Business Context and Reporting Period
Company: Bank of America Corporation
Filing Type: Form 8-K (Current Report)
Date of Report: January 6, 2026
Subject: Regulation FD Disclosure regarding a change in accounting methods for tax-related affordable housing, wind, and solar renewable energy equity investments.
Key Financial Metrics and Reclassifications
The filing details a reclassification of income statement line items due to the adoption of the Proportional Amortization Method (PAM) for affordable housing and wind investments, and a change in recognition timing for solar investment tax credits (ITCs). The filing does not provide total revenue, net income, cash flow, or debt figures, but provides specific adjustments to Noninterest Income and Income Tax Expense.
| Period | Noninterest Income Adjustment ($ millions) | Income Tax Expense Adjustment ($ millions) |
|---|---|---|
| Year Ended Dec 31, 2024 | $3,969 | $4,128 |
| Year Ended Dec 31, 2023 | $4,188 | $4,398 |
| Q3 2025 | $952 | $1,089 |
| Q2 2025 | $980 | $926 |
| Q1 2025 | $881 | $917 |
Retained Earnings Impact: Decreased by $1.7 billion as of September 30, 2025, due to cumulative timing differences in expense recognition.
Material Changes Versus Prior Period
- Accounting Method Shift: Transitioned from the equity method to PAM for affordable housing and wind investments. Costs are now amortized in proportion to tax benefits and classified in income tax expense rather than noninterest income.
- Solar ITC Recognition: Changed from recognizing ITCs and expenses upon facility placement to recognizing them over the productive life of the facilities.
- Effective Tax Rate: The revised effective tax rate for Q3 2025 is estimated at 20.0%, compared to the previously reported 10.4%.
- Capital Ratios: The company will not revise previously filed regulatory capital ratios. However, the cumulative impact would have resulted in an estimated $2.1 billion decrease in Common Equity Tier 1 (CET1) capital and a 13 basis point decrease in the CET1 ratio as of September 30, 2025.
Guidance, Outlook, and Management Commentary
Management Commentary: The Corporation determined the new accounting methods are preferable as they better align financial statement presentation with the economic impact of the equity investments. The primary impact is a reclassification between income statement lines with an insignificant impact on net income on an annualized basis.
Outlook: The timing difference in expense recognition is expected to reverse over the remaining life of the investments.
Risks and Contingencies: The information regarding the changes is preliminary and based on data available at the time of filing. The Revised Supplemental Information (Exhibit 99.1) is not deemed "filed" for purposes of Section 18 of the Exchange Act.
Important Facts for Investor Verification
- Verify the full details of the reclassified financial statements in Exhibit 99.1 (Revised Supplemental Information).
- Confirm the impact of the $1.7 billion reduction in retained earnings on future dividend capacity or capital allocation plans.
- Monitor the reversal of the timing difference in expense recognition over the remaining life of the investments.
- Note that regulatory capital ratios were not revised despite the estimated $2.1 billion decrease in CET1 capital under the new accounting method.