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

           Executive Summary                                              26
           Recent Developments                                            27
           Financial Highlights                                           28
           Balance Sheet Overview                                         30
           Supplemental Financial Data                                    31
           Business Segment Operations                                    36
           Consumer Banking                                               37
           Global Wealth & Investment Management                          40
           Global Banking                                                 42
           Global Markets                                                 44
           All Other                                                      45
           Managing Risk                                                  46
           Strategic Risk Management                                      49
           Capital Management                                             49
           Liquidity Risk                                                 54
           Credit Risk Management                                         59
           Consumer Portfolio Credit Risk Management                      60
           Commercial Portfolio Credit Risk Management                    65
           Non-U.S. Portfolio                                             71

         Loan and Lease Contractual Maturities                            72
           Allowance for Credit Losses                                    73
           Market Risk Management                                         75
           Trading Risk Management                                        76
           Interest Rate Risk Management for the Banking Book             79
           Mortgage Banking Risk Management                               80
           Compliance and Operational Risk Management                     80
           Reputational Risk Management                                   81
           Climate Risk Management                                        81
           Complex Accounting Estimates                                   82
           Non-GAAP Reconciliations                                       85

25 Bank of America

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Management report and analysis of the financial situation and operating results

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, provision for credit losses,
expenses, efficiency ratio, capital measures, strategy 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 the London Interbank Offered Rate and other 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 and inflationary environment on the Corporation's business,
financial condition and results of operations; 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 the
economic recovery and our business; 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 the Coronavirus Aid, Relief, and Economic Security
Act and any similar or related rules and regulations; a failure or disruption in
or breach of the Corporation's operational or security systems or
infrastructure, or those of third parties, including as a result of cyberattacks
or campaigns; 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 of widespread health emergencies or
pandemics, including the magnitude and duration of the COVID-19 pandemic and its
impact on the U.S. and/or global, financial market conditions and our business,
results of operations, financial condition and prospects; the impact of natural
disasters, extreme weather events, military conflict, 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

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, "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

Bank of America 26

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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, 2021, the
Corporation had $3.2 trillion in assets and a headcount of approximately 208,000
As of December 31, 2021, we served clients through operations across the U.S.,
its territories and approximately 35 countries. Our retail banking footprint
covers all major markets in the U.S., and we serve approximately 67 million
consumer and small business clients with approximately 4,200 retail financial
centers, approximately 16,000 ATMs, and leading digital banking platforms
( with approximately 41 million active users, including
approximately 33 million active mobile users. We offer industry-leading support
to approximately three 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.


Capital Management
On February 2, 2022, the Corporation announced that the Board of Directors
declared a quarterly cash common stock dividend of $0.21 per share, payable on
March 25, 2022 to shareholders of record as of March 4, 2022.
For more information on our capital resources and regulatory developments, see
Capital Management on page 49.

COVID-19 Pandemic
The Coronavirus Disease 2019 (COVID-19) pandemic (the pandemic) has impacted the
Corporation and may continue to do so, as uncertainty remains about the duration
of the pandemic and the timing and strength of the global economic recovery. As
the pandemic continues to evolve, we regularly evaluate protocols and processes
in place to execute our business continuity plans. In conjunction with our
efforts to support clients affected by the pandemic, we have cumulatively
originated $35.4 billion in loans under the Paycheck Protection Program (PPP)
with amounts outstanding of $4.7 billion and $22.7 billion at December 31, 2021
and 2020. For more information on PPP loans, see Note 1 - Summary of Significant
Accounting Principles to the Consolidated Financial Statements.
The future direct and indirect impact of the pandemic on our businesses, results
of operations and financial condition remains uncertain. Should current economic
conditions deteriorate or if the pandemic worsens due to various factors,
including through the spread of more easily communicable variants of COVID-19,
such conditions could have an adverse effect on our businesses and results of
operations and could adversely affect our financial condition.
For more information on how the risks related to the pandemic adversely affect
our businesses, results of operations and financial condition, see Part 1. Item
1A. Risk Factors on page 8.

LIBOR and Other Benchmark Rates
Subject to the continued publication of certain non-representative London
Interbank Offered Rate (LIBOR) benchmark settings based on a modified
calculation (i.e., on a "synthetic" basis), British Pound Sterling, Euro, Swiss
Franc and Japanese Yen LIBOR settings and one-week and two-month U.S. dollar
(USD) LIBOR settings ceased or became no longer representative of the underlying
market the rates seek to measure (i.e., non-representative) immediately after
December 31, 2021, and the remaining USD LIBOR settings (i.e., overnight, one
month, three month, six month and 12 month) will cease or become
non-representative immediately after June 30, 2023. Separately, the Federal
Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal
Deposit Insurance Corporation (FDIC) issued supervisory guidance encouraging
banks to cease entering into new contracts that use USD LIBOR as a reference
rate by December 31, 2021 subject to certain regulatory-approved exceptions (USD
LIBOR Guidance).
As a result, a major transition has been and continues to be in progress in the
global financial markets with respect to the replacement of Interbank Offered
Rates (IBORs). This is a complex process impacting a variety of our businesses
and operations. IBORs have historically been used in many of the Corporation's
products and contracts, including derivatives, consumer and commercial loans,
mortgages, floating-rate notes and other adjustable-rate products and financial
instruments. In response, the Corporation established an enterprise-wide IBOR
transition program, with active involvement of senior management and regular
reports to the Management Risk Committee (MRC) and Enterprise Risk Committee
(ERC). The program continues to drive the Corporation's industry and regulatory
engagement, client and financial contract changes, internal and external
communications, technology and operations modifications, including updates to
its operational models, systems and processes, introduction of new products,
migration of existing clients, and program strategy and governance.
As of December 31, 2021, the Corporation has transitioned or otherwise addressed
IBOR-based products and contracts referencing the rates that ceased or became
non-representative after December 31, 2021, including LIBOR-linked commercial
loans, LIBOR-based adjustable-rate consumer mortgages, LIBOR-linked derivatives
and interdealer trading of certain USD LIBOR and other interest rate swaps, and
related hedging
27 Bank of America


arrangements. Additionally, in accordance with the USD LIBOR Guidance, the
Corporation has ceased entering into new contracts that use USD LIBOR as a
reference rate, subject to certain regulatory-approved exceptions.
The Corporation launched capabilities and services to support the issuance and
trading in products indexed to various alternative reference rates (ARRs) and
developed employee training programs as well as other internal and external
sources of information on the various challenges and opportunities that the
replacement of IBORs has presented and continues to present. The Corporation
continues to monitor a variety of market scenarios as part of its transition
efforts, including risks associated with insufficient preparation by individual
market participants or the overall market ecosystem, ability of market
participants to meet regulatory and industry-wide recommended milestones and
access and demand by clients and market participants to liquidity in certain
products, including LIBOR products.
With respect to the transition of LIBOR products referencing USD LIBOR settings
ceasing or becoming non-representative as of June 30, 2023, a significant
majority of the Corporation's notional contractual exposure to such LIBOR
currencies, of which the significant majority is derivatives contracts, have
been remediated (i.e., updated to include fallback provisions to ARRs based on
market driven protocols, regulatory guidance and industry-recommended fallback
provisions and related mechanisms) and the Corporation is continuing to
remediate the remaining USD LIBOR exposure. The remaining exposure, a majority
of which is made up of derivatives and commercial loans and which represents a
small minority of outstanding USD LIBOR notional contractual exposure of the
Corporation, will require active dialogue with clients to modify the contracts.
For any residual exposures after June 2023 that continue to have no fallback
provisions, the Corporation is assessing and planning to leverage relevant
contractual and statutory solutions, including relevant state legislation and
any future federal legislation, to transition such exposure to ARRs.
The Corporation has implemented regulatory, tax and accounting changes and
continues to monitor current and potential impacts of the transition, including
Internal Revenue Service tax regulations and guidance and Financial Accounting
Standards Board guidance. In addition, the Corporation has engaged impacted
clients in connection with the transition by providing ARRs education and the
timing of transition events. The Corporation is also working actively with
global regulators, industry working groups and trade associations. For more
information on the expected replacement of LIBOR and other benchmark rates, see
Item 1A. Risk Factors - Other on page 21.

Changes to Overdraft Services
In January 2022, the Corporation announced changes to its overdraft services for
consumer and small business clients, which include eliminating non-sufficient
funds (NSF) fees beginning in February 2022 and reducing overdraft fees from $35
to $10 beginning in May 2022. Fees from overdraft services were approximately $1
billion in 2021 and recorded in Consumer Banking as service charges in the
Consolidated Statement of Income. Due to the policy changes, in 2022 the
Corporation expects a significant reduction in NSF and overdraft fees.

Financial Highlights
Table 1                      Summary Income Statement and Selected Financial Data

(Dollars in millions, except per share information)                                                                        2021                     2020
Income statement
Net interest income                                                                                                 $        42,934          $        43,360
Noninterest income                                                                                                           46,179                   42,168
Total revenue, net of interest expense                                                                                       89,113                   85,528
Provision for credit losses                                                                                                  (4,594)                  11,320
Noninterest expense                                                                                                          59,731                   55,213
Income before income taxes                                                                                                   33,976                   18,995
Income tax expense                                                                                                            1,998                    1,101
Net income                                                                                                                   31,978                   17,894
Preferred stock dividends                                                                                                     1,421                    1,421
Net income applicable to common shareholders                                                                        $        30,557          $        16,473

Per common share information
Earnings                                                                                                            $          3.60          $          1.88
Diluted earnings                                                                                                               3.57                     1.87
Dividends paid                                                                                                                 0.78                     0.72
Performance ratios
Return on average assets (1)                                                                                                   1.05  %                  0.67  %
Return on average common shareholders' equity (1)                                                                             12.23                     


Return on average tangible common shareholders' equity (2)                                                                    17.02                     9.48
Efficiency ratio (1)                                                                                                          67.03                    64.55

Balance sheet at year end
Total loans and leases                                                                                              $       979,124          $       927,861
Total assets                                                                                                              3,169,495                2,819,627
Total deposits                                                                                                            2,064,446                1,795,480
Total liabilities                                                                                                         2,899,429                2,546,703
Total common shareholders' equity                                                                                           245,358                  248,414
Total shareholders' equity                                                                                                  270,066                  272,924

(1)For definitions, see Key Metrics on page 169.
(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 $32.0 billion or $3.57 per diluted share in 2021 compared to
$17.9 billion or $1.87 per diluted share in 2020. The increase in net income was
due to improvement in the provision for credit losses and higher revenue,
partially offset by higher noninterest expense.
For discussion and analysis of our consolidated and business segment results of
operations for 2020 compared to 2019, see the Financial Highlights and Business
Segment Operations sections in the MD&A of the Corporation's 2020 Annual Report
on Form 10-K.

Net Interest Income
Net interest income decreased $426 million to $42.9 billion in 2021 compared to
2020. Net interest yield on a fully taxable-equivalent (FTE) basis decreased 24
basis points (bps) to 1.66 percent for 2021. The decrease in net interest income
was primarily driven by lower interest rates and average loan balances,
partially offset by higher average balances of debt securities. For more
information on net interest yield and the FTE basis, see Supplemental Financial
Data on page 31, and for more information on interest rate risk management, see
Interest Rate Risk Management for the Banking Book on page 79.

        Bank of America 28

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Non-interest income

Table 2 Non-interest income

(Dollars in millions)                                    2021          2020
Fees and commissions:
Card income                                           $  6,218      $  5,656
Service charges                                          7,504         7,141
Investment and brokerage services                       16,690        14,574
Investment banking fees                                  8,887         7,180
Total fees and commissions                              39,299        34,551
Market making and similar activities                     8,691         8,355

Other income                                            (1,811)         (738)

Total noninterest income                              $ 46,179      $ 42,168

Non-interest income increased $4.0 billion for $46.2 billion in 2021 compared to 2020. The following highlights the significant changes.

?  Card income increased $562 million primarily driven by increased client
activity and merchant services revenue.
?  Service charges increased $363 million primarily due to higher treasury and
credit service charges and increased client activity.
?  Investment and brokerage services increased $2.1 billion primarily driven by
higher market valuations and assets under management (AUM) flows, partially
offset by declines in AUM pricing.
?  Investment banking fees increased $1.7 billion primarily due to higher
advisory fees as well as higher debt and equity issuance fees.
?  Market making and similar activities increased $336 million primarily driven
by strong sales and trading performance in Equities, partially offset by a
weaker performance in Fixed Income, Currencies and Commodities (FICC), which
benefited from a more favorable market environment in 2020.
?  Other income decreased $1.1 billion primarily due to a $704 million gain on
sales of certain mortgage loans in the prior year, as well as higher partnership
losses on tax credit investments.

Provision for Credit Losses
The provision for credit losses improved $15.9 billion to a benefit of $4.6
billion in 2021 compared to 2020. The benefit was primarily due to improvements
in the macroeconomic outlook and credit quality. For more information on the
provision for credit losses, see Allowance for Credit Losses on page 73.

Non-interest expenses

Table 3           Noninterest Expense

(Dollars in millions)                                          2021          2020
Compensation and benefits                                   $ 36,140      $ 32,725
Occupancy and equipment                                        7,138         7,141
Information processing and communications                      5,769        


Product delivery and transaction related                       3,881         3,433
Marketing                                                      1,939         1,701
Professional fees                                              1,775         1,694
Other general operating                                        3,089         3,297
Total noninterest expense                                   $ 59,731      $ 55,213

Noninterest expense increased $4.5 billion to $59.7 billion in 2021 compared to
2020. The increase was primarily due to higher compensation and benefits
expense, higher costs associated with processing transactional card claims
related to state unemployment benefits, a contribution to the Bank of America
Foundation and an impairment charge for real estate rationalization.

income tax expense

Table 4 Income tax expense

(Dollars in millions)                           2021           2020
Income before income taxes                   $ 33,976       $ 18,995
Income tax expense                              1,998          1,101
Effective tax rate                                5.9  %         5.8  %

Income tax expense was $2.0 billion for 2021 compared to $1.1 billion in 2020,
resulting in an effective tax rate of 5.9 percent compared to 5.8 percent.
The effective tax rates for 2021 and 2020 were driven by the impact of our
recurring tax preference benefits and positive income tax adjustments from the
impact of U.K. tax law changes discussed below. Our recurring tax preference
benefits primarily consist of tax credits from environmental, social and
governance (ESG) investments in affordable housing and renewable energy,
aligning with our responsible growth strategy to address global sustainability
challenges. Absent these tax credits, the impact of the U.K. tax law changes and
other discrete items, the effective tax rates would have been approximately 25
percent and 26 percent for 2021 and 2020.
In June 2021, the U.K. enacted the 2021 Finance Act, which included an increase
in the U.K. corporation income tax rate to 25 percent from 19 percent. This
change is effective April 1, 2023 and unfavorably affects income tax expense on
future U.K. earnings. In addition, in July 2020, the U.K. enacted a repeal of
the final two percent of scheduled decreases in the U.K. corporation income tax
rate. As a result, in 2021 and 2020, the Corporation recorded write-ups of U.K.
net deferred tax assets of approximately $2.0 billion and $700 million, with
corresponding positive income tax adjustments. These write-ups were reversals of
previously recorded write-downs of net deferred tax assets for prior changes in
the U.K. corporation income tax rate.

29 Bank of America

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Balance Sheet Overview

Table 5                 Selected Balance Sheet Data

                                                                                 December 31
(Dollars in millions)                                                     2021                 2020              $ Change            % Change
Cash and cash equivalents                                            $   348,221          $   380,463          $ (32,242)                   (8) %
Federal funds sold and securities borrowed or purchased under
agreements to resell                                                     250,720              304,058            (53,338)                  (18)
Trading account assets                                                   247,080              198,854             48,226                    24
Debt securities                                                          982,627              684,850            297,777                    43
Loans and leases                                                         979,124              927,861             51,263                     6
Allowance for loan and lease losses                                      (12,387)             (18,802)             6,415                   (34)
All other assets                                                         374,110              342,343             31,767                     9
Total assets                                                         $ 3,169,495          $ 2,819,627          $ 349,868                    12
Deposits                                                             $ 2,064,446          $ 1,795,480          $ 268,966                    15
Federal funds purchased and securities loaned or sold under
agreements to repurchase                                                 192,329              170,323             22,006                    13
Trading account liabilities                                              100,690               71,320             29,370                    41
Short-term borrowings                                                     23,753               19,321              4,432                    23
Long-term debt                                                           280,117              262,934             17,183                     7
All other liabilities                                                    238,094              227,325             10,769                     5
Total liabilities                                                      2,899,429            2,546,703            352,726                    14
Shareholders' equity                                                     270,066              272,924             (2,858)                   (1)
Total liabilities and shareholders' equity                           $ 3,169,495          $ 2,819,627          $ 349,868                    12


At December 31, 2021, total assets were approximately $3.2 trillion, up $349.9
billion from December 31, 2020. The increase in assets was primarily due to
higher debt securities that were primarily funded by deposit growth, an increase
in loans and leases and higher trading account assets, partially offset by lower
federal funds sold and securities borrowed or purchased under agreements to
resell and cash and cash equivalents.

Cash and Cash Equivalents
Cash and cash equivalents decreased $32.2 billion primarily driven by higher
investments in debt securities.

Federal Funds Sold and Securities Borrowed or Purchased Under Agreements to
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 decreased $53.3 billion primarily due to the
investment of excess cash into debt securities.

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
increased $48.2 billion primarily due to an increase in inventory within Global

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 use the debt securities portfolio
primarily to manage interest rate and liquidity risk and to leverage market
conditions that create economically attractive returns on these investments.
Debt securities increased $297.8 billion primarily driven by the deployment of
deposit inflows. For more information on debt

securities, see Note 4 – Securities to the consolidated financial statements.

Loans and Leases
Loans and leases increased $51.3 billion primarily driven by growth in
commercial loans and higher securities-based lending within consumer loans. For
more information on the loan portfolio, see Credit Risk Management on page 59.

Allowance for Loan and Lease Losses
The allowance for loan and lease losses decreased $6.4 billion primarily due to
improvements in the macroeconomic outlook and credit quality. For more
information, see Allowance for Credit Losses on page 73.

All Other Assets
All other assets increased $31.8 billion primarily driven by higher margin loans
and loans held-for-sale (LHFS).


AT December 31, 2021total liabilities were approximately $2.9 trillionat the top
$352.7 billion from December 31, 2020mainly due to growth in deposits.


Deposits increased $269.0 billion mainly due to an increase in retail and wholesale deposits.

Federal Funds Purchased and Securities Loaned or Sold Under Agreements to
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 under agreements to
repurchase increased $22.0 billion primarily driven by client activity within
Global Markets.

Trading Account Liabilities
Trading account liabilities consist primarily of short positions in equity and
fixed-income securities including U.S. Treasury and agency securities, corporate
securities and non-U.S. sovereign

Bank of America 30

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debt. Trading account liabilities increased $29.4 billion mainly due to higher levels of short positions in 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 $4.4 billion primarily due to an increase in
short-term commercial paper issuances to manage liquidity needs. For more
information on short-term borrowings, see Note 10 - Securities Financing
Agreements, Short-term Borrowings and Restricted Cash to the Consolidated
Financial Statements.

Long-term Debt
Long-term debt increased $17.2 billion primarily due to debt issuances,
partially offset by maturities, redemptions and valuation adjustments. For more
information on long-term debt, see Note 11 - Long-term Debt to the Consolidated
Financial Statements.

Shareholders' Equity
Shareholders' equity decreased $2.9 billion primarily due to returns of capital
to shareholders through common stock repurchases and common and preferred stock
dividends, market value decreases on derivatives and debt securities and the
redemption of preferred stock, partially offset by net income.

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 54.

Additional 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.
We view net interest income and related ratios and analyses on an FTE basis,
which when presented on a consolidated basis are non-GAAP financial measures. 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
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 as follows:

?  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
?  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 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 169.
Our consolidated key performance indicators, which include various equity and
credit metrics, are presented in Table 1 on page 28, Table 6 on page 32 and
Table 7 on page 33.
For information on key segment performance metrics, see Business Segment
Operations on page 36.

31 Bank of America

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