10-Q 1 bac-930201610xq.htm 10-Q Document


 
 
 
 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ü] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 2016
or
[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from          to
Commission file number:
1-6523
Exact name of registrant as specified in its charter:
Bank of America Corporation
State or other jurisdiction of incorporation or organization:
Delaware
IRS Employer Identification No.:
56-0906609
Address of principal executive offices:
Bank of America Corporate Center
100 N. Tryon Street
Charlotte, North Carolina 28255
Registrant's telephone number, including area code:
(704) 386-5681
Former name, former address and former fiscal year, if changed since last report:
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ü     No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ü     No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (check one).
Large accelerated filer ü
 
Accelerated filer
 
Non-accelerated filer
(do not check if a smaller
reporting company)
 
Smaller reporting company
Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).
Yes      No ü
On October 31, 2016, there were 10,105,046,654 shares of Bank of America Corporation Common Stock outstanding.
 
 
 
 
 

                


Bank of America Corporation
 
September 30, 2016
 
Form 10-Q
 
 
 
INDEX
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1




2


Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report on Form 10-Q, the documents that it incorporates by reference and the documents into which it may be incorporated by reference may contain, and from time to time Bank of America Corporation (collectively with certain of its subsidiaries and affiliates, 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, expenses, efficiency ratio, capital measures, 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 elsewhere in this report, including under Item 1A. Risk Factors of the Corporation's 2015 Annual Report on Form 10-K and in any of the Corporation's subsequent Securities and Exchange Commission filings: the Corporation's ability to resolve representations and warranties repurchase and related claims, including claims brought by investors or trustees seeking to distinguish certain aspects of the New York Court of Appeals' ACE Securities Corp v. DB Structured Products, Inc. (ACE) decision or to assert other claims seeking to avoid the impact of the ACE decision; the possibility that the Corporation could face increased servicing, securities, fraud, indemnity, contribution or other claims from one or more counterparties, including trustees, purchasers of loans, underwriters, issuers, other parties involved in securitizations, monolines or private-label and other investors; the possibility that future representations and warranties losses may occur in excess of the Corporation's recorded liability and estimated range of possible loss for its representations and warranties exposures; potential claims, damages, penalties, fines and reputational damage resulting from pending or future litigation and regulatory proceedings, including the possibility that amounts may be in excess of the Corporation's recorded liability and estimated range of possible loss for litigation exposures; the possible outcome of LIBOR, other reference rate, financial instrument and foreign exchange inquiries, investigations and litigation; 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 (including negative or continued low interest rates), currency exchange rates and economic conditions; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior and other uncertainties; the impact on the Corporation's business, financial condition and results of operations of a potential higher interest rate environment; the impact on the Corporation's business, financial condition and results of operations from a protracted period of lower oil prices or ongoing volatility with respect to oil prices; our ability to achieve our expense targets; adverse changes to the Corporation's credit ratings from the major credit rating agencies; estimates of the fair value of certain of the Corporation's assets and liabilities; uncertainty regarding the content, timing and impact of regulatory capital and liquidity requirements, including the potential adoption of total loss-absorbing capacity requirements; the potential for payment protection insurance exposure to increase as a result of Financial Conduct Authority actions; the impact of Federal Reserve actions on the Corporation's capital plans; the possible impact of the Corporation's failure to remediate deficiencies and shortcomings identified by banking regulators in the Corporation's Recovery and Resolution plans; 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, FDIC assessments, the Volcker Rule, fiduciary standards and derivatives regulations; a failure in or breach of the Corporation's operational or security systems or infrastructure, or those of third parties, including as a result of cyber attacks; the impact on the Corporation's business, financial condition and results of operations from the potential exit of the United Kingdom from the European Union; and other similar 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-period amounts have been reclassified to conform to current period presentation. Throughout the MD&A, the Corporation uses certain acronyms and abbreviations which are defined in the Glossary.

The Corporation's Annual Report on Form 10-K for the year ended December 31, 2015 as supplemented by a Current Report on Form 8-K filed on August 1, 2016 to reflect reclassified business segment information is referred to herein as the 2015 Annual Report on Form 10-K.


3


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" 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 banking and various nonbank subsidiaries throughout the U.S. and in international markets, we provide a diversified range of 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 September 30, 2016, the Corporation had approximately $2.2 trillion in assets and approximately 209,000 full-time equivalent employees.

At September 30, 2016, we operated in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and more than 35 countries. Our retail banking footprint covers approximately 80 percent of the U.S. population, and we serve approximately 47 million consumer and small business relationships with approximately 4,600 retail financial centers, approximately 16,000 ATMs, and leading online (www.bankofamerica.com) and mobile banking platforms with approximately 34 million active accounts and more than 21 million mobile active users. We offer industry-leading support to approximately three million small business owners. Our wealth management businesses, with client balances of approximately $2.5 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.

Third-Quarter 2016 Economic and Business Environment

In the third quarter of 2016, the macroeconomic environment in the U.S. was mixed. Continued strengthening in the labor market and a rebound in gross domestic product (GDP) growth were offset by continued weakness in certain sectors. The unemployment rate remained slightly below five percent, close to what is generally regarded as the natural rate of unemployment. However, retail sales and industrial production declined. Manufacturing output was weak, and businesses remained reluctant to invest in equipment and software. The economic pick-up during the quarter stemmed from continued moderate growth in domestic demand, largely reflecting consumption gains, along with a rebound in exports and signs that businesses may have passed the peak of their inventory reductions. Overall, these were minimal changes in the U.S. macroeconomic environment in comparison to the prior quarter.

Oil prices were generally stable over the quarter. Core inflation maintained the momentum gained early in the year, but remained below the Board of Governors of the Federal Reserve System's (Federal Reserve) longer-term annual target of two percent. Treasury yields fell during the quarter, reaching their lows in mid-July. Corporate spreads narrowed on the perception of an improving U.S. economy and strong international demand due to negative rates in Europe and Japan. U.S. equities rose moderately.

The Federal Open Market Committee (FOMC) cited continued improvement in the labor market and progress toward meeting the requirements for another interest rate hike. However, the low level of inflation and weak spots in the economy kept the FOMC on hold regarding the increase in rates.

Following the U.K.'s Referendum on exiting the European Union (EU) (U.K. Referendum) in June, economic indicators in the U.K. proved resilient despite the risk of negative growth during the third quarter. The unemployment rate in the U.K., for instance, remained below five percent. Economic momentum in the eurozone was sustained despite the U.K. Referendum, with available indicators pointing to moderate expansion in the third quarter. However, political uncertainty remained elevated and continued to impact financial markets. The European Central Bank maintained accommodative conditions, but did not commit to a possible extension of quantitative easing beyond March 2017. Government bond yields remained low, with German 10-year Bund yields remaining in negative territory.

Amid persistently low inflation, the Bank of Japan introduced a new policy focusing on maintaining the 10-year government bond yield near zero percent. In early July, a coup attempt in Turkey increased political instability, although the current government remained in power and financial market reaction outside of Turkey was minimal. The Chinese economy was stable during the quarter, but real estate remained a major concern.

4


Recent Events

Change in Accounting Method Related to Certain Debt Securities

Effective July 1, 2016, the Corporation changed its accounting method for the amortization of premiums and accretion of discounts related to certain debt securities under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 310-20, Nonrefundable fees and other costs, from the prepayment method (also referred to as the retrospective method), to the contractual method. All prior periods presented herein have been restated to conform to current period presentation. Under the applicable bank regulatory rules, we are not required to and, accordingly, will not restate previously-filed capital metrics and ratios. The cumulative impact of the change in accounting method would have resulted in an insignificant pro forma change to our capital metrics and ratios. For additional information, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements.

Capital Management

Our 2016 Comprehensive Capital Analysis and Review (CCAR) capital plan included requests (i) to repurchase $5.0 billion of common stock over four quarters beginning in the third quarter of 2016, (ii) to repurchase common stock to offset the dilution resulting from certain equity-based compensation awards and (iii) to increase the quarterly common stock dividend from $0.05 per share to $0.075 per share. On June 29, 2016, following the Federal Reserve's non-objection to our 2016 CCAR capital plan, the Board of Directors (the Board) authorized the common stock repurchases described above. The common stock repurchase authorization includes both common stock and warrants. During the three months ended September 30, 2016, pursuant to the Board's authorization, we repurchased $1.4 billion of common stock, which includes common stock to offset equity-based compensation awards. On July 27, 2016, the Board declared a quarterly common stock dividend of $0.075 per share, payable on September 23, 2016 to shareholders of record as of September 2, 2016. For additional information, see the Corporation's Current Report on Form 8-K as filed on June 29, 2016.

Selected Financial Data

Table 1 provides selected consolidated financial data for the three and nine months ended September 30, 2016 and 2015, and at September 30, 2016 and December 31, 2015.

Table 1
 
 
 
 
Selected Financial Data
 
 
 
 
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions, except per share information)
2016
 
2015
 
2016
 
2015
Income statement
 
 
 
 
 
 
 
Revenue, net of interest expense
$
21,635

 
$
20,992

 
$
63,711

 
$
63,383

Net income
4,955

 
4,619

 
13,210

 
12,552

Diluted earnings per common share
0.41

 
0.38

 
1.10

 
1.03

Dividends paid per common share
0.075

 
0.05

 
0.175

 
0.15

Performance ratios
 
 
 
 
 

 
 
Return on average assets
0.90
%
 
0.84
%
 
0.81
%
 
0.78
%
Return on average common shareholders' equity
7.27

 
7.16

 
6.61

 
6.67

Return on average tangible common shareholders' equity (1)
10.28

 
10.40

 
9.40

 
9.74

Efficiency ratio
62.31

 
66.40

 
65.59

 
68.98

 
 
 
 
 
 
 
 
 
 
 
 
 
September 30
2016
 
December 31
2015
Balance sheet
 
 
 
 
 
 
 
Total loans and leases
 
 
 
 
$
905,008

 
$
896,983

Total assets
 
 
 
 
2,195,314

 
2,144,287

Total deposits
 
 
 
 
1,232,895

 
1,197,259

Total common shareholders' equity
 
 
 
 
244,863

 
233,903

Total shareholders' equity
 
 
 
 
270,083

 
256,176

(1) 
Return on average tangible common shareholders' equity is a non-GAAP financial measure. For more information and a corresponding reconciliation to GAAP financial measures, see Supplemental Financial Data on page 13.

5


Financial Highlights

Net income was $5.0 billion, or $0.41 per diluted share, and $13.2 billion, or $1.10 per diluted share for the three and nine months ended September 30, 2016 compared to $4.6 billion, or $0.38, and $12.6 billion, or $1.03 for the same periods in 2015. The results for the three months ended September 30, 2016 compared to the prior-year period were primarily driven by increased revenue and lower noninterest expense. The results for the nine months ended September 30, 2016 compared to the prior-year period were primarily driven by lower noninterest expense and increased revenue, offset by higher provision for credit losses.

Total assets increased $51.0 billion from December 31, 2015 to $2.2 trillion at September 30, 2016 primarily driven by higher securities borrowed or purchased under agreements to resell due to increased customer financing activity, an increase in debt securities driven by the deployment of deposit inflows, higher trading account assets, and an increase in loans and leases driven by demand for commercial loans outpacing consumer loan sales and run-off. Total liabilities increased $37.1 billion from December 31, 2015 to $1.9 trillion at September 30, 2016 primarily driven by increases in deposits and trading account liabilities, partially offset by a decrease in long-term debt. Shareholders' equity increased $13.9 billion from December 31, 2015 driven by earnings, an increase in accumulated other comprehensive income (OCI) due to a positive net change in the fair value of available-for-sale (AFS) debt securities as a result of lower interest rates, and preferred stock issuances, partially offset by returns of capital to shareholders of $6.9 billion through common and preferred stock dividends and common stock repurchases.

Table 2
 
 
 
 
 
 
 
Summary Income Statement
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Net interest income
$
10,201

 
$
9,900

 
$
30,804

 
$
29,272

Noninterest income
11,434

 
11,092

 
32,907

 
34,111

Total revenue, net of interest expense
21,635

 
20,992

 
63,711

 
63,383

Provision for credit losses
850

 
806

 
2,823

 
2,351

Noninterest expense
13,481

 
13,939

 
41,790

 
43,724

Income before income taxes
7,304

 
6,247

 
19,098

 
17,308

Income tax expense
2,349

 
1,628

 
5,888

 
4,756

Net income
4,955

 
4,619

 
13,210

 
12,552

Preferred stock dividends
503

 
441

 
1,321

 
1,153

Net income applicable to common shareholders
$
4,452

 
$
4,178

 
$
11,889

 
$
11,399

 
 
 
 
 
 
 
 
Per common share information
 
 
 
 
 
 
 
Earnings
$
0.43

 
$
0.40

 
$
1.15

 
$
1.09

Diluted earnings
0.41

 
0.38

 
1.10

 
1.03


Net Interest Income

Net interest income increased $301 million to $10.2 billion, and $1.5 billion to $30.8 billion for the three and nine months ended September 30, 2016 compared to the same periods in 2015. The net interest yield increased four basis points (bps) to 2.18 percent, and six bps to 2.21 percent. The increases for the three- and nine- month periods were primarily driven by growth in commercial loans, the impact from higher short-end interest rates and increased debt securities balances.


6


Noninterest Income

Table 3
 
 
 
 
Noninterest Income
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Card income
$
1,455

 
$
1,510

 
$
4,349

 
$
4,381

Service charges
1,952

 
1,898

 
5,660

 
5,519

Investment and brokerage services
3,160

 
3,336

 
9,543

 
10,101

Investment banking income
1,458

 
1,287

 
4,019

 
4,300

Trading account profits
2,141

 
1,616

 
5,821

 
5,510

Mortgage banking income
589

 
407

 
1,334

 
2,102

Gains on sales of debt securities
51

 
437

 
490

 
886

Other income
628

 
601

 
1,691

 
1,312

Total noninterest income
$
11,434

 
$
11,092

 
$
32,907

 
$
34,111


Noninterest income increased $342 million to $11.4 billion, and decreased $1.2 billion to $32.9 billion for the three and nine months ended September 30, 2016 compared to the same periods in 2015. The following highlights the significant changes.

Investment and brokerage services income decreased $176 million and $558 million driven by lower market valuations and lower transactional revenue, partially offset by the impact of long-term assets under management (AUM) flows.

Investment banking income increased $171 million for the three-month period primarily driven by an increase in debt and equity issuance fees, partially offset by lower advisory fees. Investment banking income decreased $281 million for the nine-month period driven by lower equity issuance and advisory fees due to a decline in market fee pools.

Trading account profits increased $525 million and $311 million for the three and nine months ended September 30, 2016 compared to the same periods in 2015 primarily due to a stronger performance globally across credit products led by mortgages and continued strength in rates products, partially offset by reduced client activity in equities.

Mortgage banking income increased $182 million for the three-month period primarily due to favorable mortgage servicing rights (MSR) results, net of the related hedge performance, partially offset by a decline in production income. Mortgage banking income decreased $768 million for the nine-month period primarily driven by a decline in production revenue, a provision for representations and warranties in the current-year period compared to a benefit in the prior-year period, as well as lower servicing fees, partially offset by favorable MSR results, net of the related hedge performance.

Other income increased $27 million and $379 million primarily due to lower debit valuation adjustment (DVA) losses on structured liabilities, as well as improved results from loans and the related hedging activities in the fair value option portfolio, partially offset by lower gains on asset sales. DVA losses related to structured liabilities were $24 million and $77 million for the three and nine months ended September 30, 2016 compared to $54 million and $604 million in the same periods in 2015.

Provision for Credit Losses

The provision for credit losses increased $44 million to $850 million, and $472 million to $2.8 billion for the three and nine months ended September 30, 2016 compared to the same periods in 2015 due to a slower pace of credit quality improvement and, for the nine-month period, an increase in energy sector reserves for the higher risk energy sub-sectors. For more information on the provision for credit losses, see Provision for Credit Losses on page 79. For more information on our energy sector exposure, see Commercial Portfolio Credit Risk Management – Industry Concentrations on page 74.
 
 
 
 
 
 
 
 

7


Noninterest Expense

Table 4
 
 
 
 
 
 
 
Noninterest Expense
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Personnel
$
7,704

 
$
7,829

 
$
24,278

 
$
25,333

Occupancy
1,005

 
1,028

 
3,069

 
3,082

Equipment
443

 
499

 
1,357

 
1,511

Marketing
410

 
445

 
1,243

 
1,330

Professional fees
536

 
673

 
1,433

 
1,588

Amortization of intangibles
181

 
207

 
554

 
632

Data processing
685

 
731

 
2,240

 
2,298

Telecommunications
189

 
210

 
551

 
583

Other general operating
2,328

 
2,317

 
7,065

 
7,367

Total noninterest expense
$
13,481

 
$
13,939

 
$
41,790

 
$
43,724


Noninterest expense decreased $458 million to $13.5 billion, and $1.9 billion to $41.8 billion for the three and nine months ended September 30, 2016 compared to the same periods in 2015. Personnel expense decreased $125 million and $1.1 billion as we continue to manage headcount and achieve cost savings. Continued expense management, as well as the expiration of certain advisor retention awards, more than offset the increases in client-facing professionals. Other general operating expense decreased $302 million for the nine-month period compared to the same period in 2015 primarily driven by lower foreclosed properties expense and lower brokerage fees, partially offset by higher FDIC expense.

Income Tax Expense

Table 5
 
 
 
 
 
 
 
Income Tax Expense
 
 
 
 
 
 
 
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Income before income taxes
$
7,304

 
$
6,247

 
$
19,098

 
$
17,308

Income tax expense
2,349

 
1,628

 
5,888

 
4,756

Effective tax rate
32.2
%
 
26.1
%
 
30.8
%
 
27.5
%

The effective tax rates for the three and nine months ended September 30, 2016 were driven by our recurring tax preference benefits, and included the $350 million charge for the impact of the U.K. tax law changes discussed below. The effective tax rates for the three and nine months ended September 30, 2015 were driven by our recurring tax preference benefits, as well as benefits related to certain non-U.S. restructurings.

The U.K. Finance Bill 2016 was enacted on September 15, 2016. The changes include reducing the U.K. corporate income tax rate by one percent to 17 percent, effective April 1, 2020. This reduction favorably affects income tax expense on future U.K. earnings, but required a remeasurement of our U.K. net deferred tax assets using the lower tax rate. Accordingly, upon enactment, we recorded an income tax charge of approximately $350 million. In addition, for banking companies, the portion of U.K. taxable income that can be reduced by existing net operating loss carryforwards in any one taxable year has been reduced from 50 percent to 25 percent retroactive to April 1, 2016.

The majority of our U.K. deferred tax assets, which consist primarily of net operating losses, are expected to be realized by certain subsidiaries over a number of years. Significant changes to management's earnings forecasts for those subsidiaries, such as changes caused by a substantial and prolonged worsening of the condition of Europe's capital markets, changes in applicable laws, further changes in tax laws or changes in the ability of our U.K. subsidiaries to conduct business in the EU, could lead management to reassess our ability to realize the U.K. deferred tax assets. 


8


Table 6
 
 
 
 
Selected Quarterly Financial Data
 
 
 
 
 
2016 Quarters
 
2015 Quarters
(In millions, except per share information)
Third
 
Second
 
First
 
Fourth
 
Third
Income statement
 
 
 
 
 
 
 
 
 
Net interest income
$
10,201

 
$
10,118

 
$
10,485

 
$
9,686

 
$
9,900

Noninterest income
11,434

 
11,168

 
10,305

 
9,896

 
11,092

Total revenue, net of interest expense
21,635

 
21,286

 
20,790

 
19,582

 
20,992

Provision for credit losses
850

 
976

 
997

 
810

 
806

Noninterest expense
13,481

 
13,493

 
14,816

 
14,010

 
13,939

Income before income taxes
7,304

 
6,817

 
4,977

 
4,762

 
6,247

Income tax expense
2,349

 
2,034

 
1,505

 
1,478

 
1,628

Net income
4,955

 
4,783

 
3,472

 
3,284

 
4,619

Net income applicable to common shareholders
4,452

 
4,422

 
3,015

 
2,954

 
4,178

Average common shares issued and outstanding
10,250

 
10,328

 
10,370

 
10,399

 
10,444

Average diluted common shares issued and outstanding
11,000

 
11,059

 
11,100

 
11,153

 
11,197

Performance ratios
 
 
 
 
 
 
 
 
 
Return on average assets
0.90
%
 
0.88
%
 
0.64
%
 
0.60
%
 
0.84
%
Four quarter trailing return on average assets (1)
0.76

 
0.74

 
0.73

 
0.73

 
0.74

Return on average common shareholders' equity
7.27

 
7.40

 
5.11

 
4.99

 
7.16

Return on average tangible common shareholders' equity (2)
10.28

 
10.54

 
7.33

 
7.19

 
10.40

Return on average shareholders' equity
7.33

 
7.25

 
5.36

 
5.07

 
7.22

Return on average tangible shareholders' equity (2)
9.98

 
9.93

 
7.40

 
7.04

 
10.08

Total ending equity to total ending assets
12.30

 
12.23

 
12.03

 
11.95

 
11.88

Total average equity to total average assets
12.28

 
12.13

 
11.98

 
11.79

 
11.70

Dividend payout
17.32

 
11.73

 
17.13

 
17.57

 
12.48

Per common share data
 
 
 
 
 
 
 
 
 
Earnings
$
0.43

 
$
0.43

 
$
0.29

 
$
0.28

 
$
0.40

Diluted earnings
0.41

 
0.41

 
0.28

 
0.27

 
0.38

Dividends paid
0.075

 
0.05

 
0.05

 
0.05

 
0.05

Book value
24.19

 
23.71

 
23.14

 
22.53

 
22.40

Tangible book value (2)
17.14

 
16.71

 
16.19

 
15.62

 
15.50

Market price per share of common stock
 
 
 
 
 
 
 
 
 
Closing
$
15.65

 
$
13.27

 
$
13.52

 
$
16.83

 
$
15.58

High closing
16.19

 
15.11

 
16.43

 
17.95

 
18.45

Low closing
12.74

 
12.18

 
11.16

 
15.38

 
15.26

Market capitalization
$
158,438

 
$
135,577

 
$
139,427

 
$
174,700

 
$
162,457

(1) 
Calculated as total net income for four consecutive quarters divided by annualized average assets for four consecutive quarters.
(2) 
Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. For more information on these ratios and for corresponding reconciliations to GAAP financial measures, see Supplemental Financial Data on page 13.
(3) 
For more information on the impact of the purchased credit-impaired (PCI) loan portfolio on asset quality, see Consumer Portfolio Credit Risk Management on page 52.
(4) 
Includes the allowance for loan and lease losses and the reserve for unfunded lending commitments.
(5) 
Balances and ratios do not include loans accounted for under the fair value option. For additional exclusions from nonperforming loans, leases and foreclosed properties, see Consumer Portfolio Credit Risk Management – Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity on page 65 and corresponding Table 35, and Commercial Portfolio Credit Risk Management – Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page 73 and corresponding Table 42.
(6) 
Primarily includes amounts allocated to the U.S. credit card and unsecured consumer lending portfolios in Consumer Banking, PCI loans and the non-U.S. credit card portfolio in All Other.
(7) 
Net charge-offs exclude $83 million, $82 million, $105 million, $82 million and $148 million of write-offs in the PCI loan portfolio in the third, second and first quarters of 2016 and in the fourth and third quarters of 2015, respectively. For more information on PCI write-offs, see Consumer Portfolio Credit Risk Management – Purchased Credit-impaired Loan Portfolio on page 62.
(8) 
Risk-based capital ratios reported under Basel 3 Advanced - Transition beginning in the fourth quarter of 2015. Prior to the fourth quarter of 2015, we were required to report risk-based capital ratios under Basel 3 Standardized - Transition only. For additional information, see Capital Management on page 39.

9


Table 6
 
 
 
 
Selected Quarterly Financial Data (continued)
 
 
 
 
 
2016 Quarters
 
2015 Quarters
(Dollars in millions)
Third
 
Second
 
First
 
Fourth
 
Third
Average balance sheet
 
 
 
 
 
 
 
 
 
Total loans and leases
$
900,594

 
$
899,670

 
$
892,984

 
$
886,156

 
$
877,429

Total assets
2,189,490

 
2,188,241

 
2,173,922

 
2,180,507

 
2,168,930

Total deposits
1,227,186

 
1,213,291

 
1,198,455

 
1,186,051

 
1,159,231

Long-term debt
227,269

 
233,061

 
233,654

 
237,384

 
240,520

Common shareholders' equity
243,679

 
240,376

 
237,229

 
234,800

 
231,524

Total shareholders' equity
268,899

 
265,354

 
260,423

 
257,074

 
253,798

Asset quality (3)
 
 
 
 
 
 
 
 
 
Allowance for credit losses (4)
$
12,459

 
$
12,587

 
$
12,696

 
$
12,880

 
$
13,318

Nonperforming loans, leases and foreclosed properties (5)
8,737

 
8,799

 
9,281

 
9,836

 
10,336

Allowance for loan and lease losses as a percentage of total loans and leases outstanding (5)
1.30
%
 
1.32
%
 
1.35
%
 
1.37
%
 
1.45
%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases (5)
140

 
142

 
136

 
130

 
129

Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the PCI loan portfolio (5)
135

 
135

 
129

 
122

 
120

Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases (6)
$
4,068

 
$
4,087

 
$
4,138

 
$
4,518

 
$
4,682

Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases (5, 6)
91
%
 
93
%
 
90
%
 
82
%
 
81
%
Net charge-offs (7)
$
888

 
$
985

 
$
1,068

 
$
1,144

 
$
932

Annualized net charge-offs as a percentage of average loans and leases outstanding (5, 7)
0.40
%
 
0.44
%
 
0.48
%
 
0.52
%
 
0.43
%
Annualized net charge-offs as a percentage of average loans and leases outstanding, excluding the PCI loan portfolio (5)
0.40

 
0.45

 
0.49

 
0.53

 
0.43

Annualized net charge-offs and PCI write-offs as a percentage of average loans and leases outstanding (5)
0.43

 
0.48

 
0.53

 
0.55

 
0.49

Nonperforming loans and leases as a percentage of total loans and leases outstanding (5)
0.93

 
0.94

 
0.99

 
1.05

 
1.12

Nonperforming loans, leases and foreclosed properties as a percentage of total loans, leases and foreclosed properties (5)
0.97

 
0.98

 
1.04

 
1.10

 
1.18

Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs (7)
3.31

 
2.99

 
2.81

 
2.70

 
3.42

Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs, excluding the PCI loan portfolio
3.18

 
2.85

 
2.67

 
2.52

 
3.18

Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs and PCI write-offs
3.03

 
2.76

 
2.56

 
2.52

 
2.95

Capital ratios at period end
Risk-based capital: (8)
 
 
 
 
 
 
 
 
 
Common equity tier 1 capital
11.0
%
 
10.6
%
 
10.3
%
 
10.2
%
 
11.6
%
Tier 1 capital
12.4

 
12.0

 
11.5

 
11.3

 
12.9

Total capital
14.2

 
13.9

 
13.4

 
13.2

 
15.8

Tier 1 leverage
9.1

 
8.9

 
8.7

 
8.6

 
8.5

Tangible equity (2)
9.4

 
9.3

 
9.1

 
8.9

 
8.8

Tangible common equity (2)
8.2

 
8.1

 
7.9

 
7.8

 
7.8

For footnotes see page 9.

10


Table 7
 
 
 
Selected Year-to-Date Financial Data
 
 
 
 
Nine Months Ended September 30
(In millions, except per share information)
2016
 
2015
Income statement
 
 
 
Net interest income
$
30,804

 
$
29,272

Noninterest income
32,907

 
34,111

Total revenue, net of interest expense
63,711

 
63,383

Provision for credit losses
2,823

 
2,351

Noninterest expense
41,790

 
43,724

Income before income taxes
19,098

 
17,308

Income tax expense
5,888

 
4,756

Net income
13,210

 
12,552

Net income applicable to common shareholders
11,889

 
11,399

Average common shares issued and outstanding
10,313

 
10,483

Average diluted common shares issued and outstanding
11,047

 
11,234

Performance ratios
 
 
 
Return on average assets
0.81
%
 
0.78
%
Return on average common shareholders' equity
6.61

 
6.67

Return on average tangible common shareholders' equity (1)
9.40

 
9.74

Return on average shareholders' equity
6.66

 
6.71

Return on average tangible shareholders' equity (1)
9.13

 
9.42

Total ending equity to total ending assets
12.30

 
11.88

Total average equity to total average assets
12.13

 
11.62

Dividend payout
15.19

 
13.78

Per common share data
 
 
 
Earnings
$
1.15

 
$
1.09

Diluted earnings
1.10

 
1.03

Dividends paid
0.175

 
0.15

Book value
24.19

 
22.40

Tangible book value (1)
17.14

 
15.50

Market price per share of common stock
 
 
 
Closing
$
15.65

 
$
15.58

High closing
16.43

 
18.45

Low closing
11.16

 
15.15

Market capitalization
$
158,438

 
$
162,457

(1) 
Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. For more information on these ratios and for corresponding reconciliations to GAAP financial measures, see Supplemental Financial Data on page 13.
(2) 
For more information on the impact of the PCI loan portfolio on asset quality, see Consumer Portfolio Credit Risk Management on page 52.
(3) 
Includes the allowance for loan and lease losses and the reserve for unfunded lending commitments.
(4) 
Balances and ratios do not include loans accounted for under the fair value option. For additional exclusions from nonperforming loans, leases and foreclosed properties, see Consumer Portfolio Credit Risk Management – Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity on page 65 and corresponding Table 35, and Commercial Portfolio Credit Risk Management – Nonperforming Commercial Loans, Leases and Foreclosed Properties Activity on page 73 and corresponding Table 42.
(5) 
Primarily includes amounts allocated to the U.S. credit card and unsecured consumer lending portfolios in Consumer Banking, PCI loans and the non-U.S. credit card portfolio in All Other.
(6) 
Net charge-offs exclude $270 million and $726 million of write-offs in the PCI loan portfolio for the nine months ended September 30, 2016 and 2015. For more information on PCI write-offs, see Consumer Portfolio Credit Risk Management – Purchased Credit-impaired Loan Portfolio on page 62.


11


Table 7
 
 
 
Selected Year-to-Date Financial Data (continued)
 
 
 
 
Nine Months Ended September 30
(Dollars in millions)
2016
 
2015
Average balance sheet
 
 
 
Total loans and leases
$
897,760

 
$
873,630

Total assets
2,183,905

 
2,153,353

Total deposits
1,213,029

 
1,145,686

Long-term debt
231,313

 
240,960

Common shareholders' equity
240,440

 
228,614

Total shareholders' equity
264,907

 
250,265

Asset quality (2)
 
 
 
Allowance for credit losses (3)
$
12,459

 
$
13,318

Nonperforming loans, leases and foreclosed properties (4)
8,737

 
10,336

Allowance for loan and lease losses as a percentage of total loans and leases outstanding (4)
1.30
%
 
1.45
%
Allowance for loan and lease losses as a percentage of total nonperforming loans and leases (4)
140

 
129

Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the PCI loan portfolio (4)
135

 
120

Amounts included in allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases (5)
$
4,068

 
$
4,682

Allowance for loan and lease losses as a percentage of total nonperforming loans and leases, excluding the allowance for loan and lease losses for loans and leases that are excluded from nonperforming loans and leases (4, 5)
91
%
 
81
%
Net charge-offs (6)
$
2,941

 
$
3,194

Annualized net charge-offs as a percentage of average loans and leases outstanding (4, 6)
0.44
%
 
0.49
%
Annualized net charge-offs as a percentage of average loans and leases outstanding, excluding the PCI loan portfolio (4)
0.45

 
0.50

Annualized net charge-offs and PCI write-offs as a percentage of average loans and leases outstanding (4)
0.48

 
0.61

Nonperforming loans and leases as a percentage of total loans and leases outstanding (4)
0.93

 
1.12

Nonperforming loans, leases and foreclosed properties as a percentage of total loans, leases and foreclosed properties (4)
0.97

 
1.18

Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs (6)
2.98

 
2.96

Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs, excluding the PCI loan portfolio
2.86

 
2.76

Ratio of the allowance for loan and lease losses at period end to annualized net charge-offs and PCI write-offs
2.73

 
2.41

For footnotes see page 11.

12


Supplemental Financial Data

In this Form 10-Q, 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 fully taxable-equivalent (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 35 percent and a representative state tax rate. In addition, certain performance measures including the efficiency ratio and net interest yield utilize net interest income (and thus total revenue) on an FTE basis. The efficiency ratio measures the costs expended to generate a dollar of revenue, and net interest yield measures the bps we earn over the cost of funds. 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., DVA) which result in non-GAAP financial measures. We believe that the presentation of measures that exclude these items are useful because they provide additional information to assess the underlying operational performance and trends of our businesses and to allow better comparison of period-to-period operating performance.

We also evaluate our business based on certain ratios that utilize tangible equity, a non-GAAP financial measure. Tangible equity represents an adjusted shareholders' equity or common shareholders' equity amount which has been reduced by goodwill and certain acquired intangible assets (excluding MSRs), net of related deferred tax liabilities. 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 goals. These ratios are as follows:

Return on average tangible common shareholders' equity measures our earnings contribution as a percentage of adjusted common shareholders' equity. The tangible common equity ratio represents adjusted ending common shareholders' equity divided by total assets less goodwill and certain acquired intangible assets (excluding MSRs), net of related deferred tax liabilities.

Return on average tangible shareholders' equity measures our earnings contribution as a percentage of adjusted average total shareholders' equity. The tangible equity ratio represents adjusted ending shareholders' equity divided by total assets less goodwill and certain acquired intangible assets (excluding MSRs), net of related deferred tax liabilities.

Tangible book value per common share represents adjusted ending common shareholders' equity divided by ending common shares outstanding.

We believe that the use of ratios that utilize tangible equity provides additional useful information because they present measures of those assets that can generate income. Tangible book value per 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.

Table 8 presents certain non-GAAP financial measures and performance measurements on an FTE basis.
Table 8
 
 
 
 
 
 
 
Supplemental Financial Data
 
Three Months Ended September 30
 
Nine Months Ended September 30
(Dollars in millions)
2016
 
2015
 
2016
 
2015
Fully taxable-equivalent basis data
 
 
 
 
 
 
 
Net interest income
$
10,429

 
$
10,127

 
$
31,470

 
$
29,936

Total revenue, net of interest expense
21,863

 
21,219

 
64,377

 
64,047

Net interest yield
2.23
%
 
2.19
%
 
2.26
%
 
2.20
%
Efficiency ratio
61.66

 
65.70

 
64.91

 
68.27



13


Tables 9 and 10 provide reconciliations of these non-GAAP financial measures to GAAP financial measures.

Table 9
Quarterly and Year-to-Date Supplemental Financial Data and Reconciliations to GAAP Financial Measures
 
Three Months Ended September 30
 
2016
 
2015
(Dollars in millions)
As Reported
 
Fully taxable-equivalent adjustment
 
Fully taxable-equivalent basis
 
As Reported
 
Fully taxable-equivalent adjustment
 
Fully taxable-equivalent basis
Net interest income
$
10,201

 
$
228

 
$
10,429

 
$
9,900

 
$
227

 
$
10,127

Total revenue, net of interest expense
21,635

 
228

 
21,863

 
20,992

 
227

 
21,219

Income tax expense
2,349

 
228

 
2,577

 
1,628

 
227

 
1,855

 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30
 
2016
 
2015
Net interest income
$
30,804

 
$
666

 
$
31,470

 
$
29,272

 
$
664

 
$
29,936

Total revenue, net of interest expense
63,711

 
666

 
64,377

 
63,383

 
664

 
64,047

Income tax expense
5,888

 
666

 
6,554

 
4,756

 
664

 
5,420


Table 10
 
 
 
 
 
 
 
 
 
 
 
Period-end and Average Supplemental Financial Data and Reconciliations to GAAP Financial Measures
 
 
 
 
 
Average
 
Period-end
 
Three Months Ended September 30
 
Nine Months Ended
September 30
(Dollars in millions)
September 30
2016
 
December 31
2015
 
2016
 
2015
 
2016
 
2015
Common shareholders' equity
$
244,863

 
$
233,903

 
$
243,679

 
$
231,524

 
$
240,440

 
$
228,614

Goodwill
(69,744
)
 
(69,761
)
 
(69,744
)
 
(69,774
)
 
(69,752
)
 
(69,775
)
Intangible assets (excluding MSRs)
(3,168
)
 
(3,768
)
 
(3,276
)
 
(4,099
)
 
(3,480
)
 
(4,307
)
Related deferred tax liabilities
1,588

 
1,716

 
1,628

 
1,811

 
1,666

 
1,885

Tangible common shareholders' equity
$
173,539

 
$
162,090

 
$
172,287

 
$
159,462

 
$
168,874

 
$
156,417

 
 
 
 
 
 
 
 
 
 
 
 
Shareholders' equity
$
270,083

 
$
256,176

 
$
268,899

 
$
253,798

 
$
264,907

 
$
250,265

Goodwill
(69,744
)
 
(69,761
)
 
(69,744
)
 
(69,774
)
 
(69,752
)
 
(69,775
)
Intangible assets (excluding MSRs)
(3,168
)
 
(3,768
)
 
(3,276
)
 
(4,099
)
 
(3,480
)
 
(4,307
)
Related deferred tax liabilities
1,588

 
1,716

 
1,628

 
1,811

 
1,666

 
1,885

Tangible shareholders' equity
$
198,759

 
$
184,363

 
$
197,507

 
$
181,736

 
$
193,341

 
$
178,068

 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
2,195,314

 
$
2,144,287

 
 
 
 
 
 
 
 
Goodwill
(69,744
)
 
(69,761
)
 
 
 
 
 
 
 
 
Intangible assets (excluding MSRs)
(3,168
)
 
(3,768
)
 
 
 
 
 
 
 
 
Related deferred tax liabilities
1,588

 
1,716

 
 
 
 
 
 
 
 
Tangible assets
$
2,123,990

 
$
2,072,474

 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

14


Table 11
Quarterly Average Balances and Interest Rates – FTE Basis
 
Third Quarter 2016
 
Third Quarter 2015
(Dollars in millions)
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Rate
Earning assets
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with the Federal Reserve, non-U.S. central banks and other banks
$
133,866

 
$
148

 
0.44
%
 
$
145,174

 
$
96

 
0.26
%
Time deposits placed and other short-term investments
9,336

 
34

 
1.45

 
11,503

 
38

 
1.32

Federal funds sold and securities borrowed or purchased under agreements to resell
214,254

 
267

 
0.50

 
210,127

 
275

 
0.52

Trading account assets
128,879

 
1,111

 
3.43

 
140,484

 
1,170

 
3.31

Debt securities
423,182

 
2,169

 
2.07

 
394,265

 
2,282

 
2.32

Loans and leases (1):
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
188,234

 
1,612

 
3.42

 
193,791

 
1,690

 
3.49

Home equity
70,603

 
681

 
3.84

 
79,715

 
730

 
3.64

U.S. credit card
88,210

 
2,061

 
9.30

 
88,201

 
2,033

 
9.15

Non-U.S. credit card
9,256

 
231

 
9.94

 
10,244

 
267

 
10.34

Direct/Indirect consumer (2)
92,870

 
585

 
2.51

 
85,975

 
515

 
2.38

Other consumer (3)
2,358

 
18

 
2.94

 
1,980

 
15

 
3.01

Total consumer
451,531

 
5,188

 
4.58

 
459,906

 
5,250

 
4.54

U.S. commercial
276,833

 
2,040

 
2.93

 
251,908

 
1,744

 
2.75

Commercial real estate (4)
57,606

 
452

 
3.12

 
53,605

 
384

 
2.84

Commercial lease financing
21,194

 
153

 
2.88

 
20,013

 
153

 
3.07

Non-U.S. commercial
93,430

 
599

 
2.55

 
91,997

 
514

 
2.22

Total commercial
449,063

 
3,244

 
2.87

 
417,523

 
2,795

 
2.66

Total loans and leases
900,594

 
8,432

 
3.73

 
877,429

 
8,045

 
3.65

Other earning assets
59,951

 
677

 
4.50

 
62,848

 
717

 
4.52

Total earning assets (5)
1,870,062

 
12,838

 
2.73

 
1,841,830

 
12,623

 
2.73

Cash and due from banks
27,361

 
 
 
 
 
27,730

 
 
 
 
Other assets, less allowance for loan and lease losses
292,067

 
 
 
 
 
299,370

 
 
 
 
Total assets
$
2,189,490

 
 
 
 
 
$
2,168,930

 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
U.S. interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Savings
$
49,885

 
$
2

 
0.01
%
 
$
46,297

 
$
2

 
0.02
%
NOW and money market deposit accounts
592,907

 
73

 
0.05

 
545,741

 
67

 
0.05

Consumer CDs and IRAs
48,695

 
33

 
0.27

 
53,174

 
38

 
0.29

Negotiable CDs, public funds and other deposits
32,023

 
43

 
0.54

 
30,631

 
26

 
0.33

Total U.S. interest-bearing deposits
723,510

 
151

 
0.08

 
675,843

 
133

 
0.08

Non-U.S. interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
Banks located in non-U.S. countries
4,294

 
9

 
0.87

 
4,196

 
7

 
0.71

Governments and official institutions
1,391

 
3

 
0.61

 
1,654

 
1

 
0.33

Time, savings and other
59,340

 
103

 
0.70

 
53,793

 
73

 
0.53

Total non-U.S. interest-bearing deposits
65,025

 
115

 
0.71

 
59,643

 
81

 
0.54

Total interest-bearing deposits
788,535

 
266

 
0.13

 
735,486

 
214

 
0.12

Federal funds purchased, securities loaned or sold under agreements to repurchase and short-term borrowings
207,634

 
569

 
1.09

 
257,323

 
597

 
0.92

Trading account liabilities
73,452

 
244

 
1.32

 
77,443

 
342

 
1.75

Long-term debt
227,269

 
1,330

 
2.33

 
240,520

 
1,343

 
2.22

Total interest-bearing liabilities (5)
1,296,890

 
2,409

 
0.74

 
1,310,772

 
2,496

 
0.76

Noninterest-bearing sources:
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
438,651

 
 
 
 
 
423,745

 
 
 
 
Other liabilities
185,050

 
 
 
 
 
180,615

 
 
 
 
Shareholders' equity
268,899

 
 
 
 
 
253,798

 
 
 
 
Total liabilities and shareholders' equity
$
2,189,490