Bank of America 2015 Annual Report Download - page 198

196 Bank of America 2015
NOTE 12 Commitments and Contingencies
In the normal course of business, the Corporation enters into a
number of off-balance sheet commitments. These commitments
expose the Corporation to varying degrees of credit and market
risk and are subject to the same credit and market risk limitation
reviews as those instruments recorded on the Consolidated
Balance Sheet.
Credit Extension Commitments
The Corporation enters into commitments to extend credit such
as loan commitments, SBLCs and commercial letters of credit to
meet the financing needs of its customers. The table below
includes the notional amount of unfunded legally binding lending
commitments net of amounts distributed (e.g., syndicated) to other
financial institutions of $14.3 billion and $15.7 billion at
December 31, 2015 and 2014. At December 31, 2015, the
carrying value of these commitments, excluding commitments
accounted for under the fair value option, was $664 million,
including deferred revenue of $18 million and a reserve for
unfunded lending commitments of $646 million. At December 31,
2014, the comparable amounts were $546 million, $18 million
and $528 million, respectively. The carrying value of these
commitments is classified in accrued expenses and other
liabilities on the Consolidated Balance Sheet.
The table below also includes the notional amount of
commitments of $10.9 billion and $9.9 billion at December 31,
2015 and 2014 that are accounted for under the fair value option.
However, the table below excludes cumulative net fair value of
$658 million and $405 million on these commitments, which is
classified in accrued expenses and other liabilities. For more
information regarding the Corporation’s loan commitments
accounted for under the fair value option, see Note 21 – Fair Value
Option.
Credit Extension Commitments
December 31, 2015
(Dollars in millions)
Expire in One
Year or Less
Expire After
One
Year Through
Three Years
Expire After
Three
Years Through
Five Years
Expire After
Five
Years Total
Notional amount of credit extension commitments
Loan commitments $ 87,873 $ 119,272 $ 158,920 $ 37,112 $ 403,177
Home equity lines of credit 7,074 18,438 5,126 19,697 50,335
Standby letters of credit and financial guarantees (1) 19,584 9,903 3,385 1,218 34,090
Letters of credit 1,650 165 258 54 2,127
Legally binding commitments 116,181 147,778 167,689 58,081 489,729
Credit card lines (2) 370,127 — — —370,127
Total credit extension commitments $ 486,308 $ 147,778 $ 167,689 $ 58,081 $ 859,856
December 31, 2014
Notional amount of credit extension commitments
Loan commitments $ 79,897 $ 97,583 $ 146,743 $ 18,942 $ 343,165
Home equity lines of credit 6,292 19,679 12,319 15,417 53,707
Standby letters of credit and financial guarantees (1) 19,259 9,106 4,519 1,807 34,691
Letters of credit 1,883 157 35 88 2,163
Legally binding commitments 107,331 126,525 163,616 36,254 433,726
Credit card lines (2) 363,989 — — — 363,989
Total credit extension commitments $ 471,320 $ 126,525 $ 163,616 $ 36,254 $ 797,715
(1) The notional amounts of SBLCs and financial guarantees classified as investment grade and non-investment grade based on the credit quality of the underlying reference name within the instrument
were $25.5 billion and $8.4 billion at December 31, 2015, and $26.1 billion and $8.2 billion at December 31, 2014. Amounts in the table include consumer SBLCs of $164 million and $396 million
at December 31, 2015 and 2014.
(2) Includes business card unused lines of credit.
Legally binding commitments to extend credit generally have
specified rates and maturities. Certain of these commitments have
adverse change clauses that help to protect the Corporation
against deterioration in the borrower’s ability to pay.
Other Commitments
At December 31, 2015 and 2014, the Corporation had
commitments to purchase loans (e.g., residential mortgage and
commercial real estate) of $729 million and $1.8 billion, which
upon settlement will be included in loans or LHFS.
At December 31, 2015 and 2014, the Corporation had
commitments to purchase commodities, primarily liquefied natural
gas of $1.9 billion and $241 million, which upon settlement will
be included in trading account assets.
At December 31, 2015 and 2014, the Corporation had
commitments to enter into forward-dated resale and securities
borrowing agreements of $92.6 billion and $73.2 billion, and
commitments to enter into forward-dated repurchase and
securities lending agreements of $59.2 billion and $55.8 billion.
These commitments expire within the next 12 months.
The Corporation is a party to operating leases for certain of its
premises and equipment. Commitments under these leases are
approximately $2.5 billion, $2.1 billion, $1.7 billion, $1.5 billion
and $1.3 billion for 2016 through 2020, respectively, and $4.6
billion in the aggregate for all years thereafter.