Summary
This 8-K filing by Bank of America Corporation (BAC) announced significant retrospective financial reporting changes and reclassifications, effective January 1, 2019. These adjustments primarily affect the presentation of the Consolidated Statement of Income and segment allocations. The company aims to provide a more relevant presentation of its consolidated and business segment results. Importantly, the consolidated net income for prior periods, as reported in their 2018 10-K, remains unchanged, but the supplemental information allows investors to understand how prior periods would have been presented under the new methodology. The changes include a simplification of line items within net interest income and noninterest income, with detailed information still available in the financial statement notes. The noninterest expense section has been updated for better functional alignment. A key reclassification moves interest expense on structured notes from interest expense to trading account income. Additionally, methodologies for allocating funding costs, credits, and expenses related to asset and liability management have been refined, with certain financing costs reattributed from 'All Other' to 'Global Wealth & Investment Management'.
Key Highlights
- 1Bank of America implemented retrospective financial reporting changes and reclassifications effective January 1, 2019.
- 2The goal of these changes is to provide a more relevant presentation of consolidated and business segment results.
- 3The Consolidated Statement of Income now features fewer line items for net interest and noninterest income, with details deferred to the notes.
- 4Noninterest expense presentation has been updated to enhance functional alignment.
- 5Interest expense on structured notes is now classified under 'Trading Account Income' instead of 'Interest Expense'.
- 6Methodologies for allocating asset/liability management costs have been refined, including reattribution of certain financing costs to 'Global Wealth & Investment Management'.
- 7Consolidated net income for prior periods as reported in the 2018 10-K remains unchanged.