# Bank of America Corporation (BAC) — Business, Risks and Management's Discussion ## Business *From the FY2025 Annual Report on Form 10-K, accession 0000070858-26-000157.* Bank of America is a Delaware-incorporated bank holding company and financial holding company that serves individual consumers, small- and middle-market businesses, institutional investors, large corporations and governments with banking, investing, asset management and other financial and risk management products and services. It operates its banking activities primarily under the Bank of America, National Association (BANA) charter, and is headquartered at 100 North Tryon Street, Charlotte, North Carolina. At December 31, 2025 the Corporation held $3.4 trillion in assets and employed approximately 213,000 people, serving clients across the U.S., its territories and more than 35 countries and jurisdictions. The retail franchise covers all major U.S. markets: approximately 69 million consumer and small business clients, approximately 3,600 retail financial centers, approximately 15,000 ATMs, and digital platforms with approximately 49 million active users including approximately 41 million active mobile users. The company supports approximately four million small business households. Its wealth businesses held $4.8 trillion of client balances at year-end 2025. Revenue comes from two broad streams — net interest income earned on a large deposit-funded loan and securities book, and fee and trading income. In 2025 those were $60.1 billion and $53.0 billion respectively, for total revenue, net of interest expense, of $113.1 billion. The fee streams are diversified: investment and brokerage services $20.0 billion, market making and similar activities $12.0 billion, investment banking fees $6.6 billion, service charges $6.5 billion and card income $6.4 billion. **Four reportable segments**, with remaining operations in All Other: - **Consumer Banking** — lending, deposit and investment products for consumers and small businesses through the financial center, ATM, call center and digital network, with financial centers in 38 states and the District of Columbia. Consumer investment assets reached $599.1 billion at year-end 2025. - **Global Wealth & Investment Management (GWIM)** — two primary businesses. Merrill Wealth Management's advisory business serves clients with over $250,000 in total investable assets through a financial advisor network; Bank of America Private Bank, together with Merrill's Private Wealth Management business, serves high net worth and ultra high net worth clients with wealth structuring, investment management, trust and specialty asset management services. - **Global Banking** — Global Corporate Banking, Global Commercial Banking, Business Banking and Global Investment Banking. Lending products include commercial loans, leases, commitment facilities, trade finance, commercial real estate lending and asset-based lending; treasury solutions include deposits, treasury management, corporate credit cards, merchant services, foreign exchange and short-term investment products; investment banking covers debt and equity underwriting and distribution and merger-related and other advisory services. - **Global Markets** — sales, trading and research for institutional clients across fixed-income, credit, currency, commodity and equity businesses, including market-making, financing, securities clearing, settlement and custody, and derivative risk management products for commercial and corporate clients. - **All Other** — asset and liability management activities, liquidating businesses, certain unallocated expenses, and adjustments that allocate income tax benefits from tax-related equity investments in order to present Global Banking and Global Markets on a fully taxable-equivalent basis. The economics of certain investment banking and underwriting activities are shared between Global Banking and Global Markets, so consolidated investment banking fees are reported separately from the segment attribution. **Competition.** The company competes with banks, thrifts, credit unions, investment banking and advisory firms, brokerages, insurers, mortgage banks, card issuers, mutual funds, hedge funds, private equity firms, and e-commerce and internet-based companies — increasingly including firms that operate solely online and non-financial companies using emerging technologies such as digital assets. Competition turns on service and convenience, pricing, product range, lending limits, technology quality and reputation, and on the ability to attract and retain employees while managing compensation cost. Compensation and benefits expense was $42.3 billion in 2025 (61 percent of total noninterest expense) against $40.2 billion in 2024 (60 percent). **Regulation.** As a registered financial holding company and BHC the Corporation is supervised by the Federal Reserve; the U.S. bank subsidiaries, organized as national banking associations, are regulated by the OCC, FDIC and Federal Reserve. Financial holding company status is conditioned on minimum capital ratios, supervisory ratings and satisfactory Community Reinvestment Act ratings at the depository institutions; failure to remain eligible could cause the Federal Reserve to limit activities, including acquisitions. Other supervisors include the SEC, FINRA and the NYSE for broker-dealers, the CFTC and NFA for the futures commission merchant and swap dealer entities, state insurance regulators, the CFPB for consumer products, and non-U.S. prudential regulators and central banks. Structural constraints that shape the business: the Riegle-Neal deposit cap (a BHC may not, as a result of an acquisition, control more than 10 percent of total U.S. insured deposits) — at June 30, 2025 the Corporation held greater than 10 percent of total U.S. insured deposits, which forecloses further whole-bank acquisitions on that measure; a parallel Financial Reform Act limit at 10 percent of total U.S. financial institution liabilities, which the Corporation's liabilities did not exceed at June 30, 2025; the Volcker Rule's ban on short-term proprietary trading and limits on hedge fund and private equity relationships; resolution planning every two years under a "single point of entry" strategy for the holding company and a separate FDIC-required plan for BANA; and FDIC deposit insurance assessments, including special assessments such as the one imposed in 2023 to recover Deposit Insurance Fund losses from the Silicon Valley Bank and Signature Bank failures. Capital distributions depend on maintaining regulatory capital above minimums plus buffers. Based on the 2025 CCAR stress test the Corporation's stress capital buffer decreased to 2.5 percent, and its G-SIB surcharge is 3.0 percent under Method 2. **Properties.** Approximately 62.9 million square feet in over 19,600 facilities and ATM locations globally, including approximately 56.9 million square feet in the U.S. and approximately six million square feet in more than 35 countries. Principal properties include the owned Bank of America Corporate Center in Charlotte, the leased Bank of America Tower at One Bryant Park in New York (in which the Corporation holds a 49.9 percent joint venture interest), the Bank of America Financial Centre in London and the Cheung Kong Center in Hong Kong. Common stock trades on the New York Stock Exchange under the symbol "BAC"; there were 122,167 registered holders of common stock as of February 24, 2026. --- ## Risk factors *From the FY2025 Annual Report on Form 10-K, accession 0000070858-26-000157. Condensed to the substantive risks.* **Markets, rates and economic conditions.** Results depend on the level and volatility of interest rates, GDP and growth, inflation, employment and labor market conditions, consumer spending, home prices and commercial property values, energy prices, bankruptcies and counterparty defaults. Adverse developments in the U.S. or global banking industry — bank and nonbank failures, liquidity concerns — can transmit through markets. The Federal Reserve reduced policy rates in 2025 and uncertainty remains about the pace and duration of further reduction; a future move to lower rates would typically reduce net interest income. Conversely, if inflation does not continue to decline toward target, rates could be held or raised, producing a flat or inverted curve and market volatility. High and rising U.S. and global debt levels, uncertainty about the U.S. budget process and the debt ceiling could produce ratings downgrades, higher rates, dollar depreciation and volatility. Significant increases in tariff rates in the past year generated heightened market volatility and adversely affected asset prices in early 2025; further tariff escalation, particularly between the U.S. and China, could disrupt trade and provoke retaliation including foreign exchange measures or large-scale sales of U.S. Treasury bonds. **Market risk and asset valuation.** Market risks affect the value of securities, trading assets and other financial instruments, the cost of debt capital, the value of and fees on assets under management, client trading volumes, and capital markets fee income. Models and hedging strategies have inherent limits: in stress, previously uncorrelated indicators can become correlated, limiting hedge effectiveness. Where securities lack a liquid market or the Corporation holds a position large relative to available liquidity, positions may not be reducible and losses may exceed expectations. Increases in rates or wider spreads adversely affect the fair value of debt securities — reducing accumulated other comprehensive income and thus capital for available-for-sale securities, and adversely affecting the regulatory liquidity position, which includes eligible AFS and held-to-maturity debt securities. Difficulty valuing assets may increase risk-weighted assets, requiring more capital. **Liquidity and funding.** Liquidity is supported by globally sourced deposits and by secured and unsecured capital markets liabilities, including credit-sensitive short-term repo funding and securitizations with the GSEs. Named threats include inability to access capital markets, decreases in collateral value or increased collateral requirements, prolonged federal government shutdowns, uncertainty about potential GSE privatization, unwillingness or inability of the Federal Reserve to act as lender of last resort, unexpected simultaneous draws on credit lines or deposits, and large-scale deposit migration — including to higher-yielding deposits, to institutions perceived as safer, into digital assets such as stablecoins, or onto non-bank financial platforms. Net interest margin compression can follow from offering higher than expected deposit rates. Concentrations in the funding profile by maturity, currency or counterparty reduce funding efficiency. **Credit ratings.** A downgrade could widen credit spreads, impair access to credit markets and to short-term funding sources such as repo financing, raise the cost of funds, and — under certain OTC derivative contracts and trading agreements — require additional collateral or permit counterparties to terminate. **Holding company structure and resolution.** Bank of America Corporation is a separate legal entity dependent on dividends, distributions, loans and other payments from bank and nonbank subsidiaries to fund its common and preferred dividends and debt obligations; those subsidiaries face laws restricting dividends and transactions with affiliates. Under the single point of entry strategy the Corporation has entered intercompany arrangements contributing most of its capital and liquidity to key subsidiaries; if its liquidity deteriorates so severely that resolution becomes imminent, it will no longer be able to draw liquidity from those subsidiaries and must contribute remaining financial assets to a wholly-owned holding company subsidiary. If the FDIC and Federal Reserve jointly find the resolution plan not credible, they could impose more stringent capital or liquidity requirements or restrictions on growth and activities. In an orderly liquidation, third-party creditors of subsidiaries may receive significant or full recoveries while security holders of the parent could face significant or complete losses. **Credit.** Loans, letters of credit, derivatives, debt securities, trading account assets and held-for-sale assets all carry credit risk. The allowance for credit losses rests on lifetime current expected credit loss models whose forecasts of borrower performance under changing economic conditions are difficult, interrelated judgments; the allowance may prove insufficient if the outlook deteriorates significantly, quickly or unexpectedly. Named concentrations: consumer real estate and consumer credit card, and commercial real estate (particularly office, which remains at risk from shifts in demand and tight credit conditions), finance companies, and asset managers and funds. The Corporation also has significant credit concentration with the financial services industry itself — broker-dealers, commercial and investment banks, insurers, mutual funds, hedge funds, CCPs and alternative asset managers — whose interconnectedness means a default or loss of confidence could produce market-wide liquidity disruptions. Transactions with sovereign nations, U.S. states and municipalities add further exposure. Increasing frequency and severity of extreme weather events and natural disasters could impair collateral values, insurability and clients' ability to pay. **U.S. housing and the GSEs.** During 2025 the housing market continued to be affected by elevated mortgage rates, with 30-year fixed rates more than double 2021 levels; home prices remained generally stable in 2025 but with regional dispersion the Corporation has been monitoring. A downturn could force significant write-downs, notably in the held-for-investment residential mortgage and home equity portfolio. The Corporation sold approximately $2.3 billion of loans to the GSEs during 2025, primarily Freddie Mac. Freddie Mac and Fannie Mae remain in conservatorship; a reduced GSE role could force alternative funding, larger retained balance sheet positions, Federal Home Loan Bank funding or private label securitization, raising funding cost and credit risk. **Derivatives.** Large derivative books expose the Corporation to unexpected market, credit and operational losses, to collateral and remedial-action triggers on ratings changes, and — as a member of various CCPs — to mutualized losses if other members default, to discretionary margin increases, and to non-performance by clients for whom it clears. **Geopolitical.** The Corporation does business globally including in emerging markets. Political and economic interactions with important trading partners including China have become more fragmented, raising the prospect of sanctions, further tariff increases and restrictions on cross-border trade, investment and data transfer. Adverse developments in or expansion of existing military conflicts (Russia/Ukraine, the Middle East) or escalation of tensions between China and Taiwan could disrupt commodity and financial markets. Nation-state cyberattacks and cyberespionage, including using AI, threaten the Corporation's and its third parties' systems and the financial infrastructure it relies on. **Operations, technology and cybersecurity.** Operational risk spans the whole organization and is amplified by extensive reliance on third parties and by processing large volumes of complex transactions across currencies and jurisdictions. Cybersecurity exposure remains heightened because of the Corporation's size, brand, global presence and role in the financial system. Attack tactics are pervasive, sophisticated and designed to evade defenses; attackers include organized crime, hostile foreign governments and their proxies and state-sponsored actors. The Corporation states that while it and its third parties have experienced cybersecurity incidents, information and security breaches and technology failures, it has not experienced material losses or other material consequences from them — but expects such events and impacts to continue with increased frequency and severity. Emerging technologies are explicitly named as risk amplifiers: AI lowers the entry barriers to planning and executing attacks, enables more personalized and harder-to-detect social engineering and improves vulnerability discovery; advances in quantum computing may introduce cryptography risks. Expanded internal AI use, including third-party AI services and autonomous AI agents, may produce increased data risk, unpredictable system interactions, inadequate safeguards, execution errors or outcomes misaligned with intent. Concentration of technology and service offerings in a small number of providers or models, including AI and cloud services, could produce systemic impact across the industry. **Mortgage servicing.** A material uncured breach of servicing or master servicing obligations could cause loss of servicing income, indemnification liability, litigation or regulatory action; foreclosure irregularities or challenges could produce costs and losses. **Regulatory, compliance and legal.** The Corporation operates in a highly regulated industry subject to evolving LRRs and Executive Branch Actions, with substantial regulatory enforcement and fines across the sector. Specific matters disclosed: in December 2024 the OCC issued a Consent Order against BANA relating to aspects of its Bank Secrecy Act, anti-money laundering and economic sanctions compliance programs, and the Corporation continues to respond to information requests from other regulators on similar aspects; in recent years it has entered orders or settlements regarding rates paid on uninvested cash swept into interest-paying bank deposits, credit card sales and marketing practices, representment fee practices, and its participation in COVID-19 relief and other government assistance programs including unemployment benefit processing for California and certain other states. It may also be adversely affected by matters related to fraud perpetrated against clients using electronic payments, including Zelle. Regulators have authority to conduct investigations, pursue enforcement, assess fines and restitution, require remediation, issue cease and desist orders, limit activities and impose consent orders; in some cases authorities have required criminal pleas or other extraordinary terms. **Capital and liquidity requirements.** As a G-SIB the Corporation must hold a G-SIB surcharge, a stress capital buffer and a countercyclical buffer, reassessed at least annually, and meet the Liquidity Coverage Ratio and Net Stable Funding Ratio. Its G-SIB surcharge is expected to increase to 3.5 percent from 3.0 percent in 2027 and could increase further. U.S. banking regulators are expected to release proposals in 2026 revising methodologies for measuring and reporting risk-based capital adequacy, including the calculation of risk-weighted assets and the G-SIB surcharge; timing and composition are uncertain and final rules could adversely affect capital requirements. **Accounting and tax.** Erroneous application of estimates and assumptions could require correction and restatement. Changes in U.S. and non-U.S. tax law, including changes to the 2025 Budget Reconciliation Act, and OECD rules imposing a 15 percent global minimum tax on a country-by-country basis, could materially affect the effective tax rate and tax liabilities. The Corporation holds U.K. net deferred tax assets consisting primarily of net operating losses expected to be realized in a U.K. subsidiary over an extended number of years; adverse developments could lead management to reassess its conclusion that no valuation allowance is necessary. **Reputation.** Reputational harm can arise from misconduct, failure to detect or respond to fraud against clients, fee practices including overdraft and non-sufficient funds fees, lending and compensation practices, cybersecurity incidents, system outages, breaches of fiduciary obligations, and challenges or criticism of environmental and social practices from parties with diverging views. Perceptions of liquidity and financial condition, or actions by others in the industry, may also cause harm; adverse publicity including social media posts, whether or not accurate, may trigger a loss of confidence. **Competition and adaptation.** Pressure to offer more attractive terms — lower fees, lower-cost investment strategies, higher deposit rates — may impair competitiveness, and the Corporation may be disadvantaged by more stringent regulatory requirements than apply to nonbank competitors or entities with limited bank charters. Widespread adoption of emerging technologies — AI, automated decision-making, self-service digital trading platforms, digital assets including cryptocurrencies and stablecoins, and distributed-ledger payment, clearing and settlement — creates strategic risk and could drive increased deposit volatility or significant long-term deposit reduction (financial disintermediation). **Models and data.** Models used enterprise-wide to forecast losses, project revenue and expense, plan capital and measure risk are limited by simplifying assumptions, uncertainty in outcomes and emerging risks including AI-reliant applications; failure could produce funding or liquidity shortfalls, adverse business decisions and regulatory risk. Failure to manage data accurately, timely and completely could impair risk management, reporting, surveillance for misconduct and strategic decision-making. **Climate.** Physical risks — extreme weather, floods, wildfires, hurricanes, tornados, and chronic risks such as rising temperatures and sea levels — could damage facilities, impair borrowers' repayment ability, damage collateral, cause rapid deposit outflows, drawdowns of credit facilities or insurance shortfalls. Transition risks from the shift to a low-carbon economy could alter strategic planning, limit activities and products, amplify credit and market risk and increase expenses. Climate-related regulatory approaches and disclosure requirements continue to evolve and diverge across and within jurisdictions. Achieving stated goals — net zero greenhouse gas emissions before 2050 across financing activities, operations and supply chain, interim 2030 targets including financed emissions, and sustainable finance goals — depends on technological advances, sector roadmaps, public policy and better emissions data, much of it outside the Corporation's control. Divergent stakeholder perspectives increase the likelihood that any action or inaction on climate will be perceived negatively. **Talent.** Performance depends on highly skilled individuals, and competition for them is intense from inside and outside financial services, including from institutions subject to different compensation and hiring rules. Because a substantial portion of compensation is equity-based, declines in profitability or outlook could impair the ability to attract and retain employees. --- ## Management's discussion and analysis — fiscal 2025 *From the FY2025 Annual Report on Form 10-K, accession 0000070858-26-000157.* **Headline.** Net income was $30.5 billion, or $3.81 per diluted share, in 2025 against $27.0 billion, or $3.19, in 2024. Management attributes the increase to higher net interest income and noninterest income and a lower provision for credit losses, partially offset by higher noninterest expense. Total revenue, net of interest expense, was $113.1 billion against $105.9 billion. Return on average assets was 0.89 percent (0.82 percent in 2024), return on average common shareholders' equity 10.59 percent (9.53 percent) and the efficiency ratio 61.65 percent (63.12 percent). Return on average tangible common shareholders' equity, a non-GAAP measure, was 14.22 percent against 12.94 percent. At year-end 2025 total loans and leases were $1,185.7 billion (from $1,095.8 billion), total assets $3,411.7 billion (from $3,261.3 billion), total deposits $2,018.7 billion (from $1,965.5 billion) and total shareholders' equity $303.2 billion (from $294.0 billion). **An accounting method change frames the comparatives.** Effective in the fourth quarter of 2025 the Corporation changed accounting methods for its tax-related affordable housing, eligible wind renewable energy and solar renewable energy equity investments, applied retrospectively. The primary effect is a reclassification between income statement lines that nets income tax credits and benefits against the investment expense; certain prior-period information has been revised to reflect it. **Net interest income** rose $4.0 billion to $60.1 billion. Net interest yield on a fully taxable-equivalent basis rose six basis points to 2.01 percent. The drivers: higher net interest income related to Global Markets activity, fixed-asset repricing, and deposit and loan growth, partially offset by the impact of lower interest rates and one less day of interest accrual. **Noninterest income** rose $3.2 billion to $53.0 billion. Investment and brokerage services rose $2.2 billion to $20.0 billion on higher asset management fees (higher market valuations and positive AUM flows) and higher brokerage fees on increased client activity. Investment banking fees rose $444 million to $6.6 billion on higher debt issuance and advisory fees, partially offset by lower equity issuance fees. Service charges rose $402 million to $6.5 billion on higher treasury service charges. Other income rose $1.0 billion to $1.6 billion primarily on gains on leveraged finance positions. Offsetting: market making and similar activities fell $953 million to $12.0 billion, driven by lower trading revenue from credit products in Fixed Income, Currencies and Commodities and lower income from derivatives used in foreign currency risk management. **Provision for credit losses** fell $146 million to $5.7 billion. Net charge-offs were $5.6 billion against $6.0 billion, the decrease driven by asset quality improvement in commercial real estate office. Consumer net charge-offs fell $90 million to $4.1 billion, primarily in the other consumer and credit card portfolios. The allowance for credit losses rose $44 million to $14.4 billion at December 31, 2025, with increases in the commercial portfolio of $229 million and consumer real estate of $128 million partly offset by a $313 million decrease in credit card and other consumer. The weighted economic outlook underpinning the year-end reserve assumes a U.S. average unemployment rate of approximately five percent in the fourth quarter of 2026 holding near that level through the fourth quarter of 2027, and U.S. real GDP growth of 1.4 percent and 1.8 percent year-over-year in the fourth quarters of 2026 and 2027. **Noninterest expense** rose $2.9 billion to $69.7 billion, driven by continued investments in people, technology and marketing and higher revenue-related expenses, partially offset by a reduction in the FDIC special assessment accrual in 2025 against an increase in 2024. **Segments.** - *Consumer Banking* — net income up $1.5 billion to $12.2 billion. Net interest income up $2.2 billion to $35.3 billion on higher deposit spreads and loan and deposit balances; noninterest income $8.4 billion, relatively unchanged. Provision down $338 million to $4.6 billion on improved credit card asset quality; noninterest expense up $593 million to $22.7 billion on investments in people and marketing. Return on average allocated capital 28 percent, from 25 percent. Average loans and leases up $5.5 billion to $319.3 billion; average deposits up $2.5 billion to $948.1 billion, with time deposit growth of $16.5 billion and net checking inflows of $7.2 billion partly offset by $21.1 billion of net outflows from money market and other savings. Consumer investment assets up $81.3 billion to $599.1 billion. Total credit card purchase volumes rose $8.9 billion and debit card purchase volumes rose $37.6 billion; the risk-adjusted margin rose eight basis points. A net decrease of 72 financial centers and an increase of 16 ATMs continued the network optimization. - *GWIM* — net income up $407 million to $4.7 billion; operating margin 25 percent in both years. Net interest income up $228 million to $7.2 billion on loan growth. Noninterest income up $1.7 billion to $17.7 billion, with asset management fees up 12 percent to $15.4 billion. Noninterest expense up $1.4 billion to $18.6 billion on revenue-related incentives and investment in people and technology. Return on average allocated capital 24 percent, from 23 percent. Average loans and leases up $19.2 billion to $243.1 billion on custom lending, securities-based lending and residential mortgage; average deposits down $7.7 billion to $279.8 billion as clients moved to higher-yielding cash alternatives and paid taxes. Merrill Wealth Management revenue $20.7 billion (up nine percent); Bank of America Private Bank revenue $4.2 billion (up eight percent). Client balances rose $499.3 billion, or 12 percent, to $4.8 trillion. - *Global Banking* — the one segment where earnings fell: net income down $191 million to $7.8 billion on higher noninterest expense and provision, partly offset by higher revenue. Net interest income down $624 million to $12.6 billion on lower interest rates, partly offset by higher average deposit and loan balances. Noninterest income up $984 million to $11.5 billion on sales of certain leveraged finance positions, higher investment banking fees and higher treasury service charges. Provision up $60 million to $943 million, driven by the commercial and industrial portfolio and partly offset by improvement in commercial real estate. Noninterest expense up $563 million to $12.4 billion on investments in people, technology and operations and higher regulatory costs. Return on average allocated capital 15 percent, from 16 percent. Within it, Business Lending revenue fell $698 million while Global Transaction Services revenue rose $506 million; average loans and leases of $385.3 billion rose three percent and average deposits of $616.8 billion rose 13 percent. - *Global Markets* — net income up $489 million to $6.1 billion. Net DVA losses were $35 million against $113 million in 2024; excluding net DVA, net income rose $430 million to $6.1 billion. Revenue rose $2.3 billion to $24.1 billion on higher sales and trading revenue, sales of certain leveraged finance positions and higher investment banking fees. Sales and trading revenue rose $2.1 billion ($2.0 billion excluding net DVA), with FICC up $896 million ($840 million ex-DVA) on improved trading performance in macro products and Equities up $1.2 billion ($1.1 billion ex-DVA) on increased client activity. Noninterest expense rose $1.5 billion to $15.4 billion. Average total assets rose $99.2 billion to $1.0 trillion. Return on average allocated capital 13 percent, from 12 percent. - *All Other* — noninterest expense fell $1.1 billion to $575 million, primarily on the lower FDIC special assessment accrual in 2025 against an increase in 2024 and lower expenses related to a liquidating business activity. The loss in noninterest income narrowed $520 million on a reduction in the volume of tax-related equity investments and lower valuation losses on certain derivatives; the income tax benefit fell $166 million on a lower pretax loss. **Capital and liquidity.** At December 31, 2025 the CET1 capital ratio was 11.4 percent under the Standardized approach, against a minimum CET1 requirement of 10.0 percent (a 4.5 percent minimum plus a 3.0 percent G-SIB surcharge plus a 2.5 percent stress capital buffer). Average Global Liquidity Sources were $975 billion in the fourth quarter of 2025 (the three months ended December 31, 2025) against $953 billion in the fourth quarter of 2024. On July 23, 2025 the Board authorized a $40 billion common stock repurchase program effective August 1, 2025, replacing a program that expired the same date; in the fourth quarter of 2025 the Corporation repurchased approximately 117 million shares, or $6.3 billion, under it. On February 3, 2026 the Board declared a quarterly common dividend of $0.28 per share, payable March 27, 2026 to holders of record March 6, 2026. --- ## Current quarter — second quarter of fiscal 2026 (three and six months ended June 30, 2026) *From the Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, accession 0000070858-26-000394.* **Results.** Net income was $9.1 billion for the quarter and $17.7 billion for the half, or $1.21 and $2.31 per diluted share, against $7.2 billion and $14.5 billion, or $0.90 and $1.79, in the same periods of 2025. Management attributes the increase to higher noninterest income and net interest income and lower provision for credit losses, partially offset by higher noninterest expense. Total revenue, net of interest expense, was $31,558 million for the quarter (from $27,443 million) and $61,830 million for the half (from $55,690 million). Provision for credit losses was $1,366 million and $2,703 million (from $1,592 million and $3,072 million). Noninterest expense was $18,627 million and $37,158 million (from $17,183 million and $34,953 million). Income tax expense was $2,491 million and $4,311 million. Return on average assets was 1.03 percent for the quarter (0.84 percent a year earlier) and 1.01 percent for the half; return on average common shareholders' equity 12.71 percent (10.12 percent) and 12.33 percent; return on average tangible common shareholders' equity, a non-GAAP measure, 17.03 percent (13.61 percent) and 16.52 percent. The efficiency ratio improved to 59.02 percent from 62.61 percent for the quarter and to 60.10 percent from 62.76 percent for the half. **Net interest income** rose $1.3 billion to $16.0 billion for the quarter and $2.6 billion to $31.7 billion for the half. Net interest yield on a fully taxable-equivalent basis rose 14 and 12 basis points, to 2.08 percent for both periods. The drivers were higher net interest income related to Global Markets activity, deposit and loan growth and fixed-asset repricing, partially offset by lower interest rates. **Noninterest income** rose $2.8 billion to $15.6 billion for the quarter and $3.5 billion to $30.1 billion for the half. Investment banking fees rose $710 million for the quarter to $2,138 million on higher debt issuance, advisory and equity issuance fees, and $1.0 billion for the half to $3,979 million led by advisory. Total Corporation investment banking fees, which exclude self-led deals, were $2.1 billion for the quarter — up 50 percent year over year — and $4.0 billion for the half, up 35 percent. Market making and similar activities rose $1.0 billion and $1.1 billion (to $4,177 million and $7,814 million), driven by higher Equities trading revenue and partially offset by lower income from foreign currency risk management. Investment and brokerage services rose $873 million and $1.6 billion (to $5,653 million and $11,194 million) on higher asset management fees and brokerage fees. Service charges rose $91 million and $204 million on higher treasury service charges. Card income declined, to $1,583 million from $1,646 million for the quarter. Other income rose $153 million for the quarter but fell $311 million for the half, the half-year decline reflecting gains recorded on leveraged finance activities in the prior-year period. **Expense** rose $1.4 billion to $18.6 billion for the quarter and $2.2 billion to $37.2 billion for the half, on higher revenue-related expenses and continued investments in people, technology and marketing. The effective tax rate increased for both periods on lower tax preference items — primarily lower renewable energy tax credits on certain tax-related equity investment activity — and lower discrete tax benefits relative to pretax earnings. **Balance sheet.** Total assets rose $87.5 billion from December 31, 2025 to $3,499.2 billion, driven by higher securities borrowed or purchased under agreements to resell and higher customer and other receivables supporting Global Markets client activity, and by higher loans and leases on commercial loan growth, partially offset by lower debt securities from maturities and paydowns. Total liabilities rose $89.6 billion to $3,198.1 billion on higher customer trade payables and trading account liabilities, higher long-term debt issuances and short-term borrowings for liquidity positioning. Total loans and leases were $1,217.6 billion (from $1,185.7 billion) and total deposits $2,025.1 billion (from $2,018.7 billion). Shareholders' equity fell $2.1 billion to $301.1 billion, as capital returns through repurchases and dividends, a decrease in accumulated OCI and a preferred stock redemption outweighed net income. **Credit quality.** The net charge-off ratio for the half declined year over year, primarily on lower commercial real estate office charge-offs. Total net charge-offs were $1.4 billion for the quarter and $2.8 billion for the half, against $1.5 billion and $3.0 billion in the same periods of 2025 — decreases of $113 million and $156 million, driven by asset quality improvement in commercial real estate and credit card. Consumer net charge-offs were relatively unchanged at $1.0 billion for the quarter, and fell $79 million to $2.1 billion for the half, primarily on improvement in the credit card portfolio. Commercial reservable criticized exposure fell $2.7 billion from December 31, 2025, driven by commercial real estate and the commercial and industrial portfolio. Nonperforming loans were relatively unchanged from year-end at $5.8 billion. The allowance for credit losses fell $116 million from December 31, 2025 to $14.3 billion, on continued improvement in credit card and commercial real estate, partially offset by loan growth and a qualitative reserve build related to uncertainties associated with the ongoing conflicts in the Middle East. The consumer allowance for loan and lease losses fell $134 million to $8.2 billion. Management notes that geopolitical tensions, particularly the Middle East conflicts, and persistent inflationary pressures continue to weigh on the broader economic outlook and may contribute to future deterioration in credit quality metrics. Nonperforming residential mortgage balances rose $41 million to $2.0 billion, driven by extended relief provided to borrowers for rebuilding efforts after the 2025 California wildfires. **Segments.** Each segment's quarterly net income rose year over year. - *Consumer Banking* — quarterly net income up $308 million to $3.3 billion; half-year up $837 million to $6.3 billion. Quarterly net interest income up $480 million to $9.2 billion on higher deposit spreads and loan and deposit balances; noninterest income $2.1 billion, relatively unchanged. Quarterly provision down $122 million to $1.2 billion on improved credit card asset quality; quarterly noninterest expense up $234 million to $5.8 billion on technology and marketing investment. Quarterly average loans and leases up $1.9 billion to $321.1 billion on credit card balance growth; quarterly average deposits up $5.0 billion to $957.0 billion, with net inflows of $11.5 billion in checking and $3.8 billion in time deposits against $10.4 billion of net outflows in money market and other savings. Consumer investment assets rose $99.8 billion year over year to $639.5 billion. The quarterly risk-adjusted margin fell 60 basis points on lower card-related fee income and lower net interest margin from loan balance mix, partly offset by lower net charge-offs. - *GWIM* — quarterly net income up $420 million to $1.4 billion; half-year up $742 million to $2.7 billion. Operating margin 27 percent against 22 percent a year earlier in both periods. Quarterly net interest income up $126 million to $1.9 billion; quarterly noninterest income up $808 million to $5.0 billion, with asset management fees up 19 percent to $4.4 billion. Quarterly noninterest expense up $383 million to $5.0 billion on revenue-related incentives. Quarterly average loans and leases up $32.9 billion to $270.3 billion; quarterly average deposits up $4.8 billion to $281.6 billion, with banking balance growth largely offset by a decline in brokerage deposits as clients moved to higher-yielding cash alternatives. Merrill Wealth Management quarterly revenue $5.7 billion (up 16 percent); Bank of America Private Bank $1.2 billion (up 17 percent). - *Global Banking* — quarterly net income up $348 million to $2.0 billion; half-year up $511 million to $4.1 billion, a reversal of the segment's 2025 decline. Quarterly net interest income up $117 million to $3.2 billion on higher average deposit and loan balances, partly offset by lower rates; quarterly noninterest income up $430 million to $3.0 billion on higher investment banking fees and treasury service charges. Quarterly provision down $62 million to $215 million on improved commercial real estate asset quality; the half-year provision decline of $31 million to $400 million was tempered by commercial and industrial loan growth and the Middle East-related qualitative reserve build. Quarterly noninterest expense up $129 million to $3.2 billion. Quarterly average loans and leases of $413.3 billion rose seven percent and quarterly average deposits of $651.9 billion rose eight percent. - *Global Markets* — quarterly net income up $1.1 billion to $2.6 billion; half-year up $1.2 billion to $4.6 billion. Quarterly net DVA losses were $57 million against $51 million. Quarterly revenue rose $2.0 billion to $8.0 billion on higher sales and trading revenue and investment banking fees; sales and trading revenue rose $1.8 billion. FICC revenue rose $281 million for the quarter on improved trading performance in credit products and commodities; Equities revenue rose $1.5 billion on increased client financing activity and strong derivatives and cash trading. Quarterly noninterest expense up $678 million to $4.5 billion. Quarterly average total assets up $97.6 billion to $1.1 trillion. - *All Other* — the net loss widened $269 million to $292 million for the quarter and $116 million to $191 million for the half, driven by lower discrete tax benefits and lower renewable energy tax credits on certain tax-related equity investment activity. **Capital.** The Corporation submitted its 2026 CCAR capital plan and related supervisory stress tests in April 2026, and the Federal Reserve released 2026 CCAR results on June 24, 2026. As announced in February 2026, stress capital buffer requirements for large banks will not change until 2027, so the Corporation's SCB remains 2.5 percent through September 30, 2027 with a CET1 minimum requirement of 10.0 percent through December 31, 2026. At June 30, 2026 the CET1 capital ratio was 11.2 percent under the Standardized approach and 12.5 percent under the Advanced approaches; CET1 capital was $201.6 billion, up $171 million from December 31, 2025 as earnings were largely offset by capital distributions and accumulated OCI. Standardized risk-weighted assets rose $19.3 billion during the quarter to $1,792 billion, which drove the lower CET1 ratio. The binding ratio at June 30, 2026 was the Tier 1 capital ratio under the Standardized approach. Effective January 1, 2026 the Corporation and its insured depository institutions early adopted a final rule on modified enhanced supplementary leverage ratio requirements, cutting the minimum SLR (inclusive of the leverage buffer) to 3.75 percent from 5.0 percent for the Corporation and 6.0 percent for its insured depository institutions. At June 30, 2026 the Corporation's SLR was 5.5 percent and BANA's was 5.9 percent. The G-SIB surcharge will increase by 50 basis points on January 1, 2027 — to 2.0 percent under Method 1 and 3.5 percent under Method 2 — raising minimum capital ratio requirements. On March 19, 2026 the Federal Reserve, OCC and FDIC issued a notice of proposed rulemaking on risk-based capital requirements for large banking organizations, and the Federal Reserve separately issued a notice that would revise the G-SIB surcharge calculation; the Corporation is evaluating the potential impact. During the quarter the Corporation repurchased $6.0 billion of common stock under the $40 billion authorization effective August 1, 2025 and paid $2.0 billion of common dividends. It repurchased and retired approximately 112 million shares in the quarter and 252 million in the half, reducing shareholders' equity by $6.0 billion and $13.2 billion including excise taxes. Preferred dividends declared were $326 million in the quarter and $751 million in the half; during the first quarter of 2026 the Corporation fully redeemed its Series DD preferred stock for $1.0 billion. Average Global Liquidity Sources were $947 billion for the three months ended June 30, 2026, against $975 billion for the fourth quarter of 2025 (the three months ended December 31, 2025), the sequential basis the filing presents. **Litigation and regulatory.** Litigation and regulatory investigation-related expense, excluding internal and external legal service providers, was $180 million in the quarter and $376 million in the half, against $82 million and $238 million a year earlier. The estimated range of possible loss for disclosed matters was $0 to $0.25 billion in excess of any accrued liability at June 30, 2026. BANA continues to work toward resolution of the OCC Consent Order announced December 23, 2024 on BSA/AML and economic sanctions compliance programs; resolution of that order and other regulatory inquiries may include monetary penalties and other remedial actions. One matter closed in the period: on March 31, 2026 the U.S. District Court for the District of Columbia ruled that BANA did not owe additional interest to the FDIC on deposit insurance assessments, and because no appeal was filed by June 15, 2026 the lawsuit concluded as of that date, with the remaining pledged security released. --- ## Subsequent events *From the Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, accession 0000070858-26-000394, and the Current Report on Form 8-K dated July 24, 2026, accession 0000070858-26-000364.* The Corporation evaluates subsequent events through the date of filing with the SEC. The following occurred after June 30, 2026 and before the July 31, 2026 filing date: - **July 23, 2026 — common dividend raised 14 percent.** The Board of Directors declared a quarterly common stock dividend of $0.32 per share, an increase of $0.04, or 14 percent, from the prior quarterly dividend, payable September 25, 2026 to shareholders of record as of September 4, 2026. - **July 23, 2026 — preferred dividend.** The Board declared a regular quarterly cash dividend of $1.75 per share on the 7% Cumulative Redeemable Preferred Stock, Series B, payable October 23, 2026 to shareholders of record as of October 9, 2026. - **Repurchase capacity carried into the second half.** Approximately $17 billion of common stock repurchases remained available under the $40 billion authorization as of June 30, 2026. - **Shares outstanding.** 6,992,748,365 shares of common stock were outstanding on July 30, 2026. No acquisition, divestiture, post-period financing or litigation settlement was disclosed as a subsequent event in the quarterly report.