

 

Net increase (decrease) in other advances

2,825

2,853 503

Proceeds from issuance of long-term debt

23,950

44,123 56,106

Retirement of long-term debt

(25,366)

(19,858) (24,544)

Proceeds from issuance of preferred stock and warrants

—

4,426 2,170

Redemption of preferred stock

—

(654) (1,971)

Common stock repurchased

(4,576)

(5,073) (25,126)

Cash dividends paid

(9,087)

(8,576) (8,055)

Net cash provided by (used in) financing activities

(12,254)

17,241 (917)

Net increase (decrease) in cash held at bank subsidiaries

(5,050)

4,598 (882)

Cash held at bank subsidiaries at January 1

9,609

5,011 5,893

Cash held at bank subsidiaries at December 31 $ 4,559

$ 9,609 $ 5,011

167 Bank of America

NOTE 25 Performance by Geographical Area

The Corporation’s operations are highly integrated with

operations in both U.S. and non-U.S. markets. The non-U.S.

business activities are largely conducted in Europe, the Middle

East and Africa and in Asia. The Corporation identifies its

geographic performance based on the business unit structure

used to manage the capital or expense deployed in the region

as applicable. This requires certain judgments related to the

allocation of revenue so that revenue can be appropriately

matched with the related capital or expense deployed in the

region. Certain asset, liability, income and expense amounts

have been allocated to arrive at total assets, total revenue, net

of interest expense, income before income taxes and net

income by geographic area as presented below.

(Dollars in millions)



Total Assets at

Year End

(1)

Total Revenue,

Net of Interest

Expense

(2)

Income Before

Income Taxes Net Income

U.S.

(3)

2023 $ 2,768,003 $ 85,571 $ 24,525 $ 23,656

 2022 2,631,815 82,890 28,135 25,607

 2021 78,012 31,392 27,781

Asia

2023 139,967 4,952 1,512 1,139

 2022 127,399 4,597 1,144 865

 2021 4,439 988 733

Europe, Middle East and Africa

2023 238,052 6,393 1,540 1,098

 2022 262,856 6,044 1,121 689

 2021 5,423 1,097 3,134

Latin America and the Caribbean

2023 34,129 1,665 765 622

 2022 29,305 1,419 569 367

 2021 1,239 499 330

Total Non-U.S.

2023 412,148 13,010 3,817 2,859

2022 419,560 12,060 2,834 1,921

2021 11,101 2,584 4,197

Total Consolidated 2023 $ 3,180,151 $ 98,581 $ 28,342 $ 26,515

2022 3,051,375 94,950 30,969 27,528

2021 89,113 33,976 31,978

(1)

Total assets include long-lived assets, which are primarily located in the U.S.

(2)

There were no material intercompany revenues between geographic regions for any of the periods presented.

(3)

Substantially reflects the U.S.

Bank of America 168

Glossary

Alt-A Mortgage – A type of U.S. mortgage that is considered

riskier than A-paper, or “prime,” and less risky than “subprime,”

the riskiest category. Typically, Alt-A mortgages are

characterized by borrowers with less than full documentation,

lower credit scores and higher LTVs.

Assets Under Management (AUM) – The total market value of

assets under the investment advisory and/or discretion of GWIM

which generate asset management fees based on a percentage

of the assets’ market values. AUM reflects assets that are

generally managed for institutional, high net worth and retail

clients, and are distributed through various investment products

including mutual funds, other commingled vehicles and separate

accounts.

Banking Book – All on- and off-balance sheet financial

instruments of the Corporation except for those positions that

are held for trading purposes.

Brokerage and Other Assets – Non-discretionary client assets

which are held in brokerage accounts or held for safekeeping.

Committed Credit Exposure – Any funded portion of a facility plus

the unfunded portion of a facility on which the lender is legally

bound to advance funds during a specified period under

prescribed conditions.

Credit Derivatives – Contractual agreements that provide

protection against a specified credit event on one or more

referenced obligations.

Credit Valuation Adjustment (CVA) – A portfolio adjustment

required to properly reflect the counterparty credit risk exposure

as part of the fair value of derivative instruments.

Debit Valuation Adjustment (DVA) – A portfolio adjustment

required to properly reflect the Corporation’s own credit risk

exposure as part of the fair value of derivative instruments and/

or structured liabilities.

Funding Valuation Adjustment (FVA) – A portfolio adjustment

required to include funding costs on uncollateralized derivatives

and derivatives where the Corporation is not permitted to use

the collateral it receives.

Interest Rate Lock Commitment (IRLC) – Commitment with a

loan applicant in which the loan terms are guaranteed for a

designated period of time subject to credit approval.

Letter of Credit – A document issued on behalf of a customer to

a third party promising to pay the third party upon presentation

of specified documents. A letter of credit effectively substitutes

the issuer’s credit for that of the customer.

Loan-to-value (LTV) – A commonly used credit quality metric. LTV

is calculated as the outstanding carrying value of the loan

divided by the estimated value of the property securing the loan.

Macro Products – Include currencies, interest rates and

commodities products.

Margin Receivable – An extension of credit secured by eligible

securities in certain brokerage accounts.

Matched Book – Repurchase and resale agreements or

securities borrowed and loaned transactions where the overall

asset and liability position is similar in size and/or maturity.

Generally, these are entered into to accommodate customers

where the Corporation earns the interest rate spread.

Mortgage Servicing Right (MSR) – The right to service a

mortgage loan when the underlying loan is sold or securitized.

Servicing includes collections for principal, interest and escrow

payments from borrowers and accounting for and remitting

principal and interest payments to investors.

Nonperforming Loans and Leases – Includes loans and leases

that have been placed on nonaccrual status, including

nonaccruing loans whose contractual terms have been

restructured in a manner that grants a concession to a borrower

experiencing financial difficulties.

Prompt Corrective Action (PCA) – A framework established by the

U.S. banking regulators requiring banks to maintain certain

levels of regulatory capital ratios, comprised of five categories

of capitalization: “well capitalized,” “adequately capitalized,”

“undercapitalized,” “significantly undercapitalized” and

“critically undercapitalized.” Insured depository institutions that

fail to meet certain of these capital levels are subject to

increasingly strict limits on their activities, including their ability

to make capital distributions, pay management compensation,

grow assets and take other actions.

Subprime Loans – Although a standard industry definition for

subprime loans (including subprime mortgage loans) does not

exist, the Corporation defines subprime loans as specific

product offerings for higher risk borrowers.

Troubled Debt Restructurings (TDRs) – Loans whose contractual

terms have been restructured in a manner that grants a

concession to a borrower experiencing financial difficulties.

Certain consumer loans for which a binding offer to restructure

has been extended are also classified as TDRs.

Value-at-Risk (VaR) – VaR is a model that simulates the value of

a portfolio under a range of hypothetical scenarios in order to

generate a distribution of potential gains and losses. VaR

represents the loss the portfolio is expected to experience with

a given confidence level based on historical data. A VaR model

is an effective tool in estimating ranges of potential gains and

losses on our trading portfolios.

169 Bank of America

Key Metrics

Active Digital Banking Users – Mobile and/or online active users

over the past 90 days.

Active Mobile Banking Users – Mobile active users over the past

90 days.

Book Value – Ending common shareholders’ equity divided by

ending common shares outstanding.

Common Equity Ratio - Ending common shareholders’ equity

divided by ending total assets.

Deposit Spread – Annualized net interest income divided by

average deposits.

Dividend Payout Ratio – Common dividends declared divided by

net income applicable to common shareholders.

Efficiency Ratio – Noninterest expense divided by total revenue,

net of interest expense.

Gross Interest Yield – Effective annual percentage rate divided by

average loans.

Net Interest Yield – Net interest income divided by average total

interest-earning assets.

Operating Margin – Income before income taxes divided by total

revenue, net of interest expense.

Return on Average Allocated Capital – Adjusted net income

divided by allocated capital.

Return on Average Assets – Net income divided by total average

assets.

Return on Average Common Shareholders’ Equity – Net income

applicable to common shareholders divided by average common

shareholders’ equity.

Return on Average Shareholders’ Equity – Net income divided by

average shareholders’ equity.

Risk-adjusted Margin – Difference between total revenue, net of

interest expense, and net credit losses divided by average

loans.

Bank of America 170

Acronyms

ABS

Asset-backed securities

AFS

Available-for-sale

Artificial intelligence

ALM

Asset and liability management

ARR

Alternative reference rates

AUM

Assets under management

AVM

Automated valuation model

BANA

Bank of America, National Association

BHC

Bank holding company

BofAS

BofA Securities, Inc.

BofASE

BofA Securities Europe SA

bps

Basis points

BSBY

Bloomberg Short-Term Bank Yield Index

CAE

Chief Audit Executive

CCAR

Comprehensive Capital Analysis and Review

CCP

Central counterparty clearinghouses

CCPA

California’s Consumer Privacy Act

CDO

Collateralized debt obligation

CECL

Current expected credit losses

CET1

Common equity tier 1

CFPB

Consumer Financial Protection Bureau

CFTC

Commodity Futures Trading Commission

CLO

Collateralized loan obligation

CLTV

Combined loan-to-value

CPRA

California Privacy Rights Act

CRO

Chief Risk Officer

CVA

Credit valuation adjustment

DIF

Deposit Insurance Fund

DTA

Deferred tax assets

DVA

Debit valuation adjustment

ECL

Expected credit losses

EEA

European Economic Area

EPS

Earnings per common share

ERC

Enterprise Risk Committee

ESG

Environmental, social and governance

European Union

FDIC

Federal Deposit Insurance Corporation

FDICIA

Federal Deposit Insurance Corporation

Improvement Act of 1991

FHA

Federal Housing Administration

FHLB

Federal Home Loan Bank

FHLMC

Freddie Mac

FICC

Fixed income, currencies and commodities

FICO

Fair Isaac Corporation (credit score)

FLUs

Front line units

FNMA

Fannie Mae

FTE

Fully taxable-equivalent

FVA

Funding valuation adjustment

GAAP

Accounting principles generally accepted in the

United States of America

GDPR

General Data Protection Regulation

GHG

Greenhouse gas

GLS

Global Liquidity Sources

GNMA

Government National Mortgage Association

GRM

Global Risk Management

GSE

Government-sponsored enterprise

G-SIB

Global systemically important bank

GWIM

Global Wealth & Investment Management

HELOC

Home equity line of credit

HQLA

High Quality Liquid Assets

HTM

Held-to-maturity

ICAAP

Internal Capital Adequacy Assessment Process

IRLC

Interest rate lock commitment

ISDA

International Swaps and Derivatives Association,

Inc.

LCR

Liquidity Coverage Ratio

LHFS

Loans held-for-sale

LIBOR

London Interbank Offered Rate

LTV

Loan-to-value

MBS

Mortgage-backed securities

MD&A

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

MLI

Merrill Lynch International

MLPCC

Merrill Lynch Professional Clearing Corp

MLPF&S

Merrill Lynch, Pierce, Fenner & Smith Incorporated

MRC

Management Risk Committee

MSA

Metropolitan Statistical Area

MSR

Mortgage servicing right

NOL

Net operating loss

NSFR

Net Stable Funding Ratio

OCC

Office of the Comptroller of the Currency

OCI

Other comprehensive income

OECD

Organization for Economic Cooperation and

Development

OREO

Other real estate owned

OTC

Over-the-counter

PCA

Prompt Corrective Action

PPP

Paycheck Protection Program

RMBS

Residential mortgage-backed securities

RSU

Restricted stock unit

RWA

Risk-weighted assets

SBA

Small Business Administration

SBLC

Standby letter of credit

SCB

Stress capital buffer

SEC

Securities and Exchange Commission

SIFI

Systemically important financial institution

SLR

Supplementary leverage ratio

SOFR

Secured Overnight Financing Rate

TDR

Troubled debt restructuring

TLAC

Total loss-absorbing capacity

UDAAP

Unfair, deceptive, or abusive acts or practices

U.S. Department of Veterans Affairs

VaR

Value-at-Risk

VIE

Variable interest entity

171 Bank of America

Item 9. Changes in and Disagreements with

Accountants on Accounting and Financial

Disclosure

None

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report and pursuant

to Rule 13a-15 of the Securities Exchange Act of 1934, as

amended (Exchange Act), Bank of America’s management,

including the Chief Executive Officer and Chief Financial Officer,

conducted an evaluation of the effectiveness and design of our

disclosure controls and procedures (as that term is defined in

Rule 13a-15(e) of the Exchange Act). Based upon that

evaluation, Bank of America’s Chief Executive Officer and Chief

Financial Officer concluded that Bank of America’s disclosure

controls and procedures were effective, as of the end of the

period covered by this report.

Report of Management on Internal Control Over

Financial Reporting

The Report of Management on Internal Control Over Financial

Reporting is set forth on page 87 and incorporated herein by

reference. The Report of Independent Registered Public

Accounting Firm with respect to the Corporation’s internal

control over financial reporting is set forth on pages 88 and 89

and incorporated herein by reference.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over

financial reporting (as defined in Rule 13a-15(f) of the Exchange

Act) during the quarter ended December 31, 2023, that

materially affected, or are reasonably likely to materially affect,

our internal control over financial reporting.

Item 9B. Other Information

Trading Arrangements

During the fiscal quarter ended December 31, 2023, none of

the Corporation’s directors or officers (as defined in Rule

16a-1(f) of the Securities Exchange Act of 1934, as amended)

adopted or terminated a Rule 10b5-1 trading arrangement or

non-Rule 10b5-1 trading arrangement (in each case, as defined

in Item 408 of Regulation S-K) for the purchase or sale of the

Corporation’s securities.

Disclosure Pursuant to Section 13(r) of the Securities

Exchange Act of 1934

Pursuant to Section 13(r) of the Exchange Act, an issuer is

required to disclose in its annual or quarterly reports, as

applicable, whether it or any of its affiliates knowingly engaged

in certain activities, transactions or dealings relating to Iran or

with individuals or entities designated pursuant to certain

Executive Orders. Disclosure may be required even where the

activities, transactions or dealings were conducted in

compliance with applicable law. As previously disclosed in its

related quarterly report on Form 10-Q, the Corporation identified

and reported certain activities pursuant to Section 13(r) for the

second quarter of 2023. The information provided pursuant to

Section 13(r) of the Exchange Act in Item 5 of the quarter ended

June 30, 2023 is hereby incorporated by reference to such

report. Except as set forth below, as of the date of this Annual

Report on Form 10-K, the Corporation is not aware of any other

activity, transaction or dealing by any of its affiliates during the

quarter ended December 31, 2023 that requires disclosure

under Section 13(r) of the Exchange Act.

During the fourth quarter of 2023, Bank of America, National

Association (BANA), a U.S. subsidiary of Bank of America

Corporation, processed seven authorized wire payments totaling

$1,063,846 pursuant to a general license issued by the U.S.

Department of the Treasury’s Office of Foreign Assets Control

regarding Afghanistan or governing institutions in Afghanistan.

These payments for BANA clients were processed to Afghan

state-owned banks, which are subject to Executive Order

13224. There was no measurable gross revenue or net profit to

the Corporation relating to these transactions, except nominal

fees received by BANA for processing payments. The

Corporation may in the future engage in similar transactions for

its clients to the extent permitted by U.S. law.

Item9C. Disclosure Regarding Foreign

Jurisdictions that Prevent Inspections

Not applicable.

PartIII

Bank of America Corporation and Subsidiaries

Item 10. Directors, Executive Officers and

Corporate Governance

Information about our Executive Officers

The name, age, position and office, and business experience of

our current executive officers are:

Dean C. Athanasia (57) President, Regional Banking since

October 2021; President, Retail and Preferred & Small Business

Banking from January 2019 to October 2021; Co-Head --

Consumer Banking from September 2014 to January 2019; and

Preferred and Small Business Banking Executive from April

2011 to September 2014.

Aditya Bhasin (50) Chief Technology & Information Officer

since October 2021; Chief Information Officer and Head of

Technology for Consumer, Small Business, Wealth Management

and Employee Technology from October 2017 to October 2021;

CIO, Retail, Preferred & Wealth Management Technology, and

Wealth Management Operations from June 2015 to October

2017.

Darrin Steve Boland (55) Chief Administrative Officer since

October 2021; President, Retail from February 2020 to October

2021; Head of Consumer Lending from May 2017 to February

2020; Consumer Lending Executive from May 2015 to May

2017.

Alastair M. Borthwick (55) Chief Financial Officer since

November 2021; President of Global Commercial Banking from

October 2012 to October 2021.

Sheri Bronstein (55) Chief Human Resources Officer since

January 2019; Global Human Resources Executive from July

2015 to January 2019; and HR Executive for Global Banking &

Markets from March 2010 to July 2015.

James P. DeMare (54) President, Global Markets since

September 2020; Global Co-Head of FICC Trading and

Commercial Real Estate Banking from February 2015 to

September 2020.

Paul M. Donofrio (63) Vice Chair since November 2021; Chief

Financial Officer from August 2015 to November 2021;

Strategic Finance Executive from April 2015 to August 2015;

and Head of Global Corporate Credit and Transaction Banking

from January 2012 to April 2015.

Bank of America 172

Geoffrey S. Greener (59) Chief Risk Officer since April 2014;

Head of Enterprise Capital Management from April 2011 to April

2014.

Lindsay D. Hans (44) President, Co-Head Merrill Wealth

Management since April 2023; Head of Private Wealth

Management, International and Institutional, Merrill Lynch from

February 2023 to March 2023; Division Executive, Merrill Lynch

from March 2017 to February 2023; Market Executive, Merrill

Lynch from September 2014 to March 2017.

Kathleen A. Knox (60) President, The Private Bank since

November 2017; Head of Business Banking from October 2014

to November 2017; and Retail Banking & Distribution Executive

from June 2011 to October 2014.

Matthew M. Koder (52) President, Global Corporate &

Investment Banking since December 2018; President of APAC

from March 2012 to December 2018.

Bernard A. Mensah (55) President, International, CEO of

Merrill Lynch International (MLI), BANA London Branch Head

since August 2020. President of UK and Central and Eastern

Europe, the Middle East, Africa, CEO of MLI, BANA London

Branch and Co-Head of Global Fixed Income Currency and

Commodities (FICC) Trading from September 2019 to August

2020; Co-Head of Global FICC Trading from March 2015 to

September 2019.

Lauren A. Mogensen (61) Global General Counsel since

November 2021; Head of Global Compliance & Operational

Risk, and Reputational Risk from December 2013 to October

2021.

Brian T. Moynihan (64) Chair of the Board since October

2014, and President, Chief Executive Officer, and member of

the Board of Directors since January 2010.

Thong M. Nguyen (65) Vice Chair, Head of Global Strategy &

Enterprise Platforms since October 2021; Vice Chairman from

January 2019 to October 2021; Co-Head -- Consumer Banking

from September 2014 to January 2019; Retail Banking

Executive from April 2014 to September 2014; and Retail

Strategy, and Operations & Digital Banking Executive from

September 2012 to April 2014.

Eric A. Schimpf (55) President, Co-Head Merrill Wealth

Management since April 2023; Pacific Coast Division Executive,

Merrill Lynch from July 2022 to March 2023; Head of Advisory

Division, Merrill Lynch from September 2020 to July 2022;

Southeast Division Executive, Merrill Lynch from April 2017 to

September 2020; South Atlantic Division Executive, Merrill

Lynch from June 2015 to April 2017; Market Executive, Merrill

Lynch from January 2014 to June 2015.

Thomas M. Scrivener (52) Chief Operations Executive since

October 2021; Head of Consumer, Small Business & Wealth

Management Operations from October 2019 to October 2021;

Global Real Estate and Enterprise Initiatives Executive from

September 2018 to October 2019; Enterprise Scenario Planning

and Execution Executive from May 2016 to September 2018;

Enterprise Stress Testing, Recovery & Resolution Planning

Executive from June 2014 to March 2016.

Bruce R. Thompson (59) Vice Chair, Head of Enterprise Credit

since October 2021; Vice Chairman, Head of Institutional Credit

Exposure Management (from December 2020) and Wholesale

Credit Underwriting and Monitoring (from May 2021) to October

2021; Vice Chairman, President of the EU & Switzerland and

CEO of Bank of America Europe DAC from May 2018 to

December 2020; Vice Chairman of Bank of America Corporation

from March 2016 to May 2018; Managing Director from July

2015 to March 2016; Chief Financial Officer from July 2011 to

July 2015.

Information included under the following captions in the

Corporation’s proxy statement relating to its 2024 annual

meeting of shareholders (the 2024 Proxy Statement) is

incorporated herein by reference:

● “Proposal 1: Electing directors – Our director nominees;”

● “Corporate governance – Additional corporate governance

information;”

● “Corporate governance – Committees and membership;”

● “Corporate governance – Board meetings and attendance;”

and

● “Delinquent Section 16(a) Reports.”

Item 11. Executive Compensation

Information included under the following captions in the 2024

Proxy Statement is incorporated herein by reference:

● “Compensation discussion and analysis;”

● “Compensation and Human Capital Committee Report;”

● “Executive compensation;”

● “CEO pay ratio;”

● “Corporate governance;” and

● “Director compensation.”

173 Bank of America

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters

Information included under the following caption in the 2024 Proxy Statement is incorporated herein by reference:

● “Stock ownership of directors, executive officers, and certain beneficial owners.”

The table below presents information on equity compensation plans at December31, 2023:

Plan Category

(1)

(a)

Number of Shares to

be Issued Under

Outstanding Options,

Warrants and Rights

(2)

(b)

Weighted-average Exercise

Price of Outstanding

Options, Warrants and

Rights

(3)

(c)

Number of Shares

Remaining for Future

Issuance Under Equity

Compensation Plans

(excluding securities

reflected in column (a))

(4)

Plans approved by shareholders 237,319,169 — 137,153,480

Plans not approved by shareholders — — —

Total 237,319,169

—

137,153,480

(1)

This table does not include 469,974 vested restricted stock units (RSUs) and stock option gain deferrals at December31, 2023 that were assumed by the Corporation in connection with prior

acquisitions under whose plans the awards were originally granted.

(2)

Consists of outstanding RSUs. Includes 3,855,179 vested RSUs subject to a required post-vest holding period.

(3)

RSUs do not have an exercise price and are delivered without any payment or consideration.

(4)

Amount represents shares of common stock available for future issuance under the Bank of America Corporation Equity Plan.

Item 13. Certain Relationships and Related

Transactions, and Director Independence

Information included under the following captions in the 2024

Proxy Statement is incorporated herein by reference:

● “Related person and certain other transactions;” and

● “Corporate governance – Director independence.”

Item 14. Principal Accounting Fees and Services

Information included under the following caption in the 2024

Proxy Statement is incorporated herein by reference:

● “Proposal 3: Ratifying the appointment of our independent

registered public accounting firm for 2024.”

Bank of America 174

Part IV

Bank of America Corporation and Subsidiaries

Item 15. Exhibits, Financial Statement Schedules

The following documents are filed as part of this report:

(1) Financial Statements:

Report of Independent Registered Public Accounting Firm (PCAOB ID 238)

Consolidated Statement of Income for the years ended December31, 2023, 2022 and 2021

Consolidated Statement of Comprehensive Income for the years ended December31, 2023, 2022 and 2021

Consolidated Balance Sheet at December31, 2023 and 2022

Consolidated Statement of Changes in Shareholders’ Equity for the years ended December31, 2023, 2022 and 2021

Consolidated Statement of Cash Flows for the years ended December31, 2023, 2022 and 2021

Notes to Consolidated Financial Statements

(2) Schedules:

None

(3) Index to Exhibits

With the exception of the information expressly incorporated herein by reference, the 2024 Proxy Statement shall not be deemed

filed as part of this Annual Report on Form 10-K.

3.1 Restated Certificate of Incorporation, as amended and in effect on the date hereof

10-Q 3.1 04/29/22 1-6523

3.2 Amended and Restated Bylaws of the Corporation as in effect on the date hereof 10-K 3.2 2/22/23 1-6523

4.1 Indenture dated as of January1, 1995 (for senior debt securities) between registrant (successor

to NationsBank Corporation) and BankAmerica National TrustCompany

S-3 4.1 2/1/95 33-57533

4.2 First Supplemental Indenture dated as of September18, 1998 between registrant and U.S. Bank

TrustNational Association (successor to BankAmerica National Trust Company) to the indenture

dated as of January1, 1995 (See Exhibit 4.1)

8-K 4.3 11/18/98 1-6523

4.3 Second Supplemental Indenture dated as of May 7, 2001 between registrant, U.S. Bank

TrustNational Association, as Prior Trustee, and The Bank of New York, as Successor Trustee to

the indenture dated as of January1, 1995 (See Exhibit 4.1)

8-K 4.4 6/14/01 1-6523

4.4 Third Supplemental Indenture dated as of July28, 2004 between registrant and The Bank of New

York to the indenture dated as of January1, 1995 (See Exhibit 4.1)

8-K 4.2 8/27/04 1-6523

4.5 Fourth Supplemental Indenture dated as of April28, 2006 between the registrant and The Bank of

New York to the indenture dated as of January1, 1995 (See Exhibit 4.1)

S-3 4.6 5/5/06 333-133852

4.6 Fifth Supplemental Indenture dated as of December1, 2008 between registrant and The Bank of

New York Mellon TrustCompany, N.A. (successor to The Bank of New York) to the indenture dated

as of January1, 1995 (See Exhibit 4.1)

8-K 4.1 12/5/08 1-6523

4.7 Sixth Supplemental Indenture dated as of February 23, 2011 between registrant and The Bank of

New York Mellon Trust Company, N.A. to the indenture dated as of January1, 1995 (See Exhibit

4.1)

10-K 4(ee) 2/25/11 1-6523

4.8 Seventh Supplemental Indenture dated as of January 13, 2017 between registrant and The Bank

of New York Mellon Trust Company, N.A. to the indenture dated as of January 1, 1995 (See

Exhibit 4.1)

8-K 4.1 1/13/17 1-6523

4.9 Eighth Supplemental Indenture dated as of February 23, 2017 between registrant and the Bank of

New York Mellon Trust Company, N.A. to the indenture dated as of January1, 1995 (See Exhibit

4.1)

10-K 4(a) 2/23/17 1-6523

4.10 Successor Trustee Agreement effective December 15, 1995 between registrant (successor to

NationsBank Corporation) and First Trust of New York, National Association, as successor trustee

to BankAmerica National Trust Company

S-3 4.2 6/28/96 333-07229

4.11 Agreement of Appointment and Acceptance dated as of December 29, 2006 between registrant

and The Bank of New York TrustCompany, N.A.

10-K 4(aaa) 2/28/07 1-6523

4.12 Form of Senior Registered Note S-3 4.12 5/1/15 333-202354

4.13 Form of Registered Global Senior Medium-Term Note, SeriesL S-3 4.13 5/1/15 333-202354

4.14 Form of Master Registered Global Senior Medium-Term Note, SeriesL S-3 4.14 5/1/15 333-202354

4.15 Form of Registered Global Senior Medium-Term Note, Series M 8-K 4.2 1/13/17 1-6523

4.16 Form of Master Registered Global Senior Medium-Term Note, Series M 8-K 4.3 1/13/17 1-6523

4.17 Indenture dated as of January 1, 1995 (for subordinated debt securities) between registrant

(successor to NationsBank Corporation) and The Bank of New York

S-3 4.5 2/1/95 33-57533

4.18 First Supplemental Indenture dated as of August 28, 1998 between registrant and The Bank of

New York to the indenture dated as of January1, 1995 (See Exhibit 4.17)

8-K 4.8 11/18/98 1-6523

Incorporated by Reference

Exhibit No. Description Notes Form Exhibit Filing Date File No.

175 Bank of America

4.19 Second Supplemental Indenture dated as of January 25, 2007 between registrant and The Bank

of New York Trust Company, N.A. (successor to The Bank of New York) to the indenture dated as

of January1, 1995 (See Exhibit 4.17)

S-4 4.3 3/16/07 333-141361

4.20 Third Supplemental Indenture dated as of February 23, 2011 between registrant and The Bank of

New York Mellon Trust Company, N.A. (formerly The Bank of New York Trust Company, N.A.) to the

indenture dated as of January1, 1995 (See Exhibit 4.17)

10-K 4(ff) 2/25/11 1-6523

4.21 Fourth Supplemental Indenture dated as of February 23, 2017 between registrant and The Bank

of New York Mellon Trust Company, N.A. to the indenture dated as of January 1, 1995 (See

Exhibit 4.17)

10-K 4(i) 2/23/17 1-6523

4.22 Indenture dated as of June 27, 2018 (for senior debt securities) between the registrant and The

Bank of New York Mellon Trust Company, N.A.

S-3 4.3 6/27/18 333-224523

4.23 Form of Registered Global Senior Medium-Term Note, Series N (prior to August 2021) S-3 4.4 6/27/18 333-224523

4.24 Form of Master Registered Global Senior Medium-Term Note, Series N (prior to August 2021) S-3 4.5 6/27/18 333-224523

4.25 Form of Registered Global Senior Medium-Term Note, Series N (from August 2021) S-3 4.4 8/2/21 333-257399

4.26 Form of Master Registered Global Senior Medium-Term Note, Series N (from August 2021) S-3 4.5 8/2/21 333-257399

4.27 Indenture dated as of June 27, 2018 (for subordinated debt securities) between the registrant

and The Bank of New York Mellon Trust Company, N.A.

S-3 4.6 6/27/18 333-224523

4.28

Form of Registered Global Subordinated Medium-Term Note, Series N (prior to August 2021)

S-3 4.7 6/27/18 333-224523

4.29

Form of Registered Global Subordinated Medium-Term Note, Series N (from August 2021)

S-3 4.7 8/2/21 333-257399

Registrant and its subsidiaries have other long-term debt agreements, but these are omitted

pursuant to Item 601(b)(4)(iii) of Regulation S-K. Copies of these agreements will be furnished to

the Commission on request

4.30 Description of the Corporation's Securities 1

10.1 Bank of America Pension Restoration Plan, as amended and restated effective January1, 2009

(Pension Restoration Plan)

2 10-K 10(c) 2/27/09 1-6523

10.2 First Amendment to the Pension Restoration Plan dated December 18, 2009 2 10-K 10(c) 2/26/10 1-6523

10.3 Second Amendment to the Pension Restoration Plan dated June 29, 2012 2 10-K 10(a) 2/28/13 1-6523

10.4 Third Amendment to the Pension Restoration Plan dated March 26, 2013 2 10-K 10.4 2/19/20 1-6523

10.5 Fourth Amendment to the Pension Restoration Plan dated August 22, 2013 2 10-K 10.5 2/19/20 1-6523

10.6 Fifth Amendment to the Pension Restoration Plan dated December 5, 2014 2 10-K 10.6 2/19/20 1-6523

10.7 Sixth Amendment to the Pension Restoration Plan dated December 15, 2016 2 10-K 10.7 2/19/20 1-6523

10.8 Bank of America Deferred Compensation Plan (formerly known as the Bank of America 401(k)

Restoration Plan) as amended and restated effective January1, 2015

2 10-K 10(c) 2/25/15 1-6523

10.9 First Amendment to the Bank of America Deferred Compensation Plan (formerly known as the

Bank of America 401(k) Restoration Plan), as amended and restated effective January 1, 2015

2 10-K 10(vv) 2/24/16 1-6523

10.10 Second Amendment to the Bank of America Deferred Compensation Plan (formerly known as the

Bank of America 401(k) Restoration Plan), as amended and restated effective January 1, 2015

2 S-8 4(c) 11/19/19 333-234780

10.11 Third Amendment to the Bank of America Deferred Compensation Plan (formerly known as the

Bank of America 401(k) Restoration Plan), as amended and restated effective January 1, 2015

2 10-K 10.14 2/19/20 1-6523

10.12 Fourth Amendment to the Bank of America Deferred Compensation Plan (formerly known as the

Bank of America 401(k) Restoration Plan), as amended and restated effective January 1, 2015

2 10-K 10.15 2/24/21 1-6523

10.13 Bank of America Executive Incentive Compensation Plan, as amended and restated effective

December 10, 2002

2 10-K 10(g) 3/3/03 1-6523

10.14 Amendment to Bank of America Executive Incentive Compensation Plan, dated January 23, 2013 2 10-K 10(d) 2/28/13 1-6523

10.15 Bank of America Director Deferral Plan, as amended and restated effective January1, 2005 2 10-K 10(g) 2/28/07 1-6523

10.16 Bank of America Director Deferral Plan, as amended and restated effective January 1, 2019 2 10-K 10(f) 2/26/19 1-6523

10.17 Bank of America Corporation Key Employee Equity Plan (formerly known as the Key Associate

Stock Plan), as amended and restated effective May 6, 2015 (2015 KEEP)

2 8-K 10.2 5/7/15 1-6523

10.18 First Amendment to the 2015 KEEP dated December 19, 2018 2 10-K 10(mm) 2/26/19 1-6523

10.19 Second Amendment to the 2015 KEEP dated April 24, 2019 2 8-K 10.1 4/24/19 1-6523

10.20 Bank of America Corporation Equity Plan (formerly known as the Key Employee Equity Plan), as

amended and restated effective April 20, 2021 (2021 BACEP)

2 8-K 10.1 4/22/21 1-6523

10.21 Bank of America Corporation Equity Plan (formerly known as the Key Employee Equity Plan), as

amended and restated effective April 25, 2023

2 8-K 10.1 4/28/23 1-6523

10.22 Form of Restricted Stock Award Agreement for Non-Employee Directors under the 2015 KEEP and

the 2021 BACEP

2 10-K 10(h) 2/26/19 1-6523

Incorporated by Reference

Exhibit No. Description Notes Form Exhibit Filing Date File No.

Bank of America 176

10.23 Form of Time-based Restricted Stock Units Award Agreement (February 2021) under the 2015

KEEP

2 10-Q 10.1 4/29/21 1-6523

10.24 Form of Performance Restricted Stock Units Award Agreement (February 2021) under the 2015

KEEP

2 10-Q 10.2 4/29/21 1-6523

10.25 Form of Cash-settled Restricted Stock Units Award Agreement under the 2021 BACEP 2 10-K 10.32 2/22/22 1-6523

10.26 Form of Time-Based Restricted Stock Units Award Agreement under the 2021 BACEP 2 10-K 10.33 2/22/22 1-6523

10.27 Form of Performance-Based Restricted Stock Units Award Agreement under the 2021 BACEP 2 10-K 10.34 2/22/22 1-6523

10.28 Form of Phantom Restricted Stock Units Award Agreement 2 10-K 10.35 2/22/22 1-6523

10.29 Amendment to various plans in connection with FleetBoston Financial Corporation merger dated

October 27, 2003

2 10-K 10(v) 3/1/04 1-6523

10.30 FleetBoston Supplemental Executive Retirement Plan effective December 31, 2004 2 10-K 10(r) 3/1/05 1-6523

10.31 FleetBoston Executive Deferred Compensation Plan No.2 effective December 16, 2003 2 10-K 10(u) 3/1/05 1-6523

10.32 FleetBoston Executive Supplemental Plan effective December 31, 2004 2 10-K 10(v) 3/1/05 1-6523

10.33 Retirement Income Assurance Plan for Legacy Fleet, as amended and restated effective

January1, 2009

2 10-K 10(p) 2/26/10 1-6523

10.34 First Amendment to the Retirement Income Assurance Plan for Legacy Fleet, as amended and

restated effective January 1, 2009

2 10-K 10(I) 2/28/13 1-6523

10.35 Officer's Certificate of Global Compensation, Benefits and Shared Services Executive Regarding

Wanger Divestiture

2 10-K 10(c) 2/25/11 1-6523

10.36 FleetBoston Directors Deferred Compensation and Stock Unit Plan effective January 1, 2004 2 10-K 10(aa) 3/1/05 1-6523

10.37 BankBoston Corporation and its Subsidiaries Deferred Compensation Plan dated December 24,

2001

2 10-K 10(cc) 3/1/05 1-6523

10.38 BankBoston Director Stock Award Plan effective July 1, 1998 2 10-K 10(hh) 3/1/05 1-6523

10.39 BankBoston Corporation Directors’ Deferred Compensation Plan effective March 1, 1988 2 10-K 10(ii) 3/1/05 1-6523

10.40 BankBoston, N.A. Directors’ Deferred Compensation Plan effective March 1, 1988 2 10-K 10(jj) 3/1/05 1-6523

10.41 Description of BankBoston Director Retirement Benefits Exchange Program 2 10-K 10(ll) 3/1/05 1-6523

10.42 Global amendment to definition of “change in control” or “change of control,” together with a list

of plans affected by such amendment

2 10-K 10(oo) 3/1/05 1-6523

10.43 Employment Agreement dated October27, 2003 between registrant and Brian T. Moynihan 2 S-4 10(d) 12/4/03 333-110924

10.44 Cancellation Agreement dated October26, 2005 between registrant and Brian T. Moynihan 2 8-K 10.1 10/26/05 1-6523

10.45 Agreement Regarding Participation in the Fleet Boston Supplemental Executive Retirement Plan

dated October26, 2005 between registrant and Brian T. Moynihan

2 8-K 10.2 10/26/05 1-6523

10.46 Securities Purchase Agreement dated August 25, 2011 between registrant and Berkshire

Hathaway Inc. (including forms of the certificate of Designations, Warrant and Registration Rights

Agreement)

8-K 1.1 8/25/11 1-6523

10.47 Amended and Restated Aircraft Time Sharing Agreement (Multiple Aircraft) dated June 26, 2018

between Bank of America, N.A. and Brian T. Moynihan

2 10-Q 10 7/30/18 1-6523

10.48 Form of Aircraft Time Sharing Agreement (Multiple Aircraft) between Bank of America, N.A. and

certain executive officers of the Corporation, including certain Named Executive Officers

2 10-Q 10(b) 7/29/19 1-6523

10.49 Amended Exhibit B to the Form of Aircraft Time Sharing Agreement (Multiple Aircraft) between

Bank of America, N.A. and certain executive officers of the Corporation, including certain Named

Executive Officers

2 10-Q 10.1 10/28/22 1-6523

10.50 ESA Retention Agreement dated March 15, 2004 between the Corporation and Dean C. Athanasia 2 10-Q 10(c) 4/26/19 1-6523

10.51 Letter Agreement dated November 9, 2021 between the Corporation and James P. DeMare 2, 3 10-Q 10.1 4/29/22 1-6523

10.52 Employment Offer Letter dated March 4, 2019 between the Corporation and Matthew M. Koder 2, 3 10-Q 10.2 4/29/22 1-6523

10.53 Letter of Understanding dated March 4, 2019 between the Corporation and Matthew M. Koder 2, 3 10-Q 10.3 4/29/22 1-6523

10.54 Appointment Letter dated December 1, 2022 between Bank of America Europe Designated Activity

Company and Paul M. Donofrio with respect to board service as Chair and Non-Executive Director

2, 3 10-K 10.62 2/22/23 1-6523

21 Direct and Indirect Subsidiaries of Bank of America Corporation As of December 31, 2023 1

22 Subsidiary Issuers of Guaranteed Securities 10-K 22 2/22/23 1-6523

23 Consent of PricewaterhouseCoopers LLP 1

Incorporated by Reference

Exhibit No. Description Notes Form Exhibit Filing Date File No.

177 Bank of America

24 Power of Attorney 1

31.1 Certification of the Chief Executive Officer pursuant to Section302 of the Sarbanes-Oxley Act of

2002

31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of

2002

32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted

pursuant to Section906 of the Sarbanes-Oxley Act of 2002

32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted

pursuant to Section906 of the Sarbanes-Oxley Act of 2002

97.1 Incentive Compensation Recoupment Policy 1

99.1 Bank of America Corporation Corporate Policy Regarding Seeking Stockholder Approval of Future

Severance Agreements

10-K 99.1 2/22/23 1-6523

101.INS Inline XBRL Instance Document 5

101.SCH Inline XBRL Taxonomy Extension Schema Document 1

101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 1

101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 1

101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 1

101.DEF Inline XBRL Taxonomy Extension Definitions Linkbase Document 1

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Incorporated by Reference

Exhibit No. Description Notes Form Exhibit Filing Date File No.

(1)

Filed Herewith.

(2)

Exhibit is a management contract or compensatory plan or arrangement.

(3)

As permitted by Regulation S-K, Item 601(b)(10)(iv) of the Securities Exchange Act of 1934, as amended, certain portions of this exhibit have been redacted from the publicly filed document.

(4)

Furnished herewith. This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibit

shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

(5)

The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

Item 16. Form 10-K Summary

Not applicable.

Bank of America 178

Signatures

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be

signed on its behalf by the undersigned, thereunto duly authorized.

Date: February20, 2024

Bank of America Corporation

By:

/s/Brian T. Moynihan

Brian T. Moynihan

Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons

on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Brian T. Moynihan

Chief Executive Officer, President, Chair and Director

(Principal Executive Officer)

February 20, 2024

Brian T. Moynihan

  

*/s/ Alastair M. Borthwick

Chief Financial Officer

(Principal Financial Officer)

February 20, 2024

Alastair M. Borthwick

  

*/s/ Rudolf A. Bless

Chief Accounting Officer

(Principal Accounting Officer)

February 20, 2024

Rudolf A. Bless

  

*/s/ Sharon L. Allen

Director February 20, 2024

Sharon L. Allen

*/s/ José E. Almeida

Director February 20, 2024

José E. Almeida

  

*/s/ Pierre J.P. de Weck

Director February 20, 2024

Pierre J.P. de Weck

  

*/s/ Arnold W. Donald

Director February 20, 2024

Arnold W. Donald

*/s/ Linda P. Hudson

Director February 20, 2024

Linda P. Hudson

*/s/ Monica C. Lozano

Director February 20, 2024

Monica C. Lozano

*/s/ Lionel L. Nowell III

Director February 20, 2024

Lionel L. Nowell III

*/s/ Denise L. Ramos

Director February 20, 2024

Denise L. Ramos

*/s/ Clayton S. Rose

Director February 20, 2024

Clayton S. Rose

179 Bank of America

*/s/ Michael D. White

Director February 20, 2024

Michael D. White

*/s/ Thomas D. Woods

Director February 20, 2024

Thomas D. Woods

*/s/ Maria T. Zuber

Director February 20, 2024

Maria T. Zuber

*By /s/ Ross E. Jeffries, Jr.

 

Ross E. Jeffries, Jr.

Attorney-in-Fact

Signature Title Date

Bank of America 180

Exhibit31.1

CERTIFICATION PURSUANT TO SECTION302

OF THE SARBANES-OXLEY ACT OF 2002

FOR THE CHIEF EXECUTIVE OFFICER

I, Brian T. Moynihan, certify that:

1. I have reviewed this Annual Report on Form 10-K of Bank of America Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a

material fact necessary to make the statements made, in light of the circumstances under which such statements

were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present

in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the

periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls

and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial

reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be

designed under our supervision, to ensure that material information relating to the registrant, including its

consolidated subsidiaries, is made known to us by others within those entities, particularly during the period

in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting

to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this

report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of

the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred

during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an

annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal

control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control

over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or

persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over

financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,

summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role

in the registrant’s internal control over financial reporting.

Date: February20, 2024 /s/ Brian T. Moynihan

Brian T. Moynihan

Chief Executive Officer

Exhibit31.2

CERTIFICATION PURSUANT TO SECTION302

OF THE SARBANES-OXLEY ACT OF 2002

FOR THE CHIEF FINANCIAL OFFICER

I, Alastair M. Borthwick, certify that:

1. I have reviewed this Annual Report on Form 10-K of Bank of America Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a

material fact necessary to make the statements made, in light of the circumstances under which such statements

were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present

in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the

periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls

and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial

reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be

designed under our supervision, to ensure that material information relating to the registrant, including its

consolidated subsidiaries, is made known to us by others within those entities, particularly during the period

in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting

to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this

report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of

the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred

during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an

annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal

control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control

over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or

persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over

financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,

summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role

in the registrant’s internal control over financial reporting.

Date: February20, 2024 /s/ Alastair M. Borthwick

Alastair M. Borthwick

Chief Financial Officer

Exhibit32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION1350,

AS ADOPTED PURSUANT TO SECTION906

OF THE SARBANES-OXLEY ACT OF 2002

I, Brian T. Moynihan, state and attest that:

1. I am the Chief Executive Officer of Bank of America Corporation (the registrant).

2. I hereby certify, pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of

2002, that:

• the Annual Report on Form 10-K of the registrant for the year ended December31, 2023 (the periodic report)

containing financial statements fully complies with the requirements of Section 13(a) or 15(d) of the

Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

• the information contained in the periodic report fairly presents, in all material respects, the financial condition

and results of operations of the registrant.

Date: February20, 2024 /s/ Brian T. Moynihan

Brian T. Moynihan

Chief Executive Officer

Exhibit32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

I, Alastair M. Borthwick, state and attest that:

1. I am the Chief Financial Officer of Bank of America Corporation (the registrant).

2. I hereby certify, pursuant to 18 U.S.C. Section1350, as adopted pursuant to Section906 of the Sarbanes-Oxley Act of

2002, that:

• the Annual Report on Form 10-K of the registrant for the year ended December31, 2023 (the periodic report)

containing financial statements fully complies with the requirements of Section 13(a) or 15(d) of the

Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

• the information contained in the periodic report fairly presents, in all material respects, the financial condition

and results of operations of the registrant.

Date: February20, 2024 /s/ Alastair M. Borthwick

Alastair M. Borthwick

Chief Financial Officer

DESCRIPTION OF REGISTRANT’S SECURITIES REGISTERED UNDER SECTION

12 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

As of December 31, 2023, Bank of America Corporation (the “Company”) had the

following classes of securities registered under Section 12 of the Securities Exchange Act of

1934, as amended (the “Exchange Act”):

• Common Stock, par value $0.01 per share

• Depositary Shares, each representing a 1/1,000

interest in a share of Floating Rate Non-

Cumulative Preferred Stock, Series E

• Depositary Shares, each representing a 1/1,000

interest in a share of 6.00% Non-

Cumulative Preferred Stock, Series GG

• Depositary Shares, each representing a 1/1,000

interest in a share of 5.875% Non-

Cumulative Preferred Stock, Series HH

• Depositary Shares, each representing a 1/1,200

interest in a share of Bank of America

Corporation Floating Rate Non-Cumulative Preferred Stock, Series 1

• Depositary Shares, each representing a 1/1,200

interest in a share of Bank of America

Corporation Floating Rate Non-Cumulative Preferred Stock, Series 2

• Depositary Shares, each representing a 1/1,200

interest in a share of Bank of America

Corporation Floating Rate Non-Cumulative Preferred Stock, Series 4

• Depositary Shares, each representing a 1/1,200

interest in a share of Bank of America

Corporation Floating Rate Non-Cumulative Preferred Stock, Series 5

• Depositary Shares, each representing a 1/1,000

interest in a share of 5.375% Non-

Cumulative Preferred Stock, Series KK

• Depositary Shares, each representing a 1/1,000

interest in a share of 5.000% Non-

Cumulative Preferred Stock, Series LL

• Depositary Shares, each representing a 1/1,000

interest in a share of 4.375% Non-

Cumulative Preferred Stock, Series NN

• Depositary Shares, each representing a 1/1,000

interest in a share of 4.125% Non-

Cumulative Preferred Stock, Series PP

• Depositary Shares, each representing a 1/1,000

interest in a share of 4.250% Non-

Cumulative Preferred Stock, Series QQ

• Depositary Shares, each representing a 1/1,000

interest in a share of 4.750% Non-

Cumulative Preferred Stock, Series SS

• 7.25% Non-Cumulative Perpetual Convertible Preferred Stock, Series L

• Floating Rate Preferred Hybrid Income Term Securities of BAC Capital Trust XIII (and

the guarantee related thereto)

• 5.63% Fixed to Floating Rate Preferred Hybrid Income Term Securities of BAC Capital

Trust XIV (and the guarantee related thereto)

• Income Capital Obligation Notes initially due December 15, 2066 of Bank of America

Corporation

• Senior Medium-Term Notes, Series A, Step Up Callable Notes, due November 28, 2031,

of BofA Finance LLC (and the guarantee of the Company with respect thereto)

Exhibit 4.30

DESCRIPTION OF COMMON STOCK

This section describes the general terms and provisions of the shares of the Company’s

common stock. You should read the Company’s Restated Certificate of Incorporation (the

“Restated Certificate of Incorporation”) and the Company’s by-laws (the “Bylaws”) for

additional information about the common stock. The Restated Certificate of Incorporation and

the Bylaws are included as exhibits to the Company’s Annual Report on Form 10-K, to which

this exhibit also is attached.

General

As of December 31, 2023, under the Restated Certificate of Incorporation, the Company

is authorized to issue twelve billion eight hundred million (12,800,000,000) shares of common

stock, par value $.01 per share (the “Common Stock”), of which approximately 7.9 billion

shares were outstanding. The Common Stock trades on the New York Stock Exchange (the

“NYSE”) under the symbol “BAC.” As of December 31, 2023, approximately 496.9 million

shares were reserved for issuance in connection with the Company’s various employee and

director benefit plans, the conversion of outstanding securities convertible into shares of the

Common Stock, and for other purposes. After taking into account the reserved shares, there

were approximately 4.4 billion authorized shares of Common Stock available for issuance as of

December 31, 2023.

Shares of newly issued Common Stock will be uncertificated unless the Company’s

board of directors (the “Board”) by resolution determines otherwise. Shares represented by an

existing certificate will remain certificated until such certificate is surrendered to the Company.

Voting and Other Rights

Holders of the Common Stock are entitled to one vote per share. There are no cumulative

voting rights. In general, a majority of votes cast on a matter is sufficient to take action upon

routine matters, including the election of directors in an uncontested election. However, (1)

amendments to the Restated Certificate of Incorporation generally must be approved by the

affirmative vote of the holders of a majority of the voting power of the outstanding stock, and (2)

a merger, dissolution, or the sale of all or substantially all of the Company’s assets generally

must be approved by the affirmative vote of the holders of a majority of the voting power of the

outstanding stock.

In the event of the Company’s liquidation, holders of the Common Stock will be entitled

to receive pro rata any assets legally available for distribution to stockholders, subject to any

prior rights of any preferred stock then outstanding.

The Common Stock does not have any preemptive rights, redemption privileges, sinking

fund privileges, or conversion rights. All the outstanding shares of the Common Stock are, and,

upon proper conversion of any convertible securities, all of the shares of Common Stock into

which those securities are converted will be, validly issued, fully paid, and nonassessable.

Computershare Trust Company, N.A. is the transfer agent and registrar for the Common

Stock.

Dividends

Subject to the preferential rights of any holders of any outstanding series of preferred

stock, the holders of the Common Stock are entitled to receive dividends or distributions,

whether payable in cash or otherwise, as the Board may declare out of funds legally available for

payments. Stock dividends, if any are declared, may be paid from the Company’s authorized but

unissued shares of Common Stock.

Certain Anti-Takeover Matters

Certain provisions of Delaware law and of the Restated Certificate of Incorporation and

Bylaws could make it more difficult for a third party to acquire control of the Company or have

the effect of discouraging a third party from attempting to acquire control of the Company. For

example, the Company is subject to Section 203 of the Delaware General Corporation Law,

which would make it more difficult for another party to acquire the Company without the

approval of the Board. Certain provisions of the Restated Certificate of Incorporation and

Bylaws may make it less likely that the Company’s management would be changed or that

someone would acquire voting control of the Company without the Board’s consent. These

provisions could make it more difficult for a third party to acquire the Company even if an

acquisition might be in the best interest of the Company’s stockholders.

Preferred Stock. The Board can, at any time, under the Restated Certificate of

Incorporation and without stockholder approval, issue one or more new series of preferred stock.

In some cases, the issuance of preferred stock without stockholder approval could discourage or

make more difficult attempts to take control of the Company through a merger, tender offer,

proxy contest or otherwise. Preferred stock with special voting rights or other features issued to

persons favoring the Company’s management could stop a takeover by preventing the person

trying to take control of the Company from acquiring enough voting shares necessary to take

control. For a description of the outstanding series of the Company’s preferred stock as of

December 31, 2023, see “Description of Preferred Stock” below.

Advance Notice Requirements. The Bylaws establish advance notice procedures with

regard to stockholder proposals relating to nominations for the election of directors or other

business to be brought before meetings of the Company’s stockholders. These procedures

provide that notice of such stockholder proposals must be timely given to the Company’s

corporate secretary prior to the meeting at which the action is to be taken. The notice must

contain certain information specified in the Bylaws and must otherwise comply with the Bylaws.

Vacancies. Under the Bylaws, a majority vote of the Board may increase or decrease the

number of directors. Any director may be removed at any time with or without cause by the

affirmative vote of the holders of a majority of the voting power of the outstanding shares then

entitled to vote at an election of directors. Any vacancy on the Board or newly created

directorship will be filled by a majority vote of the remaining directors then in office, and those

newly elected directors will serve for a term expiring at the next annual meeting of stockholders,

and until such directors’ successor has been elected and qualified.

Amendment of Bylaws. The Bylaws may be adopted, amended or repealed by a majority

of the Board, subject to certain limitations in the Bylaws. The Company’s stockholders also

have the power to adopt, amend or repeal the Bylaws.

DESCRIPTION OF PREFERRED STOCK

This section summarizes the general terms and provisions of all series of the Company’s

preferred stock outstanding as of December 31, 2023. Certain of these series of preferred stock

(or depositary shares representing a fractional interest in a share of such series of preferred stock)

are registered under Section 12 of the Exchange Act, as indicated in each case by noting its

listing. Reference is made to the Restated Certificate of Incorporation and the respective

certificates of designations for each series of the Company’s preferred stock for complete

information about the provisions of that series of preferred stock. See also “Description of

Common Stock – Certain Anti-Takeover Matters” above.

Existing Series of Preferred Stock

As of December 31, 2023, under the Restated Certificate of Incorporation, the Company

has authority to issue 100,000,000 shares of preferred stock, par value $.01 per share. As of

December 31, 2023, the Company had approximately 4.1 million issued and outstanding shares

of preferred stock and the aggregate liquidation preference of all of the Company’s outstanding

preferred stock was approximately $28.7 billion. All outstanding shares of the Company’s

preferred stock are fully paid and nonassessable. Of the Company’s authorized and outstanding

preferred stock, as of December 31, 2023:

• 35,045 shares were designated as 7% Cumulative Redeemable Preferred Stock, Series B

(the “Series B Preferred Stock”), having a liquidation preference of $100 per share,

7,076 shares of which were issued and outstanding;

• 85,100 shares were designated as Floating Rate Non-Cumulative Preferred Stock, Series

E (the “Series E Preferred Stock”), having a liquidation preference of $25,000 per

share, 12,317 shares of which were issued and outstanding;

• 7,001 shares were designated as Floating Rate Non-Cumulative Preferred Stock, Series F

(the “Series F Preferred Stock”), having a liquidation preference of $100,000 per share,

1,409 shares of which were issued and outstanding;

• 8,501 shares were designated as Adjustable Rate Non-Cumulative Preferred Stock, Series

G (the “Series G Preferred Stock”), having a liquidation preference of $100,000 per

share, 4,925 shares of which were issued and outstanding;

• 6,900,000 shares were designated as 7.25% Non-Cumulative Perpetual Convertible

Preferred Stock, Series L (the “Series L Preferred Stock”), having a liquidation

preference of $1,000 per share, 3,080,182 shares of which were issued and outstanding;

• 40,000 shares were designated as Fixed-to-Floating Rate Non-Cumulative Preferred

Stock, Series U (the “Series U Preferred Stock”), having a liquidation preference of

$25,000 per share, 40,000 shares of which were issued and outstanding;

• 80,000 shares were designated as Fixed-to-Floating Rate Non-Cumulative Preferred

Stock, Series X (the “Series X Preferred Stock”), having a liquidation preference of

$25,000 per share, 80,000 shares of which were issued and outstanding;

• 56,000 shares were designated as Fixed-to-Floating Rate Non-Cumulative Preferred

Stock, Series Z (the “Series Z Preferred Stock”), having a liquidation preference of

$25,000 per share, 56,000 shares of which were issued and outstanding;

• 76,000 shares were designated as Fixed-to-Floating Rate Non-Cumulative Preferred

Stock, Series AA (the “Series AA Preferred Stock”), having a liquidation preference of

$25,000 per share, 76,000 shares of which were issued and outstanding;

• 40,000 shares were designated as Fixed-to-Floating Rate Non-Cumulative Preferred

Stock, Series DD (the “Series DD Preferred Stock”), having a liquidation preference of

$25,000 per share, 40,000 shares of which were issued and outstanding;

• 94,000 shares were designated as Fixed-to-Floating Rate Non-Cumulative Preferred

Stock, Series FF (the “Series FF Preferred Stock”), having a liquidation preference of

$25,000 per share, 90,833 shares of which were issued and outstanding;

• 55,200 shares were designated as 6.000% Non-Cumulative Preferred Stock, Series GG

(the “Series GG Preferred Stock”), having a liquidation preference of $25,000 per

share, 54,000 shares of which were issued and outstanding;

• 34,160 shares were designated as 5.875% Non-Cumulative Preferred Stock, Series HH

(the “Series HH Preferred Stock”), having a liquidation preference of $25,000 per

share, 34,049 shares of which were issued and outstanding;

• 40,000 shares were designated as Fixed-to-Floating Rate Non-Cumulative Preferred

Stock, Series JJ (the “Series JJ Preferred Stock”), having a liquidation preference of

$25,000 per share, 34,171 shares of which were issued and outstanding;

• 60,950 shares were designated as 5.375% Non-Cumulative Preferred Stock, Series KK

(the “Series KK Preferred Stock”), having a liquidation preference of $25,000 per

share, 55,273 shares of which were issued and outstanding;

• 52,400 shares were designated as 5.000% Non-Cumulative Preferred Stock, Series LL

(the “Series LL Preferred Stock”), having a liquidation preference of $25,000 per share,

52,045 shares of which were issued and outstanding;

• 44,000 shares were designated as Fixed-to-Floating Rate Non-Cumulative Preferred

Stock, Series MM (the “Series MM Preferred Stock”), having a liquidation preference

of $25,000 per share, 30,753 shares of which were issued and outstanding;

• 44,000 shares were designated as 4.375% Non-Cumulative Preferred Stock, Series NN

(the “Series NN Preferred Stock”), having a liquidation preference of $25,000 per share,

42,993 shares of which were issued and outstanding;

• 36,600 shares were designated as 4.125% Non-Cumulative Preferred Stock, Series PP

(the “Series PP Preferred Stock”), having a liquidation preference of $25,000 per share,

36,500 shares of which were issued and outstanding;

• 52,000 shares were designated as 4.250% Non-Cumulative Preferred Stock, Series QQ

(the “Series QQ Preferred Stock”), having a liquidation preference of $25,000 per

share, 51,879 shares of which were issued and outstanding;

• 70,000 shares were designated as 4.375% Fixed-Rate Reset Non-Cumulative Preferred

Stock, Series RR (the “Series RR Preferred Stock”), having a liquidation preference of

$25,000 per share, 66,738 shares of which were issued and outstanding;

• 28,000 shares were designated as 4.750% Non-Cumulative Preferred Stock, Series SS

(the “Series SS Preferred Stock”), having a liquidation preference of $25,000 per share,

27,463 shares of which were issued and outstanding;

• 80,000 shares were designated as 6.125% Fixed-Rate Reset Non-Cumulative Preferred

Stock, Series TT (the “Series TT Preferred Stock”), having a liquidation preference of

$25,000 per share, 80,000 shares of which were issued and outstanding;

• 21,000 shares were designated as Floating Rate Non-Cumulative Preferred Stock, Series

1 (the “Series 1 Preferred Stock”), having a liquidation preference of $30,000 per share,

3,185 shares of which were issued and outstanding;

• 37,000 shares were designated as Floating Rate Non-Cumulative Preferred Stock, Series

2 (the “Series 2 Preferred Stock”), having a liquidation preference of $30,000 per share,

9,967 shares of which were issued and outstanding;

• 20,000 shares were designated as Floating Rate Non-Cumulative Preferred Stock, Series

4 (the “Series 4 Preferred Stock”), having a liquidation preference of $30,000 per share,

7,010 shares of which were issued and outstanding; and

• 50,000 shares were designated as Floating Rate Non-Cumulative Preferred Stock, Series

5 (the “Series 5 Preferred Stock”), having a liquidation preference of $30,000 per share,

13,331 shares of which were issued and outstanding.

In addition, as of December 31, 2023, the following series of preferred stock were

designated, but no shares of any of these series were outstanding: (1) approximately 1.03 million

shares of ESOP Convertible Preferred Stock, Series C; (2) approximately 20 million shares of

$2.50 Cumulative Convertible Preferred Stock, Series BB; (3) 50,000 shares of 6% Non-

Cumulative Perpetual Preferred Stock, Series T; (4) 44,000 shares of 6.500% Non-Cumulative

Preferred Stock, Series Y; (5) 44,000 shares of 6.200% Non-Cumulative Preferred Stock, Series

CC; and (6) 36,000 shares of 6.000% Non-Cumulative Preferred Stock, Series EE.

As of their respective original issue dates, the terms of the Series E Preferred Stock,

Series F Preferred Stock, Series G Preferred Stock, Series U Preferred Stock, Series X Preferred

Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series

FF Preferred Stock, Series JJ Preferred Stock, Series MM Preferred Stock, Series 1 Preferred

Stock, Series 2 Preferred Stock, Series 4 Preferred Stock and Series 5 Preferred Stock (together,

the “LIBOR Preferred Stock”) provided for dividend rates to be determined by reference to

three-month U.S. dollar LIBOR (“Three-Month USD LIBOR”) for some or all applicable

dividend periods. Three-Month USD LIBOR ceased publication following June 30, 2023. In

accordance with the U.S. Adjustable Interest Rate (LIBOR) Act and Regulation ZZ promulgated

thereunder by the Board of Governors of the Federal Reserve System, and/or the applicable

fallback provisions relating to Three-Month USD LIBOR contained in the applicable series of

LIBOR Preferred Stock, the three-month CME Term SOFR Reference Rate, as administered by

CME Group Benchmark Administration, Ltd. (or any successor administrator thereof), plus a

tenor spread adjustment of 0.26161% (such rate, including such tenor spread adjustment,

“Adjusted Three-Month Term SOFR”) replaced Three-Month USD LIBOR as the reference

rate for the determinations of dividend rates and calculations of dividend payments for all series

of the LIBOR Preferred Stock for all dividend periods commencing on or after the first London

banking date after June 30, 2023 (the “LIBOR Replacement Date”). In the descriptions of the

various series of LIBOR Preferred Stock set forth below, references to Three-Month USD

LIBOR contained in the original terms of such preferred stock accordingly have been changed to

Adjusted Term SOFR.

Series B Preferred Stock

Preferential Rights. The Series B Preferred Stock ranks senior to the Common Stock and

ranks equally with the Series E Preferred Stock, Series F Preferred Stock, Series G Preferred

Stock, Series L Preferred Stock, Series U Preferred Stock, Series X Preferred Stock, Series Z

Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series FF Preferred

Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series

KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

liquidation. Shares of the Series B Preferred Stock are not convertible into or exchangeable for

any shares of Common Stock or any other class of the Company’s capital stock. Holders of the

Series B Preferred Stock do not have any preemptive rights, and the Series B Preferred Stock is

not subject to the operation of any sinking fund. The Company may issue stock with preferences

superior or equal to the Series B Preferred Stock without the consent of holders of Series B

Preferred Stock.

Dividends. Holders of shares of Series B Preferred Stock are entitled to receive, when

and as declared by the Board, cumulative cash dividends at an annual dividend rate per share of

7.00% of the stated value per share of Series B Preferred Stock. The stated value per share of the

Series B Preferred Stock is $100. Dividends are payable quarterly on such dates that are fixed by

the Board. The Company cannot declare or pay cash dividends on any shares of Common Stock

unless full cumulative dividends on the Series B Preferred Stock have been paid or declared and

funds sufficient for the payment have been set apart.

Voting Rights. Each share of Series B Preferred Stock has equal voting rights, share for

share, with each share of Common Stock.

Distributions. In the event of the Company’s voluntary or involuntary dissolution,

liquidation, or winding up, the holders of Series B Preferred Stock are entitled to receive, after

payment of the full liquidation preference on shares of any class of preferred stock ranking senior

to the Series B Preferred Stock, but before any distribution on shares of Common Stock,

liquidating distributions in the amount of the liquidation preference of $100 per share plus

accumulated dividends.

Redemption. Shares of Series B Preferred Stock are redeemable, in whole or in part, at

the option of the holders, at the redemption price of $100 per share plus accumulated and unpaid

dividends, provided that (1) full cumulative dividends have been paid, or declared, and funds

sufficient for payment set apart, on any class or series of preferred stock ranking senior to the

Series B Preferred Stock; and (2) the Company is not then in default or in arrears on any sinking

fund or analogous fund or call for tenders obligation or agreement for the purchase of any class

or series of preferred stock ranking senior to Series B Preferred Stock. The Series B Preferred

Stock is not subject to any mandatory redemption provisions or redemption at the option of the

Company.

Series E Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series E

Preferred Stock are listed on the NYSE under the symbol “BAC PrE”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series E Preferred Stock ranks senior to the Common Stock and

ranks equally with the Series B Preferred Stock, Series F Preferred Stock, Series G Preferred

Stock, Series L Preferred Stock, Series U Preferred Stock, Series X Preferred Stock, Series Z

Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series FF Preferred

Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series

KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series E Preferred Stock is not

convertible into or exchangeable for any shares of the Company’s Common Stock or any other

class of its capital stock. Holders of the Series E Preferred Stock do not have any preemptive

rights, and the Series E Preferred Stock is not subject to the operation of any sinking fund. The

Company may issue stock with preferences superior or equal to the Series E Preferred Stock

without the consent of the holders of the Series E Preferred Stock.

Dividends. Holders of the Series E Preferred Stock are entitled to receive non-cumulative

cash dividends when, as, and if declared by the Board or a duly authorized committee of the

Board out of funds legally available for payment, on the liquidation preference of $25,000 per

share of Series E Preferred Stock, payable quarterly in arrears on each February 15, May 15,

August 15 and November 15 to record holders as of the last business day (as defined in the

certificate of designations for the Series E Preferred Stock) of the calendar month immediately

preceding the month in which the dividend payment date falls. Dividends on each share of Series

E Preferred Stock accrue on the liquidation preference of $25,000 per share at an annual rate per

share equal to the greater of (a) Adjusted Three-Month Term SOFR

plus a spread of 0.35%, and

(b) 4.00%. The amount of dividends shall be computed on the basis of a 360-day year and the

actual number of days elapsed in the dividend period. If any dividend payment date is not a

business day, then that dividend payment will be made on the next succeeding day that is a

business day, unless that day falls in the next calendar year in which case payment will occur on

the immediately preceding business day, in either case without any interest in respect of such

delay.

As long as shares of Series E Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series E Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series E Preferred Stock other than on a

pro rata basis, in each case unless full dividends on all outstanding shares of Series E Preferred

Stock for the then-current dividend period have been paid in full or declared and a sum sufficient

for the payment thereof is set aside. The Company cannot declare or pay dividends on capital

stock ranking equally with the Series E Preferred Stock for any period unless full dividends on

all outstanding shares of Series E Preferred Stock for the then-current dividend period have been

paid in full or declared and a sum sufficient for the payment thereof is set aside. If the Company

declares dividends on the Series E Preferred Stock and on any capital stock ranking equally with

the Series E Preferred Stock but cannot make full payment of those declared dividends, the

Company will allocate the dividend payments on a pro rata basis among the holders of the shares

of Series E Preferred Stock and the holders of any capital stock ranking equally with the Series E

Preferred Stock.

Voting Rights. Holders of Series E Preferred Stock do not have voting rights, except as

specifically required by Delaware law and in the case of certain dividend arrearages in relation to

the Series E Preferred Stock. Whenever dividends payable on the Series E Preferred Stock or any

other series of the Company’s preferred stock ranking equally with the Series E Preferred Stock

as to payment of dividends, and as to which voting rights equivalent to those described in this

paragraph have been conferred and are exercisable, have not been declared and paid in an

aggregate amount equal to, as to any series, at least six quarterly dividend periods, whether or not

for consecutive dividend periods, the holders of the Series E Preferred Stock will be entitled to

vote as a class, together with the holders of all series of the Company’s preferred stock having

equivalent voting rights, for the election of two additional directors of the Board to fill two

For dividend periods commencing prior to the LIBOR Replacement Date, the dividend rate was determined by

reference to Three-Month USD LIBOR.

newly-created directorships (the “Preferred Stock Directors”). When the Company has paid

full dividends on the Series E Preferred Stock and any such other series of preferred stock for at

least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series E Preferred Stock are entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series E Preferred Stock and subject to the rights of holders of securities ranking senior to or on

a parity with the Series E Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation. Shares of Series E Preferred Stock are not

subject to a sinking fund.

Redemption. The Company may redeem the Series E Preferred Stock in whole or in part,

at its option, on any dividend payment date for the Series E Preferred Stock, at the redemption

price equal to $25,000 per share, plus any declared and unpaid dividends. Holders of the Series E

Preferred Stock do not have any optional redemption rights.

Series F Preferred Stock

Preferential Rights. The Series F Preferred Stock ranks senior to the Common Stock and

ranks equally with the Series B Preferred Stock, Series E Preferred Stock, Series G Preferred

Stock, Series L Preferred Stock, Series U Preferred Stock, Series X Preferred Stock, Series Z

Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series FF Preferred

Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series

KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. The Series F Preferred Stock is not

convertible into or exchangeable for any shares of the Common Stock or any other class of the

Company’s capital stock. Holders of the Series F Preferred Stock do not have any preemptive

rights and the Series F Preferred Stock is not subject to the operation of any sinking fund. The

Company may issue stock with preferences superior or equal to the Series F Preferred Stock

without the consent of the holders of the Series F Preferred Stock.

Dividends. Holders of the Series F Preferred Stock are entitled to receive non-cumulative

cash dividends, when, as, and if declared by the Board or a duly authorized committee of the

Board out of funds legally available for payment, on the liquidation preference of $100,000 per

share of Series F Preferred Stock, payable quarterly in arrears on each March 15, June 15,

September 15 and December 15 to record holders as of the last business day (as defined in the

certificate of designations for the Series F Preferred Stock) of the calendar month immediately

preceding the month in which the dividend payment date falls. Dividends on each share of Series

F Preferred Stock will accrue on the liquidation preference of $100,000 per share at an annual

rate per share equal to the greater of (a) Adjusted Three-Month Term SOFR

plus a spread of

0.40%, and (b) 4.00%. The amount of dividends shall be computed on the basis of a 360-day

year and the actual number of days elapsed in the dividend period. If any dividend payment date

is not a business day, then that dividend payment will be made on the next succeeding day that is

a business day, unless that day falls in the next calendar year in which case payment will occur

on the immediately preceding business day, in either case without any interest or other payment

in respect of such delay.

For dividend periods commencing prior to the LIBOR Replacement Date, the dividend rate was determined by

reference to Three-Month USD LIBOR.

As long as shares of Series F Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series F Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series F Preferred Stock other than on a

pro rata basis, in each case unless full dividends on all outstanding shares of Series F Preferred

Stock for the then-current dividend period have been paid in full or declared and a sum sufficient

for the payment thereof is set aside. The Company cannot declare or pay dividends on capital

stock ranking equally with the Series F Preferred Stock unless full dividends on all outstanding

shares of Series F Preferred Stock for the then-current dividend period have been paid in full or

declared and a sum sufficient for the payment thereof is set aside. If the Company declares

dividends on the Series F Preferred Stock and on any capital stock ranking equally with the

Series F Preferred Stock but cannot make full payment of those declared dividends, the Company

will allocate the dividend payments on a pro rata basis among the holders of the shares of Series

F Preferred Stock and the holders of any capital stock ranking equally with the Series F Preferred

Stock.

Voting Rights. Holders of Series F Preferred Stock do not have voting rights, except as

specifically required by Delaware law.

Distributions. In the event of the Company’s voluntary of involuntary liquidation,

dissolution, or winding up, holders of Series F Preferred Stock are entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series F Preferred Stock and subject to the rights of holders of securities ranking senior to or on a

parity with the Series F Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $100,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation. Shares of Series F Preferred Stock are not

subject to a sinking fund.

Redemption. The Company may redeem the Series F Preferred Stock, in whole or in part,

at its option, on any dividend payment date for the Series F Preferred Stock at the redemption

price equal to $100,000 per share, plus dividends that have been declared but not paid plus any

accrued and unpaid dividends for the then-current dividend period to the redemption date.

Holders of the Series F Preferred Stock do not have any optional redemption rights.

Series G Preferred Stock

Preferential Rights. The Series G Preferred Stock ranks senior to the Common Stock and

ranks equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series L Preferred Stock, Series U Preferred Stock, Series X Preferred Stock, Series Z

Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series FF Preferred

Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series

KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. The Series G Preferred Stock is not

convertible into or exchangeable for any shares of the Common Stock or any other class of the

Company’s capital stock. Holders of the Series G Preferred Stock do not have any preemptive

rights, and the Series G Preferred Stock is not subject to the operation of any sinking fund. The

Company may issue stock with preferences superior or equal to the Series G Preferred Stock

without the consent of the holders of the Series G Preferred Stock.

Dividends. Holders of the Series G Preferred Stock are entitled to receive non-

cumulative cash dividends when, as, and if declared by the Board or a duly authorized committee

the Board out of funds legally available for payment, on the liquidation preference of $100,000

per share of Series G Preferred Stock, payable quarterly in arrears on each March 15, June 15,

September 15 and December 15 to record holders as of the last business day (as defined in the

certificate of designations for the Series G Preferred Stock) of the calendar month immediately

preceding the month in which the dividend payment date falls. Dividends on each share of Series

G Preferred Stock will accrue on the liquidation preference of $100,000 per share at an annual

rate per share equal to the greater of (a) Adjusted Three-Month Term SOFR

plus a spread of

0.40%, and (b) 4.00%. The amount of dividends shall be computed on the basis of a 360-day

year and the actual number of days elapsed in the dividend period. If any dividend payment date

is not a business day, then that dividend payment will be made on the next succeeding day that is

a business day, unless that day falls in the next calendar year in which case payment will occur

on the immediately preceding business day, in either case without any interest or other payment

in respect of such delay.

As long as shares of Series G Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series G Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series G Preferred Stock other than on a

pro rata basis, in each case unless full dividends on all outstanding shares of Series G Preferred

Stock for the then-current dividend period have been paid in full or declared and a sum sufficient

for the payment thereof is set aside. The Company cannot declare or pay dividends on capital

stock ranking equally with the Series G Preferred Stock unless full dividends on all outstanding

shares of Series G Preferred Stock for the then-current dividend period have been paid in full or

declared and a sum sufficient for the payment thereof is set aside. If the Company declares

dividends on the Series G Preferred Stock and on any capital stock ranking equally with the

Series G Preferred Stock but cannot make full payment of those declared dividends, the

Company will allocate the dividend payments on a pro rata basis among the holders of the shares

of Series G Preferred Stock and the holders of any capital stock ranking equally with the Series

G Preferred Stock.

Voting Rights. Holders of Series G Preferred Stock do not have voting rights, except as

specifically required by Delaware law.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series G Preferred Stock are entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of capital stock ranking junior to the Series

G Preferred Stock and subject to the rights of holders of securities ranking senior to or on a

parity with the Series G Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $100,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation. Shares of Series G Preferred Stock are

not subject to a sinking fund.

Redemption. The Company may redeem the Series G Preferred Stock, in whole or in

part, at its option, on any dividend payment date for the Series G Preferred Stock at the

redemption price equal to $100,000 per share, plus dividends that have been declared but not

paid plus any accrued and unpaid dividends for the then-current dividend period to the

redemption date. Holders of the Series G Preferred Stock do not have any optional redemption

rights.

For dividend periods commencing prior to the LIBOR Replacement Date, the dividend rate was determined by

reference to Three-Month USD LIBOR.

Series L Preferred Stock

Listing. The Series L Preferred Stock is listed on the NYSE under the symbol “BAC

PrL”.

Preferential Rights. The Series L Preferred Stock ranks senior to the Common Stock and

equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,

Series G Preferred Stock, Series U Preferred Stock, Series X Preferred Stock, Series Z Preferred

Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series FF Preferred Stock, Series

GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series KK Preferred

Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred Stock, Series

PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series SS Preferred

Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred Stock, Series 4

Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on the Company’s

liquidation, dissolution, or winding up. Holders of the Series L Preferred Stock do not have any

preemptive rights, and the Series L Preferred Stock is not subject to the operation of any sinking

fund. The Company may issue stock with preferences superior or equal to the Series L Preferred

Stock without the consent of the holders of the Series L Preferred Stock.

Dividends. Holders of the Series L Preferred Stock are entitled to receive non-cumulative

cash dividends, when, as, and if declared by the Board or a duly authorized committee of the

Board out of funds legally available for payment, at an annual dividend rate per share of 7.25%

on the liquidation preference of $1,000 per share of Series L Preferred Stock, payable quarterly

in arrears on each January 15, April 15, July 15 and October 15 to record holders as of the first

day of the calendar month in which the dividend payment date falls. The amount of dividends

shall be computed on the basis of a 360-day year of twelve 30-day months. If any dividend

payment date is not a business day (as defined in the certificate of designations for the Series L

Preferred Stock), then that dividend payment will be made on the next succeeding day that is a

business day, unless that day falls in the next calendar year in which case payment will occur on

the immediately preceding business day, in either case without any interest or other payment in

respect of such delay.

As long as shares of Series L Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends on any shares of Common Stock or other capital stock ranking

junior to the Series L Preferred Stock or generally repurchase, redeem or otherwise acquire for

consideration any shares of its Common Stock or other capital stock ranking junior to the Series

L Preferred Stock, or generally repurchase, redeem or otherwise acquire for consideration any

capital stock ranking equally with the Series L Preferred Stock other than on a pro rata basis, in

each case unless full dividends on all outstanding shares of Series L Preferred Stock for the then-

current dividend period have been paid in full or declared and a sum sufficient for the payment

thereof is set aside. The Company cannot declare or pay dividends on capital stock ranking

equally with the Series L Preferred Stock for any period unless full dividends on all outstanding

shares of Series L Preferred Stock for the then-current dividend period have been paid in full or

declared and a sum sufficient for the payment thereof is set aside. If the Company declares

dividends on the Series L Preferred Stock and on any capital stock ranking equally with the

Series L Preferred Stock but cannot make full payment of those declared dividends, the

Company will allocate the dividend payments on a pro rata basis among the holders of the shares

of Series L Preferred Stock and the holders of any capital stock ranking equally with the Series L

Preferred Stock.

Conversion Right. Each share of the Series L Preferred Stock may be converted at any

time, at the option of the holder, into 20 shares of the Common Stock (which reflects an initial

conversion price of $50.00 per share of Common Stock) plus cash in lieu of fractional shares,

subject to anti-dilution adjustments.

Conversion at the Company’s Option. The Company may, at its option, at any time or

from time to time, cause some or all of the Series L Preferred Stock to be converted into shares

of its Common Stock at the then-applicable conversion rate if, for 20 trading days during any

period of 30 consecutive trading days, the closing price of its Common Stock exceeds 130% of

the then-applicable conversion price of the Series L Preferred Stock.

Conversion Upon Certain Acquisitions. If a make-whole acquisition occurs, holders of

Series L Preferred Stock may cause the Series L Preferred Stock held by such holder to be

converted into shares of the Common Stock, and the Company will, under certain circumstances,

increase the conversion rate in respect of such conversions of the Series L Preferred Stock that

occur during the period beginning on the effective date of the make-whole acquisition and

ending on the date that is 30 days after the effective date by a number of additional shares of

Common Stock. The amount of the make-whole adjustment, if any, will be based upon the price

per share of the Common Stock and the effective date of the make-whole acquisition. Subject to

certain exceptions, a “make-whole acquisition” occurs in the event of (1) the acquisition by a

person or group of more than 50% of the voting power of the Common Stock or (2) the

Company’s consolidation or merger where it is not the surviving entity.

Conversion Upon Fundamental Change. In lieu of receiving the make-whole shares

described above, if the reference price (as defined below) in connection with a make-whole

acquisition is less than the applicable conversion price (a “fundamental change”), a holder may

elect to convert each share of the Series L Preferred Stock during the period beginning on the

effective date of the fundamental change and ending on the date that is 30 days after the effective

date of such fundamental change at an adjusted conversion price equal to the greater of (1) the

“reference price,” which is the price per share of the Common Stock paid in the event of a

fundamental change, and (2) $19.95, which is 50% of the closing price of the Common Stock on

January 24, 2008, the date of the initial offering of the Series L Preferred Stock, subject to

adjustment (the “base price”). If the reference price is less than the base price, holders of the

Series L Preferred Stock will receive a maximum of 50.1253 shares of the Common Stock per

share of Series L Preferred Stock, subject to adjustment, which may result in a holder receiving

value that is less than the liquidation preference of the Series L Preferred Stock.

Anti-Dilution Adjustments. The conversion rate may be adjusted in the event of, among

other things, (1) stock dividend distributions, (2) subdivisions, splits, and combinations of the

Common Stock, (3) issuance of stock purchase rights, (4) debt or asset distributions, (5)

increases in cash dividends, and (6) tender or exchange offers for the Common Stock.

Voting Rights. Holders of Series L Preferred Stock do not have voting rights, except as

specifically required by Delaware law and in the case of certain dividend arrearages in relation to

the Series L Preferred Stock. Whenever dividends payable on the Series L Preferred Stock or any

other series of the Company’s preferred stock ranking equally with the Series L Preferred Stock

as to payment of dividends, and as to which voting rights equivalent to those described in this

paragraph have been conferred and are exercisable, have not been declared and paid for the

equivalent of at least six quarterly dividend periods, whether or not for consecutive dividend

periods, the holders of the Series L Preferred Stock will be entitled to vote as a class, together

with the holders of all series of the Company’s preferred stock having equivalent voting rights,

for the election of two Preferred Stock Directors. Upon the conversion of all of the Series L

Preferred Stock, or when the Company has paid full dividends on the Series L Preferred Stock

and any other such series of preferred stock for the equivalent of at least four quarterly dividend

periods following a dividend arrearage described above, these voting rights will terminate.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series L Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series L Preferred Stock, and subject to the rights of holders of securities ranking senior to or on

a parity with the Series L Preferred Stock and after satisfaction of all liabilities to creditors, a

liquidating distribution in the amount of the liquidation preference of $1,000 per share, plus any

declared and unpaid dividends, without accumulation of any undeclared dividends, to the date of

liquidation.

Redemption. The Company does not have any rights to redeem the Series L Preferred

Stock, and holders of the Series L Preferred Stock do not have any optional redemption rights.

Series U Preferred Stock

Preferential Rights. The Series U Preferred Stock ranks senior to the Common Stock and

equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,

Series G Preferred Stock, Series L Preferred Stock, Series X Preferred Stock, , Series Z Preferred

Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series FF Preferred Stock, Series

GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series KK Preferred

Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred Stock, Series

PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series SS Preferred

Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred Stock, Series 4

Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on the Company’s

liquidation, dissolution, or winding up. Series U Preferred Stock is not convertible into or

exchangeable for any shares of its Common Stock or any other class of its capital stock. Holders

of the Series U Preferred Stock do not have any preemptive rights, and the Series U Preferred

Stock is not subject to the operation of any sinking fund. The Company may issue stock with

preferences equal to the Series U Preferred Stock without the consent of the holders of the Series

U Preferred Stock.

Dividends. Holders of the Series U Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, on the liquidation preference

of $25,000 per share, payable (a) for the “fixed rate period”, semi-annually in arrears on each

June 1 and December 1, and (b) for the “floating rate period”, quarterly in arrears on each March

1, June 1, September 1 and December 1, beginning September 1, 2023, in each case to record

holders as of the fifteenth day of the calendar month immediately preceding the month in which

the dividend payment date falls. Dividends on each share of Series U Preferred Stock will accrue

on the liquidation preference of $25,000 per share at a rate per annum equal to (1) 5.20%, for

each dividend period from the issue date to, but excluding, June 1, 2023 (the “fixed rate period”),

and (2) thereafter, at a floating rate equal to Adjusted Three-Month Term SOFR

plus a spread of

3.135%, for each dividend period from, and including, June 1, 2023 (the “floating rate period”).

The amount of dividends shall be computed (x) for the fixed rate period, on the basis of a 360-

day year of twelve 30-day months, and (y) for the floating rate period, on the basis of a 360-day

year and the actual number of days elapsed in the dividend period. If any dividend payment date

is not a business day (as defined in the certificate of designations for the Series U Preferred

Stock), then that dividend payment will be made on the next succeeding day that is a business

day (unless, for the fixed rate period, that day falls in the next calendar year or, for the floating

rate period, that day falls in the next calendar month, in which each such case payment will occur

on the immediately preceding business day), (i) on or prior to June 1, 2023, without any interest

or other payment in respect of such delay, and (ii) after June 1, 2023, with dividends accruing to

the actual payment date.

As long as shares of Series U Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series U Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series U Preferred Stock other than on a

pro rata basis, in each case unless full dividends on all outstanding shares of Series U Preferred

Stock for the immediately preceding dividend period have been paid in full or declared and a

For the dividend period commencing June 1, 2023, the dividend rate was determined by reference to Three-Month

USD LIBOR.

sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series U Preferred Stock for any period

unless full dividends on all outstanding shares of Series U Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series U Preferred Stock

and on any capital stock ranking equally with the Series U Preferred Stock but cannot make full

payment of those declared dividends, the Company will allocate the dividend payments on a pro

rata basis among the holders of the shares of Series U Preferred Stock and the holders of any

capital stock ranking equally with the Series U Preferred Stock.

Voting Rights. Holders of Series U Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series U Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series U Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an amount equal to, as to any series, the equivalent of at least

three or more semi-annual or six or more quarterly dividend periods, as applicable, whether or

not for consecutive dividend periods, the holders of the Series U Preferred Stock will be entitled

to vote as a class, together with the holders of all series of the Company’s preferred stock having

equivalent voting rights, for the election of two Preferred Stock Directors. When the Company

has paid full dividends on the Series U Preferred Stock and any other such series of preferred

stock for the equivalent of at least two semi-annual or four quarterly dividend periods following

a dividend arrearage described above, these voting rights will terminate.

As long as the Series U Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series U Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series U Preferred Stock as to dividends or the distribution of

assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series U Preferred Stock remain outstanding, the affirmative vote of the holders of

at least 66 2/3% of the voting power of the Series U Preferred Stock shall be necessary to amend,

alter or repeal any provision of the certificate of designations for the Series U Preferred Stock or

the Restated Certificate of Incorporation so as to adversely affect the powers, preferences or

special rights of the Series U Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series U Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series U Preferred Stock and subject to the rights of holders of securities ranking senior to or on

a parity with the Series U Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series U Preferred Stock, in whole or in

part, at its option, at any time on or after June 1, 2023, at the redemption price equal to $25,000

per share, plus any accrued and unpaid dividends, for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. In addition,

at any time within 90 days after a “capital treatment event,” as described in the certificate of

designations for the Series U Preferred Stock, the Company may redeem the Series U Preferred

Stock, in whole but not in part, at a redemption price equal to $25,000 per share, plus any

accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series U

Preferred Stock do not have any optional redemption rights.

Series X Preferred Stock

Preferential Rights. The Series X Preferred Stock ranks senior to the Common Stock and

equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,

Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series Z Preferred

Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series FF Preferred Stock, Series

GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series KK Preferred

Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred Stock, Series

PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series SS Preferred

Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred Stock, Series 4

Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on the Company’s

liquidation, dissolution, or winding up. Series X Preferred Stock is not convertible into or

exchangeable for any shares of its Common Stock or any other class of its capital stock. Holders

of the Series X Preferred Stock do not have any preemptive rights, and the Series X Preferred

Stock is not subject to the operation of any sinking fund. The Company may issue stock with

preferences equal to the Series X Preferred Stock without the consent of the holders of the Series

X Preferred Stock.

Dividends. Holders of the Series X Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, on the liquidation preference

of $25,000 per share of Series X Preferred Stock, payable (a) for the “fixed rate period”,

semiannually in arrears on each March 5 and September 5, and (b) for the “floating rate period”,

quarterly in arrears on each March 5, June 5, September 5 and December 5, beginning December

5, 2024, in each case to record holders as of the fifteenth day of the calendar month immediately

preceding the month in which the dividend payment date falls (or such date fixed by the Board or

a duly authorized Board committee that is not more than 60 days nor less than 10 days before the

dividend payment date). Dividends on each share of Series X Preferred Stock will accrue on the

liquidation preference of $25,000 per share at a rate per annum equal to (1) 6.250%, for each

dividend period from the issue date to, but excluding, September 5, 2024 (the “fixed rate

period”), and (2) thereafter, at a floating rate equal to Adjusted Three-Month Term SOFR plus a

spread of 3.705%, for each dividend period from, and including, September 5, 2024 (the

“floating rate period”). The amount of dividends shall be computed (i) for the fixed rate period,

on the basis of a 360-day year of twelve 30-day months, and (ii) for the floating rate period, on

the basis of a 360-day year and the actual number of days elapsed in the dividend period. If any

dividend payment date is not a business day (as defined in the certificate of designations for the

Series X Preferred Stock), then that dividend payment will be made on the next succeeding day

that is a business day (unless, for the fixed rate period, that day falls in the next calendar year or,

for the floating rate period, that day falls in the next calendar month, in which each such case

payment will occur on the immediately preceding business day), (i) on or prior to September 5,

2024, without any interest or other payment in respect of such delay, and (ii) after September 5,

2024, with dividends accruing to the actual payment date.

As long as shares of Series X Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series X Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series X Preferred Stock other than on a

pro rata basis, in each case unless full dividends on all outstanding shares of Series X Preferred

Stock for the immediately preceding dividend period have been paid in full or declared and a

sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series X Preferred Stock for any period

unless full dividends on all outstanding shares of Series X Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declare dividends on the Series X Preferred Stock

and on any capital stock ranking equally with the Series X Preferred Stock but cannot make full

payment of those declared dividends, the Company will allocate the dividend payments on a pro

rata basis among the holders of the shares of Series X Preferred Stock and the holders of any

capital stock ranking equally with the Series X Preferred Stock.

Voting Rights. Holders of Series X Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series X Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series X Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least three or more semi-annual or six or more quarterly dividend periods, as applicable,

whether or not for consecutive dividend periods, the holders of the Series X Preferred Stock will

be entitled to vote as a class, together with the holders of all series of the Company’s preferred

stock having equivalent voting rights, for the election of two Preferred Stock Directors. When

the Company has paid full dividends on the Series X Preferred Stock and any other such series of

preferred stock for the equivalent of at least two semi-annual or four quarterly dividend periods

following a dividend arrearage described above, these voting rights will terminate.

As long as the Series X Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series X Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series X Preferred Stock as to dividends or the distribution of

assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series X Preferred Stock remain outstanding, the affirmative vote of the holders of

at least 66 2/3% of the voting power of the Series X Preferred Stock shall be necessary to amend,

alter or repeal any provision of the certificate of designations for the Series X Preferred Stock or

the Restated Certificate of Incorporation so as to adversely affect the powers, preferences or

special rights of the Series X Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series X Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series X Preferred Stock and subject to the rights of holders of securities ranking senior to or on

a parity with the Series X Preferred Stock and the rights of the Company’s depositors and other

creditors, a liquidating distribution in the amount of the liquidation preference of $25,000 per

share, plus any declared and unpaid dividends, without accumulation of any undeclared

dividends, to the date of liquidation.

Redemption. The Company may redeem the Series X Preferred Stock, in whole or in

part, at its option, at any time on or after September 5, 2024, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends for the then-current dividend period,

to, but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series X Preferred Stock, the Company may redeem the Series

X Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per share,

plus any accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series X

Preferred Stock do not have any optional redemption rights.

Series Z Preferred Stock

Preferential Rights. The Series Z Preferred Stock ranks senior to the Common Stock and

equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,

Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X Preferred

Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series FF Preferred Stock, Series

GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series KK Preferred

Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred Stock, Series

PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series SS Preferred

Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred Stock, Series 4

Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on the Company’s

liquidation, dissolution, or winding up. Series Z Preferred Stock is not convertible into or

exchangeable for any shares of its Common Stock or any other class of its capital stock. Holders

of the Series Z Preferred Stock do not have any preemptive rights, and the Series Z Preferred

Stock is not subject to the operation of any sinking fund. The Company may issue stock with

preferences equal to the Series Z Preferred Stock without the consent of the holders of the Series

Z Preferred Stock.

Dividends. Holders of the Series Z Preferred Stock are entitled to receive non-cumulative

cash dividends, when, as, and if declared by the Board or a duly authorized committee of the

Board out of funds legally available for payment, on the liquidation preference of $25,000 per

share, payable (a) for the “fixed rate period”, semiannually in arrears on each April 23 and

October 23, and (b) for the “floating rate period”, quarterly in arrears on each January 23, April

23, July 23 and October 23, beginning on January 23, 2025, in each case to record holders as of

the first day of the calendar month in which the dividend payment date falls (or such record date

fixed by the Board or a duly authorized Board committee that is not more than 60 days nor less

than 10 days before the dividend payment date). Dividends on each share of Series Z Preferred

Stock will accrue on the on the liquidation preference of $25,000 per share at a rate per annum

equal to (1) 6.500%, for each dividend period from the issue date to, but excluding, October 23,

2024 (the “fixed rate period”), and (2) thereafter, at a floating rate equal to Adjusted Three-

Month Term SOFR plus a spread of 4.174%, for each dividend period from, and including,

October 23, 2024 (the “floating rate period”). The amount of dividends shall be computed (i) for

the fixed rate period, on the basis of a 360-day year of twelve 30-day months, and (ii) for the

floating rate period, on the basis of a 360-day year and the actual number of days elapsed in the

dividend period. If any dividend payment date is not a business day (as defined in the certificate

of designations for the Series Z Preferred Stock), then that dividend payment will be made on the

next succeeding day that is a business day (unless, for the fixed rate period, that day falls in the

next calendar year or, for the floating rate period, that day falls in the next calendar month, in

which each such case payment will occur on the immediately preceding business day), (i) on or

prior to October 23, 2024, without any interest or other payment in respect of such delay, and (ii)

after October 23, 2024, with dividends accruing to the actual payment date.

As long as shares of Series Z Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series Z Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series Z Preferred Stock other than on a

pro rata basis, in each case unless full dividends on all outstanding shares of Series Z Preferred

Stock for the immediately preceding dividend period have been paid in full or declared and a

sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series Z Preferred Stock for any period

unless full dividends on all outstanding shares of Series Z Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series Z Preferred Stock

and on any capital stock ranking equally with the Series Z Preferred Stock but cannot make full

payment of those declared dividends, the Company will allocate the dividend payments on a pro

rata basis among the holders of the shares of Series Z Preferred Stock and the holders of any

capital stock ranking equally with the Series Z Preferred Stock.

Voting Rights. Holders of Series Z Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series Z Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series Z Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least three or more semi-annual or six or more quarterly dividend periods, as applicable,

whether or not for consecutive dividend periods, the holders of the Series Z Preferred Stock will

be entitled to vote as a class, together with the holders of all series of the Company’s preferred

stock having equivalent voting rights, for the election of two Preferred Stock Directors. When

the Company has paid full dividends on the Series Z Preferred Stock and any other such series of

preferred stock for the equivalent of at least two semi-annual or four quarterly dividend periods

following a dividend arrearage described above, these voting rights will terminate.

As long as the Series Z Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series Z Preferred Stock and

any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series Z Preferred Stock as to dividends or the distribution of

assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series Z Preferred Stock remain outstanding, the affirmative vote of the holders of

at least 66 2/3% of the voting power of the Series Z Preferred Stock shall be necessary to amend,

alter or repeal any provision of the certificate of designations for the Series Z Preferred Stock or

the Restated Certificate of Incorporation so as to adversely affect the powers, preferences or

special rights of the Series Z Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series Z Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series Z Preferred Stock and subject to the rights of holders of securities ranking senior to or on

a parity with the Series Z Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series Z Preferred Stock, in whole or in

part, at its option, at any time on or after October 23, 2024, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends, for the then-current dividend period

to, but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series Z Preferred Stock, the Company may redeem the Series

Z Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per share, plus

any accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series Z

Preferred Stock do not have any optional redemption rights.

Series AA Preferred Stock

Preferential Rights. The Series AA Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series DD Preferred Stock, Series FF Preferred Stock

Series, Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series

KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series AA Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series AA Preferred Stock do not have any preemptive rights, and

the Series AA Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series AA Preferred Stock without the consent of

the holders of the Series AA Preferred Stock.

Dividends. Holders of the Series AA Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, on the liquidation preference

of $25,000 per share of Series AA Preferred Stock, payable (a) for the “fixed rate period”,

semiannually in arrears on each March 17 and September 17, and (b) for the “floating rate

period”, quarterly in arrears on each March 17, June 17, September 17 and December 17,

beginning on June 17, 2025, in each case to record holders as of the first day of the calendar

month in which the dividend payment date falls (or such record date fixed by the Board or a duly

authorized Board committee that is not more than 60 days nor less than 10 days before the

dividend payment date). Dividends on each share of Series AA Preferred Stock will accrue on

the liquidation preference of $25,000 per share at a rate per annum equal to (1) 6.100%, for each

dividend period from the issue date to, but excluding, March 17, 2025 (the “fixed rate period”),

and (2) thereafter, at a floating rate equal to Adjusted Three-Month Term SOFR plus a spread of

3.898%, for each dividend period from, and including, March 17, 2025 (the “floating rate

period”). The amount of dividends shall be computed (i) during the fixed rate period, on the

basis of a 360-day year of twelve 30-day months, and (ii) during the floating rate period, on the

basis of a 360-day year and the actual number of days elapsed in the dividend period. If any

dividend payment date is not a business day (as defined in the certificate of designations for the

Series AA Preferred Stock), then that dividend payment will be made on the next succeeding day

that is a business day (unless, for the fixed rate period, that day falls in the next calendar year or,

for the floating rate period, that day falls in the next calendar month, in which each such case

payment will occur on the immediately preceding business day), (i) on or prior to March 17,

2025, without any interest or other payment in respect of such delay, and (ii) after March 17,

2025, with dividends accruing to the actual payment date.

As long as shares of Series AA Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series AA Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series AA Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series AA

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series AA Preferred Stock for any period

unless full dividends on all outstanding shares of Series AA Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series AA Preferred

Stock and on any capital stock ranking equally with the Series AA Preferred Stock but cannot

make full payment of those declared dividends, the Company will allocate the dividend

payments on a pro rata basis among the holders of the shares of Series AA Preferred Stock and

the holders of any capital stock ranking equally with the Series AA Preferred Stock.

Voting Rights. Holders of Series AA Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series AA Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series AA Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least three or more semi-annual or six or more quarterly dividend periods, as applicable,

whether or not for consecutive dividend periods, the holders of the Series AA Preferred Stock

will be entitled to vote as a class, together with the holders of all series of the Company’s

preferred stock having equivalent voting rights, for the election of two Preferred Stock Directors.

When the Company has paid full dividends on the Series AA Preferred Stock and any other such

series of preferred stock for the equivalent of at least two semi-annual or four quarterly dividend

periods following a dividend arrearage described above, these voting rights will terminate.

As long as the Series AA Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series AA Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series AA Preferred Stock as to dividends or the distribution

of assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series AA Preferred Stock remain outstanding, the affirmative vote of the holders

of at least 66 2/3% of the voting power of the Series AA Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series AA Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series AA Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series AA Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series AA Preferred Stock and subject to the rights of holders of securities ranking senior to or

on a parity with the Series AA Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series AA Preferred Stock, in whole or in

part, at its option, at any time on or after March 17, 2025, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends, for the then-current dividend period

to, but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series AA Preferred Stock, the Company may redeem the

Series AA Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per

share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. Holders of

the Series AA Preferred Stock do not have any optional redemption rights.

Series DD Preferred Stock

Preferential Rights. The Series DD Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series FF Preferred Stock,

Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series KK

Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series DD Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series DD Preferred Stock do not have any preemptive rights, and

the Series DD Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series DD Preferred Stock without the consent of

the holders of the Series DD Preferred Stock.

Dividends. Holders of the Series DD Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, on the liquidation preference

of $25,000 per share of Series DD Preferred Stock, payable (a) for the “fixed rate period”,

semiannually in arrears on each March 10 and September 10, and (b) for the “floating rate

period”, quarterly in arrears on each March 10, June 10, September 10 and December 10,

beginning on June 10, 2026, in each case to record holders as of the fifteenth day of the calendar

month preceding the month in which the dividend payment date falls (or such record date fixed

by the Board or a duly authorized Board committee that is not more than 60 days nor less than 10

days before the dividend payment date). Dividends on each share of Series DD Preferred Stock

will accrue on the liquidation preference of $25,000 per share at a rate per annum equal to (1)

6.300%, for each dividend period from the issue date to, but excluding, March 10, 2026 (the

“fixed rate period”), and (2) thereafter, at a floating rate equal to Adjusted Three-Month Term

SOFR plus a spread of 4.553%, for each dividend period from, and including, March 10, 2026

(the “floating rate period”). The amount of dividends shall be computed (i) for the fixed rate

period, on the basis of a 360-day year of twelve 30-day months, and (ii) for the floating rate

period, on the basis of a 360-day year and the actual number of days elapsed in the dividend

period. If any dividend payment date is not a business day (as defined in the certificate of

designations for the Series DD Preferred Stock), then that dividend payment will be made on the

next succeeding day that is a business day (unless, for the fixed rate period, that day falls in the

next calendar year or, for the floating rate period, that day falls in the next calendar month, in

which each such case payment will occur on the immediately preceding business day), (i) on or

prior to March 10, 2026, without any interest or other payment in respect of such delay, and (ii)

after March 10, 2026, with dividends accruing to the actual payment date.

As long as shares of Series DD Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series DD Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series DD Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series DD

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series DD Preferred Stock for any period

unless full dividends on all outstanding shares of Series DD Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series DD Preferred

Stock and on any capital stock ranking equally with the Series DD Preferred Stock but cannot

make full payment of those declared dividends, the Company will allocate the dividend

payments on a pro rata basis among the holders of the shares of Series DD Preferred Stock and

the holders of any capital stock ranking equally with the Series DD Preferred Stock.

Voting Rights. Holders of Series DD Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series DD Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series DD Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least three or more semi-annual or six or more quarterly dividend periods, as applicable,

whether or not for consecutive dividend periods, the holders of the Series DD Preferred Stock

will be entitled to vote as a class, together with the holders of all series of the Company’s

preferred stock having equivalent voting rights, for the election of two Preferred Stock Directors.

When the Company has paid full dividends on the Series DD Preferred Stock and any other such

series of preferred stock for the equivalent of at least two semi-annual or four quarterly dividend

periods following a dividend arrearage described above, these voting rights will terminate.

As long as the Series DD Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series DD Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series DD Preferred Stock as to dividends or the distribution

of assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series DD Preferred Stock remain outstanding, the affirmative vote of the holders

of at least 66 2/3% of the voting power of the Series DD Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series DD Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series DD Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series DD Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series DD Preferred Stock and subject to the rights of holders of securities ranking senior to or

on a parity with the Series DD Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series DD Preferred Stock, in whole or in

part, at its option, at any time on or after March 10, 2026, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends, for the then-current dividend period

to, but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series DD Preferred Stock, the Company may redeem the

Series DD Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per

share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. Holders of

the Series DD Preferred Stock do not have any optional redemption rights.

Series FF Preferred Stock

Preferential Rights. The Series FF Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series

KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series FF Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series FF Preferred Stock do not have any preemptive rights, and

the Series FF Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series FF Preferred Stock without the consent of

the holders of the Series FF Preferred Stock.

Dividends. Holders of the Series FF Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, on the liquidation preference

of $25,000 per share of Series FF Preferred Stock, payable (a) for the “fixed rate period”,

semiannually in arrears on each March 15 and September 15, and (b) for the “floating rate

period”, quarterly in arrears on each March 15, June 15, September 15 and December 15,

beginning on June 15, 2028, in each case to record holders as of the first day of the calendar

month in which the dividend payment date falls (or such record date fixed by the Board or a duly

authorized Board committee that is not more than 60 days nor less than 10 days before the

dividend payment date). Dividends on each share of Series FF Preferred Stock will accrue on the

liquidation preference of $25,000 per share at a rate per annum equal to (1) 5.875%, for each

dividend period from the issue date to, but excluding, March 15, 2028 (the “fixed rate period”),

and (2) thereafter, at a floating rate equal to Adjusted Three-Month Term SOFR plus a spread of

2.931%, for each dividend period from and including March 15, 2028 (the “floating rate

period”). The amount of dividends shall be computed (i) for the fixed rate period, on the basis of

a 360-day year of twelve 30-day months, and (ii) for the floating rate period, on the basis of a

360-day year and the actual number of days elapsed in the dividend period. If any dividend

payment date is not a business day (as defined in the certificate of designations for the Series FF

Preferred Stock), then that dividend payment will be made on the next succeeding day that is a

business day (unless, for the fixed rate period, that day falls in the next calendar year or, for the

floating rate period, that day falls in the next calendar month, in which each such case payment

will occur on the immediately preceding business day), (i) on or prior to March 15, 2028, without

any interest or other payment in respect of such delay, and (ii) after March 15, 2028, with

dividends accruing to the actual payment date.

As long as shares of Series FF Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series FF Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series FF Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series FF

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series FF Preferred Stock for any period

unless full dividends on all outstanding shares of Series FF Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series FF Preferred Stock

and on any capital stock ranking equally with the Series FF Preferred Stock but cannot make full

payment of those declared dividends, the Company will allocate the dividend payments on a pro

rata basis among the holders of the shares of Series FF Preferred Stock and the holders of any

capital stock ranking equally with the Series FF Preferred Stock.

Voting Rights. Holders of Series FF Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series FF Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series FF Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least three or more semi-annual or six or more quarterly dividend periods, as applicable,

whether or not for consecutive dividend periods, the holders of the Series FF Preferred Stock will

be entitled to vote as a class, together with the holders of all series of the Company’s preferred

stock having equivalent voting rights, for the election of two Preferred Stock Directors. When

the Company has paid full dividends on the Series FF Preferred Stock and any other such series

of preferred stock for the equivalent of at least two semi-annual or four quarterly dividend

periods following a dividend arrearage described above, these voting rights will terminate.

As long as the Series FF Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series FF Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series FF Preferred Stock as to dividends or the distribution of

assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series FF Preferred Stock remain outstanding, the affirmative vote of the holders of

at least 66 2/3% of the voting power of the Series FF Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series FF Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series FF Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series FF Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series FF Preferred Stock and subject to the rights of holders of securities ranking senior to or on

a parity with the Series FF Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series FF Preferred Stock, in whole or in

part, at its option, at any time on or after March 15, 2028, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends, for the then-current dividend period

to, but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series FF Preferred Stock, the Company may redeem the Series

FF Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per share,

plus any accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series FF

Preferred Stock do not have any optional redemption rights.

Series GG Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series GG

Preferred Stock are listed on the NYSE under the symbol “BAC PrB”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series GG Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series HH Preferred Stock, Series JJ Preferred Stock, Series

KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series GG Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series GG Preferred Stock do not have any preemptive rights, and

the Series GG Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series GG Preferred Stock without the consent of

the holders of the Series GG Preferred Stock.

Dividends. Holders of the Series GG Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, at an annual dividend rate per

share of 6.000% on the liquidation preference of $25,000 per share, payable quarterly in arrears

on each February 16, May 16, August 16 and November 16, to record holders as of the first day

of the calendar month in which the dividend payment date falls (or such other record date fixed

by the Board or a duly authorized Board committee that is not more than 60 days nor less than 10

days prior to the dividend payment date). The amount of dividends shall be computed on the

basis of a 360-day year of twelve 30-day months. If any dividend payment date is not a business

day (as defined in the certificate of designations for the Series GG Preferred Stock), then that

dividend payment will be made on the next succeeding day that is a business day, unless that day

falls in the next calendar year in which case payment will occur on the immediately preceding

business day, without any interest or other payment in respect of such delay.

As long as shares of Series GG Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series GG Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series GG Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series GG

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series GG Preferred Stock for any period

unless full dividends on all outstanding shares of Series GG Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declare dividends on the Series GG Preferred Stock

and on any capital stock ranking equally with the Series GG Preferred Stock but cannot make

full payment of those declared dividends, the Company will allocate the dividend payments on a

pro rata basis among the holders of the shares of Series GG Preferred Stock and the holders of

any capital stock ranking equally with the Series GG Preferred Stock.

Voting Rights. Holders of Series GG Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series GG Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series GG Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least six or more quarterly dividend periods, whether or not for consecutive dividend

periods, the holders of the Series GG Preferred Stock will be entitled to vote as a class, together

with the holders of all series of the Company’s preferred stock having equivalent voting rights,

for the election of two Preferred Stock Directors. When the Company has paid full dividends on

the Series GG Preferred Stock and any other such series of preferred stock for the equivalent of

at least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

As long as the Series GG Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series GG Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series GG Preferred Stock as to dividends or the distribution

of assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series GG Preferred Stock remain outstanding, the affirmative vote of the holders

of at least 66 2/3% of the voting power of the Series GG Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series GG Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series GG Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series GG Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series GG Preferred Stock and subject to the rights of holders of securities ranking senior to or

on a parity with the Series GG Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series GG Preferred Stock, in whole or in

part, at its option, at any time on or after May 16, 2023, at the redemption price equal to $25,000

per share, plus any accrued and unpaid dividends, for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. In addition,

at any time within 90 days after a “capital treatment event,” as described in the certificate of

designations for the Series GG Preferred Stock, the Company may redeem the Series GG

Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per share, plus

any accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series GG

Preferred Stock do not have any optional redemption rights.

Series HH Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series HH

Preferred Stock are listed on the NYSE under the symbol “BAC PrK”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series HH Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series GG Preferred Stock, Series JJ Preferred Stock, Series

KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series HH Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series HH Preferred Stock do not have any preemptive rights, and

the Series HH Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series HH Preferred Stock without the consent of

the holders of the Series HH Preferred Stock.

Dividends. Holders of the Series HH Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, at an annual dividend rate per

share of 5.875% on the liquidation preference of $25,000 per share, payable quarterly in arrears

on each January 24, April 24, July 45 and October 24, to record holders as of the first day of the

calendar month in which the dividend payment date falls (or such other record date fixed by the

Board or a duly authorized Board committee that is not more than 60 days nor less than 10 days

prior to the dividend payment date). The amount of dividends shall be computed on the basis of a

360-day year of twelve 30-day months. If any dividend payment date is not a business day (as

defined in the certificate of designations for the Series HH Preferred Stock), then that dividend

payment will be made on the next succeeding day that is a business day, unless that day falls in

the next calendar year in which case payment will occur on the immediately preceding business

day, without any interest or other payment in respect of such delay.

As long as shares of Series HH Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series HH Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series HH Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series HH

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series HH Preferred Stock for any period

unless full dividends on all outstanding shares of Series HH Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series HH Preferred

Stock and on any capital stock ranking equally with the Series HH Preferred Stock but cannot

make full payment of those declared dividends, the Company will allocate the dividend

payments on a pro rata basis among the holders of the shares of Series HH Preferred Stock and

the holders of any capital stock ranking equally with the Series HH Preferred Stock.

Voting Rights. Holders of Series HH Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series HH Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series HH Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least six or more quarterly dividend periods, whether or not for consecutive dividend

periods, the holders of the Series HH Preferred Stock will be entitled to vote as a class, together

with the holders of all series of the Company’s preferred stock having equivalent voting rights,

for the election of two Preferred Stock Directors. When the Company has paid full dividends on

the Series HH Preferred Stock and any other such series of preferred stock for the equivalent of

at least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

As long as the Series HH Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series HH Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series HH Preferred Stock as to dividends or the distribution

of assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series HH Preferred Stock remain outstanding, the affirmative vote of the holders

of at least 66 2/3% of the voting power of the Series HH Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series HH Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series HH Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series HH Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series HH Preferred Stock and subject to the right of holders of securities ranking senior to or on

a parity with the Series HH Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series HH Preferred Stock, in whole or in

part, at its option, at any time on or after July 24, 2023, at the redemption price equal to $25,000

per share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. In addition,

at any time within 90 days after a “capital treatment event,” as described in the certificate of

designations for the Series HH Preferred Stock, the Company may redeem the Series HH

Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per share, plus

any accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series HH

Preferred Stock do not have any optional redemption rights.

Series JJ Preferred Stock

Preferential Rights. The Series JJ Preferred Stock ranks senior to the Common Stock and

equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,

Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X Preferred

Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series

FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series KK Preferred

Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred Stock, Series

PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series SS Preferred

Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred Stock, Series 4

Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on the Company’s

liquidation, dissolution, or winding up. Series JJ Preferred Stock is not convertible into or

exchangeable for any shares of its Common Stock or any other class of its capital stock. Holders

of the Series JJ Preferred Stock do not have any preemptive rights, and the Series JJ Preferred

Stock is not subject to the operation of any sinking fund. The Company may issue stock with

preferences equal to the Series JJ Preferred Stock without the consent of the holders of the Series

JJ Preferred Stock.

Dividends. Holders of the Series JJ Preferred Stock are entitled to receive non-cumulative

cash dividends, when, as, and if declared by the Board or a duly authorized committee of the

Board out of funds legally available for payment, on the liquidation preference of $25,000 per

share of Series JJ Preferred Stock, payable (a) for the “fixed rate period”, semi-annually in

arrears on each June 20 and December 20, and (b) for the “floating rate period”, quarterly in

arrears on each March 20, June 20, September 20 and December 20, beginning on September 20,

2024, in each case to record holders as of the first day of the calendar month in which the

dividend payment date falls (or such record date fixed by the Board or a duly authorized Board

committee that is not more than 60 days nor less than 10 days before the dividend payment date).

Dividends on each share of Series JJ Preferred Stock will accrue on the liquidation preference of

$25,000 per share at a rate per annum equal to (1) 5.125%, for each dividend period from the

issue date to, but excluding, June 20, 2024 (the “fixed rate period”) and (2) thereafter, at a

floating rate equal to Adjusted Three-Month Term SOFR plus a spread of 3.292%, for each

dividend period from, and including, June 20, 2024 (the “floating rate period”). The amount of

dividends shall be computed (i) for the fixed rate period, on the basis of a 360-day year of twelve

30-day months, and (ii) for the floating rate period, on the basis of a 360-day year and the actual

number of days elapsed in the dividend period. If any dividend payment date for the fixed rate

period is not a business day (as defined in the certificate of designations for the Series JJ

Preferred Stock), then that dividend payment will be made on the next succeeding day that is a

business day, unless that day falls in the next calendar year, in which case payment will occur on

the immediately preceding business day, in each case without additional dividends accruing or

other payment adjustment and the relevant dividend period will not be adjusted. If any dividend

payment date for the floating rate period is not a business day, then that dividend payment will

be made on the next succeeding day that is a business day, unless that day falls in the next

calendar month, in which case the immediately preceding business day will be the dividend

payment date for that dividend period, in each case with dividends accruing to, but excluding, the

actual payment date, and the dividend period will be adjusted.

As long as shares of Series JJ Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of the Common Stock or other capital stock ranking junior

to the Series JJ Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series JJ Preferred Stock other than on a

pro rata basis, in each case unless full dividends on all outstanding shares of Series JJ Preferred

Stock for the immediately preceding dividend period have been paid in full or declared and a

sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series JJ Preferred Stock for any period

unless full dividends on all outstanding shares of Series JJ Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series JJ Preferred Stock

and on any capital stock ranking equally with the Series JJ Preferred Stock but cannot make full

payment of those declared dividends, the Company will allocate the dividend payments on a pro

rata basis among the holders of the shares of Series JJ Preferred Stock and the holders of any

capital stock ranking equally with the Series JJ Preferred Stock.

Voting Rights. Holders of Series JJ Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series JJ Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series JJ Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least three or more semi-annual or for six or more quarterly dividend periods, whether or

not for consecutive dividend periods, the holders of the Series JJ Preferred Stock will be entitled

to vote as a class, together with the holders of all series of the Company’s preferred stock having

equivalent voting rights, for the election of two Preferred Stock Directors. When the Company

has paid full dividends on the Series JJ Preferred Stock and any other such series of preferred

stock for the equivalent of at least two semi-annual or four quarterly dividend periods following

a dividend arrearage described above, these voting rights will terminate.

As long as the Series JJ Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series JJ Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series JJ Preferred Stock as to dividends or the distribution of

assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series JJ Preferred Stock remain outstanding, the affirmative vote of the holders of

at least 66 2/3% of the voting power of the Series JJ Preferred Stock shall be necessary to amend,

alter or repeal any provision of the certificate of designations for the Series JJ Preferred Stock or

the Restated Certificate of Incorporation so as to adversely affect the powers, preferences or

special rights of the Series JJ Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series JJ Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series JJ Preferred Stock and subject to the rights of holders of securities ranking senior to or on

a parity with the Series JJ Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series JJ Preferred Stock, in whole or in part,

at its option, at any time on or after June 20, 2024, at the redemption price equal to $25,000 per

share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. In addition,

at any time within 90 days after a “capital treatment event,” as described in the certificate of

designations for the Series JJ Preferred Stock, the Company may redeem the Series JJ Preferred

Stock, in whole but not in part, at a redemption price equal to $25,000 per share, plus any

accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series JJ

Preferred Stock do not have any optional redemption rights.

Series KK Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series KK

Preferred Stock are listed on the NYSE under the symbol “BAC PrM”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series KK Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series

JJ Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series KK Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series KK Preferred Stock do not have any preemptive rights, and

the Series KK Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series KK Preferred Stock without the consent of

the holders of the Series KK Preferred Stock.

Dividends. Holders of the Series KK Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, at an annual dividend rate per

share of 5.375% on the liquidation preference of $25,000 per share, payable quarterly in arrears

on each March 25, June 25, September 25 and December 25, to record holders as of the first day

of the calendar month in which the dividend payment date falls (or such other record date fixed

by the Board or a duly authorized Board committee that is not more than 60 days nor less than 10

days prior to the dividend payment date). The amount of dividends shall be computed on the

basis of a 360-day year of twelve 30-day months. If any dividend payment date is not a business

day (as defined in the certificate of designations for the Series KK Preferred Stock), then that

dividend payment will be made on the next succeeding day that is a business day (unless that day

falls in the next calendar year in which case payment will occur on the immediately preceding

business day), in each case without any additional dividends accruing or other payment

adjustment and the relevant dividend period will not be adjusted.

As long as shares of Series KK Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series KK Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series KK Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series KK

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series KK Preferred Stock for any period

unless full dividends on all outstanding shares of Series KK Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series KK Preferred

Stock and on any capital stock ranking equally with the Series KK Preferred Stock but cannot

make full payment of those declared dividends, the Company will allocate the dividend

payments on a pro rata basis among the holders of the shares of Series KK Preferred Stock and

the holders of any capital stock ranking equally with the Series KK Preferred Stock.

Voting Rights. Holders of Series KK Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series KK Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series KK Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph are conferred and are exercisable, have not

been declared and paid in an aggregate amount equal to, as to any series, the equivalent of at

least six or more quarterly dividend periods, whether or not for consecutive dividend periods, the

holders of the Series KK Preferred Stock will be entitled to vote as a class, together with the

holders of all series of the Company’s preferred stock having equivalent voting rights, for the

election of two Preferred Stock Directors. When the Company has paid full dividends on the

Series KK Preferred Stock and any other such series of preferred stock for the equivalent of at

least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

As long as the Series KK Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series KK Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series KK Preferred Stock as to dividends or the distribution

of assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series KK Preferred Stock remain outstanding, the affirmative vote of the holders

of at least 66 2/3% of the voting power of the Series KK Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series KK Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series KK Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series KK Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series KK Preferred Stock and subject to the rights of holders of securities ranking senior to or

on a parity with the Series KK Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series KK Preferred Stock, in whole or in

part, at its option, at any time on or after June 25, 2024, at the redemption price equal to $25,000

per share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. In addition,

at any time within 90 days after a “capital treatment event,” as described in the certificate of

designations for the Series KK Preferred Stock, the Company may redeem the Series KK

Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per share, plus

any accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series KK

Preferred Stock do not have any optional redemption rights.

Series LL Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series LL

Preferred Stock are listed on the NYSE under the symbol “BAC PrN”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series LL Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series

JJ Preferred Stock, Series KK Preferred Stock, Series MM Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series LL Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series LL Preferred Stock do not have any preemptive rights, and

the Series LL Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series LL Preferred Stock without the consent of

the holders of the Series LL Preferred Stock.

Dividends. Holders of the Series LL Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, at an annual dividend rate per

share of 5.000% on the liquidation preference of $25,000 per share, payable quarterly in arrears

on each March 17, June 17, September 17 and December 17, to record holders as of the first day

of the calendar month in which the dividend payment date falls (or such other record date fixed

by the Board or a duly authorized Board committee that is not more than 60 days nor less than 10

days prior to the dividend payment date). The amount of dividends shall be computed on the

basis of a 360-day year of twelve 30-day months. If any dividend payment date is not a business

day (as defined in the certificate of designations for the Series LL Preferred Stock), then that

dividend payment will be made on the next succeeding day that is a business day (unless that day

falls in the next calendar year in which case payment will occur on the immediately preceding

business day), in each case without any additional dividends accruing or other payment

adjustment and the relevant dividend period will not be adjusted.

As long as shares of Series LL Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series LL Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series LL Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series LL

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series LL Preferred Stock for any period

unless full dividends on all outstanding shares of Series LL Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series LL Preferred Stock

and on any capital stock ranking equally with the Series LL Preferred Stock but cannot make full

payment of those declared dividends, the Company will allocate the dividend payments on a pro

rata basis among the holders of the shares of Series LL Preferred Stock and the holders of any

capital stock ranking equally with the Series LL Preferred Stock.

Voting Rights. Holders of Series LL Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series LL Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series LL Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least six or more quarterly dividend periods, whether or not for consecutive dividend

periods, the holders of the Series LL Preferred Stock will be entitled to vote as a class, together

with the holders of all series of the Company’s preferred stock having equivalent voting rights,

for the election of two Preferred Stock Directors. When the Company has paid full dividends on

the Series LL Preferred Stock and any such other series of preferred stock for the equivalent of at

least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

As long as the Series LL Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series LL Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series LL Preferred Stock as to dividends or the distribution of

assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series LL Preferred Stock remain outstanding, the affirmative vote of the holders of

at least 66 2/3% of the voting power of the Series LL Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series LL Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series LL Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series LL Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series LL Preferred Stock and subject to the rights of holders of securities ranking senior to or on

a parity with the Series LL Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series LL Preferred Stock, in whole or in

part, at its option, at any time on or after September 17, 2024, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends for the then-current dividend period to,

but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series LL Preferred Stock, the Company may redeem the

Series LL Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per

share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. Holders of

the Series LL Preferred Stock do not have any optional redemption rights.

Series MM Preferred Stock

Preferential Rights. The Series MM Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series

JJ Preferred Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series MM Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series MM Preferred Stock do not have any preemptive rights, and

the Series MM Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series MM Preferred Stock without the consent of

the holders of the Series MM Preferred Stock.

Dividends. Holders of Series MM Preferred Stock shall be entitled to receive non-

cumulative cash dividends, when, as and if declared by the Board or a duly authorized committee

of the Board out of funds legally available for payment, based on the liquidation preference of

$25,000 per share of Series MM Preferred Stock, payable (a) for the “fixed rate period”, semi-

annually in arrears on each January 28 and July 28, and (b) for the “floating rate period”,

quarterly in arrears on each January 28, April 28, July 28 and October 28, beginning on April 28,

2025, in each case to record holders as of the first day of the calendar month in which the

dividend payment date falls (or such record date fixed by the Board or a duly authorized Board

committee that is not more than 60 days nor less than 10 days before the dividend payment date).

Dividends on each share of Series MM Preferred Stock will accrue on the liquidation preference

of $25,000 per share at a rate per annum equal to (1) 4.300%, for each dividend period from the

issue date to, but excluding, January 28, 2025 (the “fixed rate period”) and (2) thereafter, at a

floating rate equal to Adjusted Three-Month Term SOFR plus a spread of 2.664%, for each

dividend period from, and including, January 28, 2025 (the “floating rate period”). The amount

of dividends shall be computed (i) for the fixed rate period, on the basis of a 360-day year of

twelve 30-day months, and (ii) for the floating rate period, on the basis of a 360-day year and the

actual number of days elapsed in the dividend period. If any dividend payment date for the fixed

rate period is not a business day (as defined in the certificate of designations for the Series MM

Preferred Stock), then that dividend payment will be made on the next succeeding day that is a

business day, unless that day falls in the next calendar year, in which case payment will occur on

the immediately preceding business day, in each case without additional dividends accruing or

other payment adjustment and the relevant dividend period will not be adjusted. If any dividend

payment date for the floating rate period is not a business day, then that dividend payment will

be made on the next succeeding day that is a business day, unless that day falls in the next

calendar month, in which case the immediately preceding business day will be the dividend

payment date for that dividend period, in each case, with dividends accruing to, but excluding,

the actual payment date, and the dividend period will be adjusted accordingly.

As long as shares of Series MM Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series MM Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series MM Preferred Stock other than

on a pro rata basis, in each case unless full dividends on all outstanding shares of Series MM

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series MM Preferred Stock for any period

unless full dividends on all outstanding shares of Series MM Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series MM Preferred

Stock and on any capital stock ranking equally with the Series MM Preferred Stock but cannot

make full payment of those declared dividends, the Company will allocate the dividend

payments on a pro rata basis among the holders of the shares of Series MM Preferred Stock and

the holders of any capital stock ranking equally with the Series MM Preferred Stock.

Voting Rights. Holders of Series MM Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series MM Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series MM Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least three or more semi-annual or six or more quarterly dividend periods, whether or not

for consecutive dividend periods, the holders of the Series MM Preferred Stock will be entitled

to vote as a class, together with the holders of all series of the Company’s preferred stock having

equivalent voting rights, for the election of two Preferred Stock Directors. When the Company

has paid full dividends on the Series MM Preferred Stock and any other such series of preferred

stock for the equivalent of at least two semi-annual or four quarterly dividend periods following

a dividend arrearage described above, these voting rights will terminate.

As long as the Series MM Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series MM Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series MM Preferred Stock as to dividends or the distribution

of assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series MM Preferred Stock remain outstanding, the affirmative vote of the holders

of at least 66 2/3% of the voting power of the Series MM Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series MM

Preferred Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series MM Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series MM Preferred Stock will be entitled to receive out

of assets legally available for distribution to stockholders, before any distribution or payment out

of its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series MM Preferred Stock and subject to the rights of holders of securities ranking senior to or

on a parity with the Series MM Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series MM Preferred Stock, in whole or in

part, at its option, at any time on or after January 28, 2025, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends for the then-current dividend period to,

but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series MM Preferred Stock, the Company may redeem the

Series MM Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per

share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. Holders of

the Series MM Preferred Stock do not have any optional redemption rights.

Series NN Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series NN

Preferred Stock are listed on the NYSE under the symbol “BAC PrO”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series NN Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series

JJ Preferred Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series NN Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series NN Preferred Stock do not have any preemptive rights, and

the Series NN Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series NN Preferred Stock without the consent of

the holders of the Series NN Preferred Stock.

Dividends. Holders of the Series NN Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, at an annual dividend rate per

share of 4.375% on the liquidation preference of $25,000 per share, payable quarterly in arrears

on each February 3, May 3, August 3, and November 3, to record holders as of the fifteenth day

of the calendar month preceding the month in which the dividend payment date falls (or such

other record date fixed by the Board or a duly authorized Board committee that is not more than

60 days prior to the dividend payment date). The amount of dividends shall be computed on the

basis of a 360-day year of twelve 30-day months. If any dividend payment date is not a business

day (as defined in the certificate of designations for the Series NN Preferred Stock), then that

dividend payment will be made on the next succeeding day that is a business day (unless that day

falls in the next calendar year in which case payment will occur on the immediately preceding

business day), in each case without any additional dividends accruing or other payment

adjustment and the relevant dividend period will not be adjusted.

As long as shares of Series NN Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series NN Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series NN Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series NN

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series NN Preferred Stock for any period

unless full dividends on all outstanding shares of Series NN Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series NN Preferred

Stock and on any capital stock ranking equally with the Series NN Preferred Stock but cannot

make full payment of those declared dividends, the Company will allocate the dividend

payments on a pro rata basis among the holders of the shares of Series NN Preferred Stock and

the holders of any capital stock ranking equally with the Series NN Preferred Stock.

Voting Rights. Holders of Series NN Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series NN Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series NN Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least six or more quarterly dividend periods, whether or not for consecutive dividend

periods, the holders of the Series NN Preferred Stock will be entitled to vote as a class, together

with the holders of all series of the Company’s preferred stock having equivalent voting rights,

for the election of two Preferred Stock Directors. When the Company has paid full dividends on

the Series NN Preferred Stock and any other such series of preferred stock for the equivalent of

at least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

As long as the Series NN Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series NN Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series NN Preferred Stock as to dividends or the distribution

of assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series NN Preferred Stock remain outstanding, the affirmative vote of the holders

of at least 66 2/3% of the voting power of the Series NN Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series NN Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series NN Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series NN Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series NN Preferred Stock and subject to the rights of holders of securities ranking senior to or

on a parity with the Series NN Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series NN Preferred Stock, in whole or in

part, at its option, at any time on or after November 3, 2025, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends for the then-current dividend period to,

but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series NN Preferred Stock, the Company may redeem the

Series NN Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per

share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. Holders of

the Series NN Preferred Stock do not have any optional redemption rights.

Series PP Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series PP

Preferred Stock are listed on the NYSE under the symbol “BAC PrP”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series PP Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series

JJ Preferred Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred

Stock, Series NN Preferred Stock, Series QQ Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series PP Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series PP Preferred Stock do not have any preemptive rights, and

the Series PP Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series PP Preferred Stock without the consent of

the holders of the Series PP Preferred Stock.

Dividends. Holders of the Series PP Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, at an annual dividend rate per

share of 4.125% on the liquidation preference of $25,000 per share, payable quarterly in arrears

on each February 2, May 2, August 2, and November 2, to record holders as of the fifteenth day

of the calendar month preceding the month in which the dividend payment date falls (or such

other record date fixed by the Board or a duly authorized Board committee that is not more than

60 days prior to the dividend payment date). The amount of dividends shall be computed on the

basis of a 360-day year of twelve 30-day months. If any dividend payment date is not a business

day (as defined in the certificate of designations for the Series PP Preferred Stock), then that

dividend payment will be made on the next succeeding day that is a business day (unless that day

falls in the next calendar year in which case payment will occur on the immediately preceding

business day), in each case without any additional dividends accruing or other payment

adjustment and the relevant dividend period will not be adjusted.

As long as shares of Series PP Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series PP Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series PP Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series PP

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series PP Preferred Stock for any period

unless full dividends on all outstanding shares of Series PP Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series PP Preferred Stock

and on any capital stock ranking equally with the Series PP Preferred Stock but cannot make full

payment of those declared dividends, the Company will allocate the dividend payments on a pro

rata basis among the holders of the shares of Series PP Preferred Stock and the holders of any

capital stock ranking equally with the Series PP Preferred Stock.

Voting Rights. Holders of Series PP Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series PP Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series PP Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least six or more quarterly dividend periods, whether or not for consecutive dividend

periods, the holders of the Series PP Preferred Stock will be entitled to vote as a class, together

with the holders of all series of the Company’s preferred stock having equivalent voting rights,

for the election of two Preferred Stock Directors. When the Company has paid full dividends on

the Series PP Preferred Stock and any other such series of preferred stock for the equivalent of at

least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

As long as the Series PP Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series PP Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series PP Preferred Stock as to dividends or the distribution of

assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series PP Preferred Stock remain outstanding, the affirmative vote of the holders of

at least 66 2/3% of the voting power of the Series PP Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series PP Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series PP Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series PP Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series PP Preferred Stock and subject to the rights of holders of securities ranking senior to or on

a parity with the Series PP Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series PP Preferred Stock, in whole or in

part, at its option, at any time on or after February 2, 2026, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends for the then-current dividend period to,

but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series PP Preferred Stock, the Company may redeem the Series

PP Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per share,

plus any accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series PP

Preferred Stock do not have any optional redemption rights.

Series QQ Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series QQ

Preferred Stock are listed on the NYSE under the symbol “BAC PrQ”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series QQ Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series

JJ Preferred Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred

Stock, Series NN Preferred Stock, Series PP Preferred Stock, Series RR Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series QQ Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series QQ Preferred Stock do not have any preemptive rights, and

the Series QQ Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series QQ Preferred Stock without the consent of

the holders of the Series QQ Preferred Stock.

Dividends. Holders of the Series QQ Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, at an annual dividend rate per

share of 4.250% on the liquidation preference of $25,000 per share, payable quarterly in arrears

on each February 17, May 17, August 17, and November 17, to record holders as of the first day

of the calendar month in which the dividend payment date falls (or such other record date fixed

by the Board or a duly authorized Board committee that is not more than 60 days prior to the

dividend payment date). The amount of dividends shall be computed on the basis of a 360-day

year of twelve 30-day months. If any dividend payment date is not a business day (as defined in

the certificate of designations for the Series QQ Preferred Stock), then that dividend payment

will be made on the next succeeding day that is a business day (unless that day falls in the next

calendar year in which case payment will occur on the immediately preceding business day), in

each case without any additional dividends accruing or other payment adjustment and the

relevant dividend period will not be adjusted.

As long as shares of Series QQ Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series QQ Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series QQ Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series QQ

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series QQ Preferred Stock for any period

unless full dividends on all outstanding shares of Series QQ Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series QQ Preferred

Stock and on any capital stock ranking equally with the Series QQ Preferred Stock but cannot

make full payment of those declared dividends, the Company will allocate the dividend

payments on a pro rata basis among the holders of the shares of Series QQ Preferred Stock and

the holders of any capital stock ranking equally with the Series QQ Preferred Stock.

Voting Rights. Holders of Series QQ Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series QQ Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series QQ Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least six or more quarterly dividend periods, whether or not for consecutive dividend

periods, the holders of the Series QQ Preferred Stock will be entitled to vote as a class, together

with the holders of all series of the Company’s preferred stock having equivalent voting rights,

for the election of two Preferred Stock Directors. When the Company has paid full dividends on

the Series QQ Preferred Stock and any other such series of preferred stock for the equivalent of

at least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

As long as the Series QQ Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series QQ Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series QQ Preferred Stock as to dividends or the distribution

of assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series QQ Preferred Stock remain outstanding, the affirmative vote of the holders

of at least 66 2/3% of the voting power of the Series QQ Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series QQ Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series QQ Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series QQ Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series QQ Preferred Stock and subject to the rights of holders of securities ranking senior to or

on a parity with the Series QQ Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series QQ Preferred Stock, in whole or in

part, at its option, at any time on or after November 17, 2026, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends for the then-current dividend period to,

but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series QQ Preferred Stock, the Company may redeem the

Series QQ Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per

share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. Holders of

the Series QQ Preferred Stock do not have any optional redemption rights.

Series RR Preferred Stock

Preferential Rights. The Series RR Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series

JJ Preferred Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred

Stock, Series NN Preferred Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series

SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series RR Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series RR Preferred Stock do not have any preemptive rights, and

the Series RR Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series RR Preferred Stock without the consent of

the holders of the Series RR Preferred Stock.

Dividends. Holders of Series RR Preferred Stock shall be entitled to receive non-

cumulative cash dividends, when, as and if declared by the Board or a duly authorized committee

of the Board out of funds legally available for payment, based on the liquidation preference of

$25,000 per share of Series RR Preferred Stock, payable quarterly in arrears, on each January 27,

April 27, July 27 and October 27, in each case to record holders as of the first day of the calendar

month in which the dividend payment date falls (or such record date fixed by the Board or a duly

authorized Board committee that is not more than 60 days nor less than 10 days before the

dividend payment date). Dividends on each share of Series RR Preferred Stock will accrue on the

liquidation preference of $25,000 per share at a rate per annum equal to (1) 4.375%, for each

dividend period from the issue date to, but excluding, January 27, 2027, and (2) from, and

including, April 27, 2027, during each “reset period” (as defined in the certificate of designations

for the Series RR Preferred Stock) at a rate per annum equal to the “Five-Year U.S. Treasury

Rate” (as described in the certificate of designations for the Series RR Preferred Stock) as of the

most recent “dividend determination date” (as defined in the certificate of designations for the

Series RR Preferred Stock), plus a spread of 2.76% per annum. The amount of dividends shall be

computed on the basis of a 360-day year of twelve 30-day months. If any dividend payment date

is not a business day (as defined in the certificate of designations for the Series RR Preferred

Stock), then that dividend payment will be made on the next succeeding day that is a business

day, unless that day falls in the next calendar year, in which case payment will occur on the

immediately preceding business day, in each case without additional dividends accruing or other

payment adjustment and the relevant dividend period will not be adjusted.

As long as shares of Series RR Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series RR Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series RR Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series RR

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series RR Preferred Stock for any period

unless full dividends on all outstanding shares of Series RR Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series RR Preferred

Stock and on any capital stock ranking equally with the Series RR Preferred Stock but cannot

make full payment of those declared dividends, the Company will allocate the dividend

payments on a pro rata basis among the holders of the shares of Series RR Preferred Stock and

the holders of any capital stock ranking equally with the Series RR Preferred Stock.

Voting Rights. Holders of Series RR Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series RR Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series RR Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least six or more quarterly dividend periods, whether or not for consecutive dividend

periods, the holders of the Series RR Preferred Stock will be entitled to vote as a class, together

with the holders of all series of the Company’s preferred stock having equivalent voting rights,

for the election of two Preferred Stock Directors. When the Company has paid full dividends on

the Series RR Preferred Stock and any other such series of preferred stock for the equivalent of at

least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

As long as the Series RR Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series RR Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series RR Preferred Stock as to dividends or the distribution

of assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series RR Preferred Stock remain outstanding, the affirmative vote of the holders of

at least 66 2/3% of the voting power of the Series RR Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series RR Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series RR Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series RR Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series RR Preferred Stock and subject to the rights of holders of securities ranking senior to or

on a parity with the Series RR Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends for the then-current

dividend period, without accumulation of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series RR Preferred Stock, in whole or in

part, at its option, at any time on or after January 27, 2027, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends for the then-current dividend period to,

but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series RR Preferred Stock, the Company may redeem the

Series RR Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per

share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. Holders of

the Series RR Preferred Stock do not have any optional redemption rights.

Series SS Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series SS

Preferred Stock are listed on the NYSE under the symbol “BAC PrS”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series SS Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series

JJ Preferred Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred

Stock, Series NN Preferred Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series

RR Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series SS Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series SS Preferred Stock do not have any preemptive rights, and

the Series SS Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series SS Preferred Stock without the consent of

the holders of the Series SS Preferred Stock.

Dividends. Holders of the Series SS Preferred Stock are entitled to receive non-

cumulative cash dividends, when, as, and if declared by the Board or a duly authorized

committee of the Board out of funds legally available for payment, at an annual dividend rate per

share of 4.750% on the liquidation preference of $25,000 per share, payable quarterly in arrears

on each February 17, May 17, August 17, and November 17, to record holders as of the first day

of the calendar month in which the dividend payment date falls (or such other record date fixed

by the Board or a duly authorized Board committee that is not more than 60 days prior to the

dividend payment date). The amount of dividends shall be computed on the basis of a 360-day

year of twelve 30-day months. If any dividend payment date is not a business day (as defined in

the certificate of designations for the Series SS Preferred Stock), then that dividend payment will

be made on the next succeeding day that is a business day (unless that day falls in the next

calendar year in which case payment will occur on the immediately preceding business day), in

each case without any additional dividends accruing or other payment adjustment and the

relevant dividend period will not be adjusted.

As long as shares of Series SS Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series SS Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series SS Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series SS

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series SS Preferred Stock for any period

unless full dividends on all outstanding shares of Series SS Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series SS Preferred Stock

and on any capital stock ranking equally with the Series SS Preferred Stock but cannot make full

payment of those declared dividends, the Company will allocate the dividend payments on a pro

rata basis among the holders of the shares of Series SS Preferred Stock and the holders of any

capital stock ranking equally with the Series SS Preferred Stock.

Voting Rights. Holders of Series SS Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series SS Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series SS Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least six or more quarterly dividend periods, whether or not for consecutive dividend

periods, the holders of the Series SS Preferred Stock will be entitled to vote as a class, together

with the holders of all series of the Company’s preferred stock having equivalent voting rights,

for the election of two Preferred Stock Directors. When the Company has paid full dividends on

the Series SS Preferred Stock and any other such series of preferred stock for the equivalent of at

least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

As long as the Series SS Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series SS Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series SS Preferred Stock as to dividends or the distribution of

assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series SS Preferred Stock remain outstanding, the affirmative vote of the holders of

at least 66 2/3% of the voting power of the Series SS Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series SS Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series SS Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series SS Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series SS Preferred Stock and subject to the rights of holders of securities ranking senior to or on

a parity with the Series SS Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series SS Preferred Stock, in whole or in

part, at its option, at any time on or after February 17, 2027, at the redemption price equal to

$25,000 per share, plus any accrued and unpaid dividends for the then-current dividend period to,

but excluding, the redemption date, without accumulation of any undeclared dividends. In

addition, at any time within 90 days after a “capital treatment event,” as described in the

certificate of designations for the Series SS Preferred Stock, the Company may redeem the Series

SS Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per share,

plus any accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series SS

Preferred Stock do not have any optional redemption rights.

Series TT Preferred Stock

Preferential Rights. The Series TT Preferred Stock ranks senior to the Common Stock

and equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred

Stock, Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X

Preferred Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred

Stock, Series FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series

JJ Preferred Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred

Stock, Series NN Preferred Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series

RR Preferred Stock, Series SS Preferred Stock, Series 1 Preferred Stock, Series 2 Preferred

Stock, Series 4 Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on

the Company’s liquidation, dissolution, or winding up. Series TT Preferred Stock is not

convertible into or exchangeable for any shares of its Common Stock or any other class of its

capital stock. Holders of the Series TT Preferred Stock do not have any preemptive rights, and

the Series TT Preferred Stock is not subject to the operation of any sinking fund. The Company

may issue stock with preferences equal to the Series TT Preferred Stock without the consent of

the holders of the Series TT Preferred Stock.

Dividends. Holders of Series TT Preferred Stock shall be entitled to receive non-

cumulative cash dividends, when, as and if declared by the Board or a duly authorized committee

of the Board out of funds legally available for payment, based on the liquidation preference of

$25,000 per share of Series TT Preferred Stock, payable quarterly in arrears, on each January 27,

April 27, July 27 and October 27, in each case to record holders as of the first day of the calendar

month in which the dividend payment date falls (or such record date fixed by the Board or a duly

authorized Board committee that is not more than 60 days nor less than 10 days before the

dividend payment date). Dividends on each share of Series TT Preferred Stock will accrue on the

liquidation preference of $25,000 per share at a rate per annum equal to (1) 6.125%, for each

dividend period from the issue date to, but excluding, April 27, 2027, and (2) from, and

including, April 27, 2027, during each “reset period” (as defined in the certificate of designations

for the Series TT Preferred Stock) at a rate per annum equal to the “Five-Year U.S. Treasury

Rate” (as described in the certificate of designations for the Series TT Preferred Stock) as of the

most recent “dividend determination date” (as defined in the certificate of designations for the

Series TT Preferred Stock), plus a spread of 3.231% per annum. The amount of dividends shall

be computed on the basis of a 360-day year of twelve 30-day months. If any dividend payment

date is not a business day (as defined in the certificate of designations for the Series TT Preferred

Stock), then that dividend payment will be made on the next succeeding day that is a business

day, unless that day falls in the next calendar year, in which case payment will occur on the

immediately preceding business day, in each case without additional dividends accruing or other

payment adjustment and the relevant dividend period will not be adjusted.

As long as shares of Series TT Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or generally repurchase, redeem or otherwise

acquire for consideration any shares of its Common Stock or other capital stock ranking junior to

the Series TT Preferred Stock, or generally repurchase, redeem or otherwise acquire for

consideration any capital stock ranking equally with the Series TT Preferred Stock other than on

a pro rata basis, in each case unless full dividends on all outstanding shares of Series TT

Preferred Stock for the immediately preceding dividend period have been paid in full or declared

and a sum sufficient for the payment thereof is set aside. The Company cannot declare or pay

dividends on capital stock ranking equally with the Series TT Preferred Stock for any period

unless full dividends on all outstanding shares of Series TT Preferred Stock for the immediately

preceding dividend period have been paid in full or declared and a sum sufficient for the

payment thereof is set aside. If the Company declares dividends on the Series TT Preferred Stock

and on any capital stock ranking equally with the Series TT Preferred Stock but cannot make full

payment of those declared dividends, the Company will allocate the dividend payments on a pro

rata basis among the holders of the shares of Series TT Preferred Stock and the holders of any

capital stock ranking equally with the Series TT Preferred Stock.

Voting Rights. Holders of Series TT Preferred Stock do not have voting rights, except as

described herein and as specifically required by Delaware law. Whenever dividends payable on

the Series TT Preferred Stock or any other series of the Company’s preferred stock ranking

equally with the Series TT Preferred Stock as to payment of dividends, and as to which voting

rights equivalent to those described in this paragraph have been conferred and are exercisable,

have not been declared and paid in an aggregate amount equal to, as to any series, the equivalent

of at least six or more quarterly dividend periods, whether or not for consecutive dividend

periods, the holders of the Series TT Preferred Stock will be entitled to vote as a class, together

with the holders of all series of the Company’s preferred stock having equivalent voting rights,

for the election of two Preferred Stock Directors. When the Company has paid full dividends on

the Series TT Preferred Stock and any other such series of preferred stock for the equivalent of at

least four quarterly dividend periods following a dividend arrearage described above, these

voting rights will terminate.

As long as the Series TT Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least 66 2/3% of the voting power of the Series TT Preferred Stock

and any voting parity stock, voting as a class, shall be necessary to authorize, create or issue any

capital stock ranking senior to the Series TT Preferred Stock as to dividends or the distribution of

assets upon liquidation, dissolution or winding-up, or to reclassify any authorized capital stock

into any such shares of such capital stock or issue any obligation or security convertible into or

evidencing the right to purchase any such shares of capital stock. In addition, so long as any

shares of the Series TT Preferred Stock remain outstanding, the affirmative vote of the holders of

at least 66 2/3% of the voting power of the Series TT Preferred Stock shall be necessary to

amend, alter or repeal any provision of the certificate of designations for the Series TT Preferred

Stock or the Restated Certificate of Incorporation so as to adversely affect the powers,

preferences or special rights of the Series TT Preferred Stock.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series TT Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series TT Preferred Stock and subject to the rights of holders of securities ranking senior to or on

a parity with the Series TT Preferred Stock upon liquidation and the rights of the Company’s

depositors and other creditors, a liquidating distribution in the amount of the liquidation

preference of $25,000 per share, plus any declared and unpaid dividends for the then-current

dividend period, without accumulation of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series TT Preferred Stock, in whole or in

part, at its option, at any time on or after April 27, 2027, at the redemption price equal to $25,000

per share, plus any accrued and unpaid dividends for the then-current dividend period to, but

excluding, the redemption date, without accumulation of any undeclared dividends. In addition,

at any time within 90 days after a “capital treatment event,” as described in the certificate of

designations for the Series TT Preferred Stock, the Company may redeem the Series TT

Preferred Stock, in whole but not in part, at a redemption price equal to $25,000 per share, plus

any accrued and unpaid dividends for the then-current dividend period to, but excluding, the

redemption date, without accumulation of any undeclared dividends. Holders of the Series TT

Preferred Stock do not have any optional redemption rights.

Series 1 Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series 1

Preferred Stock are listed on the NYSE under the symbol “BML PrG”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series 1 Preferred Stock ranks senior to the Common Stock and

equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,

Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X Preferred

Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series

FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred

Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series

NN Preferred Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred

Stock, Series SS Preferred Stock, Series TT Preferred Stock, Series 2 Preferred Stock, Series 4

Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on the Company’s

liquidation, dissolution, or winding up. Shares of the Series 1 Preferred Stock are not convertible

into or exchangeable for any shares of Common Stock or any other class of the Company’s

capital stock. Holders of the Series 1 Preferred Stock do not have any preemptive rights, and the

Series 1 Preferred Stock is not subject to the operation of any sinking fund. The Company may

issue stock with preferences equal to the Series 1 Preferred Stock without the consent of the

holders of the Series 1 Preferred Stock.

Dividends. Holders of the Series 1 Preferred Stock are entitled to receive non-cumulative

cash dividends, when, as, and if declared by the Board or a duly authorized committee of the

Board out of funds legally available for payment, on the liquidation preference of $30,000 per

share at an annual floating rate per share equal to the greater of (a) Adjusted Three-Month Term

SOFR, plus a spread of 0.75% and (b) 3.00%, payable quarterly, if declared, on each February

28, May 28, August 28 and November 28, to record holders as of the date fixed by the Board or a

duly authorized Board committee that is a date not more than 30 nor less than 10 days preceding

the applicable payment date. The amount of dividends payable for a period shorter than a full

dividend period shall be computed on the basis of a 360-day year of twelve 30-day months and

the actual number of days elapsed in any period of less than one month. If any dividend payment

date is not a New York business day and a London business day (each as defined in the

certificate of designations for the Series 1 Preferred Stock), then that dividend payment will be

made on the next succeeding day that is both a New York business day and a London business

day (unless that day falls in the next calendar month, in which each such case payment will occur

on the immediately preceding day that is both a New York business day and a London business

day).

As long as shares of Series 1 Preferred Stock remain outstanding, generally the Company

cannot declare or pay cash dividends or distributions on or redeem, purchase or acquire any

shares of Common Stock or other capital stock ranking junior to the Series 1 Preferred Stock

unless full dividends on all outstanding shares of Series 1 Preferred Stock have been declared,

paid or set aside for payment for the immediately preceding dividend period. The Company

cannot declare or pay dividends or distributions on or redeem, purchase or acquire any capital

stock ranking equally with the Series 1 Preferred Stock for any period unless for such dividend

period full dividends on all outstanding shares of Series 1 Preferred Stock for the immediately

preceding dividend period have been declared, paid or set aside for payment. When dividends are

not paid in full upon the shares of the Series 1 Preferred Stock and any capital stock ranking

equally with the Series 1 Preferred Stock, all dividends declared upon shares of the Series 1

Preferred Stock and all shares of capital stock ranking equally with the Series 1 Preferred Stock

shall be declared pro rata so that the amount of dividends declared per share on the Series 1

Preferred Stock and all such other of the Company’s stock shall in all cases bear to each other the

same ratio that accrued dividends per share on the shares of the Series 1 Preferred Stock and all

such other stock bear to each other.

Voting Rights. Holders of Series 1 Preferred Stock do not have voting rights, except as

provided herein and as specifically required by law. Holders of Series 1 Preferred Stock shall be

entitled to vote on all matters submitted to a vote of the holders of Common Stock, voting

together with the holders of Common Stock as one class, and each share of Series 1 Preferred

Stock shall be entitled to 150 votes. If any quarterly dividend payable on the Series 1 Preferred

Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive

dividend periods, the holders of the Series 1 Preferred Stock will be entitled to vote as a class,

together with the holders of all series of preferred stock ranking equally with the Series 1

Preferred Stock as to the payment of dividends and upon which voting rights equivalent to those

granted to the holders of Series 1 Preferred Stock have been conferred and are exercisable, for

the election of two Preferred Stock Directors; each share of Series 1 Preferred Stock shall be

entitled to three votes for the election of such Preferred Stock Directors. When the Company has

paid full dividends on the Series 1 Preferred Stock for at least four quarterly dividend periods

following a dividend arrearage described above, these voting rights will terminate.

As long as the Series 1 Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least two-thirds of the shares of Series 1 Preferred Stock, outstanding

at the time (voting as a class with all other series of preferred stock ranking equally with the

Series 1 Preferred Stock) shall be necessary to permit, effect or validate (i) the authorization,

creation, or issuance, or any increase in the authorized or issued amount, of any class or series of

stock ranking prior to the Series 1 Preferred Stock or (ii) the amendment, alteration, or repeal,

whether by merger, consolidation, or otherwise, of any of the provisions of the Restated

Certificate of Incorporation or of the resolutions set forth in a certificate of designations for the

Series 1 Preferred Stock, which would adversely affect any right, preference, or privilege or

voting power of the Series 1 Preferred Stock, or of the holders thereof.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series 1 Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of Bank of America capital stock ranking

junior to the Series 1 Preferred Stock, a liquidating distribution in the amount of the liquidation

preference of $30,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series 1 Preferred Stock, in whole or in part,

at its option, at the redemption price equal to $30,000 per share, plus any declared and unpaid

dividends, without accumulation of any undeclared dividends. Holders of the Series 1 Preferred

Stock do not have any optional redemption rights.

Series 2 Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series 2

Preferred Stock are listed on the NYSE under the symbol “BML PrH”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series 2 Preferred Stock ranks senior to the Common Stock and

equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,

Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X Preferred

Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series

FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred

Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series

NN Preferred Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred

Stock, Series SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 4

Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on the Company’s

liquidation, dissolution, or winding up. Shares of the Series 2 Preferred Stock are not convertible

into or exchangeable for any shares of Common Stock or any other class of the Company’s

capital stock. Holders of the Series 2 Preferred Stock do not have any preemptive rights, and the

Series 2 Preferred Stock is not subject to the operation of any sinking fund. The Company may

issue stock with preferences equal to the Series 2 Preferred Stock without the consent of the

holders of the Series 2 Preferred Stock.

Dividends. Holders of the Series 2 Preferred Stock are entitled to receive non-cumulative

cash dividends, when, as, and if declared by the Board or a duly authorized committee of the

Board out of funds legally available for payment, on the liquidation preference of $30,000 per

share at an annual floating rate per share equal to the greater of (a) Adjusted Three-Month Term

SOFR, plus a spread of 0.65% and (b) 3.00%, payable quarterly in arrears, if declared, on each

February 28, May 28, August 28 and November 28, to record holders as of the date fixed by the

Board or a duly authorized Board committee that is a date not more than 30 nor less than 10 days

preceding the applicable payment date. The amount of dividends payable shall be computed on

the basis of a 360-day year and the actual number of days elapsed in the dividend period. If any

dividend payment date is not a New York business day and a London business day (each as

defined in the certificate of designations for the Series 2 Preferred Stock), then that dividend

payment will be made on the next succeeding day that is both a New York business day and a

London business day (unless that day falls in the next calendar month, in which each such case

payment will occur on the immediately preceding day that is both a New York business day and

a London business day).

As long as shares of Series 2 Preferred Stock remain outstanding, generally the Company

cannot declare or pay cash dividends or distributions on or redeem, purchase or acquire any

shares of Common Stock or other capital stock ranking junior to the Series 2 Preferred Stock

unless full dividends on all outstanding shares of Series 2 Preferred Stock have been declared,

paid or set aside for payment for the immediately preceding dividend period. The Company

cannot declare or pay dividends or distributions on or redeem, purchase or acquire capital stock

ranking equally with the Series 2 Preferred Stock for any period unless for such dividend period

full dividends on all outstanding shares of Series 2 Preferred Stock for the immediately

preceding dividend period have been declared, paid or set aside for payment. When dividends are

not paid in full upon the shares of the Series 2 Preferred Stock and any capital stock ranking

equally with the Series 2 Preferred Stock, all dividends declared upon shares of the Series 2

Preferred Stock and all shares of capital stock ranking equally with the Series 2 Preferred Stock

shall be declared pro rata so that the amount of dividends declared per share on the Series 2

Preferred Stock and all such other stock of the Company shall in all cases bear to each other the

same ratio that accrued dividends per share on the shares of the Series 2 Preferred Stock and all

such other stock bear to each other.

Voting Rights. Holders of Series 2 Preferred Stock do not have voting rights, except as

provided herein and as specifically required by law. Holders of Series 2 Preferred Stock shall be

entitled to vote on all matters submitted to a vote of the holders of Common Stock, voting

together with the holders of Common Stock as one class, and each share of Series 2 Preferred

Stock shall be entitled to 150 votes. If any quarterly dividend payable on the Series 2 Preferred

Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive

dividend periods, the holders of the Series 2 Preferred Stock will be entitled to vote as a class,

together with the holders of all series of preferred stock ranking equally with the Series 2

Preferred Stock as to the payment of dividends and upon which voting rights equivalent to those

granted to the holders of Series 2 Preferred Stock have been conferred and are exercisable, for

the election of two Preferred Stock Directors; each share of Series 2 Preferred Stock shall be

entitled to three votes for the election of such Preferred Stock Directors. When the Company has

paid full dividends on the Series 2 Preferred Stock for at least four quarterly dividend periods

following a dividend arrearage described above, these voting rights will terminate.

As long as the Series 2 Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least two-thirds of the shares of Series 2 Preferred Stock, outstanding

at the time (voting as a class with all other series of preferred stock ranking equally with the

Series 2 Preferred Stock), shall be necessary to permit, effect, or validate (i) the authorization,

creation, or issuance, or any increase in the authorized or issued amount, of any class or series of

stock ranking prior to the Series 2 Preferred Stock or (ii) the amendment, alteration, or repeal,

whether by merger, consolidation, or otherwise, of any of the provisions of the Restated

Certificate of Incorporation or of the resolutions set forth in a certificate of designations for the

Series 2 Preferred Stock, which would adversely affect any right, preference, or privilege or

voting power of the Series 2 Preferred Stock, or of the holders thereof.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series 2 Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series 2 Preferred Stock, a liquidating distribution in the amount of the liquidation preference of

$30,000 per share, plus any declared and unpaid dividends, without accumulation of any

undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series 2 Preferred Stock, in whole or in part,

at its option, at the redemption price equal to $30,000 per share, plus any declared and unpaid

dividends, without accumulation of any undeclared dividends. Holders of the Series 2 Preferred

Stock do not have any optional redemption rights.

Series 4 Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series 4

Preferred Stock are listed on the NYSE under the symbol “BML PrJ”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series 4 Preferred Stock ranks senior to the Common Stock and

equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,

Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X Preferred

Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series

FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred

Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series

NN Preferred Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred

Stock, Series SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2

Preferred Stock, and Series 5 Preferred Stock as to dividends and distributions on Bank of

America’s liquidation, dissolution, or winding up. Shares of the Series 4 Preferred Stock are not

convertible into or exchangeable for any shares of Common Stock or any other class of the

Company’s capital stock. Holders of the Series 4 Preferred Stock do not have any preemptive

rights, and the Series 4 Preferred Stock is not subject to the operation of any sinking fund. The

Company may issue stock with preferences equal to the Series 4 Preferred Stock without the

consent of the holders of the Series 4 Preferred Stock.

Dividends. Holders of the Series 4 Preferred Stock are entitled to receive non-cumulative

cash dividends, when, as, and if declared by the Board or a duly authorized committee the Board

out of funds legally available for payment, on the liquidation preference of $30,000 per share at

an annual floating rate per share equal to the greater of (a) Adjusted Three-Month Term SOFR,

plus a spread of 0.75% and (b) 4.00%, payable quarterly in arrears, if declared, on each February

28, May 28, August 28 and November 28, to record holders as of the date fixed by the Board or a

duly authorized Board committee that is a date not more than 30 nor less than 10 days preceding

the applicable payment date. The amount of dividends payable shall be computed on the basis of

a 360-day year and the actual number of days elapsed in the dividend period. If any dividend

payment date is not a New York business day and a London business day (each as defined in the

certificate of designations for the Series 4 Preferred Stock), then that dividend payment will be

made on the next succeeding day that is both a New York business day and a London business

day (unless that day falls in the next calendar month, in which each such case payment will occur

on the immediately preceding day that is both a New York business day and a London business

day).

As long as shares of Series 4 Preferred Stock remain outstanding, generally the Company

cannot declare or pay cash dividends or distributions on or redeem, purchase or acquire any

shares of Common Stock or other capital stock ranking junior to the Series 4 Preferred Stock

unless full dividends on all outstanding shares of Series 4 Preferred Stock have been declared,

paid or set aside for payment for the immediately preceding dividend period. The Company

cannot declare or pay dividends or distributions on or redeem, purchase or acquire capital stock

ranking equally with the Series 4 Preferred Stock for any period unless for such dividend period

full dividends on all outstanding shares of Series 4 Preferred Stock for the immediately

preceding dividend period have been declared, paid or set aside for payment. When dividends are

not paid in full upon the shares of the Series 4 Preferred Stock and any capital stock ranking

equally with the Series 4 Preferred Stock, all dividends declared upon shares of the Series 4

Preferred Stock and all shares of capital stock ranking equally with the Series 4 Preferred Stock

shall be declared pro rata so that the amount of dividends declared per share on the Series 4

Preferred Stock and all such other of the Company’s stock shall in all cases bear to each other the

same ratio that accrued dividends per share on the shares of the Series 4 Preferred Stock and all

such other stock bear to each other.

Voting Rights. Holders of Series 4 Preferred Stock do not have voting rights, except as

provided herein and as specifically required by law. Holders of Series 4 Preferred Stock shall be

entitled to vote on all matters submitted to a vote of the holders of Common Stock, voting

together with the holders of Common Stock as one class, and each share of Series 4 Preferred

Stock shall be entitled to 150 votes. If any quarterly dividend payable on the Series 4 Preferred

Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive

dividend periods, the holders of the Series 4 Preferred Stock will be entitled to vote as a class,

together with the holders of all series of preferred stock ranking equally with the Series 4

Preferred Stock as to the payment of dividends and upon which voting rights equivalent to those

granted to the holders of Series 4 Preferred Stock have been conferred and are exercisable, for

the election of two Preferred Stock Directors; each share of Series 4 Preferred Stock shall be

entitled to three votes for the election of such Preferred Stock Directors. When the Company has

paid full dividends on the Series 4 Preferred Stock for at least four quarterly dividend periods

following a dividend arrearage described above, these voting rights will terminate.

As long as the Series 4 Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least two-thirds of the shares of Series 4 Preferred Stock, outstanding

at the time (voting as a class with all other series of preferred stock ranking equally with the

Series 4 Preferred Stock), shall be necessary to permit, effect, or validate (i) the authorization,

creation, or issuance, or any increase in the authorized or issued amount, of any class or series of

stock ranking prior to the Series 4 Preferred Stock or (ii) the amendment, alteration, or repeal,

whether by merger, consolidation, or otherwise, of any of the provisions of the Restated

Certificate of Incorporation or of the resolutions set forth in a certificate of designations for the

Series 4 Preferred Stock, which would adversely affect any right, preference, or privilege or

voting power of the Series 4 Preferred Stock, or of the holders thereof.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series 4 Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of its capital stock ranking junior to the

Series 4 Preferred Stock, a liquidating distribution in the amount of the liquidation preference of

$30,000 per share, plus any declared and unpaid dividends, without accumulation of any

undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series 4 Preferred Stock, in whole or in part,

at its option, at the redemption price equal to $30,000 per share, plus any declared and unpaid

dividends, without accumulation of any undeclared dividends. Holders of the Series 4 Preferred

Stock do not have any optional redemption rights.

Series 5 Preferred Stock

Listing. Depositary shares representing fractional interests in a share of Series 5

Preferred Stock are listed on the NYSE under the symbol “BML PrL”. See “Description of

Depositary Shares” below.

Preferential Rights. The Series 5 Preferred Stock ranks senior to the Common Stock and

equally with the Series B Preferred Stock, Series E Preferred Stock, Series F Preferred Stock,

Series G Preferred Stock, Series L Preferred Stock, Series U Preferred Stock, Series X Preferred

Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series

FF Preferred Stock, Series GG Preferred Stock, Series HH Preferred Stock, Series JJ Preferred

Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series MM Preferred Stock, Series

NN Preferred Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series RR Preferred

Stock, Series SS Preferred Stock, Series TT Preferred Stock, Series 1 Preferred Stock, Series 2

Preferred Stock, and Series 4 Preferred Stock as to dividends and distributions on the Company’s

liquidation, dissolution, or winding up. Shares of the Series 5 Preferred Stock are not convertible

into or exchangeable for any shares of Common Stock or any other class of the Company’s

capital stock. Holders of the Series 5 Preferred Stock do not have any preemptive rights, and the

Series 5 Preferred Stock is not subject to the operation of any sinking fund. The Company may

issue stock with preferences equal to the Series 5 Preferred Stock without the consent of the

holders of the Series 5 Preferred Stock.

Dividends. Holders of the Series 5 Preferred Stock are entitled to receive non-cumulative

cash dividends, when, as, and if declared by the Board or a duly authorized committee the Board

out of funds legally available for payment, on the liquidation preference of $30,000 per share at

an annual floating rate per share equal to the greater of (a) Adjusted Three-Month Term SOFR,

plus a spread of 0.50% and (b) 4.00%, payable quarterly in arrears, if declared, on each February

21, May 21, August 21 and November 21, to record holders as of the date fixed by the Board or a

duly authorized Board committee that is a date not more than 30 nor less than 10 days preceding

the applicable payment date. The amount of dividends payable shall be computed on the basis of

a 360-day year and the actual number of days elapsed in the dividend period. If any dividend

payment date is not a New York business day and a London business day (each as defined in the

certificate of designations for the Series 5 Preferred Stock), then that dividend payment will be

made on the next succeeding day that is both a New York business day and a London business

day (unless that day falls in the next calendar month, in which each such case payment will occur

on the immediately preceding day that is both a New York business day and a London business

day).

As long as shares of Series 5 Preferred Stock remain outstanding, the Company cannot

declare or pay cash dividends or distributions on or redeem, purchase or acquire any shares of

Common Stock or other capital stock ranking junior to the Series 5 Preferred Stock unless full

dividends on all outstanding shares of Series 5 Preferred Stock have been declared, paid or set

aside for payment for the immediately preceding dividend period. The Company cannot declare

or pay dividends or distributions on or redeem, purchase or acquire capital stock ranking equally

with the Series 5 Preferred Stock for any period unless for such dividend period full dividends on

all outstanding shares of Series 5 Preferred Stock for the immediately preceding dividend period

have been declared, paid or set aside for payment. When dividends are not paid in full upon the

shares of the Series 5 Preferred Stock and any capital stock ranking equally with the Series 5

Preferred Stock, all dividends declared upon shares of the Series 5 Preferred Stock and all shares

of capital stock ranking equally with the Series 5 Preferred Stock shall be declared pro rata so

that the amount of dividends declared per share on the Series 5 Preferred Stock, and all such

other of the Company’s stock shall in all cases bear to each other the same ratio that accrued

dividends per share on the shares of the Series 5 Preferred Stock and all such other stock bear to

each other.

Voting Rights. Holders of Series 5 Preferred Stock do not have voting rights, except as

provided herein and as specifically required by law. Holders of Series 5 Preferred Stock shall be

entitled to vote on all matters submitted to a vote of the holders of Common Stock, voting

together with the holders of Common Stock as one class, and each share of Series 5 Preferred

Stock shall be entitled to 150 votes. If any quarterly dividend payable on the Series 5 Preferred

Stock is in arrears for six or more quarterly dividend periods, whether or not for consecutive

dividend periods, the holders of the Series 5 Preferred Stock will be entitled to vote as a class,

together with the holders of all series of preferred stock ranking equally with the Series 5

Preferred Stock as to the payment of dividends and upon which voting rights equivalent to those

granted to the holders of Series 5 Preferred Stock have been conferred and are exercisable, for

the election of two Preferred Stock Directors; each share of Series 5 Preferred Stock shall be

entitled to three votes for the election of such Preferred Stock Directors. When the Company has

paid full dividends on the Series 5 Preferred Stock for at least four quarterly dividend periods

following a dividend arrearage described above, these voting rights will terminate.

As long as the Series 5 Preferred Stock remains outstanding, the affirmative vote or

consent of the holders of at least two-thirds of the shares of Series 5 Preferred Stock, outstanding

at the time (voting as a class with all other series of preferred stock ranking equally with the

Series 5 Preferred Stock), shall be necessary to permit, effect, or validate (i) the authorization,

creation, or issuance, or any increase in the authorized or issued amount, of any class or series of

stock ranking prior to the Series 5 Preferred Stock or (ii) the amendment, alteration, or repeal,

whether by merger, consolidation, or otherwise, of any of the provisions of the Restated

Certificate of Incorporation or of the resolutions set forth in a certificate of designations for the

Series 5 Preferred Stock, which would adversely affect any right, preference, or privilege or

voting power of the Series 5 Preferred Stock, or of the holders thereof.

Distributions. In the event of the Company’s voluntary or involuntary liquidation,

dissolution, or winding up, holders of Series 5 Preferred Stock will be entitled to receive out of

assets legally available for distribution to stockholders, before any distribution or payment out of

its assets may be made to or set aside for the holders of the Company’s capital stock ranking

junior to the Series 5 Preferred Stock, a liquidating distribution in the amount of the liquidation

preference of $30,000 per share, plus any declared and unpaid dividends, without accumulation

of any undeclared dividends, to the date of liquidation.

Redemption. The Company may redeem the Series 5 Preferred Stock, in whole or in part,

at its option, at the redemption price equal to $30,000 per share, plus any declared and unpaid

dividends, without accumulation of any undeclared dividends. Holders of the Series 5 Preferred

Stock do not have any optional redemption rights.

DESCRIPTION OF DEPOSITARY SHARES

Each outstanding share of the Series E Preferred Stock, Series GG Preferred Stock, Series

HH Preferred Stock, Series KK Preferred Stock, Series LL Preferred Stock, Series NN Preferred

Stock, Series PP Preferred Stock, Series QQ Preferred Stock, Series SS Preferred Stock, Series 1

Preferred Stock, Series 2 Preferred Stock, Series 4 Preferred Stock and Series 5 Preferred Stock

is represented by depositary shares that are registered under Section 12(b) of the Exchange Act

and listed on the NYSE. In addition, each of the Series U Preferred Stock, Series X Preferred

Stock, Series Z Preferred Stock, Series AA Preferred Stock, Series DD Preferred Stock, Series

FF Preferred Stock, Series JJ Preferred Stock, Series MM Preferred Stock, Series RR Preferred

Stock and Series TT Preferred Stock is represented by depositary shares that are not listed. This

section describes the certain provisions of all of Company’s depositary shares outstanding as of

December 31, 2023.

General

The Company has deposited the shares of preferred stock of each series of preferred stock

represented by depositary shares under respective deposit agreements: (a) in the case of all such

series of preferred stock other than the Series 1 Preferred Stock, the Series 2 Preferred Stock, the

Series 4 Preferred Stock and the Series 5 Preferred Stock (such series of preferred stock

collectively referred to as “Legacy Bank of America Preferred Stock”), between the Company

and each of Computershare Inc. and its wholly owned subsidiary Computershare Trust

Company, N.A. (collectively acting as depository) and the holders from time to time of the

depositary receipts issued thereunder and evidencing such depositary shares; and (b) in the case

of the Series 1 Preferred Stock, Series 2 Preferred Stock, Series 4 Preferred Stock and Series 5

Preferred Stock (referred to collectively as the “Legacy ML Preferred Stock”), between the

Company (as successor by merger to Merrill Lynch & Co., Inc.) and The Bank of New York

Mellon (as successor to JPMorgan Chase Bank, N.A. or The Bank of New York, N.A., as

applicable), acting as depository, and the holders from time to time of the depositary receipts

issued thereunder and evidencing such depositary shares, as amended pursuant to the assignment,

assumption and amendment agreement among the Company, Merrill Lynch & Co., Inc. and The

Bank of New York Mellon. The respective deposit agreements are included as exhibits to the

Company’s Current Reports on Form 8-K filed with the Securities and Exchange Commission

(“SEC”) on November 6, 2006 (Series E Preferred Stock), May 29, 2013 (Series U Preferred

Stock), September 5, 2014 (Series X Preferred Stock), October 23, 2014 (Series Z Preferred

Stock), March 17, 2015 (Series AA Preferred Stock), March 10, 2016 (Series DD Preferred

Stock), March 15, 2018 (Series FF Preferred Stock), June 20, 2019 (Series JJ Preferred Stock),

January 24, 2020 (Series MM Preferred Stock), January 25, 2022 (Series RR Preferred Stock)

and April 22, 2022 (Series TT Preferred Stock) or its Registration Statements on Form 8-A filed

with the SEC on January 2, 2009 (Legacy ML Preferred Stock), May 16, 2018 (Series GG

Preferred Stock), July 24, 2018 (Series HH Preferred Stock), June 25, 2019 (Series KK Preferred

Stock), September 17, 2019 (Series LL Preferred Stock), October 29, 2020 (Series NN Preferred

Stock), January 28, 2021 (Series PP Preferred Stock), October 26, 2021 (Series QQ Preferred

Stock), and January 31, 2022 (Series SS Preferred Stock).

With respect to each series of Legacy Bank of America Preferred Stock represented by

depositary shares listed on the NYSE (the “Listed Legacy Bank of America Depositary

Shares”), each depositary share represents a 1/1,000

interest in a share of the related series of

preferred stock. With respect to each series of Legacy Bank of America Preferred Stock

represented by depositary shares that are not listed (the “Unlisted Legacy Bank of America

Depositary Shares”), each depositary share represents a 1/25

interest in a share of the related

series of preferred stock. With respect to each series of Legacy ML Preferred Stock, each

depositary share represents a 1/1,200

interest in a share of the related series of preferred stock.

Subject to the terms of the respective deposit agreements, each holder of a depositary share is

entitled, in proportion to the fractional interest of a share of the series of preferred stock

represented by the depositary share, to all the rights and preferences of the series of preferred

stock being represented, including dividend, voting, redemption, conversion, and liquidation

rights.

Withdrawal of Preferred Stock

Unless the depositary shares have been called for redemption, generally a holder of

depositary shares may surrender his or her depositary receipts at the principal office of the

depository, pay any charges, and comply with any other terms as provided in the related deposit

agreement, and in exchange be entitled to delivery of the number of whole shares of preferred

stock underlying the depositary shares. However, generally holders of whole shares of the

relevant series of preferred stock are not entitled to deposit those shares under the applicable

deposit agreement or to receive depositary receipts for those shares after the withdrawal. If the

depositary shares surrendered by the holder in connection with the withdrawal exceed the

number of depositary shares that represent the number of whole shares of preferred stock to be

withdrawn, the depository will deliver to the holder at the same time a new depositary receipt

evidencing the excess number of depositary shares.

Dividends and Other Distributions

Each dividend on a Listed Legacy Bank of America Depositary Share will be in an

amount equal to 1/1,000

of the dividend declared on a share of the relevant underlying series of

preferred stock. Each dividend on an Unlisted Legacy Bank of America Depositary Share will be

in an amount equal to 1/25

of the dividend declared on a share of the relevant underlying series

of preferred stock. Each dividend on a Legacy ML Depositary Share will be in an amount equal

to 1/1,200

of the dividend declared on a share of the relevant underlying series of preferred

stock. In each case, the depository will distribute all cash dividends or other cash distributions

received in respect of the relevant underlying series of preferred stock to the record holders of

depositary shares relating to that preferred stock in proportion to the number of depositary shares

owned by those holders. If there is a distribution other than in cash, the depository will distribute

property received by it to the record holders of the depositary shares who are entitled to that

property, in proportion to the number of depositary shares held by each holder. However, if the

depository determines that it is not feasible to make this distribution of property, the depository,

with the Company’s approval, may sell that property and distribute the net proceeds to the

holders of the depositary shares.

Generally, in the case of each series of Legacy Bank of America Preferred Stock, if the

calculation of a dividend or other cash distribution results in an amount that is a fraction of a cent

and that fraction is equal to or greater than $0.005, the depository will round that amount up to

the next highest whole cent and will request that the Company pay the resulting additional

amount to the depository for the relevant dividend or other cash distribution. If the fractional

amount is less than $0.005, the depository will disregard that fractional amount.

In the case of each series of Legacy ML Preferred Stock, the depository will not

distribute any fraction of a cent and will instead retain any balance not so distributed, which shall

be held by the depository and treated as part of the next sum received by the depository for

distribution the holders.

Record dates for the payment of dividends and other matters relating to depositary shares

will be the same as the corresponding record dates for the related series of preferred stock.

The amount paid as dividends or otherwise distributable by the depository with respect to

depositary shares or the relevant underlying series of preferred stock will be reduced by any

amounts required to be withheld by the Company or the depository on account of taxes or other

governmental charges. The depository may refuse to make any payment or distribution, or to

effect any transfer, exchange, or withdrawal of any depositary shares or the shares of the related

series of preferred stock, until such taxes or other governmental charges are paid.

Redemption of Depositary Shares

If a series of preferred stock that relates to depositary shares is redeemed, the related

depositary shares will be redeemed with the proceeds received by the depository from the

redemption, in whole or in part, of that underlying series of preferred stock. Generally, the

depository will mail notice of redemption at least 30 (5 in the case of each of the Series RR

Preferred Stock and Series TT Preferred Stock, and 15 in the case of each of the Series 4

Preferred Stock and Series 5 Preferred Stock) and not more than 60 calendar days before the

redemption date to the record holders of the depositary shares to be redeemed at their addresses

appearing in the depository’s books (unless the depositary shares are held through DTC in which

case, for certain series, the notice will be in accordance with DTC’s procedures). With respect to

(i) the Listed Legacy Bank of America Depositary Shares, the redemption price per depositary

share will be equal to 1/1,000

of the redemption price per share payable with respect to the

relevant underlying series of preferred stock, (ii) the Unlisted Legacy Bank of America

Depositary Shares, the redemption price per depositary share will be equal to 1/25

of the

redemption price per share payable with respect to the relevant underlying series of preferred

stock, and (iii) the Legacy ML Depositary Shares, the redemption price per depositary share will

be equal to 1/1,200

of the redemption price per share payable with respect to the relevant

underlying series of preferred stock.

Whenever the Company redeems shares of a series of preferred stock held by the

depositary under a deposit agreement, the depositary will redeem as of the same redemption date

the number of related depositary shares representing the shares of preferred stock that are

redeemed. If less than all of the depositary shares are redeemed, the depositary shares to be

redeemed generally will be selected by lot or pro rata.

After the date fixed for redemption, the depositary shares called for redemption will no

longer be deemed to be outstanding. At that time, all rights of the holder of the depositary shares

will cease, except the right to receive any money or other property they become entitled to

receive upon surrender to the depository of the depositary receipts.

Voting the Deposited Preferred Stock

Holders of depositary receipts are entitled to a fraction of a vote per depositary share

(1/1,000

in the case of the Listed Legacy Bank of America Depositary Shares, 1/25

in the case

of the Unlisted Legacy Bank of America Depositary Shares, and 1/1,200

in the case of the

Legacy ML Depositary Shares) under those limited circumstances in which holders of the

relevant underlying series of preferred stock are entitled to a vote. When the depository receives

notice of any meeting at which holders of a series of preferred stock held by the depository are

entitled to vote, the depository will mail the information contained in the notice to the record

holders of the related depositary shares. Each record holder of depositary shares on the record

date, which will be the same date as the record date for the related series of preferred stock, will

be entitled to instruct the depository as to the exercise of the voting rights pertaining to the

amount of preferred stock underlying the holder’s depositary shares. The depository will

endeavor, insofar as practicable, to vote the amount of preferred stock underlying the depositary

shares in accordance with these instructions. The Company will agree to take all action that may

be deemed necessary by the depository to enable the depository to do so. The depository will not

vote any shares of preferred stock except to the extent it receives specific instructions from the

holders of depositary shares representing that number of shares of the related preferred stock

(provided that with respect to the Series E Preferred Stock, the depository will vote the stock

represented by such depositary shares proportionately with votes cast pursuant to instructions

received from the other holders).

Amendment and Termination of a Deposit Agreement

The form of depositary receipt evidencing depositary shares and any provision of the

related deposit agreement may be amended by agreement between the Company and the

depository. However, any amendment that materially and adversely alters the rights of the

existing holders of depositary shares will not be effective unless the amendment has been

approved by the record holders of at least a majority (or, with respect to the Legacy ML

Depositary Shares, in the case of amendments relating to or affecting rights to receive dividends

or distributions, or voting or redemption rights, two-thirds) of the depositary shares then

outstanding. Either the Company or the depository may terminate a deposit agreement if all of

the outstanding depositary shares have been redeemed or if there has been a final distribution in

respect of the related preferred stock in connection with the Company’s liquidation, dissolution,

or winding up or, with respect to the Legacy ML Depositary Shares, upon the consent of holders

of depositary receipts representing not less than two-thirds of the depositary shares then

outstanding.

Charges of Depository

The Company will pay all transfer and other taxes, assessments and governmental

charges arising solely from the existence of a depository arrangement. The Company will pay the

fees of the depository in connection with the initial deposit of the underlying series of preferred

stock and any redemption of such preferred stock. Holders of depositary receipts will pay

transfer and other taxes, assessments and governmental charges and any other charges as are

expressly provided in the related deposit agreement to be for their accounts. The depository may

refuse to make any payment or distribution on, or effect any transfer of a depositary receipt or

any withdrawals of preferred stock evidenced by, a depositary receipt until all taxes,

assessments, and governmental charges with respect to the depositary receipt or preferred stock

are paid by their holders.

Miscellaneous

The depository will forward to the record holders of depositary shares all of the

Company’s reports and communications that are delivered to the depository and which the

Company is required to furnish to the holders of its preferred stock or depositary shares.

Neither the Company nor the depository will be liable if the Company is prevented or

delayed by law or any circumstance beyond its control in performing its obligations under a

deposit agreement. All of the Company’s obligations as well as the depository’s obligations

under each deposit agreement are limited to performance of its respective duties set forth in the

deposit agreement and neither the Company nor the depository will be obligated to prosecute or

defend any legal proceeding relating to any depositary shares or preferred stock unless provided

with satisfactory indemnity. The Company, and the depository, may rely on written advice of

counsel or accountants, or information provided by persons presenting preferred stock for

deposit, holders of depositary shares, or other persons believed to be competent and on

documents believed to be genuine.

Resignation and Removal of Depository

The depository may resign at any time by delivering to the Company notice of its election

to do so, and the Company may remove the depository at any time. Any resignation or removal

will take effect only upon the appointment of a successor depository and the successor

depository’s acceptance of the appointment. Any successor depository must be a U.S. bank or

trust company.

DESCRIPTION OF FLOATING RATE PREFERRED HYBRID INCOME TERM

SECURITIES OF BAC CAPITAL TRUST XIII (AND THE GUARANTEE OF THE

REGISTRANT RELATED THERETO)

This section describes the Floating Rate Preferred Hybrid Income Term Securities of

BAC Capital Trust XIII (the “Trust XIII HITS”) and the Company’s guarantee related thereto.

The Trust XIII HITS are listed on the NYSE under the symbol “BAC/PF”.

General

The Trust XIII HITS are a class of preferred beneficial interests in BAC Capital Trust

XIII, a Delaware statutory trust (“Trust XIII”), and are issued pursuant to the Amended and

Restated Declaration of Trust of BAC Capital Trust XIII (the “Trust XIII Declaration of

Trust”) dated as of February 16, 2007 among the Company, as sponsor, The Bank of New York

Mellon (formerly known as The Bank of New York), as property trustee, BNY Mellon Trust of

Delaware (formerly known as The Bank of New York (Delaware)), as Delaware trustee, the

regular trustees named therein and the holders of the trust securities. The terms of the Trust XIII

HITS include those stated in the Trust XIII Declaration of Trust, any amendments thereto, and

those made a part of the Trust XIII Declaration of Trust by the Trust Indenture Act of 1939 (the

“Trust Indenture Act”) and the Delaware Statutory Trust Act. The Trust XIII Declaration of

Trust is included as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC

on February 16, 2007. As of December 31, 2023, 140,922 Trust XIII HITS (having an aggregate

liquidation amount of approximately $140.9 million) were outstanding.

The common securities of Trust XIII (“Trust XIII Common Securities”) are held

directly or indirectly by the Company. The Trust XIII Common Securities rank on a parity, and

payments upon redemption, liquidation or otherwise will be made on a proportionate basis, with

the Trust XIII HITS, except as set forth below in “—Ranking of Trust XIII Common Securities”.

The Trust XIII Declaration of Trust does not permit Trust XIII to issue any securities other than

the Trust XIII Common Securities and the Trust XIII HITS or to incur any indebtedness.

The assets of Trust XIII consist of shares of the Company’s Floating Rate Non-

Cumulative Preferred Stock, Series F (the “Series F Preferred Stock”), which Trust XIII owns

for the benefit of the holders of its Trust XIII HITS and Trust XIII Common Securities (together,

the “Trust XIII securities”). Each Trust XIII HITS has a liquidation amount of $1,000 and

represents a beneficial interest in Trust XIII that corresponds to 1/100

of a share of Series F

Preferred Stock. Because Trust XIII is a pass-through vehicle, Trust XIII will distribute to

holders of the Trust XIII securities the dividends that it receives on the Series F Preferred Stock.

For a description of the terms of the Series F Preferred Stock, see “Description of Preferred

Stock – Series F Preferred Stock” above.

Trust XIII’s business and affairs are conducted by its trustees, each appointed by the

Company as sponsor of Trust XIII.

The Trust XIII HITS are issued in registered book-entry only form and are held in the

name of The Depository Trust Company (“DTC”) or its nominee.

Distributions

Trust XIII must make distributions on the Trust XIII HITS on relevant distribution dates

to the extent that it has funds available therefor. The distribution dates for the Trust XIII HITS

are March 15, June 15, September 15 and December 15 of each year. A distribution period is

each period beginning on a distribution date and continuing to, but not including, the next

succeeding distribution date. When a distribution date is not a business day (as defined in the

Trust XIII Declaration of Trust), Trust XIII will make the distribution on the next business day

without interest. Distributions are calculated on the basis of a 360-day year and the number of

days actually elapsed in a distribution period.

Holders of Trust XIII HITS will be entitled to receive distributions corresponding to

dividends on the Series F Preferred Stock. These non-cumulative cash dividends will be payable

in arrears if, as and when declared by the Board (or a committee of the Board) on the quarterly

dividend payment dates, which are each March 15, June 15, September 15 and December 15 (or

if such day is not a business day, the next business day). For additional information about

dividends on the Series F Preferred Stock, see “Description of Preferred Stock – Series F

Preferred Stock” above.

Trust XIII will make distributions on the Trust XIII HITS only to the extent it has

received dividends on the Series F Preferred Stock.

Distributions on the Trust XIII HITS will be payable to the holders as they appear in the

security register of Trust XIII on the relevant record dates. The record date will be the last day

of the month immediately preceding the month in which the relevant distribution date falls.

Mandatory Redemption of Trust XIII HITS upon Redemption of Series F Preferred Stock

The Trust XIII HITS have no stated maturity but must be redeemed on the date the

Company redeems the Series F Preferred Stock, and the property trustee or paying agent will

apply the proceeds from such repayment or redemption to redeem a like amount, as defined

below, of the Trust XIII HITS. The Series F Preferred Stock is perpetual but the Company

generally may redeem it at any time. The redemption price per Trust XIII HITS will equal the

liquidation amount per Trust XIII HITS plus accumulated and unpaid distributions to, but

excluding, the redemption date.

If less than all of the shares of Series F Preferred Stock held by Trust XIII are to be

redeemed on a redemption date, then the proceeds from such redemption will be allocated pro

rata to the redemption of the Trust XIII HITS and the Trust XIII Common Securities, except as

set forth below under “— Ranking of Trust XIII Common Securities.”

The term “like amount” as used above means Trust XIII HITS having a liquidation

amount equal to that portion of the liquidation amount of the Series F Preferred Stock to be

contemporaneously redeemed, the proceeds of which will be used to pay the redemption price of

such Trust XIII HITS.

Redemption Procedures. Notice of any redemption will be mailed at least 15 days but not

more than 60 days before the redemption date to the registered address of each holder of Trust

XIII HITS to be redeemed.

If (1) Trust XIII gives an irrevocable notice of redemption of Trust XIII HITS for cash

and (2) the Company has paid to the property trustee a sufficient amount of cash in connection

with the related redemption of the Series F Preferred Stock, then on the redemption date, the

property trustee will irrevocably deposit with DTC funds sufficient to pay the redemption price

for the Trust XIII HITS being redeemed. Trust XIII will also give DTC irrevocable instructions

and authority to pay the redemption amount in immediately available funds to the beneficial

owners of the Trust XIII HITS. Distributions to be paid on or before the redemption date for any

Trust XIII HITS called for redemption will be payable to the holders as of the record dates for

the related dates of distribution. If the Trust XIII HITS called for redemption are no longer in

book-entry form, the property trustee, to the extent funds are available, will irrevocably deposit

with the paying agent for the Trust XIII HITS funds sufficient to pay the applicable redemption

price and will give such paying agent irrevocable instructions and authority to pay the

redemption price to the holders thereof upon surrender of their certificates evidencing the Trust

XIII HITS.

If notice of redemption shall have been given and funds deposited as required, then upon

the date of such deposit:

• all rights of the holders of such Trust XIII HITS called for redemption will cease,

except the right of the holders of such Trust XIII HITS to receive the redemption

price and any distribution payable in respect of the Trust XIII HITS on or prior to

the redemption date, but without interest on such redemption price; and

• the Trust XIII HITS called for redemption will cease to be outstanding.

If any redemption date is not a business day, then the redemption amount will be payable

on the next business day (and without any interest or other payment in respect of any such

delay). However, if payment on the next business day causes payment of the redemption amount

to be in the next calendar month, then payment will be on the preceding business day.

If payment of the redemption amount for any shares of Series F Preferred Stock called for

redemption is improperly withheld or refused and accordingly the redemption amount of the

Trust XIII HITS is not paid either by Trust XIII or by the Company under the Trust XIII

Guarantee (as defined below), then dividends on the Series F Preferred Stock will continue to

accrue and distributions on such Trust XIII HITS called for redemption will continue to

accumulate at the applicable rate then borne by such Trust XIII HITS from the original

redemption date scheduled to the actual date of payment. In this case, the actual payment date

will be considered the redemption date for purposes of calculating the redemption amount.

If less than all of the outstanding shares of Series F Preferred Stock are to be redeemed on

a redemption date, then the aggregate liquidation amount of Trust XIII HITS and Trust XIII

Common Securities to be redeemed shall be allocated pro rata to the Trust XIII HITS and Trust

XIII Common Securities based upon the relative liquidation amounts of such classes, except as

set forth below under “— Ranking of Trust XIII Common Securities.” The property trustee will

select the particular Trust XIII HITS to be redeemed on a pro rata basis not more than 60 days

before the redemption date from the outstanding Trust XIII HITS not previously called for

redemption by any method the property trustee deems fair and appropriate, or, if the Trust XIII

HITS are in book-entry only form, in accordance with the procedures of DTC. The property

trustee shall promptly notify the transfer agent in writing of the Trust XIII HITS selected for

redemption and, in the case of any Trust XIII HITS selected for redemption in part, the

liquidation amount to be redeemed.

For all purposes of the Trust XIII Declaration of Trust, unless the context otherwise

requires, all provisions relating to the redemption of Trust XIII HITS shall relate, in the case of

any Trust XIII HITS redeemed or to be redeemed only in part, to the portion of the aggregate

liquidation amount of Trust XIII HITS that has been or is to be redeemed. If less than all of the

Trust XIII HITS are redeemed, the Trust XIII HITS held through the facilities of DTC will be

redeemed pro rata in accordance with DTC’s internal procedures.

The holders of the Trust XIII HITS do not have any optional redemption rights.

Company Guarantee of Trust XIII HITS

The Company has irrevocably guaranteed (the “Trust XIII Guarantee”), on a junior

subordinated basis, the payment in full of any accumulated and unpaid distributions required to

the paid on the Trust XIII HITS and the redemption price for any Trust XIII HITS called for

redemption, in each case to the extent Trust XIII has funds available to make the payment, as

well as upon a voluntary or involuntary dissolution, winding-up or liquidation of Trust XIII

(other than in connection with a distribution of corresponding assets to the holders of the Trust

XIII HITS), the lesser of (i) the aggregate of the liquidation amount and all accumulated and

unpaid distributions on the Trust XIII HITS to the date of payment to the extent Trust XIII has

funds available to make the payment, and (ii) the amount of assets of Trust XIII remaining

available for distribution to holders of Trust XIII HITS upon liquidation of Trust XIII. The Trust

XIII Guarantee is a guarantee of payment and not of collection.

The Trust XIII Guarantee may be amended only with the prior approval of the holders of

not less than a majority in aggregate liquidation amount of the outstanding Trust XIII HITS. No

vote will be required, however, for any changes that do not adversely affect the rights of the

holders of the Trust XIII HITS in any material respect.

The Company’s obligations under the Trust XIII Guarantee are unsecured, are

subordinated to and junior in right of payment to all of the Company’s secured and senior and

subordinated indebtedness, and rank on a parity with all other similar guarantees issued by the

Company.

The Trust XIII HITS and the Trust XIII Guarantee do not limit the Company’s ability or

the ability of its subsidiaries to incur additional indebtedness, including indebtedness that ranks

senior to or equally with the Trust XIII Guarantee.

The Trust XIII Guarantee, when taken together with the Company’s obligations under the

Trust XIII Declaration of Trust, including the obligations to pay costs, expenses, debts and

liabilities of Trust XIII, other than liabilities with respect to the Trust XIII securities, has the

effect of providing a full and unconditional guarantee on an unsecured and junior subordinated

basis of amounts due on the Trust XIII HITS.

The HITS Guarantee Agreement dated as of February 16, 2007 between the Company, as

guarantor, and The Bank of New York Mellon (formerly known as The Bank of New York), as

guarantee trustee, related to the Trust XIII HITS, is included as an exhibit to the Company’s

Current Report on Form 8-K filed with the SEC on February 16, 2007.

Liquidation Distribution upon Dissolution

The Company can at any time dissolve and liquidate Trust XIII. Pursuant to the Trust

XIII Declaration of Trust, Trust XIII shall dissolve on the first to occur of:

• upon the Company’s bankruptcy, dissolution or liquidation;

• upon the filing of a certificate of dissolution or its equivalent with respect to the

Company;

• upon the consent of the holders of at least a majority in aggregate liquidation amount of

Trust XIII securities voting together as a single class to dissolve Trust XIII;

• upon the revocation of the Company’s charter and the expiration of 90 days after the date

of revocation without a reinstatement thereof;

• at the Company’s election at any time pursuant to which Trust XIII has been dissolved in

accordance with the terms of the Trust XIII securities and upon the distribution of the

assets of Trust XIII corresponding to its securities to the holders of Trust XIII securities;

• upon the entry of a decree of judicial dissolution of the holder of the Trust XIII Common

Securities, the Company or Trust XIII; or

• upon the redemption of all of the Trust XIII HITS.

Except as set forth in the next paragraph, if an early dissolution occurs as a result of

certain events of the Company’s bankruptcy, dissolution or liquidation, or if an early dissolution

occurs as a result of the entry of an order for the dissolution of Trust XIII by a court of

competent jurisdiction, the property trustee and the regular trustees will liquidate Trust XIII as

expeditiously as they determine possible by distributing, after satisfaction of liabilities to

creditors of Trust XIII as provided by applicable law, to each holder of Trust XIII HITS a like

amount of corresponding assets as of the date of such distribution. Trust XIII shall give notice of

liquidation to each holder of Trust XIII HITS at least 15 days and not more than 60 days before

the date of liquidation.

If, whether because of an order for dissolution entered by a court of competent

jurisdiction or otherwise, the property trustee determines that distribution of the corresponding

assets in the manner provided above is not practical, or if the early dissolution occurs as a result

of the redemption of all the Trust XIII HITS, the property trustee and the regular trustees shall

liquidate the property of Trust XIII and wind up its affairs in such manner as they determine. In

that case, upon the winding-up of Trust XIII, except with respect to an early dissolution that

occurs as a result of the redemption of all the Trust XIII HITS, the holders of the Trust XIII

securities will be entitled to receive out of the assets of Trust XIII available for distribution to

holders and after satisfaction of liabilities to creditors of Trust XIII as provided by applicable

law, an amount equal to the liquidation amount per Trust XIII security plus accumulated and

unpaid distributions to the date of payment. If, upon any such winding-up, Trust XIII has

insufficient assets available to pay in full such aggregate liquidation distribution, then the

amounts payable directly by Trust XIII on the Trust XIII securities shall be paid on a pro rata

basis, except as set forth below under “— Ranking of Trust XIII Common Securities.”

The term “like amount” as used above means, with respect to a distribution of Series F

Preferred Stock to holders of Trust XIII securities in connection with a dissolution or liquidation

of Trust XIII therefor, Series F Preferred Stock having a liquidation preference equal to the

liquidation amount of the Trust XIII securities of the holder to whom such Series F Preferred

Stock would be distributed.

Distribution of Trust Assets

Upon liquidation of Trust XIII other than as a result of an early dissolution upon the

redemption of all the Trust XIII HITS and after satisfaction of the liabilities of creditors of Trust

XIII as provided by applicable law, the assets of Trust XIII will be distributed to the holders of

the Trust XIII securities in exchange therefor.

After the liquidation date fixed for any distribution of assets of Trust XIII:

• the Trust XIII HITS will no longer be deemed to be outstanding;

• if the assets to be distributed are shares of Series F Preferred Stock, DTC or its nominee,

as the record holder of the Trust XIII HITS, will receive a registered global certificate or

certificates representing the shares of Series F Preferred Stock to be delivered upon such

distribution;

• any certificates representing the Trust XIII HITS not held by DTC or its nominee or

surrendered to the exchange agent will be deemed to represent shares of Series F

Preferred Stock having a liquidation preference equal to the Trust XIII HITS until such

certificates are so surrendered for transfer and reissuance; and

• all rights of the holders of the Trust XIII HITS will cease, except the right to receive

Series F Preferred Stock upon such surrender.

As each Trust XIII HITS corresponds to 1/100th of a share of Series F Preferred Stock,

holders of Trust XIII HITS may receive fractional shares of Series F Preferred Stock or

depositary shares representing the Series F Preferred Stock upon this distribution. Since holders

of the Series F Preferred Stock are not entitled to vote for the election of directors in the event

the Company does not pay full dividends for six quarterly dividend periods, the Series F

Preferred Stock (or depositary shares representing the Series F Preferred Stock) would not

qualify for listing on the NYSE under its current rules.

Ranking of Trust XIII Common Securities

If on any distribution date Trust XIII does not have funds available from payments of

dividends on the Series F Preferred Stock to make full distributions on the Trust XIII HITS and

the Trust XIII Common Securities, then, if the deficiency in funds results from the Company’s

failure to pay a full dividend on shares of Series F Preferred Stock on a dividend payment date,

then the available funds from dividends on the Series F Preferred Stock will be applied first to

make distributions then due on the Trust XIII HITS on a pro rata basis on such distribution date

up to the amount of such distributions corresponding to dividends on the Series F Preferred Stock

(or, if less, the amount of the corresponding distributions that would have been made on the

Trust XIII HITS had the Company paid a full dividend on the Series F Preferred Stock) before

any such amount is applied to make a distribution on Trust XIII Common Securities on such

distribution date.

If, on any date where Trust XIII HITS and Trust XIII Common Securities must be

redeemed because the Company is redeeming Series F Preferred Stock, Trust XIII does not have

funds available from the Company’s redemption of shares of Series F Preferred Stock to pay the

full redemption price then due on all of the outstanding Trust XIII HITS and Trust XIII Common

Securities to be redeemed, then (1) the available funds shall be applied first to pay the

redemption price on the Trust XIII HITS to be redeemed on such redemption date and (2) Trust

XIII Common Securities shall be redeemed only to the extent funds are available for such

purpose after the payment of the full redemption price on the Trust XIII HITS to be redeemed.

If an early dissolution event occurs in respect of Trust XIII, no liquidation distributions

will be made on the Trust XIII Common Securities until full liquidation distributions have been

made on the Trust XIII HITS.

In the case of any event of default under the Trust XIII Declaration of Trust resulting

from the Company’s failure to comply in any material respect with any of its obligations as

issuer of the Series F Preferred Stock, including obligations set forth in the Company’s Restated

Certificate of Incorporation, of or arising under applicable law, the Company, as holder of the

Trust XIII Common Securities, will be deemed to have waived any right to act with respect to

any such event of default under the Trust XIII Declaration of Trust until the effect of all such

events of default with respect to the Trust XIII HITS have been cured, waived or otherwise

eliminated. Until all events of default under the Trust XIII Declaration of Trust have been so

cured, waived or otherwise eliminated, the property trustee shall act solely on behalf of the

holders of the Trust XIII HITS and not on the Company’s behalf, and only the holders of the

Trust XIII HITS will have the right to direct the property trustee to act on their behalf.

Events of Default; Notice

Any one of the following events constitutes an event of default under the Trust XIII

Declaration of Trust (a “Trust XIII Event of Default”) regardless of the reason for such event

of default and whether it shall be voluntary or involuntary or be effected by operation of law or

pursuant to any judgment, decree or order of any court or any order, rule or regulation of any

administrative or governmental body:

• the Company’s failure to comply in any material respect with its obligations as

issuer of the Series F Preferred Stock, under the Restated Certificate of

Incorporation, or arising under applicable law;

• the default by Trust XIII in the payment of any distribution on any trust security

of Trust XIII when such becomes due and payable, and continuation of such

default for a period of 30 days;

• the default by Trust XIII in the payment of any redemption price of any trust

security of Trust XIII when such becomes due and payable;

• the failure to perform or the breach, in any material respect, of any other covenant

or warranty of the trustees in the Trust XIII Declaration of Trust and the

continuation of such default or breach for 90 days after the Company and the

trustees have received written notice of the failure to perform or breach in the

manner specified in such Trust XIII Declaration of Trust; or

• the occurrence of certain events of bankruptcy or insolvency with respect to the

property trustee and the Company’s failure to appoint a successor property trustee

within 90 days.

Within 30 days after any Trust XIII Event of Default actually known to the property

trustee occurs, the property trustee will transmit notice of such Trust XIII Event of Default to the

holders of the affected class of Trust XIII securities and to the regular trustees, unless such Trust

XIII Event of Default shall have been cured or waived. The Company, as sponsor, and the

regular trustees are required to file annually with the property trustee a certificate as to whether

or not the Company or the regular are in compliance with all the conditions and covenants

applicable to the Company and to them under the Trust XIII Declaration of Trust.

Removal of Trustees

The property trustee and/or the Delaware trustee may be removed at any time by the

holder of the Trust XIII Common Securities. The property trustee and the Delaware trustee may

be removed by the holders of a majority in liquidation amount of the outstanding Trust XIII

HITS for cause. In no event will the holders of the Trust XIII HITS have the right to vote to

appoint, remove or replace the regular trustees, which voting rights are vested exclusively in the

Company, as the holder of the Trust XIII Common Securities. No resignation or removal of a

trustee and no appointment of a successor trustee shall be effective until the acceptance of

appointment by the successor trustee in accordance with the provisions of the Trust XIII

Declaration of Trust.

Co-Trustees and Separate Property Trustee

At any time or from time to time, for the purpose of meeting the legal requirements of the

Trust Indenture Act or of any jurisdiction in which any part of Trust XIII property may at the

time be located, the Company, as the holder of the Trust XIII Common Securities, and the

regular trustees shall have the power to appoint one or more persons either to act as a co-trustee,

jointly with the property trustee, of all or any part of such trust property, or to act as separate

trustee of any such property, in either case with such powers as may be provided in the

instrument of appointment, and to vest in such person or persons in such capacity any property,

title, right or power deemed necessary or desirable, subject to the provisions of such Trust XIII

Declaration of Trust.

Mergers, Consolidations, Amalgamations or Replacements of Trust XIII

Trust XIII may not consolidate, amalgamate, or merge with or into, or be replaced by, or

convey, transfer, or lease its properties and assets substantially as an entirety, to the Company or

any other person, except as described below. Trust XIII may, with the consent of the regular

trustees but without the consent of the holders of the applicable Trust XIII securities, the

property trustee, or the Delaware trustee, consolidate, amalgamate, or merge with or into, or be

replaced by, a trust organized under the laws of any state if:

• the successor entity, if not Trust XIII, either:

• expressly assumes all of the obligations of Trust XIII with respect to the

Trust XIII securities, or

• substitutes for the Trust XIII securities other securities having

substantially the same terms as the Trust XIII securities, so long as the

successor securities rank the same as the Trust XIII securities in priority

with respect to distributions and payments upon liquidation, redemption,

and otherwise;

• the Trust XIII HITS or any successor securities are listed, or any successor

securities will be listed upon notification of issuance, on any national or

international securities exchange or with another organization, if any, on which

the Trust XIII HITS are then listed or quoted;

• the merger, consolidation, amalgamation, or replacement does not cause the Trust

XIII HITS, including any successor securities, to be downgraded by any

nationally recognized statistical rating organization;

• the merger, consolidation, amalgamation, or replacement does not adversely

affect the rights, preferences, and privileges of the holders of Trust XIII securities,

including any successor securities, in any material respect, other than in

connection with any dilution of the holders’ interest in the new entity;

• the successor entity has a purpose identical to that of Trust XIII;

• prior to the merger, consolidation, amalgamation, or replacement, the Company

has received an opinion of counsel to Trust XIII to the effect that:

• the merger, consolidation, amalgamation, or replacement does not

adversely affect the rights, preferences, and privileges of the holders of

Trust XIII securities, including any successor securities, in any material

respect, other than in connection with any dilution of the holders’ interest

in the new entity;

• following the merger, consolidation, amalgamation, or replacement,

neither Trust XIII nor the successor entity will be required to register as an

investment company under the Investment Company Act of 1940, as

amended (the “Investment Company Act”); and

• following the merger, consolidation, amalgamation, or replacement, Trust

XIII or the successor entity will continue to be classified as a grantor trust

for U.S. federal income tax purposes; and

• the Company guarantees the obligations of the successor entity under the

successor securities at least to the extent provided by the guarantees of the Trust

XIII securities.

Trust XIII may not, except with the consent of holders of 100% in liquidation amount of

its Trust XIII securities, consolidate, amalgamate, merge with or into, or be replaced by any other

entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if

that consolidation, merger, amalgamation, or replacement would cause Trust XIII or the

successor entity to be classified as other than a grantor trust for U.S. federal income tax purposes.

Voting Rights; Amendment of the Trust XIII Declaration of Trust

Except as provided herein and under “—Company Guarantee of Trust XIII HITS” above

and as otherwise required by law and the Trust XIII Declaration of Trust, the holders of the Trust

XIII HITS will have no voting rights or control over the administration, operation or

management of Trust XIII or the obligations of the parties to the Trust XIII Declaration of Trust,

including in respect of Series F Preferred Stock beneficially owned by Trust XIII. Under the

Trust XIII Declaration of Trust, however, the property trustee will be required to obtain their

consent before exercising some of its rights in respect of these securities.

Trust XIII Declaration of Trust. The Company and the regular trustees may amend the

Trust XIII Declaration of Trust without the consent of the holders of the Trust XIII HITS, the

property trustee or the Delaware trustee, unless in the case of the first two bullets below such

amendment will materially and adversely affect the interests of any holder of Trust XIII HITS or

the property trustee or the Delaware trustee, to:

• cure any ambiguity, correct or supplement any provisions in the Trust XIII

Declaration of Trust that may be inconsistent with any other provision, or to make

any other provisions with respect to matters or questions arising under such Trust

XIII Declaration of Trust, which may not be inconsistent with the other provisions

of the Trust XIII Declaration of Trust;

• modify, eliminate or add to any provisions of the Trust XIII Declaration of Trust

to such extent as shall be necessary to ensure that Trust XIII will be classified for

U.S. federal income tax purposes as one or more grantor trusts and/or agency

arrangements and not as an association or a publicly traded partnership taxable as

a corporation at all times that any Trust XIII securities are outstanding, to ensure

that Trust XIII will not be required to register as an “investment company” under

the Investment Company Act or to ensure the treatment of Trust XIII HITS as

Tier 1 regulatory capital under prevailing Federal Reserve rules and regulations;

• provide that certificates for Trust XIII HITS may be executed by a regular trustee

by facsimile signature instead of manual signature, in which case such

amendment(s) shall also provide for the appointment by the Company of an

authentication agent and certain related provisions;

• require that holders that are not U.S. persons for U.S. federal income tax purposes

irrevocably appoint a U.S. person to exercise any voting rights to ensure that Trust

XIII will not be treated as a foreign trust for U.S. federal income tax purposes; or

• conform the terms of the Trust XIII Declaration of Trust to the description of the

Trust XIII Declaration of Trust, the Trust XIII HITS and the Trust XIII Common

Securities in the prospectus supplement relating to the initial offering of the Trust

XIII HITS, in the manner provided in the Trust XIII Declaration of Trust.

Any such amendment shall become effective when notice thereof is given to the property trustee,

the Delaware Trustee and the holders of the Trust XIII HITS.

The Company and the regular trustees may generally amend the Trust XIII Declaration of

Trust with:

• the consent of holders representing not less than a majority, based upon

liquidation amounts, of each outstanding class of Trust XIII HITS affected by the

amendments; and

• receipt by the trustees of Trust XIII of an opinion of counsel to the effect that such

amendment or the exercise of any power granted to the trustees of Trust XIII or

the regular trustees in accordance with such amendment will not affect Trust

XIII’s status as one or more grantor trusts and/or agency arrangements for U.S.

federal income tax purposes or affect Trust XIII’s exemption from status as an

“investment company” under the Investment Company Act.

However, without the consent of each affected holder of Trust securities, the Trust XIII

Declaration of Trust may not be amended to:

• change the amount or timing, or otherwise adversely affect the amount, of any

distribution required to be made in respect of Trust XIII securities as of a

specified date; or

• restrict the right of a holder of Trust XIII securities to institute a suit for the

enforcement of any such payment on or after such date.

Series F Preferred Stock. So long as the Series F Preferred Stock is held by the property

trustee on behalf of Trust XIII, the trustees of Trust XIII will not waive any default in respect of

the Series F Preferred Stock without obtaining the prior approval of the holders of at least a

majority in liquidation amount of the Trust XIII HITS then outstanding. The trustees of Trust

XIII also shall not consent to any amendment to Trust XIII’s or the Company’s governing

documents that would change the dates on which dividends are payable or the amount of such

dividends, without the prior written consent of each holder of Trust XIII HITS. In addition to

obtaining the foregoing approvals from holders, the trustees of Trust XIII shall obtain, at the

Company’s expense, an opinion of counsel to the effect that such action shall not cause Trust

XIII to be taxable as a corporation or classified as a partnership for U.S. federal income tax

purposes.

General. Any required approval of holders of Trust XIII HITS may be given at a meeting

of holders of such class of Trust XIII HITS convened for such purpose or pursuant to written

consent. The property trustee will cause a notice of any meeting at which holders of Trust XIII

HITS are entitled to vote, or of any matter upon which action by written consent of such holders

is to be taken, to be given to each record holder of such Trust XIII HITS in the manner set forth

in the Trust XIII Declaration of Trust.

No vote or consent of the holders of Trust XIII HITS will be required for Trust XIII to

redeem and cancel the Trust XIII HITS in accordance with the Trust XIII Declaration of Trust.

Notwithstanding that holders of the Trust XIII HITS are entitled to vote or consent under

any of the circumstances described above, any of the Trust XIII HITS that are owned by the

Company or its affiliates or the trustees or any of their affiliates shall, for purposes of such vote

or consent, be treated as if they were not outstanding.

Payment and Paying Agent

Payments on the Trust XIII HITS shall be made to DTC by the paying agent, which shall

credit the relevant accounts on the applicable distribution dates. If any Trust XIII HITS are not

held by DTC, the paying agent shall make such payments by check mailed to the address of the

holder as such address shall appear on the register.

The “paying agent” is The Bank of New York Mellon Trust Company, N.A. (formerly

known as The Bank of New York Trust Company, N.A.) and any co-paying agent chosen by the

property trustee and acceptable to the Company and to the regular trustees. The paying agent

shall be permitted to resign as paying agent upon 30 days written notice to the regular trustees

and to the property trustee. In the event that The Bank of New York Mellon Trust Company,

N.A. shall no longer be the paying agent, the property trustee will appoint a successor to act as

paying agent, which will be a bank or trust company acceptable to the regular trustees and to the

Company.

Registrar and Transfer Agent

The Bank of New York Mellon Trust Company, N.A. acts as registrar and transfer agent

for the Trust XIII HITS.

Registration of transfers of Trust XIII HITS will be effected without charge by or on

behalf of Trust XIII but after payment of any tax or other governmental charges that may be

imposed in connection with any transfer or exchange. Neither Trust XIII nor the transfer agent

shall be required to register the transfer of or exchange any trust security during a period

beginning at the opening of business 15 days before the day of selection for redemption of Trust

XIII securities and ending at the close of business on the day of mailing of notice of redemption

or to transfer or exchange any trust security so selected for redemption in whole or in part,

except, in the case of any trust security to be redeemed in part, any portion thereof not to be

redeemed.

Any Trust XIII HITS can be exchanged for other Trust XIII HITS so long as such other

Trust XIII HITS are denominated in authorized denominations and have the same aggregate

liquidation amount and same terms as the Trust XIII HITS that were surrendered for exchange.

The Trust XIII HITS may be presented for registration of transfer, duly endorsed or accompanied

by a satisfactory written instrument of transfer, at the office or agency maintained by the

Company for that purpose in a place of payment. There will be no service charge for any

registration of transfer or exchange of the Trust XIII HITS, but the Company may require

holders to pay any tax or other governmental charge payable in connection with a transfer or

exchange of the Trust XIII HITS. The Company may at any time rescind the designation or

approve a change in the location of any office or agency, in addition to the security registrar,

designated by the Company where holders can surrender the Trust XIII HITS for registration of

transfer or exchange. However, Trust XIII will be required to maintain an office or agency in

each place of payment for the Trust XIII HITS.

Information Concerning the Property Trustee

Other than during the occurrence and continuance of a Trust XIII Event of Default, the

property trustee undertakes to perform only the duties that are specifically set forth in the Trust

XIII Declaration of Trust. After a Trust XIII Event of Default, the property trustee must exercise

the same degree of care and skill as a prudent individual would exercise or use in the conduct of

his or her own affairs. Subject to this provision, the property trustee is under no obligation to

exercise any of the powers vested in it by the Trust XIII Declaration of Trust at the request of

any holder of Trust XIII HITS unless it is offered indemnity satisfactory to it by such holder

against the costs, expenses and liabilities that might be incurred. However, the holders of the

Trust XIII HITS will not be required to offer any indemnity if those holders, by exercising their

voting rights, direct the property trustee to take any action following an event of default under

the Trust XIII Declaration of Trust. If no Trust XIII Event of Default has occurred and is

continuing and the property trustee is required to decide between alternative courses of action,

construe ambiguous provisions in the Trust XIII Declaration of Trust or is unsure of the

application of any provision of the Trust XIII Declaration of Trust, and the matter is not one

upon which holders of Trust XIII HITS are entitled under the Trust XIII Declaration of Trust to

vote, then the property trustee will take any action that the Company directs. If the Company

does not provide direction, the property trustee may take any action that it deems advisable and

in the interests of the holders of the Trust XIII securities and will have no liability except for its

own bad faith, negligence or willful misconduct.

The Company and certain of its affiliates have from time to time maintained deposit

accounts and conducted other banking transactions with the property trustee and its affiliated

entities in the ordinary course of business. The Company expects to continue those business

transactions. The property trustee or its affiliates also serve as trustee for a number of series of

the Company’s outstanding indebtedness under other indentures.

Trust Expenses

Pursuant to the Trust XIII Declaration of Trust, the Company, as sponsor, agrees to pay:

• all debts and other obligations of Trust XIII (other than with respect to the Trust XIII

HITS);

• all costs and expenses of Trust XIII, including costs and expenses relating to the

organization of Trust XIII, the fees and expenses of the trustees and the cost and expenses

relating to the operation of Trust XIII; and

• any and all taxes and costs and expenses with respect thereto, other than U.S. withholding

taxes, to which Trust XIII might become subject.

Miscellaneous

The regular trustees are authorized and directed to conduct the affairs of and to operate

Trust XIII in such a way that it will not be required to register as an “investment company” under

the Investment Company Act or characterized as other than one or more grantor trusts and/or

agency arrangements for U.S. federal income tax purposes. In this regard, the Company, as

sponsor of Trust XIII, and the regular trustees are authorized to take any action, not inconsistent

with applicable law, the certificate of trust of Trust XIII or the Trust XIII Declaration of Trust,

that the Company and the regular trustees determine to be necessary or desirable to achieve such

end, as long as such action does not materially and adversely affect the interests of the holders of

the Trust XIII HITS.

Holders of the Trust XIII HITS have no preemptive or similar rights. The Trust XIII

HITS are not convertible into or exchangeable for the Company’s Common Stock or any series

of the Company’s preferred stock (including Series F Preferred Stock).

DESCRIPTION OF 5.63% FIXED TO FLOATING RATE PREFERRED HYBRID

INCOME TERM SECURITIES OF BAC CAPITAL TRUST XIV (AND THE

GUARANTEE OF THE REGISTRANT RELATED THERETO)

This section describes the 5.63% Fixed to Floating Rate Preferred Hybrid Income Term

Securities of BAC Capital Trust XIV (the “Trust XIV HITS”) and the Company’s guarantee

related thereto. The Trust XIV HITS are listed on the NYSE under the symbol “BAC/PG”.

General

The Trust XIV HITS are a class of preferred beneficial interests in BAC Capital Trust

XIV, a Delaware statutory trust (“Trust XIV”), and are issued pursuant to the Amended and

Restated Declaration of Trust of BAC Capital Trust XIV (the “Trust XIV Declaration of

Trust”) dated as of February 16, 2007 among the Company, as sponsor, The Bank of New York

Mellon (formerly known as The Bank of New York), as property trustee, BNY Mellon Trust of

Delaware (formerly known as The Bank of New York (Delaware)), as Delaware Trustee, the

regular trustees named therein and the holders of the trust securities. The terms of the Trust XIV

HITS include those stated in the Trust XIV Declaration of Trust, any amendments thereto, and

those made a part of the Trust XIV Declaration of Trust by the Trust Indenture Act and the

Delaware Statutory Trust Act. The Trust XIV Declaration of Trust is included as an exhibit to

the Company’s Current Report on Form 8-K filed with the SEC on February 16, 2007. As of

December 31, 2023, 492,537 Trust XIV HITS (having an aggregate liquidation amount of

approximately $492.5 million) were outstanding.

The common securities of Trust XIV (“Trust XIV Common Securities”) are held

directly or indirectly by the Company. The Trust XIV Common Securities rank on a parity, and

payments upon redemption, liquidation or otherwise will be made on a proportionate basis, with

the Trust XIV HITS, except as set forth below in “—Ranking of Trust XIV Common Securities”.

The Trust XIV Declaration of Trust does not permit Trust XIV to issue any securities other than

the Trust XIV Common Securities and the Trust XIV HITS or to incur any indebtedness.

The assets of Trust XIV consist of shares of the Company’s Adjustable Rate Non-

Cumulative Preferred Stock, Series G (the “Series G Preferred Stock”), which Trust XIV owns

for the benefit of the holders of its Trust XIV HITS and Trust XIV Common Securities (together,

the “Trust XIV securities”). Each Trust XIV HITS has a liquidation amount of $1,000 and

represents a beneficial interest in Trust XIV that corresponds to 1/100

of a share of Series G

Preferred Stock. Because Trust XIV is a pass-through vehicle, Trust XIV will distribute to

holders of Trust XIV securities the dividends that it receives on the Series G Preferred Stock.

For a description of the terms of the Series G Preferred Stock, see “Description of Preferred

Stock – Series G Preferred Stock” above.

Trust XIV’s business and affairs are conducted by its trustees, each appointed by the

Company as sponsor of Trust XIV.

The Trust XIV HITS are issued in registered book-entry only form and are held in the

name of DTC or its nominee.

Distributions

Trust XIV must make distributions on the Trust XIV HITS on relevant distribution dates

to the extent that it has funds available therefor. The distribution dates for the Trust XIV HITS

are March 15, June 15, September 15 and December 15 of each year. A distribution period is

each period beginning on a distribution date and continuing to, but not including, the next

succeeding distribution date. When a distribution date is not a business day (as defined in the

Trust XIV Declaration of Trust), Trust XIV will make the distribution on the next business day

without interest. Distributions are calculated on the basis of a 360-day year and the number of

days actually elapsed in a distribution period.

Holders of Trust XIV HITS will be entitled to receive distributions corresponding to

dividends on the Series G Preferred Stock. These non-cumulative cash dividends will be payable

in arrears if, as and when declared by the Board (or a committee of the Board) on the quarterly

dividend payment dates, which each March 15, June 15, September 15 and December 15 (or if

such day is not a business day, the next business day). For additional information about

dividends on the Series G Preferred Stock, see “Description of Preferred Stock – Series G

Preferred Stock” above.

Trust XIV will make distributions on the Trust XIV HITS only to the extent it has

received dividends on the Series G Preferred Stock.

Distributions on the Trust XIV HITS will be payable to the holders as they appear in the

security register of Trust XIV on the relevant record dates. The record date will be the last day

of the month immediately preceding the month in which the relevant distribution date falls.

Mandatory Redemption of Trust XIV HITS upon Redemption of Series G Preferred Stock

The Trust XIV HITS have no stated maturity but must be redeemed on the date the

Company redeems the Series G Preferred Stock, and the property trustee or paying agent will

apply the proceeds from such repayment or redemption to redeem a like amount, as defined

below, of the Trust XIV HITS. The Series G Preferred Stock is perpetual but the Company

generally may redeem it at any time. The redemption price per Trust XIV HITS will equal the

liquidation amount per Trust XIV HITS plus accumulated and unpaid distributions to, but

excluding, the redemption date.

If less than all of the shares of Series G Preferred Stock held by Trust XIV are to be

redeemed on a redemption date, then the proceeds from such redemption will be allocated pro

rata to the redemption of the Trust XIV HITS and the Trust XIV Common Securities, except as

set forth below under “— Ranking of Trust XIV Common Securities.”

The term “like amount” as used above means Trust XIV HITS having a liquidation

amount equal to that portion of the liquidation amount of the Series G Preferred Stock to be

contemporaneously redeemed, the proceeds of which will be used to pay the redemption price of

such Trust XIV HITS.

Redemption Procedures. Notice of any redemption will be mailed at least 15 days but not

more than 60 days before the redemption date to the registered address of each holder of Trust

XIV HITS to be redeemed.

If (1) Trust XIV gives an irrevocable notice of redemption of Trust XIV HITS for cash

and (2) the Company has paid to the property trustee a sufficient amount of cash in connection

with the related redemption of the Series G Preferred Stock, then on the redemption date, the

property trustee will irrevocably deposit with DTC funds sufficient to pay the redemption price

for the Trust XIV HITS being redeemed. Trust XIV will also give DTC irrevocable instructions

and authority to pay the redemption amount in immediately available funds to the beneficial

owners of the Trust XIV HITS. Distributions to be paid on or before the redemption date for any

Trust XIV HITS called for redemption will be payable to the holders as of the record dates for

the related dates of distribution. If the Trust XIV HITS called for redemption are no longer in

book-entry form, the property trustee, to the extent funds are available, will irrevocably deposit

with the paying agent for the Trust XIV HITS funds sufficient to pay the applicable redemption

price and will give such paying agent irrevocable instructions and authority to pay the

redemption price to the holders thereof upon surrender of their certificates evidencing the Trust

XIV HITS.

If notice of redemption shall have been given and funds deposited as required, then upon

the date of such deposit:

• all rights of the holders of such Trust XIV HITS called for redemption will cease,

except the right of the holders of such Trust XIV HITS to receive the redemption

price and any distribution payable in respect of the Trust XIV HITS on or prior to

the redemption date, but without interest on such redemption price; and

• the Trust XIV HITS called for redemption will cease to be outstanding.

If any redemption date is not a business day, then the redemption amount will be payable

on the next business day (and without any interest or other payment in respect of any such

delay). However, if payment on the next business day causes payment of the redemption amount

to be in the next calendar month, then payment will be on the preceding business day.

If payment of the redemption amount for any shares of Series G Preferred Stock called

for redemption is improperly withheld or refused and accordingly the redemption amount of the

Trust XIV HITS is not paid either by Trust XIV or by the Company under the Trust XIV

Guarantee (as defined below), then dividends on the Series G Preferred Stock will continue to

accrue and distributions on such Trust XIV HITS called for redemption will continue to

accumulate at the applicable rate then borne by such Trust XIV HITS from the original

redemption date scheduled to the actual date of payment. In this case, the actual payment date

will be considered the redemption date for purposes of calculating the redemption amount.

If less than all of the outstanding shares of Series G Preferred Stock are to be redeemed

on a redemption date, then the aggregate liquidation amount of Trust XIV HITS and Trust XIV

Common Securities to be redeemed shall be allocated pro rata to the Trust XIV HITS and Trust

XIV Common Securities based upon the relative liquidation amounts of such classes, except as

set forth below under “— Ranking of Trust XIV Common Securities.” The property trustee will

select the particular Trust XIV HITS to be redeemed on a pro rata basis not more than 60 days

before the redemption date from the outstanding Trust XIV HITS not previously called for

redemption by any method the property trustee deems fair and appropriate, or, if the Trust XIV

HITS are in book-entry only form, in accordance with the procedures of DTC. The property

trustee shall promptly notify the Transfer Agent in writing of the Trust XIV HITS selected for

redemption and, in the case of any Trust XIV HITS selected for redemption in part, the

liquidation amount to be redeemed.

For all purposes of the Trust XIV Declaration of Trust, unless the context otherwise

requires, all provisions relating to the redemption of Trust XIV HITS shall relate, in the case of

any Trust XIV HITS redeemed or to be redeemed only in part, to the portion of the aggregate

liquidation amount of Trust XIV HITS that has been or is to be redeemed. If less than all of the

Trust XIV HITS are redeemed, the Trust XIV HITS held through the facilities of DTC will be

redeemed pro rata in accordance with DTC’s internal procedures.

The holders of the Trust XIV HITS do not have any optional redemption rights.

Company Guarantee of Trust XIV HITS

The Company has irrevocably guaranteed (the “Trust XIV Guarantee”), on a junior

subordinated basis, the payment in full of any accumulated and unpaid distributions required to

the paid on the Trust XIV HITS and the redemption price for any Trust XIV HITS called for

redemption, in each case to the extent Trust XIV has funds available to make the payment, as

well as upon a voluntary or involuntary dissolution, winding-up or liquidation of Trust XIV

(other than in connection with a distribution of corresponding assets to the holders of the Trust

XIV HITS), the lesser of (i) the aggregate of the liquidation amount and all accumulated and

unpaid distributions on the Trust XIV HITS to the date of payment to the extent Trust XIV has

funds available to make the payment, and (ii) the amount of assets of Trust XIV remaining

available for distribution to holders of Trust XIV HITS upon liquidation of Trust XIV. The Trust

XIV Guarantee is a guarantee of payment and not of collection.

The Trust XIV Guarantee may be amended only with the prior approval of the holders of

not less than a majority in aggregate liquidation amount of the outstanding Trust XIV HITS. No

vote will be required, however, for any changes that do not adversely affect the rights of the

holders of the Trust XIV HITS in any material respect.

The Company’s obligations under the Trust XIV Guarantee are unsecured, are

subordinated to and junior in right of payment to all of the Company’s secured and senior and

subordinated indebtedness, and rank on a parity with all other similar guarantees issued by the

Company.

The Trust XIV HITS and the Trust XIV Guarantee do not limit the Company’s ability or

the ability of its subsidiaries to incur additional indebtedness, including indebtedness that ranks

senior to or equally with the Trust XIV Guarantee.

The Trust XIV Guarantee, when taken together with the Company’s obligations under the

Trust XIV Declaration of Trust, including the obligations to pay costs, expenses, debts and

liabilities of Trust XIV, other than liabilities with respect to the Trust XIV securities, has the

effect of providing a full and unconditional guarantee on an unsecured and junior subordinated

basis of amounts due on the Trust XIV HITS.

The HITS Guarantee Agreement dated as of February 16, 2007 between the Company, as

guarantor, and The Bank of New York Mellon (formerly known as The Bank of New York), as

guarantee trustee, related to the Trust XIV HITS, is included as an exhibit to the Company’s

Current Report on Form 8-K filed with the SEC on February 16, 2007.

Liquidation Distribution upon Dissolution

The Company can at any time dissolve and liquidate Trust XIV. Pursuant to the Trust

XIV Declaration of Trust, Trust XIV shall dissolve on the first to occur of:

• upon the Company’s bankruptcy, dissolution or winding up;

• upon the filing of a certificate of dissolution or its equivalent with respect to the

Company;

• upon the consent of the holders of at least a majority in aggregate liquidation amount of

Trust XIV securities voting together as a single class to dissolve Trust XIV;

• upon the revocation of the Company’s charter and the expiration of 90 days after the date

of revocation without a reinstatement thereof;

• at the Company’s election at any time pursuant to which Trust XIV has been dissolved in

accordance with the terms of the Trust XIV securities and upon the distribution of the

assets of Trust XIV corresponding to its securities to the holders of Trust XIV securities;

• upon the entry of a decree of judicial dissolution of the holder of the Trust XIV Common

Securities, the Company or Trust XIV; or

• upon the redemption of all of the Trust XIV HITS.

Except as set forth in the next paragraph, if an early dissolution occurs as a result of

certain events of the Company’s bankruptcy, dissolution or liquidation, or if an early dissolution

occurs as a result of the entry of an order for the dissolution of Trust XIV by a court of

competent jurisdiction, the property trustee and the regular trustees will liquidate Trust XIV as

expeditiously as they determine possible by distributing, after satisfaction of liabilities to

creditors of Trust XIV as provided by applicable law, to each holder of Trust XIV HITS a like

amount of corresponding assets as of the date of such distribution. Trust XIV shall give notice of

liquidation to each holder of Trust XIV HITS at least 15 days and not more than 60 days before

the date of liquidation.

If, whether because of an order for dissolution entered by a court of competent

jurisdiction or otherwise, the property trustee determines that distribution of the corresponding

assets in the manner provided above is not practical, or if the early dissolution occurs as a result

of the redemption of all the Trust XIV HITS, the property trustee and the regular trustees shall

liquidate the property of Trust XIV and wind up its affairs in such manner as they determine. In

that case, upon the winding-up of Trust XIV, except with respect to an early dissolution that

occurs as a result of the redemption of all the Trust XIV HITS, the holders will be entitled to

receive out of the assets of Trust XIV available for distribution to holders of the Trust XIV

securities and after satisfaction of liabilities to creditors of Trust XIV as provided by applicable

law, an amount equal to the liquidation amount per Trust XIV security plus accumulated and

unpaid distributions to the date of payment. If, upon any such winding-up, Trust XIV has

insufficient assets available to pay in full such aggregate liquidation distribution, then the

amounts payable directly by Trust XIV on the Trust XIV securities shall be paid on a pro rata

basis, except as set forth below under “— Ranking of Trust XIV Common Securities.”

The term “like amount” as used above means, with respect to a distribution of Series G

Preferred Stock to holders of Trust XIV securities in connection with a dissolution or liquidation

of Trust XIV therefor, Series G Preferred Stock having a liquidation preference equal to the

liquidation amount of the Trust XIV securities of the holder to whom such Series G Preferred

Stock would be distributed.

Distribution of Trust Assets

Upon liquidation of Trust XIV other than as a result of an early dissolution upon the

redemption of all the Trust XIV HITS and after satisfaction of the liabilities of creditors of Trust

XIV as provided by applicable law, the assets of Trust XIV will be distributed to the holders of

the Trust XIV securities in exchange therefor.

After the liquidation date fixed for any distribution of assets of Trust XIV:

• the Trust XIV HITS will no longer be deemed to be outstanding;

• if the assets to be distributed are shares of Series G Preferred Stock, DTC or its nominee,

as the record holder of the Trust XIV HITS, will receive a registered global certificate or

certificates representing the shares of Series G Preferred Stock to be delivered upon such

distribution;

• any certificates representing the Trust XIV HITS not held by DTC or its nominee or

surrendered to the exchange agent will be deemed to represent shares of Series G

Preferred Stock having a liquidation preference equal to the Trust XIV HITS until such

certificates are so surrendered for transfer and reissuance; and

• all rights of the holders of the Trust XIV HITS will cease, except the right to receive

Series G Preferred Stock upon such surrender.

As each Trust XIV HITS corresponds to 1/100th of a share of Series G Preferred Stock,

holders of Trust XIV HITS may receive fractional shares of Series G Preferred Stock or

depositary shares representing the Series G Preferred Stock upon this distribution. Since holders

of the Series G Preferred Stock are not entitled to vote for the election of directors in the event

the Company does not pay full dividends for six quarterly dividend periods, the Series G

Preferred Stock (or depositary shares representing the Series G Preferred Stock) would not

qualify for listing on the NYSE under its current rules.

Ranking of Trust XIV Common Securities

If on any distribution date Trust XIV does not have funds available from payments of

dividends on the Series G Preferred Stock to make full distributions on the Trust XIV HITS and

the Trust XIV Common Securities, then, if the deficiency in funds results from the Company’s

failure to pay a full dividend on shares of Series G Preferred Stock on a dividend payment date,

then the available funds from dividends on the Series G Preferred Stock will be applied first to

make distributions then due on the Trust XIV HITS on a pro rata basis on such distribution date

up to the amount of such distributions corresponding to dividends on the Series G Preferred

Stock (or, if less, the amount of the corresponding distributions that would have been made on

the Trust XIV HITS had the Company paid a full dividend on the Series G Preferred Stock)

before any such amount is applied to make a distribution on Trust XIV Common Securities on

such distribution date.

If, on any date where Trust XIV HITS and Trust XIV Common Securities must be

redeemed because the Company is redeeming Series G Preferred Stock, Trust XIV does not have

funds available from the Company’s redemption of shares of Series G Preferred Stock to pay the

full redemption price then due on all of the outstanding Trust XIV HITS and Trust XIV Common

Securities to be redeemed, then (1) the available funds shall be applied first to pay the

redemption price on the Trust XIV HITS to be redeemed on such redemption date and (2) Trust

XIV Common Securities shall be redeemed only to the extent funds are available for such

purpose after the payment of the full redemption price on the Trust XIV HITS to be redeemed.

If an early dissolution event occurs in respect of Trust XIV, no liquidation distributions

will be made on the Trust XIV Common Securities until full liquidation distributions have been

made on the Trust XIV HITS.

In the case of any event of default under the Trust XIV Declaration of Trust resulting

from the Company’s failure to comply in any material respect with any of its obligations as

issuer of the Series G Preferred Stock, including obligations set forth in the Company’s Restated

Certificate of Incorporation of or arising under applicable law, the Company, as holder of the

Trust XIV Common Securities, will be deemed to have waived any right to act with respect to

any such event of default under the Trust XIV Declaration of Trust until the effect of all such

events of default with respect to the Trust XIV HITS have been cured, waived or otherwise

eliminated. Until all events of default under the Trust XIV Declaration of Trust have been so

cured, waived or otherwise eliminated, the property trustee shall act solely on behalf of the

holders of the Trust XIV HITS and not on the Company’s behalf, and only the holders of the

Trust XIV HITS will have the right to direct the property trustee to act on their behalf.

Events of Default; Notice

Any one of the following events constitutes an event of default under the Trust XIV

Declaration of Trust (a “Trust XIV Event of Default”) regardless of the reason for such event

of default and whether it shall be voluntary or involuntary or be effected by operation of law or

pursuant to any judgment, decree or order of any court or any order, rule or regulation of any

administrative or governmental body:

• the Company’s failure to comply in any material respect with its obligations as

issuer of the Series G Preferred Stock, under the Restated Certificate of

Incorporation, or arising under applicable law;

• the default by Trust XIV in the payment of any distribution on any trust security

of Trust XIV when such becomes due and payable, and continuation of such

default for a period of 30 days;

• the default by Trust XIV in the payment of any redemption price of any trust

security of Trust XIV when such becomes due and payable;

• the failure to perform or the breach, in any material respect, of any other covenant

or warranty of the trustees in the Trust XIV Declaration of Trust and the

continuation of such default or breach for 90 days after the Company and the

trustees have received written notice of the failure to perform or breach in the

manner specified in such Trust XIV Declaration of Trust; or

• the occurrence of certain events of bankruptcy or insolvency with respect to the

property trustee and the Company’s failure to appoint a successor property trustee

within 90 days.

Within 30 days after any Trust XIV Event of Default actually known to the property

trustee occurs, the property trustee will transmit notice of such Trust XIV Event of Default to the

holders of the affected class of Trust XIV securities and to the regular trustees, unless such Trust

XIV Event of Default shall have been cured or waived. The Company, as sponsor, and the

regular trustees are required to file annually with the property trustee a certificate as to whether

or not the Company or the regular trustees are in compliance with all the conditions and

covenants applicable to the Company and to them under the Trust XIV Declaration of Trust.

Removal of Trustees

The property trustee and/or the Delaware trustee may be removed at any time by the

holder of the Trust XIV Common Securities. The property trustee and the Delaware trustee may

be removed by the holders of a majority in liquidation amount of the outstanding Trust XIV

HITS for cause. In no event will the holders of the Trust XIV HITS have the right to vote to

appoint, remove or replace the regular trustees, which voting rights are vested exclusively in the

Company, as the holder of the Trust XIV Common Securities. No resignation or removal of a

trustee and no appointment of a successor trustee shall be effective until the acceptance of

appointment by the successor trustee in accordance with the provisions of the Trust XIV

Declaration of Trust.

Co-Trustees and Separate Property Trustee

At any time or from time to time, for the purpose of meeting the legal requirements of the

Trust Indenture Act or of any jurisdiction in which any part of Trust XIV property may at the

time be located, the Company, as the holder of the Trust XIV Common Securities, and the

regular trustees shall have the power to appoint one or more persons either to act as a co-trustee,

jointly with the property trustee, of all or any part of such trust property, or to act as separate

trustee of any such property, in either case with such powers as may be provided in the

instrument of appointment, and to vest in such person or persons in such capacity any property,

title, right or power deemed necessary or desirable, subject to the provisions of such Trust XIV

Declaration of Trust.

Mergers, Consolidations, Amalgamations or Replacements of Trust XIV

Trust XIV may not consolidate, amalgamate, or merge with or into, or be replaced by, or

convey, transfer, or lease its properties and assets substantially as an entirety, to the Company or

any other person, except as described below. Trust XIV may, with the consent of the regular

trustees but without the consent of the holders of the applicable Trust XIV securities, the

property trustee, or the Delaware trustee, consolidate, amalgamate, or merge with or into, or be

replaced by, a trust organized under the laws of any state if:

• the successor entity, if not Trust XIV, either:

• expressly assumes all of the obligations of Trust XIV with respect to the

Trust XIV securities, or

• substitutes for the Trust XIV securities other securities having

substantially the same terms as the Trust XIV securities, so long as the

successor securities rank the same as the Trust XIV securities in priority

with respect to distributions and payments upon liquidation, redemption,

and otherwise;

• the Trust XIV HITS or any successor securities are listed, or any successor

securities will be listed upon notification of issuance, on any national or

international securities exchange or with another organization, if any, on which

the Trust XIV HITS are then listed or quoted;

• the merger, consolidation, amalgamation, or replacement does not cause the Trust

XIV HITS, including any successor securities, to be downgraded by any

nationally recognized statistical rating organization;

• the merger, consolidation, amalgamation, or replacement does not adversely

affect the rights, preferences, and privileges of the holders of Trust XIV securities,

including any successor securities, in any material respect, other than in

connection with any dilution of the holders’ interest in the new entity;

• the successor entity has a purpose identical to that of Trust XIV;

• prior to the merger, consolidation, amalgamation, or replacement, the Company

has received an opinion of counsel to Trust XIV to the effect that:

• the merger, consolidation, amalgamation, or replacement does not

adversely affect the rights, preferences, and privileges of the holders of

Trust XIV securities, including any successor securities, in any material

respect, other than in connection with any dilution of the holders’ interest

in the new entity;

• following the merger, consolidation, amalgamation, or replacement,

neither Trust XIV nor the successor entity will be required to register as an

investment company under the Investment Company Act; and

• following the merger, consolidation, amalgamation, or replacement, Trust

XIV or the successor entity will continue to be classified as a grantor trust

for U.S. federal income tax purposes; and

• the Company guarantees the obligations of the successor entity under the

successor securities at least to the extent provided by the guarantees of the

Trust XIV securities.

Trust XIV may not, except with the consent of holders of 100% in liquidation amount of

its Trust XIV securities, consolidate, amalgamate, merge with or into, or be replaced by any

other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace

it if that consolidation, merger, amalgamation, or replacement would cause Trust XIV or the

successor entity to be classified as other than a grantor trust for U.S. federal income tax purposes.

Voting Rights; Amendment of the Trust XIV Declaration of Trust

Except as provided herein and under “—Company Guarantee of Trust XIV HITS” above

and as otherwise required by law and the Trust XIV Declaration of Trust, the holders of the Trust

XIV HITS will have no voting rights or control over the administration, operation or

management of Trust XIV or the obligations of the parties to the Trust XIV Declaration of Trust,

including in respect of Series G Preferred Stock beneficially owned by Trust XIV. Under the

Trust XIV Declaration of Trust, however, the property trustee will be required to obtain their

consent before exercising some of its rights in respect of these securities.

Trust XIV Declaration of Trust. The Company and the regular trustees may amend the

Trust XIV Declaration of Trust without the consent of the holders of the Trust XIV HITS, the

property trustee or the Delaware trustee, unless in the case of the first two bullets below such

amendment will materially and adversely affect the interests of any holder of Trust XIV HITS or

the property trustee or the Delaware trustee, to:

• cure any ambiguity, correct or supplement any provisions in the Trust XIV

Declaration of Trust that may be inconsistent with any other provision, or to make

any other provisions with respect to matters or questions arising under such Trust

XIV Declaration of Trust, which may not be inconsistent with the other

provisions of the Trust XIV Declaration of Trust;

• modify, eliminate or add to any provisions of the Trust XIV Declaration of Trust

to such extent as shall be necessary to ensure that Trust XIV will be classified for

U.S. federal income tax purposes as one or more grantor trusts and/or agency

arrangements and not as an association or a publicly traded partnership taxable as

a corporation at all times that any Trust XIV securities are outstanding, to ensure

that Trust XIV will not be required to register as an “investment company” under

the Investment Company Act or to ensure the treatment of Trust XIV HITS as

Tier 1 regulatory capital under prevailing Federal Reserve rules and regulations;

• provide that certificates for Trust XIV HITS may be executed by a regular trustee

by facsimile signature instead of manual signature, in which case such

amendment(s) shall also provide for the appointment by the Company of an

authentication agent and certain related provisions;

• require that holders that are not U.S. persons for U.S. federal income tax purposes

irrevocably appoint a U.S. person to exercise any voting rights to ensure that Trust

XIV will not be treated as a foreign trust for U.S. federal income tax purposes; or

• conform the terms of the Trust XIV Declaration of Trust to the description of the

Trust XIV Declaration of Trust, the Trust XIV HITS and the Trust XIV Common

Securities in the prospectus supplement relating to the initial offering of the Trust

XIV HITS, in the manner provided in the Trust XIV Declaration of Trust.

Any such amendment shall become effective when notice thereof is given to the property trustee,

the Delaware Trustee and the holders of the Trust XIV HITS.

The Company and the regular trustees may generally amend the Trust XIV Declaration of

Trust with:

• the consent of holders representing not less than a majority, based upon

liquidation amounts, of each outstanding class of Trust XIV HITS affected by the

amendments; and

• receipt by the trustees of Trust XIV of an opinion of counsel to the effect that

such amendment or the exercise of any power granted to the trustees of Trust XIV

or the regular trustees in accordance with such amendment will not affect Trust

XIV’s status as one or more grantor trusts and/or agency arrangements for U.S.

federal income tax purposes or affect Trust XIV’s exemption from status as an

“investment company” under the Investment Company Act.

However, without the consent of each affected holder of Trust XIV securities, the Trust

XIV Declaration of Trust may not be amended to:

• change the amount or timing, or otherwise adversely affect the amount, of any

distribution required to be made in respect of Trust XIV securities as of a

specified date; or

• restrict the right of a holder of Trust XIV securities to institute a suit for the

enforcement of any such payment on or after such date.

Series G Preferred Stock. So long as the Series G Preferred Stock is held by the property

trustee on behalf of Trust XIV, the trustees of Trust XIV will not waive any default in respect of

the Series G Preferred Stock without obtaining the prior approval of the holders of at least a

majority in liquidation amount of the Trust XIV HITS then outstanding. The trustees of Trust

XIV also shall not consent to any amendment to Trust XIV’s or the Company’s governing

documents that would change the dates on which dividends are payable or the amount of such

dividends, without the prior written consent of each holder of Trust XIV HITS. In addition to

obtaining the foregoing approvals from holders, the trustees of Trust XIV shall obtain, at the

Company’s expense, an opinion of counsel to the effect that such action shall not cause Trust

XIV to be taxable as a corporation or classified as a partnership for U.S. federal income tax

purposes.

General. Any required approval of holders of Trust XIV HITS may be given at a

meeting of holders of such class of Trust XIV HITS convened for such purpose or pursuant to

written consent. The property trustee will cause a notice of any meeting at which holders of Trust

XIV HITS are entitled to vote, or of any matter upon which action by written consent of such

holders is to be taken, to be given to each record holder of such Trust XIV HITS in the manner

set forth in the Trust XIV Declaration of Trust.

No vote or consent of the holders of Trust XIV HITS will be required for Trust XIV to

redeem and cancel the Trust XIV HITS in accordance with the Trust XIV Declaration of Trust.

Notwithstanding that holders of the Trust XIV HITS are entitled to vote or consent under

any of the circumstances described above, any of the Trust XIV HITS that are owned by the

Company or its affiliates or the trustees or any of their affiliates shall, for purposes of such vote

or consent, be treated as if they were not outstanding.

Payment and Paying Agent

Payments on the Trust XIV HITS shall be made to DTC by the paying agent, which shall

credit the relevant accounts on the applicable distribution dates. If any Trust XIV HITS are not

held by DTC, the paying agent shall make such payments by check mailed to the address of the

holder as such address shall appear on the register.

The “paying agent” is The Bank of New York Mellon Trust Company, N.A. (formerly

known as The Bank of New York Trust Company, N.A.) and any co-paying agent chosen by the

property trustee and acceptable to the Company and to the regular trustees. The paying agent

shall be permitted to resign as paying agent upon 30 days written notice to the regular trustees

and to the property trustee. In the event that The Bank of New York Trust Company, N.A. shall

no longer be the paying agent, the property trustee will appoint a successor to act as paying

agent, which will be a bank or trust company acceptable to the regular trustees and to the

Company.

Registrar and Transfer Agent

The Bank of New York Mellon Trust Company, N.A. acts registrar and transfer agent for

the Trust XIV HITS.

Registration of transfers of Trust XIV HITS will be effected without charge by or on

behalf of Trust XIV but after payment of any tax or other governmental charges that may be

imposed in connection with any transfer or exchange. Neither Trust XIV nor the transfer agent

shall be required to register the transfer of or exchange any trust security during a period

beginning at the opening of business 15 days before the day of selection for redemption of Trust

XIV securities and ending at the close of business on the day of mailing of notice of redemption

or to transfer or exchange any trust security so selected for redemption in whole or in part,

except, in the case of any trust security to be redeemed in part, any portion thereof not to be

redeemed.

Any Trust XIV HITS can be exchanged for other Trust XIV HITS so long as such other

Trust XIV HITS are denominated in authorized denominations and have the same aggregate

liquidation amount and same terms as the Trust XIV HITS that were surrendered for exchange.

The Trust XIV HITS may be presented for registration of transfer, duly endorsed or accompanied

by a satisfactory written instrument of transfer, at the office or agency maintained by the

Company for that purpose in a place of payment. There will be no service charge for any

registration of transfer or exchange of the Trust XIV HITS, but the Company may require

holders to pay any tax or other governmental charge payable in connection with a transfer or

exchange of the Trust XIV HITS. The Company may at any time rescind the designation or

approve a change in the location of any office or agency, in addition to the security registrar,

designated by the Company where holders can surrender the Trust XIV HITS for registration of

transfer or exchange. However, Trust XIV will be required to maintain an office or agency in

each place of payment for the Trust XIV HITS.

Information Concerning the Property Trustee

Other than during the occurrence and continuance of a Trust Event of Default, the

property trustee undertakes to perform only the duties that are specifically set forth in the Trust

XIV Declaration of Trust. After a Trust XIV Event of Default, the property trustee must exercise

the same degree of care and skill as a prudent individual would exercise or use in the conduct of

his or her own affairs. Subject to this provision, the property trustee is under no obligation to

exercise any of the powers vested in it by the Trust XIV Declaration of Trust at the request of

any holder of Trust XIV HITS unless it is offered indemnity satisfactory to it by such holder

against the costs, expenses and liabilities that might be incurred. However, the holders of the

Trust XIV HITS will not be required to offer any indemnity if those holders, by exercising their

voting rights, direct the property trustee to take any action following an event of default under

the Trust XIV Declaration of Trust. If no Trust XIV Event of Default has occurred and is

continuing and the property trustee is required to decide between alternative courses of action,

construe ambiguous provisions in the Trust XIV Declaration of Trust or is unsure of the

application of any provision of the Trust XIV Declaration of Trust, and the matter is not one

upon which holders of Trust XIV HITS are entitled under the Trust XIV Declaration of Trust to

vote, then the property trustee will take any action that the Company directs. If the Company

does not provide direction, the property trustee may take any action that it deems advisable and

in the interests of the holders of the Trust XIV securities and will have no liability except for its

own bad faith, negligence or willful misconduct.

The Company and certain of its affiliates have from time to time maintained deposit

accounts and conducted other banking transactions with the property trustee and its affiliated

entities in the ordinary course of business. The Company expects to continue those business

transactions. The property trustee or its affiliates also serve as trustee for a number of series of

the Company’s outstanding indebtedness under other indentures.

Trust Expenses

Pursuant to the Trust XIV Declaration of Trust, the Company, as sponsor, agrees to pay:

• all debts and other obligations of Trust XIV (other than with respect to the Trust XIV

HITS);

• all costs and expenses of Trust XIV, including costs and expenses relating to the

organization of Trust XIV, the fees and expenses of the trustees and the cost and

expenses relating to the operation of Trust XIV; and

• any and all taxes and costs and expenses with respect thereto, other than U.S. withholding

taxes, to which Trust XIV might become subject.

Miscellaneous

The regular trustees are authorized and directed to conduct the affairs of and to operate

Trust XIV in such a way that it will not be required to register as an “investment company”

under the Investment Company Act or characterized as other than one or more grantor trusts and/

or agency arrangements for U.S. federal income tax purposes. In this regard, the Company, as

sponsor of Trust XIV, and the regular trustees are authorized to take any action, not inconsistent

with applicable law, the certificate of trust of Trust XIV or the Trust XIV Declaration of Trust,

that the Company and the regular trustees determine to be necessary or desirable to achieve such

end, as long as such action does not materially and adversely affect the interests of the holders of

the Trust XIV HITS.

Holders of the Trust XIV HITS have no preemptive or similar rights. The Trust XIV

HITS are not convertible into or exchangeable for the Company’s Common Stock or any series

of the Company’s preferred stock (including the Series G Preferred Stock).

DESCRIPTION OF INCOME CAPITAL OBLIGATION NOTES

INITIALLY DUE DECEMBER 15, 2066

This section describes the Company’s Income Capital Obligations Notes initially due

December 15, 2066 (the “ICONs”). The ICONs are issued under the Junior Subordinated

Indenture dated as of December 14, 2006 between the Company (successor by merger to Merrill

Lynch & Co., Inc.) and The Bank of New York Mellon (formerly known as The Bank of New

York), as trustee (as supplemented, the “ICONs Indenture”). The ICONs Indenture is included

as an exhibit to the Company’s Registration Statement on Form 8-A filed with the SEC on

October 18, 2018.

General

The ICONs are unsecured junior subordinated debt securities of the Company. An

aggregate principal amount of $1,050,000,000 of the ICONs was outstanding as of December 31,

2023. The ICONs are listed on the NYSE under the symbol “MER PrK”. The ICONs are issued

in registered book-entry only form, represented by a global security registered in the name of a

depository.

Unless the ICONs are redeemed prior to maturity, the ICONs will mature on December

15, 2066 (the “Initial Scheduled Maturity Date”), unless the Company extends the maturity of

the ICONs as described below.

Interest Rate

The ICONs will bear interest at 6.45% per annum through the Initial Scheduled Maturity

Date or any earlier redemption date (the “Fixed Rate Period”). Subject to the Company’s right

to defer interest payments described below, during the Fixed Rate Period interest is payable

quarterly in arrears, on March 15, June 15, September 15, and December 15 of each year. If

interest payments are deferred or otherwise not paid during the Fixed Rate Period, the interest

will accrue and compound until paid at the annual rate of 6.45%. The amount of interest payable

for any accrual period during this period will be compounded on the basis of a 360-day year

consisting of twelve 30-day months.

If the Company elects to extend the maturity date of the ICONs as described below, the

ICONs will bear interest at Adjusted Three-Month Term SOFR

plus 132.7 basis points

(1.327%), reset quarterly, during the period commencing on and including December 15, 2066

to, but excluding, the date on which the ICONs mature or any earlier redemption date (the

“Floating Rate Period”). Subject to the Company’s right to defer interest payments as

described below, during the Floating Rate Period interest is payable quarterly in arrears on

March 15, June 15, September 15 and December 15 of each year, beginning March 15, 2067. If

interest payments are deferred or otherwise not paid during the Floating Rate Period, the interest

will accrue and compound until paid at the prevailing floating rate. The amount of interest

payable for any accrual period during the Floating Rate Period will be computed on the basis of a

360-day year and the actual number of days elapsed during the relevant period.

As of their original issue, the terms of the ICONs provided for applicable interest rates (if any) to be determined by

reference to three-month U.S. dollar LIBOR (“Three-Month USD LIBOR”). Three-Month USD LIBOR ceased

publication following June 30, 2023. In accordance with the U.S. Adjustable Interest Rate (LIBOR) Act and

Regulation ZZ promulgated thereunder by the Board of Governors of the Federal Reserve System, the three-month

CME Term SOFR Reference Rate, as administered by CME Group Benchmark Administration, Ltd. (or any

successor administrator thereof), plus a tenor spread adjustment of 0.26161% (such rate, including such tenor spread

adjustment, “Adjusted Three-Month Term SOFR”) replaced Three-Month USD LIBOR as the reference rate for

calculations of interest payments (if any) for the ICONs.

During the Fixed Rate Period if an interest payment date or a redemption date of the

ICONs falls on a day that is not a business day, the payment of interest and principal will be

made on the next succeeding business day, and no interest on such payment will accrue for the

period from and after the interest payment date or the redemption date, as applicable. During the

Floating Rate Period, if any interest payment date, other than a redemption date or the maturity

date of the ICONs, falls on a day that is not a business day, the interest payment date will be

postponed to the next day that is a business day, except that if that business day is in the next

succeeding calendar month, the interest payment date will be the immediately preceding business

day. Also during the Floating Rate Period, if a redemption date or the maturity date of the

ICONs falls on a day that is not a business day, the payment of interest and principal will be

made on the next succeeding business day, and no interest on such payment will accrue for the

period from and after the redemption date or the maturity date, as applicable.

A “business day” means any day other than a day on which banking institutions in The

City of New York are authorized or required by law to close; provided that, during the Floating

Rate Period the day is also a London banking day. “London banking day” means a day on

which commercial banks are open for business, including dealings in U.S. dollars, in London.

“Calculation agent” means The Bank of New York Mellon, or its successor appointed

by the Company, acting as calculation agent.

Interest payable at any interest payment date other than the maturity date will be paid to

the registered holder of the ICON on the regular record date for that interest payment date. The

principal and interest payable at maturity will be paid to the holder of the ICON at the time of

payment by the paying agent.

Maturity; Extension of Maturity

The ICONs do not have a sinking fund. This means that the Company is not required to

make any principal payments prior to maturity.

The ICONs will mature on December 15, 2066 unless the Company elects to extend the

maturity date as described in the following paragraph.

On December 15, 2026, the Company may, at its sole option, elect to extend the maturity

date of the ICONs for an additional ten years. If the Company makes this election, the ICONs

will mature on December 15, 2076. The Company will provide irrevocable notice of any such

election not less than 30 days, nor more than 60 days, prior to the applicable election date. The

Company may make this election to extend the maturity date of the ICONs only if the following

conditions are met at the time it provides irrevocable notice of any such election:

• the Company’s senior unsecured indebtedness is rated at least Baa1 by Moody’s

Investors Service, Inc. (“Moody’s”) or BBB+ by either of Standard & Poor’s Ratings

Services, a division of McGraw Hill, Inc. (“S&P”) or Fitch Ratings (“Fitch”) or, if

any of Moody’s, S&P and Fitch (or their respective successors) is no longer in

existence, the equivalent rating by any other nationally recognized statistical rating

organization within the meaning of Rule 15c3-1 under the Exchange Act;

• the Company is not deferring the payment of interest on the ICONs pursuant to an

Optional Deferral Period (as defined below); and

• the Company is not in default in respect of any of its outstanding indebtedness for

money borrowed having an aggregate principal or face amount in excess of $100

million.

Ranking of the ICONs

The Company’s payment obligations under the ICONs are unsecured and rank junior and

are subordinated in right of payment and upon liquidation to all of its Senior Indebtedness.

“Senior Indebtedness” means, with respect to the Company, (i) the principal, premium,

if any, and interest in respect of (A) indebtedness for money borrowed and (B) indebtedness

evidenced by securities, notes, debentures, bonds or other similar instruments issued by the

Company, including without limitation all indebtedness (whether now or hereafter outstanding)

issued under the Merrill Lynch & Co., Inc. subordinated indenture, dated as of December 17,

1996, (ii) all capital lease obligations of the Company, (iii) all obligations of the Company issued

or assumed as the deferred purchase price of property, all conditional sale obligations of the

Company and all obligations of the Company under any conditional sale or title retention

agreement (but excluding trade accounts payable in the ordinary course of business), (iv) all

obligations, contingent or otherwise, of the Company in respect of any letters of credit, banker’s

acceptances, security purchase facilities and similar credit transactions, (v) all obligations of the

Company in respect of interest rate swap, cap or other agreements, interest rate future or option

contracts, currency swap agreements, currency future or option contracts and other similar

agreements, (vi) all obligations of the type referred to in clauses (i) through (v) of other persons

for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise,

and (vii) all obligations of the type referred to in clauses (i) through (vi) of other persons secured

by any lien on any property or asset of the Company (whether or not such obligation is assumed

by the Company), except that Senior Indebtedness does not include obligations in respect of (1)

any indebtedness issued under the ICONs Indenture, (2) any guarantee entered into by the

Company in respect of any capital securities issued by any finance subsidiary trust similar to

Merrill Lynch Capital Trust I, (3) any indebtedness or any guarantee that is by its terms

subordinated to, or ranks equally with, the ICONs and the issuance of which does not at the time

of issuance prevent the ICONs from qualifying for tier 1 (or its equivalent for purposes of the

capital adequacy guidelines of the applicable regulatory body or governmental authority) capital

treatment (irrespective of any limits on the amount of the Company’s tier 1 capital) under

applicable capital adequacy guidelines, regulations, policies, published interpretations, or the

concurrence or approval of the SEC or any other applicable regulatory body or governmental

authority, or (4) trade accounts payable. Upon any payment or distribution of assets to creditors

upon the Company’s liquidation, dissolution, winding up, reorganization, whether voluntary or

involuntary, assignment for the benefit of creditors, marshaling of assets or any bankruptcy,

insolvency, debt restructuring or similar proceedings, the holders of Senior Indebtedness will

first be entitled to receive payment in full of the principal, premium, or interest due before the

holders of ICONs will be entitled to receive any payment or distribution.

In the event of the acceleration of the maturity of any ICONs, the holders of all Senior

Indebtedness outstanding at the time of the acceleration will first be entitled to receive payment

in full of all amounts due on the Senior Indebtedness (including any amounts due upon

acceleration) before the holders of the ICONs.

No payment, by or on the Company’s behalf, of principal or interest on the ICONs shall

be made if at the time of the payment, there exists:

• a default in any payment on any Senior Indebtedness, or any other default under

which the maturity of any Senior Indebtedness has been accelerated; and

• any judicial proceeding relating to the defaults which shall be pending.

At December 31, 2023, the Senior Indebtedness to which the ICONs would rank

subordinate includes (but is not limited to) approximately $367 billion of principal, premium, if

any, and interest in respect of indebtedness for money borrowed and indebtedness evidenced by

securities, notes, debentures, bonds or other similar instruments issued by the Company, on an

unconsolidated basis.

Because the Company is a holding company, its right and the rights of its creditors,

including the holders of the ICONs, to participate in any distribution of the assets of any

subsidiary upon its liquidation or reorganization or otherwise is necessarily subject to the prior

claims of creditors of the subsidiary, except to the extent that a bankruptcy court may recognize

its claims as a creditor of its subsidiary. In addition, dividends, loans and advances from certain

subsidiaries are restricted by net capital requirements under the Exchange Act and under rules of

certain exchanges and other regulatory bodies.

The ICONs do not limit the Company’s or its subsidiaries’ ability to incur additional debt

or liabilities, including debt or other liabilities which would rank senior in priority of payment to

the ICONs.

Redemption

Subject to obtaining any required regulatory approval, the Company may redeem the

ICONs before their maturity in whole or in part, on one or more occasions at any time, at 100%

of their principal amount plus accrued and unpaid interest. Notice of any redemption will be

given at least 30 days but not more than 60 days before the redemption date to each holder of

ICONs at its registered address. The holders of the ICONs do not have any optional redemption

rights.

Option to Defer Interest Payments

As long as no event of default that would permit acceleration of the ICONs has occurred

and is continuing, the Company can defer quarterly interest payments on the ICONs for one or

more periods (each an “Optional Deferral Period”) for up to 40 consecutive quarters, or 10

years, if no event of default that would permit acceleration of the ICONs has occurred and is

continuing. A deferral of interest payments cannot extend, however, beyond the maturity date of

the ICONs. During the Optional Deferral Period, interest will continue to accrue on the ICONs,

compounded quarterly, and deferred interest payments will accrue additional interest at the

annual interest rate then applicable to the ICONs to the extent permitted by applicable law. No

interest will be due and payable on the ICONs until the end of the Optional Deferral Period

except upon a redemption of the ICONs during a deferral period.

The Company may pay at any time all or any portion of the interest accrued to that point

during an Optional Deferral Period. At the end of the Optional Deferral Period or on any

redemption date, the Company will be obligated to pay all accrued and unpaid interest.

Once the Company pays all accrued and unpaid deferred interest on the ICONs, the

Company again can defer interest payments on the ICONs as described above, provided that a

deferral period cannot extend beyond the maturity date of the ICONs. The Company may pay the

accrued and unpaid interest at any time during an Optional Deferral Period.

Certain Limitations During a Deferral Period. During any deferral period, the Company

will not and its subsidiaries will not be permitted to:

• declare or pay any dividends or distributions, or redeem, purchase, acquire, or make a

liquidation payment on any of the Company’s capital stock;

• make any payment of principal of or interest or premium, if any, on or repay,

repurchase or redeem any of the Company’s debt securities that rank equally with or

junior in interest to the ICONs, other than pro rata payments of accrued and unpaid

amounts on the ICONs and any other of the Company’s debt securities that rank

equally with the ICONs; or

• make any guarantee payments on any guarantee by the Company of debt securities of

any of its subsidiaries if the guarantee ranks equally with or junior in interest to the

guarantee issued in connection with Merrill Lynch Capital Trust I other than pro rata

payments of accrued and unpaid amounts on the guarantee and any other of the

Company’s guarantees of debt securities of its subsidiaries that rank equally with the

guarantee.

However, at any time, including during a deferral period, the Company will be permitted

to:

• pay dividends or distributions on its capital stock in additional shares of its capital

stock;

• declare or pay a dividend in connection with the implementation of a shareholders’

rights plan, or issue stock under such a plan or repurchase such rights; and

• purchase Common Stock for issuance pursuant to any employee benefit plans.

Notice. The Company will provide to the trustee written notice of any optional deferral of

interest at least ten and not more than 60 business days prior to the applicable interest payment

date, and the trustee shall promptly give notice of the election to the holders of the ICONs.

Events of Default and Rights of Acceleration

The ICONs Indenture provides that any one or more of the following events with respect

to the ICONs that has occurred and is continuing constitutes an event of default and acceleration:

• default in the payment of interest, including compounded interest, in full on any

ICONs for a period of 30 days after the conclusion of a ten-year period following the

commencement of any Optional Deferral Period; or

• some events of bankruptcy, insolvency and reorganization involving the Company.

If an event of default and acceleration under the ICONs Indenture of the type described in

the first bullet point above has occurred and is continuing, the trustee or the holders of at least

25% in outstanding principal amount of the ICONs will have the right to declare the principal of,

and accrued interest (including compounded interest) on, those securities to be due and payable

immediately. If the trustee or the holders of at least 25% of the outstanding principal amount of

the ICONs fail to make that declaration, then the holders of at least 25% in total liquidation

amount of the capital securities then outstanding will have the right to do so. If an event of

default and acceleration under the ICONs Indenture arising from events of bankruptcy,

insolvency and reorganization involving the Company occurs, the principal of and accrued

interest on the ICONs will automatically, and without any declaration or other action on the part

of the trustee or any holder of ICONs, become immediately due and payable. In case of any

default that is not an event of default and acceleration, there is no right to declare the principal

amount of the junior subordinated debt securities immediately payable. The holders of a majority

in aggregate principal amount of the ICONs then outstanding, in some circumstances, may annul

the declaration of acceleration and waive past defaults.

Modification of ICONs Indenture

The Company and the trustee may change the indenture without the holders’ consent for

specified purposes, including:

• to fix any ambiguity, defect or inconsistency, provided that the change does not

materially adversely affect the interest of any holder of ICONs; and

• to qualify or maintain the qualification of the ICONs Indenture under the Trust

Indenture Act.

In addition, under the ICONs Indenture, the Company and the trustee may modify the

ICONs Indenture to affect the rights of the holders of the ICONs, with the consent of the holders

of a majority in principal amount of the outstanding ICONs that are affected. However, neither

the Company nor the trustee may take the following actions without the consent of each holder

of the ICONs affected:

• change the maturity date of the ICONs (other than in connection with any election

by the Company to extend the maturity of the ICONs in accordance with their

terms), or reduce the principal amount, rate of interest, or extend the time of

payment of interest;

• reduce the percentage in principal amount of the ICONs necessary to modify the

ICONs Indenture;

• modify some provisions of the ICONs Indenture relating to modification or

waiver, except to increase the required percentage; or

• modify the provisions of the ICONs Indenture relating to the subordination of the

ICONs in a manner adverse to the holders.

Consolidation, Merger, Sale of Assets and Other Transactions

The ICONs Indenture provides that the Company cannot consolidate with or merge into

any other person or convey, transfer or lease its properties and assets substantially as an entirety

to any person, and no person will consolidate with or merge into the Company or convey,

transfer or lease its properties and assets substantially as an entirety to the Company, unless:

• the Company is the continuing entity or the successor is organized under the laws

of the United States or any state or the District of Columbia and expressly

assumes all of the Company’s obligations under the ICONs Indenture;

• immediately after the transaction, no event of default, and no event which, after

notice or lapse of time or both, would become an event of default, shall have

occurred and be continuing; and

• certain other conditions specified in the ICONs Indenture are met.

Collection of Indebtedness

If the Company fails to pay the principal of or any premium on any securities, or if it is

over 30 calendar days late on any interest payment or other amounts payable (other than

principal, any premium, or other amounts payable at maturity or upon redemption) on the

securities, the trustee can demand that the Company pay to it, for the benefit of the holders of

those securities, the amount which is due and payable on those securities, including any interest

incurred because of the Company’s failure to make that payment. If the Company fails to pay

the required amount on demand, the trustee may take appropriate action, including instituting

judicial proceedings against the Company.

The holders of a majority of the aggregate outstanding principal amount of the ICONs

have the right to direct the time, method and place of conducting any proceeding for any remedy

available to the trustee with respect to the ICONs, but the trustee will be entitled to receive from

the holders indemnity reasonably satisfactory to the trustee against expenses and liabilities.

The Company is required periodically to file with the trustee under the ICONs Indenture

a certificate stating that the Company is not in default under any of the terms of the ICONs

Indenture.

Limitation on Suits

The ICONs Indenture provides that no individual holder of ICONs may institute any

action against the Company under the indenture, except actions for the payment of overdue

principal, any premium, interest or other amounts due, unless the following actions have

occurred:

• the holder must have previously given written notice to the trustee of a continuing event

of default;

• the holders of not less than 25% in principal amount of such outstanding securities issued

under the ICONs Indenture must have (1) requested the trustee to institute proceedings in

respect of such event of default and (2) offered the trustee indemnity against liabilities

incurred by the trustee for taking such action, which indemnity is reasonably satisfactory

to the trustee;

• the trustee must have failed to institute proceedings within 60 days after receipt of the

request referred to above; and

• the holders of a majority in principal amount of such outstanding ICONs must not have

given direction to the trustee inconsistent with the request of the holders referred to

above.

However, the holder of any securities will have an absolute right to receive payment of

principal of and any premium and interest or other amounts due on the securities when due and

to institute suit to enforce this payment.

DESCRIPTION OF SENIOR MEDIUM TERM NOTES, SERIES A, STEP UP

CALLABLE NOTES, DUE NOVEMBER 28, 2031 OF BOFA FINANCE LLC (AND THE

GUARANTEE OF THE REGISTRANT RELATED THERETO)

This section describes the Senior Medium-Term Notes, Series A, Step Up Callable Notes,

due November 28, 2031 (the “Step Up Callable Notes”), issued by BofA Finance LLC (“BofA

Finance”) and guaranteed by the Company. The Step Up Callable Notes were issued under the

Indenture dated as of August 23, 2016 among BofA Finance, as issuer, the Company, as

guarantor, and The Bank of New York Mellon Trust Company, N.A., as trustee (the “BofA

Finance Indenture”). The BofA Finance Indenture is filed as an exhibit to the Company’s

Registration Statement on Form S-3 (File No. 333-213265) filed with the SEC, pursuant to

which the Step Up Callable Notes were issued.

Principal Terms of the Step Up Callable Notes

The Step Up Callable Notes are unsecured senior debt securities issued by BofA Finance,

which are fully and unconditionally guaranteed by the Company. The Step Up Callable Notes

were issued originally on November 28, 2016 in the aggregate principal amount of $5,000,000,

all of which is outstanding as of December 31, 2023. The Step Up Callable Notes are listed on

the NYSE under the symbol “BAC/31B”. The Step Up Callable Notes are issued in registered

book-entry only form, represented by a global security registered in the name of a depository.

Unless the Step Up Callable Notes are redeemed prior to maturity, the Step Up Callable

Notes will mature on November 28, 2031. The Step Up Callable Notes are not subject to the

operation of a sinking fund.

Interest on the Step Up Callable Notes is payable semiannually in arrears, on May 28 and

November 28 of each year, with the final interest date occurring on the maturity date. Each

interest period (other than the first interest period, which began on the issue date) will begin on,

and will include, an interest payment date, and will extend to, but will exclude, the next

succeeding interest payment date (or the maturity date, as applicable). Interest on the Step Up

Callable Notes is computed and paid on the basis of a 360-day year consisting of twelve 30-day

months. The Step Up Callable Notes will accrue interest at the following rates per annum during

the indicated periods of their term:

• November 28, 2016 to, but excluding, November 28, 2021: 3.00%

• November 28, 2021 to, but excluding, November 28, 2026: 3.50%

• November 28, 2026 to, but excluding, November 28, 2028: 4.00%

• November 28, 2028 to, but excluding, November 28, 2030: 5.00%

• November 28, 2030 to, but excluding, November 28, 2031: 7.00%

Interest payable at any interest payment date other than the maturity date will be paid to the

registered holder of the note on the regular record date for that interest payment date. The

principal and interest payable at maturity will be paid to the holder of the note at the time of

payment by the paying agent.

BofA Finance has the right to redeem all, but not less than all, of the Step Up Callable

Notes on November 28, 2019 and on each subsequent interest payment date (other than the

maturity date). The redemption price will be 100% of the principal amount of the Step Up

Callable Notes, plus any accrued and unpaid interest. In order to call the Step Up Callable

Notes, BofA Finance will give notice at least five business days but not more than 60 calendar

days before the specified early redemption date.

If any interest payment date, any early redemption date or the maturity date of the Step

Up Callable Notes occurs on a day that is not a business day in New York, New York, then the

payment will be postponed until the next business day in New York, New York. No additional

interest will accrue on the Step Up Callable Notes as a result of such postponement, and no

adjustment will be made to the length of the relevant interest period. As long as the Step Up

Callable Notes are held in book-entry only form, the record dates for interest payments on the

notes will be one business day in New York, New York prior to the payment date.

The trustee serves as the sole paying agent, security registrar and transfer agent for the

Step Up Callable Notes through the trustee’s office or agency in Jacksonville, Florida. BofA

Finance may rescind the designation of paying agent, appoint a successor or an additional paying

agent, or approve a change in the office through which any paying agent acts in accordance with

the terms of the BofA Finance Indenture. BofA Finance also may decide to act as its own paying

agent, and the paying agent may resign.

The Company and certain of its affiliates have from time to time maintained deposit

accounts and conducted other banking transactions with The Bank of New York Mellon Trust

Company, N.A. and its affiliates in the ordinary course of business. The Company and its

affiliates expect to continue these business transactions. The Bank of New York Mellon Trust

Company, N.A. and its affiliates also serve as trustee for a number of series of outstanding

indebtedness of the Company and its affiliates under other indentures.

Company Guarantee

The Company has fully and unconditionally guaranteed, on an unsecured basis, the due

and punctual payment of the principal of (and premium, if any, on) and any interest and all other

amounts payable on the Step Up Callable Notes issued by BofA Finance, when the same

becomes due and payable, whether at maturity or upon redemption, repayment or acceleration, in

accordance with the terms of the Step Up Callable Notes and the BofA Finance Indenture. If for

any reason BofA Finance does not make any required payment on the securities when due, the

Company will make such payment, on demand, at the same place and in the same manner that

applies to payments made by BofA Finance under the BofA Finance Indenture. The guarantee is

of payment and not of collection. The Company’s obligations under its guarantee of the

securities are unconditional and absolute.

Sale or Issuance of Capital Stock of Principal Subsidiary Banks

The BofA Finance Indenture provides that, subject to the provisions of the BofA Finance

Indenture described below relating to the merger or sale of assets of the Company, the Company

will not sell, assign, transfer or otherwise dispose of, or permit the issuance of, or permit a

subsidiary to sell, assign, transfer or dispose of, any shares of capital stock, or any securities

convertible into or options, warrants or rights to acquire capital stock, of any “principal

subsidiary bank” (as described below) or of any subsidiary which owns shares of capital stock, or

securities convertible into or options, warrants or rights to acquire capital stock, of any principal

subsidiary bank, with the following exceptions:

• sales of directors’ qualifying shares;

• sales or other dispositions for fair market value, if, after giving effect to the

disposition and to conversion of any shares or securities convertible into capital

stock of a principal subsidiary bank, the Company would own at least 80% of

each class of the capital stock of that principal subsidiary bank;

• sales or other dispositions made in compliance with an order of a court or

regulatory authority of competent jurisdiction;

• any sale by a principal subsidiary bank of additional shares of its capital stock,

securities convertible into shares of its capital stock, or options, warrants or rights

to subscribe for or purchase shares of its capital stock, to its stockholders at any

price, so long as before that sale the Company owned, directly or indirectly,

securities of the same class and immediately after the sale, the Company owned,

directly or indirectly, at least as great a percentage of each class of securities of

the principal subsidiary bank as it owned before the sale of additional securities;

and

• any issuance of shares of capital stock, or securities convertible into or options,

warrants or rights to subscribe for or purchase shares of capital stock, of a

principal subsidiary bank or any subsidiary which owns shares of capital stock, or

securities convertible into or options, warrants or rights to acquire capital stock, of

any principal subsidiary bank, to the Company or its wholly-owned subsidiary.

A “principal subsidiary bank” is defined in the BofA Finance Indenture as any bank or

trust company subsidiary of the Company that is organized and doing business under any U.S.

state or federal law, with total assets equal to more than 10% of the Company’s total

consolidated assets.

Limitation on Mergers and Sales of Assets

Under the terms of the BofA Finance Indenture, each of BofA Finance and the Company

generally is permitted to merge or consolidate with another entity. Each of BofA Finance and

the Company also is permitted to sell all or substantially all of its assets. These transactions are

permitted if:

• With respect to BofA Finance:

◦ the resulting or acquiring entity, if other than BofA Finance, is organized and

existing under the laws of the United States or any state or the District of

Columbia and expressly assumes all of BofA Finance’s obligations under the

BofA Finance Indenture and the debt securities issued under the BofA Finance

Indenture; and

◦ immediately after the transaction, BofA Finance (or any successor entity) is not in

default in the performance of any covenant or condition under the BofA Finance

Indenture.

• With respect to the Company:

◦ the resulting or acquiring entity, if other than the Company, is organized and

existing under the laws of the United States or any state or the District of

Columbia and expressly assumes the guarantee obligations under the BofA

Finance Indenture; and

◦ immediately after the transaction, the Company (or any successor guarantor) is

not in default in the performance of any covenant or condition under the BofA

Finance Indenture.

Upon any consolidation, merger, sale, or transfer of this kind, the resulting or acquiring

entity will be substituted for BofA Finance or the Company, as the case may be, in the BofA

Finance Indenture with the same effect as if it had been an original party to that indenture. As a

result, the successor entity may exercise BofA Finance’s or the Company’s rights and powers

under the BofA Finance Indenture, as the case may be. If BofA Finance were to merge into the

Company, under the terms of the BofA Finance Indenture, the guarantee would terminate.

Waiver of Covenants

The holders of a majority in aggregate principal amount of all affected securities then

outstanding under the BofA Finance Indenture may waive compliance with some of the

covenants or conditions of the BofA Finance Indenture.

Modification of the BofA Finance Indenture

BofA Finance, the Company and the trustee may modify the BofA Finance Indenture and

the rights of the holders of the securities with the consent of the holders of not less than a

majority of the aggregate principal amount of all outstanding securities under the BofA Finance

Indenture affected by the modification. However, no modification may extend the stated

maturity of, reduce the principal amount or any premium of, or reduce the rate, or extend the

time of payment, of interest on, any security or reduce any amount payable on redemption of any

security (except in accordance with the terms of the securities) without the consent of all holders

of each outstanding security affected by the modification. No modification may reduce the

percentage of securities that is required to consent to modification of the BofA Finance Indenture

without the consent of all holders of the securities outstanding under the BofA Finance

Indenture.

In addition, BofA Finance, the Company and the trustee may execute supplemental

indentures in some circumstances without the consent of any holder of outstanding securities.

For purposes of determining the aggregate principal amount of securities outstanding at

any time in connection with any request, demand, authorization, direction, notice, consent or

waiver under the BofA Finance Indenture, (1) the principal amount of any security issued with

original issue discount is that amount that would be due and payable at that time upon

declaration of acceleration following an event of default, and (2) the principal amount of

securities denominated in a foreign currency or currency unit is the U.S. dollar equivalent of the

security determined as described in the supplement relating to that security.

Meetings and Action by Securityholders

The trustee may call a meeting in its discretion, or upon request by BofA Finance or the

holders of at least 10% in principal amount of the outstanding securities affected thereby, by

giving notice. If a meeting of holders is duly held, any resolution raised or decision taken in

accordance with the BofA Finance Indenture will be binding on all holders of securities affected

thereby.

Events of Default and Rights of Acceleration

Under the BofA Finance Indenture, an event of default for the Step Up Callable Notes

includes any one of the following events:

• default in the payment of the principal or any premium when due on the Step Up Callable

Notes;

• default in the payment of interest or other amounts due (other than principal, premium, if

any, or other amounts payable at maturity or upon redemption) on the Step Up Callable

Notes, within 30 calendar days after the interest or other such amounts become due;

• BofA Finance’s breach of any of its other covenants in the Step Up Callable Notes or in

the BofA Finance Indenture that is not cured within 90 calendar days after written notice

to BofA Finance by the trustee, or to BofA Finance and the trustee by the holders of at

least 25% in aggregate principal amount of all securities then outstanding under the BofA

Finance Indenture and affected by the breach; or

• specified events involving BofA Finance’s bankruptcy, insolvency, or liquidation.

If an event of default occurs and is continuing, either the trustee or the holders of not less

than 25% in aggregate principal amount of the securities outstanding under the BofA Finance

Indenture and affected by such event of default (or, in the case of an event of default under the

BofA Finance Indenture relating to specified events involving BofA Finance’s bankruptcy,

insolvency, or liquidation, the holders of 25% in principal amount of all outstanding securities)

may declare the principal amount, or, if the securities are issued with original issue discount, a

specified portion of the principal amount, of all affected securities (or all securities, as the case

may be) to be due and payable immediately. The holders of a majority in aggregate principal

amount of the affected securities then outstanding, in some circumstances, may annul the

declaration of acceleration and waive past defaults.

Collection of Indebtedness

If BofA Finance fails to pay the principal of or any premium on any securities, or if it is

over 30 calendar days late on any interest payment or other amounts payable (other than

principal, any premium, or other amounts payable at maturity or upon redemption) on the

securities, the trustee can demand that BofA Finance pay to it, for the benefit of the holders of

those securities, the amount which is due and payable on those securities, including any interest

incurred because of BofA Finance’s failure to make that payment. If BofA Finance fails to pay

the required amount on demand, the trustee may take appropriate action, including instituting

judicial proceedings against BofA Finance.

In addition, a holder of a security also may file suit to enforce BofA Finance’s obligations

to make payment of principal, any premium, interest, or other amounts due on that security

regardless of the actions taken by the trustee.

The holders of a majority in principal amount of the affected securities then outstanding

under the BofA Finance Indenture may direct the time, method and place of conducting any

proceeding for any remedy available to the trustee under the BofA Finance Indenture, but the

trustee will be entitled to receive from the holders indemnity reasonably satisfactory to the

trustee against expenses and liabilities.

BofA Finance and the Company are required periodically to file with the trustee under

the BofA Finance Indenture a certificate stating that BofA Finance or the Company, as the case

may be, is not in default under any of the terms of the BofA Finance Indenture.

Limitation on Suits

The BofA Finance Indenture provides that no individual holder of securities of any series

may institute any action against BofA Finance under the indenture, except actions for the

payment of overdue principal, any premium, interest or other amounts due, unless the following

actions have occurred:

• the holder must have previously given written notice to the trustee of a continuing event

of default;

• the holders of not less than 25% in principal amount of such outstanding securities issued

under the BofA Finance Indenture must have (1) requested the trustee to institute

proceedings in respect of such event of default and (2) offered the trustee indemnity

against liabilities incurred by the trustee for taking such action, which indemnity is

reasonably satisfactory to the trustee;

• the trustee must have failed to institute proceedings within 60 days after receipt of the

request referred to above; and

• the holders of a majority in principal amount of such outstanding securities issued under

the BofA Finance Indenture must not have given direction to the trustee inconsistent with

the request of the holders referred to above.

However, the holder of any securities will have an absolute right to receive payment of

principal of and any premium and interest or other amounts due on the securities when due and

to institute suit to enforce this payment.

Exhibit 21

Direct and Indirect Subsidiaries of Bank of America Corporation

As of December 31, 2023

Name Location Jurisdiction

BA Continuum India Private Limited Hyderabad, India India

BA Electronic Data Processing (Guangzhou) Ltd. Guangzhou, PRC People's Republic of China

BAC Canada Finance Company Toronto, Ontario, Canada Canada

BAC North America Holding Company Charlotte, NC Delaware

BAL Investment & Advisory, LLC San Francisco, CA Delaware

Banc of America FSC Holdings, Inc. San Francisco, CA Delaware

Banc of America Leasing & Capital, LLC San Francisco, CA Delaware

Banc of America Securities Asia Limited Hong Kong, PRC Hong Kong

Bank of America California, National Association San Francisco, CA United States of America

Bank of America Europe Designated Activity Company Dublin, Ireland Ireland

Bank of America Malaysia Berhad Kuala Lumpur, Malaysia Malaysia

Bank of America Merrill Lynch Banco Múltiplo S.A. Sao Paulo, Brazil Brazil

Bank of America Mexico, S.A., Institucion de Banca Multiple Mexico City, Mexico Mexico

Bank of America, National Association Charlotte, NC United States of America

Bank of America Singapore Limited Singapore, Singapore Singapore

Bank of America Yatirim Bank A.S. Istanbul, Turkey Turkey

BankAmerica International Financial Corporation San Francisco, CA United States of America

Blue Ridge Investments, L.L.C. New York, NY Delaware

BofA Finance LLC Charlotte, NC Delaware

BofA Securities Europe SA Paris, France France

BofA Securities, Inc. New York, NY Delaware

BofA Securities India Limited Mumbai, India India

BofA Securities Japan Co., Ltd. Tokyo, Japan Japan

BofA Securities Prime, Inc. New York, NY Delaware

Managed Account Advisors LLC Jersey City, NJ Delaware

Merrill Lynch (Asia Pacific) Limited Hong Kong, PRC Hong Kong

Merrill Lynch (Australia) Futures Limited Sydney, Australia Australia

Merrill Lynch (Singapore) Pte. Ltd. Singapore, Singapore Singapore

Merrill Lynch Argentina S.A. Capital Federal, Argentina Argentina

Merrill Lynch B.V. Amsterdam, Netherlands Netherlands

Merrill Lynch Bank and Trust Company (Cayman) Limited George Town, Grand Cayman, Cayman Is. Cayman Islands

Merrill Lynch Canada Inc. Toronto, Ontario, Canada Canada

Merrill Lynch Capital Services, Inc. New York, NY Delaware

Merrill Lynch Commodities Canada, ULC Toronto, Ontario, Canada Canada

Merrill Lynch Commodities, Inc. Houston, TX Delaware

Merrill Lynch Corredores de Bolsa SpA Santiago, Chile Chile

Merrill Lynch Equities (Australia) Limited Sydney, Australia Australia

Merrill Lynch Far East Limited Hong Kong, PRC Hong Kong

Merrill Lynch Global Services Pte. Ltd. Singapore, Singapore Singapore

Merrill Lynch International London, U.K. United Kingdom

Merrill Lynch International & Co. C.V. Curacao, Netherlands Antilles Curacao

Merrill Lynch International, LLC Charlotte, NC Delaware

Merrill Lynch Israel Ltd. Tel Aviv, Israel Israel

Merrill Lynch, Kingdom of Saudi Arabia Company Kingdom of Saudi Arabia Saudi Arabia

Merrill Lynch Malaysian Advisory Sdn. Bhd. Kuala Lumpur, Malaysia Malaysia

Merrill Lynch Markets (Australia) Pty. Limited Sydney, Australia Australia

Merrill Lynch Mexico, S.A. de C.V., Casa de Bolsa Mexico City, Mexico Mexico

Merrill Lynch, Pierce, Fenner & Smith Incorporated New York, NY Delaware

Merrill Lynch S.A. Corretora de Títulos e Valores Mobiliários Sao Paulo, Brazil Brazil

Merrill Lynch Securities (Taiwan) Ltd. Taipei, Taiwan Taiwan

Merrill Lynch Securities (Thailand) Limited Bangkok, Thailand Thailand

Merrill Lynch South Africa Proprietary Limited Gauteng, South Africa South Africa

Mortgages plc London, U.K. United Kingdom

NB Holdings Corporation Charlotte, NC Delaware

PT Merrill Lynch Sekuritas Indonesia Jakarta, Indonesia Indonesia

U.S. Trust Company of Delaware Wilmington, DE Delaware

Wave Lending Limited London, U.K. United Kingdom

Pursuant to Item601(b)(21)(ii)of Regulation S-K, the names of certain other subsidiaries of Bank of America Corporation are omitted. These subsidiaries, considered

in the aggregate, would not constitute a "significant subsidiary" under SEC rules.

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-268718

and 333-257399) and on Form S-8 (Nos. 333-212376; 333-204453; 333-167797; 333-157085; 333-133566;

333-121513; 333-102043; 333-234780; 333-231107; 333-251608; 333-256008; 333-271554; and

333-271559) of Bank of America Corporation of our report dated February 20, 2024 relating to the financial

statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

Charlotte, North Carolina

February 20, 2024

Exhibit 24

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each of the several undersigned officers and directors of Bank of

America Corporation whose signatures appear below, hereby makes, constitutes and appoints Lauren A. Mogensen and Ross E.

Jeffries, Jr., and each of them acting individually, his or her true and lawful attorneys-in-fact and agents with power to act without

the other and with full power of substitution, to prepare, execute, deliver and file with the Securities and Exchange Commission in

his or her name and on his or her behalf, and in each of the undersigned officer’s and director’s capacity or capacities as shown

below, an Annual Report on Form 10-K for the year ended December 31, 2023, with all exhibits thereto and all documents in

support thereof or supplemental thereto, and any and all amendments or supplements to the foregoing, granting unto said

attorneys-in-fact andagents full power and authority to do and perform every act necessary or incidental to the performance and

execution of the powers granted herein, hereby ratifying and confirming all acts which said attorneys-in-fact or attorney-in-fact

might do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned officers and directors, in the capacity or capacities noted, has hereunto

set his or her hand as of the date indicated below.

Signature Title Date

/s/ Brian T. Moynihan

Chief Executive Officer, President,

Chair and Director

(Principal Executive Officer) January 31, 2024

Brian T. Moynihan

/s/ Alastair M. Borthwick

Chief Financial Officer

(Principal Financial Officer) February 20, 2024

Alastair M. Borthwick

/s/ Rudolf A. Bless

Chief Accounting Officer

(Principal Accounting Officer) February 16, 2024

Rudolf A. Bless

/s/ Sharon L. Allen Director January 31, 2024

Sharon L. Allen

/s/ José E. Almeida Director January 31, 2024

José E. Almeida

/s/ Pierre J.P. de Weck Director January 31, 2024

Pierre J.P. de Weck

/s/ Arnold W. Donald Director January 31, 2024

Arnold W. Donald

/s/ Linda P. Hudson Director January 31, 2024

Linda P. Hudson

/s/ Monica C. Lozano

Director January 31, 2024

Monica C. Lozano

/s/ Lionel L. Nowell III

Director January 31, 2024

Lionel L. Nowell III

/s/ Denise L. Ramos

Director January 31, 2024

Denise L. Ramos

/s/ Clayton S. Rose

Director January 31, 2024

Clayton S. Rose

/s/ Michael D. White

Director January 31, 2024

Michael D. White

/s/ Thomas D. Woods

Director January 31, 2024

Thomas D. Woods

/s/ Maria T. Zuber

Director January 31, 2024

Maria T. Zuber

Incentive Compensation Recoupment Policy

This Incentive Compensation Recoupment Policy (“Policy”) shall be administered by the Board of

Directors (the “Board”) of Bank of America Corporation (the “Company”) or an appropriate Board

committee. Any determinations made by the Board or committee shall be final and binding on all

affected individuals. Additionally, this Policy incorporates by reference the requirements of Section

954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (regarding recovery of

erroneously awarded compensation) and its implementing rules and regulations thereunder and the

New York Stock Exchange listing standards. This Policy operates in addition to any (a) recoupment

provisions contained in the terms of other compensation awards or programs, and (b) recoupment

requirements imposed under applicable laws.

Covered Officers

This Policy applies to all of the Company’s current and former “executive officers,” as determined by

the Board pursuant to Rule 16a-1(f) promulgated under the Exchange Act (“Covered Officers”) and in

accordance with Section 10D of the Exchange Act and the New York Stock Exchange listing

standards. This Policy shall be binding and enforceable against all such Covered Officers and their

beneficiaries, heirs, executors, administrators or other legal representatives.

Compensation Subject to Recoupment

For purposes of this Policy, covered compensation subject to recoupment includes any non-equity

incentive plan awards, bonuses paid to a Covered Officer from a bonus pool, cash awards, equity or

equity-based awards, or proceeds received upon sale of shares acquired through an incentive plan;

provided that, such compensation is granted, earned, and/or vested based wholly or in part on the

attainment of a financial reporting measure (“Incentive-based Compensation”). For purposes of this

Policy, Incentive-based Compensation will also include any amounts which were determined based on

(or were otherwise calculated by reference to) Incentive-based Compensation. A financial reporting

measure includes those found in financial statements prepared under U.S. Generally Accepted

Accounting Principles or derived in whole or in part from such measure (e.g., total shareholder return,

stock price, revenue, net income, return on assets, tangible book value).

Incentive-based Compensation shall not include any salaries, discretionary cash bonuses, non-equity

incentive plan awards earned by a Covered Officer upon satisfying a strategic measure or operational

measure (e.g., completion of a project), or equity-based awards that are not contingent on achieving

any financial reporting measure.

Required Recoupment; Accounting Restatement

In the event the Company is required to prepare an accounting restatement of its financial statements

due to the Company’s material noncompliance with any financial reporting requirement under U.S.

securities laws or regulations issued by the Securities and Exchange Commission, the Board or

applicable committee shall require reimbursement, forfeiture, or other recovery of any excess

Incentive-based Compensation (described below) received by any Covered Officer during the

applicable look-back period (described below). Covered accounting restatements include those that

either (a) correct an error in a previously issued financial statement that is material to such previously

issued financial statement or (b) correct an error that is not material to a previously issued financial

statement, but would result in

Exhibit 97.1

a material misstatement if left uncorrected in a current report or the error correction was not recognized

in the current period.

The amount of excess Incentive-based Compensation to be recouped due to a covered accounting

restatement will be the amount the Covered Officer received in excess of the amount that would have

otherwise been received by the Covered Officer had the Incentive-based Compensation been

determined based on the restated amounts, calculated on a pre-tax basis. If the Board or committee

cannot determine the amount of excess compensation received by the Covered Officer directly from

the information in the accounting restatement, then it shall make its determination based on a

reasonable estimate of the effect of the covered accounting restatement.

The look-back period will be the three completed fiscal years immediately preceding the earlier of the

date on which (a) the Board or committee concludes or reasonably should have concluded that an

accounting restatement is required or (b) a court, regulator, or other legally authorized body directs a

restatement.

Additional Recoupment; Fraud or Intentional Misconduct

If the Board or an appropriate committee has determined that any fraud or intentional misconduct by

one or more Covered Officers caused, directly or indirectly, the Company to restate its financial

statements, the Board or committee shall take, in its sole discretion, such additional action, if any, as it

deems necessary to remedy the misconduct and prevent its recurrence. Notwithstanding the

“Compensation Subject to Recoupment” and “Required Recoupment; Accounting Restatement”

sections above, this may include requiring reimbursement of any bonus or incentive compensation

awarded to such officers and/or the cancellation of unvested equity-based awards previously granted to

such Covered Officers in the amount by which compensation exceeded any lower payment that would

have been made based on the restated financial results.

Recoupment Method

The Board or committee may determine, in its sole discretion, the method for recouping compensation

from a Covered Officer reasonably promptly under this Policy including, without limitation: (a)

requiring reimbursement of cash previously paid; (b) seeking recoupment of any gain realized on the

vesting, exercise, settlement, sale, transfer, or other disposition of any equity or equity-based awards;

cancelling outstanding vested or unvested equity or equity-based awards; (e) forfeiting any vested non-

qualified deferred compensation account balances; and/or (f) taking any other remedial and

recoupment action permitted by law, as determined by the Board or committee. The Board or

committee shall not be required to seek to recoup compensation under this Policy if such recoupment

would (i) be impracticable, (ii) violate home country laws, or (iii) likely cause an otherwise tax-

qualified retirement plan, under which benefits are broadly available to employees of the Company, to

fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the U.S. Internal Revenue

Code of 1986, as amended; each as determined by the Board or committee in accordance with the New

York Stock Exchange listing standards. Any such determination that recoupment is not required shall

be evidenced by the Board or committee.

The Company shall not indemnify any Covered Officers against the loss of any compensation resulting

from the application of this Policy.