Bank of America : 1 report for March 31, 2024

Pillar 3 Regulatory Capital Disclosure

Advanced Approaches

For the quarter ended March 31, 2024

TABLE OF CONTENTS
DISCLOSURE MAP	3
SCOPE OF APPLICATION	4
CAPITAL STRUCTURE	6
CAPITAL ADEQUACY	7
RISK MANAGEMENT ORGANIZATIONAL STRUCTURE AND RESPONSIBILITIES	12
CREDIT RISK	13
RETAIL CREDIT RISK	15
WHOLESALE CREDIT RISK	17
COUNTERPARTY CREDIT RISK	19
CREDIT RISK MITIGATION	21
SECURITIZATION	22
MARKET RISK OVERVIEW	25
EQUITY EXPOSURES IN THE BANKING BOOK	29
OPERATIONAL RISK OVERVIEW	29
INTEREST RATE RISK MANAGEMENT FOR THE BANKING BOOK	31
SUPPLEMENTARY LEVERAGE RATIO	32
MODEL RISK MANAGEMENT	33
APPENDIX: REFERENCES	34

2

DISCLOSURE MAP

Pillar 3 Requ iremen t	Desc ription	Pillar 3 Report	1Q24 Form 10-Q	2023 Form 10-K
Page Referen ce	Page Referen ce	Page Referenc e
Scope of	Corporate Overview	4	3	2
Principles of Consolidation and Basis of Presentation	4	47	94
Application
Basel 3 Regulatory Capital Standards and Disclosures	4	16, 75	48, 144
Capital Structure	Capital Structure	6	73, 78	141, 143
	Capital Adequacy	7		48
	Regulatory Capital Ratios	8	17	145
Capital Adequacy	Total Loss-Absorbing Capacity	10
	Bank Subsidiary Distributions	10		145
	Risk-Weighted Assets	10	18	50
Risk Management
Organizational Structure	Risk Management Organizational Structure and Responsibilities	12	16	44
and Responsibilities
	Credit Risk	13	23, 40, 59	10, 57
Credit Risk	Credit Risk Exposures	13	7, 24, 23, 29, 56, 59,	58, 64, 115
	74, 75
	Retail Credit Risk	15	59	52, 58, 115
Retail Credit Risk	Retail Risk Rating System	15
Determining Retail Risk Parameters	15	24, 59	115
	Retail Credit Exposures	16
	Wholesale Credit Risk	17	23	62
Wholesale Credit Risk	Wholesale Risk Rating System	17
Determining Wholesale Risk Parameters	17	59	62
	Wholesale Credit Exposures	18
	Counterparty Credit Risk	19	49	104
	Valuation Adjustments	19	23, 49, 79	104, 152
	Credit Limits	19	16, 23
Counterparty Credit Risk	Economic Capital	19
	Collateral Valuation	19	47	94
	Counterparty Credit Exposures	20
	Wrong-Way Risk	20	49, 79
Credit Risk Mitigation	Credit Risk Mitigation	21	24, 49, 69, 74	57, 94
	Securitization	22		126
Securitization	Risk Management	22
Due Diligence	23	69
	Securitization Exposures	23		102, 126
	Market Risk Overview	25		73
	Trading Book	25
	Trading Risk Management	25		74
	Regulatory VaR	26
Market Risk	VaR Backtesting	26	37	76
	Regulatory Stressed VaR	27
	Incremental Risk Charge	27
	Comprehensive Risk Measure	27
	Trading Portfolio Stress Testing	28		77
Equity Exposures in Banking	Equity Exposures in Banking Book	29		101, 151
Book	Accounting and Valuation	29
Equity Exposures	29
Operational Risk Overview	Operational Risk Overview	30		79
Advanced Measurement Approach	30
Interest Rate Risk	Interest Rate Risk Management for the Banking Book	31
Management for the
Risk Measurement	31	39	77
Banking Book
Supplementary Leverage	Supplementary Leverage Ratio	32
Ratio
Model Risk Management	Model Risk Management	33		73

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SCOPE OF APPLICATION

Corporate Overview

Bank of America Corporation (together, with its consolidated subsidiaries, Bank of America, we, us or our) is a Delaware corporation, a bank holding company (BHC) and a financial holding company. When used in this report, "Bank of America", "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. Bank of America is one of the world's largest financial institutions, serving individual consumers, small- and middle-market businesses, institutional investors, large corporations and governments with a full range of banking, investing, asset management and other financial and risk management products and services. Our principal executive offices are located in the Bank of America Corporate Center, 100 North Tryon Street, Charlotte, North Carolina 28255.

Principles of Consolidation and Basis of Presentation

The Consolidated Financial Statements include the accounts of the Corporation and its majority-owned subsidiaries and those variable interest entities (VIEs) where the Corporation is the primary beneficiary. Intercompany accounts and transactions have been eliminated. Results of operations of acquired companies are included from the dates of acquisition, and for VIEs, from the dates that the Corporation became the primary beneficiary. Assets held in an agency or fiduciary capacity are not included in the Consolidated Financial Statements. The Corporation accounts for investments in companies for which it owns a voting interest and for which it has the ability to exercise significant influence over operating and financing decisions using the equity method of accounting. These investments, which include the Corporation's interests in affordable housing and renewable energy partnerships, are recorded in other assets. Equity method investments are subject to impairment testing, and the Corporation's proportionate share of income or loss is included in other income.

The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could materially differ from those estimates and assumptions. For additional information, refer to Note 1 - Summary of Significant Accounting Principles in the March 31, 2024 Form 10-Q and December 31, 2023 Form 10-K.

These disclosures are required by regulatory capital rules set out by the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation (collectively, U.S. banking regulators) in alignment with the Basel 3 regulatory capital framework. These disclosures provide qualitative and quantitative information about regulatory capital and risk-weighted assets (RWA) for the Advanced approaches, and should be read in conjunction with our Form 10-K for the year ended December 31, 2023, Form 10-Q for the quarter ending March 31, 2024, and the Consolidated Financial Statements for Bank Holding Companies - FR Y-9C, the Market Risk Regulatory Report for Institutions Subject to the Market Risk Capital Rule - FFIEC 102 and the Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework ― FFIEC 101 for the period ended March 31, 2024.

The Corporation's Pillar 3 disclosures may include some financial information that has not been prepared under GAAP. Certain

information contained in the Pillar 3 disclosures is prepared pursuant to instructions in the U.S. Basel 3 Final Rule (Basel 3).

U.S. banking regulators permit certain Pillar 3 disclosure requirements to be addressed by their inclusion in the Consolidated Financial Statements of the Corporation. In such instances, incorporation into this report is made by reference to the relevant section(s) of the most recent Form 10-K and 10-Q filed with the United States Securities and Exchange Commission (SEC). This Pillar 3 report should be read in conjunction with the aforementioned reports as information regarding regulatory capital and risk management is largely contained in those filings. The table on the previous page indicates the location of such disclosures.

Basel 3 Regulatory Capital Standards and Disclosures

As a financial holding company, the Corporation is subject to regulatory capital rules, including Basel 3, issued by the U.S. banking regulators. Basel 3 is a regulatory capital framework composed of three parts, or pillars. Pillar 1 addresses capital adequacy and provides minimum capital requirements. Pillar 2 requires supervisory review of capital adequacy assessments and strategies. Pillar 3 promotes market discipline through prescribed regulatory public disclosures on capital structure, capital adequacy and RWA.

The Corporation and its primary banking subsidiaries, Bank of America, National Association (BANA) and Bank of America California, National Association (BACANA), are Advanced approaches institutions under Basel 3. Basel 3 requires the Corporation and its banking subsidiaries to meet minimum regulatory capital ratios and buffers in order to avoid certain restrictions, including restrictions on capital distributions. The Corporation was subject to a capital conservation buffer under the Advanced approaches only, a stress capital buffer (SCB) under the Standardized approach only, a countercyclical capital buffer (if any) and a global systemically important bank (G-SIB) surcharge. The buffers and surcharge must be comprised solely of Common equity tier 1 (CET1) capital. In addition, banking entities are required to meet adequately capitalized requirements under the Prompt Corrective Action (PCA) framework. The PCA framework establishes categories of capitalization including well capitalized, based on the Basel 3 regulatory capital ratio requirements. U.S. banking regulators are required to take certain mandatory actions depending on the category of capitalization, with no mandatory actions required for well capitalized banking organizations.

Basel 3 provides two methods of calculating RWA, the Standardized approach and the Advanced approaches. As an Advanced approaches institution, the Corporation is required to report regulatory risk-based capital ratios and RWA under both the Standardized and Advanced approaches. The approach that yields the lower ratio is used to assess capital adequacy including under the PCA framework. At March 31, 2024, the CET 1, Tier 1 capital and Total capital ratios for the Corporation were lower under the Standardized approach and the Corporation's CET1 capital ratio of 11.9 percent under the Standardized approach exceeded its CET1 capital ratio requirement.

Based on the final 2023 Comprehensive Capital Analysis and Review (CCAR) results, effective October 1, 2023, our stress capital buffer (SCB) declined to 2.5 percent from 3.4 percent.

The Corporation is required to calculate its G-SIB surcharge on an annual basis under two methods and is subject to the higher of the resulting two surcharges. Method 1 is consistent with the approach prescribed by the Basel Committee's assessment methodology and is calculated using specified indicators of systemic importance. Method

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2 modifies the Method 1 approach by, among other factors, including a measure of the Corporation's reliance on short-term wholesale funding. Effective January 1, 2024 the Corporation's G-SIB surcharge, which is higher under Method 2, increased 50bps, resulting in an increase in our minimum CET1 capital ratio requirement under the Advanced and Standardized approaches to 10.0 percent from 9.5 percent.

The Corporation is also required to maintain a minimum supplementary leverage ratio (SLR) of 3.0 percent plus a leverage buffer of 2.0 percent in order to avoid certain restrictions on capital distributions and discretionary bonus payments to executive officers. At March 31, 2024, our insured depository institution subsidiaries exceeded their requirement to maintain a minimum 6.0 percent SLR to be considered well capitalized under the PCA framework.

The Corporation is subject to the Federal Reserve's final rule requiring G-SIBs to maintain minimum levels of total loss-absorbing capacity (TLAC) and long-term debt. TLAC consists of the Corporation's Tier 1 capital and eligible long-term debt issued directly by the Corporation. Eligible long-term debt for TLAC ratios is comprised of unsecured debt that has a remaining maturity of at least one year and satisfies additional requirements as prescribed in the TLAC final rule. As with the risk-based capital ratios and SLR, the Corporation is required to maintain TLAC ratios in excess of minimum requirements plus applicable buffers to avoid restrictions on capital distributions and discretionary bonus payments to executive officers.

During the first quarter of 2024, the Federal Deposit Insurance Corporation (FDIC) increased its estimate of the loss to the Deposit Insurance Fund (DIF) arising from the closures of Silicon Valley Bank and Signature Bank. The estimated loss to the DIF will be recovered through the collection of a special assessment from certain insured depository institutions. Accordingly, the Corporation recorded a pretax charge of $700 million in noninterest expense to increase the accrual for its estimated share of the special assessment. For additional information on the FDIC Special Assessment, refer to Note 10 - Commitments and Contingencies in the March 31, 2024 Form 10-Q.

For additional information on Basel 3 and management of the Corporation's regulatory capital and pending or proposed capital changes, refer to Regulatory Developments - Capital Management section within the Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) in the December 31, 2023 Form 10-K

Information contained in this report is presented in accordance with the Basel 3 rules for RWA and capital measurement under the Advanced approaches, and follows the Pillar 3 disclosure requirements for the quantitative and qualitative presentation of data. Information presented herein may differ from similar information

presented in the Consolidated Financial Statements and other publicly available disclosures. Unless specified otherwise, all amounts and information are presented in conformity with the definitions, rules and requirements of Basel 3.

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CAPITAL STRUCTURE

Under Basel 3, Total capital consists of two tiers of capital, Tier 1 and Tier 2. Tier 1 capital is further composed of CET1 capital and additional Tier 1 capital. CET1 capital primarily includes common stock, retained earnings and Accumulated Other Comprehensive Income (AOCI). Goodwill, disallowed intangible assets and certain deferred tax assets are excluded from CET1 capital. Additional Tier 1 capital primarily includes qualifying non-cumulative preferred stock. Tier 2 capital primarily consists of qualifying subordinated debt and a limited portion of eligible credit reserves. The Corporation's Total capital is the sum of Tier 1 capital and Tier 2 capital.

The following table presents the capital composition as of March 31, 2024. Results below reflect the impact of transition provisions related to the Corporation's adoption of the current expected credit losses (CECL) accounting standard, as well as information reflecting the full impact of CECL adoption.

	Basel 3 CECL	Basel 3 CECL
Table 1 - Capital Composition	Transitional	Fully Phased-In
March 31, 2024 (Dollars in millions)
Total common shareholders' equity	$	265,155	$	265,155
CECL transitional amount1		627		-
Goodwill, net of related deferred tax liabilities		(68,648)		(68,648)
Deferred tax assets arising from net operating loss
and tax credit carryforwards		(8,148)		(8,148)
Intangibles, other than mortgage servicing rights and
goodwill, net of related deferred tax liabilities		(1,482)		(1,482)
Defined benefit pension plan net assets		(775)		(775)
Cumulative unrealized net (gain) loss related to
changes in fair value of financial liabilities
attributable to own creditworthiness, net-of-tax		1,585		1,585
Accumulated net (gains) loss on certain cash flow
hedges2		8,449		8,449
Other		(138)		(138)
Common equity tier 1 capital	$	196,625	$	195,998
Qualifying preferred stock, net of issuance cost		28,396		28,396
Other		-		-
Tier 1 capital	$	225,021	$	224,394
Tier 2 capital instruments		14,185		14,185
Qualifying allowance for credit losses3		13,592		14,444
Other		(398)		(398)
Total capital under the Standardized approach	$	252,400	$	252,625
Adjustment in qualifying allowance for credit losses
under the Advanced approaches3		(9,824)		(9,849)
Total capital under the Advanced approaches	$	242,576	$	242,776

1. March 31, 2024 includes 25 percent of the CECL transition provision's impact as of December 31, 2021.
2. Includes amounts in accumulated other comprehensive income related to the hedging of items that are not recognized at fair value on the Consolidated Balance Sheet.
3. Basel 3 CECL Transitional includes the impact of transition provisions related to the CECL accounting standard.

For additional information on the components of common shareholders' equity, refer to Schedule A "Advanced Approaches Regulatory Capital" in Bank of America's March 31, 2024 Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework ― FFIEC 101. For the related breakdown of AOCI, refer to Note 12 - Accumulated Other Comprehensive Income (Loss) in the March 31, 2024 Form 10-Q. For additional information on goodwill and intangibles, refer to Note 7 - Goodwill and Intangible Assets in the March 31, 2024 Form 10-Q. For terms and conditions of common stock and preferred stock, refer to Note 11 - Shareholders' Equity in the March 31, 2024 Form 10-Q. For additional information on Tier 2 capital instruments, refer to Note 11 - Long-term Debt in the December 31, 2023 Form 10-K.

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CAPITAL ADEQUACY

The Corporation manages its capital position so that its capital is more than adequate to support its business activities and aligns with risk, risk appetite and strategic planning. Additionally, we seek to maintain safety and soundness at all times, even under adverse scenarios, take advantage of organic growth opportunities, meet obligations to creditors and counterparties, maintain ready access to financial markets, continue to serve as a credit intermediary, remain a source of strength for our subsidiaries and satisfy current and future regulatory capital requirements. Capital management is integrated into our risk and governance processes, as capital is a key consideration in the development of our strategic plan, risk appetite and risk limits.

The Federal Reserve requires BHCs to submit a capital plan and planned capital actions on an annual basis, consistent with the rules governing the CCAR capital plan, which includes supervisory stress testing by the Federal Reserve. Based on our 2023 stress test results, our stress capital buffer (SCB) is 2.5 percent effective October 1, 2023 through September 30, 2024. In April 2024, we submitted our 2024 CCAR capital plan and related supervisory stress tests. The Federal Reserve has indicated that it will disclose CCAR capital plan supervisory stress test results by June 30, 2024.

We conduct an Internal Capital Adequacy Assessment Process (ICAAP) on a periodic basis. The ICAAP is a forward-looking assessment of our projected capital needs and resources, incorporating earnings, balance sheet and risk forecasts under baseline and adverse economic and market conditions. We utilize periodic stress tests to assess the potential impacts to our balance sheet, earnings, regulatory capital and liquidity under a variety of stress scenarios. We perform qualitative risk assessments to identify and assess material risks not fully captured in our forecasts or stress tests. We assess the potential capital impacts of proposed changes to regulatory capital requirements. Management assesses ICAAP results and provides documented quarterly assessments of the adequacy of our capital guidelines and capital position to the Board of Directors (the Board) or its committees.

The Board has authorized the repurchase of up to $25 billion of common stock over time, which includes common stock repurchases to offset shares awarded under the Corporation's equity-based compensation plans. Pursuant to Board authorization, during the three months ended March 31, 2024, we repurchased $2.5 billion of common stock). For more information, see Part II, Item 2. Unregistered Sales of Equity securities and Use of Proceeds in the March 31, 2024 Form 10-Q and Capital Management - CCAR and Capital Planning within the MD&A section in the December 31, 2024 Form 10-K.

The timing and amount of common stock repurchases are subject to various factors, including the Corporation's capital position, liquidity, financial performance and alternative uses of capital, stock trading price, regulatory requirements and general market conditions, and may be suspended at any time. Such repurchases may be effected through open market purchases or privately negotiated transactions, including repurchase plans that satisfy the conditions of Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

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Regulatory Capital Ratios

March 31, 2024 Key Capital Metrics - Bank of America Corporation

1. As of March 31, 2024, the CET1 capital ratio for the Corporation was lower under the Standardized approach.

The following tables present capital ratios and related information as well as the regulatory minimum and well capitalized ratio requirements under Basel 3 Advanced and Basel 3 Standardized for the Corporation and its major national bank subsidiaries: BANA and BACANA as of March 31, 2024. For the Corporation and BANA, the results below include information that reflects the impact of transition provisions related to the adoption of the CECL accounting standard, as well as information reflecting the full impact of CECL adoption. BACANA did not elect to apply the transition provisions.

Table 2 - Regulatory Capital - Bank of America Corporation								March 31, 2024
				Bank of America Corporation
		Basel 3 Standardized		Basel 3 Standardized	Basel 3 Advanced CECL	Basel 3 Advanced CECL
(Dollars in millions, except ratios)		CECL Transitional1		CECL Fully Phased-In		Transitional1		Fully Phased-In
Regulatory Capital
Common equity tier 1 capital	$	196,625	$	195,998	$	196,625	$	195,998
Tier 1 capital		225,021		224,394		225,021		224,394
Total capital2		252,400		252,625		242,576		242,776
Assets
Risk-weighted assets	$	1,657,660	$	1,657,851	$	1,462,660	$	1,462,864
Adjusted quarterly average assets3		3,168,595		3,167,968		3,168,595		3,167,968
Supplementary Leverage Exposure						3,723,890		3,723,264
Capital Ratios
Common equity tier 1 capital		11.9%		11.8%		13.4%		13.4%
Tier 1 capital		13.6		13.5		15.4		15.3
Total capital		15.2		15.2		16.6		16.6
Tier 1 leverage		7.1		7.1		7.1		7.1
Supplementary Leverage Ratio						6.0		6.0
Table 2 - Regulatory Capital - Bank of America, N.A.								March 31, 2024
				Bank of America, N.A.
		Basel 3 Standardized		Basel 3 Standardized	Basel 3 Advanced CECL	Basel 3 Advanced CECL
(Dollars in millions, except ratios)		CECL Transitional1		CECL Fully Phased-In		Transitional1		Fully Phased-In
Regulatory Capital
Common equity tier 1 capital	$	188,744	$	188,119	$	188,744	$	188,119
Tier 1 capital		188,744		188,119		188,744		188,119
Total capital2		203,699		203,921		194,099		194,297
Assets
Risk-weighted assets	$	1,398,085	$	1,398,085	$	1,118,378	$	1,118,378
Adjusted quarterly average assets3		2,481,383		2,480,759		2,481,383		2,480,759
Supplementary Leverage Exposure						2,925,586		2,924,962
Capital Ratios
Common equity tier 1 capital		13.5%		13.5%		16.9%		16.8%
Tier 1 capital		13.5		13.5		16.9		16.8
Total capital		14.6		14.6		17.4		17.4
Tier 1 leverage		7.6		7.6		7.6		7.6
Supplementary Leverage Ratio						6.5		6.4

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Table 2 - Regulatory Capital - Bank of America California, N.A.				March 31, 2024
		Bank of America California, N.A.
(Dollars in millions, except ratios)		Basel 3 Standardized		Basel 3 Advanced
Regulatory Capital
Common equity tier 1 capital	$	2,257	$	2,257
Tier 1 capital		2,257		2,257
Total capital2		2,271		2,263
Assets
Risk-weighted assets	$	6,096	$	3,216
Adjusted quarterly average assets3		14,975		14,975
Supplementary Leverage Exposure				14,975
Capital Ratios
Common equity tier 1 capital		37.0%		70.2%
Tier 1 capital		37.0		70.2
Total capital		37.3		70.4
Tier 1 leverage		15.1		15.1
Supplementary Leverage Ratio				15.1

	Bank Holding Company	Insured Depository Institutions
	Regulatory	Regulatory
	Minimum4	Minimum5
Capital Ratios
Common equity tier 1 capital	10.0%	7.0%
Tier 1 capital	11.5	8.5
Total capital	13.5	10.5
Tier 1 leverage	4.0	5.0
Supplementary leverage ratio	5.0	6.0

1. As of March 31, 2024, capital ratios are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of CECL.
2. Total capital under the Advanced approaches differs from the Standardized approach due to differences in the amount permitted in Tier 2 capital related to the qualifying allowance for credit losses.
3. Reflects total average assets adjusted for certain Tier 1 capital deductions.
4. The CET1 capital regulatory minimum is the sum of the CET1 capital ratio minimum of 4.5 percent, our G-SIB surcharge of 3.0 percent and our capital conservation buffer (under the Advanced approaches) or the SCB (under the Standardized approach) of 2.5 percent at March 31, 2024. The countercyclical capital buffer was zero. The SLR regulatory minimum includes a leverage buffer of 2.0 percent.
5. Risk-basedcapital regulatory minimums at March 31, 2024 are the minimum ratios under Basel 3 including a capital conservation buffer of 2.5 percent. The regulatory minimums for leverage ratios as of March 31, 2024 are the percent required to be considered well capitalized under the PCA framework.

As of March 31, 2024 Bank of America Corporation and its regulated banking subsidiaries were in excess of their respective minimum Total capital requirements and our regulated principal broker-dealer subsidiaries were in compliance with their net capital requirements.

The Corporation's capital conservation buffer of 7.23 percent and leverage buffer of 3.04 percent are above the capital conservation buffer (including the G-SIB surcharge) requirement of 5.5 percent and the leverage buffer requirement of 2.0 percent, respectively.

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Total Loss-Absorbing Capacity

The following table presents the Corporation's TLAC and long-term debt ratios and related information as of March 31, 2024. Results below reflect the election of CECL transition.

Total Loss-Absorbing Capacity and Long-Term Debt under CECL Transitional						March 31, 2024
			Regulatory		Long-term	Regulatory
(Dollars in millions)		TLAC1	Minimum2		Debt	Minimum3
Regulatory Capital
Total eligible balance	$	475,215		$	235,649
Percentage of risk-weighted assets4		28.7%	22.0%		14.2%	9.0%
Percentage of total supplementary leverage exposure		12.8%	9.5%		6.3%	4.5%

1. As of March 31, 2024, TLAC ratios are calculated using the regulatory capital rule that allows a five-year transition period related to the adoption of CECL.
2. The TLAC RWA regulatory minimum consists of 18.0 percent plus a TLAC RWA buffer comprised of 2.5 percent plus the Method 1 G-SIB surcharge of 1.5 percent. The countercyclical buffer is zero for this period. The TLAC supplementary leverage exposure regulatory minimum consists of 7.5 percent plus a 2.0 percent TLAC leverage buffer. The TLAC RWA and leverage buffers must be comprised solely of CET1 capital and Tier 1 capital, respectively.
3. The long-term debt RWA regulatory minimum is comprised of 6.0 percent plus an additional 3.0 percent requirement based on the Corporation's Method 2 G-SIB surcharge. The long-term debt leverage exposure regulatory minimum is 4.5 percent. Effective January 1, 2024, the Corporation's G-SIB surcharge, which is higher under Method 2, increased 50 bps, resulting in an increase in our long-term debt RWA regulatory minimum requirement to 9.0 percent from 8.5 percent.
4. The approach that yields the higher RWA is used to calculate TLAC and long-term debt ratios, which was the Standardized approach as of March 31, 2024.

Bank of America is not subject to payout ratio limitations, including limitations on capital distributions and discretionary bonus payments to executive officers, under Basel 3 requirements. For additional information on regulatory capital, capital ratios, capital conservation and countercyclical capital buffers for the Corporation, refer to Capital Management within the MD&A section in the March 31, 2024 Form 10-Q, Schedule A "Advanced Approaches Regulatory Capital" in Bank of America's March 31, 2024 Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework ― FFIEC 101 and Schedule HC-R "Regulatory Capital" in Bank of America's March 31, 2024 Consolidated Financial Statements for Bank Holding Companies - FR Y-9C. For information on eligible retained income, refer to Schedule HC-R "Regulatory Capital" in Bank of America's March 31, 2024 Consolidated Financial Statements for Bank Holding Companies - FR Y-9C.

Bank Subsidiary Distributions

The amount of dividends that a subsidiary bank may declare in a calendar year without OCC approval is the subsidiary bank's net profits for that year combined with its retained net profits for the preceding two years. Retained net profits, as defined by the OCC, consist of net income less dividends declared during the period. For additional information, refer to Note 16 - Regulatory Requirements and Restrictions in the December 31, 2023 Form 10-K.

Risk-Weighted Assets

Basel 3 Advanced approaches include measures of credit risk, market risk, operational risk and risks related to the credit valuation adjustment (CVA) for over-the-counter (OTC) derivative exposures. The Advanced approaches rely on internal analytical models to measure risk weights for credit risk exposures and allow the use of models to estimate the exposure at default (EAD) for certain exposure types. Market risk applies to covered positions which include trading assets and liabilities, foreign exchange exposures and commodity exposures.

Market risk capital is modeled for general market risk as well as specific risk for products where specific risk regulatory approval has

been granted; in the absence of specific risk model approval, standard specific risk charges apply.

For securitization exposures, institutions are permitted to use the Supervisory Formula Approach (SFA) and would use the Simplified Supervisory Formula Approach (SSFA) if the SFA is unavailable for a particular exposure.

Credit risk exposures are measured using internal ratings-based models to determine the applicable risk weight by estimating the probability of default (PD), loss-given default (LGD) and, in certain instances, EAD. The internal analytical models primarily rely on internal historical default and loss experience.

Operational risk is measured using internal analytical models which rely on both internal and external operational loss experience and data. The calculations require management to make estimates, assumptions and interpretations, including with respect to the probability of future events based on historical experience.

Actual results could differ from those estimates and assumptions. Under the Federal Reserve's reservation of authority, they may require us to hold an amount of capital greater than otherwise required under the capital rules if they determine that our risk-based capital requirement using our internal analytical models is not commensurate with our credit, market, operational or other risks.

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