BANK OF AMERICA CORP DE

Credit risk management for the consumer portfolio begins with initial underwriting and continues throughout a borrower’s credit cycle. Statistical techniques in conjunction with experiential judgment are used in all aspects of portfolio management including underwriting, product pricing, risk appetite, setting credit limits, and establishing operating processes and metrics to quantify and balance risks and returns. Statistical models are built using detailed behavioral information from external sources, such as credit bureaus, and/or internal historical experience and are a component of our consumer credit risk management process. These models are used in part to assist in making both new and ongoing credit decisions as well as portfolio management strategies, including authorizations and line management, collection practices and strategies, and determination of the allowance for loan and lease losses and allocated capital for credit risk.

Consumer Credit Portfolio

During the three months ended March 31, 2024, the U.S. unemployment rate remained relatively stable and home prices increased slightly. During the three months ended March 31, 2024, net charge-offs increased $375 million to $1.0 billion compared to the same period in 2023, primarily due to higher credit card loan charge-offs.

The consumer allowance for loan and lease losses decreased $44 million during the three months ended March 31, 2024 to $8.5 billion. For more information, see Allowance for Credit Losses on page 35.

For more information on our accounting policies regarding delinquencies, nonperforming status, charge-offs and loan modifications for the consumer portfolio, see Note 1 – Summary of Significant Accounting Principles to the Consolidated Financial Statements of the Corporation’s 2023 Annual Report on Form 10-K and Note 5 – Outstanding Loans and Leases and Allowance for Credit Losses to the Consolidated Financial Statements.

Table 16 presents our outstanding consumer loans and leases, consumer nonperforming loans and accruing consumer loans past due 90 days or more.

(1)Residential mortgage loans accruing past due 90 days or more are fully-insured loans. At March 31, 2024 and December 31, 2023, residential mortgage included $140 million and $156 million of loans on which interest had been curtailed by the Federal Housing Administration (FHA), and therefore were no longer accruing interest, although principal was still insured, and $90 million and $96 million of loans on which interest was still accruing.

(2)Outstandings primarily includes auto and specialty lending loans and leases of $54.1 billion and $53.9 billion, U.S. securities-based lending loans of $45.3 billion and $46.0 billion at March 31, 2024 and December 31, 2023, and non-U.S. consumer loans of $2.7 billion and $2.8 billion at March 31, 2024 and December 31, 2023.

(3)For more information on the fair value option, see Note 15 – Fair Value Option to the Consolidated Financial Statements.

(4)Excludes consumer loans accounted for under the fair value option. At both March 31, 2024 and December 31, 2023, $4 million of loans accounted for under the fair value option were past due 90 days or more and not accruing interest.

n/a= not applicable

Table 17 presents net charge-offs and related ratios for consumer loans and leases.

(1)Net charge-off ratios are calculated as annualized net charge-offs divided by average outstanding loans and leases, excluding loans accounted for under the fair value option.

We believe that the presentation of information adjusted to exclude the impact of the fully-insured loan portfolio and loans accounted for under the fair value option is more representative

of the ongoing operations and credit quality of the business. As a result, in the following tables and discussions of the residential mortgage and home equity portfolios, we exclude loans accounted for under the fair value option and provide information that excludes the impact of the fully-insured loan portfolio in certain credit quality statistics.

Residential Mortgage

The residential mortgage portfolio made up the largest percentage of our consumer loan portfolio at 50 percent of consumer loans and leases at March 31, 2024. Approximately 51 percent of the residential mortgage portfolio was in Consumer Banking,46 percent was in GWIMand the remaining portion was in All Other.

Outstanding balances in the residential mortgage portfolio decreased $968 million during the three months ended March

31, 2024, as paydowns and payoffs outpaced new originations.

At March 31, 2024 and December 31, 2023, the residential mortgage portfolio included $10.6 billion and $11.0 billion of outstanding fully-insured loans, of which $2.1 billion and $2.2 billion had FHA insurance, with the remainder protected by Fannie Mae long-term standby agreements.

Table 18 presents certain residential mortgage key credit statistics on both a reported basis and excluding the fully-insured loan portfolio. The following discussion presents the residential mortgage portfolio excluding the fully-insured loan portfolio.

(1)Outstandings, accruing past due, nonperforming loans and percentages of portfolio exclude loans accounted for under the fair value option.

(2)Includes loans that are contractually current that have not yet demonstrated a sustained period of payment performance following a modification.

Nonperforming outstanding balances in the residential mortgage portfolio remained relatively unchanged during the three months ended March 31, 2024. Of the nonperforming residential mortgage loans at March 31, 2024, $1.3 billion, or 64 percent, were current on contractual payments. Loans accruing past due 30 days or more decreased $154 million.

Of the $216.8 billion in total residential mortgage loans outstanding at March 31, 2024, $62.9 billion, or 29 percent, of loans were originated as interest-only. The outstanding balance of interest-only residential mortgage loans that had entered the amortization period was $3.6 billion, or six percent, at March 31, 2024. Residential mortgage loans that have entered the amortization period generally experience a higher rate of early stage delinquencies and nonperforming status compared to the residential mortgage portfolio as a whole. At March 31, 2024, $51 million, or one percent, of outstanding interest-only residential mortgages that had entered the amortization period were accruing past due 30 days or more compared to $832 million, or less than one percent, for the entire residential mortgage portfolio. In addition, at March 31, 2024, $188

million, or five percent, of outstanding interest-only residential mortgage loans that had entered the amortization period were nonperforming, of which $62 million were contractually current. Loans that have yet to enter the amortization period in our interest-only residential mortgage portfolio are primarily well-collateralized loans to our wealth management clients and have an interest-only period of three years to 10 years. Substantially all of these loans that have yet to enter the amortization period will not be required to make a fully-amortizing payment until 2025 or later.

Table 19 presents outstandings, nonperforming loans and net charge-offs by certain state concentrations for the residential mortgage portfolio. In the New York area, the New York-Northern New Jersey-Long Island Metropolitan Statistical Area (MSA) made up 15 percent of outstandings at both March 31, 2024 and December 31, 2023. The Los Angeles-Long Beach-Santa Ana MSA within California represented 14 percent of outstandings at both March 31, 2024 and December 31, 2023.

(1)Outstandings and nonperforming loans exclude loans accounted for under the fair value option.

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Home Equity

At March 31, 2024, the home equity portfolio made up six percent of the consumer portfolio and was comprised of home equity lines of credit (HELOCs), home equity loans and reverse mortgages. HELOCs generally have an initial draw period of 10 years, and after the initial draw period ends, the loans generally convert to 15- or 20-year amortizing loans. We no longer originate home equity loans or reverse mortgages.

At March 31, 2024, 84 percent of the home equity portfolio was in Consumer Banking, ten percent was in GWIM and the remainder of the portfolio was in All Other. Outstanding balances in the home equity portfolio decreased $342 million during the three months ended March 31, 2024 primarily due to paydowns outpacing draws on existing lines and new

originations. Of the total home equity portfolio at March 31, 2024 and December 31, 2023, $9.8 billion and $10.1 billion, or 39 percent as of both periods, were in first-lien positions. At March 31, 2024, outstanding balances in the home equity portfolio that were in a second-lien or more junior-lien position and where we also held the first-lien loan totaled $4.4 billion, or 17 percent, of our total home equity portfolio.

Unused HELOCs totaled $45.5 billion and $45.1 billion at March 31, 2024 and December 31, 2023. The HELOC utilization rate was 35 percent at both March 31, 2024 and December 31, 2023.

Table 20 presents certain home equity portfolio key credit statistics.

(1)Outstandings, accruing past due, nonperforming loans and percentages of the portfolio exclude loans accounted for under the fair value option.

(2)Includes loans that are contractually current that have not yet demonstrated a sustained period of payment performance following a modification.

Nonperforming outstanding balances in the home equity portfolio decreased $12 million to $438 million at March 31, 2024, primarily driven by paydowns and payoffs and returns to performing status outpacing new additions. Of the nonperforming home equity loans at March 31, 2024, $255 million, or 58 percent, were current on contractual payments. In addition, $101 million, or 23 percent, were 180 days or more past due and had been written down to the estimated fair value of the collateral, less costs to sell. Accruing loans that were 30 days or more past due remained relatively unchanged during the three months ended March 31, 2024.

Of the $25.2 billion in total home equity portfolio outstandings at March 31, 2024, as shown in Table 20, 10 percent require interest-only payments. The outstanding balance of HELOCs that had reached the end of their draw period and entered the amortization period was $3.8 billion at March 31, 2024. The HELOCs that have entered the amortization period have experienced a higher percentage of early stage delinquencies and nonperforming status when compared to the HELOC portfolio as a whole. At March 31, 2024, $33 million, or one percent, of outstanding HELOCs that had entered the

amortization period were accruing past due 30 days or more. In addition, at March 31, 2024, $274 million, or seven percent, were nonperforming.

For our interest-only HELOC portfolio, we do not actively track how many of our home equity customers pay only the minimum amount due on their home equity loans and lines; however, we can infer some of this information through a review of our HELOC portfolio that we service and is still in its revolving period. During the three months ended March 31, 2024, 28 percent of these customers with an outstanding balance did not pay any principal on their HELOCs.

Table 21 presents outstandings, nonperforming balances and net recoveries by certain state concentrations for the home equity portfolio. In the New York area, the New York-Northern New Jersey-Long Island MSA made up 11 percent of the outstanding home equity portfolio at both March 31, 2024 and December 31, 2023. The Los Angeles-Long Beach-Santa Ana MSA within California made up 11 percent and 10 percent of the outstanding home equity portfolio at March 31, 2024 and December 31, 2023.

(1)Outstandings and nonperforming loans exclude loans accounted for under the fair value option.

Credit Card

At March 31, 2024, 97 percent of the credit card portfolio was managed in Consumer Banking with the remainder in GWIM. Outstandings in the credit card portfolio decreased $3.7 billion during the three months ended March 31, 2024 to $98.5 billion primarily driven by a seasonal decline in purchase volume. Net charge-offs increased $398 million to $899 million during the three months ended March 31, 2024 compared to the same period in 2023 primarily due to late-stage delinquent credit card

loans that were charged off. Credit card loans 30 days or more past due and still accruing interest increased $27 million, and 90 days or more past due and still accruing interest increased $75 million at March 31, 2024.

Unused lines of credit for credit card increased to $395.5 billion at March 31, 2024 from $390.2 billion at December 31, 2023.

Table 22 presents certain state concentrations for the credit card portfolio.

Direct/Indirect Consumer

At March 31, 2024, 53 percent of the direct/indirect portfolio was included in Consumer Banking (consumer auto and recreational vehicle lending) and 47 percent was included in GWIM(principally securities-based lending loans). Outstandings in the direct/indirect portfolio decreased $619 million during the

three months ended March 31, 2024 to $102.8 billion driven by declines in securities-based lending stemming from paydown activity due to higher interest rates.

Table 23 presents certain state concentrations for the direct/indirect consumer loan portfolio.

Other Consumer

Other consumer primarily consists of deposit overdraft balances. Net charge-offs decreased $88 million to $74 million during the three months ended March 31, 2024 compared to the same period in 2023, primarily driven by lower overdraft losses from fraud activity.

Nonperforming Consumer Loans, Leases and Foreclosed Properties Activity

Table 24 presents nonperforming consumer loans, leases and foreclosed properties activity for the three months ended March 31, 2024 and 2023. During the three months ended March 31,

2024, nonperforming consumer loans of $2.7 billion remained relatively unchanged.

At March 31, 2024, $487 million, or 18 percent, of nonperforming loans were 180 days or more past due and had been written down to their estimated property value less costs to sell. In addition, at March 31, 2024, $1.7 billion, or 61 percent, of nonperforming consumer loans were current and classified as nonperforming loans in accordance with applicable policies.

Foreclosed properties increased $9 million during the three months ended March 31, 2024 to $112 million.

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(1)Consumer loans may be returned to performing status when all principal and interest is current and full repayment of the remaining contractual principal and interest is expected, or when the loan otherwise becomes well-secured and is in the process of collection.

(2)Includes repossessed non-real estate assets of $22 million and $0 at March 31, 2024 and 2023.

(3)Outstanding consumer loans and leases exclude loans accounted for under the fair value option.