# MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED X-17A-5 (2022-02-28) — Broker-dealer annual report - Company: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED - Form: X-17A-5 - Filed: 2022-02-28 - Period: 2021-12-31 - Accession: 0000065106-22-000007 - CIK: 65106 - File #: 8-07221 - Type: Broker-dealer - Material weakness: No - Auditor: PricewaterhouseCoopers, LLP - Auditor location: New York, NY - Contact: Faruqe Alam - Phone: 980-388-0576 - Signed by: Faruqe Alam (Managing Director and Chief Financial Officer) Original filing: https://www.sec.gov/Archives/edgar/data/65106/000006510622000007/mlpfs2021Publicg.pdf --- {0}------------------------------------------------ # Merrill Lynch, Pierce, Fenner & Smith Incorporated and Subsidiaries (SEC ID No. 8-07221) Consolidated Balance Sheet # December 31, 2021 Filed pursuant to Rule 17a-5(e)(3) under the Securities Exchange Act of 1934 as a Public Document {1}------------------------------------------------ | Report of Independent Registered Public Accounting Firm | Page(s) | |---------------------------------------------------------|---------| | Consolidated Balance Sheet | | | Notes to Consolidated Balance Sheet | | {2}------------------------------------------------ ![](_page_2_Picture_0.jpeg) ## Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholder of Merrill Lynch, Pierce, Fenner & Smith Incorporated: ### Opinion on the Financial Statements – Balance Sheet We have audited the accompanying consolidated balance sheet of Merrill Lynch, Pierce, Fenner & Smith Incorporated and its subsidiaries (the "Company") as of December 31, 2021, including the related notes (collectively referred to as the "consolidated financial statement"). In our opinion, the consolidated financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2021 in conformity with accounting principles generally accepted in the United States of America. ### Basis for Opinion The consolidated financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit of the consolidated financial statement in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statement is free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as, evaluating the overall presentation of the consolidated financial statement. We believe that our audit provides a reasonable basis for our opinion. aternouseloopers LLP Charlotte, NC February 25, 2022 We have served as the Company's auditor since 2009. {3}------------------------------------------------ | (dollars in millions) | | | |----------------------------------------------------------------------------------|-----|--------| | ASSETS | | | | Cash and cash equivalents | ತಿ | 2,532 | | Cash segregated for regulatory purposes or deposited with clearing organizations | | 1,106 | | Securities financing transactions | | | | Receivables under resale agreements | | 18,132 | | Receivables under securities borrowed transactions | | 443 | | | | 18,575 | | Trading assets, at fair value | | | | Equities | | 213 | | Other | | 3 | | | | 216 | | Other receivables | | | | Customers | | 8,867 | | Brokers and dealers | | 261 | | Interest and other, including loans due from affiliates | | 2,085 | | | | 11,213 | | Right-of-use lease assets | | 1,133 | | Equipment and facilities, net | | 239 | | Goodwill and intangible assets | | 1,813 | | Other assets | | 162 | | Total Assets | ക്ക | 36,989 | {4}------------------------------------------------ | LIABILITIES | | | |---------------------------------------------------------------------------------------------------------------------------------|----|--------| | Securities financing transactions | | | | Payables under securities loaned transactions | ಕಾ | 1,642 | | Trading liabilities, at fair value (includes \$210 measured at fair value in accordance
with the fair value option election) | | | | Equities | | 207 | | Other | | 13 | | | | 220 | | Other payables | | | | Customers | | 18,720 | | Brokers and dealers | | 274 | | Compensation and benefits | | 943 | | Interest and other | | 3,460 | | Loans due to affiliates | | 822 | | Lease liabilities | | 1,190 | | | | 25,409 | | Contingencies and guarantees (See Note 11) | | | | Subordinated borrowings | | 620 | | Total Liabilities | | 27,891 | | STOCKHOLDER'S EQUITY | | | | Common stock, par value \$1 per share; 1,200 shares authorized; 1,000 shares issued
and outstanding | | | | Paid-in capital | | 6,764 | | Accumulated other comprehensive loss (net of tax) | | (5) | | Retained earnings | | 2,339 | | Total Stockholder's Equity | | 9,098 | | Total Liabilities and Stockholder's Equity | ਦਰ | 36,989 | {5}------------------------------------------------ #### 1. Organization ### Description of Business Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"), together with its subsidiaries (the "Company"), is registered as a broker-dealer and investment adviser with the U.S. Securities and Exchange Commission ("SEC"), and is a member firm of the Financial Industry Regulatory ("FINRA"), the New York Stock Exchange ("NYSE"), and other securities exchanges. MLPF&S is also registered as an introducing broker with the U.S. Commodity Futures Trading Commission ("CFTC") and is a member of the National Futures Association ("NFA") and the Securities Investor Protection ("SIPC"). Additionally, it is registered as a swap firm with the NFA. The Company provides its clients with investment-related products and services, including brokerage services and discretionary and non-discretionary investment advisory services through its investment advisory programs. Through its retirement group, the Company provides a wide variety of investment and custodial services to Individual Retirement Accounts ("IRAs") and other retirement plans for small businesses. The Company also provides investment, administration, communications, and consulting services to corporations and their employees for their retirement programs, including 401(k), pension, profit-sharing and nonqualified deferred compensation plans. In addition, the Company provides financing to clients including margin lending, and other extensions of credit. Certain products and services may be provided through affiliates. The Company is a wholly-owned indirect subsidiary of Bank of America Corporation ("Bank of America" or the "Parent"). The Company's direct parent is BAC North America Holding Company ("BACNA"), which is a whollyowned subsidiary of NB Holdings Corporation ("NB Holdings"). NB Holdings is a wholly-owned subsidiary of Bank of America. ### 2. Summary of Significant Accounting Policies ### Basis of Presentation The Consolidated Balance Sheet in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP"). Intercompany transactions and balances have been eliminated. The Consolidated Balance Sheet is presented in U.S. dollars. ### Consolidation Accounting The Consolidated Balance Sheet includes the accounts of the Company and its subsidiaries in which the Company has a controlling financial interest. The Company determines whether it is required to consolidate an entity by first evaluating whether the entity qualifies as a voting rights entity ("VRE") or as a variable interest entity ("VIE"). VREs are defined to include entities that have both equity at risk that is sufficient to fund future operations and have equity investors that have a controlling financial interest in the entity through their equity investments. The Company generally consolidates those VREs where it has the majority of the voting rights. VIEs are those entities that do not meet the VRE is an entity that lacks equity investors or whose equity investors do not have a controlling financial interest in the entity through their equity investments. At December 31, 2021, there were no consolidated nor unconsolidated VIEs. ### Use of Estimates In presenting the Consolidated Balance Sheet, management makes estimates including the following: - · Valuations of assets and liabilities requiring fair value estimates; - · The ability to realize deferred tax assets and the recognition and measurement of uncertain tax positions; - · The carrying amount of goodwill and intangible assets; - · The outcome of pending litigation; - · Incentive-based compensation accruals and valuation of share-based payment compensation arrangements; and - · Other matters that affect the reported amounts and disclosure of contingencies in the Consolidated Balance Sheet. Estimates, by their nature, are based on judgment and available information. Therefore, actual results could differ from those estimates and could have a material impact on the Consolidated Balance Sheet, and it is possible that such {6}------------------------------------------------ changes could occur in the near term. A discussion of certain areas in which estimates are a significant component of the amounts reported in the Consolidated Balance Sheet follows: #### Fair Value Measurement The Company accounts for certain assets at fair value under applicable industry guidance, namely Accounting Standards Codification ("ASC") 940 Financial Services - Brokers and Dealers. The Company also accounts for certain financial liabilities at fair value under the fair value option election in accordance with ASC 825-10-25, Financial Instruments - Recognition, ("fair value option election"). ASC 820, Fair Value Measurements and Disclosures, ("Fair Value Accounting") defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 825-10-50 - Financial Instruments, requires disclosure of the fair value of certain financial instruments that are not carried at fair value in the Balance Sheet. ### Legal Reserves The Company is occasionally a party in various actions, some of which involve claims for substantial amounts. Amounts are accrued for the financial resolution of claims that have either been asserted or are deemed probable of assertion if, in the opinion of management, it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In many cases, it is not possible to determine whether a liability has been incurred or to estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no accrual is made until that time. Accruals are subject to significant estimation by management, with input from any outside counsel handling the matter. Refer to Note 11 for further information. #### Income Taxes The Company provides for income taxes on all transactions that have been recognized in the Consolidated Balance Sheet in accordance with ASC 740 Income Taxes ("Income Tax Accounting"). Accordingly, deferred taxes are adjusted to reflect the tax rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on deferred tax liabilities and deferred tax assets, as well as other changes in income tax laws, are recognized in net earnings in the period during which such changes are enacted. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts that are more-likelythan-not to be realized. Pursuant to Income Tax Accounting, the Company may consider various sources of evidence in assessing the necessity of valuation allowances to reduce deferred tax assets to amounts more-likely-than-not to be realized, including the following: 1) past and projected earnings, including losses, of the Company and Bank of America, as certain tax attributes such as U.S. net operating losses ("NOLs"), U.S. capital loss carryforwards and foreign tax credit carryforwards can be utilized by Bank of America in certain income tax returns, 2) tax carryforward periods, and 3) tax planning strategies and other factors of the legal entities, such as the intercompany tax allocation agreement. Included within the Company's net deferred tax assets are carryforward amounts generated in the U.S. that are deductible in the future as NOLs. The Company has concluded that these net deferred tax assets are more-likelythan-not to be fully utilized prior to expiration, based on the projected level of future taxable income of the Company and Bank of America, which is relevant due to the intercompany tax allocation agreement. For this purpose, future taxable income was projected based on forecasts, historical earnings after adjusting for past market disruptions and the anticipated impact of the differences between pre-tax earnings and taxable income. The Company recognizes and measures its unrecognized tax benefits ("UTB") in accordance with Income Tax Accounting. The Company estimates the likelihood, based on their technical merits, that tax positions will be sustained upon examination considering the facts and circumstances and information available at the end of each period. The Company adjusts the level of unrecognized tax benefits when there is more information available, or when an event occurs requiring a change. In accordance with Bank of America's intercompany tax allocation agreement, any new or subsequent change in an unrecognized tax benefit related to Bank of America's state consolidated, combined or unitary return in which the Company is a member will generally not be reflected in the Company's Consolidated Balance Sheet. However, upon resolution of the item, any significant impact determined to the Company will be reflected in the Company's Consolidated Balance Sheet. Under the intercompany tax allocation agreements, tax benefits associated with NOLs (or other tax attributes) of the Company are payable to the Company generally upon utilization in Bank of America's tax returns. {7}------------------------------------------------ # dqq`\_\_t]fhu`dqfdd]]dqg`ch]f\qi\qbcdab]agl^`a`bq`d^ \cd^c\chd[\]^\\_`abcdaeb\_b]fdghddc vdfddq -- - - - -- -- - - - - --- - !"#"\$!% &'!("#)\* +,-&\* .,'% \$&-"/#'0%//\*,\*%!"\$) !"#"\$!% &'!("#1%2%3,"\$-4'% \$&-"!'%//\*,\*%!"\$ ----- 5678 --5 # 9::;<=>>?@;A@B?@C=D>EFGGEBG H I - -J 5H- K - ----- -- --- -5 L - - - - - J 5- - -- - J - M ---N - - 5O - - - --- - - M- - -- -- - -- -5 -- M -- - - J -- 5L -- ---- J --- - -J - -5L - -J --- J - 5 P - -J -- -N - -- 5 - - - -K -J 5Q- - -K-- --N5Q- --- - J - - - - -- -5R - - 6S5 L -- - K---T U7 VWV75 ------N - -X Y- --- -- -H---QQ --5-- -- - K5 L -M -I - --- - - -- - - -5Z 6S - -5 # [\]^\\_`abcdaeb\_b]fdghddc[bic`\]^ L - - ---5 # [b^hb]a[b^hjkl`mb\_d]c^ L --J - n J - n -- - oW - - 5 # [b^hgdpqdpbcdar\qsdpl\_bc\qtulqi\^d^\qvdi\^`cdaw`ch[\_dbq`]pxqpb]`ybc`\]^ L --- --- - z -{ J - 5- - - - -K------{ J - nn -5QT U7 VWV7 - |757- - -K-5 - - - -K-T U7 VWV7 |}5W-- - - J Z 7}UnU - z -Q7oU8~Z 7}UnU-- -5Q- J Z 7}UnU - -"+"\*%3,"\$- &"##"\$%,"%.#""0" !\$ - - - -K---| -- -T U7 VWV75 {8}------------------------------------------------ #### Securities Financing Transactions Resale agreements are treated as collateralized financing transactions. These transactions are recorded at their contractual amounts plus accrued interest, and approximate fair value of these items is not materially sensitive to shifts in market interest rates because of these instruments and/or variable interest rates or to credit risk because the resale agreements are substantially collateralized. The Company may use securities received as collateral for resale agreements to satisfy regulatory requirements such as Rule 15c3-3. At December 31, 2021, approximately \$12 billion of such securities had been segregated in special reserve accounts as required by Rule 15c3-3. Refer to Note 16 for further information Securities borrowed and loaned transactions are recorded at the amount of cash collateral advanced or received plus accrued interest. Securities borrowed transactions require the counterparty with collateral in the form of cash, letters of credit, or other securities. The Company receives collateral in the form of cash or other securities for securities loaned transactions. The carrying value of securities borrowed and loaned transactions approximates fair value as these items are not materially sensitive to shifts in market interest rates because of their short-term nature and/or variable interest rates or to credit risk because securities borrowed and loaned transactions are substantially collateralized. For securities financing transactions, the Company's policy is to monitor the market value of the principal amount loaned and obtain collateral from or return collateral pledged to counterparties, where appropriate. Securities financing agreements do not create material credit risk due to these collateral provisions; therefore, an allowance for loan losses is unnecessary. The collateral maintenance provisions consisting of collateral is expected to be maintained into the foreseable future and any expected losses are assumed to not have a material impact to the Consolidated Balance Sheet. A significant majority of securities financing activities are transacted under legally enforceable master agreements that give the Company, in the event of default by the counterparty, the right to liquidate securities held and to offset receivables and payables with the same counterparty. The Company offsets certain repurchase and resale transactions with the same counterparty on the Consolidated Balance Sheet where it has such a legally enforceable master netting agreement, and the transactions have the same maturity date. #### Trading Assets and Liabilities Trading assets and liabilities are recorded at fair value, and primarily consist of equity securities held by the Company in connection with dividend reinvestment plans ("DRIP") participated in by our clients. ### Other Receivables and Payables #### Customers Customer securities transactions are recorded on a settlement date basis. Receivables from and payables to customers include amounts due on cash and margin transactions. Securities owned by customers, including those that collateralize margin or other similar transactions, are not reflected on the Consolidated Balance Sheet. Customer receivables include margin loan transactions where the Company will typically make a loan to a customer to finance the customer's purchase of securities. These transactions are conducted through margin accounts. In these transactions, the customer is required to post collateral in excess of the loan and the collateral must meet marketability criteria. Collateral is valued daily and must be maintained over the life of the loan. Given that these loans are fully collateralized by marketable securities, credit risk is negligible and reserves for loan losses are rarely required. The collateral maintenance provisions consisting of collateral is expected to be maintained into the foreseable future and the expected losses are assumed to not have a material impact to the Consolidated Balance Sheet. ### Brokers and Dealers Receivables from brokers and dealers primarily include amounts receivable for securities not delivered by the Company to a purchaser by the settlement date ("fails to deliver"), margin deposits, and commissions. Payables to brokers and dealers primarily include amounts payable for securities not received by the Company from a seller by the settlement date ("fails to receive"). These accounts generally settle daily and due to the short nature of broker and {9}------------------------------------------------ dealers receivables the credit exposures arising from these accounts are of limited amounts owed to the Company for a short period of time. The expected credit losses are assumed to not have a material impact to the Consolidated Balance Sheet. #### Compensation and Benefits Compensation and benefits payables consists of salaries payable, financial advisor compensation, incentive and deferred compensation, payroll taxes, pension and other employee benefits. #### Interest and Other Interest and other receivables interest receivable on customer or other receivables, and securities financing transactions, income taxes, commissions and fees, financial advisors are offered cash upfront in the form of an interestbearing loan ("FA Loans"), and other receivables. The Company performs qualitative analyses, including consideration of historical losses and current economic conditions, to estimate any expected credit are then included in a valuation account that is recorded as a contra-asset against the amortized cost basis of the financial asset. Interest and other payable interest payable for securities financing transactions, amounts payable for income taxes, and other payables. #### Equipment and Facilities Equipment and facilities primarily consist of technology hardware and software, leasehold improvements, and owned facilities. Equipment and facilities are reported at historical cost, net of accumulated depreciation, except for land, which is reported at historical cost. The cost of certain facilities is allocated to the Company by Bank of America based on the relative amount of space occupied. Depreciation and amortization are computed using the straight-line method. Equipment is depreciated over its estimated useful life, while leasehold improvements are amortized over the improvement's estimated economic useful life or the term of the lease. #### Leases The Company's lessee arrangements are comprised of operating leases. Under these arrangements, the Company records right-of-use assets and lease liabilities at lease commencement. All leases are recorded on the Consolidated Balance Sheet, except for leases with an initial term of less than 12 months for which the shortterm lease election. The Company made an accounting policy election not to separate lease and non-lease components of a contract that is or contains a lease for its real estate and equipment lease payments represent payments on both lease and non-lease components. At lease commencement, lease liabilities are discounted using the Company's incremental borrowing rate. Right-of-use assets initially equal the lease liability, adjusted for any lease payments made prior to lease commencement and for any lease incentives. Refer to Note 9 for further information. #### Other Assets Other assets consist primarily of prepaid expenses, deferred charges and trading assets. #### Loans Due to Affiliates Loans due to affiliates consist of unsecured borrowings with Bank of America, NB Holdings and Merrill Lynch Bank and Trust Company (Cayman) Ltd. ("MLBTC"). Refer to Note 3 for further information. #### Subordinated Borrowings The Company enters into subordinated borrowings with NB Holdings. Refer to Note 8 for further information. #### Translation of Foreign Currencies Assets and liabilities denominated in foreign currencies are translated at period-end rates of exchange. #### 3. Related Party Transactions The Company enters into securities financing transactions with affiliates. The Company also provides certain securities services to affiliated companies, and contracts a variety of services from Bank of America and certain affiliated companies including accounting, legal, regulatory compliance, transaction purchasing, building management and other services. {10}------------------------------------------------ In June 2021, the Company entered into a new agreement with NB Holdings for a \$9.0 billion revolving unsecured senior line of credit, and cancelled it's \$7.0 billion revolving unsecured senior line of credit. In October, 2021, the Company entered into a new agreement with MLBTC for a \$5.0 billion revolving unsecured senior line of credit. In October 2021, the Company entered into a new agreement with Bank of America, National Association ("BANA") for a \$3.5 billion committed inter-day unsecured line of credit, and cancelled it's \$3.5 billion uncommitted inter-day unsecured line of credit. The following two tables summarize related party balances included in the respective balance sheet captions as of December 31, 2021. #### Assets | 2,176 | |--------| | 18,132 | | 443 | | 446 | | 21,197 | | | #### Liabilities | (dollars in millions) | | | |-----------------------------------------------|---|-------| | Payables under securities loaned transactions | S | 1.642 | | Interest and other payables | | 1.397 | | Loans due to affiliates | | 822 | | Subordinated borrowings | | 620 | | Total | | 4,481 | | | | | The Company has established unsecured borrowing agreements with Bank of America, NB Holdings and MLBTC in the normal course of business. Amounts outstanding under these arrangements are included within Loans due to affiliates. The arrangements are summarized below: #### Agreements with Bank of America · A \$2.5 billion uncommitted six month revolving senior unsecured line of credit. Interest on the line of credit is based on prevailing short-term market rates. The credit line will mature on August 01, 2022 and may automatically be extended semi-annually to the succeeding August 14 unless specific actions are taken 180 days prior to the maturity date. At December 31, 2021, approximately \$2.1 million was outstanding on the line of credit. #### Agreements with NB Holdings - · A \$1.0 billion committed six month revolving senior unsecured line of credit. Interest on the line of credit is based on prevailing short-term market rates. The credit line will mature on August 01, 2022 and may automatically be extended semi-annually to the succeeding August 18 unless specific actions are taken 180 days prior to the maturity date. At December 31, 2021, there was no significant amount outstanding on the line of credit. - · A \$9.0 billion uncommitted six month revolving senior unsecured line of credit. Interest on the line of credit is based on prevailing short-term market rates. The credit line will mature on August 01, 2022 and may {11}------------------------------------------------ automatically be extended semi-annually to the succeeding August 18 unless specific actions are taken 180 days prior to the maturity date. At December 31, 2021, approximately \$820.0 million was outstanding on the line of credit. Other subsidiaries of MLPF&S engage in lending transactions with NB Holdings in the normal course of business. At December 31, 2021, the subsidiaries of MLPF&S had \$70.4 million due from NB Holdings included in Loans due from affiliates Other subsidiaries of MLPF&S engage in borrowing transactions with NB Holdings in the normal course of business. At December 31, 2021, the subsidiaries of MLPF&S had no amounts outstanding on this line of credit. #### Agreements with MLBTC · A \$5.0 billion uncommitted six month revolving senior unsecured line of credit. Interest on the line of credit is based on prevailing short-term market rates. The credit line will mature on August 01, 2022 and may automatically be extended semi-annually to the succeeding August 13 unless specific actions are taken 180 days days prior to the maturity date. At December 31, 2021, there was no significant amount outstanding on the line of credit. #### Agreements with BANA · The Company has a \$3.5 billion committed intra-day unsecured line of credit with BANA. The intraday liquidity is provided through daylight overdraft of the demand deposit accounts held by the Company at BANA. At December 31, 2021, there were no amounts outstanding on this line of credit. Other subsidiaries of MLPF&S engage in borrowing transactions with Bank of America Europe Designated Activity Company ("BOAEDAC") in the normal course of business. During April 2021, the outstanding facilities with BOAEDAC were repaid and closed. Refer to Note 8 for information on subordinated borrowings between the Company and NB Holdings. Financial advisors who receive FA loans also receive a monthly service incentive payment that equates to the principal and interest due on the loan for as they remain with the Company during the loan term. The outstanding loan balance becomes due if employment is terminated before the vesting period. As of December 31, 2021, the Company had loans outstanding from financial advisors of \$402.0 million, net of allowance for credit losses of \$20.0 million, which are not included in the table above but are included in Interest and other receivables on the Consolidated Balance Sheet. See Note 11 for guarantees related to FA Loans. #### 4. Risks and Uncertainties ### Market Risk Market risk is the risk that changes in market conditions may adversely impact the value of assets, liabilities, and assets under management, and may negatively impact earnings. #### Market Liquidity Risk Market liquidity risk represents the level of expected market activity changes dramatically and, in certain cases, may even cease. This exposes the Company to the risk that the Company will not be able to transact business and execute trades in an orderly manner, which may impact could be further exacerbated if expected hedging or pricing correlations are compromised by disproportionate demand for certain instruments. ### Liquidity Risk Liquidity Risk represents the risk of inability to meet expected cash flow and collateral needs while continuing to support the Company's business and customer needs, under a range of economic conditions. The Company's primary liquidity risk management objective is to meet all contractual and contingent financial obligations at all times, including during periods of stress. To achieve that objective, the Company analyzes and monitors its liquidity risk under expected and stressed conditions, maintains excess to diverse funding sources {12}------------------------------------------------ and seeks to align liquidity-related incentives and risks. Excess liquidity is defined as readily available asses, limited to cash and high-quality, liquid, unencumbered securities that the Company can use to meet contractual and contingent financial obligations as those obligations arise. In addition, the Company is supported through committed and uncommitted borrowing arrangements with Bank of America and NB Holdings. #### Counterparty Credit Risk The Company is exposed to risk of loss if an individual, counterparty or issuer fails to perform its obligations under contractual terms ("default risk"). Cash instruments expose the Company to default risk. In the normal course of business, the Company executes, settles, and finances various customer securities transactions. Execution of these transactions includes the purchase and sale of securities by the Company. These activities may expose the Company to default risk arising from the potential that customers or counterparties may fail to satsfy their obligations. In these situations, the Company may be required to purchase or sell financial instruments at unfavorable market prices to satisfy obligations to other customers or counterparties. In addition, the Company seeks to control the risks associated with its customer margin activities by requiring customers to maintain collateral in compliance with regulatory and internal guidelines. Liabilities to other brokers and dealers related transactions (i.e., securities fails to receive) are recorded at the amount for which the securities were purchased, and are paid upon receipt of the securities from other brokers or dealers. In the case of aged securities fails to receive, the Company may purchase the underlying security in the market and seek reimbursement for losses from the counterparty. #### Concentrations of Credit Risk The Company's exposure to credit risk associated with its activities is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes. Concentrations of credit risk can be affected by changes in political, industry, or economic factors. To reduce the potential for risk concentration, credit limits are established and monitored in light of changing counterparty and market conditions. #### Concentration of Risk to the U.S. Government and its Agencies At December 31, 2021, the Company had indirect exposure to the U.S. Government and its agencies from maintaining U.S. Government and agencies securities as collateral for resale agreements and securities borrowed transactions. The Company's direct credit exposure on these transactions is with the Company has credit exposure to the U.S. Government and its agencies only in the counterparty's default. Securities issued by the U.S. Government or its agencies held as collateral for resale agreements and securities borrowed transactions at December 31, 2021 totaled \$18.6 billion, which was from affiliated companies. #### Industry Concentration Risk The Company's primary industry credit concentration is with financial institutions, including affiliates, which arises in the normal course of the Company's brokerage and financial institutions include other brokers and dealers, commercial banks, financing companies, insurance companies, and investment companies. #### ડ. Fair Value Accounting #### Fair Value Hierarchy In accordance with Fair Value Accounting, the Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into a three-level fair value hierarchy. The fair value hierarchy gives the highest prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Financial assets and liabilities recorded on the Consolidated Balance Sheet are categorized based on the inputs to the valuation techniques as follows: Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access. {13}------------------------------------------------ - Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following: - a. Quoted prices for similar assets or liabilities in active markets; - b. Quoted prices for identical or similar assets or liabilities in non-active markets; - c. Pricing models whose inputs are observable for substantially the full term of the asset or liability; and - d. Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability. - Level 3. Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management's view about the assumptions a market participant would use in pricing the asset or liability. As required by Fair Value Accounting, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Level 1 and 2) and unobservable (Level 3). Therefore, gains and losses for such assets and liabilities categorized within the Level 3 reconciliation below may include changes in fair value that are attributable to both observable inputs (Level 1 and 2) and unobservable inputs (Level 3). Further, the following reconciliations do not take into consideration the offect of Level 1 and 2 financial instruments entered into by the Company that economically hedge certain exposures to the Level 3 positions. A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability or significance of valuation inputs may result in a reclassification for certain financial assets or liabilities. Transfers into or out of fair value hierarchy classifications are made if the significant inputs used in the financial measuring the fair values of the assets and liabilities became unobservable in the current market place. ### Valuation Techniques The following sections outline the valuation methodologies for the Company's material categories of assets and liabilities. While the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. During 2021, there were no changes to valuation approaches or techniques that had, or are expected to have, a material impact on the Company's Consolidated Balance Sheet. ### Equities Exchange-traded equity securities: Exchange-traded equity securities are generally valued based on quoted prices from the exchange. These securities are classified as either Level 2 in the fair value hierarchy, primarily based on volume and bid-offer spread information. {14}------------------------------------------------ The following table presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of December 31, 2021: (dollars in millions) | | | Fair Value Measurement on a Recurring Basis | | | | | | | |---------------------------|---------|---------------------------------------------|---------|----|---------|---|-------|-----| | | Level 1 | | Level 2 | | Level 3 | | Total | | | Assets: | | | | | | | | | | Trading assets | | | | | | | | | | Equities | ਦਰ | 212 | ಕೆ | - | ಕೆ | | સ્ત્ર | 213 | | Other | | | | | | 3 | | 3 | | Total trading assets | | 212 \$ | | | ಳಿ | 3 | ಕೆ | 216 | | Liabilities: | | | | | | | | | | Trading liabilities | | | | | | | | | | Equities | S | 206 | S | 1 | ಕೆ | | S | 207 | | Other | | | | 13 | | | | 13 | | Total trading liabilities | | 206 | ಕ | 14 | ಳ | | ಕ | 220 | | | | | | | | | | | During 2021, there were no material changes in the fair value of the Company's Level 3 financial assets. #### Additional Disclosures About the Fair Value of Financial Instruments Certain financial instruments that are not carried at fair value on the Consolidated Balance Sheet are carried at amounts that approximate fair value due their short term nature and generally negligible credit risk. Assets and liabilities that the Company estimates their carrying value to approximate their fair value include securties financing transactions, other receivables and payables from and to customers, brokers and affiliates, interest and other receivables and payables, and subordinated borrowings which are considered level 2 in the fair value hierarchy. Cash and cash equivalents and cash segregated for regulatory purposes or deposited with clearing organizations are considered level 1 in the fair value hierarchy. #### Fair Value Option Election The fair value option election allows companies to irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and liabilities. The fair value option election is permitted on an instrument by instrument basis at initial recognition of an asset or liability or upon an event that gives rise to a new basis of accounting for that instrument. As discussed above, certain of the Company's financial instruments are required to be accounted for at fair value under industry level guidance. For certain financial instruments that are not accounted for at fair value under other applicable accounting guidance, the fair value option election has been made. The Company elected the fair value option for trading liabilities related to the Company's DRIP program. #### 6. Securities Financing Transactions The Company enters into securities financing transactions with affiliates to obtain securities for settlement, to meet its regulatory reserve requirements under Rule 15c3-3, and to maintain liquidity. Under these transactions, the Company either receives or provides collateral, including U.S. Treasury and government agency securities and equity securities. The Company receives collateral in connection with resale agreements, securities borrowed transactions, customer margin loans, under most agreements the Company is permitted to sell or repledge the securities received (e.g., use the secure repurchase agreements, enter into securities lending transactions or deliver to counterparties to cover short positions). At December 31, 2021, the fair value of securities received as collateral where the Company is permitted to sell or repledge the securities was \$2.0 billion, all of which was received from affiliated companies. The fair value of securities received as collateral that had been sold or repledged was \$0.4 billion, all of which had been sold or repledged to affiliated companies. {15}------------------------------------------------ ### Offsetting of Securities Financing Agreements A significant majority of securities financing transacted under legally enforceable master repurchase agreements that give the Company, in the event of default by the counterparty, the right to liquidate securities held and to offset receivables and payables with the same counterparty. The Company offsets financing transactions with the same counterparty on the Company's Consolidated Balance Sheet where it has such a legally enforceable master netting agreement and the transactions have the same maturity date. At December 31, 2021, the Company did not offset any of its financing transactions. The tables below present securities financing agreements included on the Company's Consolidated Balance Sheet at December 31, 2021. Gross assets and liabilities are adjusted on an aggregate basis to take into consideration the effects of legally enforceable master netting agreements. The column entitled "Financial Instruments" in the tables below includes securities collateral received or pledged under repurchase or securities lending agreements where is a legally enforceable master netting agreement. These amounts are not offset in the Consolidated Balance Sheet but are shown as a reduction to the net balance sheet amount in the table to derive a net asset or liability. #### (dollars in millions) | | Assets | | | | | | | | | |-------------------------------------------------------|-------------------|----------------------|--|-------------------|-----------|--------------------------------|---|--------------------------|---------------| | | December 31, 2021 | | | | | | | | | | | | Gross Assets | | Amounts
Offset | | Net
Balance Sheet
Amount | | Financial
Instruments | Net Asset | | Receivables under resale
agreements | ਦਰ | 18,132 | | | ਦਿੱਤਾ। ਉਹ | 18,132 | | (18,132) \$ | | | Receivables under securities
borrowed transactions | | 443 | | | | 443 | | (422) | 21 | | Total | | 18,575 \$ | | | ക | 18,575 | ಕ | (18,554) \$ | 21 | | | Liabilities | | | | | | | | | | | December 31, 2021 | | | | | | | | | | | | Gross
Liabilities | | Amounts
Offset | | Net Balance
Sheet
Amount | | Financial
Instruments | Net Liability | | Payables under securities loaned
transactions | ਦਰ | 1,642 \$ | | | ಕಾ | 1,642 \$ | | (1,589) \$ | રે રે | | Total | | 1,642 \$ | | | ਦਰ | 1,642 | S | (1,589) \$ | રે રે | 'These amounts are limited to the securities finance and accordingly, do not include excess collateral received/pledged. #### Payables under Securities Loaned Transactions Accounted for as Secured Borrowings At December 31, 2021, the maturity of all of the Company's securities loaned transactions were either overnight or continuous (i.e., no stated term). At December 31, 2021, the Company pledged equity securities of \$1.6 billion as collateral for its securities loaned transactions. For securities loaned transactions, the Company receives collateral in the collateral is generally valued daily based on the market value of the securities loaned and the Company may receive or return collateral pledged, when appropriate. ### 7. Goodwill and Intangible Assets Refer to Note 2 for the Company's accounting policies for goodwill and intangible assets. #### Goodwill The carrying amount of the Company's goodwill at December 31, 2021 was \$878.0 million. {16}------------------------------------------------ The Company completed its annual goodwill impairment test as of June 30, 2021 using a qualitative assessment. Based on the results of the annual goodwill impairment test, the Company determined there was no impairment. #### Intangible Assets The carrying amount of the Company's indefinite lived intangible asset representing the Merrill Lynch brane, as of December 31, 2021, was \$935.0 million. The Company determined that there was no impairment of the intangible asset as of the June 30, 2021 test date. #### 8. Subordinated Borrowings and Other Financing At December 31, 2021, subordinated borrowings and credit committed under agreements with NB Holdings consisted of the following: (dollars in millions) | | Maturity | Amount
Outstanding | | Total Credit
Facility | | |---------------------------------------|-----------------|-----------------------|--------|--------------------------|--| | MLPF&S with NB Holdings | | | | | | | Revolving Subordinated Line of Credit | August 19, 2023 | 620 | ಕ್ಕೆ ಕ | 6.000 | | | Total Subordinated Liabilities | | 620 | D | 6,000 | | | | | | | | | The borrowing, which has been approved for regulatory capital purposes, is a U.S. dollar-denominated obligation at variable interest rates based on Fed Funds plus a market-based spread. MLPF&S' revolving subordinated line of credit agreement contains a provision that automatically extends the loan's maturity by one year unless specified actions are taken 390 days prior to the maturity date. The Company obtains letters of credit from issuing banks to satisfy various counterparty collateral requirements in lieu of depositing cash or securities collateral. There were no letters of credit outstanding at December 31, 2021. #### 9. Leases The Company enters into lessee arrangements. For more information on lease accounting, see Note 2. The Company's lessee arrangements predominantly consist of operating leases for premises and equipment. Right-ofuse assets and the related lease liabilities for such arrangements were approximately \$1.0 billion respectively, at December 31, 2021. The weighted-average discount rate used to calculate the present value of future minimum lease payments was 2.9% . Lease terms may contain renewal and extension options and early termination features. Generally, these options do not impact the lease term because the Company is not reasonably certain that it will exercise the options. The weightedaverage lease term was 7.7 years at December 31, 2021. {17}------------------------------------------------ #### Maturity Analysis The maturities of lessee arrangements outstanding at December 31, 2021 are presented in the table below based on undiscounted cash flows. | (dollars in millions) | | | |------------------------------------|--------|------------------| | | Lessee | | | | | Operating Leases | | | | | | 2022 | | 238 | | 2023 | | 221 | | 2024 | | 190 | | 2025 | | 139 | | Thereafter | | 239 | | | | | | Total undiscounted cash flows | | 1,327 | | Less: Net present value adjustment | | (137) | | Total Lease Liability | S | 1,190 | | | | | #### 10. Stockholder's Equity MLPF&S is authorized to issue 1,200 shares of \$1.00 par value common stock. At December 31, 2021, there were 1,000 shares issued and outstanding. MLPF&S is authorized to issue 1,000 shares of \$1.00 par value preferred stock. At December 31, 2021, there were no preferred shares issued and outstanding. ### 11. Contingencies and Guarantees ### Litigation and Regulatory Matters In the ordinary course of business, the Company is occasionally a defendant in or a party to pending and threatened legal actions and proceedings. In view of the inherent difficulty of predicting the of such litigation and regulatory matters, particularly where the claimants seek unspecified or very large or indeterminate damages or where the matters present novel legal theories or involve a large number of parties, the Company cannot predict what the eventual outcome of the pending matters will be, what the timing of the ultimate resolution of these matters will be, or what the eventual loss, fines or penalties related to each pending matter may be. In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. As a matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. Once the loss contingency related to a litigation or regulatory matter is deemed to be both probable and estimable, the Company will establish an accrued liability. At December 31, 2021, the Company did not have an accrued liability for litigation nor regulatory matters. #### Guarantees The Company is a member of various securities and derivative exchanges and clearinghouses, both in the U.S. and in other countries. As a member, the Company may be required to pay a pro-rata share of the losses incurred by some of these organizations as a result of another member's default and under other loss scenarios. The Company's potential obligations may be limited to its membership interests in such exchanges and clearinghouses, to the amount (or multiple) of the Company's contribution to the guarantee fund or, in limited instances, to the full pro-rata share of the {18}------------------------------------------------ residual losses after applying the guarantee fund. The Company's maximum potential exposure under these membership agreements is difficult to estimate; however, the potential for the Company to be required to make these payments is remote. The Company performs securities clearance and settlement services with other brokerage firms and clearinghouses on behalf of its clients. Under these arrangements, the Company stands ready to meet the obligations with respect to securities transactions. The Company's obligations in this respect are secured by the assets in the clients' accounts and the accounts of their customers as well as by any proceeds received from the transactions cleared and settled by the Company on behalf of clients or their customers. The Company's maximum potential exposure under these arrangements is difficult to estimate; however, the potential for the material losses pursuant to these arrangements is remote. In connection with the FA Loans discussed in Note 3, the Company services FA loans through an affiliate in addition to those serviced directly by the Company fully guarantees the amount outstanding of the affiliate serviced FA Loans in the event of default during the FA loan's vesting period. At December 31, 2021, the Company had FA Loan guarantees of \$39.0 million which is the maximum of future payments. The affiliate performs qualitative analyses, including consideration of historical losses and current economic conditions, to estimate any expected credit losses. At December 31, 2021, expected credit losses assessed by the affiliate do not have a material impact to the Consolidated Balance Sheet. ### 12. Employee Benefit Plans Bank of America provides pension and other postretirement benefits to its employees worldwide through sponsorship of defined contribution pension, defined benefit pension and other post retirement plans. The Bank of America Corporation Corporate Benefits Committee has overall responsibility for the administration of these benefit plans. The defined benefit pension plans and postretirement benefit plans are accounted for in accordance with ASC 715-20-50, Compensation - Retirement Benefit Plans-General ("Defined Benefit Plan Accounting"). Post employment benefits are accounted for in accordance with ASC 712, Compensation-Non retirement Post employment Benefits. Required disclosures are included in the December 31, 2021 Form 10-K of Bank of America. #### Defined Contribution Pension Plans The U.S. defined contribution plan sponsored by Bank of America is the Bank of America 401(k) Plan. #### Defined Benefit Pension Plans Certain of the Company's employees are covered by Bank of America's qualified pension plan. Bank of America has an annuity contract that guarantees the payment of benefits vested under a terminated U.S. pension plan. Bank of America, under a supplemental agreement, may be responsible for, or benefit from, actual experience and investment performance of the annuity assets. Bank of America made no contribution under this agreement for the period ended December 31, 2021. Contributions may be required in the future under this agreement. Bank of America also maintains non-contributory, non qualified pension plans (i.e., plans not subject to Title IV of ERISA) that are unfunded and provide supplemental defined benefits for certain eligible U.S. employees. #### Postretirement Benefits Other Than Pensions Health insurance benefits are provided to eligible retired employees and dependents through Bank of America sponsored plans. The health care coverage is contributory, with certain retiree contributions adjusted periodically. The accounting for costs of health care benefits for most eligible employees anticipates future changes in cost-sharing provisions. #### Postemployment Benefits Bank of America provides certain post employment benefits for employees on extended leave due to injury, illness, or death and for terminated employees. Eligible employees who are disabled due to non-work related illness or injury are {19}------------------------------------------------ - - -- - -- - - - - - - - - /-- - - 0 -1 2 3 456789:;<=:>?@ABC9D:AEF 1 4- ---GH --2 I6JKJ6L6KM0 -1 !"#\$%%&'(%')\*+%,"-'. N4 - - -3 - - - - 0 -1 O O - -- - 0 -1 M P P3 Q -EMPPQHR-MPPQ0 -1 - 1 O -- 1- EFSR GH T-JK JKJ60 -1 U -- - -MPPQ -- - 0 -1 4 -P3 Q -V - -JKJ6MPPQ-SR O W - - - - 10 -1 4 -SR O - - - - - O --O - -X- - - - 0 -1 U - 1 - NSR O- - N O -- -- - -- - O O -- -- - -- - - -- O4 -- -OX- -- --- - - N SR - O - W --- - - O--- O - - X- - - Y)Z%[\# !%'.-)\*#'][[-'^% %'). N4 - -0 -1 - - - - -O O --- - - - - 4-- - - X - Q - U- - -- -X - -- N4 - - 0 -1 - O -O - - - - -- - - \_- 0 -1 - - - - -- - - - - - - O -- - - ` &'(# %a-b%. | /




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o | | | pr | 2 I6JKJ6 -4 s RN0 O O -W 4 s X O oI5K-/--RN0 - --O O- X - RN0 O X- {20}------------------------------------------------ associated federal deduction, and the portion of gross non-U.S. UTBs that would be offset by tax reductions in other jurisdictions. It is reasonably possible that the UTB balance may decrease by as much as \$7.6 million during the next 12 months, since resolved items will be removed from the balance whether their resolution results in payment or recognition. The Company files income tax returns in numerous state, local and non-U.S. jurisdictions each year. The Internal Revenue Service ("IRS") and other tax authorities in states, cities, and countries in which the Company has significant business operations, examine tax returns periodically (continuously in some jurisdictions). The table below summarizes the status of significant tax examinations, by jurisdiction, for the Company as of December 31, 2021. | | Years under | Status at | |---------------|-----------------|-------------------| | .Iurisdiction | Examination (1) | December 31, 2021 | | U.S. federal | 2017-2021 | Field examination | | California | 2012-2014 | Appeals | | California | 2015-2017 | Field examination | | New York | 2016-2018 | Field examination | (1) All tax years subsequent to the above years remain open to examination. At December 31, 2021, the Company's accrual for interest and penalties that related to income taxes and remittances, was \$13.0 million. Current income taxes are recorded as income tax payable due to affiliate, which are included on the Consolidated Balance Sheet within Interest and other payables. Significant components of the Company's deferred tax assets and liabilities as of December 31, 2021 are presented below. | (dollars in millions) | | | |-------------------------------------------------------|------|-------| | Deferred tax assets | | | | Lease liability | ਦਿੱਤ | 296 | | Loss carryforward | | 117 | | Accrued expenses | | રે રે | | Other | | 40 | | Gross deferred tax assets | | 488 | | Less: valuation allowance | | (62) | | Total deferred tax assets, net of valuation allowance | | 426 | | Deferred tax liabilities | | | | Right-to-use asset | | 282 | | Goodwill and intangibles | | 240 | | Gross deferred tax liabilities | | 522 | | Net deferred tax liability | S | 96 | | | | | {21}------------------------------------------------ The table below summarizes the deferred tax assets and the related valuation allowance recognized for the net operating loss and tax credit carryforwards at December 31, 2021. #### (dollars in millions) | | | Deferred Tax
Asset | | Valuation
Allowance | | Net Deferred
Tax Asset | First Year
Expiring | | |----------------------------------------|----|-----------------------|---|------------------------|---|---------------------------|------------------------|--| | Net operating losses - U.S. | ಳಿ | | S | | S | | After 2028 | | | Net operating losses - U.S. States (1) | | 117 | | (44) | | 73 | Various | | | Total Loss Carryforwards | | 117 | A | (44) | 1 | 73 | | | | State tax credits | ಳ | ব | | | S | য | After 2033 | | | Foreign tax credits | | 18 | | (18) | | | | | | Total Tax Credit Carryforwards | | 22 | | (18) | S | | | | (1) Amounts above include capital losses and related valuation allowances for U.S. states before considering the benefit of federal deductions were \$147.9 million and \$(55.4) million, respectively. Realization of the deferred tax assets above is dependent on the Company's, or Bank of America's ability to generate sufficient taxable income prior to their expiration. Management concluded that no valuation allowance was necessary to reduce the U.S. federal NOL and state tax credit carryforwards since estimated future taxable income will morelikely-than-not be sufficient to utilize these assets prior to expiration. At December 31, 2021, the Company had a current income tax payable due to its affiliates of approximately \$547.0 million as a result of its inclusion in consolidated, combined, and unitary tax return filings with Bank of America under the intercompany tax allocation agreements with Bank of America. ### 15. Subsequent Events ASC 855, Subsequent Events, requires the Company to evaluate whether events, occurring after the Consolidated Balance Sheet date but before the date the Consolidated Balance Sheet is available to be issued, require accounting as of the balance sheet date, or disclosure in the Consolidated Balance Sheet. The Company has evaluated such subsequent events through date of issuance. In February 2022, the maturities of the Company's existing revolving senior unsecured lines of credit with NB Holdings, Bank of America and MLBTC were extended to February 1, 2023. There were no other material subsequent events which affected the amounts or disclosures in the Consolidated Balance Sheet through February 25, 2022, which is the issuance date of the Consolidated Balance Sheet. ### 16. Regulatory Requirements #### SEC Uniform Net Capital Rule As an SEC registered broker-dealer and CFTC registered introducing broker, MLPF&S is subject to the net capital requirements of the Securities Exchange Act of 1934 Rule 15c3-1") and CFTC Regulation 1.17. MLPF&S has elected to compute the minimum capital requirement in accordance with the "Alternative Standard" as permitted by SEA Rule 15c3-1. {22}------------------------------------------------ The company prepares SEC Form X-17A-5, FOCUS Report, Part II, on an unconsolidated basis. The following is a summary of certain consolidating financial information of the Company: #### (dollars in millions) | Standalone | | | | | | | | | | | |-----------------------------------------------|----------------|-----------|-------------|--------|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|-----------|--------------|--------| | | (FOCUS Report) | | Adjustments | | Subsidiaries | | Eliminations | | Consolidated | | | Total Assets | | 36,607 | | 111 \$ | | 1,051 | ಕೆ | (780) | ટે | 36,989 | | Total Liabilities | ಳ | 27,509 | ಕೆ | 111 | | 458 | | (187) S | | 27,891 | | Total Stockholder's Equity | | 9,098 | | | | રું રેતે રેતા પાસની વસવાડી તેમ જ દૂધની ડેરી જેવી સવલતો પ્રાપ્ય થયેલી છે. આ ગામનાં લોકોનો મુખ્ય વ્યવસાય ખેતી, ખેતમજૂરી તેમ જ પશુપાલન છે. આ ગામમાં મુખ્યત્વે ખેતી, ખેતમજૂરી તેમ | | (593) | | 9,098 | | Total Liabilities and
Stockholder's Equity | | 36,607 \$ | | 111 8 | | 1,051 | e | (780) | ని | 36.989 | At December 31, 2021, MLPF&S' regulatory net capital as defined by SEA Rule 15c3-1 was \$5.6 billion and exceeded the minimum requirement of \$198.9 million by \$5.4 billion. In accordance with the Alternative Standard, MLPF&S is required to maintain net capital in excess of \$198.9 million or two percent of aggregate debit items computed in accordance with the Formula for Determination of Customer Account Reserve Requirements of Brokers and Dealers. As of December 31, 2021, MLPF&S had net capital in excess of the minimum requirement. #### SEC Customer Protection Rule MLPF&S is also subject to SEA Rule 15c3-3, which requires, under certain circumstances, that cash or securities be deposited into a special reserve bank account for the exclusive benefit of customers. As of December 31, 2021, the Company had \$12.0 billion of U.S. Government securities segregated in the special reserve bank account. As a clearing broker and in accordance with Rule 15c3-3, MLPF&S computed a reserve requirement for the proprietary accounts of broker dealers ("PAB"). As of December 31, 2021, the Company had \$5.0 million of eash segregated in a special reserve bank account for such requirement. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.