8-KRegulation FDExhibits & Filings

BANK OF AMERICA CORP /DE/ 8-K Report, Regulation FD Disclosure (Jul 12, 2016)

Filed July 12, 2016For Securities:BACBAC-PBBAC-PKBAC-PLBAC-PMBAC-PNBAC-PSBML-PJBAC-PEBAC-PPBAC-PQBACRPBML-PGBML-PHBML-PLBAC-POMER-PK

Summary

Bank of America Corporation (BAC) filed an 8-K on July 12, 2016, to disclose a significant change in its business segment reporting structure. Effective April 1, 2016, the company eliminated the 'Legacy Assets & Servicing' segment and consolidated its operations into four primary segments: Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets, with remaining operations in 'All Other'. This realignment aims to better reflect how the company currently manages its businesses. Crucially, this filing also details a reclassification of consumer real estate secured lending and servicing activities into 'core' and 'non-core' categories. This resulted in a net $23 billion increase in consumer real estate loans within the Consumer Banking segment and a $1 billion increase in the 'All Other' segment as of April 1, 2016. The associated revenues, credit costs, and expenses have also been realigned. Importantly, this segment realignment did not impact the company's overall Consolidated Statement of Income or Consolidated Balance Sheet. Investors can expect to see these new segment presentations in BAC's Second Quarter 2016 10-Q filing and subsequent reports.

Key Highlights

  • 1Bank of America (BAC) has restructured its business segment reporting, effective April 1, 2016.
  • 2The 'Legacy Assets & Servicing' segment has been eliminated.
  • 3Operations are now presented across four core segments: Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets.
  • 4A significant portion of consumer real estate loans and servicing activities have been reclassified into 'core' and 'non-core' categories.
  • 5This reclassification resulted in a net $23 billion increase in consumer real estate loans within the Consumer Banking segment.
  • 6There was also a $1 billion increase in consumer real estate loans in the 'All Other' segment.
  • 7The segment realignment does not affect the company's overall financial statements (Consolidated Statement of Income or Consolidated Balance Sheet).

Frequently Asked Questions

The main reason for this 8-K filing is to inform investors about a change in Bank of America's business segment reporting structure and a reclassification of consumer real estate loans and servicing activities. This is to better align reporting with how the company manages its operations and to provide clarity on the segmentation changes.

This segment realignment did not affect Bank of America's Consolidated Statement of Income or Consolidated Balance Sheet. The changes are primarily in how the company categorizes and presents its results across different business segments, not in the overall financial results themselves.

The filing details a reclassification of consumer real estate secured lending and servicing activities. Loans were categorized as 'core' or 'non-core' based on factors like origination date, underwriting guidelines, and performance status. Generally, loans originated after January 1, 2010, meeting current underwriting standards are considered 'core', while older, non-performing, or government-insured loans (originated prior to 2010) are often classified as 'non-core'.

Investors will see these new segment reporting changes reflected in Bank of America's Second Quarter 2016 Form 10-Q filing and all subsequent filings that include segment information.