SEC Comment Letter for BANK OF AMERICA (BAC) — May 20, 2015
BANK OF AMERICA CORP /DE/ (BAC, BAC-PB, BAC-PE, BAC-PK, BAC-PL, BAC-PM, BAC-PN, BAC-PO, BAC-PP, BAC-PQ, BAC-PS, BML-PG, BML-PL) (CIK 0000070858)
Date: May 20, 2015 · CIK: 0000070858 · Accession: 0000000000-15-027401
AI Filing Summary & Sentiment
Reasoning
Letter
May 20, 2015 Via E -mail Brian T. Moynihan Chief Executive Officer Bank of America Corporation Bank of America Corporate Center 100 N. Tryon Street Charlotte, NC 28255
Re: Bank of America Corporation Form 10-K for the Fiscal Year Ended December 31, 2014 Filed February 25, 2015 Form 10 -Q for the Quarterly Period Ended March 31, 2015 Filed April 29, 2015 File No. 001 -06523
Dear Mr. Moynihan :
We have reviewed your filing s and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances , please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
Annual Report on Form 10 -K for the Fiscal Year Ended December 31, 2014
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
Global Wealth and Investment Management, page 42
Client Balances, page 43
1. We note that your assets under management (AUM) increased 10% during 2014 to $902.9 billion, and increased an additional $15 billion during the first quarter of 2015. In light of the significant increases in AUM during the periods, and the fact that these AUM inflows are disclosed as significant drivers in investment and brokerage services income during the respective periods, please provide the following information in future filings:
Brian T. Moynihan Bank of America Corporation May 20, 2015 Page 2
Provide a rollforward of your AUM by investment strategy (i.e. equities, fixed income, other assets) that separately presents gross client inflows, gross client outflows, market appreciation/(depreciation), and foreign currency translation adjustments. Disclose the typical fee rates earned for each product type, or weighted average fee rate by investment strategy.
Item 11. Executive Compensation
Definitive Proxy Statement on Schedule 14A
Compensation Discussion and Analysis, page 25
2. Your compensation discussion and analysis describes a number of factors that the Compensation and Benefits Committee considered in setting the compensation for each of the named executive officers. The factors include: the targeted mix of cash and equity variable compensation; the impact of overall company performance as well as busin ess group performance; and the relative performance of Bank of America compared to your competitor groups. Finally, you provide a list of the performance highlights considered by the Compensation and Benefits Committee in making compensation decisions wit h regard to 2014 for each named executive.
In reading this section, an investor can readily understand what the Compensation and Benefits Committee considered in setting compensation amounts. However, the disclosure in this section does not go on to pr ovide your shareholders with an explanation of how these various pieces of information resulted in the compensation awards included in the summary compensation table and presented in the table on page 35. We note that the discussion states that Mr. Moynih an’s compensation was lower in 2014 compared to 2013, but does not disclose how the Compensation and Benefits Committee determined that the decline of $1 million in targeted compensation was the appropriate amount. Similarly, we note that the targeted com pensation for each NEO declined in 2014 compared to the prior year, with variable compensation declining by between 7% -9%.
Please confirm that in future filings you will provide your investors with additional analysis as to how the factors that the Com pensation and Benefits Committee considered resulted in the compensation awards reported in the compensation discussion and analysis.
Brian T. Moynihan Bank of America Corporation May 20, 2015 Page 3
Quarterly Report on Form 10 -Q for the Quarter Ended March 31, 2015
Item 2. Management’s Discussion and Analysis of Financial Condition a nd Results of Operation
Regulatory Capital, Page 47
Basel 3 Liquidity Standards, page 58
3. We note your discussion of the Liquidity Coverage Ratio that Bank of America and its insured depository subsidiaries must meet. In your discl osure, both in the Quarterly Report as well as in the related portion of your Annual Report , you state that you believe that Bank of America meets the LCR requirements on a fully phased in basis. Please tell us whether your subsidiaries that are insured d epository institutions similarly met their LCR requirements, or provide us with an explanation of any material factors that might impact the LCR compliance of your subsidiaries.
Note 1 – Summary of Significant Accounting Policies, page 126
New Accounting Pronouncements, page 126
4. We note your disclosure discussing the new disclosure guidance related to nature of collateral pledged in repurchase agreements accounted for as secured borrowings. However, we were unable to locate the disclosure required by ASC 860 -30-50-7. Please advise, or revise future filings to include this required disclosure.
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made.
In respo nding to our comments, please provide a written statement from the company acknowledging that:
the company is responsible for the adequacy and accuracy of the disclosure in the filing;
staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United Stat es.
Brian T. Moynihan Bank of America Corporation May 20, 2015 Page 4
You may contact Lory Empie at (202) 551 -2714 or me at (202) 551 -3512 if you have questions regarding comments on the financial statements and related matters. Please contact Eric Envall at (202) 551 -3234 or Christian Windsor, Special Counsel at (202) 551 -3419 with any other questions.
Sincerely,
/s/ Stephanie J. Ciboroski
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May 20, 2015 Via E -mail Brian T. Moynihan Chief Executive Officer Bank of America Corporation Bank of America Corporate Center 100 N. Tryon Street Charlotte, NC 28255 Re: Bank of America Corporation Form 10-K for the Fiscal Year Ended December 31, 2014 Filed February 25, 2015 Form 10 -Q for the Quarterly Period Ended March 31, 2015 Filed April 29, 2015 File No. 001 -06523 Dear Mr. Moynihan : We have reviewed your filing s and have the following comments. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances , please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Annual Report on Form 10 -K for the Fiscal Year Ended December 31, 2014 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation Global Wealth and Investment Management, page 42 Client Balances, page 43 1. We note that your assets under management (AUM) increased 10% during 2014 to $902.9 billion, and increased an additional $15 billion during the first quarter of 2015. In light of the significant increases in AUM during the periods, and the fact that these AUM inflows are disclosed as significant drivers in investment and brokerage services income during the respective periods, please provide the following information in future filings: Brian T. Moynihan Bank of America Corporation May 20, 2015 Page 2 Provide a rollforward of your AUM by investment strategy (i.e. equities, fixed income, other assets) that separately presents gross client inflows, gross client outflows, market appreciation/(depreciation), and foreign currency translation adjustments. Disclose the typical fee rates earned for each product type, or weighted average fee rate by investment strategy. Item 11. Executive Compensation Definitive Proxy Statement on Schedule 14A Compensation Discussion and Analysis, page 25 2. Your compensation discussion and analysis describes a number of factors that the Compensation and Benefits Committee considered in setting the compensation for each of the named executive officers. The factors include: the targeted mix of cash and equity variable compensation; the impact of overall company performance as well as busin ess group performance; and the relative performance of Bank of America compared to your competitor groups. Finally, you provide a list of the performance highlights considered by the Compensation and Benefits Committee in making compensation decisions wit h regard to 2014 for each named executive. In reading this section, an investor can readily understand what the Compensation and Benefits Committee considered in setting compensation amounts. However, the disclosure in this section does not go on to pr ovide your shareholders with an explanation of how these various pieces of information resulted in the compensation awards included in the summary compensation table and presented in the table on page 35. We note that the discussion states that Mr. Moynih an’s compensation was lower in 2014 compared to 2013, but does not disclose how the Compensation and Benefits Committee determined that the decline of $1 million in targeted compensation was the appropriate amount. Similarly, we note that the targeted com pensation for each NEO declined in 2014 compared to the prior year, with variable compensation declining by between 7% -9%. Please confirm that in future filings you will provide your investors with additional analysis as to how the factors that the Com pensation and Benefits Committee considered resulted in the compensation awards reported in the compensation discussion and analysis. Brian T. Moynihan Bank of America Corporation May 20, 2015 Page 3 Quarterly Report on Form 10 -Q for the Quarter Ended March 31, 2015 Item 2. Management’s Discussion and Analysis of Financial Condition a nd Results of Operation Regulatory Capital, Page 47 Basel 3 Liquidity Standards, page 58 3. We note your discussion of the Liquidity Coverage Ratio that Bank of America and its insured depository subsidiaries must meet. In your discl osure, both in the Quarterly Report as well as in the related portion of your Annual Report , you state that you believe that Bank of America meets the LCR requirements on a fully phased in basis. Please tell us whether your subsidiaries that are insured d epository institutions similarly met their LCR requirements, or provide us with an explanation of any material factors that might impact the LCR compliance of your subsidiaries. Note 1 – Summary of Significant Accounting Policies, page 126 New Accounting Pronouncements, page 126 4. We note your disclosure discussing the new disclosure guidance related to nature of collateral pledged in repurchase agreements accounted for as secured borrowings. However, we were unable to locate the disclosure required by ASC 860 -30-50-7. Please advise, or revise future filings to include this required disclosure. We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the information the Securities Exchange Act of 1934 and all applicable Exchange Act rules require. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In respo nding to our comments, please provide a written statement from the company acknowledging that: the company is responsible for the adequacy and accuracy of the disclosure in the filing; staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United Stat es. Brian T. Moynihan Bank of America Corporation May 20, 2015 Page 4 You may contact Lory Empie at (202) 551 -2714 or me at (202) 551 -3512 if you have questions regarding comments on the financial statements and related matters. Please contact Eric Envall at (202) 551 -3234 or Christian Windsor, Special Counsel at (202) 551 -3419 with any other questions. Sincerely, /s/ Stephanie J. Ciboroski Stephanie J. Ciboroski Senior Assistant Chief Accountant