8-KOther EventsExhibits & Filings

BANK OF AMERICA CORP /DE/ 8-K Report, Corporate Update (Aug 1, 2016)

Filed August 1, 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 August 1, 2016, to report a significant change in its business segment reporting structure, effective April 1, 2016. The company has eliminated the 'Legacy Assets & Servicing' segment and reorganized its operations into four primary segments: Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets, with remaining operations categorized under 'All Other'. This realignment is intended to better align reporting with how the company manages its businesses. A key outcome of this restructuring was the reclassification of consumer real estate-secured lending and servicing activities. The company reviewed these activities across various segments to categorize loans as 'core' or 'non-core.' Core loans, generally those originated after January 1, 2010, or meeting specific underwriting standards, are now reflected within the balance sheets of the appropriate business segments. Non-core loans, primarily run-off portfolios, are consolidated under the 'All Other' category. This reclassification resulted in a net $23 billion increase in consumer real estate loans on the Consumer Banking segment's balance sheet as of April 1, 2016, and a $1 billion increase in the 'All Other' segment.

Key Highlights

  • 1Effective April 1, 2016, Bank of America realigned its business segments, eliminating 'Legacy Assets & Servicing' and consolidating operations into four primary segments: Consumer Banking, Global Wealth & Investment Management, Global Banking, and Global Markets.
  • 2The segment realignment aims to better reflect how the company internally manages its diverse business operations.
  • 3A significant review of consumer real estate-secured lending and servicing activities was conducted as part of this realignment.
  • 4Loans have been categorized as 'core' (generally originated after Jan 1, 2010, or meeting current underwriting standards) and 'non-core' (primarily run-off portfolios).
  • 5The reclassification led to a net $23 billion increase in consumer real estate loans on the Consumer Banking segment's balance sheet.
  • 6The 'All Other' segment saw a net $1 billion increase in consumer real estate loans due to this reclassification.
  • 7Prior period financial results and segment data have been reclassified to conform to the new reporting structure.

Frequently Asked Questions

This 8-K filing announces and details a change in Bank of America's business segment reporting structure, effective April 1, 2016. The company has eliminated the 'Legacy Assets & Servicing' segment and reorganized its reporting into four core segments to better align with its management structure.

The realignment involved reclassifying consumer real estate loans into 'core' and 'non-core' categories. This resulted in a net $23 billion increase in consumer real estate loans on the Consumer Banking segment's balance sheet and a $1 billion increase in the 'All Other' segment as of April 1, 2016.

Generally, 'core' loans are those originated after January 1, 2010, or that meet current underwriting guidelines. 'Non-core' loans typically include those in legacy private-label securitizations, government-insured loans originated before 2010, products no longer originated, and specific types of pre-2010 loans that were already nonperforming or modified.

The filing indicates that updated information, including Management's Discussion and Analysis (MD&A) and Financial Statements, is provided as exhibits (Exhibit 99.1 and Exhibit 99.2) and should be reviewed for details on the revised segment presentation and its impact.