Item 1:
Business.
Item 1A:
Item 1A:
Risk Factors.
Item 2:
Properties.
Item 3:
Legal Proceedings.
Item 1B.
Item 1B.
Unresolved Staff Comments.
Not Applicable.
Item 4.
Item 4.
Mine Safety Disclosures.
Not Applicable.
Substitute information provided in accordance with General Instruction J to Form 10-K:
Item 1112(b) of Regulation AB. Significant Obligors of Pool Assets (Financial Information).
The primary asset of BA Credit Card Trust is the collateral certificate, Series 2001-D, representing an undivided interest in BA Master Credit Card Trust II, whose assets include the receivables arising in a portfolio of unsecured consumer revolving credit card accounts. BA Master Credit Card Trust II, therefore, may be considered a significant obligor in relation to BA Credit Card Trust. Pursuant to Instruction 2.b. to Item 1112(b) of Regulation AB, the information required by Instruction J to Form 10-K in respect of BA Master Credit Card Trust II has been disclosed in this report on Form 10-K in lieu of the information otherwise contemplated by Item 1112(b).
The pool assets held by BA Master Credit Card Trust II do not include any significant obligors.
Item 1114(b)(2) of Regulation AB: Credit Enhancement and Other Support, Except for Certain Derivatives Instruments (Financial Information).
Based on the standards set forth in Item 1114(b)(2) of Regulation AB, no information is required in response to this Item.
Item 1115(b) of Regulation AB: Certain Derivatives Instruments (Financial Information).
Based on the standards set forth in Item 1115(b) of Regulation AB, no information is required in response to this Item.
Item 1117 of Regulation AB: Legal Proceedings.
Industry Developments
Bank of America, National Association (“BANA”) issues credit cards on MasterCard’s and Visa’s networks. MasterCard and Visa are subject to settlement obligations relating to certain litigations and continue to be subject to significant ongoing litigations, including class actions, and increased competition. These settlements and litigations are based on, among other things, claimed violations of United States federal antitrust laws, claims that currency conversion fees were wrongly applied on purchases of goods and services in foreign countries, and claims alleging that the interchange charged by MasterCard and Visa is impermissible. The costs associated with these settlements, litigations and other matters could cause MasterCard and Visa to invest less in their networks and marketing efforts and could adversely affect the interchange paid to their member banks, including BANA.
Litigation
In 2005, a group of merchants filed a series of putative class actions and individual actions directed at interchange fees associated with Visa and MasterCard payment card transactions. These actions, which were consolidated in the U.S. District Court for the Eastern District of New York under the caption In Re Payment Card Interchange Fee and Merchant Discount Anti-Trust Litigation (Interchange), named Visa, MasterCard and several banks and bank holding companies, including Bank of America Corporation (“BAC”), as defendants. Plaintiffs alleged that defendants conspired to fix the level of default interchange rates and that certain rules of Visa and MasterCard related to merchant acceptance of payment cards at the point of sale were unreasonable restraints of trade under the Sherman Act. Plaintiffs sought unspecified damages and injunctive relief.
On October 19, 2012, defendants, including BAC, settled the matter. The settlement provided for, among other things, (i) payments by defendants to the class and individual plaintiffs totaling approximately $6.6 billion, allocated proportionately to each defendant based upon loss-sharing agreements; (ii) distribution to class merchants of an amount equal to 10 basis points of default interchange across all Visa and MasterCard credit card transactions for a period of eight consecutive months, which period began on July 29, 2013, which otherwise would have been paid to Visa and MasterCard issuers, including BAC, and which effectively reduces credit interchange for that period of time; and (iii) modifications to certain Visa and MasterCard rules regarding merchant point of sale practices.
The district court granted final approval of the class settlement agreement on December 13, 2013. On June 30, 2016, the U.S. Court of Appeals for the Second Circuit vacated the judgment approving the settlement and remanded the case back to the district court for further proceedings. On November 23, 2016, counsel for the class filed a petition with the U.S. Supreme Court seeking review of the Second Circuit decision which was denied on March 27, 2017. As a result of the Second Circuit’s decision, the Interchange class case was remanded to the district court, and the parties are in the process of coordinating the case with the already-pending actions brought by merchants who had opted out of the class settlement, as described below.
Following district court approval of the class settlement agreement in December 2013, a number of the class members opted out of the settlement, and many filed individual actions against the defendants. BAC was named as a defendant in one such individual action, as well as one action brought by cardholders alleging claims under the Sherman Act and under California state law. In addition, a number of these individual actions were filed that do not name BAC as a defendant. As a result of various loss-sharing agreements, however, BAC remains liable for any settlement or judgment in these individual suits where it is not named as a defendant. Now that the Interchange class case has been remanded to the district court, these individual actions will be coordinated as individual merchant lawsuits alongside the Interchange class case.
On November 26, 2014, the district court granted defendants’ motion to dismiss the Sherman Act claim in the cardholder action, and on February 26, 2016, the court dismissed plaintiffs’ California state law claims. The plaintiffs appealed these decisions to the U.S. Court of Appeals for the Second Circuit. On October 17, 2016, the Second Circuit affirmed the dismissal of plaintiffs’ complaint and, on October 31, 2016, it denied plaintiffs’ petition for rehearing en banc.
Regulatory Developments
On May 29, 2015, BANA entered into a Consent Order with the Office of the Comptroller of the Currency (the “OCC”) to resolve its investigation relating to BANA’s enterprise-wide compliance risk management program, compliance with the Servicemembers Civil Relief Act, and activities in connection with sworn document and collections litigation practices. In connection with entering into this Consent Order with the OCC, BANA was assessed $30 million in civil monetary penalties and agreed to provide remediation to affected customer accounts. The OCC terminated this Consent Order on January 23, 2018.
Legal Proceedings Involving The Bank of New York Mellon
In the ordinary course of business, The Bank of New York Mellon is named as a defendant in or made a party to pending and potential legal actions. In connection with its role as trustee of certain residential mortgage-backed securitization (“RMBS”) transactions, The Bank of New York Mellon has been named as a defendant in a number of legal actions brought by RMBS investors. These lawsuits allege that the trustee had expansive duties under the governing agreements, including the duty to investigate and pursue breach of representation and warranty claims against other parties to the RMBS transactions. While it is inherently difficult to predict the eventual outcomes of pending actions, The Bank of New York Mellon denies liability and intends to defend the litigations vigorously.
The Bank of New York Mellon has provided us with the information in the paragraph above in response to the requirements of Regulation AB. Other than the above paragraph and the information concerning The Bank of New York Mellon specified in this Form 10-K under the caption Item 1122 of Regulation AB: Compliance with Applicable Servicing Criteria and in Exhibit 33.2 to this Form 10-K, The Bank of New York Mellon has not participated in the preparation of, and is not responsible for, any other information contained in this Form 10-K.
PART II
The following Items have been omitted in accordance with General Instruction J to Form 10-K:
Item 5:
Item 5:
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Item 6:
Item 6:
Selected Financial Data.
Item 7:
Item 7:
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 7A:
Item 7A:
Quantitative and Qualitative Disclosures about Market Risk.
Item 8:
Item 8:
Financial Statements and Supplementary Data.
Item 9:
Item 9:
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Item 9A:
Item 9A:
Controls and Procedures.
Item 9B:
Item 9B:
Other Information.
None.
PART III
The following Items have been omitted in accordance with General Instruction J to Form 10-K:
Item 10:
Item 10:
Directors, Executive Officers and Corporate Governance.
Item 11:
Item 11:
Executive Compensation.
Item 12:
Item 12:
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Item 13:
Item 13:
Certain Relationships and Related Transactions, and Director Independence.
Item 14:
Item 14:
Principal Accountant Fees and Services.
Substitute information provided in accordance with General Instruction J to Form 10-K:
Item 1119 of Regulation AB: Affiliations and Certain Relationships and Related Transactions.
Information required by Item 1119 of Regulation AB has been omitted from this report on Form 10-K in reliance on the Instruction to Item 1119.
Item 1122 of Regulation AB: Compliance with Applicable Servicing Criteria.
(a) Item 1122 Reports: Each of BANA, with respect to itself and its affiliated servicing participants, and The Bank of New York Mellon (each, a “Servicing Participant”) has been identified by the registrant as a party participating in the servicing function with respect to the pool assets held by each of BA Master Credit Card Trust II and BA Credit Card Trust. Each Servicing Participant has completed a report on assessment of compliance with the servicing criteria applicable to such Servicing Participant (each, a “Report on Assessment”), which Reports on Assessment are attached as exhibits to this Form 10-K. In addition, each of the Servicing Participants has provided an attestation report (each, an “Attestation Report”) by a registered independent public accounting firm regarding its related Report on Assessment. Each Attestation Report is attached as an exhibit to this Form 10-K. We have not independently verified the accuracy of The Bank of New York Mellon’s assertions or the related attestations of its registered independent public accounting firm.
A Servicing Participant may engage one or more vendors to perform specific and limited activities that address all or a portion of one or more servicing criteria applicable to such Servicing Participant. Each Servicing Participant indicates that it has instituted policies and procedures to monitor whether its vendors’ activities comply in all material respects with such servicing criteria, and has elected to take responsibility for assessing compliance with the servicing criteria applicable to its vendors’ activities in such Servicing Participant’s Report on Assessment.
Except as disclosed below, no Report on Assessment or related Attestation Report has identified (i) any material instance of noncompliance with the servicing criteria identified in such Report on Assessment as applicable to the related Servicing Participant or (ii) any material deficiency in such Servicing Participant’s policies and procedures to monitor vendor compliance.
Exceptions:
The Bank of New York Mellon: The Bank of New York Mellon's Report on Assessment and the related Attestation Report prepared by KPMG LLP have identified material noncompliance with one servicing criterion applicable to The Bank of New York Mellon.
Servicing criterion 1122(d)(3)(i)(A) contemplates that reports to investors, including those to be filed with the Commission, are maintained in accordance with the transaction agreements and applicable Commission requirements. Specifically, such reports are prepared in accordance with timeframes and other terms set forth in the transaction agreements.
Noncompliance: The Bank of New York Mellon indicates that during the reporting period, certain reports to investors were not prepared in accordance with the timeframes set forth in the transaction agreements. These reports contain the information that is also required to be filed with the Commission in distribution reports on Form 10-D.
Remediation: The Bank of New York Mellon indicates that the above finding relates to reports sent to the registered holders of some resecuritization and repackage transactions. These reports were delivered outside the timeframe set forth in the transaction agreements. The Bank of New York Mellon further indicates that its management has enhanced controls in order to better ensure reports are delivered timely to investors. They also indicate that the related distribution reports on Form 10-D were timely filed with the Commission.
The Bank of New York Mellon has also confirmed that none of the identified instances of noncompliance involved the servicing of pool assets held by either BA Master Credit Card Trust II or by BA Credit Card Trust.
We have not independently verified the accuracy of The Bank of New York Mellon's assertions or the adequacy of its remediation efforts.
Platform-Level Reports:
Regulations of the SEC require that each servicing participant complete a report on assessment at a “platform” level, meaning that the transactions covered by the report on assessment should include all asset-backed securities transactions involving such servicing participant that are backed by the same asset type. Subsequent guidance from the SEC staff identifies additional parameters that a servicing participant may apply to define and further limit its platform. For example, a servicing participant may define its platform to include only transactions that were completed on or after January 1, 2006 (the effective date for Regulation AB) and that were registered with the SEC pursuant to the Securities Act of 1933. Each servicing participant is responsible for defining its own platform, and each platform will naturally differ based on various factors, including the servicing participant’s business model, the transactions in which it is involved and the range of activities performed in those transactions.
(b) Other Reports: BANA has completed an assertion letter which states that, as of December 31, 2017, its controls over the functions performed as servicer of BA Master Credit Card Trust II and BA Credit Card Trust are effective in providing reasonable assurance that BA Master Credit Card Trust II and BA Credit Card Trust assets in the possession of or under the control of BANA, as servicer, are safeguarded against loss from unauthorized use or disposition, as specified in the applicable agreements. PricewaterhouseCoopers LLP has produced an accountants report attesting to the fairness of such assertion as of December 31, 2017. Such assertion letter and related accountants report is attached as Exhibit 99.1 to this Form 10-K.
Item 1123 of Regulation AB: Servicer Compliance Statement.
BANA has been identified by the registrant as a servicer with respect to the pool assets held by each of BA Master Credit Card Trust II and BA Credit Card Trust. BANA has provided a statement of compliance with the related servicing agreement (the “Compliance Statement”), signed by an authorized officer of BANA. The Compliance Statement is attached as an exhibit to this Form 10-K.
PART IV
Item 15.
Item 15.
Exhibits and Financial Statement Schedules.
(a)(1)
Not Applicable.
(a)(2)
Not Applicable.
(a)(3)
Not Applicable.
(b)
Exhibits.
Exhibit Index
(c)
Not Applicable.
Item 16.
Form 10-K Summary.
Not applicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 27th, 2018